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.
Date: Tuesday, April 22, 2025
Scott Engelbrecht is the chief development officer for CLA. For more than 30 years, he has dedicated his career to providing business and financial solutions to the firm's clients through its business lines: audit, tax, consulting, outsourcing and wealth advisory. In his current role as chief development officer, he is not only focusing on the firm's organic client growth but also driving forward greenfield opportunities, including opening new CLA locations and bringing other firms across the U.S. into the CLA family. He supports the development and management of the firm's financial reporting systems, and he coordinates across CLA to develop and manage appropriate measuring and reporting approaches required to accomplish the needs of the firm. Engelbrecht is also responsible for helping the firm reach stated financial goals for service lines, industry groups and geographic regions. As chief development officer, he leads and coordinates the overall facility management requirements of the firm and is responsible for coordinating a consistent approach operationally and financially regarding all lease, merger/acquisition and principal-related agreements.
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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.