U.S. Conference of Mayors Report Highlights Declining Tax Revenues and Slowing Growth
Foreclosure Crisis Forecast to Squeeze State Budgets
The U.S. Conference of Mayors has released an economic impact report which forecasts sharp gross domestic product losses as a result of the ongoing foreclosure crisis. Specifically, the report projects economic output losses for 361 metro areas equaling $166 billion, and the mortgage crisis will result in 524,000 fewer jobs being created and $6.6 billion in lost tax revenues. The report stops short of forecasting a recession, but predicts that economic growth will dip below 2% in a number of metropolitan areas.
This has the potential to affect a number of states as falling tax revenues lead to tighter budgets. In recent economic downturns, a number of states turned to tax increases, including taxes on advertising, to raise revenue. With the grim outlook for 2008, there is a high probability that advertising will again be on the list of potential targets.
ANA has been successful in defeating nearly all of these state advertising tax proposals. Of course, we will be on guard for such proposals as state legislatures return in January for their 2008 sessions. It has the potential to be a very challenging year if these forecasts hold true.