State Revenues Plummet; More Reason for Subsidy Restraint

By Greg LeRoy, Good Jobs First

The Rockefeller Institute's quarterly analysis of state revenues finds that the first quarter of 2009 showed the sharpest decline in at least 46 years - "the worst on record for the states."

Overall, compares to the same period of 2008, state revenues fell 11.7 percent including personal income tax decline of 17.5 percent, sales tax down 8.5 percent and corporate income tax down 18.8 percent.

Alarmingly, the report also finds an even sharper downturn for the first two months of the second quarter. For the 45 states with data available for April and May, revenues fell almost 20 percent year over year, with a median personal income tax decline of 33.2 percent and a median sales tax decline of 10 percent.

If ever there were a time for states to re-examine and reform the way they subsidize economic development, to make all tax breaks fully transparent, to audit their performance, and to refrain from costly interstate zero-sum job wars, it would be now.

The states' budget plight makes the Recovery Act's fiscal relief provisions more important than ever. It also means that we federal taxpayers have more right than ever to question how the states are spending our stimulus money.