WASHINGTON (Reuters) - Tax revenues of U.S. state and local governments rose in the third quarter, the U.S. Census said on Tuesday, marking the eighth straight quarter of growth and heralding the promise of continued economic recovery in areas where revenues collapsed during the recent recession. Revenues totaled $292 billion, rising 4.1 percent over the third quarter of 2010 to their highest third quarter level on record.
They were primarily bolstered by a 10.9 percent surge in individual income taxes, which reached $66.7 billion in the third quarter.
"State and local finances are gradually improving, but neither states nor localities are out of the woods yet," said Gregory Daco, principal U.S. Economist at IHS Global Insight, in a note on the data.
"The current fiscal year will be one of many challenges. State and local governments will have to manage still-high demand for public services while relying less on federal assistance, and without the boost to revenues from temporary tax increases and fees," he added.
Most states begin their fiscal year in July.
State tax revenues alone rose 5.6 percent, to $178.2 billion, from the third quarter of 2010.