Tax revenue in 42 states off in quarter

NEW YORK - State tax collections stagnated in the third quarter for the first time in six years, as incomes and retail sales dropped, according to a preliminary report released yesterday.

Tax revenue from 42 states rose 0.1 percent in the July-to-September quarter compared with the same quarter a year earlier, according to the report from the State University of New York's Rockefeller Institute of Government. After adjusting for inflation, real tax revenue declined 2.6 percent in those states compared with the prior year's quarter, dropping in 31 of 42 states. Eight states' tax data were incomplete and not included in the report.

Income and sales taxes are the two largest sources of tax revenue for states. Both suffered during the quarter.

With the budget picture bleak nationwide, dozens of states have cut payrolls and enacted other spending cuts to address revenue shortfalls.

Sales-tax revenue fell 0.7 percent compared with the same quarter a year earlier.

Income taxes for the quarter grew 1.5 percent, compared with the same quarter a year earlier, slower than last year.