NCSL: Tax policy, K-12 education among top issues, fiscal analyst survey says

LOUISVILLE, Ky. — Tax policy, K-12 education funding and housing are among this year’s top issues noted by state fiscal analysts across the country.

Along with state economic conditions and long-term liabilities, those topics are top of mind for legislative fiscal offices, a senior policy analyst with the National Conference of State Legislatures said Tuesday. Eric Syverson said the list — which will be released in a forthcoming report — comes from a new database the organization is compiling.

In 2024, the top tax policy implemented by states was property tax relief, Syverson said. Other popular policies included income tax cuts, business incentives, tax benefits for families and sales tax exemptions:

  • Fifteen states enacted property tax relief this year, Syverson said. Those cuts came primarily as homestead exemptions, either broad or targeted. For example, Kansas exempted the first $75,000 of home value from a homeowner’s property tax bill.
  • Many states implemented new income taxes or accelerated previously enacted cuts. Syverson said there were fewer cuts this year than last year, but states are still cutting income taxes at a historically high pace.
  • There’s been increased interest by legislatures in using tax policy to help families with children, particularly to address the cost of child care. For example, Georgia, Kansas and Wisconsin made those types of tax benefits more generous this year. Syverson predicted more federal action on child tax credits in 2025.
  • Six states enacted business-specific sales tax exemptions this year, and seven did so for certain goods and services.

A ‘reality check’ on some concerns

Michael D’Arcy, director of U.S. public finance for Fitch Ratings, gave attendees at the NCSL session a “reality check” on some of the top concerns identified by policymakers: declining revenues, economic uncertainty, demographic changes, structural deficits and state credit ratings.

Continue reading “NCSL: Tax policy, K-12 education among top issues, fiscal analyst survey says”

NCSL: Tax policy, K-12 education among top issues, fiscal analyst survey says

LOUISVILLE, Ky. — Tax policy, K-12 education funding and housing are among this year’s top issues noted by state fiscal analysts across the country.

Along with state economic conditions and long-term liabilities, those topics are top of mind for legislative fiscal offices, a senior policy analyst with the National Conference of State Legislatures said Tuesday. Eric Syverson said the list — which will be released in a forthcoming report — comes from a new database the organization is compiling.

In 2024, the top tax policy implemented by states was property tax relief, Syverson said. Other popular policies included income tax cuts, business incentives, tax benefits for families and sales tax exemptions:

  • Fifteen states enacted property tax relief this year, Syverson said. Those cuts came primarily as homestead exemptions, either broad or targeted. For example, Kansas exempted the first $75,000 of home value from a homeowner’s property tax bill.
  • Many states implemented new income taxes or accelerated previously enacted cuts. Syverson said there were fewer cuts this year than last year, but states are still cutting income taxes at a historically high pace.
  • There’s been increased interest by legislatures in using tax policy to help families with children, particularly to address the cost of child care. For example, Georgia, Kansas and Wisconsin made those types of tax benefits more generous this year. Syverson predicted more federal action on child tax credits in 2025.
  • Six states enacted business-specific sales tax exemptions this year, and seven did so for certain goods and services.

A ‘reality check’ on some concerns

Michael D’Arcy, director of U.S. public finance for Fitch Ratings, gave attendees at the NCSL session a “reality check” on some of the top concerns identified by policymakers: declining revenues, economic uncertainty, demographic changes, structural deficits and state credit ratings.

The top concern, declining state revenue, is a very real issue, D’Arcy said. Revenue declined for 16 states in the last fiscal year, and year-over-year revenue growth across all states has decelerated.

Some of those declines are the result of economic conditions. But D’Arcy said it’s a “largely engineered phenomenon” because of states’ recently enacted tax cuts.

There are reasons for concern over the economy, but D’Arcy said Fitch is skeptical of some of the economic indicators that point to a coming recession. For example, he said recent increases in the U.S. unemployment rate are a “statistical anomaly” because the numbers are driven by an increase in young, unskilled immigrant workers.

Fitch doesn’t have any states on a negative outlook, and no state’s credit rating is in an “immediate danger of going down,” D’Arcy said.

