May 19, 2014 / 8:45 PM / in 4 years

Revenues still not at pre-recession levels in 26 U.S. states-study

WASHINGTON, May 19 (Reuters) - When it comes to recovering from the 2007-09 recession, not all U.S. state budgets are created equal.

Data released by the non-profit Pew Charitable Trusts on Monday shows that in 26 states, tax revenues had not returned to their pre-recession levels by the end of 2013, when adjusted for inflation.

Overall, total state tax revenues in 2013 surpassed their pre-recession peak when adjusted for inflation, according to Pew. Data from the U.S. Census also shows all state revenues combined reached a new record high last year.

But the performance among states varied greatly.

Alaska was the furthest from its high point, at 59.9 percent below the peak it reached in 2008, almost entirely due to its reliance on severance taxes on oil production. Wyoming, which also depends heavily on energy taxes, follows with revenue 27.6 percent below its peak.

Florida, New Mexico and Louisiana followed. Alaska, Wyoming, and Florida do not levy personal income taxes, while Louisiana cut income taxes after the recession.

But energy has helped other states, notably North Dakota, where tax receipts were 119.4 percent higher at the end of 2013 than at their 2008 peak, Pew found.

Long-struggling Illinois came in second for the most improved, as temporary tax increases pushed its revenues 23.4 percent higher than their previous peak.

“Even when tax revenues bounce back, policymakers will face challenges because of competing demands that piled up during the recession,” according to Pew, which closely follows state fiscal issues.

“Getting back to peak returns states only to where they were in purchasing power years earlier, leaving little money available to start making up for investments and spending they postponed during the downturn,” it said. (Reporting by Lisa Lambert, editing by G Crosse)

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