The Growth and Volatility of State Tax Revenue Sources in the Tenth District
分析了税收组合构成对州税收收入增长和稳定性的影响，特别关注第十联邦储备区各州的情况，对政策制定者和公共财政研究者有参考价值。
ith the sluggishness in the national economy in 2008, many state governments are projecting budget shortfalls for the 2009 fiscal year. This trend is a concern to policy makers, as the health of a state’s tax revenues is important to its economic growth and its ability to finance the public services that residents demand. State governments provide physical infrastructure, educate the future workforce, and protect people and property. In addition, in the Tenth Federal Reserve District, state and local governments employ more than 16 percent of the workforce. While a number of factors influence the growth and volatility of state tax revenues, one key determinant is the composition of each state’s tax portfolio. Governments desire a portfolio of tax instruments that allows for revenues to grow with the economy so that spending demands can be met without much change in tax rates. At the same time, stability in the revenue stream is important so that governments are not left with large financing constraints during downturns. This article analyzes the impact of portfolio composition on the growth and stability of state tax revenues, particularly in the states that R. Alison Felix is an economist at the Federal Reserve Bank of Kansas City. Adam Pope, a research associate at the bank, helped prepare this article. This article is on the bank’s website at www.KansasCityFed.org. 63 64 Federal Reserve Bank of Kansas City make up the Tenth District. The first section tracks the performance of state tax revenues nationwide since 1967, examines the factors that influence their performance, and details the portfolio components of Tenth District states. The second section discusses the importance of growth and stability for state tax revenues and describes the methodology for measuring growth and stability. The third section uses long-run and short-run elasticity estimates to analyze the growth and stability of each tax instrument. The fourth section discusses implications for Tenth District states.