Tax collections for two major sources of revenue — sales taxes and personal income taxes — declined for the third consecutive quarter. Income tax was down by 27.5 percent, while sales tax was down by 9.5 percent.

Scott Pattison, executive director of the National Association of State Budget Officers is on record as say the states’ revenue situation is “close to unprecedented” and calling the circumstances “crazy” and “unbelievable.”

Even many of the states that lowered their expectations and set modest goals for their 2010 fiscal year tax income have fallen short of their target numbers.

According to the report, budget gaps have opened in at least 18 states since FY 2010 began. Most states have taken a variety of measures to balance their budgets, including across-the-board budget cuts, tax increases, tapping rainy day funds, and agency consolidations. The continued weakening of state tax revenues in the second half of 2009 will force states to take more drastic measures. v

How States are Coping

Back in the summer the National Governors Association Center for Best Practices (NGA Center) released a report (How States and Territories Fund Transportation: An Overview of Traditional and Nontraditional Strategies) which looked at ways states under financial pressure could get the biggest bang for the bucks they had.

Among the new or innovative transportation funding and financing approaches being used in one or more states are:

Grant Anticipation Revenue Vehicles (GARVEE bonds) —

financing instruments issued by a state whose principal and interest are repaid primarily by future federal-aid funds;

Private Activity Bonds (PABs) — financing instruments authorized for highway and intermodal transfer stations;