State Budget and Tax Archive
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General Assistance Programs: Safety Net Weakening Despite Increased Need
Updated December 19, 2011
State General Assistance programs, which provide a safety net of last resort for those who are very poor and do not qualify for other public assistance, have weakened considerably in recent decades and are continuing to do so, despite the large increase in need resulting from the recession. This report discusses how General Assistance Programs … -
Slideshow: The State Budget Crisis and the Economy
Updated December 19, 2011
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Senate’s Balanced Budget Amendment Could Force Deep Cuts in Aid to States
December 14, 2011
The Republican-sponsored version of a constitutional balanced budget amendment, which the Senate voted on today, would require enormous federal budget cuts, very likely resulting in dramatic reductions in federal grants to states and localities for services ranging from education to highway maintenance to public safety. The attached … -
New CBO Report Finds Up to 2.4 Million People Owe Their Jobs to the Recovery Act
Updated November 23, 2011
View the most recent version of this report: New CBO Report Finds Hundreds of Thousands of People Still Owe Their Jobs to the Recovery Act Updated May 29, 2012 A new Congressional Budget Office (CBO) report estimates that the American Recovery and Reinvestment Act (ARRA) increased the number of people employed by between 0.4 million and 2.4 million jobs … -
TANF Benefits Fell Further in 2011 and Are Worth Much Less Than in 1996 in Most States
November 21, 2011
Cash assistance benefits for the nation's poorest families with children fell again in purchasing power in 2011 and are now at least 20 percent below their 1996 levels in 34 states, after adjusting for inflation. While most states froze benefit levels in 2011, six states and the District of Columbia cut them, reducing … -
The Impact of State Income Taxes on Low-Income Families in 2010
November 15, 2011
The successful bipartisan effort over the last two decades to reduce state income taxes on working-poor families has stalled and is in danger of reversing. No new states exempted working-poor families from income taxes in 2010, and in most of the 15 states where such families still pay income taxes, they saw their … -
The Current Services Baseline: A Tool for Understanding Budget Choices
October 21, 2011
When governors and legislative bodies put forward state budget proposals, they almost always recommend changes in state policies, such as increases or reductions in the number of people eligible for state services, alterations in formulas used to fund schools and local governments, changes in staffing levels, and so on. To … -
New School Year Brings Steep Cuts in State Funding for Schools
Updated October 7, 2011
To view the updated paper see: New School Year Brings More Cuts in State Funding for Schools Elementary and high schools are receiving less state funding than last year in at least 37 states, and in at least 30 states school funding now stands below 2008 levels – often far below. These cuts are attributable, in part, to the failure of the federal … -
PAYGO: Improving State Budget Discipline While Retaining Flexibility
September 22, 2011
States can help policymakers and the public understand the consequences of budget decisions and properly weigh the long-term impact of alternative proposals by adopting important budget management tools that also promote fiscal responsibility. The cornerstone of these tools is "pay-as-you-go" (PAYGO), a requirement that the … -
Raising Medicare’s Eligibility Age Would Increase Overall Health Spending and Shift Costs to Seniors, States, and Employers
August 23, 2011
Raising Medicare's eligibility age from 65 to 67, which the new Joint Select Committee will likely consider this fall as a deficit-reduction measure, would not only fail to constrain health care costs across the economy; it would increase them. While this proposal would save the federal government money, it would do so by shifting costs … -
Proposed “Digital Goods and Services Tax Fairness Act” Likely to do More Harm Than Good In Current Form
August 11, 2011
The Digital Goods and Services Tax Fairness Act of 2011 (S. 971/H.R. 1860) would regulate state and local taxation of downloaded music and movies and online services like photo storage and payroll processing. One section of the legislation — a set of so-called "sourcing rules" specifying which … -
Case for Regulating State and Local Taxation of Digital Goods and Services has Little Merit
August 11, 2011
A bill before Congress, the Digital Goods and Services Tax Fairness Act of 2011 or DGSTFA (S. 971/H.R. 1860), would regulate states' and localities' taxation of downloaded music, movies and online services like photo storage and payroll processing. Though proponents of the legislation claim that it is needed to … -
Tax Flight Is a Myth
August 4, 2011
Executive Summary Attacks on sorely-needed increases in state tax revenues often include the unproven claim that tax hikes will drive large numbers of households — particularly the most affluent — to other states. The same claim also is used to justify new tax cuts. Compelling evidence shows that this claim is … -
Podcast: Tax Flight Is a Myth
August 4, 2011
"Attacks on sorely-needed increases in state tax revenues often include the unproven claim that tax hikes will drive large numbers of households - particularly the most affluent - to other states. The same claim also is used to justify new tax cuts. Compelling evidence shows that this claim is false. The effects of tax increases on migration are, at most, small - so small that states that raise income taxes on the most affluent households can be assured of a substantial net gain in revenue."
