State Net Capitol Journal – May 19, 2014; States Souring On Property Taxes

State Net Capitol Journal – May 19, 2014; States Souring On Property Taxes

Budget & Taxes

STATES SOURING ON PROPERTY TAXES: Not for the first time, Pennsylvania Sen. David Argall (R) is backing a bill that would replace property taxes levied by school districts with higher state income and sales taxes. But this year, more than half of the state's senators are co-sponsoring his bill.

One reason the measure has gained traction may be that, as Argall said, the property tax "has very little connection to the ability to pay."

"It can literally make people homeless," he said. "It can drive seniors on a fixed income out of a home that they may have built 50 or 60 years ago. It's incredibly unfair."

Opposition to the tax seems to be gaining traction in other states as well. In New York, Gov. Andrew Cuomo (D) and state lawmakers agreed in March to provide $1.5 billion in property tax relief as part of a plan to cut local government spending by sharing services. In Connecticut, a bill that would have made nonprofit entities subject to property taxes died in the Senate, and the House declined to consider the issue. And in Texas, large commercial property owners have successfully challenged hundreds of property tax assessments in court.

But property tax supporters say it is a relatively "good" tax because the revenues it generates are controlled locally and used to pay for things that taxpayers can readily appreciate, like education and public safety. David Brunori, a professor of public policy at George Washington University, actually called Argall's plan to scrap his state's tax "asinine."

"Every public financing expert in the world says it's the ideal tax for public services and he wants to eliminate it? It's efficient, effective and it's generally a very good tax," he said. (STATELINE.ORG)

CA GOV'S BUDGET PLAN CALLS FOR MORE SPENDING: California Gov. Jerry Brown (D) proposed a revised 2014-15 budget last week that calls for nearly $1 billion more in spending than his draft proposal in January.

The new $107.8-billion spending plan includes a sizable increase in Medicaid funding to cover the cost of expanding the program from 7.9 million people to 11.5 million to accommodate the rise in enrollments that has accompanied the rollout of the Affordable Care Act. The proposal also includes a 30-year plan for paying down the state's teacher pension liability, estimated at nearly $74 billion.

"This May revision is good news for California," Brown said. "It shows that California can afford to provide health care to many more people, while at the same time paying its debts and shoring up the long-troubled teachers' retirement system."

The governor also said Democratic lawmakers who control the state's Legislature and outside interest groups are pressing for the restoration of funding for social services and other programs slashed during the recession. But he said overspending has caused budget deficits in most of the last 15 years.

"There are many good ideas, in healthcare, in schooling, the environment, in prison reform, in court expansion, but we only have so much money. We do live within the revenues given," he said.

Brown will now have to sell lawmakers on his plan by the state's June 15 budget deadline. (LOS ANGELES TIMES, WALL STREET JOURNAL)

STATE FISCAL HEALTH STILL 'STABLE': The slow and steady improvement that has characterized state finances for most of the post-Great Recession era is continuing, according to the National Conference of State Legislatures' Spring 2014 "State Budget Update," which is based on a survey of legislative fiscal officers in all 50 states.

Most state officials still describe their fiscal situations as "stable," with those in 34 states expecting to meet revenue estimates for FY 2014 and those in nine states expecting to exceed them. Officials in 22 states expect spending to be over budget, although not substantially.

But despite the considerable improvement in state fiscal conditions since the recession, officials still have concerns.

"While state officials are happy to have moved beyond the pain of the recession, they are still concerned about sluggish revenue growth, rebuilding reserves, tax policy and long-term spending," said Arturo Perez, director of NCSL's fiscal affairs program. (NATIONAL CONFERENCE OF STATE LEGISLATURES)

BUDGETS IN BRIEF: MISSISSIPPI lawmakers approved $17 million in state disaster relief in response to last month's deadly tornadoes (CLARION-LEDGER [JACKSON]). • OHIO's Supreme Court will likely hear two lawsuits challenging Cleveland's so-called "jock tax," a 2-percent income tax on professional athletes from out of town each time their teams play in the city. The lawsuits, filed by a pair of former NFL players — Indianapolis Colts center Jeff Saturday and Chicago Bears linebacker Hunter Hillenmeyer — allege Cleveland charges visiting athletes higher income taxes than other out-of-town workers (CLEVELAND.COM). • NEW JERSEY Gov. Chris Christie (R) has proposed 23 fee increases expected to generate $32.3 million in revenue in his new budget for the upcoming fiscal year. The proposals include a $15 hike in the fee for non-criminal fingerprinting and a $20 increase in the licensing fee for home improvement contractors (STAR-LEDGER [NEWARK]). • MISSOURI's General Assembly passed a bill last week (HJR 68) placing a measure on the Nov. 4 statewide ballot seeking to temporarily raise the state sales tax by .75 percent for transportation projects (ST. LOLUIS POST-DISPATCH, STATE NET).

- Compiled by KOREY CLARK

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