State Rundown 1/25: State of the States

West Virginia Gov. Earl Ray Tomblin proposed two tax increases in his State of the State address to help close a projected revenue gap of more than $350 million in the current fiscal year. The governor plans to ask lawmakers to increase the tax on tobacco products and add telecommunications services to the state’s sales tax bases, applying a 6 percent tax to cell phone data and voice plans. Cigarette taxes would increase by 45 cents a pack, while other tobacco products would be taxed at 12 percent, up from 7 percent. Together, both taxes would raise $138 million in revenue — including $28.9 million for this fiscal year if the increases are effective on April 1. This amount would not be nearly enough to avoid spending cuts, and is far from the reform-minded revenue raising ideas that groups such as the West Virginia Center on Budget and Policy have been promoting.   

Gov. Mike Pence of Indiana used his State of the State address to criticize a House Republican proposal to raise the state’s gasoline tax — and gained support from House Democrats in the process. House Bill 1001 would increase the gas tax by 4 cents a gallon to 22 cents, the first increase in thirteen years. The tax on diesel would increase by seven cents per gallon, and the amount of gas tax revenue earmarked for roads and bridges would also go up. While House Speaker Brian Bosma argues that increasing the tax to pay for transportation maintenance would be good for economic growth, Pence and House Democratic Leader Scott Pelath say the tax increase would be premature. Both men argue that the state should rely on its revenue surplus to pay for transportation improvements instead. 

Kansas, which has been awash in red ink since Gov. Sam Brownback’s tax cut experiment failed, will again face deep cuts to balance the budget. Brownback would eliminate the Kansas Bioscience Authority, which strives to build bioscience jobs in Kansas, and the Children’s Initiative Fund, which sponsors crucial early childhood education programs. The move would allow the governor to cover at least $80 million of a $190 million deficit next fiscal year. Brownback would also raid the state’s transportation fund for $25 million to support general government programs. Meanwhile, individuals in Kansas have used the governor’s exemption on business pass-through income to avoid millions in income taxes. While the state estimated about 191,000 taxpayers would be eligible for this break, over 330,000 “self-employed” filers have taken advantage of the loophole. Even business advocates, like local chambers of commerce, say the pass-through income break has failed to create jobs and hurt economic growth.  

State lawmakers in Massachusetts heard arguments for and against the Fair Share Amendment, which would impose an increased tax rate on income over $1 million. If passed, the tax rate on income over that amount would increase from 4 percent to 9 percent. ITEP data show that the current tax system in Massachusetts is regressive; the top one percent pay 4.9 percent of their income in state and local taxes, while the middle 20 percent pay 9.3 percent of their income. The disparity arises from Massachusetts’ flat tax rate on income, and the fact that those who earn less pay a larger proportion of their income in sales and property taxes. The proposed tax increase would affect just one percent of Massachusetts taxpayers.

North Carolina lawmakers claim that their tax cuts are responsible for a budget surplus. But as a recent editorial in The News and Observer notes, lawmakers didn’t cut taxes — they merely shifted responsibility from the wealthy to the working poor. While Gov. Pat McCrory and legislators cut personal and corporate income taxes, they expanded the sales tax base — and the revenue increase is a result of that base expansion. And since the sales tax is a regressive tax, working families and the middle class are paying more.  

State of the State Addresses This Week:  

Hawaii Gov. David Ige — January 25 

Illinois Gov. Bruce Rauner — January 27 

Kentucky Gov. Matt Bevin — January 26 

Utah Gov. Gary Herbert — January 27 

Mississippi Gov. Phil Bryant — January 26 

Previous State of the State Addresses:  

Alaska Gov. Bill Walker — January 21 (link here) 

Arizona Gov. Doug Ducey — January 11 (link here) 

California Gov. Jerry Brown — January 21 (link here) 

Colorado Gov. John Hickenlooper — January 14 (link here) 

Delaware Gov. Jack Markell — January 21 (link here) 

Florida Gov. Rick Scott  — January 12 (link here) 

Georgia Gov. Nathan Deal — January 13 (link here) 

Idaho Gov. Butch Otter — January 11 (link here) 

Indiana Gov. Mike Pence — January 12 (link here) 

Iowa Gov. Terry Branstad — January 12 (link here) 

Kansas Gov. Sam Brownback — January 12 (link here) 

Massachusetts Gov. Charlie Baker — January 21 (link here) 

Michigan Gov. Rick Snyder — January 19 (link here) 

Missouri Gov. Jay Nixon — January 20 (link here) 

Nebraska Gov. Pete Ricketts — January 14 (link here) 

New Jersey Gov. Chris Christie — January 12 (link here) 

New Mexico Gov. Susana Martinez — January 19 (link here) 

New York Gov. Andrew Cuomo — January 13 (link here) 

South Carolina Gov. Nikki Haley — January 20 (link here) 

South Dakota Gov. Dennis Daugaard — January 12 (link here) 

Vermont Gov. Peter Shumlin — January 7 (link here) 

Virginia Gov. Terry McAuliffe — January 13 (link here) 

Washington Gov. Jay Inslee — January 12 (link here) 

West Virginia Gov. Earl Ray Tomblin — January 13 (link here) 

Wisconsin Gov. Scott Walker — January 19 (link here)