Bumps in the Road?

Fiscal year (FY) 2013 marks the third consecutive year that state officials are forecasting state tax growth compared with the previous fiscal year; nevertheless, it is unclear whether such growth is sustainable. According to the Nelson A. Rockefeller Institute of Government, following five quarters of declines brought on by the Great Recession, total state tax collections have risen for 10  consecutive quarters (since the first quarter of 2010); growth, however, has slowed in the last four. Overall, the state revenue situation continues to improve, but at a more tempered—and uncertain pace. Projections for FY 2013 reflect this slow growth trend as officials in nearly three-fourths of the states and the District of Columbia anticipate total tax growth between 1 and 4.9%--only two states—Georgia and Oklahoma—have forecast tax growth of more than 5% for all of the three major categories—personal income, general sales and use, and corporate income—this fiscal year. The Institute notes that there have been few notable state tax changes, which largely affect collections in FY 2013. So far, 2012 features the smallest aggregate tax cut (0.2 percent) in NCSL’s 32-year history of collecting this data.