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State Revenues Rise Slightly, but Temporary Taxes Expire

For the first time in a decade, states around the country cut taxes more than they increased them—a drop-off that resulted from a few states allowing temporary tax hikes to expire, a new report says.

Overall, state actions resulted in a net tax decrease of $2.5 billion, according to the National Conference of State Legislatures, which issued the report. (Not counting the expiration of temporary taxes, states enacted net tax increases of $9 billion, NCSL concluded.)

Those numbers aren't likely to ease the financial pressure on schools, which in many states have faced significant cuts in state funding. That, in turn, has resulted in deep reductions to programs, as well as layoffs and personnel changes affecting teachers and other workers.

Many of the taxes that states decided to allow to expire were originally imposed in 2009, for two years, NCSL says.

In general, there appears to be little appetite among state policymakers for new taxes, perhaps not surprising, given that many Republican state officials have pledged to cut taxes and spending. A few months ago I reported on information compiled by the Nelson A. Rockefeller Institute of Government, which found that states, despite their budget woes, have relied less on tax increases to replenish revenues during this recession/post-recession period, cumulatively, than they did during and after other downturns, dating to the early 1980s.

In a second report, NCSL found that state budgets are continuing to recover, though they are a long way from rebounding completely from the depths of the "Great Recession." Fiscal year 2012 marks the fourth straight year that "states faced significant mismatches between revenues and spending," NCSL found.

The most biggest change in state budgets in fiscal 2012? Perhaps not surprisingly, NCSL says it's the end of federal stimulus funds, a change that basically means states are having to find more money on their own—or make cuts.

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