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How much money the housing crisis cost state and local governments

States have been struggling over the last few years.

Those financial woes coincided with the bursting housing bubble that helped bring down the overall U.S. economy.

House_money2a So you might be tempted to blame most of the states' fiscal troubles on the housing sector.

Don't, say some folks at the Federal Reserve Board in Washington, D.C.

A recent study by the Fed's Research and Statistics and Monetary Affairs divisions found that "the recent contraction in state and local tax revenues has been driven primarily by the general economic recession, rather than the housing market per-se."

The reason has to do with four other revenue streams that states and localities collect -- home sales transfer taxes, sales taxes via spending on construction materials, sales taxes via impact on consumption of lower housing wealth and personal income tax -- as well as with the way real property taxes are calculated and collected.

Find out more on the Fed report entitled The Housing Crisis and State and Local Government Tax Revenue: Five Channels in my Bankrate Taxes Blog post Did housing crisis hurt states?

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