CSG Midwest
As the new year began in Illinois, there was still seemingly no resolution in sight to a months-old problem: The state had no budget. But even without one in place, many parts of Illinois government continued to operate, as the result of a mix of judicial, legislative and executive actions.
“Government ‘shutdown’ is always in quotes because no government really shuts down,” notes Chris Mooney, director of the University of Illinois Institute on Government and Public Affairs. “It’s always a matter of to what degree — how much government activity is not being done.”
Illinois has been without a budget since July 1 because of a stalemate between the Democrat-led legislature and Republican governor.
Still, according to the Illinois comptroller’s office, 90 percent of state operations are being funded. For example, state employees get paid because of a court order; services for the disabled continue as the result of a consent decree; and other obligations, such as pension payments, are covered under “continuing appropriations” language in state statute. Illinois legislators also have passed emergency spending bills to fund K-12 schools and local governments.
“All states feel disruption without a budget,” says Brian Sigritz, director of state fiscal studies at the National Association of State Budget Officers, “but the level of disruption varies from state to state.”

In 2016, state sales tax rates look a lot like they did in 2015. In 2015, 45 states plus the District of Columbia levied a sales tax – the same was true on January 1, 2016. In 2015, five states (Alaska, Delaware, Montana, New Hampshire and Oregon) did not levy a sales tax – the same five states did not levy a sales tax on January 1, 2016. Sales tax rates (or lack thereof) remained the same in 49 states and the District of Columbia on January 1, 2016 over 2015 rates. Those rates range from a low of 2.9 percent in Colorado to a high of 7.5 percent in California, with an average rate 5.65 percent.

In 2016, state sales tax rates look a lot like they did in 2015. In 2015, 45 states plus the District of Columbia levied a sales tax – the same was true on January 1, 2016. In 2015, five states (Alaska, Delaware, Montana, New Hampshire and Oregon) did not levy a sales tax – the same five states did not levy a sales tax on January 1, 2016. Sales tax rates (or lack thereof) remained the same in 49 states and the District of Columbia on January 1, 2016 over 2015 rates. Those rates range from a low of 2.9 percent in Colorado to a high of 7.5 percent in California, with an average rate 5.65 percent.

For states in the coming year, no news is good news when it comes to finances. For the last few years, states on the whole have seen a slow and steady increase in revenues. In the coming year, state leaders will have a little bit more breathing room when making fiscal decisions. States collected $912 billion in total tax revenues in fiscal year 2015—an increase of 5.6 percent over 2014 levels. Growth over this time was widespread—47 states reported growth—while three states, Alaska, Illinois and North Dakota, reported declines. For states reliant on natural resources, that cautious revenue growth could be derailed by volatility in the oil market.

Congress finished 2015 on an unusually productive streak – at least compared to recent years – by passing a variety of legislation important to state governments, including funding the highway trust fund, reforming the Elementary and Secondary Education Act (now called the Every Student Succeeds Act), reauthorizing the highly debated Export-Import Bank, extending a variety of tax incentive provisions, and funding the federal government through September 2016.  Going into a presidential election year, many experts do not expect Congress to act on major policy initiatives before November, and are closely watching what President Obama will do in his final year in office. 

CSG Director of Fiscal and Economic Development Policy Jennifer Burnett outlines the top five issues for 2016, including strategic decisions following modest revenue growth, workforce development, public pensions, federal instability, and health care costs. 

CSG Midwest
As the result of legislative action across the Midwest in 2015, individuals with developmental disabilities and their families may soon have a new tax-free savings tool. According to the National Down Syndrome Society, nine states in this region have passed laws allowing for the establishment of ABLE accounts: Illinois, Iowa, Kansas, Michigan, Minnesota, Nebraska, North Dakota, Ohio and Wisconsin. ABLE stands for Achieving a Better Life Experience. 

NOW, THEREFORE BE IT RESOLVED, The Council of State Governments supports efforts by Congress to regulate e-commerce through legislation that allows States to enforce their existing sales and use tax laws, regardless of the method of transaction, and to collect taxes under state law.

The use of electronic cigarettes—or “vaping”—has exploded in recent years among both youth and adults. In the absence of clear federal regulations, state policymakers have struggled with how best to approach the taxation and regulation of the devices. Attendees heard from state leaders, experts, law enforcement and federal representatives who will discuss how states are currently taxing e-cigarettes and restricting their sales to minors. The presenters also described what the future may hold for regulating consumption and marketing and manufacturing devices.

CSG Midwest

In the final weeks of this year’s legislative session, Minnesota Rep. Bob Barrett worked successfully to secure $100,000 in state funds for a city in his home district. The money, which came from an existing economic development program, aims to help the city lower taxes and be more competitive within the state, as well as with neighboring Wisconsin. But as Barrett’s appropriations request made its way to final passage, he had to answer questions from colleagues. What will prevent you, the Minnesota Senate chair asked Barrett during conference committee, from coming back next year and requesting even more money? “If this money doesn’t do what it’s intended to do, then I won’t be coming back,” Barrett told fellow legislators. “But if it works, and we [create] new jobs, new businesses, new property taxes in my area, that would be telling you that it was money well spent, and I will be coming back and asking for more.”

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