By Anadolu Agency
August 1, 2024 4:31 pmISTANBUL
The American states’ resilience remains high despite two years of weak tax revenue, Fitch Ratings said Thursday in a statement.
“Overall, state tax revenue growth was roughly flat for the second consecutive year, driven by sluggish sales tax revenue growth, lingering effects of weak 2022 tax returns, and widespread income tax cuts, although actual experience varied by state,” it said.
“Accumulated surpluses and record tax growth in 2021 and 2022 have allowed states to maintain rainy-day funds at historically high levels,” it added.
The median overall tax revenue growth for the July 2023 to June 2024 period for 46 states was 0.5%, with 16 seeing annual revenue declines, according to Fitch.
Total state tax collections from July 2023 through May 2024 were below the high set in 2022, but were still well above pre-pandemic levels, it noted.
Several states with large income tax cuts in the 2024 fiscal year estimated steep revenue declines and ended the period down on an annual basis, it added.
Ohio reported a $458 million personal income tax shortfall and a $485 million overall tax revenue shortfall, as its personal income taxes declined 12% from fiscal year 2023.
Revenue growth, on the other hand, was generally stronger in states without large tax cuts, according to Fitch.
In New York, total tax collections in the 2024 fiscal year were $3.5 billion, or 3.4%, more than budget estimates, while tax revenues increased 3.7% in the July 2023 – June 2024 period, said the rating agency.
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