State Tax Revenue Declines = Increased Services Cuts = More Crime

The U.S. economy may be creeping toward recovery after the worst slowdown since the Great Depression, but many states see no end in sight to their diving tax revenues.

 

Tax revenues used to pay teachers and fuel police cars continue to trail even the most pessimistic expectations, despite the cash from the economic stimulus plan pouring into state coffers.

 

Lower tax revenues could lead to higher taxes or another sharp reduction in services…That could mean fewer teachers, early prisoner releases and fewer highway repairs as residents battle soaring unemployment.

 

States are coming off a terrible first quarter, which for most states began on July 1.

 

Among the worst cases is Indiana where revenue collections were 8 percent below forecast, or $254 million lower than expected, leading state budget officials to speculate revenue could fall $1 billion by the end of the fiscal year.

 

Iowa cut its fiscal 2010 revenue estimate by 8.4 percent this week. That prompted Governor Chet Cutler on Thursday to order spending reductions of 10 percent across the board.

 

Last week, Mississippi Governor Haley Barbour said his state's September tax collections were 10 percent less than forecast.

 

…For other states revenues are not only coming in below forecast, but have fallen steeply from the year ago period, when revenues were already depressed by the recession -- a sign of further fiscal distress for many states.

 

Georgia on Friday reported its September revenue fell 16 percent, of $260 million, worse than the 14.2 percent shortfall for July, August and September from the year-earlier fiscal quarter. The state's net sales tax and use-tax revenue was off by more than 20 percent last month, according to the state revenue department.

 

A DIM FUTURE

 

In the second quarter of calendar year 2009, total state revenue was down 18 percent compared with the period in 2008, according to the National Governors Association, which projects revenue will not return to pre-recession levels until 2014 or 2015.

 

http://news.yahoo.com/s/nm/20091009/pl_nm/us_usa_state_budgets