WASHINGTON (Reuters) – Jobless rates in all but two U.S. states dropped in April from a year before, and were sharply lower in battleground states that could decide November’s presidential contest.

Sharp drops in unemployment rates were registered in Florida, Nevada and Ohio, while joblessness in Michigan, a key state in the election four years ago, hit its lowest since 2008.

According to Labor Department data released on Friday, New York’s rate rose to 8.5 percent, marking the third month in a row in which New York was the sole state with an unemployment rate higher than the year before. Rhode Island’s was the same as in April 2011, 11.2 percent.

Compared with March, jobless rates fell in 37 states and the District of Columbia, rose in five, and were unchanged in eight states. North Dakota again notched the lowest rate, 3 percent.

Ahead of an election often regarded a referendum on President Barack Obama’s job creation efforts, the country is closely watching the economic performance of so-called “swing states.”

In the unique U.S. electoral system in which states cast votes for President, a candidate must collect 270 electoral votes to win. Ten states in particular are considered toss-ups in this election, representing 130 electoral votes.

In swing state Ohio, the jobless rate in April 2012 was 7.4 percent, more than a full percentage point below the 8.8 percent of April 2011.

By Lisa Lambert and Karen Pierog

(Reuters) – Personal income tax collections in states in April might have grown an average of more than 7 percent, but for some the increase may not be enough to ease budget crises.

Reuters found that the average increase of personal income tax collections in April 2012 from April 2011 for the 20 states for which data is available was 7.3 percent.

A handful of states that were lulled into a false sense of security from last year’s surge in collections, when the average April increase was 18.5 percent, are now wondering if revenue is growing enough to cover their spending plans.

In New Jersey, income tax collections, the state’s largest revenue source, slipped 1.2 percent from April last year to $1.75 billion, according to the governor’s office. That was also 2.8 percent below forecast. The Office of Legislative Services warned the decline “further eroded the overall revenue situation with less than three months remaining in fiscal 2012.”

Most states end fiscal 2012 on June 30 and all except Vermont must have balanced budgets. During the Great Recession, they were often caught by surprise with sudden declines in taxes that forced them to make emergency spending cuts and temporarily hike taxes. Income taxes, which make up about one-third of state tax collections, were particularly hard hit as unemployment rates climbed.

April is typically a big revenue month for the 41 states with personal income taxes: wage earners face a mid-month deadline to report and pay tax liabilities incurred in the previous year. And in April 2011, states saw a sharp reversal in fortune, with some reporting growth in individual tax collections of more than 25 percent from the year before.

SAN FRANCISCO/WASHINGTON (Reuters) – Public employees in San Jose, California’s third-largest city, are gearing up for a marathon court battle if local voters approve a measure in June to overhaul the city’s pension system.

“It’s just a straight-up war with us,” said Jim Unland, board president of the San Jose Police Officers’ Association, the union representing the city’s police force. ” Once the thing passes, we’ll be in court for years.”

San Jose is part of a broader legal and political struggle shaping up across the United States as cash-strapped state and local governments, Republican- and Democratic-led, try to rein in rising pension costs that are gobbling up big chunks of their budgets.

The stakes are high. Local and state officials have to make tough choices between using their shrinking or flat revenues for local services such as police, firefighters and schools, or making up for falling financial returns on pension investments.

The ballot measure being decided by San Jose’s voters would require city employees to pay more toward their pensions or accept a reduced retirement plan.

“There is a strong case for reform in many places,” said Keith Brainard, research director of the National Association of State Retirement Administrators (NASRA), many of whose members are struggling to get public pension funds in balance.

“Since 2009, more than 40 states have made reforms to their pension plans and … in the few remaining others they are working on them,” Brainard added.

SAN FRANCISCO/WASHINGTON, May 8 (Reuters) – Public employees in San Jose, California’s third-largest city, are gearing up for a marathon court battle if local voters approve a measure in June to overhaul the city’s pension system.

“It’s just a straight-up war with us,” said Jim Unland, board president of the San Jose Police Officers’ Association, the union representing the city’s police force. ” Once the thing passes, we’ll be in court for years.”

San Jose is part of a broader legal and political struggle shaping up across the United States as cash-strapped state and local governments, Republican- and Democratic-led, try to rein in rising pension costs that are gobbling up big chunks of their budgets.

The stakes are high. Local and state officials have to make tough choices between using their shrinking or flat revenues for local services such as police, firefighters and schools, or making up for falling financial returns on pension investments.

The ballot measure being decided by San Jose’s voters would require city employees to pay more toward their pensions or accept a reduced retirement plan.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Related graphic on funding: r.reuters.com/wyp29r

May 3 (Reuters) – From the hearing rooms of the U.S. Congress to the halls of state legislatures across the country, a cry is rising for more states to be able to tax transactions over the Internet as a fix for their budget problems.

On Thursday, the credit rating agency Fitch Ratings put a damper on the promises of the “Amazon Tax,” saying that additional revenues “would be of limited scope and are unlikely to affect a state or local government’s overall budget picture.”

As the housing market downturn, financial crisis and recession came together to create a collapse in revenue not seen in decades, many states saw promise in taxing Web sales as a way of balancing budgets. Smartphones have made buying on-line even easier and local retailers are worried about losing business, and having to cut jobs.

According to Fitch, the loss for all U.S. states under the current practice of only collecting sales taxes where companies have a physical presences is about $11 billion.

The impact is smaller for local governments because they primarily rely on property taxes for revenues.

