State Rundown 9/13: The Year of Unprecedented State Budget Impasses Continues

This week, Pennsylvania lawmakers risk defaulting on payments due to their extremely overdue budget and Illinois legislators will borrow billions to start paying their backlog of unpaid bills. Governing delves into why there were more such budget impasses this year than in any year in recent memory. And Oklahoma got closure from its Supreme Court on whether closing special tax exemptions counts as “raising taxes” (it doesn’t).

— Meg Wiehe, ITEP Deputy Director, @megwiehe

• Pennsylvania lawmakers will fail to pay the state’s basic basic bills for the first time ever if they are not able to bridge their ongoing budget impasse or take out a short-term loan by this Friday.
• The Wisconsin Joint Finance Committee has released a budget plan that the Assembly will get a first pass on today. The proposal includes several generous tax provisions for the wealthy– including eliminating the Alternative Minimum Tax, reducing the business personal property tax, and eliminating the state portion of the property tax—provides no long-standing solution to the state’s transportation fund problems, and eliminates a low-income tax credit. In other news, the Foxconn tax incentives (largest ever offered by a state) cleared the Wisconsin Senate earlier this week.
• Oklahoma‘s Supreme Court has ruled that the state’s requirement for legislative supermajorities to enact tax increases does not stop the state from repealing sales tax exemptions, as it did recently to help fill a major budget shortfall. In other Oklahoma news, lawmakers have been called to a special session to work on more solutions to the state’s budget woes.
• Illinois Governor Bruce Rauner signed off on issuing $6 billion in new bonds to begin paying down the state’s $14 billion backlog of unpaid bills. To account for the new debt service on the bonds, the governor says he may make $350 million in budget cuts.
• New revenues from Indiana’s recent transportation funding bill are expected to be put to good use soon repairing deficient bridges.
• Utah lawmakers want to launch a pilot program that would tax drivers by the miles they travel rather than the amount of fuel they consume. The transportation commission in Washington state has its eyes on this approach, too.
• With inadequate state funding, K-12 school districts and institutions of higher education alike in Colorado are struggling to provide competitive salaries and invest in technology and curriculum improvements. That’s why despite a precedent of failed past measures and prospective failures due to TABOR restrictions, more and more localities are taking tax measures to the ballot.
• South Dakota signature-gatherers are working the streets to put a measure on the November ballot that would raise tobacco taxes to improve funding for the state’s technical colleges.
• Revenue performance is strong the first two months of the current fiscal year in Idaho and California.
• Cook County, Illinois‘s soda tax continues to be a lightning rod, with a business lobby planning one last effort at repeal through raising public opposition, Michael Bloomberg promising electoral support for backers of the tax, County Commissioner Boykin leading an effort to repeal the tax, and county Board President Toni Preckwinkle continuing to defend the tax.
• Local officials in St. Paul, Minnesota are looking to pilot a new program for encouraging non-profit organizations (such as universities and large hospitals) to make voluntary payments to local governments since they don’t pay property taxes.
• A recent opinion piece published in the Washington Post suggested Texas—a low tax state—should pay its fair share of hurricane recovery Perhaps some city officials are heeding this call, as Houston’s mayor is seeking the approval of an 8.9 percent property tax increase.

What We’re Reading…

• Governing investigates the unprecedented number of late state budgets this year, relating them to structural budget issues and an increase in split-power states where executive and legislative branches represent different parties.
• Prosperity Now issued a new report documenting how the racial wealth divide continues to grow, concluding that “without a serious change in course, the country is heading towards a racial and economic apartheid state.”
• The Center on Budget and Policy Priorities dives into new Census poverty data out this week that show recent gains in income, poverty, and health coverage. The Washington Post covers the new data as well.
• Bloomberg breaks down why it is that typical American workers pay much higher effective tax rates than the wealthy who get their incomes from investments.
• TaxVox covers how states are walking a thin and hilarious line by allowing and taxing “Daily Fantasy Sports” to generate revenue in difficult times while taking care not to call it “gambling.”
• New Jersy Policy Perspective has released an excellent new report featuring ITEP data that details how reforming the state’s income tax can build shared prosperity in the Garden State.
• The Commonwealth Institute delves into the tax plans of the three candidates for Virginia governor, using ITEP data to compare the plans to each other and to the services that might have to be cut if they are enacted.

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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