rapier T A B L El- 9 Federal Spending by State per Tax Dollar Sent to Washington, continued (Fiscal Years 1990 and

2000) Expenditures per Dollar of Taxes Ranking FY 1990 FY 2000 FY 1990 .95 .93 35 .96 1.06 33 1.06 1.18 28 1.32 1.27 11 1.35 1.46 9 1.14 1.20 22 .97 .96 11 1.34 1.06 10 .87 1.08 40 1.44 1.48 4 .96 .87 32 1.39 1.75 7 .86 .83 42 1.07 1.09 ,7 of $ 5.59 $ 6.49

FY 2000 Oregon 35 Pennsylvania 26 Rhode Island 21 South Carolina 18 South Dakota lu Tennessee 10 Texas 34 Utah 27 Vermont 25 Virginia 9 Washington 37 West Virginia Wisconsin 43 Wyoming 23 District Columbia Source: From lax Foundation website. www.taxfoundation.org. Reprinted by permission. Kek - k9State Tax B u re. e; -1 s The 1990s were good times for state and local governments, a period of exceptionally strong growth in most sectors of the economy. The 1990s saw abundant tax revenues in state governments throughout the United States- Income and sales taxes during the 1990s added to the boom for expanding state and loca l government operations. Income-tax-dependent states witnessed rapid growth in citizens' personal incomes. Strong consumer spending promoted state and local government operations dependent on the sales tax_ However, the boom times of the 1990s appear to be over. For fiscal year 2002, state government increased taxes by an estimated $303.8 million. Personal income taxes decreased by $671.2 million. Sales taxes increased by $186.1 million, corporate income taxes by $381.6 million, and cigarette, tobacco, and alcohol taxes by $98.7 million. Other taxes and fees increased by $308.6 million. As the 1990s came to an end, state tax and fee collections grew 8 percent. This growth in overall tax collections was substantial when adjusted for inflation-5.7 percent. Inflation rates reflect a decade-long trend. Property taxes rose at an annual growth rate of 7.8 percent_ Individual income taxes rose at an average growth rate of 7.3 percent- The overall distribution of taxes indicates that states derive the majority of their tax collections from general sales taxes (32.3

percent) and the individual income tax (36 percent)-Some states rely disproportionately
on one or the other. States that rely on the sales tax for over 50 percent of their tax collections are: Washington (61.6 percent), Florida (60.5 percent), Tennessee (57.4 percent), South Dakota (52.6 percent), Nevada (52.2 percent), and Texas (51.1 percent). States who rely on the individual income tax for over 50 percent of their tax collections are: Oregon (68.9 percent), Massachusetts (56 percent), New York (55.6 percent), Virginia (54 percent), and Colorado (51.4 percent). Table 9.4 lists state tax collections and distributions by type of tax for fiscal year 2000.

During the 1990s, state governments' tax collections grew faster than taxpayers' personal income. In fiscal year 2000, state tax collections grew 1.82 percent faster than personal incomes. The growth rate of state tax collections relative to that of
personal income varies substantially from state to state. Table 9.5 compares state tax growth to personal income (PI) growth for fiscal year 1990 and 2000. States with the highest per capita tax collections include Connecticut, Hawaii, and Minnesota. States with the lowest tax collections include South Dakota, Texas, and New Hampshire. States with the highest levels of tax collections per $1,000 of personal income include Hawaii, New Mexico, and Vermont States with the lowest levels of tax collections per $41,000 of personal income were Texas, South Dakota, and New Hampshire. See t able 9.6 for state tax collections per capita and per $1,000 of personal income with the correspondin g ranks of the states.

Various measurements of state tax collections differ substantially. The disparity may be explained by differences in income per capita in example. states Mississippi and
New Jersey. Income per capita in Mississippi is approximately 57 percent of that in New Jersey. As a result, Mississippi is ranked 37th in tax collections per capita. But in terms of tax collections per $1,000 of persona l income, it ranks I Ith highest. New Jersey ranks 16th in tax collections per capita, but only 40th in tax collections per $1,000 of persona! income.

The fiscal year 2000 s tate tax collections are based on Bureau of the Census data. The census data r ecord tax collections from various taxes levied at the state by level. The data are limited b their applications to the computation of individual tax burdens by state. Tax incidence analysis best determines tax burdens and which taxpayers ultimately bear the real burden of taxes. Income tars paid by corporations to one state may not be fully borne by the residents of that state. Some portions of the real tax burdens are borne by residents of other statesas customers, out-of-state employees, or shareholders. State governments spent $1.1 trillion in fiscal year 2000. Fiscal year 2000 ended in ;une In a!I states except Alabama, Michigan, New York, and Texas. The 2000 Annual Survey of State Government Finances indicates that spending on education continues to be the largest states' expenditure$347 billion, or 32 percent. Other major categories of state spending were public welfare (22 percent), high ways, health and hospitals (7 percent each), and police and corrections (4
percent).32 Tax collections constituted the largest share of state revenues$539 billion, or 43 percent. Intergovernmental revenues totaled $274 billion, or 22 percent, most of which came from the federal government. Current operations ($523 billion) ac counted for most state government spending. Local governments spend about 30 percent ($328 billion). States appropriated $76 billion on capital projects, $105 billion on insurance benefits, and more than $30 billion on debt interest.

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