Stable But Slowing State Revenues Start to Squeeze Policy Ambitions: Jonathan Williams in Governing
This year, there was a return to serious discussion about pretty substantial tax increases in blue states for the first time in several years.
ALEC Executive Vice President of Policy and Chief Economist, Jonathan Williams, was quoted in a Governing piece by Alan Greenblatt discussing the critical decisions lawmakers may have to make regarding stagnating state revenues.
Jonathan Williams, chief economist for the conservative American Legislative Exchange Council, warns of other dangers. With state revenues flattening, some of the holdout states that have never expanded Medicaid are considering doing so to draw down more federal revenue, but they would also be obligating themselves to pick up a portion of the tab.
He also notes that state lawmakers feel under pressure to buy down property tax burdens at the local level. Property tax bills lag market values and many states cap increases, but with housing prices at new highs, bigger tax bills will inevitably follow. Some lawmakers are concerned that at least some local governments used their share of ARPA money to take on permanent expenses such as salaries.
In recent years, both red and blue states were able to have their cake and eat it, too, offering tax relief even as they increased spending on education and other programs. That’s all changed.
“The other thing I’d mention is a return to tax increases in some states that haven’t seen them in a while,” Williams says. “This year, there was a return to serious discussion about pretty substantial tax increases in blue states for the first time in several years.”