Just Taxes Blog by ITEP

State Rundown 8/6: States Fiscal Solutions Getting Bolder

August 6, 2020

This week, voters in Missouri approved Medicaid expansion, Nevada lawmakers moved to amend their Constitution to raise taxes on the state’s mining industry, and leaders in California and New York continued to push for needed revenues through tax increases on their richest households.

Major State Tax Proposals and Developments

State Roundup

  • The Maricopa County Superior Court in ARIZONA removed the Invest in Education initiative from the November ballot after ruling that the 100-word description on the petitions was inaccurate. The initiative’s leaders have already committed to appealing the decision.
  • CALIFORNIA lawmakers are considering raising $6.8 billion to help fill the state’s revenue shortfall and fund vital public services through a progressive tax increase on the state’s richest households. The proposal would add an additional 1 percent surcharge on income exceeding $1 million, 3 percent on income over $2 million, and 3.5 percent on income over $5 million, and would bring in needed funds quickly because it would apply to income earned in 2020.
  • The Fair Tax COLORADO campaign announced that Initiative #271 will not appear on the November ballot after falling short of its signature goals. The campaign aimed to move the state to a progressive tax system while giving 95 percent of Coloradans a tax cut.
  • Also, COLORADO‘s Oil and Gas Conservation Commission increased tax levies on oil and gas production to 1.5 mills.
  • Many states, including KENTUCKY, continue to make the case for additional federal aid. Despite ending the previous Fiscal Year with a surplus, budget experts in the Bluegrass State are gearing up for a rocky Fiscal 2021.
  • MAINE cities and towns expect to see at least $124 million in lost revenue this year as a result of the pandemic. Together local lawmakers they make a case for federal funds to help ease revenue shortfalls and ensure essential services that help keep communities healthy and safe.
  • Lawmakers in MASSACHUSETTS have agreed to extend their legislative session and are expected to reconvene in September. The state’s Fiscal Year 2021 budget is pending as they await information on federal support.
  • NEBRASKA lawmakers debated and gave initial approval to a property tax and business subsidy compromise amendment in their session that ends next week. Among other components, the compromise would put loose caps on total business subsides and create a refundable income tax credit based on school property taxes paid. But some in the state are speaking out against the package, pointing out there is not room for it in the budget without either unrealistically high revenue growth or funding cuts to other state priorities. They are also considering bills today to decouple from CARES Act tax breaks and a SALT cap workaround.
  • NEW YORK legislative leaders are pushing for progressive taxes on very-high-income households to raise needed funds for state priorities, but Gov. Andrew Cuomo is opposed.
  • OREGON Gov. Kate Brown will bring the legislature back into special session to address the state’s $1 billion revenue shortfall on August 10.

What We’re Reading

  • Tim Bartik of the Upjohn Institute published a memo for the Economic Strategy Group on improving the design of local economic development policies and recommends state-level reforms like capping the size of tax incentives awarded to companies.
  • NPR released a special series on COVID19 and its impact on state budgets using data from the Urban Institute. The series, including interactive graphics, is available here.
  • Route Fifty shares the increasingly clear and distressing data on the state of state and local sales tax collections, as well as the similarly distressing numbers on state and local government jobs.
  • Black leaders in New Jersey have issued a call for an anti-racist state budget.
  • Pew reviews an online panel discussion in which officials from major U.S. cities talked about city budgeting challenges in the time of the pandemic.
  • Pew also notes the difficulty of projecting revenues from taxes on recently legalized cannabis.

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