Opens in a new tab

State tax collections: Weakest in 5 years

August 6, 2008

Most attention these days is paid to the national economy. But according to the latest numbers from the Rockefeller Institute of Government, we’d better start looking at the government level one step down.

State tax collections are at their weakest in five years, according to the public policy research arm of the State University of New York in Albany. In fact, sales tax collection, a key
revenue source for most states, didn’t grow at all in this year’s first quarter. That’s the first time in six years that has happened.

I guess folks really are cutting back on their spending. Recent (and upcoming) state sales tax holidays aren’t going to help either. And if the trend continues, governors and state legislators will probably be forced to make budget cuts or enact tax hikes in
the coming months.

Rockefeller_institute_graphic_2

According to the Rockefeller Institute of Government’s latest quarterly report, state tax revenues in the first three months of quarter of 2008 grew only 1.7 percent compared to the same period last year. That’s the slowest growth rate since 2003.

Rockefeller Institute analysts said that when adjusted for inflation in the cost of government purchases as well as legislated tax changes, state tax revenues declined by 5.3 percent, the third quarter in a row that total adjusted state revenues fell.

Regional differences: In general, state tax revenues declined in the Southeast and Rocky Mountain states, while growth was in the single digits in all other regions.

New England states showed the strongest overall revenue growth, about 5.3 percent, while the Southeast states saw tax revenue drop by about 2.6 percent.

There were a few bright spots, for state coffers if not state residents. Four states — Alaska, Iowa, North Dakota and West Virginia — had total tax collections that were up more than 10 percent.

At the other end of the tax collection spectrum, revenues fell in 15 states, with Arizona, Montana and Florida experiencing declines of more than 10 percent. Foreclosure effects anyone?

Georgia, Idaho, Mississippi, Nebraska, Nevada, New Jersey, North Carolina, Ohio, Oklahoma, Rhode Island, South Carolina, and Utah showed smaller tax revenue drops.

California isn’t on either of the Rockefeller lists of tax revenue extremes, but the Golden State is definitely facing some tough tax choices. Fellow tax blogger taxgirl reports that the Governator is proposing a temporary penny sales tax increase to help balance the budget.

California‘s current levy is 6.25 percent, but when combined with local taxes, consumers could pay as much as 8 percent sales tax on their purchases.

How does your state compare with others when it comes to sales taxes? Find out at this Sales Tax Clearinghouse page.

Share:

The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

Latest Posts
IRS sending refunds to families that claimed adoption tax credit carryforwards

October 18, 2026

Tax reform changes to the adoption tax credit meant some families didn’t get the new…

Read More
TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Credits/Deductions
Disasters
Family
Filing and Paying Taxes
Politics/Laws
Refunds
State Taxes
Tax Brackets/Inflation
Tax Tips
Comments
  • foreclosurefish
    18 years ago Reply

    I live near the Indiana/Illinois border, and sales taxes here have actually increased in both states in the recent past. That definitely will not help with people having less money, but the trend of government isn’t usually to get smaller.
    It’s affecting my spending behavior, that’s for sure. I’d rather buy used now to save a little bit, or just go without. But of course, that just keeps money out of the government entirely, as well as the market. I’m not willing to pay 10.25% sales tax in Chicago for a book, though.

  • Foreclosure Freeze
    15 years ago Reply

    The beauty of the topic kept me reading till it ended. It happens only for a few times in a month that i read everything in an article. I admire your vision and the effort to explain foreclosures. Kindly do come up with topics like foreclosure fraud and foreclosure freeze.
    ____________________________
    foreclosure fraud | wrongful foreclosure

Leave your comment