A Special Summary and Forecast Of Federal and State Tax Developments
FASTER ECONOMIC GROWTH finally brings some cheer to many states.</br></br>As the economy perks up, tax collectors report higher revenues. State revenue, even excluding tax increases, rose faster than inflation in the third quarter, says the Center for the Study of the States in Albany, N.Y. That was the first time this has happened in any quarter since late 1990. Oregon and Utah posted especially strong gains. Total state revenue rose 4.3%, without tax-law changes, up from sluggish second-quarter growth of 2.6% and anemic first-quarter growth of 1%.</br></br>But growth generally remains "far from robust," says Steven Gold, the center's director, and many states remain depressed. The mid-Atlantic region posted the smallest improvement, and California's budget woes worry bond investors. This year, fewer states raised taxes than last year. Total third-quarter state revenue, including tax increases, rose 7.6%, down from second-quarter growth of 8.9%.</br></br>Ohio, facing an estimated $300 million deficit, may increase taxes soon, an aide to Gov. Voinovich says.</br></br>SOFTWARE SALES surge for tax preparation and planning.