States Take in More Taxes Than Expected

States collected more tax revenue in fiscal 2020 than many budget analysts initially expected, given the global pandemic and recession that began this spring. Some analysts also are increasing their estimates for tax collections in fiscal 2021, which in most states began July 1.

Connecticut, South Carolina and South Dakota ended fiscal 2020 with unexpected budget surpluses. And in states such as Colorado, Michigan and New Jersey, which ended the fiscal year in better shape than anticipated, budget analysts are revising their fiscal 2021 revenue estimates upward.

Back in April, many state and local leaders predicted catastrophic declines in tax revenue as stay-at-home orders shuttered businesses.

But state tax collections declined by just 5.5% in fiscal 2020 compared with fiscal 2019, according to the Washington, D.C.-based Tax Foundation. Preliminary data from 32 states shows a 4.4% decline in tax revenues last fiscal year, said the Urban Institute, another D.C.-based think tank.