It’s no wonder states are having problems balancing their budgets. The decline in state tax collections in early 2009 was the "sharpest on record," according to a new
report released July 17.
State tax revenues plunged nearly 12 percent in the first three months of 2009, the worst in the 46 years for which quarterly data are available, the Nelson A. Rockefeller Institute of Government said in its latest state revenue report. The drop exceeds those of recent recessions, the report said.
The report comes as all but a handful of states have finally cobbled together new budgets for the fiscal year that began July 1, but many already are scrambling to fill gaps as revenues projections are off the mark. Unlike the federal government, states must balance their budgets.
The Rockefeller Institute found that total state tax collections from three major sources – sales tax, personal income and corporate income – all fell for the second consecutive quarter. Forty-five states experienced revenue drop-offs, the report said.
All regions saw total state tax collections sink but the Far West saw the largest drop at 16 percent. Personal income tax nose-dived, plummeting an unprecedented 17.5 percent.
Local tax revenue remained stronger than state taxes, with growth of 3.9 percent for the quarter.
Contact Pamela M. Prah at pprah@stateline.org.
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By Sharon Jarvis on Jul 24, 2009 11:44:36 AM
Gas prices have dropped significantly but we're still in trouble. That's because all other prices went up while income remained the same. I have seen average people stop shopping at Wal-Mart because it's too expensive and start buying food at Dollar General. Aldi, a discount food place, is jammed. So are the thrift shops. Unless you can bring back the corporations our government encouraged to go overseas, we will remain completely screwed.
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The Reason for the sharp Decline in the Nation's Economy
By Lawrence Rosier on Jul 19, 2009 4:26:35 AM
From: Lawrence Rosier Management Consultant Government Reform 573 364 8789
GOVERNMENT REFORM WEBSITE: http://managementconsultant.blogsome.com
From Article 127. My Take on the Current Recession June 2009
High Gas Prices Created the Severity and the Sharpness of the Recession...
The view of our recent housing values is varied but research shows that one half of the most severely depressed housing areas are in only 35 counties nation wide and one fourth of them are in only 8 counties in the entire nation. Falling housing values and foreclosures can not account for the severe shock delivered by the sudden decrease in consumer purchasing in the fall of 2008.
Because of the very high real estate values in larger cities especially on the east and west coasts the average American must commute long distances and spends nearly all his income on his house payment and on gas for commuting. This situation coupled with American credit card debt averaging an astounding $8000 per person. Then add an extremely low savings rate 0%, it is not difficult to determine that the average American has virtually no discretionary spending funds. Now we introduce $4 Gas prices and the same average American goes in debt and canât meet his mortgage payment and he ceases to make discretionary purchases forcing the economy to go south after only a few months.
How did this happen? The middle class those who bought the SUVs that get 8 to 15 miles per gallon are the same group that eats out in restaurants and takes the family on short weekend vacations. They found themselves with a problem. Suddenly all their extra cash was being pumped into their SUV which they drove to work.
There is one thing President Obama must do: he must keep gas prices below the two dollar level. I see this as the Achilles heel to convincing the public that the severity of the recession has passed. A significant rise in gas prices instantly affects all Americans and delivers the message: efforts to slow the recession has failed. High gas prices blew the economy out the window and it wonât come back till prices are stable at a lower level or until electric cars arrive to drive down the price.
Thanks for listening Lawrence Rosier
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