While Maryland experiences a tax revenue write-down, it may be holding its own compared with other states: state and local government tax revenues weakened significantly across the U.S. during the first quarter of 2016, continuing a slowdown which began in the middle of 2015, according to the State University of New York, Rockefeller Institute of Government’s State Revenue Report. Revenues actually declined in the second quarter of 2016, according to preliminary data. Much of the slowdown appears attributable to declines in oil prices (particularly for oil-producing states) and the weak stock market. Total state tax revenue from all sources grew by 1.6 percent in the first quarter of 2016 and preliminary data indicates actual declines of 2.1 percent for the second quarter.
States nationwide are experiencing a sharp slowdown in the income tax, caused by slow growth in wage withholdings and declines in payments associated with nonwage income. Weak sales tax revenues demonstrate weak growth in taxable consumption: year-over-year growth in nominal consumption of durable goods slowed from 5.9 percent in the first quarter of 2015 to 2.7 percent in the first and second quarters of 2016. Nondurable goods consumption saw declines in 2015, with growth resuming this year.
Corporate income taxes are declining most sharply nationally at 4.5 percent in first quarter 2016, and preliminary data indicates declines of 9.2 percent for second quarter 2016.
Local governments have generally fared better, with total tax revenues growing by 4.4 percent. This is attributable to their general dependency on property taxes, which are generally stable and accelerated slightly in the first quarter by 5.7 percent, compared to a 3.2 percent average increase over the prior four quarters.