Weekly Wrap: Recession Setting Records in Wisconsin, Oregon

By: - September 18, 2009 12:00 am

The historic nature of what the New York Times now has dubbed “the Great Recession” was brought home vividly this week in separate developments in Wisconsin and Oregon.

Wisconsin began collecting a retail sales tax in 1962 and every year since then tax receipts have increased – until now.

State revenue officials reported that sales tax receipts declined 4.3 percent between June 30, 2008 and June 30, 2009, the first such decrease in Wisconsin history. The drop reflects consumers’ worry about the economy, which translated to fewer purchases last holiday season and throughout the year. Wisconsin’s base sales tax rate is 5 percent.

Officials say they expect sales tax revenue, which is about billion a year, to increase in the current fiscal year. But overall, tax revenues still are down from fiscal 2007-2008 levels, which could punch a billion gap in the two-year budget that starts July 1, 2011. Lawmakers already cut billion in spending and raised taxes on wealthy residents to balance the current state budget.

In Oregon, state officials reported a record demand for food stamps. Between Aug. 1, 2008 and Aug. 1, 2009, the number of Oregonians getting food stamps spiked nearly 32 percent.

Human services officials said they were surprised, according to a report in The (Portland) Oregonian , because demand for food stamps usually slacks off in the summer.

The Oregon Food Bank said it distributed nearly 900,000 emergency food boxes last year. “It’s by far the largest number of emergency food boxes the Oregon Food Bank Network has ever distributed in a single fiscal year,” said Rachel Bristol, chief executive officer of the food bank.

Increases in sin taxes on tobacco and alcohol were popular among states this year; at least 18 states hiked tobacco and or booze to help balance budgets. Pennsylvania apparently will not be among them, despite lawmakers’ need to find billion to complete a spending plan for fiscal 2009-2010.

A tobacco tax increase, which Gov. Ed Rendell (D) supports, was missing from a .9 billion bipartisan budget proposal lawmakers sent him this week. Rendell and anti-tobacco groups were stunned, said a report in the Philadelphia Inquirer . Polls show most Pennsylvanians back taxes on smokeless tobacco or cigars; most states tax both.

But the tobacco industry prevailed on lawmakers, prompting Johnna Pro, press secretary for the House Majority Appropriations Committee, to surmise that the real reason is “the majority of people negotiating the budget are cigar-chomping men. It’s sexism.”

The quote of the week belongs to Jerry Nickelsburg, senior economist with the UCLA Anderson Forecast , an authoritative source on the California economy. California often is a barometer of economic trends in other states, and if Nickelsburg is right, the New York Times may have to change its characterization of the downturn to the Great Recovery. In remarks at the Brookings Institution, a Washington, D.C. think tank, Nickelsburg said the words some people have been waiting to hear for 21 months.

“All of the indicators are that the recession is over with, even in California,” he said.

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Stephen Fehr

Stephen Fehr is a senior officer with Pew’s government performance portfolio. He is a lead writer on many of the products generated by the portfolio, specializing in state and local fiscal health.