Temperatures and tensions are high right now across the country as Congress debates its next pandemic response and states continue to sweat through difficult decisions. Nevada lawmakers, for example, just wrapped up a special session during which they came within one vote of a proposed tax increase but ultimately chose to balance their shortfall through only funding cuts. But advocates in many states, including California, New Jersey, New York, and Rhode Island are trying to light a fire under lawmakers to encourage them to enact progressive tax increases on their wealthiest households.

With tax day finally coming at the federal level and in many states this week, policymakers in Nevada and New Jersey began to talk about revenue solutions to their revenue shortfalls, even if they fell well short of wholeheartedly backing needed reforms. Like their counterparts in most states, they remain primarily focused on temporary solutions to their short-term emergencies. Still, advocates in these and other states continue to push for more fundamental fixes to their inadequate and upside-down tax codes, including a new campaign for better tax policy in Massachusetts and efforts to rein in tax subsidies and loopholes in Ohio and elsewhere.

Local leaders in the District of Columbia and Seattle, Washington, approved progressive tax changes to raise needed funding this week for priorities such as coronavirus relief, affordable housing, and mental health. Arizona advocates submitted signatures to place a high-income surcharge on the ballot for November. And as a number of states made decisions on how to use federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funds, North Carolina decoupled from costly business tax cuts contained in the act and Nebraska started discussing doing the same.

As ITEP analyst Kamolika Das wrote today, July 1 is typically the beginning of state fiscal years and “a point when one can take a step back and reflect on the wins and disappointments of the past state legislative sessions.” Not so in 2020, she writes, as uncertainty surrounding the virus, state revenues, and potential federal action give state lawmakers no such time to relax and reflect. Although most recent state actions, such as those covered below in California, Mississippi, and West Virginia, have focused on funding cuts and temporary measures to bring budgets into short-term balance, the need for revenue solutions to the revenue crisis “has become increasingly clear.”

State policymakers this week took a variety of approaches to their fiscal situations amid the COVID-19 pandemic. Tennessee lawmakers chose to balance their budget through $1.5 billion in cuts to public services, but not before adding to those cuts by going forward with planned tax cuts. California legislators also passed a budget but relied on a number of temporary measures and delays to do so. Their counterparts in Massachusetts, New Jersey, and Rhode Island opted for interim budgets to tide them over for a few months while they continue to look for lasting solutions. Meanwhile, many states are debating whether to couple to tax cuts in the federal response bills and how to use the aid approved so far, while making the case to Congress that major additional aid is needed.

Despite uncertainty all around the nation, a few states passed budgets this week and many more are negotiating to enact theirs before fiscal years close at the end of June. Colorado notably pared back some of its own tax breaks and limited the potential damage on its budget from new federal breaks. California also passed a budget but few in the state actually think the dealing is done. Iowa quietly enacted its budget too, though advocates in the state are making noise about non-fiscal bills that were added late in the game.

As calls to defund the police demonstrate, state and local decisions about funding priorities and how those funds are raised are deeply embedded in racial justice issues. Tax justice is also a key component in advancing racial justice. Racial wealth disparities are the result of countless historic inequities and tax policy choices are certainly among […]