State Tax Revenues Plummet By $87 Billion, Biggest Year Over Year Decline In History; Record State Tax Hikes In Progress

Tyler Durden's picture

The Center on Budget and Policy Priorities has released a report "State Tax Changes in Response to the Recession" in which the center notes that "national recession has had such a devastating effect on state finances that states took in $87 billion less in tax revenue from October 2008 through September 2009 than they collected in the previous 12 months. This 11 percent decline, the steepest on record, resulted from the impact on tax collections of lost jobs, reduced wages, and lowered economic activity." And here we are, missing the forest for the Greek tree, and discussing evil CDS speculators' role in Greece barely able to make a €5 billion bond auction, when we should be all over the evil Municipal CDS speculators wreaking havoc in our own back yard. 

And it actually gets worse: as we have pointed out, states are now running on fiscal fumes, as record unemployment insurance claims bleed the vast majority of state not only dry, but well in credit to the Federal government. "At the same time, the recession has driven up the number of people needing various state services. This, along with the requirement that states have balanced budgets, has increased the pressure on states to deal with the unprecedented revenue shortfalls in a variety of ways. Nearly all states have cut spending. In addition, most have opted for a balanced approach that includes revenue."

So while Obama is about to break all campaign promises about taxing everyone, let alone those who make under $250,000, individual states have already raised taxes by substantial amounts in an unprecedentedly short period of time.

In 20 states, tax changes are providing a significant boost to revenues — that is, they are producing additional revenue of more than 1 percent of the prior year’s total revenues. Ten of those states have raised taxes by more than 5 percent of the prior year’s collections: California, Delaware, Florida, Indiana, Massachusetts, Nevada, New Hampshire, New York, North Carolina, and Oregon. Personal income taxes and sales taxes, the two largest sources of state tax revenue, experienced the greatest changes. Overall, 13 states raised new revenue from personal income taxes, 17 enacted sales tax increases, 22 increased excise taxes on tobacco, alcohol, or motor fuel, 17 increased business taxes, and 24 increased fees or other taxes.

Surely no sane man can believe that the tax respone will be appropriate or meaningful, as ever more people decide instead to either cheat, or to outright decline to pay these exorbitant tax increases. But at least we can now proudly tell Papandreou that austerity has come to the US as well.

And to save the mainstream media some time in finding the next scapegoat, we present the Municipal CDX index.


Here's an idea - why not just sell MCDX? If you think the market is so mispriced, just take the other side of the trade.

Ugh, logic.

Full report detailing the collapse in state tax receipts.


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Sancho Ponzi's picture

We just received the property tax bill for the local warehouse, and guess what, it reflects a 40% increase over last year. Of course we'll contest the valuation, but really, 40%?


Cognitive Dissonance's picture

"It rubs the lotion on it's skin, or else it gets the hose again."  

Aren't we already getting hosed?

umop episdn's picture

Same thing happened to me with my two acres of rural doomstead, except my property taxes more than doubled. I live in one of the no-tax increase states in the Babble Belt, too!

Anonymous's picture

Here in N. AZ the news of plunging real estate values finally made it to the tax assessors office. Saw a 20-30% drop in values from 2010 to 2011. Now the only thing they can do is change the multiplier, we'll see what happens when the bills come later this year.

fuu's picture

It is all burning now.

Mr Lennon Hendrix's picture

Torching?  or crowning?  There is so much smoke, it is hard to see.  ;)

WaterWings's picture

Yep. Slow burn for a lack of oxygen - "backdraft" if you open the door to take a look.

Nobody wants to believe the fireman these days:

TraderMark's picture

No worries.  I am enjoying the news stories about the need to raise rates, taxes, and the like while never pointing out the disparity in pay and benefits between public and private workers.  It's all good... just pay up... it is only right that Joe Public Employee 6Pack shall retire at age 56 with full benefits and pension. 