As for structural deficits — where a government consistently spends more than it makes in revenue — Fitch’s state credit team doesn’t see reason for concern over the next few years. D’Arcy said the “economy would have to really hit a recession” for those deficits to become major problems.

‘Unprecedented’ teacher pay growth

Teacher compensation was the top K-12 education funding issue identified by state fiscal analysts.

There’s been “unprecedented” increases in teacher salaries over the past few years, said Michelle Exstrom, director of the National Conference of State Legislatures’ education program. The growth rate of teacher compensation has caught up with the private sector for the first time in years.

In 2023 and 2024, lawmakers across the country introduced 191 bills addressing special student populations — such as special education, English-language learners and at-risk students — the most of any education topic.

Part of that figure includes a new trend, Exstrom said: funding specifically to help homeless students, a group that graduates at significantly lower rates.

The biggest outstanding at-risk funding issue? Exstrom said states are still trying to figure out how to ensure the money actually goes to those particular student groups after it’s sent to school districts.

Other major school funding issues in 2024 include reducing schools’ reliance on property tax revenue, reforms to school funding formulas and big efforts to rethink schooling, including through avenues such as voucher programs and community schools.

Other issues: Long-term liabilities, housing

State and local governments reported $3 trillion in long-term debt as of 2021, according to Fatima Yousofi, a principal associate for Pew Charitable Trusts. The good news, she said, is that states have made progress in recent years, particularly in funding their pension liabilities.

Additionally, deferred costs of infrastructure maintenance are estimated to be in the range of $1 trillion to $2 trillion.

Yousofi said climate change will add to that bill through various avenues, including road and bridge repair and updates to states’ water systems.

Heather Wilson, a senior policy specialist for the National Conference of State Legislatures, said the four primary ways states are addressing the nation’s housing shortage are through stability, easing zoning restrictions, development incentives and efforts to increase home ownership.

State lawmakers have introduced 1,913 housing-related bills so far this year, Wilson said, and 336 have passed.

She cited the Joint Center for Housing Studies’ 2024 report, which showed the nation is 1.5 million units short of meeting its housing needs and no state has a sufficient supply of affordable rental housing.

Brett Stover is a Statehouse reporter at State Affairs Pro Kansas/Hawver’s Capitol Report. Reach him at [email protected] or on X @BrettStoverKS.

NCSL: National housing shortage requires tailored solutions

No state is immune from the nationwide shortage of 1.5 million housing units, but each must find its own approach to target its unique challenges, state lawmakers said Tuesday.

Cameron Rifkin, a policy associate with the National Conference of State Legislatures, said during an NCSL summit panel discussion that the shortage has been increasing over the years as construction has failed to keep up with demand, among other factors. 

In the past three years, however, state legislatures have been attempting to address root causes. 

Common themes include incentivizing construction, preventing displacement, strengthening eviction protections, preserving naturally existing affordable housing, revising zoning regulations, permitting more density, expanding transit-oriented development and regulating investor purchases and short-term rentals. 

Kansas, for example, enacted the Affordable Housing Tax Credit Act and the Housing Investor Tax Credit Act (HB 2237 of 2022) for affordable housing projects. 

This year, Maryland prohibited local governments from restricting placements of manufactured homes in a zoning district that allows single-family residential use. 

Illinois has proposed imposing a tax on certain real estate investment trusts and limited liability companies that purchase single-family residences. 

Kentucky, this year’s NCSL summit host, has launched an affordable housing caucus and has a Housing Task Force that is exploring a myriad of comprehensive approaches, similar to Ohio’s Select Committee on Housing.

“We started seeing bills roll into local governments with good intentions, but you’ve got to look at unintended consequences,” Kentucky Rep. Randy Bridges, R-Paducah, said. “We decided to put a task force together to bring anyone and everyone to the table. Hopefully next session we’ll have a lot of good legislation to push forward.”

While Kentucky’s housing shortage has doubled in the past three years, housing-related tax credits are “not an option,” Bridges said. 

“We’re consecutively lowering our income tax from 6% to now 4%, and it’s scheduled for 3.5% in 2025,” he said. “We can’t give up revenue to gain revenue.” 

