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Alaska leads state tax revenue volatility list; South Dakota is the most stable

Part of the reason that most states are struggling with balancing their budgets is that their revenue has been up and down, not just in this fiscal year, but over the past decade.

Just how big of a tax money roller coaster ride has it been? The Tax Foundation has computed the each state's volatility score, with the figure expressed as a percentage of Alaska's score because it is most volatile state.

And no, Sarah Palin had nothing to do with the Last Frontier's ranking. C'mon, you all were making jokes in your head anyway!

Alaska's volatility is high because the state depends heavily on oil revenues, which are more unpredictable than more conventional sources of state income.

The most volatile states when it comes to revenue, (shown in blue in the map below; click on the image for a larger view), counting from 10th to first a la David Letterman, are:

10. Connecticut
 9.  Louisiana
 8.  Vermont
 7.  Nevada
 6.  New Mexico
 5.  California
 4.  Arizona
 3.  Florida
 2.  North Dakota
 1.  Alaska

State revenue volatility 2000-2009 tax foundation

And at the other end of the scale, the most stable states (in red in the map above, click on the image for a larger view), again counting from 41 to 50 a la a much longer Letterman list, are:

41.  Maryland
42.  Wisconsin
43.  Mississippi
44.  West Virginia
45.  Missouri
46.  New Hampshire
47.  Indiana
48.  Kentucky
49.  Michigan
50.  South Dakota

Wide income variations: While this latest look at the fluctuations in state revenue is for volatility is for the first decade of the 21st century, Tax Foundation researchers previously looked as one year, 2008 to 2009, to find out what accounted for extremes in state revenue collection.

And that one-year study also included an examination of year-to-year changes in state tax revenue from 2000 to 2009.

During that period, overall tax collections were up in every year except 2002, 2008 and 2009, which had the largest drop in revenue. The significant 2009 drop, however, is almost exactly matched by the earlier years of major increases.

The table below (click it or here for a larger view) shows the ups and downs of the various types of state and local tax collections.

Changes in state tax revenue 2000-09 Tax Foundation

Over the last decade, says the Tax Foundation, when you adjust for inflation the states' tax revenues have increased by 6.1 percent. When controlling for population, tax revenues are down only about one percent.

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