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. 

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 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.

This Act provides that neither the state nor a political subdivision may impose, assess, collect, or attempt to collect a tax on Internet access or the use of Internet access.

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.”

In late October, outgoing Speaker of the House John Boehner of Ohio announced his intention to “clean the barn” as much as possible before his successor took the gavel. In keeping his promise, Boehner succeeded in brokering a bipartisan, two-year budget deal to avoid a government shutdown and prevent a government default on its debt. To offset the increased spending caps for defense and discretionary programs, the budget deal included cost-saving provisions for certain programs, some of which—including the following—will have an impact on state governments.

CSG Midwest
Every state uses tax and financial incentives to attract, retain and expand businesses. The benefits are the jobs and economic activity that these firms bring to a state, but what are the costs? In 2012, New York Times investigation put the price tag for states and local governments at more than $80 billion, but to a large degree, policymakers have been establishing and continuing these incentive programs without a firm handle on the costs.
That may begin to change in 2017, when a new rule of the Governmental Accounting Standards Board takes effect. It will require state and local governments to report how much revenue they are losing or willingly not collecting as the result of their tax-abatement agreements with businesses.

Congress returned from the August break facing the challenge of having to address a long list of critical issues in the dwindling legislative year. These important issues include reaching agreement on the budget and debt ceiling; addressing the expiring highway funding authority; overhauling federal education policy; and discussing cybersecurity legislation.

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