Key Findings

• H. 3295, a proposed spending limit in South Carolina, includes the central element of Colorado’s TABOR: its formula.
• In Colorado, TABOR led to reductions in health, education, public safety, and transportation services. Business leaders headed a successful campaign to suspend TABOR’s formula for five years in November 2005.
• H. 3295 would have similar consequences for public services in South Carolina as TABOR did in Colorado.

Key Findings:

• As a result of SCHIP, the number of uninsured low-income children has fallen significantly, but a substantial share of this progress will be undone if SCHIP funding is frozen (by being held to the SCHIP “budget baseline” level) when the program is reauthorized this year.
• The baseline assumes that SCHIP funding will be frozen for the next ten years at the 2007 funding level of $5 billion, with no adjustment for rising health care costs or expected increases in the number of children due to normal population growth.
• If SCHIP funding is frozen at its 2007 level when the program is reauthorized, states will face a shortfall of $12.3 billion to $13.4 billion for 2008-2012.
• If SCHIP funding is frozen, 20 states will face a shortfall in 2008 equivalent to the average, annual cost of covering up to 940,000 children. In 2012, some 36 states will face a shortfall equivalent to the average, annual cost of covering up to 1.9 million children.

Key Findings

• The President’s budget would reduce funding for most parts of the domestic discretionary budget below the 2007 funding levels, adjusted for inflation. The cuts would start in 2008 and grow deeper in each of the four succeeding years.
• The proposed reductions would effectively shift billions of dollars in costs on to states, requiring them to scale back key public services or raise taxes to plug the holes left by the federal cuts.
• The reductions would come from a wide range of areas, including education, environmental protection, community development, and key supports for low-income families.
• At the same time, the budget would permanently extend virtually all of the 2001 and 2003 tax cuts. Extending the tax cuts would cost much more each year than all of the proposed discretionary program cuts would save.

Key Findings

• Hawaii’s income tax is one of the most burdensome on the poor in the nation. 
• Last year’s tax cut (Act 110) did relatively little for low-income working families.
• A state Earned Income Tax Credit (EITC) would improve Hawaii’s income tax treatment of the poor more than Gov. Lingle’s proposal, and at far less cost.
• An EITC also has other benefits such as reducing poverty, increasing workforce participation, and ease of administration.

Key Findings

• The Administration’s budget would cut federal Medicaid funding by $25 billion over the next five years ($61 billion over the next ten years). 
• $21 billion of the $25 billion in federal savings would be accomplished by shifting costs from the federal government to the states. 
• To compensate for the loss of federal Medicaid funds, states would have to choose between cutting back on their Medicaid programs by reducing eligibility, benefits, or payments to providers; cutting back on other state programs and using those funds to replace federal Medicaid dollars lost; or increasing taxes.

•  Approximately 12,000 impoverished refugees and other humanitarian immigrants who are elderly or have disabilities have lost subsistence aid as a result of the seven-year time limit on eligibility for SSI benefits; SSI constituted the sole source of income for most of these individuals. 
• If Congress does not act, an estimated 40,000 more refugees and other humanitarian immigrants will lose their subsistence aid over the next decade. 
• Congress should help this extremely vulnerable group by eliminating the time limit on SSI benefits for refugees and other humanitarian immigrants who are elderly or have disabilities. 
• At the very least, as a stopgap measure, Congress should extend the time limit because it is difficult or impossible for many refugees and other humanitarian immigrants to become citizens within seven years and retain their SSI eligibility; bipartisan legislation that is consistent with an Administration proposal to temporarily extend the time limit has been introduced but not enacted.

Key Findings

• Nearly 9 million low-income families have severe housing affordability problems, an increase of 33 percent since 2000. Yet despite the increasing need for low-income housing assistance, the emergence of large federal budget deficits has created pressure to reduce domestic spending and led to cuts in low-income housing assistance.  
• In 2006, funding for HUD's affordable housing and community development programs was $3.3 billion (8 percent) below the 2004 level, adjusted for inflation. These cuts come at a time when funding increases will be needed merely to continue to assist the same number of families being helped now. 
• The squeeze on low-income housing already is affecting low-income families. More than 150,000 Section 8 housing vouchers have been lost over the past two years. 
• Cuts in low-income housing assistance threaten to undermine major federal goals such as preserving the stock of affordable housing and improving housing opportunities for low-income families.

