State Rundown 10/4: Wildfires in Montana and Tax Cuts in Kansas Wreak Budget Havoc

This week, Kansas‘s school funding was again ruled unconstitutionally low and unfair, while Montana lawmakers indicated they’d rather let historic wildfires burn a hole through their budget than raise revenues to meet their funding needs. Meanwhile, a struggling agricultural sector continues to cause problems for Iowa and Nebraska, but legalized recreational marijuana is bringing good economic news to both California and Nevada.

— Meg Wiehe, ITEP Deputy Director, @megwiehe

• The Kansas Supreme Court ruled earlier this week that the state is not adequately funding education both in terms of the total dollar amount as well as the distribution of funding across districts. No specific revenue target was given, but lawmakers have until April 30, 2017 to put forward an alternative funding plan. Additional tax revenue will likely be required.
• Facing lower than anticipated state revenues and higher than ever firefighting costs, Montana Steve Bullock is hoping to not have to balance the state’s budget entirely through cuts to services. However, GOP lawmakers have not evidenced willingness to consider raising additional revenue—even temporarily—to mitigate $227 million in cuts.
• Both Iowa and Nebraska‘s economies and public finances are struggling due to a weak farm economy, and the troubles are expected to continue into next year.
• Legalization of recreational marijuana has brought even better revenues than expected to Nevada and new jobs to California.
• Colorado lawmakers convened briefly for a special session to fix a legislative error that ended almost as soon as it began with no fix made. To understand what went wrong, read here.
• Plans to increase property taxes in Houston, Texas to help fund hurricane recovery have been dropped by the mayor after receiving $50 million in state aid.
• New Jersey Chris Christie is doubling down on his efforts to lure a new Amazon headquarters to the Garden State with $5 billion in tax subsidies, claiming the deal “will be done” before he is term-limited out of office in January.
• Polling in Mississippi indicates that residents are averse to gas tax increases but also concerned about their state’s ailing infrastructure, and potentially open to tax and fee increases devoted to improving it.
• State and tribal governments in North Dakota are at odds over taxes on alcohol sold on Native American land. Unable to reach a revenue sharing agreement that would send some state taxes to the tribal governments, the tribal tax commission added its own 7 percent sales tax.
• Ballot initiatives are taking shape in California to reduce the assessed value on new home purchases, in Colorado to increase the sales tax to fund needed transportation improvements, and in St. Paul, Minnesota to create racially equitable

What We’re Reading…

• The similarities between the failed Kansas tax experiment and proposed federal tax reforms are not lost on many, as highlighted this week on NPR and Politico.
• A working paper with the National Bureau of Economic Research shows that carbon taxes are actually progressive, even without additional transfers via rebates.
• In a Washington Post Op-Ed, Bruce Bartlett, an architect of 1980s federal tax cuts, calls out modern day tax cut zealots for their blind adherence to the myth that tax cuts always create economic growth. He writes that while tax cuts seemed to have helped in the 1980s, growth was faster in the 1990s as taxes were increased, and “there’s no evidence that a tax cut now would spur growth.”
• Congress has let the Children’s Health Insurance Program (CHIP), which covers 9 million low-income children and pregnant mothers who don’t qualify for Medicaid, expire. Governing summarizes the bind states are in as a result, having passed their budgets with the expectation that the federal funding would be renewed: “The uncertainty is forcing states to make tough decisions: Do they fund the program themselves, at the expense of other programs, or do they cut or cap the program?”
• Governing continues its helpful coverage of “blockchain” technology, i.e. virtual currencies like Bitcoin, and its implications for business, government, and society more generally.
• Route Fifty explores the myths and realities about the relative efficiency of state and federal governments.

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.

---

---