Nov. 23 (Bloomberg) -- U.S. states tax collections fell for the fourth consecutive quarter as job losses and the economic recession cut revenue from income and sales levies, according to the Nelson A. Rockefeller Institute of Government.

The decline of 10.7 percent in the period that ended in September, compared with a year earlier, was less than the previous quarter’s 16.6 percent drop, which was the biggest since 1963, the Albany, New York-based institute said today. The report covered 44 states for which comparable data was available.

“Despite indications that the national recession may be over, the revenue situation remained gloomy in virtually every state in the third quarter,” according to the report. A number of states are collecting less than they projected, and “further revenue shortfalls and more spending cuts are most likely on the way for many,” the institute said.

State budget deficits will exceed $350 billion in the next two years, the Center on Budget and Policy Priorities said in a report earlier this month. At least 42 states have cut spending, with 28 reducing outlays for health care, and 26 for schools. More than 30 states increased taxes or fees this year, the Washington-based center said.

To contact the reporter on this story: Michael Quint in Albany, New York, at mquint@bloomberg.net.

Last Updated: November 23, 2009 10:23 EST