Duration: 1:54
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Video Podcast: Tax Flight Is a Myth
August 4, 2011
"Attacks on sorely-needed increases in state tax revenues often include the unproven claim that tax hikes will drive large numbers of households - particularly the most affluent - to other states. The same claim also is used to justify new tax cuts. Compelling evidence shows that this claim is false. The effects of tax increases on migration are, at most, small - so small that states that raise income taxes on the most affluent households can be assured of a substantial net gain in revenue."
Duration:1:49
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State Budget Cuts in the New Fiscal Year Are Unnecessarily Harmful
Updated July 28, 2011
The cumulative effect of four consecutive years of lagging revenues has led to budget-cutting of historic proportions. An analysis of newly enacted state budgets shows that budget cuts will hit education, health care, and other state-funded services harder in the 2012 fiscal year – which started July 1, 2011 – than … -
Better-Than-Expected State Tax Collections Highlight Importance of Income Taxes
July 11, 2011
State revenues—especially income tax collections—are beginning to recover from the worst recession since the 1930s, but they still have a long way to go. At least 28 states have reported that tax collections for the just-ended fiscal year will exceed the amount expected when their budgets were adopted last spring. … -
New Fiscal Year Brings Further Budget Cuts to Most States, Slowing Economic Recovery
June 28, 2011
States have enacted deep cuts in education, health care, and other important public services in their budgets for fiscal year 2012 (which begins July 1 in most states). It is the fourth year in a row of budget-cutting for states, and the 2012 cuts are deeper than in past years. Of the 32 states that have enacted budgets, as … -
Camp-Hatch Proposal Would Harm Long-Term Unemployed and Weaken Recovery
June 13, 2011
Legislation from House Ways and Means Chairman Dave Camp and Senate Finance Committee Ranking Member Orrin Hatch would rescind the federal government’s commitment to provide unemployment insurance (UI) benefits through 2011 to Americans who have been out of work for more than half a year and are still looking for a job. Their bill … -
Promoting State Budget Accountability Through Tax Expenditure Reporting
Updated May 24, 2011
Each year states spend tens, maybe hundreds, of billions of dollars through “tax expenditures.” Tax expenditures are tax credits, deductions, and exemptions that reduce state revenue. They can include everything from poverty-reducing tax credits, to middle-class benefits, to corporate subsidies. Tax expenditures … -
Federal “Business Activity Tax Nexus” Legislation: Half of a Two-Pronged Strategy to Gut State Corporate Income Taxes
Updated May 13, 2011
Major multistate corporations are engaged in a two-pronged lobbying strategy aimed at substantially increasing the share of their nationwide profit that is not taxed by any state. The strategy involves the enactment of complementary state and federal legislation. The state legislation — which corporations have already … -
A Common-Sense Strategy for Fixing State Pension Problems in Tough Economic Times
May 12, 2011
Restoring underfunded state and local workers’ pension programs to full fiscal health is a long-term goal for state policymakers that should be accomplished with moderate, common-sense steps, rather than drastic measures that could imperil states’ economic recoveries. Today’s pension shortfalls were caused in substantial … -
Testimony: Iris Lav on the Transparency and Funding of State and Local Pensions
May 5, 2011
Mr. Chairman, Mr. Lewis, and members of the committee, I appreciate the invitation to appear before you today. I would like to make six related points in my testimony: Most state and local employees receive modest pension benefits, for which both they and their employers contribute annually during their working years. … -
Proponents' Case for a Federally-Imposed Business Activity Tax Nexus Threshold Has Little Merit
Updated April 27, 2011
A bill under consideration in the U.S. House of Representatives would strip states of their current authority to tax a fair share of the profits of many corporations that are based out-of-state but do business within their borders. The Subcommittee on Courts, Commercial and Administrative Law of the House Judiciary Committee held a … -
An Arizona “TABOR” Would Endanger Education, Public Safety, and Infrastructure
April 19, 2011
The Arizona legislature is considering a new, very rigid limit on state spending. The limit would closely resemble a Colorado limitation known as the Taxpayer Bill of Rights or TABOR. An Arizona TABOR would make it very difficult for future Arizona legislatures and governors to meet the state’s obligations in … -
