Just Taxes Blog by ITEP

State Rundown 8/12: States Find Themselves in New Unemployment Pickle

August 12, 2020

.ITEP Staff

Even in statehouses, many eyes remained on Congress and President Trump this week as state lawmakers advocated for needed federal fiscal relief and debated whether they can afford to join in on the president’s executive order requiring states to partially fund a new version of enhanced unemployment benefits that have otherwise expired.

Major State Tax Proposals and Developments

  • President Donald Trump’s legally questionable executive order to partially extend federal unemployment benefits requires states to contribute 25% of the cost, leaving many states struggling to find sufficient funds. The ALABAMA legislature expressed concerns about not being able to cover the costs for over two months. GEORGIA Gov. Brian Kemp also expressed uncertainty about the state’s ability to incur new costs. MISSISSIPPI Gov. Tate Reeves stated that the proposal would double the state’s weekly expense, draining the unemployment trust fund in about 10 weeks. OREGON lawmakers are also uncertain about participating. On the other hand, WEST VIRGINIA Gov. Jim Justice claimed that the state would participate in the program but hopes that the federal government will reverse the 25% state contribution requirement. – KAMOLIKA DAS
  • NEBRASKA lawmakers appear poised to pass a bill advanced last week that would grant a refundable tax credit for school property taxes and create a new business tax subsidy program. Because it does not generate any new revenue to pay for these tax cuts and relies on arbitrary growth rates, the bill would worsen the state’s fiscal position and grow more costly over time. Meanwhile, an effort to save the state some money by de-coupling from federal business tax breaks in the CARES Act has stalled and likely failed. – DYLAN GRUNDMAN

State Roundup

  • According to the ALABAMA Department of Revenue, state tax revenues grew for the first time in four months. The increase is primarily due to the Simplified Sellers Use Tax, a flat 8 percent tax on online sales when the seller does not have a physical location in the state.
  • FLORIDA Gov. Ron DeSantis, as well as top staff in the state legislature, have called on state agencies to cut 8.5 percent of their current budgets.
  • GEORGIA also reported an increase in tax collections for the first time in three months. The increase is partially due to $120 million or more a month in income tax withholding from unemployed residents.
  • LOUISIANA officials are debating whether to maintain local government control over tax collections or to create a single, centralized state sales tax collector similar to other states.
  • According to data from the MASSACHUSETTS Cannabis Control Commission, the state’s cannabis industry has brought in more than $150 million in tax revenue since legalization in late 2018.
  • A MICHIGAN lawmaker has introduced legislation that would provide a sales tax exemption for purchases of personal protective equipment and disinfecting supplies.
  • The MISSISSIPPI legislature overrode Gov. Tate Reeve’s veto of much of the year’s education budget; the veto could have jeopardized the flow of state funds to local school districts. The legislature also increased funding for individual small businesses impacted by the pandemic.
  • The Democratic candidate for MONTANA governor, Lt. Gov. Mike Cooney, has proposed a 2022 ballot measure that would ban the legislature from enacting a state sales tax.
  • The NEW HAMPSHIRE Dept. of Justice is investigating whether neighboring states are improperly taxing its residents during the pandemic. In July, Massachusetts ruled that out-of-state workers who worked in Massachusetts prior to the pandemic would continue to be subject to their income tax while working remotely, but New Hampshire Gov. Chris Sununu has objected to this practice.
  • While many states’ eviction prevention programs are expiring (see What We’re Reading below), NEW JERSEY Gov. Phil Murphy has announced a forgiveness program using federal CARES Act dollars to reimburse landlords for unpaid rent over the last few months.
  • OREGON legislators met for a single-day special session to close the state’s $1 billion revenue shortfall, doing so by pulling $400 million from education reserves, $200 million from pension payments, and nearly $400 million of funding cuts, mostly to human services.
  • A TEXAS tax break program under Chapter 313 of the tax code will force taxpayers to pay large companies like Tesla an estimated $1.6 billion over the next two years. Chapter 313 agreements, which have few strings attached, are available to many manufacturers and renewable energy companies.
  • VERMONT committee members tasked with hashing out details of the state’s retail cannabis market are expected to begin meeting in the coming weeks. They will be reconciling differences between various versions of bills to legalize cannabis sales with an eye on the tax structure, the amount of local control to give municipalities and the state’s approach to highway safety.
  • VIRGINIA lawmakers will hold a special legislative session next week to focus on the budget and criminal justice reform. Richmond Mayor Levar Stoney asked Gov. Ralph Northam and the legislature to establish a tax system for the recreational use of marijuana.

What We’re Reading

  • Stateline covers a troubling trend of ongoing economic stagnation combined with expiration of eviction protections, potentially pushing many more people out of their homes.
  • The Center on Budget and Policy Priorities (CBPP) explains how the recently worsening pandemic and unstable economic footings could make the already severe state budget crisis even worse.
  • CBPP also recently reiterated the need for additional federal fiscal relief to states and localities and demonstrated the particular challenges and needs facing tribal nations.
  • Route Fifty explores how the pandemic is revealing and exacerbating an already widespread issue of underemployment, as people with jobs were seeking more hours before the virus struck, and now even those who have kept or regained their jobs in recent months have been asked to do so at reduced hours.

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.


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