States' tax revenues finished strong in 2010 and show solid gains through the early part of 2011, continuing a trend toward gradual fiscal recovery, according to the Rockefeller Institute's latest State Revenue Report.
State tax revenues grew by 7.8 percent in the fourth quarter of 2010, compared to the fourth quarter of 2009, according to Rockefeller Institute research and Census Bureau data. This is the fourth consecutive quarter that states reported growth in collections on a year-over-year basis. Forty-two states reported tax revenue growth
during the fourth quarter, with nine showing double-digit growth. Preliminary figures for January and February 2011 indicate further strength in state tax revenues this year. Overall collections in 45 early-reporting states showed growth of 9.5 percent compared to the same months of 2010, and 7.5 percent compared to the same months of 2009.
Local tax revenues, however, have experienced the reverse trend. Tax collections by local governments declined by 2.3 percent in the fourth quarter of 2010, mostly driven by declines in property tax collections. This is the result in part of the lagged impact of falling housing prices on property tax collections. Such a lag in the recession's impact on local government coffers is somewhat typical, say report authors Lucy Dadayan and Donald J. Boyd.
To read the full report, visit the Institute's Web site.