Postal's picture

Well, I work for the gov't. But since there's so many alternative options in the private sector, why don't you hire me?

crosey's picture

Have you checked your USPS financials lately?  Might want to get your resume ready for UPS.

Whizbang's picture

you can bitch all you want about government employees. At least we are doing some work. The rest of the sad sacks out there have been collecting (welfare) unemployment for the last two years.

Anonymous's picture

I may not be old enough or wise enough yet to mentally correlate all the data, but my 43 years have me fairly convinced that you cannot have a government without a working population to support it.


The Stalinesque solution is work camps for the people!

Not to worry, this contingency has been planned for.

Manitoba has a million man plus work camp prepared.

Or should I say, pre-prepared, as it was prepared previously to the preparation we now must make.


Postal's picture

I don't disagree that we gov't type work off of the taxes of the rest.

My complaint is with the hypocrisy of the criticism: If Alice doesn't want me working for Bob, she should hire me herself. Otherwise, she should shut the hell up and be thankful I'm not doing other "work": Growing weed, harboring illegals, taking "pictures" of her kids, getting together with other unemployed to riot... The list goes on.

I have yet to have even one positive response to this proposal: If you don't want me working for the government (and being paid with your taxes), then you are welcome to extend a offer to employ me in the private sector. Unless and until you are willing to provide an alternative, quit yer bitchin'.

Anonymous's picture

"If you don't want me working for the government (and being paid with your taxes), then you are welcome to extend a offer to employ me in the private sector. Unless and until you are willing to provide an alternative, quit yer bitchin'."

So in other words, you admit you're a prostitute, we're just haggling over the price? If you're not getting a positive response, perhaps it's because you've created a false dilemma.

If you think that these jobs (and pensions) can continue to be supported by an ever-decreasing pool of funds and more and more government debt, you're welcome to that fantasy. Just keep your fingers crossed that you're safely in the grave by the time the math finally catches up.

mnevins2's picture

"I have yet to have even one positive response to this proposal: If you don't want me working for the government (and being paid with your taxes), then you are welcome to extend a offer to employ me in the private sector. Unless and until you are willing to provide an alternative, quit yer bitchin'.

You're kidding, right? Otherwise, your "logic" leads to the govt hiring EVERY unemployed person in the country?!? Why don't all of the "private sector" employees quit and then get become "public sector" employees?

Any idea where the money will come to pay them?

Anonymous's picture

no one cares who you work for, the contention is that alice shouldnt have to pay (taxes) for you to work for bob. go work for the gov't all you want, just dont expect us to pay for it, put a tip jar out and see how much people value your services. who knows, you might make a living, theres a homeless guy out in san francisco who jumps out of bushes, scaring passers by and he makes $60k a year.

chumbawamba's picture

That dude scared me once!  I still owe him a punch in the face.

I am Chumbawamba.

Anonymous's picture

Dear worthless bitchin: You may be included in that bunch of people incapable of actual work. I hire only very motivated people, of which, you, dear whiner, are not. Have a nice day.

chumbawamba's picture

Here's a civics lesson for you, since that didn't seem to be a prequalification for whatever job you're currently performing on my dime.

(This works no matter what country you live in, as long as you subscribe to the concept of Liberty.)

We, as in those here posting messages, including you, are The People.  Once in a while We decide to form a government, and in this iteration here in the USA We have chosen a government by the People, of the People, for the People.

Notice, now, it says FOR the People, not For Postal, or For Those Whom We Hire To Fulfill The Rolls That Such Government Entails.  No, it's FOR The People.  It's for US.

Our consent is the fuel of the government.  Without our consent, there is no fuel, and therefore there is no power.  As long as We consent, you have a job.

Well, guess what?  We no longer consent.

Go grow a garden.

I am Chumbawamba.

Anonymous's picture

"If Alice doesn't want me working for Bob, she should hire me herself."

what are your skills?

i dare the public sector to riot.

