Tax receipts down, but unemployment slowing in most states, studies say

A study out Monday find that tax collections are down by double digits across forty-four states in the third quarter, forecasting continued strain on state and local budgets well into next year. However, state unemployment rates are showing slight signs of decline, another study finds.

According to studies released by the Nelson A. Rockefeller Institute of Government at the State University of New York, sales, corporate and personal-income taxes continue to fall across most states. The third quarter’s biggest loser was corporate-income tax, dropping 19.4 percent in the fort-four states surveyed by the Rockefeller Institute. Personal-income taxes and sales taxes fell 11.4 and 8.2 percent, respectively, indicating the need for further cuts in state spending, the report said.

“Further revenue shortfalls and more spending cuts are mostly likely on the way for many states — particularly those that did not take significant actions to balance revenues and expenditures in their 2010 budgets,” the Rockefeller institute concluded.

Another picture of economic volatility came from the National Conference of State Legislatures, finding that some states are beginning to see a slowing decline in unemployment. Twenty-nine states saw small increases, while the rate of unemployment fell in thirteen other states. But only eight states saw “statistically significant increases,” the NCSL said in a brief released Friday.

Michigan (15.1 percent) and Nevada (13 percent) continue to have the dubious honor of leading the states in unemployment, though thirty one states have jobless rates below the national average of 10.2 percent.

“High unemployment rates are contributing to one of the most difficult years in history for state budgets,” the NCSL said.

Despite the slightly less awful news coming from NCSL, both organizations agree that recovery will be a long time coming.

“The fiscal challenges are enormous, widespread and, unfortunately, far from over. Lawmakers in virtually every state struggled to enact new budgets for FY 2010, and new budget gaps have opened up in at least 16 states since the new fiscal year began,” the NCSL brief concluded.