State Budget and Tax
State revenues plummet in recessions, just when states can least afford the loss. Some proposals to address this flaw in state tax systems would change the systems’ structure — for instance, by replacing state personal income taxes with sales taxes — but wouldn’t solve the problem and would exacerbate others in state tax systems.
States could better address revenue volatility with such strategies as stronger reserve funds and better mechanisms for managing budget surpluses.
State and local governments are the main source of funding for K-12 education, public colleges and universities, health care, transportation, public safety, and many other services — including services for low-income and other vulnerable residents. They finance these services mostly through taxes and fees, primarily income and sales taxes. (Not every state has an income and sales tax.) Unlike the federal government, states must balance their budgets on an annual basis.
The Center’s State Fiscal Project works with state officials and state-based nonprofits to develop responsible budget and tax policies that take the needs of low-income families into account. We provide information and technical assistance on a variety of issues, including strengthening state tax systems, state budget priorities, and making low-income programs more effective. We also help state nonprofits understand how federal budget and tax decisions affect states and their residents.
May 17, 2013
April 22, 2013
April 18, 2013
Updated April 12, 2013
April 2, 2013
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The State Fiscal Analysis Initiative
The State Fiscal Analysis Initiative brings together nonpartisan, independent, nonprofit organizations in more than 30 states. These organizations have diverse backgrounds and missions, but they share a commitment to rigorous policy analysis, responsible budget and tax policies, a particular focus on the needs of low- and moderate-income families.