State Rundown 1/11: State Legislative Sessions Kick Off Amid Uncertainty

This week brings still more states looking for solutions to revenue shortfalls, multiple governors’ State of The State addresses, important reading on counter-transparency and local-preemption efforts, and more. 

— Meg Wiehe, ITEP State Policy Director, @megwiehe 

• A Nebraska legislator this week diagnosed the state’s $900 million revenue shortfall in plain terms, describing it as “self-inflicted misery” brought on mostly by repeated tax cuts in recent years, and adding that further tax cuts in this context would amount to “visionless activity.”
  
• Hawaii‘s tax revenue growth is down, resulting in $155 million less than expected for the upcoming legislative session. The state’s Council on Revenues predicts that low visitor spending and an increase in online shopping could be contributing to the shortfall.
  
• Ohio again this month saw tax revenues fall short of estimates. Legislators are gearing up for a difficult budget situation.
  
• North Dakota‘s 2016 budget woes will continue into the new year, as a new forecast has reduced projected revenues 7 percent just since the last forecast in December.
  
• New York‘s Gov. Andrew Cuomo proposed expanding the state’s child care tax credit. The proposal, another attempt to provide breaks to the middle-class, would benefit 200,000 families making between $50,000 and $150,000 and would cost $42 million.
  
• South Carolina lawmakers are putting forth a range of bills to address the state’s need for funding to improve roads and bridges. Unfortunately, as we saw in New Jersey last year, one of these ideas is to use the state’s infrastructure issues as an opportunity to force through regressive income tax cuts.
  
• Pennsylvania‘s Gov. Tom Wolf, again this session, is proposing a natural gas severance tax. This will be the governor’s third attempt to tax the industry since coming into office.

Budget Watch 

• Gov. Paul LePage’s budget would, among other things, cut 500 state jobs, broaden the sales tax base, and shift Maine to a flat tax by 2020, effectively rolling back the state’s recent referendum for an education tax surcharge on high-income Mainers.
  
• On the heels of his State of the State Address, Kansas Governor Sam Brownback is expected to release his budget proposal this week.  Based on his speech, don’t expect to see an expansion of Medicaid or elimination of his state’s costly pass through business income exemption in the proposal.  He will seek in his words “modest, targeted” tax increases including another hike in the state’s cigarette tax to help address a $342 million revenue shortfall. 

Governors’ State of the State Addresses 

• In the past week, Governors Ducey of Arizona, Hutchinson of Arkansas, Malloy of Connecticut, Otter of Idaho, Branstad of Iowa, Brownback of Kansas, Christie of New Jersey, Burgum of North Dakota, Daugaard of South Dakota, Scott of Vermont, and Walker of Wisconsin delivered their State of the State addresses.
• States with addresses scheduled through the end of next week are: Georgia, South Carolina, Virginia, and Wyoming today; Colorado and Nebraska on the 12th; West Virginia on the 16th; and Indiana, Michigan, Mississippi, Missouri, Nevada, New Mexico, and Rhode Island on the 17th. 

What We’re Reading…

• The Hill looks at a likely trend of Republican-led state governments passing “preemption” laws to reduce the flexibility of democratically dominated cities in areas such as local minimum wage laws, environmental regulations, and soda taxes.
  
• The Missouri Budget Project has created a Policy Framework for Building a Prosperous Missouri and a Strong Middle Class, which includes important tax reforms: creating a refundable state Earned Income Tax Credit, better evaluating tax credits going forward, and rolling back dangerous tax-cut triggers enacted in 2014.
  
• Governing reports on a troubling trend of states reducing transparency to avoid shining light on the negative consequences of their own short-sighted tax policies.
  
• At the kickoff of the Arizona Center for Economic Policy, Kansans offer a cautionary tale of the negative impacts of deep tax cuts.
  
• In a recent report citing ITEP data, Ohio Policy Matters finds that that a move toward a flat tax would mean more taxes for most Ohioans.

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 meg@itep.org. Click here to sign up to receive the Rundown via email.