Anonymous's picture

Ohhhh . I can't resist that one!

The government 'vampire squid' (hat tip to Matt T.)has fed off the economy to the extent it is causing the unemployment.

Sack the worthless government sector and the economy grows again. But that would require you to actually produce something instead of the parasitic nature of government work.

I know your response ..... As long as you can increase a fee, fine or ticket someone you can always balance your books.

Greyzone's picture

The notion of "globalism" is nice but it totally does not mesh with reality. Globally open markets would make sense in a world where laws were largely the same and enforced in the same manner, meaning contract, labor, and environmental laws.

Instead, because these huge disparities exist between governments, all that has happened is wage arbitrage, moving jobs out of wealthier nations into poorer nations where a corporation can pay some poor guy $1 a day to make tennis shoes or assemble PCBs. Indeed, this destruction of the US middle class was predicted decades ago by people who saw the lie of "globalism" for what it was - a play to further enrich the very wealthiest while also exploiting weak or nonexistent labor laws (including child labor) and environmental laws. Indeed, look at China, an ongoing environmental disaster as all heavy industry has moved to Asian nations where weak laws allow massive dumping of toxins directly into the local ecosphere. And further, weak individual liberties and lack of property laws ensure that none of the "little people" can sue against such gross acts of negligence.

Those nations that have done better are those that have deliberately taken steps to protect production jobs inside their own borders. Germany is one such example.

It is now too late to save the middle class in the United States. All that will be left will be the rich and the poor. And while most of those reading ZH don't admit it or even realize it yet, they too will be among the poor.

Austerity is coming to the United States too. And then not only will the private sector good jobs be gone but the public sector ones will go as well.

That's about when I expect the US Congress to start issuing titles of nobility. After all, if we're going to do a high tech feudalism, we may as well have all the trappings, right?

kwvrad's picture

Sad but true... even IF we tried saving the middle class, it'd take years, after all mechanics, machinists,plumbers ect all the tradesman jobs take many years to become 1,

a good mechanice/machinist takes at least 10 years in the trade before you truly know what you are doing...and we simply donot have that kind of time to do it in...

Anonymous's picture

Don't forget the hoops you have to jump through.. schooling, funding for school, etc.

Yes, you could learn these trades on your own, but society is not pushing the youngsters down that path. So on top of the time it takes to be qualified in that trade, we also have to wait many years for people to figure out the true need for these trades.

Of course, a big war could be initiated in which all able bodied men are drafted :)

chumbawamba's picture

Austerity is certainly coming to America.  But those who had the foresight to acquire hard money like gold and silver when they could will be a little less austere.

I am Chumbawamba.

SteveNYC's picture

Just look at the stock market SOAR on all this good news......

Masked Man's picture

Pathetic attitude. Ask for a raise from your employer instead of complaining that gov't workers are "overpaid". The only reason public jobs now seem so "well paid with great benefits" is that private jobs have been gutted. Gov't jobs were not desirable jobs 30 years ago. Even today in many professional fields, entering government work pretty much kills the resume. Wait another 20 years and even these professional jobs will be more desirable in the gov't sector.

Anonymous's picture

Gov't jobs became desirable as soon as Kennedy allowed Gov't workers to unionize genius.

Anonymous's picture

Yeah gosh, it could be worse. If municipalities started firing diversity counselors and community liaisons with gold-plated benefits for life...THEN we'd really be in trouble. Pay your taxes and count your blessings!

Mr Lennon Hendrix's picture

'Merica getting hit from all sides!  "Give us money to pay the banksters!  Give us monie to give the government!  Pay for cable to watch the Oscars instead of putting food on yer family (yes I said it)!  Give your monie to help Haiti/Chile/Turkey/Sesame Street.  Give us all your damn monies!"

