PROVIDENCE – The post-pandemic rebound has boosted some state coffers ,including Rhode Island which was among 20 states that ended 2020 with more in tax revenue than when the year began, according to Pew Charitable Trusts.
The new research published on July 27 shows that Rhode Island actually gained 2.4% in tax revenue by the end of 2020 compared to the end of 2019 – the ninth-best post-pandemic standing nationwide, according to Pew. Idaho led the pack, posting end-of-year tax revenue 11.2% higher than the year prior, followed by a 5.8% gain in Utah.
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While three-quarters of states increased their revenues in the final quarter of 2020, it wasn’t enough to overcome the largest loss in 25 years that occurred in the second quarter, according to Pew. How much individual states were able to regain in lost revenue depended on several factors including their economic makeup, the share of jobs conducive to remote work, types of taxes, and differences in severity of COVID-19 infection rates and restrictions.
Personal income taxes drove fourth-quarter rebounds for most states, rising on average 7.7% – the highest quarterly increase since early 2018, according to the Urban Institute. Sales income taxes also grew at an average 1.7% in the fourth quarter.
The third and fourth-quarter tax receipt rebounds also suggests post-pandemic recovery has started much quicker than in prior recessions, including the 2008 Great Recession from which it took five years for state tax revenues to recover.
Rhode Island, for example, did not see its total tax revenue recover from the 2008 recession until the first quarter of 2015, according to Pew data.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
