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State Tax Revenues Softened in the Fourth Quarter of 2011
By Lucy Dadayan
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ALBANY, N.Y. ---- Preliminary data for the October-December quarter of 2011 show further growth in state tax collections, with gains now coming for every quarter over two full years. However, such growth softened considerably in the second half of 2011. We will provide a full report on the October-December period after Census Bureau data for the quarter are available.
The Rockefeller Institute's compilation of preliminary data from all 50 states shows collections from major tax sources increased by 2.7 percent in nominal terms in the fourth quarter of 2011 compared to the same quarter of 2010. This is a noticeable slowdown from the 11.1 and 6.1 percent year-over-year growth reported in the second and third quarters of 2011 respectively. The net gain of 2.7 percent was shaped significantly by a large year-over-year decline in California and increases in Illinois, both related to legislated changes. If we exclude those two states with large fluctuations in collections, overall state tax receipts during the quarter were 4.4 percent higher than a year earlier.
Among individual states, 41 reported gains during the fourth quarter while nine reported declines in overall tax collections during the fourth quarter. Personal income taxes rose by 3.5 percent, a considerable slowdown from 10.1 year-over-year percent growth reported in the third quarter of 2011. Sales taxes also reported modest growth of 1.8 percent for the period. After five consecutive quarters of growth, corporate income taxes reported a decline of 3.8 percent in the fourth quarter of 2011 (see Table 1).
Table 2 shows state-by-state figures for change in major tax revenues during the fourth quarter of 2011 compared to a year earlier. Illinois reported the largest increase in overall collections, $1.2 billion or 24 percent, mostly attributable to the legislated personal income tax increases that took effect as of January 2011. According to preliminary data, eight states reported double-digit growth in total tax collections, four states in personal income taxes, and four states in sales tax revenues. Among states reporting declines in overall tax collections, California reported the largest drop of $2.4 billion or 8.9 percent. Such decline is mostly attributable to expiration of temporary tax increases. Whether we consider the 2.7 percent overall gain for all states, or the 4.4 percent increase seen if we exclude both California and Illinois, the quarterly growth in revenues is the lowest since mid-2010.
Table 1: All Major Taxes Showed Continued Growth in the Fourth Quarter of 2011 Percent Change in State Tax Collections vs. Same Quarter Year Ago
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PIT
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CIT
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Sales
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Total
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2007 Q1
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8.5
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14.8
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3.1
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5.2
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2007 Q2
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9.2
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1.7
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3.5
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5.5
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2007 Q3
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7.0
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(4.3)
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(0.7)
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3.1
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2007 Q4
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3.8
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(14.5)
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4.0
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3.6
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2008 Q1
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4.8
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(1.4)
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0.7
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2.6
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2008 Q2
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8.1
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(7.0)
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1.0
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5.4
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2008 Q3
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0.9
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(13.2)
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4.7
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2.8
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2008 Q4
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(1.9)
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(23.0)
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(5.3)
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(4.0)
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2009 Q1
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(19.4)
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(20.2)
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(8.4)
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(12.2)
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2009 Q2
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(27.7)
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3.0
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(9.5)
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(16.3)
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2009 Q3
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(11.5)
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(21.3)
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(10.1)
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(11.0)
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2009 Q4
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(4.1)
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0.7
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(4.8)
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(3.1)
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2010 Q1
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3.6
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0.3
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0.1
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3.3
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2010 Q2
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1.3
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(19.0)
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5.7
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1.9
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2010 Q3
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3.9
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0.5
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4.2
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4.6
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2010 Q4
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10.6
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18.1
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5.0
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7.7
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2011 Q1
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12.9
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9.0
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6.5
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9.6
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2011 Q2
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17.1
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19.1
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4.7
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11.1
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2011 Q3
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10.1
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2.3
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3.8
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6.1
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2011 Q4 (preliminary)
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3.5
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(3.8)
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1.8
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2.7
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Table 2: Percent Change in State Tax Revenue
Quarterly Tax Revenue by Major Tax
October-December 2010-2011, percent change
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PIT
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CIT
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Sales
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Total
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United States
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3.5
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(3.8)
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1.8
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2.7
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New England
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7.1
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(11.9)
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7.1
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5.7
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Connecticut
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23.0
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35.4
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13.4
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21.9
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Maine
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4.6
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1.4
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4.8
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1.2
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Massachusetts
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0.2
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(24.4)
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3.2
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(1.3)
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New Hampshire
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NA
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(1.0)
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NA
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(4.5)
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Rhode Island
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2.2
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(6.2)
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7.8
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4.8
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Vermont
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3.0
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(27.1)
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6.5
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(1.5)
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Mid-Atlantic
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2.6
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(10.6)
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4.5
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2.3
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Delaware
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5.8
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(31.6)
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NA
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0.7
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Maryland
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9.8
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8.5
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10.3
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6.4
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New Jersey
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5.2
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(8.9)
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4.6
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3.8
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New York
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0.4
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(12.1)
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0.6
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0.5
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Pennsylvania
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3.3
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(14.5)
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7.2
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3.3
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Great Lakes
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17.9
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23.8
