Tax Law

State Net Capitol Journal – May 4, 2015; Transportation Funding Crisis Breeds Self-Reliance In States

Budget & Taxes

Transportation Funding Crisis Breeds Self-Reliance In States

The transportation funding crisis in the states is continuing to worsen. At least six states -- Arkansas, Delaware, Georgia, Montana, Tennessee, and Wyoming -- have delayed roughly $2 billion in construction projects, and five states with Republican governors -- Georgia, Idaho, Iowa, South Dakota and Utah -- increased fuel taxes this year.

With Congress’s latest extension of the federal Highway Trust Fund expiring at the end of May and no long-term funding plan having been approved since 2009, states have largely been left to fend for themselves. State and local governments provided 75 percent of the $213 billion spent each year on average between 2008 and 2012, according to the Pew Charitable Trusts. And Joshua Schank, president of the nonpartisan Eno Center for Transportation, said that percentage will likely increase as long as federal funding remains stagnant.

In addition to raising fuel taxes, which six states did in 2013 and three did in 2014, along with the five that did this year, states are also turning to the private sector. Ohio, for instance, initiated its first public-private partnership last month, when it issued private-activity bonds for a $430 million highway construction project, the largest in the state’s history.

In Minnesota, meanwhile, Republicans who control the House of Representatives are at odds with Democratic Gov. Mark Dayton over how to meet that state’s transportation needs, with the former advocating for shifting existing sales tax revenues to transportation and the latter calling for a tax hike. But they did seem to agree on one thing.

“We would just as soon be proactive in making sure that we’ve got our needs met, and not relying solely on the federal government to come through,” said Rep. Tim Kelly (R), chairman of the House Transportation Policy and Finance Committee.

And back in February, Dayton said the funding the state needed wasn’t “going to come from the federal government,”

“It’s not going to come from the sky, so it’s going to have to come from us,” he said.

Still, U.S. Transportation Secretary Anthony Foxx said states can’t afford to lose transportation funding from Washington.

“The federal funding is still foundational,” he told reporters last month. “They could take one step forward and two steps back if the federal government ends up going over this cliff.” (BLOOMBERG BUSINESS, LEXISNEXIS STATE NET)

KS Welfare Law Draws Broad Criticism

Supporters of the new Kansas law restricting how welfare recipients spend their benefits (see KS AIMS TO LIMIT HOW WELFARE RECIPIENTS SPEND BENEFITS in the April 13 issue of SNCJ) said it’s intended to push the poor to find work.

“The law is really about encouraging individuals to become employed. We believe that employment is the most effective path out of poverty,” said Theresa Freed, director of communications for the Kansas Department for Children and Family Services.

But the state’s approach has drawn criticism from welfare policy experts on both ends of the ideological spectrum. Liz Schott, a senior fellow at the left-leaning Center on Budget and Policy Priorities said the law creates the impression that welfare recipients are gaming the system. Rachel Sheffield, of the conservative Heritage Foundation, said there’s also no evidence of widespread fraud involving the Electronic Benefit Transfer (EBT) cards Kansas welfare recipients receive, and passing laws restricting how they’re used is simply easier than developing policy that’s really effective.

“There are stories that will come out about individuals spending their dollars on casinos, and people get riled up about those things, which is understandable. So you have policymakers putting forth these kinds of laws,” she said. “But this doesn’t get to the heart of what is needed for reform.”

At least 23 states have laws restricting the use of EBT cards, according to the National Conference of State Legislatures, and 18 more -- Arizona, Colorado, Connecticut, Illinois, Kentucky, Massachusetts, Maine, Missouri, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Washington and West Virginia -- are considering bills to limit their use. But Kansas’ law is the most restrictive, according to analysts, because among other things it limits welfare recipients from making more than $25 in ATM withdrawals per day and stops benefits at 36 months, 24 months less than the federal limit. (STATELINE.ORG)

Renewable Energy Offsets Collapse Of Coal

The U.S. coal industry has endured a precipitous decline in recent years. A Duke University study indicated that the industry shed 49,530 jobs between 2008 and 2012.

U.S. renewable energy, meanwhile, has surged. The Duke study found that wind and solar energy generation provided more than 79,000 direct and spinoff jobs over that same period.

“The capacity growth in wind was amazing, and the growth in solar has been absolutely phenomenal,” said Lincoln Pratson, professor of earth and ocean sciences at Duke University’s Nicholas School of the Environment.

Texas and California have been among the biggest beneficiaries of that growth. According to the American Wind Energy Association, wind power generated 9,000 jobs in Texas in 2014 alone, and more new wind projects are currently under construction there than in all other states combined. California, likewise, is expected to account for over half the solar construction nationwide this year.

The Appalachian states hardest hit by the collapse of coal, however, have benefited little from green energy.

“In West Virginia and Eastern Kentucky, where a lot of the job losses have occurred, it is very rugged terrain, these are not easy places to set up wind and solar facilities, they are heavily forested,” said Duke’s Pratson.

Another reason for the lagging renewable energy industry in Appalachia is that states in that region haven’t mandated a percentage of renewable energy that utilities have to meet as 29 other states have done, according to the National Conference of State Legislatures.

“States with incentives have more growth,” said Drew Hearer, who coauthored the Duke study. “The Southeast is incentive-free, and there is almost no development of green energy there compared to other regions.”

But those incentives have come under fire recently. The Texas Senate passed a bill last month (SB 931) that will end that state’s wind power incentives if the House also approves the measure. Federal tax breaks for wind and solar power are also scheduled to expire or diminish, respectively, in 2017 unless Congress extends them. And that might not happen, according to William Nelson, head of North American analysis for Bloomberg New Energy Finance.

“I hear from our wind analysts that they truly believe this could potentially be the end,” he said. (BELLINGHAM HERALD, LEXISNEXIS STATE NET)

Budgets in Brief - May 4 2015

TX Tax Relief: The TEXAS House has tentatively approved a $4.9 billion tax relief plan that includes a sales tax cut. The Senate’s plan favors property tax cuts instead (TEXAS TRIBUNE [AUSTIN]). * RI Approves Casino Hotel: RHODE ISLAND Gov. Gina Raimondo (D) has signed legislation allowing the state’s only full-fledge casino, the Twin River, to build a hotel on its property in Lincoln (PROVIDENCE JOURNAL). * NM Tops Education Budget: Spending on public education and early childhood programs will top $2.75 billion in NEW MEXICO this coming budget year, the highest amount in the state’s history (KRQE NEWS 13 [ALBUQUERQUE]). * SC Collects Accommodations Back Taxes: SOUTH CAROLINA local governments will receive sizeable sums of money as a result of a $3.5 million settlement with several popular travel websites, including Expedia, Orbitz, Priceline and Travelocity, over their alleged failure to collect and remit accommodations taxes from their customers (FREE TIMES [COLUMBIA])

- Compiled by KOREY CLARK

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