- The Washington Times - Thursday, April 19, 2007

ASSOCIATED PRESS

Higher-than-expected revenue has meant more state government spending this year on transportation, higher education and pensions, a new survey found, though it also picked up new worries over poorly performing sales taxes.

Mixed sales-tax reports were the most-prominent weak spot in the biannual financial report made public yesterday by the National Conference of State Legislatures (NCSL), which last month surveyed all 50 states.

The good news was that 42 states had extra money, either from stronger tax income or other sources, as they closed in on the end of the current fiscal year, which wraps up in June for all but four states.

So far, fiscal 2007 has been the fourth-straight year of strengthening finances for states. And of the 45 states with a statewide sales tax, 27 said those taxes came in on target or above.

Yet a weakness in sales taxes left 14 states with revenues below forecast, and New Jersey and Florida both reported sharp drops.

“We’re concerned because sales-tax performance was a leading indicator of fiscal problems the last time we went into an economic downturn,” said Warren Deschenaux, director of the Maryland General Assembly’s fiscal agency.

In addition, roughly two out of every three states — 33 so far this year — have spent more than they planned, though in most cases the overruns were modest and the extra revenue, in many cases, will balance it out, NCSL said.

In other categories, the survey found:

• Overall revenue collections were above forecast in 15 states, on target in 23 states and below target in 11 states. (Florida did not provide information.)

• Personal income tax remained strong, with 32 of the 41 states with broad-based personal income taxes either above or on target. Still, the critical April numbers for this category weren’t captured in the survey.

• Business taxes were on target or above in 38 states.

Plans on how to spend the extra cash varied across the states, with Virginia devoting $161 million to transportation funding, Arkansas focused on public school facilities, and several looking to strengthen reserve funds.

Tax cuts are up for consideration in at least 12 states, with property-tax relief on the agenda in Florida, Minnesota, Montana, North Dakota and Texas.

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