State revenue loss due to COVID-19 not as bad as feared

September 20, 2020

Most states’ final quarter of fiscal year 2020 took a revenue hit due to the COVID-19 pandemic. But their annual tax collections, which were probably mostly electronic instead of as official state quarters, wasn’t as bad as many had feared. (Photo — and coin collection — by Kay Bell)

Most states wrapped up their 2020 fiscal year (FY) on June 30. As you might expect, those annual financial numbers were affected by the COVID-19 pandemic.

What is surprising, however, is that states’ revenue situations weren’t as bad as many had feared given the tax issues created by the coronavirus.

Fourth-quarter drag: Jared Walczak, Vice President of State Projects at the Tax Foundation, analyzed U.S. Census data and found that total state tax collections were about 5.5 percent ($59 billion) lower in FY 2020 than in FY 2019.

That 5.5 percent drop, which is this week’s By the Numbers figure, is the total from all the usual state revenue sources.

The biggest, both in quarterly and annual comparisons, was in the corporate income tax category. That’s not surprising since most businesses in many states were forced to close for the final three months of the fiscal year as a pandemic precaution.

Below is the full state tax collection breakout for FY19 and FY20:

Tax Type	Year-over-Year	Quarter-over-Quarter
Individual Income Taxes	-10.1%	-38.7%
Corporate Income Taxes	-17.5%	-50.9%
General Sales Taxes	-0.3%	-17.3%
State Property Taxes	2.0%	-2.5%
Other Taxes	-2.6%	-18.8%
Total Tax Collections	-5.5%	-29.0%
Sources: U.S. Census Bureau; Tax Foundation calculations.

Revision expected: Walczak notes that while income tax revenue dropped 10.1 percent year-over-year, this decrease is mainly due to delayed collections because of postponed filing deadlines, not an actual decline in receipts.

And once delayed income tax payments are accounted for and shifted to FY 2020, the decline in state tax revenue between FY 2019 and FY 2020 should drop from 5.5 percent to the low single digits, added Walczak. (I’m still sticking with 5.5. percent, however, as the By the Numbers honoree.)

State-by-state views: The Tax Foundation map of state revenue results below also gives you a visual clue as to where your state stands as far as tax collection.

For all y’all more textually inclined, the Tax Foundation also put the data in table form:

State Tax Revenues by Fiscal Year (in Billions)
State	FY 2019	FY 2020	Change
Alabama	$11.5	$11.7	1.6%
Alaska	$1.9	$1.3	-32.7%
Arizona	$17.5	$16.4	-6.3%
Arkansas	$10.3	$10.1	-2.0%
California	$188.6	$169.9	-9.9%
Colorado	$15.3	$14.2	-7.2%
Connecticut	$19.1	$15.1	-20.9%
Delaware	$4.6	$4.5	-1.0%
Florida	$45.8	$44.0	-3.8%
Georgia	$24.0	$23.0	-4.4%
Hawaii	$8.2	$8.0	-1.9%
Idaho	$4.9	$5.3	8.2%
Illinois	$42.5	$43.3	1.8%
Indiana	$22.2	$21.0	-5.5%
Iowa	$10.6	$9.6	-9.5%
Kansas	$10.0	$9.7	-3.6%
Kentucky	$12.8	$12.9	0.7%
Louisiana	$12.2	$11.9	-1.7%
Maine	$4.7	$4.9	4.0%
Maryland	$23.9	$22.9	-4.2%
Massachusetts	$31.5	$28.9	-8.2%
Michigan	$29.8	$27.8	-6.6%
Minnesota	$28.2	$26.8	-4.9%
Mississippi	$8.2	$8.0	-2.4%
Missouri	$13.2	$12.4	-5.9%
Montana	$3.2	$3.2	0.1%
Nebraska	$5.8	$5.8	1.0%
Nevada	$10.0	$9.9	-1.1%
New Hampshire	$2.9	$2.8	-4.6%
New Jersey	$38.1	$37.9	-0.3%
New Mexico	$7.6	$7.3	-3.9%
New York	$88.0	$80.9	-8.1%
North Carolina	$29.2	$28.2	-3.5%
North Dakota	$5.0	$4.3	-12.6%
Ohio	$30.7	$30.6	-0.4%
Oklahoma	$10.6	$9.9	-6.5%
Oregon	$12.9	$11.8	-8.7%
Pennsylvania	$41.4	$39.1	-5.5%
Rhode Island	$3.7	$3.6	-3.3%
South Carolina	$11.4	$11.3	-0.5%
South Dakota	$1.9	$2.0	4.1%
Tennessee	$16.5	$16.6	0.5%
Texas	$62.9	$58.5	-6.9%
Utah	$9.7	$9.9	2.2%
Vermont	$3.4	$3.4	-0.2%
Virginia	$24.0	$23.1	-3.6%
Washington	$28.2	$27.2	-3.4%
West Virginia	$6.0	$5.5	-8.7%
Wisconsin	$20.0	$18.9	-5.6%
Wyoming	$2.1	$2.0	-6.7%
District of Columbia	$8.4	$8.4	0.0%
U.S. Total	$1,076.4	$1,017.1	-5.5%
Sources: U.S. Census Bureau; Tax Foundation calculations.

Walczak elaborates on all these numbers in his paper. I encourage you to check it out.

Federal fiscal year-end on horizon: And if you’re wondering about Uncle Sam’s FY2020, which ends on Sept. 30, the news right now is not so good. Congress is struggling to come to a deal to keep federal offices open on Oct. 1 and beyond.

I suspect a short-term agreement will be reached, at least to get us past the November election. But if Capitol Hill stays true to form, that’ll happen 10 days from now.

You also might find these items of interest:

Coronavirus Caveat & More Information
In 2020, we’re all dealing with extraordinary circumstances,
both in our daily lives and when it comes to our taxes.
The COVID-19 pandemic and efforts to reduce its transmission
and protect ourselves and our families means that,
for the most part, we’re focusing on just getting through these trying days.
But life as we knew it before the coronavirus will return,
along with our mundane tax matters.
Here’s hoping that happens soon!
In the meantime, you can find more on the virus and its effects on our taxes
by clicking Coronavirus (COVID-19) and Taxes.