The most recent figures on state tax revenue reveal that New Hampshire’s ability to finance public services remains behind where it was seven years ago. In its interactive, online tool Fiscal 50: State Trends and Analysis, the Pew Charitable Trusts presents updated data on tax receipts for all 50 states, adjusted for inflation, to compare how state treasuries are mending five years after the Great Recession[i].
In its analysis, Pew notes that, as of the third quarter of 2014, twenty states are collecting more than their respective peak levels before or during the recession. Overall, states received 2.5 percent more state tax revenue in that quarter than they did midway through the recession. (It’s important to note that tax revenue trends reflect not only economic changes, but also policy decisions, such as rate increases or decreases.)
On the other hand, Pew estimates that New Hampshire is collecting approximately 9.6 percent less in tax revenue than its peak, which the organization identifies as the fourth quarter of 2007. As shown in the graphic below, this divergence from the national trend has occurred only recently. Before and throughout the early parts of the recession, revenues in New Hampshire were growing or falling at about the pace of most states. In the latter parts of the recession and early parts of the recovery, New Hampshire actually held up a bit better. Yet, since late 2011, Granite State revenues have trailed inflation, while the opposite has taken place across most of the United States.
Moreover, compared to the rest of New England, the Granite State is the laggard, raising the question: What is restraining New Hampshire revenues? Could it be that New Hampshire’s economy has not performed as well as many other states or have public policy decisions prevented a stronger liftoff? A future blog will try to dig deeper and examine the data.
Visit the Pew Fiscal 50 online data tool to view tax revenue and other indicators for all 50 states.
[i] Pew Charitable Trusts uses the Bureau of Economic Analysis’ gross domestic product implicit price deflator to adjust the Census Bureau’s tax revenue figures for inflation. Also, Pew smooths out any seasonal fluctuations by using a four-quarter moving average. The Census Bureau collects tax revenue data by surveying state government and reporting their results in their Quarterly Summary of State and Local Taxes. The Census Bureau defines taxes as “all compulsory contributions exacted by a government for public purposes, excluding retirement and social insurance assessments and unemployment compensation tax.”