State Tax Collections Increased in Fiscal 1991; Study Cites Tax Rise Approved by Legislatures
WASHINGTON - Despite the recession, state treasuries collected more taxes in the last fiscal year thanks to tax increases approved by many state legislatures, according to a report released yesterday by the Center for the Study of the States in Albany.
The report, based on a survey of all states except Alaska, found that state tax receipts were up 3.2% for the year ending June 30, which marked the end of fiscal year 1991 for most states. The states surveyed supplied information on personal income taxes, general sales taxes, and corporate income taxes - which when combined account for about 70% of total state revenue.
Among the states with the largest tax increases for the year were Kentucky, Nebraska, Oklahoma, and New Jersey, which raised both their sales and income taxes. Arizona and Massachusetts raised only their income taxes.
Over all, nine states approved legislation to increase annual tax receipts by at least 5%, while another six states raised revenue between 1% and 5%.
More state tax increases are on the way. The report estimates that during the current year states will collect a record $17 billion in additional taxes, or about 6% of total state tax revenue.
The increases reflect large tax increases that have been approved or are expected to win approval in a handful of large industrial states. California is expected to boost taxes some $7 billion, while Pennsylvania is looking at an additional $3 billion. Connecticut, New York, Texas, and Florida are all expected to see gains of at least $1 billion.
Steven Gold, the author of the report, said the recession generally crimped state tax receipts.
"If states hadn't voted to increase taxes in 1990, state tax revenues would have been virtually unchanged from the previous year, which means they would have been lower after taking inflation into account," he said. Mr. Gold is director of the Center for the Study of the States, which is part of the Nelson A. Rockefeller Institute of Government at the State University of New York in Albany.
Moreover, Mr. Gold said, the rise in revenues was "small consolation" for many states that had to contend with continuing increases in spending that kept state budgets in "real hot water."
A recovering economy combined with higher taxes should brighten the outlook for state revenues this year, Mr. Gold said. But, he added, "you have to consider the spending side, too, and I think that many states enacted budgets with spending increases that are unrealistic."
For all of fiscal year 1991, state personal income taxes rose 4.8%, while general sales receipts, reflecting the slowdown in the retail sector, rose only 2.5%. Corporate income taxes tumbled 5.2% on the downturn in profits that many firms experienced.
But in regions where the recession hit the hardest, tax revenues hardly gained at all. In New England, revenues rose 1.5%, and in the Far West they were up slightly less, at 1.4%. Receipts in California actually fell 0.7%, but there were solid gains in Hawaii, Oregon, and Washington, where the economies were much healthier. Taxes in the Rocky Mountain states were up 1.9%.
By contrast, tax receipts in the Southwest shot up 12%. That region includes Arizona, New Mexico, Oklahoma, and Texas.
In other regions, tax increases were more moderate: Mid-Atlantic states saw taxes rise 3.6%. Taxes in the Great Lakes states were up 2.1%, the Plains states, 4.9%, and the Southeast states, 3.6%.