U.S. states saw their tax revenue drop by about $31 billion, or 6 percent, from March through August, compared to the same period a year earlier, as the pandemic triggered economic shutdowns across the country, according to data from 44 states compiled by the Urban Institute.
The scale of the drop appears smaller than expected, relative to the depth of the economic contraction, and comes after several states have reported that their revenue didn’t decline as much as anticipated despite business shutdowns and increased unemployment. In August, when much of the country was reopening, state revenue climbed about 1.1 percent from a year earlier, the Urban Institute found.
Stephen Graziano is the director of channel sales at Flimp Communications. Prior to joining Flimp, Stephen spent most of his career working in the insurance consulting space, specifically in the voluntary insurance and benefits communication arenas. He is passionate about helping employees and employers have a better experience with their benefits through better understanding, higher engagement, and cost savings for both parties.
Jessica Tuman is vice president of the Voya Cares Center of Excellence at Voya Financial. Voya Cares provides training and resources to help its staff and external stakeholders understand, employ and better serve those with special needs and disabilities and their caregivers to achieve the quality of life they seek today and through retirement. Learn more at voyacares.com. And, check out one of Voya’s recent ad campaigns, titled Growing Up, which features a family with special needs in three periods during the course of a lifetime.
Leslie C. Egiziano, MBA, SHRM-SCP, SPHR, is a human resources consultant at Paychex HR Services. She has over 15 years of experience working with Paychex clients in HR Solutions. She came to the company with a diverse work history which helps her connect with a variety of clients. She’s done everything from sales and marketing to establishing an HR department and hiring over 400 staff in a year and a half for a tech startup company — all while continuing her education and certification programs.
The tax figures come as Republicans in Washington balk at extending aid to states and cities to help cover budget deficits that are expected to continue as the coronavirus weighs on the economy. Experts say that states’ financial outlooks could worsen as the effects of the stimulus bill fade and high unemployment reduces tax bills next year.
The August increase should be viewed with caution since income-tax deadlines were pushed back to July, which could have resulted in some revenue being processed later, according to Lucy Dadayan, senior research associate with the Urban-Brookings Tax Policy Center at the Urban Institute. Personal income-tax collections, which rose 3.8 percent in August, were in some cases supported by backlogged unemployment insurance benefits subject to withholding tax, Dadayan said.
Between March and August, tax revenues fell 6.4 percent year over year, with 36 states reporting declines over that period, the report said. Between March and August, eight states, including Washington and Georgia, reported growth in tax revenue.
“Due to the shifting in timing of tax receipts this past year, it is crucial to view August year-over-year revenue gains and fiscal year to date data with caution,” Dadayan said in the report.