Key Findings

• Cuts in federal low-income housing programs are undermining community plans to fight homelessness, which affects approximately 3 million Americans (including 1 million children and 150,000 to 200,000 chronically homeless adults with disabilities) each year. 
• More than 200 communities have begun to develop such plans and many are already implementing them - largely at the urging of the Administration, which has set a goal of ending chronic homelessness and reducing other types of homelessness and promised new federal resources to help meet these goals. 
• Yet the Administration and Congress have cut funding for HUD programs by $3.3 billion (after adjusting for inflation) over the past two years. These cuts have weakened key programs on which local homelessness plans rely, including HOME, CDBG, and Housing Choice Vouchers. 
• These cuts also have more than offset a modest increase in funding for the McKinney-Vento homeless assistance programs, which have grown by $70 million since 2002.

Key Findings

• Maine taxes few services under its sales tax; the sales tax could be modernized to yield more revenue and improve fairness. 
• If Maine included just the services taxed by Connecticut, it would collect an additional $120 million a year.

Key Findings

• Two provisions of the 2001 tax cut are only partially in effect today and will phase in gradually over the next three years.
• These two tax provisions exclusively benefit high-income households. Almost two thirds of the benefits of these tax cuts will go to households with incomes over $1 million when the tax cuts are fully in effect. 98 percent of the benefits will go to households with incomes over $200,000.
• Simply freezing these two tax cuts at their 2007 levels, instead of allowing them to scale up in future years, would save about $13 billion — without taking away any tax cuts that households are already receiving and without having any effect on middle-class households.
• Freezing these two tax cuts at their current levels would primarily affect people with incomes over $1 million, who would still receive tax cuts averaging $140,000 in 2010 due to other provisions of the 2001 and 2003 tax cuts.

Key Findings

• The new CBO ten-year budget forecast shows improvement from last summer’s CBO forecast.
• More than half of the improvement since last August, however, is due to arbitrary rules CBO must follow in projecting emergency supplemental appropriations; CBO says it reflects no “changes in the underlying budgetary environment."
• The remaining portion of the improvement in the ten-year forecast is mainly due to lower projected Medicare and Medicaid costs, rather than higher revenues.  The CBO data do not support claims that the tax cuts are paying for themselves and producing exceptional economic growth.
• The CBO estimates also show that if current policies are continued (i.e., if the tax cuts and AMT relief are extended and no changes are made in programs such as Medicare and Social Security), combined deficits over the next decade will total $2.9-$3.4 trillion.
• The CBO figures indicate that the long-term budget outlook remains grave.

•  The "domestic production deduction" - sometimes also known as the "qualified production activities income" or QPAI deduction - is a large corporate tax break enacted by the federal government in 2004. It is doubling in size in 2007, and tripling by 2010. 
• Some 18 states have disallowed the deduction, even though states typically base their tax codes on the federal. But 29 other states allow it, costing them a billion dollars per year or more. (The rest are unaffected.) '
• The tax break is unjustified as state economic policy. The main beneficiaries are large, profitable, multi-state corporations. They can benefit even if they have no in-state employees. 
• Disallowing the deduction is administratively straightforward. The revenue that would be saved can be used for other, more productive purposes.

Key Findings

•  When states cut taxes too much, they undermine and destabilize the revenue streams necessary to pay for education, transportation, health care, and other public services.  
• During the economic boom of the middle and late 1990s, many states enacted tax cuts, some of them quite large. Proponents argued that big tax cuts would improve a state’s fiscal and economic performance.  
• Those improvements did not occur. When the economic boom ended six years ago, states with big tax cuts had larger budget problems and larger job losses than states that had shown more fiscal restraint.  
• Even as the economy has recovered, the top tax-cutting states continue to lag behind.