Record Spending in States

Total spending across all 50 states last fiscal year exceeded $2 trillion, a new high, according to the National Association of State Budget Officers. The record spending was driven largely by a bump in income tax revenues, resulting from last year’s federal tax overhaul, which prompted many taxpayers to file their tax returns for 2018 early.

 

Total state revenues for fiscal 2018, which for most states ended on June 30, was $838 billion, a more than 6 percent increase from the prior year and the biggest jump since fiscal 2011.

 

Income tax revenue growth was particularly strong in Connecticut (51.4 percent), Illinois (43.2 percent) and Kansas (66.6 percent). In Illinois and Kansas, the gains were due mostly to state income tax increases. Connecticut’s growth was mainly the result of the repatriation of overseas profits by a large number of hedge fund managers who reside in the state.

 

It remains to be seen whether the revenue growth will continue in 2019.

 

“States are still trying to untangle the one-time nature of this revenue bump,” said NASBO Executive Director John Hicks, pointing out that the booming economy has also contributed to higher state income tax collections.

 

On the spending side, states invested almost 9 percent more on transportation, with the biggest increase coming in California, which initiated a ten-year, $54 billion building program.

 

Education spending also increased by 4.6 percent. And Hicks said that growth will likely continue in 2019, given the attention that education funding and teacher pay drew this year. (GOVERNING, REUTERS)

ID Cities Look to Charge New Residents for Growth

A population explosion in Ada County, Idaho is putting a strain on city services, from roads to parks to fire and police stations. So some cities in the tax-averse region are looking to do what the county’s largest city, Boise, has done before: increase impact fees.

 

Impact fees are imposed on developers instead of taxpayers. But since the fees are ultimately passed on to property buyers, developers say they make housing even less affordable.

 

The proposed increase in Nampa, on top of the impact fees that city currently imposes, would add about 3 percent to the price of a $200,000 home.

 

Meridian, which already adopted an impact fee increase earlier this year, is now considering charging developers based on square footage rather than on the number of units they build, as is usually the case. The square footage approach is considered to be more equitable, because larger units tend to attract more people who require more services.

 

Miguel Gaddi, a real estate development consultant who’s been involved with projects in Boise and Nampa, proposed another alternative: imposing lower fees on developers who build close to existing services, saving cities the expense of providing new services.

 

“Why do I have to pay the same impact fee if I’m not putting a burden on the infrastructure?” he said. (IDAHO STATESMAN [BOISE])

Sports Betting Blows Past $500M Mark in NJ

About $260 million was wagered in New Jersey on sporting events in October, bringing the total for the four and a half months sports betting has been legal in the state to $597 million.

 

A spokesman for FanDuel, which handles the sports book at the Meadowlands Racetrack in East Rutherford, said there were two and a half times as many bets placed online in October as there were in September, and in-person wagering was continuing to grow at a “double-digit” rate.

 

“The numbers continue to be impressive,” said Joe Asher, CEO of sports bookmaker William Hill US. “It’s important to remember that the New Jersey sports betting industry is just ramping up. We didn’t even have our app in the Apple Store until the end of September, so we are very pleased.”

 

In May the U.S. Supreme Court struck down the federal Professional and Amateur Sports Protection Act of 1992, which had barred sports betting in most states. Since that ruling, legal sports betting operations have been set up in six states, Delaware, Mississippi, New Jersey, New Mexico, Rhode Island and West Virginia, with Pennsylvania expected to do the same in the coming weeks. The Keystone State will be the first with franchises in each of the nation’s four major professional sports leagues, the NBA, the NFL, the NHL and Major League Baseball, offering legal betting. (ASSOCIATED PRESS, ESPN, PROVIDENCE JOURNAL)

Budgets in Brief - December 3 2018

AK FACING BIG CLIMATE-CHANGE COSTS

ALASKA is facing some of the country’s most extreme climate changes, including coastal erosion and road damage, according to the federal climate report released last month. The report estimated that the climate-related damage could cost the state $110 million to $270 million a year. (ANCHORAGE DAILY NEWS)

 

OR GOV CALLS FOR BIG BOOST IN EDUCATION FUNDING

A policy and fiscal agenda for the next two years issued by OREGON Gov. Kate Brown (D) last week indicated that her main focus over the next six months will be on negotiating a major tax increase for public education. She said more than $2 billion would be required to improve K-12 schools, cover soaring public pension debt and prevent cuts to higher education, but she didn’t offer any specifics about how to generate that revenue. (OREGONIAN [PORTLAND], LEXISNEXIS STATE NET)

 

OR POTENTIALLY FACING $623M DEFICIT

OREGON budget analysts are projecting general fund and lottery revenues in the state could total $23.6 billion from 2019 to 2021, a 5 percent increase over current levels. But they also say the state could face a $623 million deficit, due largely to rising Medicaid and education costs. (OREGONIAN [PORTLAND])

 

OR COULD GAIN $376M FROM CRACKDOWN ON OFFSHORE TAX AVOIDANCE

Reinstating a state law abandoned in the 1980s requiring the complete reporting of corporate profits could net OREGON $376 million more in revenue, according to a report from the Oregon Center for Public Policy. The OCPP said the law would make it harder for multinational corporations to shield their profits from state taxes. (WORLDLINK.COM)

 

OH BUSINESS TAX BREAKS MEANT FOR POOR GOING TO WEALTHY

Policy Matters OHIO, a liberal think tank, says the state’s business income-tax deduction, which allows tens of thousands of businesses to avoid paying state income taxes, is also letting wealthier taxpayers qualify for tax credits intended for low-income residents. Policy Matters opposes the business tax exemption in general, noting that 43 percent of it goes to 7 percent of business filers in the state who earn $200,000 or more in income. (COLUMBUS DISPATCH)

 

-- Compiled by KOREY CLARK

Citizen-Initiated Legislation Altered by MI Senate

Last week the Michigan Senate voted largely along party lines to make significant changes to citizen-initiated measures raising the state’s minimum wage from $9.25 to $12 per hour (SB 1171) and requiring paid sick leave (SB 1175).

 

The Republican-controlled Legislature adopted the two measures in September, keeping them off the Nov. 6 ballot and also making them easier to amend.

 

The changes to the minimum wage measure approved by the Senate would extend the phase-in of the increase by eight years, to 2030 instead of 2022, and cap the wage for tipped restaurant workers at $4 per hour instead of increasing it to $12. The amended sick leave measure would exempt businesses with less than 40 employees and cut the minimum number of hours employers would have to provide from 72 per year to 36.

 

Michigan’s Constitution grants the Legislature the power to either adopt initiated legislation or allow it to go on the ballot. And Senate Majority Leader Arlan Meekhof (R) said as much.

 

“The voters know when they sign a petition that it comes before the Legislature before anything happens to it,” he said.

 

He also said business owners had urged modifications to the legislation to “make sure Michigan continues on its economic progress.”

 

But adopting and amending citizen-initiated legislation in the same two-year session is reportedly unprecedented and potentially unconstitutional. And Democrats decried the timing of the move, in a “lame-duck session” before Gov.-elect Gretchen Whitmer, a Democrat, takes office in January.

 

“I think one of the most troubling things is they dropped the bills the day after the election,” said Senate Minority Leader Jim Ananich (D). “So obviously they had these bills in the works all summer long and didn’t have the courage to show the voters what they were planning on doing.”

 

The bills could be taken up by the House this week. (DETROIT FREE PRESS, DETROIT NEWS, LEXISNEXIS STATE NET)