Many
state governments were pulled out of the recession by a surge in tax
revenue from their residents' stock-market gains. But that money spigot
has slowed, leaving budget holes and debates over the reliance on the
wealthy just as many governors face re-election.
While
a number of states had forecast lower growth this year in personal
income-tax revenue—which is derived in part from capital gains on
investments—they failed to project the degree of the decline.
Government figures show that state income tax collections nationwide slipped 0.4% in the first quarter,
the first drop since the end of 2009, according to the Nelson A.
Rockefeller Institute of Government. But the decline is magnified in
some states.
|
Ohio
|
-19.3%
|
|
North Dakota
|
-19.1%
|
|
Maine
|
-15.3%
|
|
California
|
-11.1%
|
|
North Carolina
|
-9.2%
|
|
Iowa
|
-4.1%
|
|
Mississippi
|
-3.7%
|
|
South Carolina
|
-3.7%
|
|
Virginia
|
-1.1%
|
|
Kansas
|
-0.1%
|
A
Federal Reserve Bank of Chicago study found that over the last decade,
state revenues have become increasingly sensitive to the economy, with
tax revenue from residents' investment returns a key reason. There are
indications the increased volatility is here to stay, said Richard
Mattoon, an economist at the Chicago Fed and one of the authors of the
2012 report [State Tax Revenues over the Business Cycle: Patterns and Policy Responses].
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