State Budgets

Tax and Fiscal Policy Task Force and Center for State Fiscal Reform: Policy Prescriptions to Address Economic and Health Care Challenges in the Face of COVID-19

The Tax and Fiscal Policy Task Force describes policy solutions that can be applied during this COVID-19 crisis.

Facilitating Business Rapid Response to State Declared Disaster Act
In response to natural disasters in previous years, policymakers many times focused their efforts on appropriating money to pay for reconstruction. Of course, this can be a needed response. However, temporarily repealing burdensome state regulations and tax policies is another essential tool that policymakers have at their disposal to significantly speed up response times for indispensable disaster relief workers. This ALEC model policy would amend the public services law, state law and tax law, in relation to thresholds for establishing presence, residency or doing business in the state for out-of-state employees and businesses including affiliates of in-state businesses that temporarily provide resources and personnel in the state during a state of emergency declared by either the Governor or the President of the United States. For more information, see: When Disaster Struck, States Repealed Onerous Regulations

State Budget Reform

As many states look to re-evaluate their budgets to factor-in recent market trends, the ALEC State Budget Reform Toolkit is a great resource. The toolkit outlines 23 proven policy solutions for states to improve their budget process, while avoiding economically damaging tax increases. Retaining our national and state economic competitiveness during this period will be critical. This will ensure we exit this painful time with the best outlook for recovery and growth.  You might be interested in our latest video, where we discuss how state policymakers can best position their states to weather these challenging times of economic uncertainly.

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Principles of Taxation

States can also reference the ALEC Principles of Taxation as a guide for tax policy changes. These principles provide guidance for a neutral and effective tax system; one that raises needed revenue for core functions of government, while minimizing the burden on citizens.

When it comes to tax policy, we are seeing some encouraging solutions. The Trump Administration has wisely delayed the federal tax filing and payment deadline by 90 days, and an increasing number of states are following suit. This shift will help businesses remain competitive (a key component of the ALEC Principles of Taxation) and families manage cash flow during these trying times. Also, the recent federal CARES Act provided businesses flexibility in claiming net operating losses (NOLs) and this will give businesses some much-needed breathing room. States could allow more flexibility around claiming NOLs on their state income tax as well.

Resolution for a Federal Balanced Budget Amendment

Once the COVID-19 crisis subsides, the federal government should wholeheartedly work toward a reduction in both federal spending and the national debt. There are many pro-taxpayer fiscal rules to choose from, including the Taxpayer Bill of Rights (TABOR) in Colorado, or a meaningful balanced budget amendment, like the one Indiana voters overwhelmingly inserted into their state constitution in 2018. President Trump’s proposed budget for FY 2021 already outlined the importance of fiscal rules this year. Individuals and businesses should not be squeezed for higher taxes to support federal spending habits as the national debt hurtles past $23 trillion.

Policy prescriptions developed by our members can be found in ALEC Connect.

In Depth: State Budgets

Smart budgeting is vital to a state’s financial health. The ALEC State Budget Reform Toolkit offers more than 20 policy ideas for addressing today’s shortfalls in a forthright manner, without resorting to budget gimmicks or damaging tax increases. One way to stabilize budgets over time is to embrace…

+ State Budgets In Depth