State Rundown 10/16: More Cuts, Less Funding

The Clarion-Ledger reports that transportation funding could be a “sleeper issue” in Mississippi’s upcoming election. The state has not raised its gas tax, right now at 18.4 cents per gallon, since 1987 and road conditions reflect the lack of investment. Last fall, state highway officials were forced to tell farmers and other businesspeople that crucial bridges connecting fields and ports were off limits to heavy trucks. Many decided to flout the state’s rules and send heavy trucks across the deteriorating bridges, which have collapsed on occasion. The Department of Transportation estimates that $400 million a year in additional revenue will be needed just to maintain current road conditions.  

Low oil prices pose a challenge for state budgets in Texas and Oklahoma. Texas Comptroller Glenn Hegar lowered revenue projections by $2.6 billion from his January estimate, citing lower economic growth than anticipated and undercutting the fabled “Texas Miracle” narrative of low taxes leading to gangbusters economic expansion. Meanwhile, Oklahoma Finance Secretary Preston Doerflinger reported that general fund apportionments were below projections last month due to falling oil prices and accompanying job loss. Notably, while personal and corporate income tax revenues exceeded projections, sales and gross receipt tax revenues were far below projections. Many conservative lawmakers advocate a move from income to consumption taxes, but Oklahoma’s example indicates that such a move could be bad for budget stability.

Florida Gov. Rick Scott wants more tax cuts and additional funds for corporate tax incentives, but so far the legislature is not biting. Scott pledged during his reelection campaign last year to cut taxes by $1 billion. He is almost halfway there after lawmakers passed a $427 billion package of tax cuts during the most recent legislative session, but even conservatives have yet to endorse a further round of cuts and more corporate giveaways. Senate President Andy Gardiner says $250 more in cuts could be possible, but balked at more money for corporate incentives. Meanwhile, Senate Democratic Leader Arthenia Joyner decried new tax cuts and more “corporate welfare” as “grand abdications of the public trust.”

Florida House lawmakers are considering a different tax plan that would not cut taxes but swap revenue sources. The House Tax and Finance Committee is exploring options that would allow it to reduce property taxes by increasing sales taxes. One proposal would exempt the first $1 million of a property’s appraised value from property tax liability and cover 98 percent of property in the state. In return, the sales tax rate would have to increase by 4.93 percentage points. Some lawmakers were outraged at the proposals, as poor Floridians already pay eight times as much of their income in sales taxes as the wealthy. An editorial in The Gainesville Sun notes that “Florida already has one of the most unfair tax systems in the country, and the sales-tax plan would only make it worse. Making Florida even more reliant on the sales tax would also force greater cuts of schools, safety-net programs and other government expenses whenever the state experienced a recession.”