State Rundown 5/22: Last-Minute Fireworks (Tax Justice Blog)

By Sebastian Johnson

A Louisiana Senate committee passed a package of eleven bills that would raise an additional $615 in revenue next fiscal year. If passed, the package will raise the state cigarette tax by 32 cents per pack, scale back business subsidies, and decrease many of the state’s existing tax breaks through a 20 percent across-the-board cut. Most of the new revenue raised by the package of bills would go toward preventing deep cuts to higher education and healthcare programs. The bills have garnered opposition from many business groups, and are likely to have a tough time gaining the governor’s signature. Gov. Bobby Jindal has pledged to veto any measure considered a net tax increase by Grover Norquist, who is the head of Americans for Tax Reform and not a resident of Louisiana.

Minnesota’s lawmakers are headed for a special session after Gov. Mark Dayton pledged to veto a $400 million education spending bill that does not include additional funds for universal pre-kindergarten. The veto comes after an offer by Dayton to drop his insistence on universal pre-kindergarten in exchange for $125 million in additional educational funding was rebuffed by conservative lawmakers. The veto and call for a special session cap five months of negotiations and failed compromises over the budget. In the press conference announcing his planned veto, Gov. Dayton railed against lawmakers for considering billions of dollars in tax cuts but balking at funding education, saying “It’s astonishing that with a $1.9 billion projected surplus and more than $1 billion on the bottom line for future tax cuts, there would not be more invested in our schools this year.”

Oklahoma lawmakers passed an unbalanced budget deal that would cut the higher education budget deeply but allow disastrous tax cuts to take effect. Facing a $611 million budget deficit, the legislature decided to address most of the shortfall through the use of $589 million in agency and reserve funds. The rest of the shortfall was made up in cuts to higher education ($24.1 million). Some agencies will see budget cuts of up to 7.25 percent, while a proposal to increase teacher pay and add days to the school year will likely be scrapped. Meanwhile, a cut in the top personal income tax rate from 5.25 to 5 percent will continue as planned, despite the revenue shortfall and its cost of $200 million over two years. The cut willoverwhelmingly benefit the wealthy, with ITEP data revealing that the top 1 percent of Oklahoma taxpayers will receive an average cut of $2,127 while those in the middle will get an average cut of just $31. The Oklahoma Policy Institute called for the rejection of the budget deal  as it “barely maintains some vital services only by using up hundreds of millions in one-time revenues that will immediately dig another large budget hole for next year. Oklahoma will not be able to kick this can down the road much longer. Legislators should reject this budget and demand a balanced plan that includes sustainable revenue options.


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