Tax collection rose in all 50 states in fiscal 2011, and in nine states increased more than 10 percent, according to U.S. Census data released on Thursday that marked the end of a severe revenue collapse.
"The nationwide increases in state government tax revenue are an indication of the stabilization of revenues for state governments," said Lisa Blumerman, chief of the Governments Division at the Census, in a statement.
Tax collections rose the most in North Dakota, 44.5 percent, followed by oil giant Alaska, 22.4 percent. They were up 17.4 percent in California, 15.3 percent in Illinois and 15.1 percent in New Mexico. Wyoming, also a state that produces energy sources, had revenues increase 14.1 percent in the fiscal year.
In Idaho, Colorado and Minnesota, tax collections were up around 10 percent from the previous fiscal year. For most states, fiscal 2011 ended on June 30, 2011.
The Census noted that tax collections made up a little more than a third of total state revenues in fiscal 2010. Grants and reimbursements from the federal government can also supply a large proportion of funding.
Each state structures its tax code differently. For example, seven states - Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming - do not levy individual income taxes.
Still, the data provided signs of life for states that recently suffered some of the lowest revenues in decades.
After the recession began in 2007, states made mid-year emergency budget changes as revenues cratered. Since all states except Vermont must balance their budgets, they hiked taxes and slashed spending. Worse yet, many reduced revenue forecasts only for collections not to meet the lower projections, which in turn forced more spending cuts.
In fiscal 2010, the Census noted tax collections rose only in 11 states.
"No state increased by more than 10 percent and five states actually decreased by 10 percent or more," it added in a report.
North Dakota was mostly inured to the recession's effects, maintaining the lowest unemployment rate and the highest revenue levels in the country mostly due to its large commodity sector.
But by December 2011, total tax revenues had returned to pre-recession levels across the country, according to the independent think tank, the Rockefeller Institute. A Census report last month showed state and local government tax revenue rose in the final quarter of 2011 to the highest level on records dating back to 1988.
States are worried the improvement will not last. Many fear a global or national economic downturn could truncate the revenue growth, or that the revenue growth will be so slow that they will still have to find places to cut spending.
Individual income taxes rose in 42 states to a total of $259.14 billion, "a primary explanation for the increase in total state government tax collections," the Census found.
Illinois, which legislated a tax hike that year, had the sharpest increase of 42.6 percent from fiscal 2010. Hawaii, meanwhile, had the only decrease, 18.4 percent. Altogether, states' individual income taxes rose 9.8 percent.
According to the Census report, general sales taxes totaled $240.9 billion in 2011, up 8.3 percent from 2010.
"This increase followed consecutive decreases of 1.9 percent in 2010 and 5.6 percent in 2009," the report found.
Severance taxes are not a large source of revenue nation-wide, but the tax charged on extraction rose 31.1 percent from the year before, following two consecutive years of declines and helping strengthen commodity-rich states' revenues.
(Reporting By Lisa Lambert)