Economy Watch: State, Local Tax Revenues Up
- Dec 12, 2013
The Rockefeller Foundation reported recently that total state tax collections increased during the second quarter of 2013, the latest in a string of quarterly increases and an indication that the contraction of state government–which represented a major headwind for the entire U.S. economy during the worst of the recession–is over. Compared with the same quarter in 2012, state tax revenues were up 9 percent in 2Q13.
At the end of fiscal 2013 (September 30), inflation-adjusted total tax revenues for the year actually edged above the most recent annual peak, which was fiscal year 2008. State personal income taxes, corporate income taxes and sales taxes have all been recovering since then–although more slowly than after previous recessions–as the wider economy has slowly recovered.
Local tax revenues have mostly recovered as well, according to the foundation. Most local governments rely heavily on property taxes, with roughly two-thirds of local tax revenue comes from that source. Year-over-year in the second quarter of 2013, property tax revenues were up 2 percent. Sales tax revenues (only about 10 percent of local funding) were up 1.3 percent year-over-year.
Small businesses feeling a little less grumpy
National Federation of Independent Businesses reported on Tuesday that its small business optimism index increased in November, but only slightly—0.9 points—coming in at 92.5. Of note in November is the positive trend of job growth; small-business employment is better at the end of this year than last year.
NFIB owners increased employment by an average of 0.05 workers per firm in November, half the October figure, but still positive. Some 14 percent of the owners reported adding an average of 3.7 workers per firm over the past few months. Offsetting that, 12 percent reduced employment an average of 3.4 workers. Fifty-one percent of the owners hired or tried to hire in the last three months and 44 percent reported few or no qualified applicants for open positions.
However, uncertainty remains throughout the small business sector, according to the federation, with owners anticipating increased taxes, regulations, and healthcare costs. In November, 22 percent of respondents cited regulations as the “single most important small business problem,” up from 18 percent a year ago. Only 15 percent cited poor sales, down from 23 percent a year ago.
Wall Street took a dive on Wednesday, supposedly because investors are worried about the taper by the Fed, with the Dow Jones Industrial Average losing 129.6 points, or 0.81 percent. The S&P 500 was off 1.13 percent and the Nasdaq declined 1.29 percent.