State Rundown 2/13: Snow Way Forward

Massachusetts Gov. Charlie Baker is facing a blizzard of criticism in the wake of a series of massive snowstorms that have revealed the inadequacy of public transit in Boston. The MBTA – which runs the city’s fleet of subways, busses, commuter trains and ferries and currently faces $9 billion in debt and a $3 billion backlog in maintenance – was forced to suspend service on Tuesday after riders were stranded on a train for two hours. Yesterday, the MBTA’s embattled general manager resigned, but not before revealing in a press conference that the governor hadn’t spoken to her directly about her agency’s woes. Baker, who ran on an anti-tax platform, recently proposed cutting the state’s transportation budget by $40 million (including $14 million from the MBTA), but insisted that it wouldn’t impact service. Given the depth of the problems exposed over the past week and the ire of disgruntled passengers, Baker may have a hard time selling his proposed cuts.

Mississippi Lt. Gov. Tate Reeves introduced the Taxpayer Pay Raise Act, which is mostly a package of tax cuts aimed at business and corporations. His measure would eliminate the 3-percent income tax on the first $5,000 of taxable income, which would benefit working families. However, the proposal would also cut taxes for business owners and eliminate the state’s franchise tax on property and capital owned by corporations. Reeves’s plan would cost Mississippi $400 million in revenue every year, and over half of that money would go back to corporations – the franchise tax brings in $242 million in revenue and accounts for 45 percent of corporate tax revenue in the state. As the Mississippi Economic Policy Center points out, corporate tax cuts are unlikely to make Mississippi more competitive since the state has failed to adequately invest in the quality of its workforce.

The latest revenue forecast out of North Carolina shows that the state will collect $271 million less than estimated due to lower-than-expected income tax receipts. This measure is higher than the $199 million shortfall projected in December. State officials have blamed weak growth in wages for the gap, but the North Carolina Budget and Tax Center, using ITEP data, points to the 2013 tax plan as the real culprit. The income tax cuts included in the plan will cost the state almost $1 billion this fiscal year, almost twice what the plan was originally estimated to cost.

The Arizona House considered a bill this week that would force the state to cut income taxes if Congress passes the Marketplace Fairness Act, which would allow states to collect sales tax on online purchases. The bill failed by a close margin on Tuesday, but received a reconsideration vote after one was requested by sponsor Rep. J.D. Mesnard. The Arizona Children’s Action Alliance came out against the bill, arguing that it would tie the hands of future legislators and eliminate a possible revenue source. Citing ITEP data, they note that two-thirds of the income tax cuts would go to those with incomes above $94,000. With the combined impact of lower income taxes and higher sales taxes, 80 percent of Arizona taxpayers would see a net increase in their tax bill.

Following Up:
Oklahoma: A tax exemption for manufacturers and wind farms came under fire as being too generous before a House committee this week.