State tax revenue down 26% in 2009

It’s not just California.  Tax revenue is falling everywhere.

State income-tax revenue fell 26% in the first four months of 2009 compared to the same period last year, according to a survey of states by the nonprofit Nelson A. Rockefeller Institute of Government.

The report, conducted by the public-policy research arm of the State University of New York, is one of the most up-to-date measures of how deep the recession is digging into Americans’ wallets and, consequently, state coffers.

States are required by law to balance the budget, so lower tax revenues will translate in service cuts, rather than red ink. Already states such as Kansas are slowing the payment of income-tax refunds and delaying payments to local school districts, according to the report.

This is a point I have highlighted in the past: when state taxes fall, services get cut.  And the fact that states are constrained unlike the U.S. government because they have no printing presses is one reason I said in January that the President’s stimulus package was not going to get it done. Time will tell whether U.S. government largesse is countered by state and local government cutbacks. And it is local government services you probably care most about: schools, police, garbage collection, swimming pools, libraries.

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