January 30, 2020
January 30, 2020
State tax and budget debates can turn on a dime sometimes, as in Utah this past week, where lawmakers unanimously repealed a tax package they had just approved in a special session last month. Delaware lawmakers are hoping to avoid the similarly abrupt end to their last effort to improve their Earned Income Tax Credit (EITC) by crafting a bill that Gov. John Carney will have no reason to unexpectedly veto as he did two years ago. But at other times, these debates just can’t change fast enough, as in New Hampshire and Virginia, where leaders are searching for revenue to address long-standing transportation needs, and in Hawaii, Nebraska, and North Carolina, where education funding issues remain painfully unresolved.
— MEG WIEHE, ITEP Deputy Director, @megwiehe
Major State Tax Proposals and Developments
- UTAH lawmakers acted fast at the beginning of the 2020 legislative session, unanimously repealing in its entirety the tax reform bill passed in special session in December. The legislative plans for repeal were announced shortly after it became apparent that organizers had collected more than enough signatures to place an appeal referendum on the November ballot. — LISA CHRISTENSEN GEE
- DELAWARE lawmakers will again consider improving their EITC, which is currently set to 20 percent of the federal credit but is unable to offset regressive sales and property taxes for many low-income families because it is not refundable. The bill would allow a choice between a 20 percent nonrefundable credit and a 4.5 percent refundable version, which should please Gov. John Carney, who vetoed a 2018 bill because it would have resulted in some recipients getting smaller credits. — DYLAN GRUNDMAN
Governors’ Budget Proposals and State of the State Speeches
- ILLINOIS Gov. J.B. Pritzker delivered his State of the State Address yesterday, emphasizing the importance of a fair tax structure to address the state’s pervasive budget deficit and identifying investments in early childhood education and ethics and lobbying reforms as among his top priorities.
- In his first budget as governor, KENTUCKY’s Gov. Andy Beshear proposed a relatively tight state budget with new revenue originating from regressive sources such as sports gambling, cigarette, tobacco and vaping taxes.
- WISCONSIN Gov. Tony Evers revealed plans for new commissions to tackle issues related to redistricting and tackling student loan debt in his 2020 State of the State Address. With a tax cut passed last year and a divided government, not a lot of tax action is expected during the 2020 legislative session.
- More addresses are scheduled this week in ALASKA, MICHIGAN, MISSISSIPPI, NORTH DAKOTA, and UTAH, and next week in CONNECTICUT, MARYLAND, NEW HAMPSHIRE, OKLAHOMA, and TENNESSEE.
- Assembly members in Anchorage, ALASKA, seeking to raise additional revenue, voted to send a 5 percent alcohol tax to the ballot. The proposal will require the approval of the majority of voters.
- The state of COLORADO has missed out on millions of dollars in state tax revenues due to lax enforcement of oil and gas reporting, a recent audit shows.
- Pointing to the compact between Kansas and Missouri, lawmakers in CONNECTICUT are looking to team up with others states to end the “race to the bottom” as a result of businesses luring companies across state lines with economic incentives.
- A proposed constitutional amendment in HAWAII would provide the state’s Board of Education with the power to levy property taxes to pay for teacher salaries. If the issue makes the ballot, it will require the approval of a majority of voters.
- Legislation in KENTUCKY that would have increased the state’s sales tax to 8 percent has been withdrawn. On the heels of extensive tax cuts, primarily for the wealthy, lawmakers will likely continue to search for revenue options.
- LOUISIANA Gov. John Bel Edwards is advocating for some changes to the state’s Industrial Tax Exemption Program, seeking to streamline administrative processes and procedures across parishes and constrain local jurisdictions from banning projects that are already finished or already under construction.
- A legislative proposal in MAINE would exempt school textbook purchases from the state’s sales tax. The Pine Tree State is the only New England state that taxes textbooks in its sales tax base.
- Some MARYLAND legislators are attempting again to enact paid family leave in the state, to be funded through a payroll tax.
- More and more cities in MINNESOTA are turning to local sales taxes to reduce pressure on property taxes while keeping up with growing costs. Despite new limitations enacted by state lawmakers last year, lawmakers expect the high rate of requests from local governments to continue this year.
- NEBRASKA lawmakers continue to debate and tweak a proposal to reduce property taxes by increasing state and limiting school budgets after it received very mixed reviews. School representatives, for example, are dubious about the state maintaining the funding over time and concerned about new limitations on their ability to raise funds themselves if state aid is cut.
- NEW HAMPSHIRE lawmakers are considering two transportation revenue options: a new system for vehicle registration fees and higher fees on more fuel-efficient vehicles. Simultaneously, the Granite State is digging into its property tax, weighing its structure, rates, and exemptions.
- Opportunity Zones are also a hot topic in NEW HAMPSHIRE, where lawmakers are weighting the impact of federal conformity on their bottom line.
- It’s a short legislative session this year in NEW MEXICO, with tax activity limited to debating the “germaneness” of proposed tax breaks.
- A new poll found that the majority of NEW YORKers favor raising taxes on the state’s wealthiest residents. This, as lawmakers continue to weigh whether to make the state’s temporary millionaires’ tax permanent.
- NORTH CAROLINA educators are considering a strike to push state leaders to fund pay raises and increased Medicaid funding.
- OREGON Gov. Kate Brown is proposing a tax on sales of homes over $500,000 to fund affordable housing needs in the state.
- RHODE ISLAND lawmakers seek to lure movie and television production to the Ocean State. Recently introduced legislation would loosen restrictions that production take place mostly in-state.
- VIRGINIA Gov. Ralph Northam is proposing to raise $1 billion over four years for transportation needs by updating the state’s very low and out of date gas tax.
- WASHINGTON is now among the states currently considering eliminating sales taxes on feminine hygiene products.
What We’re Reading
- Advocates in Philadelphia won their local soda tax battle, but Big Soda is winning the war the Philadelphia Inquirer reports.
- It’s tough to be an underfunded tax enforcer. ProPublica featured two stories last week about faceoffs between the IRS and corporate giants Microsoft and Facebook.
- The group Patriotic Millionaires took their case for globally raising taxes on the wealthy to the World Economic Forum in Davos last week.
- The New York Times is quizzing readers regarding their own capacity to navigate the complex administrative requirements associated with various public programs. Find out if you could manage as a poor American?
- The TaxProf Blog covers Illinois academic Michelle D. Layser’s proposals to improve on the “long history of place-based tax incentives [such as Opportunity Zones and Tax Increment Financing] that lack any clear objective to benefit residents of targeted communities,” by designing them “to reduce the underlying, geographic causes of neighborhood inequality.”
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