States Aren't As Broke As They Thought

In the past day, California, New Jersey and Michigan have all said they're collecting more tax money than they expected.

This fits with a broader trend. Twenty three states are on track to bring in more income-tax revenues than predicted, according to a recent report from the National Conference of State Legislatures. Only three states are bringing in less than predicted.

Many states rely heavily on taxing capital gains — profits from the sale of investments such as stocks. As a result, state tax revenues rise and fall with the stock market. And the stock market is rising.

California said it will bring in an extra $6.6 billion through June of next year; Jersey's predicting nearly $1 billion in extra revenue. The extra money in both states is coming largely from capital gains. Michigan's looking at a bump of several hundred million dollars, driven largely by gains in employment.

For those states, like others around the country, the fiscal picture is getting better. But it's still pretty grim.

Dozens of states are still facing budget deficits. And tax revenues in 47 of the 50 states still haven't returned to their pre-recession peak.