State Rundown 11/2: State Revenue Shortfalls Keep on Growing and Growing

This week we are bringing you news on Alabama joining the rank of states requiring Amazon.com to collect and remit sales taxes, and another round of sobering revenue shortfall updates in states including Nebraska, Maryland, Kansas and Louisiana. Thanks for reading the Rundown!

— Meg Wiehe, ITEP State Policy Director, @megwiehe

• Amazon.com begins collecting sales taxes on orders from Alabama on November 1st, which is expected to bring in $30-$50 million in currently uncollected tax revenues this year alone.  This brings the number of states where Amazon is collecting sales taxes to 29.
• The Rockefeller Institute recently presented some “sober news” to the National Association of Budget Officers, calling the current situation “not an ebullient time for revenue,” as FY17 revenues are running behind projections that were relatively low to begin with.
• Nebraska‘s revenue forecast was revised sharply downward last Friday, bringing the state’s projected shortfall for the upcoming two-year budget cycle to $910 million. This was an expected development due to a struggling farm economy and other reasons. The Lincoln Journal Star editorial board soberly opined in response that repeated tone-deaf calls for income tax cuts in the state are “the wrong priority for Nebraska…The last thing Nebraskans need is a slap-dash and poorly considered reform of the state’s tax system.”
• Maryland Gov. Hogan has put together a package of $82 million of funding cuts — to Medicare, the university system, juvenile services, housing, and others — to begin closing the $175-$250 million budget hole the state currently faces. The state also faces another $486 million shortfall in the next fiscal year.
• Kansas revenues fell short again in October, creating a budget gap of now $75 million.
• Louisiana faces a $313 million mid-year budget deficit due to a shortfall in revenue raised from last year.  This news foreshadows more budget cuts for services like health care and higher education in the current year and reiterates the need for more meaningful tax reform next year when lawmakers need to close more than a $1 billion gap.
• New Mexico‘s repeated rounds of funding cuts and failure to consider revenue solutions to its budget woes have now lost the state its coveted Aaa credit rating from Moody’s Investor Services.
• Governing reports that half of the 2016 races for governor are too close to call. “Tossup” states include: Montana, Vermont, Indiana, West Virginia, North Carolina, and New Hampshire. ITEP is keeping a close eye on what this will mean for tax policy in 2017.

What We’re Reading…

• Alexandra Sirota of the North Carolina Budget and Tax Center explains that multiple years of tax cuts in the Tarheel state have not provided an economic boom.
• Ted Boettner of the West Virginia Budget and Policy Center explains how expanding the middle-class is the best tool for improving the state’s economy.
• Alltherooms.com Analytics estimates that Airbnb rentals could be bringing states a total of $440 million in annual revenue, but that 60 percent – $260 million – of that revenue is currently going uncollected (pdf at link above).
• A Charleston Gazette editorial warns lawmakers of budget-balancing tactics that will create an even more upside-down tax system in West Virginia and force the state’s poorest to pick up the tab.

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.