CS Tax Revenue Snaps Back - Tax Revenue Snaps Back States...

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Tax Revenue Snaps Back States Book More Inflows but Face Tab for Higher Spending, End of Federal Funds WSJ 3/30/11 MORE IN BUSINESS » By CONOR DOUGHERTY State and local tax revenue has nearly snapped back to the peak hit several years ago—a gain attributed to a reviving economy and tax increases implemented during the recession. But the improvement masks deeper problems for state and local governments that are likely to linger for years. To weather the recession, state governments relied on now-depleted federal stimulus funds, which allowed them to put off painful cuts that would have otherwise been necessary to balance budgets. Meanwhile, demand for government services and the tab for public-worker pensions and health care have continued to grow. Total tax receipts for state and local governments hit $1.29 trillion in 2010, just 2.3% shy of the $1.32 trillion taken in during 2008, not adjusted for inflation, according to Census Bureau data. Peak tax revenue was reached during the first year of the recent recession, which began in December 2007, due to the usual lag between the time a downturn hits and when it is reflected in tax receipts.
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Part of the upturn in state revenue can be traced to tax increases imposed during the recession. For 2010, tax hikes boosted state revenue by $12.3 billion, about 2%, according to the Nelson A. Rockefeller Institute of Government. The latest tallies show a diverging trend in the fiscal health of state and local
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CS Tax Revenue Snaps Back - Tax Revenue Snaps Back States...

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