Just Taxes Blog by ITEP

State Rundown 1/5: New Year, Same Old Playbook

January 5, 2022

.ITEP Staff

The new year often brings with it a reinvigorated commitment to new goals and a fresh perspective on how to accomplish them, but it seems like lawmakers in states around the country are giving up already as legislative sessions start back up. Mississippi leaders have named eliminating the personal income tax as a top priority, which would blow a massive hole in the state budget. In Arizona, majority leaders are committed to undermining voters and are exploring plans to nullify the upcoming November referendum on the flat tax by repealing and replacing it with a different tax. At a time when fresh solutions are needed to address national crises and consistently underfunded public programs and services, voters shouldn’t stand for lawmakers dusting off the same old playbook.

Major State Tax Proposals and Developments

  • ARIZONA Republicans are considering undercutting an upcoming voter referendum that would determine the fate of a $2 billion income tax cut that was pushed through the legislature after voters approved a 2020 ballot measure that created an additional surcharge on wealthy residents. The plan would repeal and replace the law with a new version, effectively ending the voter referendum. – MARCO GUZMAN
  • MISSISSIPPI‘s 2022 legislative session convened this Tuesday, and personal income tax elimination seems more likely than ever as both Speaker of the House Philip Gunn and Gov. Tate Reeves have claimed that this is their top priority. As a reminder, the personal income tax accounts for nearly a third of all General Fund dollars and even with the personal income tax intact, their state and local revenue per capita is the 4th lowest in the nation. – KAMOLIKA DAS

Governors’ Annual Addresses and State of State Speeches

  • NEW YORK Gov. Kathy Hochul’s first State of the State Address is today, and she is expected to lay out a moderate agenda including her opposition to progressive tax increases on wealthy residents.
  • VERMONT’s Gov. Phil Scott delivered his State of the State address today in which he announced plans to put forth a “progressive tax relief package.” Details of that package have not yet been shared.

State Roundup

  • CALIFORNIA’s legislative session is underway, and deciding how to handle a recent revenue surge is high on the agenda. If the revenues are high enough, an obscure law requires them to use a portion on either tax reimbursements or school investments.
  • Advocates in CONNECTICUT are urging lawmakers to reconsider aspects of the state’s inequitable property tax system.
  • FLORIDA‘s two-month legislative session convened on Tuesday. While state lawmakers are not prioritizing tax policy changes, Gov. Ron DeSantis is pushing them to approve a 25-cents-a-gallon cut to the state gas tax for five months.
  • GEORGIA‘s 2022 legislative session is set to convene next week. Several tax-related changes have just gone into effect, including an increase in the standard deduction and new tax incentives. Gubernatorial candidate David Perdue has proposed eliminating the income tax, which may gain steam, but for now, it seems like lawmakers will primarily focus on consequential social issues.
  • House Republicans in INDIANA are pushing to cut the state individual income tax and reduce taxes that businesses must pay on equipment, costing the state a total of $1 billion and local governments $103 million.
  • MAINE Gov. Janet Mills is expected to submit a supplemental budget later this month that will likely include some form of “direct financial relief” to Mainers. The administration also recently announced a property tax deferral program for qualifying residents to temporarily defer the collection of their homestead property taxes.
  • MARYLAND lawmakers pre-filed a bill that would establish a commission to study racial disparities in wealth and resources as a result of tax laws and to make recommendations to compensate Black communities.
  • The MISSOURI legislature is considering exempting firearms, food and diapers from state sales tax.
  • Rochester, NEW YORK, Mayor Malik Evans is proposing to fund a small universal basic income program through cannabis taxes.
  • SOUTH CAROLINA’s Sen. Josh Kimbrell is proposing to slash the state’s individual income tax in half and eliminate it for corporations.
  • A TENNESSEE lawmaker proposed repealing a 2017 law that had gradually raised the gas tax from 20 cents per gallon to 26 cents.
  • WASHINGTON State’s first-of-its-kind long-term care program and accompanying payroll tax are likely to be postponed for 12 to 18 months as lawmakers and Gov. Jay Inslee take a step back to address concerns about the program and the amount of time workers had to opt out of it by acquiring private plans.
  • Also in WASHINGTON, a small school district is suing the state, arguing that funding school construction and other capital costs primarily through property taxes is inequitable and fails to meet the state’s constitutional obligations.

What We’re Reading

  • Columbia University released a report on the impact the expanded Child Tax Credit had on families after six months of payments.
  • Inequality.org shared a set of eye-opening graphs demonstrating troubling trends in inequality over the past year.
  • Governing reports on a trend of states—including Kansas, Missouri, and South Dakota—looking to raise pay for public employees to better compete in this tight labor market.
  • Labor scarcity creating pressure on public payroll budgets is also one of Governing’s six themes to expect in public finance this year, in which they describe how economic and political trends will create opportunities and challenges for public budgets nationwide.
  • Route Fifty Senior Editor Bill Lucia looks back on developments in state and local government in 2021 and shares some of the publication’s greatest hits from the year.


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