Business news from the Fredericksburg region.
States’ revenue continues to climb
BY CHELYEN DAVIS
When Virginia Secretary of Finance Ric Brown made his monthly revenue report to the governor for March, he had good news.
The state’s revenues for the month were 7.6 percent above the previous March, and up 5.3 percent for the fiscal year so far.
That’s in line with a slow improvement other states are seeing in their revenues, according to a new report from the Rockefeller Institute.
Overall, states’ tax collections have been on the upswing for eight straight quarters through the end of 2011, the institute found. It studied census data and other research.
States saw a 3.6 percent increase in revenues for the last quarter of 2011, compared with the same quarter in 2010.
Overall, revenues in most states—33—still haven’t regained the peak they saw in fiscal 2008, just as the recession was starting to take hold. Seventeen states reported total taxes in fiscal 2011 that were higher than those peak levels.
Those numbers also vary by tax; 29 states reported that sales tax revenues in fiscal 2011 were still below the peak, while 16 states had sales tax revenues for 2011 above the peak.
Personal income taxes—which the institute said have “suffered the most persistent and widespread declines”—were still 6.8 percent below their levels at the end of fiscal 2008. Only five states have seen their personal income tax collections increase since 2008.
In Virginia, comparing fiscal 2008 to 2011, the institute reports that total tax collections are still 6.7 below the peak. Sales taxes are 4.8 percent below, and personal income taxes are 6.9 percent below 2008 levels.
Numbers from Brown, the state finance secretary, show the state ended fiscal 2011 with revenue growth over the previous year. His numbers for March, in comparison with the previous year, show growth in several categories but a drop in personal income tax collections.
The institute reports that overall, state revenues improved in fiscal 2011 over 2010. But, it warned, early tax data from the Census Bureau for the first two quarters of 2012 show “a noticeable softening of tax revenue growth” compared with 2011.
Brown, in a letter to Gov. Bob McDonnell explaining March revenue numbers, said that national economic indicators “suggest the modest expansion will continue,” but he also said that rising gas prices and tension in the Middle East “continue to dampen growth.”
In a separate report, the Rockefeller Institute said that while states are mostly seeing modest growth, local governments are still struggling, due largely to their reliance on real estate taxes.
Decreases in home values are dampening tax collections, the institute said.
“As a result, services and functions that are largely funded by local governments, such as education and public safety, are likely to be under severe fiscal pressures for some time if current trends continue,” the report said.
Chelyen Davis: 540/368-5028