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States Have $95 Billion to Restore their Unemployment Trust Funds—Why Aren’t They Using It?

Key Findings States have paid out $175 billion in unemployment benefits since the start of the pandemic, with the federal government providing an additional $660 billion. Taking debt into account, state trust funds now have a negative aggregate balance of -$11 billion and are $115 billion shy of minimum adequate solvency levels. States are authorized […]

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Tax Foundation Comment on Treasury’s State Tax Cuts Limitation Rule

Last month, the U.S. Department of the Treasury promulgated an interim final rule regarding its implementation of the American Rescue Plan Act (ARPA) provision restricting states’ ability to cut taxes. We previously outlined four questions Treasury needed to answer in its guidance and subsequently analyzed the text of the rule when it was promulgated in […]

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Treasury Rule on State Tax Cuts Limitation Raises New Questions

Today, the U.S. Treasury issued an interim final rule on the $350 billion in State and Local Fiscal Recovery Funds provided under the American Rescue Plan Act (ARPA). The proposed rule resolves several important questions but continues to involve the federal government in state finances at an extraordinary level. Most astonishingly, the rule may functionally […]

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ARPA’s Tax Cuts Limitation Is a Problem for More States Than You Think

What do Alabama, Kansas, Nebraska, Rhode Island, and South Dakota have in common? They’re the only states that did not adopt or implement some sort of tax cut in 2019 or 2020, based on NCSL tables on new revenue negative tax provisions (43 states) and Tax Foundation research on the implementation of previously-adopted phased tax […]

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ARPA Allocates $2 Billion to Nonexistent County Governments

The government of Hartford County, Connecticut is in line to receive $173 million in local aid under the American Rescue Plan Act (ARPA). There’s only one problem: the government of Hartford County doesn’t exist, nor do any of Connecticut’s other counties have county-level government despite being allocated a collective $691 million under the bill. The […]

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The American Rescue Plan Act Greatly Expands Benefits through the Tax Code in 2021

American Rescue Plan Act of 2021 The United States has provided about $6 trillion in total economic relief to the American people during the coronavirus pandemic, including the $1.9 trillion that was approved when President Biden signed the American Rescue Plan (ARP) Act into law on Thursday, amounting to about 27 percent of gross domestic […]

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Does the American Rescue Plan Ban State Tax Cuts?

Senate amendments to the American Rescue Plan Act prohibit using any of the $350 billion in State and Local Fiscal Recovery Funds to cut taxes, but many are concerned that states which accept the funds could be prohibited from implementing tax cuts between now and 2024—an astonishing level of federal interference in states’ fiscal affairs. […]

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For Meaningful Federal Aid to States, Why Not Reimburse Unemployment Compensation Payments?

State tax revenues held steady in 2020, coming in less than one-tenth of 1 percent lower than in 2019, according to the latest JPMorgan research (which is consistent with earlier data), and combined state and local revenues have likely risen year-over-year. This is a curious backdrop to the current federal debate, in which Congress is […]

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President-elect Biden Outlines Plan for Additional Coronavirus-Related Relief and Stimulus

In releasing details of his coronavirus relief plan Thursday evening, President-elect Joe Biden envisions a two-part response to the pandemic and economic crisis. The first aspect builds on previous rounds of relief enacted in 2020, and would provide larger payments to individuals, expanded relief for households and small businesses, funding for vaccine distribution, and aid […]

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The COVID-19 Relief Bill Contains Over $100 Billion in State Aid After All

Much has been made of the decision not to include state and local government relief in the $910 billion Coronavirus Response and Relief Supplemental Appropriations Act which recently passed Congress, pending presidential action. The exclusion of direct aid in the lame duck session legislation was likely informed by the relatively good shape of many states’ […]