Projected Revenue Growth in FY 2011 and Beyond
After several years of steep declines, state revenues are starting to pick up. In some states this means the rate of decline has slowed, but in others, positive revenue performance is occurring in one or more tax categories. State officials have anxiously awaited this turnaround for months or, in some cases, years. Now they are waiting to see if the economy will sustain this nascent revenue growth.
State revenue collections consistently underperformed forecasts throughout the recession, and they continued to struggle even after the recession ended. The revenue decline was unexpected, both in its depth and duration. But that is the impossible challenge associated with economic downturns in general: Predicting how long they will last and projecting how deep their impact will be. During the recession even pessimistic forecasts were missed. This widened the gap between spending needs and available revenues, causing lawmakers to resolve budget shortfalls during budget enactment and after the new fiscal year began. The task has been daunting: Lawmakers expect to have closed multi-year budget gaps exceeding $530 billion by the time the effects of the recession dissipate. And despite recent revenue improvements, more gaps loom as states confront the phase out of federal stimulus funds, expiring tax increases and growing spending pressures.
This report includes:
- State tax forecasts for FY 2011 compared to estimated FY 2010 collections. It includes projected growth for total taxes and information for personal income, sales, corporate income and miscellaneous taxes.
- Long-term tax collection forecasts, which cover projected tax growth for FY 2012, FY 2013 and FY 2014 for states with forecasts going out that far.
- Projected peak and return to peak revenue collections, which represent a more comprehensive view of state resources than what is accounted for by state own-source taxes. This discussion covers the peak fiscal year for general fund revenues and when states expect to return to those peak levels.
- A broader view of the state fiscal situation with state examples of the current and expected fiscal environment.
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