A new report from the Nelson A. Rockefeller Institute of Government warns that state tax collections could fall even further this year, making a bad fiscal situation even worse for much of the nation. The trend could hurt spending on higher education, among other state budget lines.

“Superficially, tax collections appeared to be doing OK — certainly not the leading edge of a fiscal crisis — but below the surface, great trouble is brewing,” said Donald Boyd, a senior fellow at the Albany-based research arm of the State University of New York. “Some states have already made midyear budget cuts, and more widespread cuts are virtually certain as revenues deteriorate further,” Mr. Boyd said in a news release accompanying the report.

While state income-tax collections in the second quarter of 2008 were 6.6 percent higher than they were for the same period in 2007, state sales taxes dropped 1.4 percent, corporate income taxes fell 8.3 percent, and motor-fuel taxes declined by 3.4 percent, according to the institute’s analysis.

At the same time, state and local governments are suffering more from inflation than the overall economy is, the report says, with the costs of goods and services jumping 6.6 percent in the second quarter.

So far, Arizona, California, Florida, Michigan, and Rhode Island have suffered the most from the nation’s financial woes. The Wall Street meltdown will spread the fiscal problems to Connecticut, New Jersey, and New York “due to those states’ reliance on the financial-services industries and steeply progressive income taxes that extract much of their revenue from individuals with high wages and investment income,” the study found.

“The last fiscal crisis for states, which occurred in the midst of a mild recession, was dubbed a perfect storm,” said Mr. Boyd in the news release. “This one could be more perfect.” —Eric Kelderman