States are Broke

Bond Tangent reports (note that I've cut out some information - go to Bond Tangent for full post and bold mine):

• Total state tax collections for Q1 fell by more than 11.7% YOY (the largest decline in state since 1963)
• Local taxes, which rely primarily on property taxes that tend to be more stable, rose 3.9%.
• Income tax collections are now worse-off than sales taxes (the effect of a sharp rise in unemployment)
• Total collections declined in 45 states in Q1, versus 35 in Q4 of 2008. Twenty-five of those states experienced double-digit declines.
• Personal income tax declined 17.5% YOY; "preliminary figures for the second quarter of 2009 indicate that the personal income tax declines will be far more severe compared to the last recession when the largest decline was reported at 22.3 percent for the second quarter of 2002."
• Sales tax collections for Q1 represent a 8.3% decline YOY. In fact, the inflation-adjusted decline in state and local sales taxes was the greatest in the 45 years for which quarterly data are available."
• Nominal corporate tax revenues are down 18.8% YOY in Q1, which the authors note is the 7th consecutive decline.

In total, state tax revenues are down ~$20 billion in the first quarter from Q1 '08 levels.

Note the strength of sales tax in the last recession as compared to the current environment.

Source: Rockefeller Institute