State lowdown for 2011
According to the National Conference of State Legislatures (NCSL), “…many state legislatures increased taxes and fees for the ninth consecutive year as they worked to shore up state budgets.”
States not only “enacted a net tax increase of nearly $4 billion” for Fiscal Year 2011, they made substantial changes to nontax revenue that affects sales taxpayers: fee increases, revenue accelerations, amnesty programs and tax compliance initiatives. These additional measures increased income by “…more than $1.5 billion” according to NCSL.
According to information provided through the National Association of Legislative Fiscal Offices (NAFLO), highlights of the tax actions taken in 2010 to affect 2011 revenue included:
- Twelve states increased taxes by more than 1 percent, while one state cut taxes by more than 1 percent.
- Seven of the eight tax categories monitored showed net increases.
- The personal income tax was the only category with a decrease, reporting a net cut of $656 million.
- Sales and use taxes were raised the most, increasing by $1.7 billion.
- Business taxes were increased by $494 million.
- The health industry was affected for another year, in part because states sought matching federal dollars. The net increase was close to $1.3 billion.
- States raised tobacco taxes by $603 million.
- Taxes on alcoholic beverages increased by $34 million.
- Motor fuel taxes increased by $48 million.
- Miscellaneous taxes were raised by $402 million.
- States made several property tax changes, resulting in reduced property tax relief efforts in some states.
The latest report (March 2011) on state budgets from the NCSL is ambiguous at best: “Nearly two years into the U.S. economic recovery, following the end of the Great Recession, state finances are showing encouraging signs of revenue stability. At the same time, budget gaps remain a daunting obstacle for some states. Much of the difficulty is explained by the significant drop in state revenue collections in the previous two fiscal years. The steady, but slow pace of revenue growth since, has not been sufficiently robust to offset the loss of American Recovery and Reinvestment Act (ARRA) funds or the increases in caseloads and related costs in program areas such as Medicaid and K-12 education.”
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