Sixth district sales tax collections increased notably in October
State coffers across the Sixth District may have breathed a small sigh of relief in October as sales tax collections rose notably in all Sixth District states. Sales tax collections are often a good indicator of general retail activity, but they are also vital revenue sources for cash-strapped states that continue to feel the lagging fiscal effects of the recession. Table 1 shows how much each Sixth District state depended on its sales tax revenues last year.
When comparing October 2010 data to same month in 2009, Georgia saw the largest gain in sales tax collections (10.4 percent, on a three-month moving average) (see the chart). This is peachy news for the state, as roughly one-third of all taxes collected in Georgia last year were from its sales tax. Florida saw a smaller year-over-year percentage increase in October (2.4 percent) (see table 2), but the state could have appreciated that gain more, as sales tax collections made up almost 77 percent of all taxes collected last year in the Sunshine State.
While the last few months of sales tax data have shown a slow-but-encouraging growth trend, state departments of revenue have little else to be cheering about in terms of each state's overall fiscal picture. Table 3 shows budget gaps for fiscal year 2011 and projected gaps for fiscal year 2012 for each Sixth District state; it also serves as a solemn reminder that while states may be through the worst of the recent recession, there's still a long way to go before they're out of the woods.
Note: Fiscal years are July through June except in Alabama, where the fiscal year is October through September. Data for all 50 states are available through the Wall Street Journal.
Monthly updates on state tax revenues are available on the Atlanta Fed's state government finance page.
By Mark Carter, an analyst in the Atlanta Fed's research department
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