Fiscal year (FY) 2013 marks the third consecutive year that state officials are forecasting state tax growth compared with the previous fiscal year. Despite this positive development, the robust return of state tax collections that typified previous economic recoveries remains elusive. 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 ten consecutive quarters (since the first quarter of 2010); however, growth has slowed in the last four. Overall, the state revenue situation continues to improve, albeit at a leisurely 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 percent and 4.9 percent. Only two states–Georgia and Oklahoma–have forecast tax growth of more than 5 percent for all of the three major categories (personal income, general sales and use and corporate income) this fiscal year. Also playing a role in the modest projections for FY 2013 is that 2012 has been a quiet year for notable state tax changes, which largely affect collections in FY 2013. Thus far, 2012 features the smallest aggregate tax cut (0.2 percent) in NC SL’s 32-year history of collecting this data.
This brief presents a summary of the projected growth for state total, personal income, sales, corporate income and other taxes compared with FY 2012 estimated collections. This brief is based on a survey of legislative fiscal directors in 50 states and the District of Columbia in the summer of 2012.