Just Taxes Blog by ITEP

State Rundown 5/22: When One Legislative Session Closes, Another Opens

May 22, 2024

State legislatures are wrapping up, but don’t stray too far from your state capital or you’ll miss out on the action. While Kansas ended its legislative session with yet another veto by Gov. Laura Kelly of a deep tax cut plan, the governor hopes to bring legislators back soon for a special session on taxes. Lawmakers in both Arkansas and Louisiana are making plans for the summer, as well. Arkansas will likely hold a special session in June where they will attempt to cut personal income taxes for the fourth time in less than two years. Louisiana lawmakers are eyeing a constitutional convention over the summer months – the state’s first in 50 years. While some states will likely spend their summer debating regressive tax policies, other states are ending their legislative sessions with policies aimed to lift up children and families. Colorado Gov. Jared Polis signed legislation this week that will expand the state’s Earned Income Tax Credit, and the state appears to also be moving forward with an expansion and boost to the Child Tax Credit.


Major State Tax Proposals and Developments

  • COLORADO Gov. Jared Polis signed a bill that would rework the state’s Taxpayer’s Bill of Rights (TABOR) refund mechanisms by reinstating temporary income and sales tax rate cuts conditioned on surplus revenues. The governor also signed into law a bill that reduces valuations for residential and commercial property and creates a local revenue growth limit. Another bill that appears likely to become law—despite not yet receiving the governor’s signature or veto—will create a new credit for children that will serve as an expanded state Child Tax Credit. Per the design, the amount of the credit would be contingent on revenue growth subject to TABOR. – MARCO GUZMAN
  • KANSAS Gov. Laura Kelly vetoed the latest tax cut plan from the legislature and will call a special session in hopes of reaching a tax cut compromise. Gov. Kelly repeatedly voiced concerns over the price of the latest tax cut plan, which included rate cuts and the consolidation of the state’s personal income tax brackets from three to two, a full exemption of Social Security benefits from the income tax, a reduction in property tax millage rates for schools, an increase to the state’s the homestead exemption, and an acceleration of the elimination of the sales tax on groceries. – NEVA BUTKUS
  • MISSOURI’s legislative session has come to a close. The session was chaotic throughout. It ended with a lengthy filibuster by Democrats to defeat an attempt to change the state’s ballot initiative process. The legislature did pass several substantive tax laws. They reauthorized a consumption tax on healthcare used to fund Medicaid despite another filibuster, this time by the far-right Freedom Caucus. Additionally, the legislature also passed a major education package which expanded charter schools and a tax credit used to fund private education. – ELI BYERLY-DUKE


State Roundup

  • Legislators in ARKANSAS anticipate another special session this summer to enact additional personal income tax cuts. Arkansas has cut personal income taxes four times in less than two years.
  • A constitutional convention is being discussed in LOUISIANA. Legislation for convention has already been approved by the House. And the Senate is now considering holding hearings throughout the summer and calling a special session in the Fall to officially begin the convention. Among issues under consideration, lawmakers have expressed their willingness to change the state’s constitutional prohibition on taxing groceries, utilities, and prescription drugs.
  • In other news, a new report shows LOUISIANA collected nearly $1 million in revenue from medical marijuana in 2023, which marks a 60 percent increase over the previous year.
  • The dizzying battle over whether to funnel NEBRASKA taxpayer dollars to private schools continues. After lawmakers passed a scholarship tax credit to achieve this purpose last year, signatures were gathered to give voters a chance to repeal the credit at the ballot this November. In an effort to avoid that public vote, lawmakers replaced the tax credit with a publicly funded private school scholarship program. This shift prompted officials to remove the repeal measure from the ballot. A new signature-gathering effort is now underway to give voters back their voice in the matter.
  • Also in NEBRASKA, a group pushing to replace most state and local taxes with a highly regressive consumption tax (at a woefully unrealistic rate) has reported that they are on track to gather enough signatures to put their misguided proposal before voters. Meanwhile Gov. Jim Pillen continues to tour the state in an attempt to gain support for his plan to raise and expand sales taxes to fund property tax reductions, despite that plan having faced derision and rejection repeatedly this year.
  • WASHINGTON’s new capital gains excise tax, which raised almost $900 million from the richest Washingtonians in its first full year, is trending to bring in less in its second year, perhaps around half as much, though it will be many months before a final tally is available. The variation from year to year was expected and can be managed through sound budgeting practices.
  • Lawmakers in WEST VIRGINIA had a brief special session and authorized spending on several programs.


What We’re Reading

  • Pew Charitable Trust has updated their Fiscal 50 database which tracks state trends and fiscal health.
  • In a recent op-ed Voices for Utah Children weighs in on the potential devastation the state could face if lawmakers continue down the path of cutting the state income tax.
  • State officials in Massachusetts announced that revenues from the state’s Fair Share Amendment (commonly known as the millionaire’s tax) have brought in more than $1.8 billion through the fiscal year with three months left, beating previous projections.


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