September 11, 2020
September 11, 2020
Readers may want to start with our “What We’re Reading” section this week, which is full of good reading on how progressive taxation is needed to fund vital public services, helpful for state and local economic growth, and popular among voters as well. In that spirit, leaders in both New Jersey and New York are looking at small taxes on stock trades to help improve their budgets and tax codes. These last couple of weeks have also featured more state fiscal action than is typical this time of year, for example in North Carolina, where lawmakers decided to use federal aid on a mix of direct payments to households with children, education funding, broadband access, and other needs.
Major State Tax Proposals and Developments
- Last week, NORTH CAROLINA lawmakers passed legislation that would allocate Coronavirus Relief Funds for schools, broadband access, PPE, and more. Another $440 million—making up nearly half of the funds—will be spent on a $335 per household stimulus checks called “extra credit grants” to households with at least one child 16 and younger. – AIDAN DAVIS
- ALABAMA‘s gas tax collections have dipped by about $2.5 million since the start of the pandemic, which will reduce funding for planned road improvements.
- ARKANSAS‘s tourism industry continues to face hurdles amid the pandemic. The state’s tourism tax collections dropped 30.4 percent from January to June compared to the same time last year.
- GEORGIA tax collections improved during the first two months of FY 2021. As a result, Gov. Brian Kemp said that he would not ask for new spending reductions in the coming year, but it is unclear whether this minor reprieve will be lasting or temporary. The FY 2021 budget already cut $2.2 billion, including $950 million in basic aid to schools; this has led to 13 percent of school district furloughing teachers and 28 percent eliminating jobs and/or instituting a hiring freeze.
- HAWAII’s Council on Revenues predicts that the state will see a 12 percent reduction in state tax collections this coming fiscal year, and an 11 percent drop in the current fiscal year. These findings point to a slower than anticipated economic recovery for the Aloha State.
- IDAHO’s gross receipts exceeded expectations for August, coming in 13 percent over forecasts. Budget analysts noted that federal pandemic relief has helped the state’s budget outlook.
- In MAINE, the Mills administration has proposed a hiring freeze and spending cuts to offset the state’s $528 million revenue shortfall. The plan would rely on unspent CARES Act funds and higher than anticipated revenue from liquor sales. The state anticipates a $1.4 billion shortfall through mid-2023.
- This November, MISSISSIPPI voters will vote on two competing medical marijuana initiatives; one measure would prohibit the state from limiting licenses or setting product prices while the other would limit use to terminally ill patients and require oversight by licensed officials.
- NEW HAMPSHIRE‘s Department of Revenue Administration recently reported that tax revenues reflect a 14 percent decline in meals and a 33 percent decline in hotel stays compared to last year. Tax revenue from tobacco sales, sales of tax stamps, and the real estate transfer tax are faring better.
- NEW JERSEY Gov. Phil Murphy is considering a small tax on stock trades to generate revenue to address racial inequities in the state.
- The prospect of raising taxes on NEW YORK’s highest-income households to maintain services amid the pandemic is supported by 90 percent of state residents. Nobel Prize economist Joseph Stiglitz is among them, arguing for a small financial transactions tax. Gov. Andrew Cuomo, however, is among the 10 percent who oppose more progressive taxes in the state.
- SOUTH CAROLINA lawmakers put forward a new budget proposal that would reinstate a $100 million pay raise for teachers that was temporarily frozen earlier this year. Other considerations are security upgrades for the state’s prisons system, charter school funding, and additional funding for school nurses. In other news, the state Supreme Court upheld the constitutionality of special purpose districts and their capacity to continue collecting taxes for local needs such as fire protection, sewage treatment and recreational facilities.
- TEXAS lawmakers introduced a bill that would provide tax incentives for the mining of rare earth materials. The legislation would also create a $50 million yearly grant program over the next four fiscal years for the rare earths industry.
- Observers in WASHINGTON State expect the legislature to take a wait-and-see approach to their $8.8 billion three-year revenue shortfall for a little longer, either returning after the November election for a special session or holding off until their regularly scheduled return in January, in hopes that federal aid or an economic rebound brightens the picture.
What We’re Reading
- Scholars Kitty Richards and Joseph Stiglitz demonstrate powerfully in the New York Times that raising taxes on high-income households during the pandemic is “not only the right thing to do from a humanitarian standpoint, it is sound economics” that can simultaneously mitigate vast economic inequalities, generate needed funding for core priorities like education, and bolster state and local economies. Richards has more on specific strategies for doing so via the Roosevelt Institute here, and ITEP’s Meg Wiehe and Carl Davis summarize the policy upshots here.
- Darrick Hamilton and Naomi Zewde write in Yes! that a combination of reparations, baby bonds, and wealth taxation would constitute “three complementary policies that can make meaningful progress toward undoing centuries of systemic inequities, while prospectively ensuring capital access going forward.”
- A State Innovation Exchange (SiX) poll showed voters support stronger state investments in shared priorities like education and infrastructure by a 3-1 margin, even if those investments require higher taxes, and strongly favor progressive tax proposals to raise those funds.
- The Washington Post draws troubling parallels between the Covid-19 crisis and the Great Recession.
- The New York Times (see here for states and here for cities), Barron’s, and the Center on Budget and Policy Priorities each report on the fiscal crisis still coming into focus for state and local governments, and Pew shows how the pattern of uneven recovery from the Great Recession is being echoed in the current crisis.
- Route Fifty has more on how the crisis is affecting capital budgets and infrastructure maintenance, parks and recreation funding, and state and local public sector jobs.
- The experts at Pew remind us that Rainy Day Funds are meant to be used, and that credit ratings agencies do not penalize states for using them responsibly.
- The Tampa Bay Times reports that Florida homeowners who financed energy-efficient upgrades through Property Assessed Clean Energy (PACE) programs are now saddled with skyrocketing property taxes.
- The economic and fiscal experts at the Iowa Policy Project have merged with the Child & Family Policy Center to become Common Good Iowa, a new united source for policy research, analysis, and advocacy in the Hawkeye State.
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.