States Continue to Feel Recession’s Impact

This article recently published by the Center on Budget and Policy Priorities outlines that states are currently experiencing the steepest decline in tax receipts on record.  “As a result, even after making very deep spending cuts over the last two years, states continue to face large budget gaps.”  States experience large shortfalls in fiscal years 2009 and 2010, and the situation is no better for fiscal year 2011 (July 1- June 30 2011).  According to the article, at least 46 states struggled to close shortfalls this year.

The need for states to seek new sources of funds is clear; and the Main Street Fairness Act currently pending in Congress is gaining a lot of support from state Governors.  In addition to replacing sales tax revenue that has declined as shopping has shifted online (down from 40% to 14% in recent years), the MSFA is viewed as a way to help local merchants compete with remote sellers.  Local merchants provide local jobs, which is an added benefit to financially-strapped communities.

 

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