States once flushed with revenue from surging sales tax collections are starting to see inflation-related declines, signaling state revenues may continue to drop, Bloomberg News reported. The number of states that saw year-over-year declines increased to 25 in June from 16 in May, according to the Urban Institute. That declining performance, which is analyzed over a three month rolling average, follows a strong first quarter for sales tax receipts in which nearly every state saw growth in real terms. While state coffers remain buoyed by high sales tax collections this year and record income tax receipts in 2021, changing consumer spending patterns and high prices have triggered a decline in revenues for one of states’ key funding sources at the same time as stock market volatility threatens income tax collections.
