By Peter Schroeder - 05/23/14 11:04 AM EDT
States nationwide are feeling the pinch of shrinking tax revenues, according to new analysis.
Reuters reported Friday that at least 27 of the 43 states that collect an income tax saw their collections fall in April from one year ago. Some states saw declines of as much as 50 percent.
Most states anticipated falling or flat income tax revenues when it came time to put together budgets, but not all. New Jersey’s budget woes have become well-known; Gov. Chris Christie’s team is facing criticism after he pulled funds meant for public pension payments to cover a budget shortfall exceeding $1 billion for the year.
Those that anticipated tough times are actually facing a bit of a rosier outlook. Illinois revenue fell 19.3 percent in the last year, but state officials had anticipated an even deeper plunge, and now are able to boost their revenue projections.
All told, personal income tax accounts for roughly a third of total revenue for states, about the same as comes in from sales taxes.
Several states saw tax revenue fall after they enacted tax cuts. For example, Ohio enacted a three-year, $2.6 billion tax cut in 2013, and now reports a revenue decline of 45 percent. The state was able to offset that shrinkage somewhat by increasing its sales tax.