WASHINGTON — States have been operating in fiscal year 2013 for three months and already tax collections are expected to rise between 1% and 4.9% in nearly three-quarters of the states for the third consecutive year, according to a new report.
Two states — Georgia and Oklahoma — are forecasting tax growth of more than 5% in personal income, general sales and use, and corporate income taxes in fiscal 2013, according to a recent analysis by the National Conference of State Legislatures.
Despite the positive forecast, the NCSL's report said the "robust return on state tax collections that typified previous economic recoveries remains elusive."
"Overall, the state revenue situation continues to improve, albeit at a leisurely pace," it said.
Total state tax collections have risen for 10 consecutive quarters, since the first quarter of 2010, following five quarters of decline brought on by the recession. However, growth has slowed significantly in the last four quarters.
"There is not a large buffer if any shocks happen to the economy or if there is federal deficit reduction," said Todd Haggerty, author of the report. "It's a very small margin that states have for their projected tax growth."
State tax changes largely affect collections, but there have been few notable changes in 2012. As a result, they are likely to play a role in the modest projections for the coming fiscal year.
As of the end of September the states' aggregate tax cuts were 25%, the smallest in the NCSL's 32-year history of collecting this data.
Nine states expect total tax collections to grow at least 5% above fiscal 2012 levels with the largest increases in California and Delaware, each anticipating 10% growth.
California's increase is subject to the passage of three separate ballot measures — two of which would result in large broad-based tax increases and up to $10 billion in new revenues.
Delaware's tax growth is largely attributable to declines in corporate income and abandoned property collections, which were typically considered volatile revenue sources in fiscal 2012 and reduced the tax base.
Only Alaska and Kansas anticipate fiscal 2013 total tax collections to decline by at least 1% compared with the previous fiscal year. Alaska expects to see a 17.9% decline and Kansas a 3.6% decline.
The falling price of oil is expected to be the primary driver for Alaska's decline, while Kansas' tax policy changes, which is estimated to reduce state income taxes by an estimated $249.2 million, will be the leading cause of its decrease in tax collections.
The report analyzed five taxes: personal, income, general sales, corporate.
Personal income taxes are the largest share of state tax collections, representing approximately 34% of the total tax collections.
Fourteen states project their personal income tax collections will rise by at least 5% in fiscal 2013, the report said. Only California expects a growth of 14%, pending passage of a tax initiative on the November ballot.
Three states — Maine, Kansas and the District of Columbia — expect negative personal income tax collections when compared with the previous year.
Forty-five states levy a general sales tax and only six forecast that sales tax collections will surpass last year's levels by 5% or more. Only Oklahoma projects growth of more than 10%, at 10.1%.
The NCSL's brief was based on a survey of legislative fiscal directors in 50 states and the District of Columbia in the summer of 2012.