Perhaps the largest recent investment came from Minnesota, where Gov. Tim Walz, now the Democratic nominee for vice president, last year signed a $1 billion housing omnibus.

The massive bill was possible due to a multibillion-dollar surplus that had built up as lawmakers repeatedly failed to agree on uses, Minnesota Rep. Steve Elkins, DFL-Bloomington, said.

It included $200 million for down payment assistance programs, $200 million in housing infrastructure investments, among other earmarks, and created a permanent funding stream for housing needs across the state. 

This year, the Minnesota Legislature is focused on enacting reforms. 

“We all agreed it doesn’t matter how much we appropriate” if there are still barriers to build, Elkins said.

He helped introduce another omnibus, tackling “every zoning reform issue under the sun,” but has decided to break it into component parts and chip away at issues one at a time, he said. 

“I’m hopeful that will give us the leverage we need to get stuff done,” Elkins said. 

A “build-more” experiment in Minneapolis has already seen success, he said, compared with a St. Paul initiative for rent stabilization. 

“You have to keep building,” Elkins said. “Housing is a commodity, and the overall market is driven by supply and demand. If you want to keep it at a reasonable level, build more housing.” 

Washington state Rep. April Berg, D-Mill Creek, said she has been trying to increase property taxes for homes over $3 million by 1%, which would be used as a dedicated funding source for a housing trust fund. 

Further complicating Washington’s fiscal response to the housing crisis is the state’s constitutional uniformity clause that prevents a progressive property tax, as well as the 1% levy cap.

In a creative move, the state has enacted an annexation sales tax credit to encourage cities to take on parts of unincorporated counties. That translates to better service for residents and increased tax bases for municipalities, Berg said.

“We put a sunset on it because we want it to happen quickly,” she said. 

The state successfully passed the Covenant Homeownership Act, which provides down payment assistance for people negatively affected by redlining. 

Berg said it is the first legislation of its kind in the nation.

Krista Kano is a staff writer for Gongwer Ohio/State Affairs. Reach her at [email protected] or on X @krista_kano

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Housing is our fundamental infrastructure

NCSL: National housing shortage requires tailored solutions

No state is immune from the nationwide shortage of 1.5 million housing units, but each must find its own approach to target its unique challenges, state lawmakers said Tuesday.

Cameron Rifkin, a policy associate with the National Conference of State Legislatures, said during an NCSL summit panel discussion that the shortage has been increasing over the years as construction has failed to keep up with demand, among other factors. 

In the past three years, however, state legislatures have been attempting to address root causes. 

Common themes include incentivizing construction, preventing displacement, strengthening eviction protections, preserving naturally existing affordable housing, revising zoning regulations, permitting more density, expanding transit-oriented development and regulating investor purchases and short-term rentals. 

Kansas, for example, enacted the Affordable Housing Tax Credit Act and the Housing Investor Tax Credit Act (HB 2237 of 2022) for affordable housing projects. 

This year, Maryland prohibited local governments from restricting placements of manufactured homes in a zoning district that allows single-family residential use. 

Continue reading “NCSL: National housing shortage requires tailored solutions”

NCSL: Swatting, catalytic converters and redistricting anchor ‘Lightning Round’ session

Sen. John Albers, R-Roswell, shared how his family was the victim of “swatting,” when someone makes a phony 911 call that results in a response from a SWAT team. 

In Albers’ case, an individual called local police for a domestic dispute at the senator’s home when he and his wife were out of the state. Fifteen police officers responded to his home when only his son was there. 

“When you have 25 vehicles out on a Code 3, a lot of bad things can happen,” Albers told attendees at the National Conference of State Legislatures summit in Louisville, Kentucky. 

Maryland Sen. Cheryl Kagan, D-Montgomery, said each swatting call can cost $15,000 to $25,000. 

Albers said several other high-ranking officials in Georgia were also targeted, and earlier this session, the Georgia General Assembly passed a bill to increase penalties. 

Continue reading “NCSL: Swatting, catalytic converters and redistricting anchor ‘Lightning Round’ session”

NCSL: Swatting, catalytic converters and redistricting anchor ‘Lightning Round’ session

Georgia Sen. John Albers, R-Roswell, shared how his family was the victim of “swatting,” when someone makes a phony 911 call that results in a response from a SWAT team. 

