Second quarter state tax revenue increased slightly nationwide, but revenue from sales, fuel and property taxes fell from year ago levels.

The State University of New York’s Rockefeller Institute of Government says cities and states across the nation face spending cuts as tax revenues continue to decline in the weakening economy.

In New York City, Mayor Michael Bloomberg recently ordered further budget cuts, noting there is “no end in sight to the turmoil on Wall Street.” Bloomberg ordered all city agencies to trim spending by 2.5% for the current fiscal year and 5% or more next year. Bloomberg said a planned 7% cut in property taxes planned for this year may have to be abandoned.

Total tax revenue for the states increased 3.6% in the second quarter compared with the same period a year ago. However, adjusted for inflation, revenue increased only 1.6%.

The Rockefeller Institute of Government says fuel tax revenue in the second quarter fell 2.1% from a year ago. This was the sixth quarter in which fuel tax revenue has declined year-over-year. Weakening demand and a stronger dollar are driving the price of oil down. A barrel of oil recently fetched $90.76 on the New York Mercantile Exchange, down about 38.4% from the high of $147.27 in July.

Nationwide, property tax revenue declined 0.1% and sales tax revenue declined 1.4% compared with the second quarter of 2007. Sales tax revenues fell in 28 states.

Corporate income tax revenue declined 8.3% from the second quarter in 2007, the fourth straight drop in corporate income tax revenue.

“We are all going to feel some of the pain because the money that Wall Street makes and spends affects just about everyone,” Bloomberg said