Tax Increases Spur State Revenue Growth

By: - August 6, 2003 12:00 am

State tax revenue grew 2.3 percent last quarter, capping a year in which revenue across all states grew 2 percent over the year before, according to a report released Wednesday by the Rockefeller Institute of Government.

Rockefeller analyst Nick Jenny cautioned, however, that the revenue growth is not a sign that state fiscal prospects are on the upswing, because most of the growth was due to state lawmakers raising taxes.

“You can count for just about all of it from legislation. If you threw in inflation, that just depresses it even further,” Jenny said.

Take away legislated tax changes from the Rockefeller revenue numbers and state tax revenue shrunk by .8 percent for the April-June quarter and .2 percent for the year. Take away inflation, which Jenny estimates at roughly 2 percent, and things look even worse.

“While fiscal year 2003 was by no means as bad as fiscal year 2002, it was still a down year, or putting the happiest face on it, it was a flat year,” Jenny said.

Rockefeller is a public policy research organization based at the State University of New York, Albany. Jenny said the April-June numbers are preliminary, but that final figures shouldn’t look much different.

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