Calculated Risk tells us this morning that the Census Bureau reported quarterly state tax receipts for the 4th quarter of 2010 (fiscal 2Q 2011). As it turns out, they were a pleasant upside surprise compared with the preliminary Rockefeller Institute estimates.
I previously showed that only the April to June quarter (during which annual corporate and individual tax returns are most filed) shows a significant seasonal departure from the other quarters. A reasonable seasonal adjustment for this quarter to reduce it by 22.5%. Then all we have to do is adjust for inflation to create a record of "real" state revenues.
Below is an update trhough fiscal 2Q 2011 of quarterly state tax revenues. It records nominal state revenues and adjusts (in parentheses) *.775 for the April- June quarter beginning with the last fiscal year before the recession. In the second column I have further adjusted for inflation. The last quarter shows the relation of each quarter's revenues from the peak in revenue in the 4th quarter of fiscal 2008 (2nd calendar quarter of 2008) :
[apologies for the huge gap in the post - keep scrolling down. Every time I try to fix it, the html reverts to an older post]
| Fiscal Quarter | Revenues* ($ billions) | Inflation- adjusted Revenues | % off of peak |
|---|---|---|---|
| 1Q 2008 | 176.4 | 183.8 | -1.5% |
| 2Q 2008 | 178.7 | 183.6 | -1.6% |
| 3Q 2008 | 181.4 | 184.6 | -1.1% |
| 4Q 2008 | 240.8 (186.6) | 186.6 | 0 |
| 1Q 2009 | 181.2 | 179.9 | -3.6% |
| 2Q 2009 | 171.4 | 176.2 | -5.6% |
| 3Q 2009 | 159.2 | 162.7 | -12.8% |
| 4Q 2009 | 200.4(155.3) | 157.3 | -15.7% |
| 1Q 2010 | 160.5 | 161.5 | -13.5% |
| 2Q 2010 | 164.6 | 164.7 | -11.7% |
| 3Q 2010 | 163.3 | 163.0 | -12.6% |
| 4Q 2010 | 204.5(158.5) | 158.8 | -14.9% |
| 1Q 2011 | 168.1 | 167.2 | -10.4% |
| 2Q 2011 | (170.6p)177.8 | 175.5 | -5.9% |
(p)=preliminary, based on Rockefeller Institute report
When I originally posted this chart last month, I noted that "If the current trend ... continues, the Rockefeller Institute estimate of a shortfall of $60 Billion in FY 2011 compared with 2008 appears accurate."
With this revenue surprise, that estimate looks too pessimistic to me. Through the first two fiscal quarters, 2011's shortfall compared with 2008 is only $9.2B, and only $0.9B of that is from 2Q. While this quarter's GDP is likely to be only weakly positive, that is enough to believe that fiscal 3Q 2011 revenues will at least be in line with 2Q 2011 revenues. In other words, nominal FY 2011 state revenues may only have a shortfall of $10B-$20B, rather than $60B - and if we avoid another recession, nominal state revenue may have no shortfall at all compared with pre-recession revenues by the end of this summer.
While this is welcome good news, real state tax revenues will still lag pre-recession levels, and per-capita revenues still further (since to keep an even level, services must grow with population).
