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Reason Foundation

State Revenues Continue to Fall

Adrian Moore
December 31, 2009, 1:20pm

The Wall Street Journal reports:

State and local tax revenues fell 7% in the third quarter of 2009 from a year ago, the Census Bureau said in a report underscoring how the economic downturn is stressing government collections.

Sales taxes declined 9% to $70 billion in the third quarter compared with the year-ago period, the Census Bureau said. Income taxes plunged 12% to about $58 billion. Together, sales and income taxes make up roughly half of state and local tax revenue.

And from that follows budget deficits.  Because it is virtually an iron law of state financial management that they spend everything they bring in, rainy day funds can't backfill any significant downturn, and of course, cutting spending is always catastrophic. 

Now, more than ever, is the time for budget discipline and privatization.


Adrian Moore is Vice President, Policy


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