A Hand Up: How State Earned Income Tax Credits Help Working Families Escape Poverty in 2011
April 18, 2011
Summary The federal Earned Income Tax Credit, which began in 1975 and has been expanded several times since then, is often heralded as the most effective anti-poverty program in the United States, particularly for children in working families. In 2009 alone, it lifted 6.5 million working families, including 3.3 million children, out … -
States Can Avert New Revenue Loss And Protect Their Economies by Decoupling From Federal Expensing Provision
Updated April 14, 2011
A recent change in federal tax law regarding business investment in machinery and equipment could be very costly for many states and hurt their economies. Eighteen states are on track to lose $4.6 billion in state corporate and individual income tax revenues during the current and next two state fiscal years: some … -
Proposed “Business Activity Tax Nexus” Legislation Would Seriously Undermine State Taxes on Corporate Profits And Harm the Economy
Updated April 13, 2011
A bill recently reintroduced in the U.S. House of Representatives would strip states of their current authority to tax a fair share of the profits of many corporations that are based out-of-state but do business within their borders. Representative Bob Goodlatte reintroduced the “Business Activity Tax Simplification Act” … -
Tax Foundation Figures Do Not Represent Typical Households’ Tax Burdens
April 12, 2011
This report has been updated. Click here for the updated analysis. Executive Summary Each year, the Tax Foundation releases a report projecting “Tax Freedom Day,” which it describes as the day when Americans will have “earned enough money to pay this year’s tax obligations at the federal, state, and local levels.” [1] The Tax … -
State and Local Governments Should Close Online Hotel Tax Loophole and Collect Taxes Owed
April 12, 2011
State and local governments throughout the United States are losing roughly $275 million to $400 million in revenue each year because of their failure to ensure that online travel companies like Expedia, Orbitz, and Priceline collect and remit the appropriate amount of tax on hotel room bookings. Online travel companies (OTCs) typically pay applicable … -
What if Ryan's Medicaid Block Grant Had Taken Effect in 2000?
April 12, 2011
House Budget Committee Chairman Paul Ryan’s radical proposal to convert Medicaid to a block grant, which the House will consider this week as part of Ryan’s sweeping budget plan, would have cut federal Medicaid funds to most states by more than 25 percent by 2009 and to several of them by more than 40 percent if it … -
Podcast: Governors' Budgets Proposals: The Good, the Bad, and the Ugly
April 5, 2011
Erica Williams, Policy Analyst with the Center’s State Fiscal Project discusses how proposed budgets put forth by many governors would greatly harm their states residents.
Duration: 3:17
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Podcast: Radical Medicaid Proposals Could Add Millions to Ranks of Uninsured
March 24, 2011
Edwin Park, Vice President for Health Policy, discusses how Medicaid block grant proposals would harm seniors, children, and people with disabilities, as well as states.
Duration: 4:59
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Governors are Proposing Further Deep Cuts in Services, Likely Harming Their Economies
Updated March 21, 2011
All of the 48 states releasing initial budget proposals for fiscal year 2012 (which begins July 1 in most states) have done so, and for the fourth year in a row, these budgets propose deep cuts in education, health care, and other important public services — in many cases, deeper than previous cuts. [1] These cuts will delay the … -
Podcast: Basic Facts About State and Local Workers
March 17, 2011
Liz McNichol, Senior Fellow with the Center’s State Fiscal Project discusses the facts about state and local workers: who they are, what they do, and how their pay compares to their private sector counterparts.
Duration: 3:37
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Proposed Public Employee Pension Reporting Requirements Are Unnecessary
March 15, 2011
In February, Congressmen Devin Nunes and Darrell Issa (both California Republicans) and Paul Ryan (R-Wis) introduced legislation (H.R. 567) to require states and local governments to report their pension liabilities to the federal government using what is known as a “riskless rate” — an interest rate tied to … -
Podcast: Tax Cuts Worsening Wisconsin’s Budget Problems
March 1, 2011
Nick Johnson, Vice President for State Fiscal Policy discusses the budget situation in Wisconsin.
