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.
Jennifer Harrity-Cantero, SEA, brings more than 20 years of business and marketing experience to her role as the leader for the Sensiba Center for Sustainability at Sensiba LLP. She leads the firm's core sustainability efforts as well as consults with small to medium size business clients assisting with their sustainability strategy. She led the firm's B Corporation certification process, resulting in SSF becoming the first California accounting firm certified as a B Corporation. In 2020, she launched the firm's Sensiba Center for Sustainability, to help companies move to a purpose-driven, sustainable business model that includes social and environmental performance, accountability, and transparency. Harrity-Cantero hosts the Rebooting Capitalism podcast that digs into why traditional capitalism is broken and what people are doing to fix it. She also as honored in 2021 by the San Francisco Business Times as one of the 100 Most Influential Women in Businesses. She received a dual bachelor's degree in graphic design and photography from California State University, East Bay. She also holds a diversity and inclusion certificate from Cornell University. She has been a member of the Association for Accounting Marketing for the past 10 years and has served on the board for the past several years. Outside of work, she enjoys CrossFit, kayaking, and spending time in the redwoods.
David Ritter, Director of Financial Services Strategy, CI&T
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.