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States Are Starting to Save for Another Rainy Day

April 16, 2014

With the budget challenges of the Great Recession and its aftermath still fresh in their minds, state policymakers are considering ways to strengthen their “rainy day funds” — budget reserves they can use when recessions or other unexpected events cause revenues to fall or spending to rise.  But, it’s still premature for most states to act aggressively to refill the funds until their revenues...

New Report Highlights Need for States to Help Address Income Inequality

March 6, 2014

An important new report documents rising inequality in states across the country.  As we outlined in our 2012 analysis of state-by-state income inequality, states can — and should — take certain steps to help alleviate these trends.

A study of IRS data by the Economic...

Plenty of Room for Improvement in State Budget Planning

February 5, 2014

Most states fall short on long-term budget planning (see map below) and would reap concrete benefits by adopting proven, non-partisan fiscal tools, according to our new report.  Oregon is a good example.

When Oregon created a state lottery in 1984, it exempted lottery winnings from the state income tax.  But...

The Best — and Worst — States at Long-Term Budget Planning

February 4, 2014

Connecticut, Maryland, and Tennessee do the best job of factoring long-term issues into their budget decisions, according to our major new report (with state-by-state fact sheets), while New Jersey, Oklahoma, and South Dakota do the worst.
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Not So Fast: Echoing the Call for State Budget Caution

January 27, 2014

We recently explained that policymakers shouldn’t use the arrival of budget surpluses to start cutting taxes.  Now, others also are urging states to use caution before prematurely cutting taxes.

Twenty-three states cut taxes or other revenues in their fiscal year 2014 budgets, according to...

Higher-Than-Expected Revenues Offer Lessons for States

June 13, 2013

In many states, recent tax collections are higher than last year, exceeding the states’ own projections.  The higher-than-expected revenues are welcome — but states should proceed cautiously as they consider what to do with the new funds, as we explain in a new paper.

A closer look into the tax spurt...

Texas Model Isn’t All That It Seems

June 11, 2013

Texas Governor Rick Perry heads to New York this weekend to try to attract businesses by presenting Texas as a prosperous, business-friendly state.  To be sure, the number of people and jobs in Texas has grown in recent decades; groups like the American Legislative Exchange Council have cited it as a model for...

Swapping State Income Taxes for Bigger Sales Taxes Would Make Tax Systems Even Less Fair

April 25, 2013

4-25-13sfp.jpgMy recent post explaining that there are far better ways to address state tax volatility than replacing income taxes with larger sales taxes noted that such a swap would tilt state tax systems even more against low-income families.  This two-part graphic...

Looking for Common Ground in the State Income Tax Debate

April 22, 2013

Josh Barro of Bloomberg News wrote a thoughtful commentary on our recent report on ways to address income tax volatility.  While we differ with some of his conclusions, we’re encouraged that he agrees that states shouldn’t...

Five Strategies to Smooth Out the Ups and Downs of State Tax Dollars

April 18, 2013

State revenues plummet in recessions as struggling households and businesses pay less in taxes, and it occurs just when states can least afford the loss (see chart).  Some states, including Louisiana, Nebraska, and North Carolina, have recently considered replacing state...

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