Remember how the nation's GDP was supposed to have grown by 2.2% in Q3 2009? Well then how come state tax revenue fell of a cliff in Q3 2009?
(Bloomberg) -- U.S. state tax collections fell the most in 46 years in the first three quarters of 2009 as the recession shrank revenue from sources including personal income, the Nelson A. Rockefeller Institute of Government said.
Revenue dropped 13.3 percent, or $80 billion, compared with the same nine months of 2008, to $523 billion, the institute said. Collections in the third quarter alone sank 10.9 percent to about $162 billion, according to the report released today by the Albany-based body.
The first three quarters of 2009 were the worst on record for states in terms of the decline in overall state tax collections, as well as the change in personal income and sales tax collections.
Budget gaps have opened in 31 states since fiscal year 2010 began, Dadayan and Boyd wrote, citing a National Conference of State Legislatures study.
“The great recession hit virtually every single source of tax revenue and pushed a number of states to revise revenue forecasts numerous times throughout fiscal 2009 and 2010, with significant impacts on services,” Dadayan and Boyd wrote.
State income tax revenue was down 11.8 percent in the third quarter, sales tax collections were down 8.9 percent, and corporate income tax declined 22.6 percent, according to the study.
If there is one consistency concerning government statistics and records, its that tax records are always the most accurate and complete. So why are tax revenues dropping across the board if the economy is recovering?