Tax receipts in Rocky Mountain States piling up as region's economy stays hot.

WASHINGTON -- A booming economy in the Rocky Mountain slams is providing the region with the fastestgrowing tax base in the nation, according to a study by the Center for the Study of the States.

The study by the Albany, N.Y.-based public policy group found that from April to June of this year, tax receipts in Colorado, Idaho, Montana, Utah, and Wyoming surged 10.7% compared with the same quarter last year.

Overall, state tax collections increased 5.4% during the spring quarter as a strengthening economy boosted taxes on personal income, corporate income, and sales, the study said. Corporate taxes rose 9.1%, sales taxes were up 9.0%, and personal income taxes increased 1.3%.

The Commerce Department recently estimated that real gross domestic product in the United States rose 3.8% in the second quarter, well above the pace economists generally believe can be sustained for any long period of time. Last week's employment report for August indicated that the economy is cooling, at least temporarily.

Mark Zandi, chief economist for the Regional Financial Associates in West Chester, Pa., said the economy of the Rocky Mountain states is benefiting as individuals and businesses relocate there from California.

Compared with the West Coast, the region offers lower taxes, a friendlier environment for doing business, and less crime, Zandi said. Costs are generally low, and the climate is pleasant, he added.

These conditions, which are likely to persist for some time, are proving ideal for software firms, chip manufacturers, and other companies that produce high value-added products, Zandi said.

According to the study by the Center for the Study of the States, nonfarm payroll jobs increased 4.1% in the Rocky Mountain states during the second quarter -- more than any other region in the United States. By contrast, employment in California and other states in the Far West rose an anemic 0.3%, meaning there was hardly any job growth at all. California employment actually fell slightly.

Outside the Rockies, tax receipts in the Southeast rose the most -- 6.1%. The region is benefiting from the migration of jobs and capital from the Northeast, much the way the Rockies are gaining at the expense of California, Zandi said.

The Great Lakes region, which is prospering as a major U.S. export center, saw tax receipts rise 7.6%.

Elsewhere, in New England taxes rose 4.6%; in the mid-Atlantic stabs they were up 3.6%; in the Plains states, 5.8%; in the Southwest, 5.3%; and in the Far West, 5.0%.

Revenue increased by at least 10% in 11 states -- South Dakota, Wyoming, Oregon, Delaware, New Mexico, Nevada, Indiana, North Dakota, Tennessee, Florida, and Mississippi. Except for Wyoming, where state legislators increased the sales tax rate in July of last year, the increases reflected strong economies, the study said.

Only three states had lower revenue than a year earlier. In Kentucky and Montana, a change in the schedule for paying tax refunds led to a flood of refunds during the second quarter. In the case of Vermont, there was a tax cut.

The center's study said that special factors made the 1.3% increase in personal income tax collections smaller than it would have been otherwise. One factor was connected to the move by many high-income taxpayers to forward income to the close of 1992 to beat an expected increase in federal taxes. As a result, personal income tax receipts were artificially strong in the spring of 1993.

The center also noted that the stock market fell in early 1994, reducing estimated payments by large investors. By contrast, the market was up in the spring of 1993.

Ten states reported income tax receipts were lower than the year before, but in some cases the change reflected tax cuts. In March, Michigan voters approved a referendum to reduce school property taxes. In New Jersey, state income taxes were slashed at the direction of the newly elected Gov. Christine Todd Whitman.

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