Duration: 4:18
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Media Briefing: Medicaid, Health Reform, and the States
February 28, 2011
Judith Solomon, Vice President for Health Policy, Edwin Park, Vice President for Health Policy, and Robert Greenstein, the Center’s President, will discuss proposals to block grant the Medicaid program and repeal its maintenance of effort requirements.
Duration: 20:00
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A Balanced Approach to Closing State Deficits
Updated February 25, 2011
As states head into their fourth year of fiscal crisis, most continue to face severe revenue shortfalls that require closing huge deficits. [1] As they prepare and consider budgets for the upcoming fiscal year, which begins July 1, 2011 in most states, the choices they make about how to close those deficits have serious … -
Florida “TABOR” Proposal SJR 958 Would Endanger Education, Public Safety, and Infrastructure
Updated February 22, 2011
The Florida legislature is considering a TABOR proposal, SJR 958, to limit the growth in state revenues by the combined rate of inflation and population growth. The measure would: Immediately and over the long term raise Florida’s cost of borrowing to invest in infrastructure, costing the state potentially tens of … -
Press Release: State Unemployment Insurance Systems Need Major Reforms to Avoid Employer Tax Increases, Deep Benefit Cuts for Jobless Workers
February 9, 2011
Issued Jointly With Many states’ systems for financing unemployment insurance (UI) are broken and, without major reforms, will remain broken, requiring years of high federal taxes on employers and threatening UI’s role as a key economic stabilizer during recessions, according to a major new report … -
Testimony: Iris Lav, Senior Advisor, Before the House Oversight Committee Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs
February 9, 2011
Mr. Chairman, Mr. Quigley, and members of the committee, I appreciate the invitation to appear before you today. A spate of recent articles regarding the fiscal situation of states and localities have lumped together their current fiscal problems, stemming largely from the recession, with longer-term issues relating to debt, … -
An Update on State Budget Cuts
Updated February 9, 2011
See the following reports for more up-to-date data: State Budget Cuts in the New Fiscal Year Are Unnecessarily Harmful, July 28, 2011 New School Year Brings Steep Cuts in State Funding for Schools, October 7, 2011 With tax revenue still declining as a result of the recession and budget reserves largely drained, the vast majority of states have … -
Podcast: Troubling Trends in Governors’ Budget Proposals
February 8, 2011
Erica Williams, policy analyst with the Center’s State Fiscal Project, discusses troubling trends in governors’ new budget proposals.
Duration: 4:16
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Rebuilding the Unemployment Insurance System: A Deficit-Neutral Plan That Limits Tax Increases and Maintains Benefits
February 8, 2011
Issued Jointly With The systems for financing unemployment insurance (UI) in many states are broken and, without major reforms, they will remain broken through this decade and beyond, requiring years of high federal taxes on employers and threatening the system’s role as a key economic stabilizer during … -
Why and How States Should Strengthen Their Rainy Day Funds
February 3, 2011
The roller-coaster economy of the last decade has highlighted the importance of state “rainy day funds” — budget reserves designed to respond to unexpected revenue declines or spending increases caused by recessions or other events. Between 2001 and 2004 and again starting in 2007, states … -
Podcast: Misunderstandings About State Debt and Pensions Create Unnecessary Alarm
January 25, 2011
Senior advisor Iris Lav discusses misconceptions concerning bond debt, pensions and other challenges facing states.
Duration: 4:42
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Media Briefing: Misunderstandings Regarding State Debt, Pensions, and Retiree Health Costs Create Unnecessary Alarm
January 20, 2011
Iris Lav discusses misconceptions about state and local bond debt, pension obligations, and retiree health costs that have lead to misguided calls for drastic, immediate measures that are not necessary and could prove harmful.
Duration: 14:49
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Misunderstandings Regarding State Debt, Pensions, and Retiree Health Costs Create Unnecessary Alarm
January 20, 2011
A spate of recent articles regarding the fiscal situation of states and localities have lumped together their current fiscal problems, stemming largely from the recession, with longer-term issues relating to debt, pension obligations, and retiree health costs, to create the mistaken impression that drastic and immediate measures are needed to avoid an imminent fiscal …
