Publications on State & Local Tax Policy Issues

This report examines the funding of unemployment insurance (UI) in Ohio. It proposes seven recommendations to improve program solvency, both in the short run and in the long run. The two main recommendations to improve short-run solvency are to: 1) implement a substantial increase in the taxable wage base and 2) institute a temporary freeze in weekly benefits, both recommendations to be effective in 2009. Indexation of the taxable wage base is a principal recommendation to improve solvency in the long-run.

The Urban-Brookings Tax Policy Center launches a new intellectual venture capital fund to help policymakers, the public and the media better understand the U.S. tax system and the policy challenges facing the nation over the next decade. The $10 million Opportunity Fund will include a $2.5 million challenge grant from the Gates Foundation.

State and local revenues have been relatively stable over the last 30 years, growing from 13.5 percent of GDP in 1972 to 16.3 percent in 2005. However, as shown in the table, the composition of revenues has changed, with property taxes declining from 25.6 percent of revenues to only 16.6 percent. Much of this decline occurred in the 1970s.

California's health care reform effort may have been one of the first casualties of the national economic downturn. Yet the conditions that gave rise to the initiative did not disappear when the plan failed, and other states are pushing ahead with proposals to expand health coverage. So it remains useful to reflect on the California experience. In particular, it will be helpful to understand the proposed funding sources, how they would have interacted with California's revenue system, and what alternative funding streams might have withstood the politics of reform. In this policy brief, we analyze the options for financing expanded health insurance coverage in California and offer our own preferred solution in light of the state's fiscal and political constraints.

Every state except Vermont operates under some sort of balanced budget requirement. That means that to serve the increased need of distressed populations during recessions, states must either increase revenue or reallocate resources dedicated to other programs. Similarly, when revenue declines, states must raise taxes or reallocate resources. This report examines the extent to which rainy day and general fund savings were a significant factor in helping states cope with fiscal stress during and after the 2001 recession, a possible explanation for the lower than expected legislated tax increases and social welfare cuts.