Recession Lingers in 26 States as Tax Revenue Trails Peak

Tax revenue in more than half of U.S. states still hasn’t fully recovered from the recession that ended five years ago, according to a report by the Pew Charitable Trusts.

Collections in 26 states remained below their 2008 highs as of the end of 2013, with five states more than 15 percent short, according to Pew, a Washington-based nonprofit group that researches public policy. Alaska was furthest off, 60 percent. Wyoming was down 28 percent; Florida, 20 percent; New Mexico, 18 percent; and Louisiana, 15 percent.

Nationally, states collected 2.2 percent more in the final quarter of 2013 than at their peak in 2008, when adjusted for inflation. Still, more than half of the 24 states with rebounding revenue benefited from tax increases, according to an analysis by Barb Rosewicz and Alex Boucher.

“Recovery to peak levels does not necessarily signal an economic comeback, because growth also can result from tax or policy changes,” Pew said.

North Dakota, for example, had returns 119 percent greater than in 2008, fed by sales taxes and oil production. Illinois had the second-highest gain, 23 percent, partly because of temporarily higher personal and corporate taxes. In fiscal 2015, when the increases are due to phase out, the state is expected to lose as much as $1.5 billion of revenue, according to Pew.

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