Khali better start printing new monies in a state bank or else China will use their IMF gold they just bought at $1125 an OZ to buy the whole state.  Cali, can I make a suggestion?  Print your new monie on hemp paper (obviously legalize Cannabis) and back the currentsea with gold/silver/PMs/hemp.  You can do it!

seventree's picture

 Print your new monie on hemp paper

Brilliant! Print CA state scrip on ZigZags. It will always be worth something.

10044's picture

Can they tax you more than once after filing?? Going retro-active or some summers-geithner-barry rule sheitster

Sancho Ponzi's picture

As I recall, there was a Fed retroactive tax increase during the Clinton administration.

carbonmutant's picture

Collection may be a problem... Not everybody has a home to live in these days.

sodbuster's picture

Handy Dandy News Definition Interpreter:

Good news..................good news

No news......................good news

Bad news....................good news

Really horseshit bad news.......good news


So according to this it's.......let's see...add 3, carry the one........GOOD NEWS!!! Praise be! Hallelujah! We should commence upon a 1.5% rally, immediately.

faustian bargain's picture

Recession? What recession?

Postal's picture

It must be bad. Even CNBC is headlining the budget mess (at least on the website). I really miss the cheerleading. It might be fantasy, but I do feel better. ZH can be so depressing--accurate, but depressing.

Cognitive Dissonance's picture

"ZH can be so depressing--accurate, but depressing."

And thus precisely why the vast majority embrace Zombie-land. Being anesthetized during the ass reaming is always preferable to being wide awake and screaming bloody murder.

Let's place blame where it belongs. If facts are depressing, maybe it's not the speaker of the facts but the facts themselves that's the problem. But of course, we aren't much good at anything when we're falling down stinking drunk, are we? Thank God I was too drunk to see that car run over me.

Thank God indeed!

Lux Fiat's picture

As others have noted on other occassions, there are Treasury auctions this week.  CNBC is just being helpful by highlighting some facts about our financial and economic situation, versus verbally mugging the occassional unsuspecting guest who, gasp, decides to actual call it as they see it.  Don't worry, they'll have their smiley faces back on come Friday morning, unless something really bad does break loose.

carbonmutant's picture

The only reason it's depressing is that nobody is doing anything about it.

swamp's picture

The banksters covered up the debt but the debt was still there. The big drop in revenues will continue, but the decrease in revenues trails enormous bubbles and windfall revenue for years, that was spent in excess and no prudent reserves were not set aside. Austerity? The government has spent lavishly with puff programs, fat salaries and stratospheric pension programs far in excess of the private sector. The massive spend spree covered every entitlement, perk, interest group and fantasy imaginable. The base number for the backdrop was the blow off top, not an average and not sane.

Anonymous's picture

I live in Princeton, NJ and was just notified by NJ Transit that my monthly rail pass to NYC will be raised 25% effective May 1, 2010. That comes out to an increase of $1,020 per annum!! With this will come service cuts as well as cuts to the NJ Transit workforce and so the death spiral continues unabated. There is NO economic recovery in the REAL world. Only in the minds of economists, sell-side pump monkeys, MSM shills and corporate owned politicians. The future for many Americans is getting bleaker by the day. I am lucky to still have my job after surviving several major culls at my firm. My father just took a mandatory 20& paycut at his job.. The beat goes on and the deflationary wage spiral continues.. there is much more pain coming..

Bam_Man's picture

Just out of curiosity, how much will that monthly ticket cost after May 1?

I did the commute between Princeton and NYC Penn Station for several years back in the late 1980's when the monthly ticket was $165.

Anonymous's picture

It is currently $340.00 per month BEFORE the scheduled
25% rate hike goes into effect on May 1st.

Bam_Man's picture


Then there is the parking at the station as well.

Whizbang's picture

Metro just upped fares by about the same amount. Brutal.

walküre's picture

They can try.

Of course it won't work.

Tax increases to support government spending levels are never a good idea.

Make no mistake, if you don't "give" your "fair share" voluntarily. The government will take it by way of confiscation.

Stage exit.