July 29, 2020
July 29, 2020
As many of the country’s major professional sports leagues attempt to return to action amid concerns that the pandemic will find a way to ruin even the best-laid plans, state legislatures find themselves in a similar boat. Lawmakers would normally be enjoying their summer breaks at this time of year, but instead are returning to work in special sessions surrounded by plexiglass and uncertainty. Read on for information on ongoing sessions in states including California, Massachusetts, and Nebraska, as well as upcoming sessions in Missouri and Oregon.
Major State Tax Proposals and Developments
- Numerous sales tax holidays begin this weekend including in ARKANSAS, MISSISSIPPI, MISSOURI, and TENNESSEE, with several more states holding them the following weekend. Tennessee will hold a second sales tax holiday August 7-9th on restaurant food and drink purchases. ITEP’s policy brief and blog on sales tax holidays explain why these are misguided gimmicks in normal times and particularly problematic amid the Covid-19 pandemic.
- ALASKA ended its fiscal year with a $1.3 billion revenue shortfall and anticipates a $946 million shortfall for the current fiscal year. Lawmakers will weigh some combination of new taxes, budget cuts or additional spending from the state’s reserves.
- Come November, ARKANSAS voters will reject or make permanent a 1/2 cent sales tax dedicated to highway projects that was originally passed in 2012 and set to expire in 2023.
- Some CALIFORNIA lawmakers are proposing a $100 billion pandemic response that would include extended unemployment benefits to replace expiring federal assistance, funded through a mixture of borrowing from the federal government and borrowing against future tax revenues by asking residents to pay their taxes early at a discount.
- FLORIDA‘s Office of Economic & Demographic Research reported that the state collected about $2.1 billion less than forecast during the final three months of the 2019-2020 fiscal year.
- A survey of GEORGIA mayors found that some cities have lost 80 percent of taxes generated by hotels and another 25-50 percent from utilities. Cities may be forced to lay off emergency responders and utility workers and delay infrastructure projects.
- MAINE forecasters anticipate a $1.5 billion revenue shortfall for the state over the next three years, with a $523 million drop in revenue expected during the current fiscal year.
- The MASSACHUSETTS House passed an economic growth bill that includes sports betting. The bill would require license holders to pay a 15 percent excise tax, or “privilege tax,” of the operator’s adjusted gross sports waging receipts. The bill also includes a one percent fee on sports bets placed within state facilities. The bill is expected to face scrutiny in the Senate.
- Legislators in MISSOURI may return for a special session in August, and there is some hope that they will enact laws to collect sales taxes on online sales, as all states with sales taxes except Florida and Missouri now do.
- NEBRASKA’s latest revenue projections indicate the state’s budget isn’t in as dire a situation as was feared, but the improved fiscal picture will help budget deliberations but is not likely enough to get a stalled property tax and school finance proposal over the finish line.
- OREGON lawmakers are preparing for their upcoming special session, and residents are already objecting to $387 million of proposed funding cuts to state services.
- TEXAS Comptroller Glenn Hegar reports that the state faces a $11.6 billion budget shortfall in the coming year; cuts will most likely impact education and health and human services.
- In a second round of funding, VIRGINIA Gov. Ralph Northam will provide localities about $645 million in federal CARES Act funds, ultimately allocating 45 percent of its total $3.1 billion state allocation to local governments.
- WYOMING lawmakers have advanced a bill that would cut the severance tax rate from 6 percent to 3 percent if oil and gas prices remain below a certain level.
What We’re Reading
- The TaxProf Blog reviews Dorothy A. Brown’s new book, “The Whiteness of Wealth,” which explores how tax policy widens racial wealth and opportunity gaps in the U.S. The book is available for pre-order, but will not be available until 2021.
- Stateline compares approaches to how states are using federal CARES Act aid: some policymakers want to put the federal dollars into unemployment insurance, but others point out that this approach ultimately saves businesses from small tax increases down the road rather than providing help to people who need it now.
- Stateline also investigates states raiding Temporary Assistance for Needy Families (TANF) funds for unrelated purposes.
- Governing has suggestions for how local-level governments can address systemic racism, including reimagining public safety and reversing the shift from relying on taxes on white residents to fines and fees levied disproportionately on people of color.
- The Center on Budget and Policy Priorities reminds us that fiscal relief for states and localities is sorely needed and that “flexibility” will not meet the need.
- A Sacramento Bee contributor writes that repealing the California’s infamous Proposition 13 property tax limitation, which voters can choose to do in November, will advance racial equity in the state by dismantling a policy that has served to “transfer wealth from public services to private hands and developers” and drive wedges between communities.
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