Census: State tax revenues fell again in 2010

WASHINGTON — Battered by the Great Recession, state tax collections fell for the second straight year in 2010, helping to trigger the wave of state-government budget cuts that now threaten the economic recovery.

The U.S. Census Bureau reported Wednesday that state tax revenue totaled $704.6 billion in fiscal year 2010, down 2 percent from roughly $719 billion in 2009.

Of 43 states with an individual income tax, 40 took in less money from that than the previous year, which helped fuel the overall downturn in receipts.

While certainly not good news, the slower rate of revenue decline in 2010 was a welcome sign that the economic recovery is taking hold. At the height of the recession, state tax collections fell 8.5 percent from 2008 to 2009.

Even though tax revenue fell in 39 states last year, 11 other states saw their tax collections rise. That's up from five in 2009.

North Dakota led the way, with a 9.6 percent increase in revenues last year, due mainly to the strength of taxes on the extraction of natural resources.

North Carolina's near 5 percent increase was driven by strong sales and gross-receipts taxes.

Nevada's 4 percent hike came on a hodgepodge of small increases in several tax categories.

Even California, mired in a massive budget crisis, saw its tax revenue increase 3.8 percent last year.

"We were a little surprised to be honest," said Jesse Willhide, census bureau section chief for the state finance and tax statistics branch.

California's bump came on the strength of general sales and gross receipts taxes on goods and services, which jumped by $2.2 billion, Willhide said.

Data in the Annual Survey of State Government Tax Collections was collected through a mail survey of state government offices. The bureau surveyed tax receipts in five main areas: property taxes; sales and gross receipts taxes; license taxes; income taxes and other taxes, such as gift taxes, stock transfer taxes and severance taxes on the harvesting of natural resources.

Wyoming led all states, with a 23.4 percent reduction in tax revenues last year.

The culprit was a 40 percent, $500 million decline in severance taxes, Willhide said. The loss dropped Wyoming's total tax revenue from $2.7 billion in 2009 to $2.1 billion last year.

Other states with notable declines in 2010 include: Louisiana, down 14 percent; Oklahoma, down 13.5 percent; and Montana, which weathered an 11 percent revenue decline.

Individual income tax receipts, the largest source of state tax revenue, were down 4.5 percent nationally last year, at $236.4 billion. As a result, individual income taxes made up only a third of total state tax revenue in 2010, down from just over 40 percent in 2009.

Corporate income tax receipts were down for the third straight year, falling 6.7 percent to $38.2 billion in 2010. On the bright side, however, only 20 of 46 states with a corporate income tax saw declines of 10 percent or more, down from 39 in 2009.

While they increased 1.4 percent in the South, corporate income-tax receipts declined nearly 17 percent in the hard-hit Midwest, seven percent in the Northeast and 5 percent in the West in 2010.


Census report on state government tax collections


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