By Frank Keegan | State Budget Solutions
The U.S. Census Bureau on Thursday released its Annual Survey of State Government Finances for 2011, and it shows the “revenue crisis” politicians have been blaming on the Great Recession is false.
In reality, “General Revenues” remained above historic 2007 highs throughout the recession, and “Taxes” revenue dropped below historic highs in only two years, 2009 and 2010, and then only by 7 percent and 10 percent, respectively.
Those “declines” came right after the largest one-year state tax revenue increase in history, 29 percent from 2007 to 2008.
Tax revenue in 2011 increased 8 percent over 2010 to regain the historic high level of 2007.
According to Census, “Total state government revenue increased to $2.3 trillion in 2011, up 11.3 percent from $2.0 trillion in 2010 …. Total state government revenue includes general revenues (mainly tax revenue), utility revenue, liquor store revenue and insurance trust revenue. General revenues were $1.7 trillion in 2011, a 5.7 percent increase from 2010. General expenditures by state governments rose 3.7 percent in 2011 to $1.7 trillion.”
General Revenues declined in only one year, 2009, and by less than 1 percent. As of last year, General Revenues were up $590 billion, or 56 percent, in a decade despite the recession.
When it comes to “Total Revenue,” states are more than double a decade ago and 13.6 percent above the record 2007 high, “… mainly because of a $141.0 billion increase in social insurance trust revenue. Social insurance trust revenue includes employee retirement investments, which had gains in 2011.”
However those increases from recession lows still leave state and local pension funds more than $5 trillion in the hole as of this year, according to my estimates.
If you want to see the real cause of state government fiscal woes, take a look at the spending.
Throughout the Great Recession, “Total Spending” continued to increase. From 2007 to 2008 it was up 6 percent, 5 percent after that, then 6 percent and up 3 percent from 2010 to 2011 for a cumulative increase of more than 22 percent through the recession.
Over a decade, state spending was up 56 percent in 2011.
But that does not show all taxing because it does not include local governments.
Including local taxes, the total burden on citizens and businesses – crushed by a 5.1 percent Gross Domestic Product decline, according to the study – actually increased 7.6 percent, or $98 billion since the historic high of 2008.
According to Latest National Totals of State and Local Taxes for the previous 12 months ending June 30 from the U.S. Census Bureau, revenues declined in just one period, 2009, and that was by only 1.9 percent. Year-over-year total revenues were flat in 2010, up 6.1 percent in 2011 and 3.3 percent in 2012.
In fact for 12 months ending June 30, total revenue in 2012 was up 53.3 percent in a decade and almost 107 percent since 1996, an average annual increase of about 4.5 percent a year.
That means state and local politicians took $45 billion more from us in 2012 than in 2011, $485 billion more than they did 10 years ago, and $719 billion more than in 1996.
Frank Keegan is editor of Statebudgetsolutions.org a project of sunshinereview.org. The State Budget Solutions Project is non-partisan, positive, pro-reform, proactive and anchored in fundamental-systemic solutions. The goal is to successfully engage political journalists/bloggers, state officials and opinion leaders in a new way of thinking about state government and budgets, fundamental reforms, transparency and accountability. firstname.lastname@example.org