State, local revenues up 33 percent in Q4: Census

By Lisa Lambert

WASHINGTON (Reuters) – State and local revenues galloped ahead by 33 percent in the final quarter of 2010 from the quarter before, U.S. Census data showed on Tuesday in yet another sign that the budget crisis may be slowly ending.

Half of the revenues came from property taxes, which benefit local governments and which nearly doubled to $177.15 billion from $90.12 billion in the third quarter. Property tax revenues, though, were down 3 percent from the same period the year before, according to Census data.

For the fourth quarter, total state and local revenues were 2 percent above the last quarter of 2009. And for the 12 months ended in December, total revenues were $1.29 trillion, compared to $1.26 trillion in the year that ended in December 2009.

The housing bust, financial crisis and recession caused a collapse in states’ revenues, forcing them to cut spending, hike taxes and turn to the federal government for help. The recession ended in 2009, but states’ budgets have yet to bounce back and investors in the $2.9 trillion municipal bond market are studying tax collections for hints of recovery.

Meanwhile, because of a lag in real estate assessments, local governments are worried their property tax revenues will dip just as states cut back aid and the assistance from the $821 billion federal stimulus plan ends.

Individual income tax revenues reached $65.93 billion in the fourth quarter. That was up 9 percent from the $60.75 billion brought in during the third quarter and 10 percent above the $59.88 billion during the final quarter of 2009.

Corporate income tax revenues rose, too — to $10.33 billion in the fourth quarter from $9.39 billion in the third.

Still, many revenue sources dropped over the quarter. Sales tax receipts fell to $71.78 billion compared to $72.2 billion the quarter before.

Gas taxes were $9.7 billion. That was below the $10.05 billion reached the quarter before, the most collected since the second quarter of 2007.

Motor vehicle taxes dipped to $5.55 billion in the quarter from $5.79 billion in the third quarter, hitting the lowest level in two years.

The budget crisis was fairly uniform across the country, sparing all but a few states and local governments. Recovery from the longest and deepest economic downturn since the Great Depression will likely not be as consistent.

Last week, Fitch Ratings said local and state governments this year “will face varying degrees of fiscal and economic pressure as prospects for recovery differ widely across areas.”

(Editing by Andrea Ricci)

State, local revenues up 33 percent in Q4: Census