Figure 7
Per Capita State Revenues, 198097
$ 4 ,0 0 0
$ 3 ,8 8 4
$ 3 ,5 0 0
$3,620
$ 3 ,0 0 0
$3,080
$2,754
$ 2 ,5 0 0
$ 2 ,3 8 3
$ 2 ,0 0 0
$ 1 ,5 0 0
$ 1 ,0 0 0
$500
$0
1980
1985
1990
1995
1997
California has cut taxes under Wilson. Yet, as
percent; and in FY98 they rose by 7.4 per-
the Los Angeles Times reported, "Wilson the tax
cent.15
cutter has not come close to matching Wilson
Because state income tax codes have a
the tax raiser. Tax increases at the start of
graduated rate structure, meaning that rev-
Wilson's administration in 1991 hover at
enues rise faster than income growth, unless
$3.6 billion a year above recent cuts."14 The
state lawmakers are continually cutting taxes,
tax burdens will automatically rise. That has
overall tax burden is far higher now than in
indeed been the case over the last two years,
1990. Even in Arizona, a state that led the
Because state
as personal income has lagged behind rev-
nation in income tax cuts in the 1990s under
enue, growing only about 5 percent per year
former governor Fife Symington, tax rev-
income tax codes
over that period. Population has grown by 1
enues have outpaced population growth and
have a graduated
percent per year over that period.
inflation.
Figure 7 shows that by fiscal year 1997,
rate structure,
The States' $75 Billion Revenue Bonanza
real per capita state revenues had reached a
unless state law-
A reasonable benchmark for state tax rev-
high of $3,884. That represents an increase of
makers are
enue collections is the growth of a state's
26.1 percent since 1990, a growth rate of 3.4
population plus inflation. In fact, several
percent per year compared to the lower 1980s
continually
states cap spending or taxes, or both, at that
growth rate of 2.6 percent per year. This rev-
cutting taxes, tax
level.
enue tide is mainly attributable to strong
burdens will
In this section we estimate the size of
national economic growth. In recent years as
excess tax collections by states by measuring
the economy has picked up steam, revenue
automatically
how much states' actual revenue intake has
growth has accelerated. In fiscal year 1996
rise.
exceeded inflation plus population growth
state tax revenues increased by 5.4 percent
over the course of the current economic
over the prior year; in FY97 they rose by 6.2
14