States Take the Lead on Fiscal Reform: Jonathan Williams on the Hugh Hewitt Show

States are taking matters into their own hands to ensure efficient governance and responsible budgeting. In a wide-ranging interview, ALEC President and Chief Economist Jonathan Williams spoke with nationally syndicated radio host Hugh Hewitt about national trends on the fiscal front as state leaders pursue their own DOGE efforts.

“It’s something that we at ALEC have thought a lot about, and we’ve created our ALEC Government Efficiency Coalition to meet that need, really to help coordinate the efforts of our members to look at those spending issues at the state level,” Williams explained.

Unlike the federal government, which has failed to pass a regular budget in decades, nearly every state operates under a balanced budget requirement.

“The big difference between the states and D.C. when it comes to budgeting is 49 out of the 50 states have a balanced budget amendment, at least in some type or form, and the Feds don’t even pass a regular budget.”

This push for efficiency is gaining traction as more than a dozen states are implementing their own measures to root out waste, fraud, and abuse in government spending.

“We are absolutely looking at that,” Williams said, adding that even though the dollar amounts at the state level are smaller than those in Washington, there is still significant room for improvement.

But fiscal responsibility goes beyond state DOGE attempts. In states like South Carolina and Mississippi, for example, they are trying to take a bite out of personal income tax rates.

“The Southeastern Conference is not just an impressive football conference, it’s an impressive economic competition of what’s going on in the southeastern states,” Williams noted.

South Carolina’s proposal, backed by legislative leaders and Governor Henry McMaster, seeks to transform the state’s tax system.

“It would take South Carolina’s personal income tax rate, which is nearly six and a half right now, and a huge outlier of a very competitive region where you’re competing, obviously, with zero income tax states like Tennessee and Florida and Texas in the region.”

The plan aims to lower the state’s income tax to a 3.99% flat tax, with triggers in place to further reduce it to 2.5%. “Which of course, would be one of the lowest of any state that has an income tax today,” Williams emphasized.

Another major policy issue facing states is the lingering presence of inheritance taxes, also known as the “death tax.” Hewitt, a longtime critic of these taxes, called them outdated and unnecessary, questioning why they still exist. Williams agreed, arguing that inheritance taxes drive successful individuals and business owners out of high-tax states.

“Tt’s an incredibly economic backward way of looking at things. You’re not going to build a wall and keep your residents from leaving the state,” he said. “You’re basically not raising any revenue from these state-level death taxes.”

Only about five states still have inheritance taxes, including progressive-leaning states like Maine, but Williams noted that some conservative states, such as Nebraska, also maintain them due to local government funding mechanisms.

“The revenue goes not to the state level. That goes to the counties and to the local units of government who are fighting for their fiefdom,” he explained.

Hewitt pressed further, calling the tax fundamentally unfair. Williams agreed, citing former Virginia Governor George Allen’s observation that “people are not trees. People will move. They will vote with their feet.” He noted that death taxes rank among the least popular in national polling, alongside gas and property taxes. “That’s exactly right … it’s been taxed a couple of times already. It’s an unfair tax.”

As states continue to implement policies that promote economic growth and fiscal discipline, Williams believes that through initiatives like the ALEC Government Efficiency Coalition and aggressive tax reform efforts, states are proving that conservative fiscal policies work.

“We’ve seen over a dozen states now move towards their own DOGE-level efforts, and while the dollar amounts obviously, are much smaller at the state level than they are in Washington, we all know there’s a lot of room to look for waste, fraud, and abuse at the state and local level as well. And that’s exactly what we’re doing at ALEC.”