Interestingly, several of the states that raised taxes the most had among the most generous programs for residents. Three of the six states spent among the absolute most per capita in fiscal year 2008, the most in recent year for which data is available. The same year, four of the six spent over $4,600, far more than the national average of $4,114 per person.
Several of the states that increased revenue from taxes the most had among the worst budget gaps during the recession. In 2010, California, Illinois, New York and Rhode Island, all of which increased revenue from taxes by over 9%, had among the highest deficits, exceeding 30% of general funds. California faced a gap of more than 50%, second only to Arizona. Despite cutting spending and increasing tax revenue, many of these states have continued to experience major shortfalls. Projected budget deficits for California, New York and Illinois remain among the highest in the country.
Many of the states with the largest budget gaps, including half of the states that increased tax revenue the most, also experienced the sharpest declines in their housing markets. Seven of the top 10 states with the biggest deficits in 2010 also had among the worst declines in home values in the country from their prerecession peaks. California, Rhode Island and Illinois had among the 15 sharpest declines of all 50 states.
These are the six states where tax revenues are soaring.
> Increase in personal income tax: none
> Expenditure per capita (2008): $6,800 (3rd highest)
> 2009 budget shortfall: 12.2% (18th highest)
> Home price decline from peak: 20.3% (16th largest)
> Increase in personal income tax: more than 5%
> Expenditure per capita (2008): $4,196 (25th lowest)
> 2009 budget shortfall: 36.7% (2nd highest)
> Home price decline from peak: 46.7% (3rd largest)