The Center's work on 'State Budget and Tax' Issues

The Center’s State Fiscal Project works with state officials and state-based nonprofits to develop responsible budget and tax policies that take the needs of low-income families into account. We provide information and technical assistance on a variety of issues, including strengthening state tax systems, state budget priorities, and making low-income programs more effective. We also help state nonprofits understand how federal budget and tax decisions affect states and their residents.


More Bad News for Backers of Kansas Tax Cuts

November 21, 2014 at 10:42 am

The latest projections from Kansas’ nonpartisan Legislative Research Department bring more bad news for those who hoped Kansas’ massive tax cuts would generate an economic surge.

The department predicts that personal incomes will grow more slowly in Kansas than in the nation as a whole this year and will continue to lag behind the national rate in 2015, 2016, and 2017, by wide margins (see graph).

This isn’t what tax cut proponents predicted.  Governor Sam Brownback said they would be “a shot of adrenaline into the heart of the Kansas economy.”  The Heritage Foundation’s Stephen Moore, who helped design them, said the economic benefits would be “near immediate and permanent.”

Faced with the state’s unimpressive economic performance since the tax cuts took effect, proponents now claim they just need a little more time to work.  But the new forecast, combined with last week’s announcement that Kansas’ budget has fallen much further into the red than previously acknowledged (because of the tax cuts), casts further doubt on those claims.

This shouldn’t be a surprise.  History suggests that deep cuts in personal income taxes are a poor strategy for economic growth, and the serious academic literature typically finds little relationship between a state’s tax levels and its economic performance.  So there’s no reason to think that the tax cuts will cause Kansas’ economy to boom in the future.

California Votes to Shrink Prison Population and Reinvest Savings

November 6, 2014 at 4:28 pm

California voters approved Tuesday a measure to not only reduce the state prison population but also reinvest the savings in specific, high-priority programs.  As our recent report on criminal justice reform and education investments explains, Proposition 47 includes several features that make it a model reform.

Specifically, it:

  • Makes targeted sentencing reductions by reclassifying certain offenses from felonies to misdemeanors, for both current and future offenders.
  • Requires the state to calculate the savings from these reforms each year and deposit them in a dedicated fund.
  • Earmarks the savings for specific investments in mental health and substance abuse treatment, supporting at-risk youth in schools, and victim services.

State policies have been the major drivers of rising prison populations in recent decades, so these changes will reduce prison overcrowding and lower incarceration rates.  The California Legislative Analyst’s Office estimates that Proposition 47 would likely cut the state’s prison population by several thousand inmates while generating corrections savings in the low hundreds of millions of dollars annually.  Even better, research indicates that states can significantly reduce their prison populations without harming public safety.

Just as important, Proposition 47 ensures that the savings get reinvested in specific areas of the budget.  While most states have enacted criminal justice reforms, few have directed the savings to investments in human capital (such as education) or low-income neighborhoods.

How Has State K-12 Funding Fared in Your State?

November 5, 2014 at 3:00 pm

This interactive map shows the change — in both dollars and percent — in state general K-12 funding per student since 2008.  As our recent report explains, funding is below pre-recession levels in at least 30 states, after adjusting for inflation; in 14 states, the decline exceeds 10 percent.  While most states are providing more funding per student this school year than they did a year ago, funding generally hasn’t risen enough to fully offset earlier cuts.


State K-12 Funding in 80 Seconds

November 4, 2014 at 9:47 am

Most states continue to spend less — often far less — per student in general funding for kindergarten through 12th grade than they did before the recession began seven years ago, as our latest analysis shows.  These cuts have serious consequences for students, schools, and jobs.  This short video explains what states should do to ensure that children have the education to succeed in the global economy.

4 Ways States Can Reduce Incarceration Rates

October 31, 2014 at 11:51 am

I outlined recently the causes and costs of states’ high incarceration rates. While most states, under both Republican and Democratic control, have enacted criminal justice reforms in recent years to reduce prison populations without harming public safety, most states’ reforms to date haven’t been extensive enough to have a big impact on prison populations.

State policymakers need to enact reforms that target the main drivers of high incarceration rates: the number of people admitted (or re-admitted) into correctional facilities and the length of their prison stays. States should consider four basic kinds of reforms:

  • Decriminalize certain activities and reclassify certain low-level felonies. The increased use of prison — and longer prison sentences — to punish crimes such as the possession of certain drugs, like marijuana, has contributed heavily to the growth in mass incarceration. Lawmakers should look to reduce or eliminate criminal penalties for such crimes when doing so would not affect public safety.
  • Expand the use of alternatives to prison for non-violent crimes and divert people with mental health or substance abuse issues away from the criminal justice system altogether. Policymakers should assess the range of sentencing alternatives available in their state, such as drug and mental health courts and related treatment, community correction centers, community service, sex offender treatment, and fines and victim restitution. Whenever possible, people whose crimes stem from addiction or mental illness should be diverted into treatment programs rather than sent to prison. New York State adopted this approach as part of its successful corrections reforms (see below).
  • Reduce the length of prison terms and parole/probation periods. Policymakers should reform unnecessarily harsh sentencing policies, including “truth-in-sentencing” requirements and mandatory minimum sentences, and allow inmates to reduce their sentences through good time or earned time policies. States also should expand programs that enable inmates meeting certain requirements to receive favorable decisions in parole hearings, especially in states where parole grant rates remain low.
  • Restrict the use of prison for technical violations of parole/probation. The share of individuals entering prison due to a parole violation grew rapidly between the late 1970s and the late 2000s. While it has fallen more recently, parole revocations accounted for more than a quarter of admissions to state prisons in 2013. Some of these violations are technical, such as missing a meeting with a probation officer or failing a drug test. States should heavily restrict the use of prison for technical parole violators and implement graduated sanctions for more serious parole violations.

States can also adopt more effective probation policies. For example, Hawaii has sharply reduced probation revocations with a program that punishes infractions more quickly and with more certainty, but with much shorter periods of incarceration.

These reforms are complementary; adopting just one or two won’t shrink a state’s prison population as much as a more comprehensive set of reforms that improves “front-end” sentencing and admission policies as well as “back-end” release and re-entry policies. New Jersey, New York, and California have adopted comprehensive reforms that helped drive down prison populations in each of those states by roughly 25 percent, even as crime rates continued to fall.