December 20, 2017
December 20, 2017
These have been dark days for those who care about tax justice and public investments, but with the Winter Solstice this week and many states diving into their legislative sessions in January, longer days (and long work days) are soon to come! Governors and legislators are already proposing or hinting at their 2018 tax and budget plans in Alaska, California, Iowa, Maryland, and Washington. And transportation investments are getting strong support in Missouri, Oregon, and Virginia. The State Rundown will be taking next week off but will be back in the new year collecting state tax and budget news for you as legislative sessions kick off and states grapple with the fallout of the federal tax bill.
— Meg Wiehe, ITEP Deputy Director, @megwiehe
- It’s shaping up to be a rough year for fiscal responsibility and sound tax policy in Iowa. Gov. Kim Reynolds wants to cut taxes next year despite revenues repeatedly coming in below projections, and will unveil her plan to do so in her January 9th Condition of the State address. One tax cut plan that has already been leaked, however, includes major income tax cuts likely to heavily favor the wealthy and drive the state budget even further into the red. And even those who would like to improve the state’s revenue situation rather than worsen it, for example through a cigarette tax increase, are not optimistic they can get the necessary votes in an election year.
- Alaska’s Governor Bill Walker put forth a budget proposal that would, among other things, enact a modified 5 percent payroll tax to be used for designated purposes, withdraw money from the state’s Permanent Fund earnings, reduce dividend (PDF) payouts, and adopt a two-year budgeting process.
- Maryland Larry Hogan will introduce a bill in the coming legislative session to expand manufacturing business tax subsidies created in 2017 by increasing them from $9 million to $15 million and extending them to additional industries and jurisdictions.
- The California Assembly has released a budget proposal that includes plans to expand the state’s Earned Income Tax Credit in addition to extending the state’s Medi-Cal health insurance program to all low-income adult residents (including undocumented immigrants), boosting investments in child care and preschool, and increasing college scholarships. The governor’s expected-to-be-more-conservative budget proposal is expected to be released in January.
- Washington state Gov. Inslee is proposing the state draw on reserves in order to comply with the McCleary ruling to adequately fund public education this biennium and to ultimately adopt a carbon tax to fill the ongoing need. The details for the carbon tax proposal are expected to be included in Inslee’s budget proposal to be released in January.
- Virginia Terry McAuliffe is proposing to raise $65 million per year for its share of needed funding for the DC-area Metro system by raising taxes on real estate sales, hotel stays, and gas in Northern Virginia, provided that the District of Columbia and Maryland pay their shares as well.
- Four new transit taxes take effect in Oregon in 2018, three of which begin January 1.
- A Missouri transportation task force is recommending that the state update its gas tax for the first time since 1996. They propose a 10-cent gasoline tax increase and 12-cent diesel tax increase, which would raise about $430 million per year for the state’s infrastructure.
- The Missouri Housing Development Commission, on the other hand, voted this week to end the state tax credit for low-income housing even though only one member of the public out of hundreds to appear at five public hearings spoke in support of eliminating the credit.
- The Colorado Department of Revenue released statewide data on medical and retail marijuana sales data going back to 2014 and will be releasing a new report every month going forward. Find the marijuana sales reports here and the marijuana tax data here.
- Better than expected sales tax collections in Louisiana have boosted budget performance in the current and coming fiscal year, but not enough to stave off the looming fiscal cliff. Bel Edwards recently announced his favored approach to closing the gap, which includes reducing the deduction for federal taxes paid, changing income tax brackets so more middle- and higher-income earners pay higher tax rates, eliminating hundreds of sales tax exemptions, extending the 4-cent sales tax to cover some services, continuing to charge businesses higher sales taxes for utilities, and continuing to reduce tax break programs for business (like this gem).
- State and tribal leaders in North Dakota have begun meetings to mollify tensions over their respective rights to tax reservation residents.
- The Salt Lake Chamber of Commerce is calling for modernization of the Utah tax code in order to raise needed funds for education and infrastructure.
- A 1.75-per-ounce soda tax is schedule to go into effect January 1 in Seattle, Washington and a group businesses and community groups—funded by the American Beverage Association—are agitating against the tax via a “public education campaign.”
What We’re Reading…
- States that expect to lose out big time from the federal elimination of the state and local tax deduction have some technical workarounds available to them (whether they pursue them or not will be up to lawmakers).
- Governing reports that state spending has grown at its slowest pace since the recession, based on survey data recently released by the National Association of State Budget Officers.
- Governing also explains how states and localities are likely to see their debt and the cost of borrowing increase as a result of the federal tax bill.
- The United Nation’s special rapporteur on extreme poverty and human rights, Philip Alston, has finished a two-week tour of poverty in America. His report to the UN highlights the role both federal and state/local taxes play in exacerbating inequality. At the federal level: “…the tax reform package is essentially a bid to make the US the world champion of extreme inequality.” At the state and local level: “At the state level, the demonizing of taxation, as though it is inherently evil, means that legislature effectively refuse to levy taxes even when there is a desperate need. Instead they impose fees and fines through the back door, some of which fund the justice system and others of which go to fund the pet projects of legislators. This sleight of hand technique is a winner, in the sense that the politically powerful rich do not have to pay any more taxes, while the politically marginalized poor bear the burden but can do nothing about it.”
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.
TagsITEP State Rundown
- Corporate Taxes
- Education Tax Breaks
- Federal Policy
- ITEP Work in Action
- Personal Income Taxes
- Property Taxes
- Sales, Gas and Excise Taxes
- State Corporate Taxes
- State Policy
- State Reports
- Tax Analyses
- Tax Basics
- Tax Credits for Workers and Families
- Tax Credits for Workers and Families
- Tax Reform Debate
- Who Pays?