Author Archive

What Falling Oil Prices Will Mean for State Budgets

Oil prices are dropping…fast. This may be good news for drivers but not so good for a handful of states that use energy tax revenue to help fund their budgets. It may be especially challenging for states that rely on taxes from production of shale oil that uses methods that may be practical only at […]

How Michigan Blocked a $1 Billion Tax Windfall for Corporations

For all the talk of political gridlock, it is amazing how quickly a state legislature can act when $1 billion in unexpected corporate tax refunds are at stake. The lawmakers are in Michigan. And their pistons were fired up following an unfavorable state Supreme Court decision in a lawsuit brought by IBM. The case involved the […]

State Taxes and the April Surprise

In recent months, several governors have complained about the April, 2014, surprise in state tax revenues. They say they were shocked when personal income tax payments fell far below expectations. They shouldn’t have been. What happened? In part, in an effort to beat an upcoming increase in capital gains taxes, investors accelerated realizations into tax […]

Ohio Lawmakers Turn A Surprise Surplus Into A Huge Tax Cut

What does a state do when faced with a 14 percent decline in income tax collections, much of it due to past tax cuts? Why, it cuts taxes even more—especially when that fall in revenues is lower than expected and—combined with lower spending — results in a surprising $700 million budget surplus. That seems to […]

Camp Tax Reform Would Create New Challenges for States

House Ways and Means Chair Dave Camp’s recent tax reform plan would raise the cost of doing business for many state and local governments. Camp would repeal the deductibility of state and local taxes, including both property taxes and income taxes. He’d abolish tax-exempt private activity bonds. And he’d impose a 10 percent surtax on municipal […]

Federal Job Cuts Are Not Just Biting Inside the Beltway

Government employment is down again. But while cuts in state and local jobs drove the decline in 2011 and 2012, the federal government is the culprit now. The federal workforce has decreased about 3 percent, or 75,000 positions, from last year. That’s in sharp contrast to the slightly positive growth (0.3 percent) for the state […]

Narrow Tax Hikes Win Support in Several States

Last Tuesday, voters in several states approved modest tax hikes. Increasingly, states are using ballot measures to determine whether to support new taxes. Some of these referenda are binding, others just advisory. But in 2013, voters in several states seem to be hungering for more revenue—though sometimes from unusual sources and decidedly not by raising […]

States Recovering Unevenly and Fed Shutdown Not Helping

The latest edition of the Tax Policy Center’s State and Local Finance Initiative’s State Economic Monitor finds that revenue growth is accelerating in most states but many jurisdictions faced strong economic headwinds going into the recent partial government shutdown and potential default. In several states, a decline in public sector jobs was boosting unemployment even […]

Kansas Sets the Stage for a Perpetual Budget Crisis

Kansas Governor Sam Brownback (R) and the GOP-controlled legislature are struggling to accomplish two goals: They want to repeal the state income tax but need to balance a budget that, despite substantial spending cuts, faces a $700 million shortfall. It is no easy trick. Their solution: new net short-term revenue increases accompanied by a promise […]

Update: Senate Will Consider State Remote Sales Tax Today

Senate Majority Leader Harry Reid (D-NV) plans to bring the Marketplace Fairness Act of 2013 to the floor today for a preliminary vote.  The measure would give states authority to require on-line sellers to collect sales tax on the products they sell to consumers within their jurisdictions. This is big news.  Two years ago, Senate […]