“The Maryland number is $300 million,” Maryland Senator Ben Cardin said about how much his state loses in sales taxes at a hearing last week. “Interesting number because the governor is talking … about bringing the legislature back for a special session in May because of a $300 million (budget) gap and is looking at increasing a lot of taxes in our state.”

State revenues have begun improving recently. Still, Kim Rueben, senior fellow at the Urban-Brookings Tax Policy Center, said Congress “could help stop the erosion of sales tax receipts” by allowing state and local governments to collect taxes on Internet and mail-order sales.

By Lisa Lambert

(Reuters) – U.S. states’ tax revenues have improved greatly, but they remain below the peaks reached before the recession, a report showed on Friday.

The U.S. Census said on Thursday that tax collections rose in all 50 states in fiscal 2011, which for most ended on June 30, 2011. That was a strong reversal from previous years, when the financial crisis, housing downturn and recession combined to cause a revenue collapse in virtually every state.

But the Rockefeller Institute of Government noted on Friday that overall tax collections were still 2.1 percent below peak levels, and personal income tax collections were still 6.8 percent below the high reached in fiscal 2008.

Although the recession began in late 2007, the effects on state revenue were delayed until the end of 2008. But those effects were dramatic, with revenues dropping from peak levels for five straight quarters to lows not seen in more than 20 years.

Because all states except Vermont must balance their budgets, they slashed spending, hiked taxes, borrowed and turned to the federal government for help. States often had to call emergency budget meetings to make additional adjustments, caught off guard by the rapid decline in revenue.

The Rockefeller report noted that in fiscal 2010, total tax collections were down from the peaks by a much steeper 10 percent and in fiscal 2009 by 8.4 percent.

By Lisa Lambert

(Reuters) – Since 2009, the city of Chesapeake, tucked up against the Great Dismal Swamp in southern Virginia, has cut its workforce twice. This summer, nearly three years after the recession ended, the city of 222,209 has plans for a third round of layoffs.

“We’re not seeing the recovery we want to see,” said Budget Director Steven Jenkins, who is hoping many of the 20 people will move into other jobs.

The city’s revenues are still feeling the concussions from the housing market downturn, which started in 2006, even as overall growth in the United States has improved.

“We are heavily reliant on the residential real estate market,” said Jenkins. In a recent assessment the average property value dropped 3.7 percent, which hits property taxes, and hurts government budgets. “The reassessment we just had was as big as any we’ve seen since the recession started.”

While Friday’s report of weak growth in U.S. March payrolls raised concerns about the pace of private-sector hiring, local government jobs remain a drag on the recovery, one that is not anticipated to end soon.

State and local governments for a time were able to shield public safety and education workforces from harmful cuts as the recession deepened. The 2009 federal stimulus fund helped offset lost tax revenue, but that money is gone.

April 8 (Reuters) – Since 2009, the city of Chesapeake, tucked up against the Great Dismal Swamp in southern Virginia, has cut its workforce twice. This summer, nearly three years after the recession ended, the city of 222,209 has plans for a third round of layoffs.

“We’re not seeing the recovery we want to see,” said Budget Director Steven Jenkins, who is hoping many of the 20 people will move into other jobs.

The city’s revenues are still feeling the concussions from the housing market downturn, which started in 2006, even as overall growth in the United States has improved.

“We are heavily reliant on the residential real estate market,” said Jenkins. In a recent assessment the average property value dropped 3.7 percent, which hits property taxes, and hurts government budgets. “The reassessment we just had was as big as any we’ve seen since the recession started.”

While Friday’s report of weak growth in U.S. March payrolls raised concerns about the pace of private-sector hiring, local government jobs remain a drag on the recovery, one that is not anticipated to end soon.

State and local governments for a time were able to shield public safety and education workforces from harmful cuts as the recession deepened. The 2009 federal stimulus fund helped offset lost tax revenue, but that money is gone.

Now, many cities and counties nationwide are facing the same dilemma as Chesapeake. Squeezed by depressed property tax revenues and cuts in state aid, they are chipping away at their workforces.

By Lisa Lambert

(Reuters) – Unemployment rates dropped in almost all U.S. states in February, with many of those considered up for grabs in the 2012 presidential election registering the biggest improvement, data released on Friday showed.

The Labor Department said that in 29 states the rates dropped from the month before and in 13 states there was no movement.

Compared with a year earlier, 49 out of 50 states and the District of Columbia had lower jobless rates. The rate rose only in New York, to 8.5 percent from 8.1 percent in February 2011.

In about 10 states the fight between President Barack Obama and the eventual Republican nominee is expected to be the most fierce, during an election widely considered a referendum on Obama’s job creation efforts.

The 10 swing states represent 130 electoral votes. A candidate must collect 270 of the votes to win.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

March 30 (Reuters) – Unemployment rates dropped in almost all U.S. states in February, with many of those considered up for grabs in the 2012 presidential election registering the biggest improvement, data released on Friday showed.

The Labor Department said that in 29 states the rates dropped from the month before and in 13 states there was no movement.

Compared with a year earlier, 49 out of 50 states and the District of Columbia had lower jobless rates. The rate rose only in New York, to 8.5 percent from 8.1 percent in February 2011.

In about 10 states the fight between President Barack Obama and the eventual Republican nominee is expected to be the most fierce, during an election widely considered a referendum on Obama’s job creation efforts.

The 10 swing states represent 130 electoral votes. A candidate must collect 270 of the votes to win.

Coming into office at the height of the financial crisis, Obama quickly bailed out banks and automobile companies and enacted a package of spending and tax measures intended to create thousands of jobs.

Only recently has the national unemployment rate edged down, however, reaching a three-year low of 8.3 percent in February and January. The Labor Department will release data for March on April 6.