U.S. states tax collections fell for the fourth consecutive quarter as job losses and the economic recession cut revenue from income and sales levies. -Nelson A. Rockefeller Institute of Government “Despite indications that the national recession may be over, the revenue situation remained gloomy in virtually every state in the third quarter,” according to the report. A number of states are collecting less than they projected, and “further revenue shortfalls and more spending cuts are most likely on the way for many,” the institute said. Total tax revenue declined in 44 states. State budget deficits will exceed $350 billion in the next two years. -Center on Budget and Policies Preliminary tax collection data for the July-September quarter of 2009 show continued widespread and sharp declines for most states for all three major sources of tax revenue, as well as for overall taxes. Overall, tax revenue declined by 10.7 percent in nominal terms. -Nelson A. Rockefeller Institute of Government BREAKDOWN OF DECREASED TAX REVENUE: Personal income tax declines represented a $6.7 billion loss. Sales tax declines represented a $3.8 billion loss. Corporate income tax represented the sharpest rate of decline at 19.4% This is the fourth quarter in a row that revenues from two major sources — personal income tax and sales tax — declined, and it is extremely likely that this trend will continue. REGIONAL BREAKDOWN OF DECREASED TAX REVENUE: The Far West region was the weakest by far in terms of personal income tax revenue collections. The Southwest region was the weakest in terms of sales tax collections. The Southeast region had the smallest decline in total tax revenues at 8.1 percent. New England states reported the smallest decline in sales tax revenues at 2.6 percent. Mid-Atlantic States reported the smallest decline in personal income collections, at 8.0 percent.

EFFECTS: The current economic situation and its resulting decrease in U.S. state’s tax revenue have and will continue to have detrimental effects on programs running on state funds. At least 42 states have cut spending, with 28 reducing outlays for health care, and 26 for schools. More than 30 states increased taxes or fees this year . -The Rockefeller Institute The spending reduction on health and education will only contribute to a perpetuation of the current economic situation. Specifically, children will receive less adequate educations, in turn leaving them less prepared for the potential career market that awaits post graduation. Similarly, the reduction in state government healthcare funds will create a physically inferior workforce, which will potentially create an even higher rate of unemployment. THE ADVANTAGES OF MOBILE LOTTERY: Mobile Lottery will serve as an enormous supplement to the current revenue of land-based lottery systems. Its added convenience, accessibility and technological abilities have the potential to create a multi-billion dollar rise in state revenue collected from the sale of lottery tickets. The increased state revenue would successfully combat the trend in funding cuts for education and healthcare, while also potentially allowing for increased funding of similar programs. **The Rockefeller Institute collects data directly from individual states to get the earliest possible read on what is happening to state government finances.