In today's Q & A, we discuss how states are continuing to feel the recession’s impact with Policy Analyst Phil Oliff.
BEYOND THE NUMBERS
Most of the attention in this election season is going to candidates, but ballot questions in several states will greatly affect these states’ ability to maintain public services. Some of the ballot measures would make it easier for states to balance their budgets without excessive cuts in areas like education and health care. Others would make it much harder.
Kudos to sharp-eyed Seattle technology blogger Eric Engleman, who broke the news today that Texas issued a $269 million assessment against Amazon.com last month for failing to collect sales taxes on its sales in the state. Engleman spotted the disclosure in the company’s third-quarter earnings report to the Securities and Exchange Commission, which was issued yesterday.
The Rockefeller Institute of Government issued a report today that says state revenues are in a “gradual recovery” after their record decline of recent years. The new data that Rockefeller has collected for the report (on revenues for the April-June quarter) are helpful. But it’s too early to say that state finances have turned the corner.
Yesterday I posted about state budget conditions. Readers may want to know how we calculate state shortfalls. Here are the basics:
State revenues are stabilizing, and many states expect some revenue growth in fiscal year 2011 (which started July 1 in most states) after the record decline of recent years, according to recent Census data. In addition, as states tally up spending and revenues for fiscal year 2010, some are finding that they ended the year in the black. Yet as I noted last week, total state shortfalls for 2012 will be about as big as this year’s. Why do states continue to face huge shortfalls if fiscal conditions are looking up?
As our analysis of today’s jobs report explains, a sharp decline in government jobs in September more than offset the small gain in private-sector jobs. State and local governments, still coping with a massive recession-induced loss of tax revenue and their own balanced-budget requirements, eliminated 83,000 jobs in September, and most of the lost jobs — some 50,000 of them — were in education. Since August 2008, states and localities have shed 416,000 jobs (see chart). These numbers suggest three things:
With states in the third year of a fiscal crisis sparked by their steepest revenue decline on record, we’ve updated our analysis of state budget shortfalls for the current (2011) and coming (2012) fiscal years. Here are the highlights:
Many people equate a strong state “business climate” with lower taxes. So it’s especially noteworthy that a major business group in Massachusetts has come out against a ballot measure to lower the state’s sales tax.
Data on state tax revenues that the Census Bureau released this morning remind us how devastating the recession has been for states’ ability to fund public services — and how important it is that states are closing their shortfalls in part through new revenues, as my colleague Jon Shure noted Friday.