State Rundown 11/6: State Voters Show Readiness to Fix Broken Tax Codes

Many of yesterday’s Election Day votes came down to questions of whether or not to improve on upside-down and often inadequate state and local tax systems. The status quo was maintained in Colorado, where voters failed to approve a proposition to allow the state to invest tax revenue in education and other needs, and in Texas, where a constitutional amendment was approved to prohibit the state from creating an income tax. But voters supported important reforms in other states by approving needed funding for schools in Idaho, opting to legalize and tax recreational cannabis in California. And for more on why and how we can make tax policy more fair, find the link below to today’s live-streamed Tax the Rich conference!

— MEG WIEHE, ITEP Deputy Director, @megwiehe

Major State Tax Proposals and Developments

• The proposal to allow COLORADO to keep surplus funds to invest in K-12 education, transportation, and higher education rather than give a TABOR refund (Prop CC) lost at the polls yesterday. Prop DD—which would legalize and tax sports betting—has pulled ahead, appearing to have won by a very slight margin. — LISA CHRISTENSEN GEE
• Voters in TEXAS approved Proposition 4, amending their state constitutional to prohibit an income tax. Enactment of an income tax in the future will now require super-majority support in both chambers of the legislature as well as majority approval by Texas voters. — LISA CHRISTENSEN GEE
• Two more cities in CALIFORNIA have legalized and will be taxing recreational cannabis with voters approving Measure E in Brisbane and Measure A in Stanton.  — LISA CHRISTENSEN GEE

State Roundup

• ALABAMA lawmakers have a good problem on their hands: now that the state’s gas tax has finally been updated and the 6-cent increase is delivering needed revenue, they must decide on the most effective ways to repair the state’s dilapidated infrastructure.
• The good news is that taxpayers in IDAHO continue to support supplemental levies to ensure their local schools have needed resources, setting a new record this year at $241 million. The bad news is that these supplemental levies are needed due to the failure of state lawmakers to adequately carry their share of funding for K-12 education, which results in major disparities in educational equity and pressed local budgets.
• It’s not easy coming back from a failed tax experiment. While KANSAS has had some more cash on hand post-rolling back many of former-Gov. Sam Brownback’s tax cuts, the state’s finances certainly aren’t “in the clear” as it continues to recover from past cuts, address unmet needs, and be responsive to a looming recession.
• NEBRASKA Revenue Committee members are getting close to a property tax reduction plan they’ll attempt to pass in the 2020 session, hoping to find the “perfect storm” that will lower property taxes, stave off a ballot initiative to create an unfunded income tax credit for 35 percent of property taxes, and somehow raise enough funds to do so while appeasing anti-tax Gov. Pete Ricketts.
• NEW JERSEY state and local jurisdictions will be providing a total of more than $1 billion in subsidies to build a shopping mall.
• Lawmakers in NORTH CAROLINA adjourned, leaving an uncertain path for a few major pieces of legislation. Action on Medicaid expansion and teachers’ pay, for instance, remain unresolved. However, a standard deduction increase and a franchise tax cut, which would cost the state roughly $1 billion over 5 years, head to Gov. Roy Cooper.
• In a frantic race to the bottom, OHIO welcomes a Google data center at the estimated cost of $43.5 million in tax breaks. The new facility is expected to generate about 50 jobs in the next few years. Lawmakers continue down this path with legislation that would create a new tax credit for large development projects in the state.
• In MASSACHUSETTS, lawmakers are considering a gas tax increase and weighing that against the idea of congestion pricing. Business groups in the state are pushing for legislation to raise revenue needed for transportation needs.
• SOUTH DAKOTA advocates have gathered and submitted enough signatures to give voters the opportunity in November 2020 to legalize and tax medical and/or recreational cannabis.
• Tax reform efforts in UTAH are picking up as the Tax Restructuring and Equalization Task Force passed a motion to draft legislation based on its co-chairs’ proposals for tax reform. The package of proposed reforms would make Utah’s tax structure less regressive by providing targeted relief to lower-income families through a grocery sales tax credit and adoption of a state EITC, but it would also cut public revenues by $79 million while rewarding the largest tax cuts to the state’s wealthiest families.
• The question of whether Seattle can enact an income tax on high-income households will go to WASHINGTON’s Supreme Court. One local councilmember already has a backup plan to raise progressive revenue for the city: tax unearned income (from stock dividends, interest, and capital gains).

What We’re Reading

• The group Patriotic Millionaires is holding a Tax The Rich: A Conversation on Why & How conference, livestreamed TODAY at 5pm Eastern.
• Route Fifty alerts us that farm debt and bankruptcies are on the rise in the majority of states.
• NEW MEXICO’s cabinet secretary from the Taxation and Revenue Department weighs-in on the conversation about the impact of 2019 state tax reforms to improve fairness as well as persisting needs that the newly appointed Tax Policy Advisory Committee aim to address.
• If you make a solid middle-class income, the taxes you pay aren’t going to vary much whether you live in California or Texas, a Mother Jones blogger illustrates.

If you like what you are seeing in the Rundown (or even if you don’t) please send any feedback or tips for future posts to Meg Wiehe at [email protected]. Click here to sign up to receive the Rundown via email.

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