A report released by the Nelson A. Rockefeller Institute on Government on October 15 found that state tax collections for the second quarter showed a record drop of 16.6 percent.  The report notes that every state but Vermont saw total tax revenue fall and that 36 states reported revenue declines of 10 percent or more.  The revenue shortages come as many states have already tapped their “rainy day” funds and relied heavily on ARRA funding in their most recent budgets, indicating that states will likely move to cut spending unless revenue increases.

From the report:

Total state tax collections as well as collections from two major sources — sales tax and personal income — all declined for the third consecutive quarter. Overall state tax collections in the April-June quarter of 2009, as reported by the Census Bureau, declined by 16.6 percent from the same quarter of the previous year. We have compiled historical data from the Census Bureau Web site going back to 1962. Both nominal and inflation adjusted figures indicate that the second quarter of 2009 marked the largest decline in state tax collections at least since 1963. The same is true for combined state and local tax collections, which declined by 12.2 percent in nominal terms.

Full report:  State Tax Revenues Show Record Drop for Second Consecutive Quarter (PDF | 3.85 MB)

The Nelson A. Rockefeller Institute of Government. (2009). State tax revenues show record drop for second consecutive quarter. Lucy Dadayan and Donald J. Boyd.