State Rundown 10/25: Marijuana Taxes a Bright Spot amid Underperforming State Revenues
October 25, 2017
.ITEP Staff
October 25, 2017
This week in state tax news saw Alaska begin yet another special session, Louisiana lawmakers holding meetings to begin preparing for the state’s looming (self-imposed) fiscal cliff, and Alabama policymakers beginning a study of school finance (in)adequacy and (in)equity. Meanwhile, state revenue performance is poor well into 2017 in many states, though Montana, Nevada, and Oregon are all enjoying modest but welcome revenue bumps from legalized marijuana.
— Meg Wiehe, ITEP Deputy Director, @megwiehe
- The Alaska legislature started its fourth special session earlier this week, but the governor’s proposed payroll tax plan isn’t moving in either chamber.
- Talk to me: Lawmakers in Louisiana are engaging in a lot of meetings and talks about the state’s fiscal cliff. A summary of the meetings is expected to be released by Gov. Bel Edwards in November, but concrete proposals for tax increases and/or deep spending cuts may still be a long way off.
- A study commences this week to take a good hard look at school funding in Alabama, where the state is spending less on K-12 education than it did in 2006 (after adjusting for inflation) and major inequities in school funding persist as well.
- Once considered to be a state revenue cash cow, casinos are now being considered for a nearly 50 percent tax cut in Delaware as the spread of casino gambling has eroded their profitability.
- Iowa‘s revenue projection for the year has been reduced again, likely forcing still more funding cuts to keep the budget in balance.
- The ripple effects of low crop prices are compromising revenues from a sales tax increase South Dakota legislators enacted in 2016 to fund teacher pay raises.
- One state senator remains committed to eliminating the personal income tax in Michigan. While he has yet to release the details of his plan, it would include a regressive one penny increase to the general sales tax. A 2016 ITEP analysis found the state would need to more than double its general sales tax rate from 6% to 12.24% to offset the $10 billion in lost revenue from the personal income tax and that such a tax shift would result in substantial tax cuts for the top 60% of taxpayers and substantial increases for the poorest 40%.
- Also in Michigan, things are looking up for local governments following the State Supreme Court’s upholding of a 2016 appeals court ruling that challenges the “dark store method” many big box retailers have relied on when computing the assessed value of their properties.
- In pot news, Montana has collected its first quarter of tax receipts on medical marijuana and schools in Oregon are expecting a little extra cash to work with due to the first distribution of marijuana tax revenues (though no panacea). Nevada revenues from recently legalized marijuana sales also continue to exceed expectations, bringing in nearly $5 million in August alone.
- The $3 billion tax incentive package for Foxconn has been delayed in Wisconsin until November by the state’s Economic Development Corp. due to—surprise—a contractual provision that would have “not protected taxpayers whatsoever.”
- Taking the tax temperature: A new poll shows that most Hoosiers approve of the recent Indiana gas tax increases to fund transportation projects; and the Utah Citizen’s Council (a panel of politically moderate, accomplished retirees with diverse public policy expertise) has become the latest group to support the tax increases proposed by the Our Schools Now initiative to increase investment in public education.
What We’re Reading…
- Read more this week about “lessons learned” from the Kansas tax lab experiment and implications for federal tax reform from the Center on Budget and Policy Priorities and NBC News.
- A new study published in the Journal of Health Economics is likely to be useful in soda tax debates across the country. The key finding? Taxing sugar leads to significant decreases in consumption.
- Amazon’s request for proposals from cities interested in hosting its new “HQ2” headquarters garnered many pitches featuring many different gimmicks, from massive tax subsidies to 5-star reviews of Amazon products. MarketWatch provides some highlights.
- Route Fifty notes that weak state tax revenue issues are continuing well into 2017.
- S. Senators approved an amendment to the budget last week that signaled their willingness to eliminate the federal income tax deduction for state and local taxes (“SALT” deduction). The Center on Budget and Policy Priorities has a helpful report showing how repeal of the SALT deduction is part of a larger plan to slash taxes on the wealthy while undermining support for progressive state and local taxes.
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