State Tax and Budget Trends and Resources
Most states started their 2010 fiscal year today, but not all have budgets in place. Late night budget deliberations yesterday in California, Pennsylvania, and Illinois broke down before any resolutions were reached, leaving those states operating without any way to pay bills or state employees. Many others scrambled to get budget finished, some still have major holes, some are only running by executive order. Click HERE to read more about the budget troubles from Connecticut to Arizona.
Merely having a budget in place does not put your state in the clear. 48 states are facing significant budget deficits, so unless you are in Montana or North Dakota, this issue is immediately pressing.
How can states bridge the gap between their projected expenses and projected revenue? In some cases federal stimulus money is helping, but that's obviously a short term fix and the feds signaled to California last week that they are not interested in stepping in to cover operating budgets. That leaves two basic options - cut costs (i.e. slash services) and/or raise revenue (i.e. hiketaxes and fees). Neither are easy and chambers of commerce must be on guard for both.
There are certainly ways to cut state government expense and waste, however, many government services from police and fire protection to education to economic development and tourism promotion are integral to the prosperity of our communities. On the revenue side, businesses are often a target for tax increases as opposed to broader taxes like income, sales or property. But chambers know that increased business taxes impact everyone by dissuading hiring and investment by business.
Some trends to watch -
- Income Tax Hike on the Wealthy - New York increased income taxes more than 2% on individuals earning more than 500K
- Sin Taxes - Florida and Rhode Island increased cigarette taxes $1 per pack, others have followed suit with tobacco and alcohol tax hikes
- Increased court fees, vehicle registration fees and other sources of non-tax revenue
Here are some website that offer helpful resources related to state tax and budgets:
Stateline.org - Legislative Year in Review - this Pew Foundation funded project offers a great collection state legislative trends. The website also has links to other articles about state issues.
National Association of State Budget Officers - their Fiscal Survey of States, conducted in conjunction with the National Governor's Association, offers analysis and raw data about how states are faring financially.
Center on Budget and Policy Priorities - this left leaning DC think tank has good aggregated trends data about how states are coping with budget deficits.
Tax Foundation - this DC think tank offers analysis of local, state and federal tax with an emphasis on tax policy that is simple, transparent, neutral, stable, not retroactive and broad based.