Local, state tax revenues on the rise

Alisa Roth Apr 2, 2010
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Local, state tax revenues on the rise

Alisa Roth Apr 2, 2010
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KAI RYSSDAL: There’s a certain beauty to a rising economy. When people have jobs, or the prospect of ’em, they tend to buy things. And when they buy things, they pay taxes. And when they pay taxes, governments have more money. There was news today from the Census Bureau today on that front. State and local tax revenues went up in the fourth quarter of last year — the first time in more than a year that that’s happened. It’s one more sign that the worst has probably passed.

Marketplace’s Alisa Roth reports.


Alisa Roth: At first glance, the numbers look pretty good: State and local governments took in nearly 1 percent more in the fourth quarter of last year than they did in the same period of the year before.

Kim Reuben is a fellow at the Urban Institute. She says you have to remember that 2008 was a really bad year, so it didn’t take much to do better.

Kim Reuben: It’s the first period that the comparison year was also in free fall.

Reuben says it’s going to take municipalities a long time to recover completely.

Reuben: But part of it is, once you hit bottom, you start getting better, but you’re still not back at where you were before the bottom fell out.

Sales and income taxes fell again. It’s property taxes that pulled the number up. They rose 5.8 percent. That’s good news for local governments, because that’s where they get most of their money.

The problem is in a lot of places, those taxes are still being calculated based on real estate prices from the peak of the boom. Don Boyd is a fellow at the Rockefeller Institute of Government. He says different states assess property values at different times: Some do it every three years; others just do it when the property is sold.

Don Boyd: So it may be time before some of those assessed valuations are lowered by assessors to reflect changes in market values.

And he says those revaluations could pummel tax revenues.

Some states are already in trouble because they thought tax revenues would rebound faster than they have. And things could get worse as stimulus money starts running out later this year.

In New York, I’m Alisa Roth for Marketplace.

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