WASHINGTON (Reuters) - State and local governments brought in record first-quarter revenues this year, according to a Census Bureau report released on Tuesday that offered a sign their budget crises may be abating.
Total state and local revenues for the first quarter reached $321.6 billion, a 4.7 percent rise from the first quarter of 2010 and the highest level on records going back to 1988. It marked “the sixth consecutive quarter of positive year-over-year growth,” the Census said.
Revenues fell from $381.27 billion in the fourth quarter. Typically, the fourth quarter shows the highest state and local tax revenues of the year.
States’ revenues alone totaled $179.84 billion, a separate Census report showed. That was 9 percent above the first quarter of 2010 and 13 percent above the first quarter of 2009, when state revenues hit their lowest point in the recession.
Still, states’ revenues in the first three months of 2011 were lower than the $181.41 billion brought in during the same period in 2008.
In the first three months of 2008, states’ revenues reached the highest first quarter level on record. Then, the housing bust, financial crisis and recession caught up with states and their revenues collapsed. For nearly three years, they have had to cut spending, hike taxes and turn to the federal government for help.
The recession ended in mid-2009, but states’ budgets have yet to bounce back. Investors in the $2.9 trillion municipal bond market are worried about how most states are closing billions of dollars in budget gaps for their fiscal years that start July 1.
Meanwhile, because of a lag in real estate assessments, local governments are watching their property tax revenues dip just as states cut aid and funds cease flowing from Washington’s $831 billion stimulus plan.
Property tax revenues made up more than a third of the total state and local tax revenue in the first quarter at $113.3 billion, according to the Census. Almost all of that, $111.3 billion, was collected by local governments such as cities and counties.
The total property tax revenues were down 1.7 percent from the first quarter of 2010. It was the second quarter in a row that property tax revenue dropped from the year before.
Conversely, total state and local individual income tax revenues grew to $64.4 billion in the first quarter from $57.5 billion in the year-ago period. It was the fifth straight quarter of year-on-year growth, the Census said.
General sales tax revenue also rose -- to $73.7 billion from $69.7 billion in the first quarter of 2010.
Still, the Census said that “general sales tax collection remains below the first quarter 2007 level of $74.7 billion.”
Census data showed that individual income tax provides most of the revenues for states alone, making up a third of their total revenues in the first quarter at $59.21 billion. States also collected $57.72 billion in sales taxes. Both states’ income and sales tax receipts were higher than the first quarter of last year.
Editing by Philip Barbara; Graphic by Stephen Culp