state revenue

The budget agreement reached by Texas lawmakers earlier this week includes $50 million in new funds to provide grants to technology companies for research and commercialization activities under the Emerging Technology Fund (ETF). A bill to address accountability and transparency of the fund was passed in the House, but later removed from the Senate calendar despite controversy surrounding the decision-making authority of the grants. Lawmakers also passed a measure to reinstate an R&D tax incentive that was repealed in 2006, and set aside funding to lure a space transport company to the state.

In 2010, eight of 13 Western U.S. states currently maintain at least one tax exemption to encourage research and development according to a report from the Council of State Governments. In Trends in Western State Business Incentive, CSG looks at trends in the type and number of incentive business programs being used by 13 Western states — Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming. Among the report's findings, all 13 states had tax incentives targeted at building a knowledge-based economy including:

States have been slow to recover from the recession, but amid all the doom and gloom surrounding the national economy, state general fund expenditure trends are moving in a positive direction. The Spring 2012 Fiscal Survey of States finds governors' recommended budgets show an overall increase in both general fund expenditures and revenues in fiscal year 2013. There are, however, significant challenges ahead for states, including increased expenditures, particularly Medicaid costs and enrollment, and reductions in federal funding.

A steady increase in personal income and sales taxes has helped state tax revenue in most states to surpass previous peak levels seen at the start of the recession. All regions of the country saw gains in the fourth quarter of 2011, with the exception of the Far West. The Plains had the largest gain, at 12.5 percent, followed by the Great Lakes states at 8.9 percent. However, tax collections for local governments are not faring as well mostly due to the lagged impact of falling housing prices on property tax collections. Findings are from a recent Nelson A. Rockefeller Institute of Government report that looks at the impact of taxes on state revenue and highlights trends affecting state revenue changes.

An increase in tax receipts driven mostly by sales and income tax has improved the fiscal outlook for state and local governments in the near term. However, a new report from the Government Accountability Office warns of a widening gap between revenue and spending that is expected to grow significantly over time due to projected increases in health-related costs. Substantial policy changes at the state and local level are needed to maintain fiscal balance over the long term, the report finds. Read the report...

To bring more tech-related companies and jobs to Wyoming, Gov. Matt Mead's budget request for the new biennium adds $15 million to broaden an existing fund established last year for the recruitment of mega data centers. If approved by the legislature, the state would make available $30 million for both large-scale recruitment and to attract smaller technology companies. Anticipating flat growth over the next two years, the budget for 2013-14 proposes a slight reduction in ongoing spending from last biennium. However, the governor recommends expanding an appropriation for data center recruitment to provide the state with more opportunity to attract large-scale high technology opportunities and jobs. In February, Gov. Mead signed a measure providing tax incentives for construction of data centers.

State fiscal conditions are likely to remain constrained in the coming year due to a weak national economic recovery and loss of federal stimulus funds, according to the latest Fiscal Survey of States. The survey points to some improvement in state finances in 2011 with 38 states reporting higher general fund spending in 2011 compared to FY10. However, 29 states still have lower general fund spending in FY12 compared to pre-recession levels in FY08 and total state revenues in 2012 remain below their 2008 levels by nearly $20.8 billion.

The U.S. Government Accountability Office (GAO) released their annual State and Local Governments' Fiscal Outlook and long-term projections paint a bleak picture. Even though both state and local government near-term fiscal outlooks have improved slightly since 2010, these sectors face long-term revenue declines that will necessitate "substantial policy changes" to stimulate revenue growth. According to the report, without policy changes, governments will face an increasing fiscal gap between receipts and expenditures in the coming years that would force across-the-board programmatic cuts. The primary long-term driver of fiscal challenges is the increasing costs of health-related costs. Based upon current and historical spending and revenue patterns, GAO's model projects the receipts and the expenditures for each sector until 2060. Since 2007, GAO has published long-term fiscal simulations for both the state and local sectors using National Income and Product Accounts data collected by the Bureau of Economic Analysis. Read the report...

Voters disapproved of several tax-cutting measures appearing on statewide ballots across the nation — a good sign for states facing huge budget deficits. A proposal to roll back the sales tax from 6.25 percent to 3 percent failed to garner support in Massachusetts, saving the state's projected deficit from doubling in the next year, according to Stateline.org. Colorado voters also rejected tax-cutting measures, including an amendment to prohibit the state from borrowing.

Wisconsin Governor Jim Doyle recently signed several economic development bills intended to spur job creation and high-tech development. The new legislation authorizes additional job creation tax credits, expands the state's enterprise zones program and establishes new incentives for angel investors. Key among the bills is Wisconsin's CORE Jobs Act, which creates and expands a number of tax credits, loan and grant programs for manufacturing, R&D and venture capital investment. Bill sponsor State Senator Julie Lassa (D-Stevens Point) noted that the CORE Jobs Act should help commercialize new technologies and convert existing factories into green energy manufacturing and production businesses.