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.
Garret Gray is the President of CoreLogic's Global Insurance Solutions Business. He leads a team of industry experts focused on building market-driven solutions that drive better customer outcomes throughout the property insurance ecosystem.
Prior to this, Gray was the founder and CEO of Next Gear Solutions, acquired by CoreLogic in September 2021. Next Gear is an industry-leading provider of claims workflow technology used by eight of the top ten US carriers. Next Gear restoration management solutions are used by four out of the top five contractor brands in addition to more than 10,000 contractors in North America.
Shannon Shallcross is a Tedx speaker and has coached dozens of data and insurtech startups, advising Fortune 500 clients on analytics strategy as head of client management for a national health-tech company and co-founder of BetaXAnalytics, a company that pioneered emerging data science techniques using AI to remove the barriers to transparent and actionable data. She also spent 12 years with Amica Insurance running branch sales and service operations across the country. Currently, she is head of client services at Pinpoint.
Rachel Roney is an associate in the Dallas office of the Labor and Employment group at Hunton Andrews Kurth LLP.
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.