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3.1
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9.5
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Illinois
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60.3
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(6.0)
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(0.7)
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24.1
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Indiana
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6.0
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22.9
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7.7
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7.3
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Michigan
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1.9
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73.1
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1.0
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3.3
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Ohio
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7.4
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NM
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5.1
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9.3
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Wisconsin
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(0.1)
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(0.3)
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3.6
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1.6
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Plains
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4.6
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22.0
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6.8
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6.1
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Iowa
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7.3
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NM
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2.7
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6.1
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Kansas
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6.9
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1.1
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7.2
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8.9
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Minnesota
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4.4
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2.6
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7.2
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6.7
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Missouri
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2.2
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8.5
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0.9
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1.1
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Nebraska
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6.6
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89.4
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8.7
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7.7
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North Dakota
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(8.3)
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18.9
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47.9
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18.5
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South Dakota
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NA
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NA
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(3.8)
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0.2
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Southeast
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3.7
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(4.2)
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1.8
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2.4
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Alabama
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2.7
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27.0
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4.5
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2.3
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Arkansas
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6.4
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6.2
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1.1
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4.9
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Florida
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NA
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(6.1)
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3.5
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2.6
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Georgia
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3.2
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(17.3)
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8.0
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3.5
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Kentucky
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1.7
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68.7
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1.3
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2.3
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Louisiana
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(4.1)
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(82.9)
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(2.2)
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(5.1)
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Mississippi
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0.4
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1.6
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3.2
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1.6
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North Carolina
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5.4
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(7.8)
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(14.3)
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(0.9)
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South Carolina
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4.6
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NM
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3.9
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6.1
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Tennessee
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NA
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15.5
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6.0
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10.0
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Virginia
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3.9
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(16.3)
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3.4
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1.7
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West Virginia
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9.5
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(70.6)
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5.0
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1.0
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Southwest
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6.3
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41.5
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11.2
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12.5
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Arizona
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6.8
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78.3
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5.6
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19.9
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New Mexico
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(11.2)
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(25.0)
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7.2
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0.3
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Oklahoma
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14.3
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80.4
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8.5
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19.7
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Texas
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NA
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NA
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12.7
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11.4
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Rocky Mountain
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2.5
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53.6
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1.5
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3.9
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Colorado
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3.0
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64.0
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2.0
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5.0
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Idaho
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6.0
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38.5
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2.0
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4.2
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Montana
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7.4
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96.3
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NA
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12.7
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Utah
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(2.3)
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8.8
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(1.4)
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(1.7)
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Wyoming
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NA
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NA
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7.1
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5.6
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Far West
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(5.9)
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(20.5)
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(10.3)
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(6.3)
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Alaska
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NA
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(55.0)
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NA
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(0.0)
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California
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(7.6)
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(18.1)
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(8.0)
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(8.9)
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Hawaii
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(4.4)
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NM
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8.5
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2.3
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Nevada
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NA
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NA
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6.7
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4.7
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Oregon
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10.1
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(15.9)
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NA
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7.8
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Washington
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NA
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NA
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(33.8)
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(0.1)
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Source: Individual state data, analysis by Rockefeller Institute.
Notes: NA - not applicable; NM - not meaningful.
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# # #
About the Rockefeller Institute of Government
The Nelson A. Rockefeller Institute of Government, at the University at Albany, is the public policy research arm of the State University of New York. The Institute conducts fiscal and programmatic research on American state and local governments. Visit our Web site at www.rockinst.org.
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