Econintersect: The Great Recession is still exerting great influence on the American economy. An example of the lingering damage is found in state tax revenues. In a continuing program of tracking state tax data, The Pew Charitable Trusts reports that only 21 states have regained tax revenues to equal or exceed their peak from before the Great Recession. Even so, the total tax revenues for all 50 states combined have exceeded the earlier peak. Corrected for inflation, tax revenues for all states totalled 1.6% higher in 2Q 2014 than the previous peak 3Q 2008. This was the third quarter that exceeded 3Q 2008: 1Q 2014 was higher by 2.4% and 4Q 2013 by 2.6%.
The state-by-state data reveals some significant hardships are hidden within the seemingly positive data. The 29 states that have not recovered prior peak tax revenues include 12 (41% of the 29) that are still more than 10% below the previous high. Another 10 states are between 5% and 10% short of recovery.
Here is the summary from the Pew report:
- Alaska was furthest from its peak, down 68.6 percent. But its 2008 peak was due to a short-lived windfall from a new state oil tax that took effect just as crude prices spiked to record levels.
- Three other states' receipts also were still down more than 15 percent from previous peaks: New Mexico (-27.3 percent), Wyoming (-25.5 percent), and Florida (-18.7 percent).
- North Dakota led all states, as its oil boom boosted tax revenue to 119.2 percent above its highest point during the recession.
- The next-largest rebounds were in Illinois (19.8 percent) and Minnesota (16.3 percent). Tax increases imposed after the recession contributed to both states' revenue growth.
- Despite Decline, Tax Revenue Still Tops Recession Milestone (The Pew Charitable Trusts, 10 November 2014)