Uneven Recovery Across States

May 30, 2014

While nationally, state tax revenue has recovered since the recession, twenty-six states are still struggling to reach peak revenue levels, according to a report from Barb Rosewicz and Alex Boucher of the Pew Charitable Trusts.

  • In five states -- Alaska, Wyoming, Florida, New Mexico and Louisiana -- tax receipts remain more than 15 percent below their previous peak levels. In Alaska, revenue is down 59.9 percent.
  • However, of the 24 states whose tax revenue has bounced back, North Dakota is seeing tax receipts 120 percent above previous peak levels. Illinois (23.4 percent) and Minnesota's (20.6 percent) revenues are also up.
  • Overall, combined tax revenue from all 50 states has risen for 16 straight quarters. As of the fourth quarter of 2013, the states brought in 2.2 percent more in total tax dollars than they did at their 2008 peak.

While tax revenue is up overall, the states have just 2 cents more in purchasing power for every dollar that they collected at their 2008 peak. This small increase, the report says, may not cover all of the new costs that have emerged since 2008. Since the end of the recession, state populations have grown by more than 10 million, and 8 million additional people had enrolled in the Medicaid program before the health insurance mandate took effect.

The states whose revenues have recovered have been able to cut taxes. North Dakota cut its income and property taxes as its tax receipts from sales and severance taxes soared.  And while Minnesota raised income taxes in 2013, it cut taxes during the 2014 legislative session in response to a projected surplus.

Source: Barb Rosewicz and Alex Boucher, "State Tax Revenue Grows, but a Full Recovery Eludes 26 States," The Pew Charitable Trust, May 19, 2014. 

 

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