State Tax Collections and Rates
Special Report No. 128
For most states, FY 2002 stretched from July 2001 through June 2002, a period that saw a significant economic slowdown, and the substantial economic repercussions of the September 11th attacks. The economic slowdown and recession in Fiscal Year 2002 has had a profound effect on state tax collections, with the individual income tax, and corporate income tax collections suffering the most significant losses.
State tax increases for FY 2003 were estimated at $8.3 billion. However, revenue collections fell far short of their initial estimates in fiscal year 2003. States saw widening gaps between planned expenditure and the revenue required to fund this spending. As for FY 2004, states have enacted a $9.6 billion increase in taxes, which include $2.6 billion in sales tax increases, $2.4 billion in personal income tax increases, and a $1.8 billion increase in fees.1
It is in this context that we look back at state tax revenue in FY 2002, for which Census Bureau data are now final. During FY 2002, States that depend predominantly on the income tax experienced considerable cuts in revenue, as individual income tax revenue fell by a enormous 11.1 percent, the largest drop in over a decade. This struggling economy also lead to lower consumer spending, which hurt the coffers of states dependent on the sales tax.
1 “The Fiscal Survey of States,” The National Governors Association and the National Association of State Budget Officers, ISBN 1-55877-351-7, December 2003.