| March 19
March 19 Revenues in most U.S. states increased
in the fourth quarter of 2011, but their recent surge is
tapering off, as they grew just 2.7 percent from the final
quarter of 2010, according to a report released on Monday.
"This is a noticeable slowdown from the 11.1 (percent) and
6.1 percent year-over-year growth reported in the second and
third quarters of 2011, respectively," the Rockefeller
Institute, a think tank that closely watches states' revenues,
said in the report.
The growth rate in last year's fourth quarter was the lowest
since the second quarter of 2010.
Altogether, revenue rose in 41 states and dropped in nine,
according to the Rockefeller Institute's report.
The largest decline was in California, where fourth-quarter
revenue dropped 8.9 percent from the year-ago quarter, followed
by Louisiana, where the revenue drop was 5.1 percent for the
2011 final quarter on a year-over-year basis, the Rockefeller
Illinois recorded the largest gain in fourth-quarter
revenue of 24.1 percent year-over-year, followed by Connecticut,
with a 21.9 percent increase, the report found.
Altogether, eight states recorded double-digit percentage
gains in revenue.
California and Illinois made legislative changes that had
large impacts on their incomes - dragging down revenues in
California, while pumping them up in Illinois last quarter.
Without those two states, total growth was a bit stronger, 4.4
percent, Rockefeller said.
Even that higher rate, though, is the slowest since the
third quarter of 2010, according to the report.
Total corporate income-tax collections were off 3.8 percent,
balanced by a 3.5 percent increase in personal income-tax
revenues and a 1.8 percent rise in sales-tax revenues. Still,
personal-income tax collections were much weaker than in the
previous quarter, when they were up 10.1 percent.
AN UNEVEN RECOVERY
Revenue has now increased in U.S. states for eight straight
quarters, which should bring some encouraging news. The
recession spared just a few states from collapsing revenue and
steep spending cuts, but the recovery that officially began in
mid-2009 has been far more uneven.
Most states have four months until their next fiscal years
begin. And many legislatures and governors are in the thick of
budget negotiations. All states except Vermont must end their
fiscal years with balanced budgets, and they will have to cut
spending and hike taxes further if their revenue projections are
So far, for fiscal 2013, 29 states are closing or have
closed budget gaps of $47 billion, according to another group
that watches states' fiscal health, the Center on Budget and
That is less than half the size of the shortfalls they had
to wipe out for the current fiscal year. Still, the total gap
could drag on the national economy, the think tank said in a
report last week.
As revenue slows, "states' education and healthcare
obligations continue to grow," the Center on Budget and Policy
"Next year, states expect to educate 350,000 more K-12
students and 1.7 million more public college and university
students in the upcoming school year than in 2007-08," it said.
"And some 5.6 million more people are projected to be
eligible for subsidized health insurance through Medicaid in
2012 than were enrolled in 2008, as employers have cancelled
their coverage and people have lost jobs and wages."
During the revenue crisis, states "made deeper cuts to
education spending and local government aid than in prior
downturns," Kimberly Lyons, assistant vice president in the
public finance group at Moody's Investors Service, said in a
note on Monday.
She pointed to Florida, which has already enacted its fiscal
2013 budget, as a state that has "made significant cuts in
funding to state colleges," while North Carolina cut $2.6
billion of education spending for fiscal 2012 and 2013.
"Although we expect that projected state budget gaps will
continue to moderate, states still face risks such as sluggish
economic growth and expenditure pressures from Medicaid and
pensions," she wrote.