State Rundown 6/29: State Budgets Come Down to the Wire

We’ve got a jam-packed Rundown for you with legislative action coming down to the fiscal year wire. Read about tax happenings in New Jersey, North Carolina, Pennsylvania, California, and Wisconsin. Thanks for reading the State Rundown!

— Meg Wiehe, ITEP State Policy Director, @megwiehe

•  New Jersey lawmakers are coming up against a hard deadline at the end of the month to raise the state’s gas tax and shore up its Transportation Trust Fund (TTF), but continue to insist on pairing it with cuts in other taxes. They appear to have abandoned the weird mix of tax policies they were considering last week, but the new plan backed by Gov. Christie and Assembly leadership is even more destructive. The plan would slash the state sales tax rate from 7 percent to 6 percent and quintuple an existing tax break for retirement income, and is a net revenue loss for the state as a whole, draining the General Fund of more than $17 billion over 10 years.
• The North Carolina Senate gave final approval on Tuesday to its radical measure to enshrine in the state constitution a 5.5 percent cap on the personal income tax rate.  If the House signs off, the fate of the state’s ability to fairly and adequately fund vital public services will be in the hands of voters in November.   As our guest blogger Cedric Johnson wrote earlier in the month, the cap would forever lock in recent tax decisions that have primarily benefitted wealthy North Carolinians, force higher sales and property taxes, tie the hands of future lawmakers, and cut off a vital source of revenue needed to invest in education and healthy communities. 

• Up against tomorrow’s budget deadline, Pennsylvania lawmakers are charging ahead with a budget bill. The bill passed the House Tuesday evening and now moves to the Senate where it will likely face scrutiny over whether it is truly balanced. The $31.6 billion budget includes a dollar per pack increase to the cigarette tax, revenue gains from changes to liquor laws, expanded casino gambling, and a one-time tax amnesty program.

• California Gov. Jerry Brown signed the FY17 budget bill on Monday, which includes added investments in higher education and child care, an additional $3 billion for the state’s rainy day fund, and a $1.75 billion cushion to account for lower-than-expected revenues or higher-than-expected costs. While in good standing this year, the state faces a $4 billion deficit if higher income tax rates for the wealthy aren’t extended in November.
• Deficits, delays, and more short-term borrowing appear to be Wisconsin Gov. Scott Walker’s continued approach to the state’s transportation funding crisis. The governor recently reiterated his opposition to raising the gas tax or vehicle registration fees without an equal cut elsewhere when advising agencies on their 2017-2019 budget requests, signaling that the long-term transportation funding solution lawmakers have been working for over the past several years is likely still a ways off. 

What We’re Reading…

• The Washington Post on a growing trend among states to explore mileage taxes to address inadequate gas tax revenues.
• With growing income inequality, the Institute for Policy Studies identifies significant tax reform campaigns to watch.
• Mayors grapple with new economy player Airbnb and how to respond to disruption of hospitality industry tax collections.
• The annual KIDS COUNT Data Book identifies the EITC as one of the best policies to encourage work while improving the lives of children in low- to middle-income families.
• Check out ITEP’s updated policy brief on state corporate tax disclosure.