Tax Policy Discussion Focuses on State and Local Issues

A recent article posted on the Pew Center on the States website, billed as “a quick analysis of the day’s top news in state government,” covers recent issues with state budgets and revenues, as well as numerous federal proposals to intervene in states’ authority to administer their own varying tax systems.

On recent state budget woes:

The hearing came as the drumbeat of bad budget news for states continued. Robert Ward, deputy director of The Nelson A. Rockefeller Institute of Government, said last year was the worst calendar year for state revenues on record, with revenue falling 11 percent compared to the year before.

The last quarter of 2009 marked the fifth quarter in a row that revenues fell below their level in the previous year, and signs suggest that trend will continue for the first quarter of 2010, Ward said.

Earlier this week, the National Conference of State Legislatures called the revenue drop-offs the “principal cause” for state budget woes this fiscal year. Half of states reported that personal income tax returns came in below projections in the first eight months of the current fiscal year. Sales taxes fell short in 23 states.

Both of this week’s reports, though, had glimmers of optimism. NCSL noted, for example, that 41 states expected revenues finally to pick up in the next fiscal year, which, for most states, starts in July. And the Rockefeller study pointed out that, during the last quarter of 2009, nine states actually saw an uptick in revenue.

On state taxing automomy:

But Rep. Hank Johnson, a Georgia Democrat, said state-by-state arrangements can lead to people who live and work in different jurisdictions paying income taxes in both for the same job. Johnson is a sponsor of legislation, called the Mobile Workforce State Income Tax Fairness and Simplification Act, that would streamline the process across state lines.

Congress, he said, should address the issue. “There has never been an instance where all states have enacted a uniform tax law,” he said.

Michael Sanderson

Executive Director Maryland Association of Counties

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