State tax revenues continues to plummet to economic disaster levels as the worse economic downturn since the Great Depression of the 1930′s tightens its grip.
According to numbers published at Agora Financial’s 5 minute forecast State tax revenue fell 4% in the last quarter of 2008, the first decline in six years and the largest in over 50. Preliminary numbers suggest the first quarter of 2009 will be even worse… by a multiple of three. Average state tax collections in January and February were down 12.8% compared to the same time in 2008.
It is not only state tax receipts that are in free fall. Personal and corporate income tax receipts are in the tank as well. And so are property taxes as residential real estate prices remain in a downtrend. And to make it even worse commercial real estate is beginning to crumble. Taxes on investment profits? Sure everyone has done well in the stock market, right? Har!
As bad as things are at the Federal level the Fed has a way out of the revenue shortfall that states and local communities just don’t have. The Feds can just print money, which they are doing, in an effort to keep paying the bills with money they don’t have. States and local communities are being forced to cut back on important services like police and fire protection and social services in an effort to balance their budgets.
In spite of President Obama and Ben Bernanke seeing “tentative signs that the sharp decline in economic activity may be slowing” the bad news economic data just keeps on flowing. The Labor Dept. reported today that consumer prices enjoyed their first annual decline since 1955. Lower prices and deflation may be good for those who still have cash hidden away but for those many millions of Americans burdened with high levels of mortgage, credit card, and student loan debt, it makes that debt that much harder to repay.
The Long Crisis is going to bring a lot of pain to America. So much so that a breakdown in civil order is probably not that far away. As State and Local tax revenues continue to fall there will be further cutbacks of vital services leading to a shortage of services designed to protect the population. No wonder gun sales are soaring. Unless conditions improve soon we are heading for an everyman for himself society. Can you say Anarchy?
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