In Albers’ case, an individual called local police for a domestic dispute at the senator’s home when he and his wife were out of the state. Fifteen police officers responded to his home when only his son was there. 

“When you have 25 vehicles out on a Code 3, a lot of bad things can happen,” Albers told attendees at the National Conference of State Legislatures summit in Louisville, Kentucky. 

Maryland Sen. Cheryl Kagan, D-Montgomery, said each swatting call can cost $15,000 to $25,000. 

Albers said several other high-ranking officials in Georgia were also targeted, and earlier this session, the Georgia General Assembly passed a bill to increase penalties. 

Maryland passed its version last year, Kagan said, which was controversial because of “challenges with juvenile justice.” 

“I call myself a pragmatic progressive, and people on my left were worrying about increasing penalties,” she said. “It’s a challenge, but it’s a crime. We’ve got to make sure people know about it and hopefully that’s part of the disincentive.” 

All 50 states have penalties for swatting, but no federal legislation has been enacted. Thirty-three states have some level of felony penalty, usually when causing injury or death. Twenty-one states provide the ability to seek restitution for costs incurred. 

Catalytic converters

Virginia tackled rampant catalytic converter thefts not by going after the perpetrators but by eliminating the market, Senate Minority Leader Ryan McDougle, R-Hanover, said. 

The exhaust emission control devices in motor vehicles were quick and easy to steal and were being sold for $1,500 to $3,500, he told NCSL attendees.

While the parts themselves hold little value, the metals are in high demand, he said. 

Addressing the crime as a larceny had evidentiary challenges, so Virginia lawmakers instead focused on the resale market. 

“If you weren’t acting for a motor dealer, or scrap metal, if you didn’t have a registration or it wasn’t new, then it’s assumed you were possessing it illegally,” he said of catalytic converters. “After that went into place, it [theft] went from being a scourge to dropping dramatically.” 

“It’s an effective tool,” he continued. “It’s not eliminated, but it’s reduced substantially and we’re no longer getting calls in our office like we did before.” 

One negative side effect, he said, was that surrounding states saw an increase in catalytic converter thefts because there was no longer a market in Virginia. 

The Ohio House in June passed a proposal, HB 328, aimed at curbing catalytic converter thefts. The current version, which awaits Senate action, requires additional record keeping and reporting and imposes a $10,000 to $50,000 penalty on business entities that violate those requirements, among other provisions. 

Redistricting

Attorneys involved in Ohio’s and New York’s redistricting litigation explained the challenges faced in their respective states and how other states have handled redrawing their maps. 

Frank Strigari, former chief legal counsel for the Ohio Senate, noted that Michigan has faced significant issues since a newly established independent commission was put in place.

“Basically, the people that were on that commission didn’t have any experience,” he said. “Their system was meant to be that way, but because they didn’t have experience, they had to rely on experts, consultants and all types of people, which, you can imagine, come with all sorts of partisan agendas.” 

Ohio voters will decide whether to establish a similar body in November following a heavily litigated process.

“In Ohio and New York, we didn’t have the greatest success, even with well-intended reforms,” Strigari said. “I don’t know if there’s really, truly a panacea for this type of issue, especially when politics are involved. You can try to take the politics out of it, but it’s impossible to do that.”

He said it is his personal opinion that redistricting should remain in the hands of state legislatures and advised against placing the process within state constitutions.

“You’ll just constantly change the state constitution to try to make the process perfect, but it will never be perfect,” he said. “It’s not a good idea.” 

Strigari and Jeff Wice, special counsel to the New York Legislature, advised lawmakers to begin planning now for the 2030 Census by making updated data easily accessible for constituents and thinking about the future system for public input and maps. 

Krista Kano is a staff writer for Gongwer Ohio/State Affairs. Reach her at [email protected] or on X @krista_kano.

