State Rundown 11/30: Hitting the Road… or at Least Determining How to Fund It

This week we are bringing you news about transportation and infrastructure funding in Indiana, California, and South Carolina, next steps for New York‘s millionaire’s tax, moves toward comprehensive tax expenditure review in Ohio, continuation of the income tax reciprocity agreement between New Jersey and Pennsylvania, and efforts for tax change in Nebraska and Arkansas.

— Meg Wiehe, ITEP State Policy Director, @megwiehe

• Lawmakers in Indiana have identified transportation funding as a top priority for the 2017 legislative session. While there is not yet consensus on the sources for this funding, new taxes are expected to be in the mix.  Lawmakers have expressed support for indexing the gasoline tax to inflation, reallocating existing state resources, and imposing new user fees.
• In South Carolina, where a gas tax update failed earlier this year, support for raising the tax next year to fund needed infrastructure improvements remains strong.
• California lawmakers ended a special session on transportation funding last week without a vote on a resolution. The session has dragged out since June 2015, leaving many frustrated with lawmakers.
• Expect New York‘s millionaire’s tax to be a major topic of discussion come January as lawmakers head back into session. With lower than expected tax collections and a $3.5 billion budget shortfall, expiration of the  tax would worsen the state’s budget woes and make low- and middle-income New Yorkers pay more.
• Ohio lawmakers have put forth a bill that would formalize a tax expenditure review process. It would task a bipartisan review committee with the review of the state’s $8 billion in tax breaks once every eight years.
• New Jersey Gov. Christie won’t end the state’s income tax reciprocity agreement with Pennsylvania after all.
• Nebraska joins the growing list of states where brick-and-mortar retailers will be making a concerted push to enact laws to tax online sales at sites such as Amazon.com.
• With recent voter approval of a constitutional amendment for dispensing medical marijuana, Arkansas lawmakers are assembling legislation to modify and flesh out the details of implementing its new dispensary program. Among them is a bill proposed by Senator Hester to reallocate some of the new revenues to pay for a tax cut. (Senator Hester released a tax cut plan earlier this fall, which ITEP estimates would cost the state $152 million with 64% of the tax cut going to the top 20% of taxpayers).

What We’re Reading… 

• The latest state revenue update from the Rockefeller Institute reports weak tax revenue performance around the nation, and warns that this effect could be amplified as wealthy Americans push their income out of 2016 into 2017 when taxes may be lower due to a new federal administration.
• Kentucky Center for Economic Policy’s executive director, Jason Bailey, makes the case for a tax plan that will be fair for all Kentuckians. He argues against elimination of the inheritance tax, shifts away from the state personal income tax, and corporate tax cuts in the name of economic development.