WASHINGTON - A significant number of states are experiencing declines in the revenues they obtain from their largest or second-largest source - the sales tax - according to a
The report, which was released Thursday, found that of the 36 states that have reported sales tax numbers for the first quarter of 2008, 21 faced declines compared to the revenue they collected in the same quarter in 2007. All told, 45 states collect a sales tax.
"The news for the current quarter is likely to spell further budget troubles in many states," the study concluded.
Nationwide, sales tax revenue has declined 0.1 percent over the same period, marking the first such decline since 2002, according to the study.
While the nation's economic slowdown stems from the subprime mortgage crisis, the resulting impact from that sector appears to be spreading across the economy to other areas, such as sales tax revenues, further pinching state and local budgets.
"The sales tax declines suggest that consumption, retail sales, and the income needed to support spending are slowing considerably," the study stated.
The study found that the areas hit hardest by the subprime mortgage crisis are similarly facing declining sales tax numbers, an indication that the crisis has reduced how much consumers are spending.
"Nine of the 21 declining states were in the Southeast, which has been hit especially hard by the subprime mortgage crisis ... the Rocky Mountain region was next weakest, with three out of four sales-tax states reporting declines," the study stated.
While sales tax collections are lagging, income taxes were higher for the states over the same time period, increasing overall by 4.7 percent in the first quarter. As a result, the overall tax revenue for states rose by 1.7 percent, an amount the Rockefeller Institute called "modest."
