State tax revenues dropped in 2008 as economy weakenedState tax revenues fell in the last quarter of 2008 as an increase in unemployment and decrease in consumer spending and business profits led to many states having significantly large deficits, according to The Wall Street Journal. Tax revenue estimates are based on 36 states that have released tax data.
Most sources of revenue declined compared with a year earlier, including a 6.5 percent drop for sales taxes and 22.1 percent drop for corporate income taxes. A 0.1 percent gain in personal income taxes was largely based on income earned before the recession worsened.
Unlike the federal government, most state governments are required to balance their budgets, and state governors and legislatures have been focusing on budget problems. California is considering delaying more than $3 billion in tax refunds and other payments to individuals and businesses, as well as state vendors and local governments expecting aid for social programs. Arizona's state government has said it could be out of money by February and may be forced to borrow money. Other actions states have taken include pay freezes, employee furloughs and funding cuts.
States have been affected by falling tax revenues and less money while having to handle increased unemployment, which has created a need for more money for social assistance programs.
Some states are banding together to try to ease the burden. Minnesota and Wisconsin governors are finding ways to share things such as heavy equipment, road salt and software to save money. However, many states are waiting for state aid in President-elect Barack Obama's proposed stimulus package.
Date : 1/21/2009