State Rundown 10/10: More Special Sessions, More Proposed Tax Cuts

This week several states are getting an early start at writing new tax policy in special sessions. In West Virginia, the legislature has come to an agreement with Gov. Justice on an additional tax cut—on top of already-planned cuts. The 2 percent cut will cost the state $49 million a year and come from spending on healthcare. Meanwhile, Louisiana may soon follow suit as Gov. Landry has called a special session.

Meanwhile, one Florida county may be on the hook for millions in refunds to Disney for taxes that a court says were improperly collected. Elsewhere, tax policy debates continue as policymakers prepare for legislative sessions next year.

Major State Tax Proposals and Developments

• LOUISIANA Gov. Jeff Landry plans to call the legislature into a special session next month to change the graduated personal income tax to a flat 3 percent rate, eliminate the corporate franchise tax, and lower the corporate income tax rate to 3.5 percent. The plan to replace lost revenue includes broadening the state sales tax base, reinstating the sales tax rate of 4.45 percent (which was set to drop to 4 percent in June of 2025), and ridding the state of certain corporate tax exemptions. – NEVA BUTKUS
• The WEST VIRGINIA legislature has agreed to a 2 percent reduction in state personal income tax rates at a cost of $46 million. State senators previously expressed skepticism that the cut was affordable but have now decided to take the funds out of the state’s Department of Human Services. The Senate has passed the cut, and the House will likely approve it. – ELI BYERLY-DUKE

State Roundup

• A group of business representatives in Anchorage, ALASKA, proposed adopting a new 3 percent sales tax to offset property taxes. If the Anchorage Assembly approves the proposal, residents will vote on it next April.
• DELAWARE Gov. John Carney signed legislation establishing a short-term rental tax of 4.5 percent.
• Orange County, FLORIDA, may be forced to refund Disney at least $2 million for improper assessments of Disney World.
• Officials in Cook County, ILLINOIS, are considering a circuit breaker tax credit to assist low-income households with unsustainably high property tax bills.
• Voters in ILLINOIS will have the chance to approve a non-binding resolution this November that would urge the state legislature to enact a 3 percent surcharge on income over $1 million, which would be used to lower property taxes across the state.
• Republicans in MISSISSIPPI are divided on ridding the state of its personal income tax.
• The NEBRASKA Auditor’s investigations into overuse and misuse of Tax Increment Financing (TIF) in the state have already caused one small city to return more than $600,000 that had been “rolled over” from TIF projects to other purposes back to the public funds they had originally been diverted from.
• A lawsuit challenging NEW YORK City’s property tax system as inequitable and discriminatory can proceed, a state court has ruled. Local leaders have been discussing property tax reform for years, and this case that was first brought forward seven years ago could force their hands.

What We’re Reading

• The Colorado Sun breaks down the state’s proposition KK, which would levy an excise tax on firearms. The state estimates it would raise $39 million on the sale of guns and ammunition. Most of the money would be spent on support for victims of crime.
• Route Fifty has a helpful article this week arguing that the rise of electric and hybrid vehicles constitutes a fundamental disruption of the traditional gas-tax-based transportation funding model and laying out an initial framework for the deep rethinking of that model that is needed.
• Two New York City councilmembers penned an op-ed in Next City explaining their efforts this year to reform property tax lien sales to better protect both homeowners and renters from a system of “effectively privatized property debt collection” that was disproportionately displacing homeowners and renters of color, of old age, with disabilities, and on fixed incomes.

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