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.
Karen Monks is a Principal Analyst in Celent's North American insurance practice. She brings a broad range of insurance and consulting experience to her work; she has worked as a management consultant to and within insurance carriers and other financial services companies for over 25 years.
Karen's focus is life insurance technology and trends. Her research concentrates on life, all aspects of life insurance processing including illustrations, eApplications and eSignature, new business and underwriting systems, policy administration systems, claims systems, and digital enablement technologies. Her consulting experience at Celent includes new business and underwriting system selections, policy administration system selections, distribution management system selections, vendor product strategy reviews, a life claims system benchmarking project, eApplication and automated underwriting cost analyses, plus several small life insurance technology analyses. Karen led Celent's Knowledge Management team for seven years. The KMC supports Celent's vendor assessments across all practices and helps manage vendor data on Celent's online platform, VendorMatch. She helped build out Celent's VendorMatch Digital Services Platform.
Mary Mulcare, MD, FACEP, is the Chief Medical Officer at Summus and oversees all clinical aspects of operations. Mary also serves as a Clinical Assistant Professor of Emergency Medicine at NewYork-Presbyterian/Weill Cornell Medicine, and has held several leadership roles at Weill Cornell, including Director of Undergraduate Medical Education in the Department of Emergency Medicine and Assistant Director of the Margaret and Ian Smith Clinical Skills Center.
Sam Raus studies public relations and political science at the University of Miami. Follow him on Twitter: @SamRaus1.
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.