Lawmaker calls Republicans who back Harris ‘whores’

Arizona’s debut of “Republicans for Harris” on Monday sparked contention from some Trump-backers such as Hoffman who called members of the group “whores” in a post on X. The group is co-chaired by Mesa Mayor John Giles and former state Rep. Robin Shaw, both Republicans. In the 2022 election cycle, Giles endorsed Democrat U.S. Senate candidate Mark Kelly as well. “I think the time has come for us, as Arizona Republicans, to admit the obvious and to start saying the quiet part out loud, which is our party’s nominee is not qualified for office, and that we need to vote for the adult in the room, and that is Kamala Harris,” Giles said on Monday. The committee’s announcement was met by backlash from MAGA Republicans on social media. “Strange… I thought prostitution was illegal in Arizona,” Hoffman wrote in a post on X. “Ignore these whores. Donald Trump will win Arizona.” In a statement, AZGOP Chair Gina Swoboda said that Giles “has been endorsing Democrats for several election cycles,” and dismissed it as not being newsworthy. GOP U.S. Senate candidate Kari Lake said in a post on X Monday night that she will debut her “Democrats/former Democrats for Kari Lake & America First” on Thursday.

Hobbs gives full-throated endorsement of Harris’ VP pick

Hobbs told reporters Tuesday morning that she is “absolutely thrilled” about Harris picking Minnesota Gov. Tim Walz as her running mate, even though Harris passed over Arizonan and rumored VP candidate Mark Kelly. “You should have been in my house and heard my scream when I saw the news this morning,” Hobbs said during a press gaggle on Tuesday. She said she has worked directly with Walz in their roles as Democratic governors and is confident in the pick. Hobbs said Harris had “a lot of good choices” including Kelly, who she said could deliver for Arizonans as vice president. But ultimately, Hobbs said, “Governor Walz, as a governor, he knows what it takes to deliver for people in his state, and he’ll work with Vice President Harris to deliver for Arizonans.” Harris and Walz are slated to visit Arizona on Friday, but Hobbs said she does not yet know if she will attend the event. Hobbs also told reporters that she has no plans to join the administration if Harris and Walz win in November, saying, “I’m the governor of Arizona, and that’s my plan for the next six years.”

As temperatures rise, so does state efforts to meet the heat

Hobbs and Arizona’s Chief Heat Officer Eugene Livar are raising awareness about the Extreme Heat Preparedness Plan as the state enters its hottest month of the year. At a press conference at the Arizona Department of Health Services on Tuesday, Livar said the governor’s office has been deploying mobile cooling centers and millions of dollars in state funding to address the state’s extreme temperatures. However, he said there’s still much to do to combat heat-related illness and death in the state. “We’re not going to solve all the problems that are happening in heat season within three, six or 12 months,” Livar said. “This is going to be an ongoing effort.” Livar was appointed Chief Heat Officer in March and has been working with Hobbs’ office, community groups, plus city and county officials on the Extreme Heat Preparedness Plan. It’s unclear how many total heat-related deaths the state has seen in 2024, but Maricopa County has reported 66 confirmed heat-related deaths with 447 additional deaths under investigation for heat-related causes. Livar said the state’s 2023 report on heat deaths is expected to be released in the fall. Hobbs told our reporter on Tuesday that U.S. Secretary of Health and Human Services Xavier Becerra will be visiting Arizona later this week to discuss the heat preparedness plan and the best ways to protect residents from the heat.

Justice refuses to recuse himself on abortion initiative pamphlet 

Arizona Supreme Court Justice Montgomery refused to recuse himself from overseeing the challenge to include “unborn human being” in the summary of the Arizona Abortion Access Act and claimed a prior recusal in his presiding over the case on the 1864 abortion ban is irrelevant to the matter at hand. Attorneys for Arizona for Abortion Access moved to have Montgomery removed from the case in a motion filed Monday, citing his prior recusal, as well as past statements claiming Planned Parenthood “kills children” and is “responsible for the greatest generational genocide known to man.” In an order, Montgomery noted he denied the initial motion for recusal in the 1864 case, which rested on many of the same statements. Though he did eventually recuse himself from the case, he found that to be an “insufficient basis for recusal.” He then added the current case involves “different parties and different issues and … my responsibility to perform my duties with honor and integrity and with fidelity to my oath of office is paramount to any opinion or feeling about any issue that may come before the Court, including this one.” He signed the order, “Willaim G. Montgomery.”

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