State Tax Revenue Grows, but a Full Recovery Eludes 26 States

Policymakers will face challenges for competing demands  Nationally, total state tax revenue has recovered from its plunge during the Great Recession, thanks to factors such as North Dakota’s oil boom and tax increases in Illinois, California, and elsewhere. But the recovery is uneven. Tax collections in 26 states had not fully rebounded by the final quarter of 2013, after adjusting for inflation. A 50-state ranking shows that tax receipts in five states were more than 15 percent below their previous adjusted peak level: Alaska (-59.9 percent), Wyoming (-27.6), Florida (-20.2), New Mexico (-17.9), and Louisiana (-15.2). Where tax revenue remains below its previous peak, policymakers are more likely to face tough tradeoffs in balancing state budgets.  Leading the list of 24 states where tax revenue had bounced back by the end of 2013 were North Dakota (nearly 120 percent above its peak), Illinois (23.4), and Minnesota (20.6). But recovery to peak levels does...

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