Government relations firm MultiState Associates recently published its tax revenue volatility report, taking a wider view of tax policy by looking at state revenue volatility – measured by total revenue cuts and increases as a result of policy choices – from 2011 to 2020.
MultiState used this data to create volatility rankings and found that the five most volatile states are California, Illinois, Ohio, New York and Virginia. Here’s why:
California had the largest total revenue increases of any state, but also the largest tax cuts. In fact, the ratio of cuts to raises was close to 1:1.
Illinois, by contrast, topped the list because it had several sessions where it aggressively increased revenues from its corporate and personal income taxes.
Ohio’s ranking came from the fact that lawmakers there, more than any other state, worked consistently to cut taxes, with a particular focus on the personal income tax.
New York was a study in partisanship. When the Independent Democratic Caucus established de facto divided government in Albany, the legislature only passed tax cuts. After the IDC dissolved, lawmakers focused their actions almost exclusively on raising revenues.
Virginia showed what a difference a single session can make. For most of the decade, the commonwealth’s revenue policy tacked a middle of the road course. However, in 2013, they enacted a transportation bill so large that it put them at No. 5 on MultiState’s volatility list.
