Alabama’s governor signed a series of criminal justice reform bills into law addressing issues like early parole based on completion of educational or vocational programs, increased oversight of the corrections department, and designating a deputy commissioner for rehabilitation. The fiscal year 2022, $7.7 billion, education budget is the largest in the state’s history with teacher pay raises, incentives for teachers in math and science, and a teacher stabilization fund. Schools had until June 1 to submit plans on spending the $900 million in federal relief funds for K-12 education approved in December. The state is exploring alternatives for building new prisons after a previous lease plan missed deadlines.
Alaska lawmakers continue to debate the state’s fiscal 2022 budget in a special session as they try to reach agreement on dividend payments and other items and avert a government shutdown. The governor has urged lawmakers to act on his proposed constitutional amendment that would establish a new formula for dividend payments to residents. However, legislative leaders say the proposal would need to be accompanied by new taxes. The state Senate approved spending $10 million for a program to offer bonuses to the unemployed if they find work, but it is unclear if it will be in the final enacted budget.
Arizona House lawmakers narrowly rejected parts of the budget in a vote earlier this week, including a proposed tax cut package. The tax reduction proposal would phase out the state’s current income tax structure and replace it with a flat 2.5 percent tax, as well as cap taxes on the wealthy as a workaround to the new 3.5 percent tax surcharge on high income earners approved by voters last fall. The governor vetoed 22 bills in response to lawmakers failing to pass a budget for fiscal 2022. Last month, the governor announced that unemployed residents would no longer receive the enhanced federal unemployment compensation, while the state would set aside federal funds to offer one-time bonuses to those who secure a job.
Arkansas’ general revenue tax collections in May hit $822.8 million, outpacing the prior year collections and budget projections; the year-to-date surplus totals $980 million. The governor authorized state agencies to use up to 3 percent of total salary expenses for employee merit pay increases at a cost of approximately $28 million. The governor released a proposal to reduce the state’s top individual income tax rate from 5.9 percent to 5.5 percent over two years. Lawmakers approved a $5.84 billion state budget for fiscal year 2022, with the public school fund receiving the largest amount by category. A steering committee formed to recommend uses of American Rescue Plan funds recommended $150 million for the state’s rural broadband program.
California’s governor last month released his administration’s revised budget proposal for fiscal 2022, calling for $267.8 billion in spending. The budget plan, supported in part by one-time surplus funds resulting from revenue exceeding projections and federal aid, would reverse nearly all proposed spending cuts and tax increases from last year, as well as issue tax rebates to most residents, provide rental and utility assistance, bolster spending to combat climate change, and make many other one-time investments. Lawmakers released their own budget plan that largely aligns with the governor’s proposal but provides additional funding for certain areas as well as assumes higher state tax collections.
Colorado’s governor last month signed the state’s $34 billion budget, which restored spending reductions from the prior-year budget and increases the general fund reserve to historic levels of 13.4 percent for fiscal 2022 and 15 percent for fiscal 2023. The legislature ended its session after passing a large transportation bill that will raise $3.8 billion from fee increases and provide a total of nearly $5.4 billion to fund road, transit, and other transportation projects. This session the legislature also passed bills making changes to the state tax code, including limiting certain capital gains tax deductions and expanding the Earned Income Tax Credit (EITC) and Child Care Tax Credit, along with other tax changes.
Connecticut’s House approved a $46.4 billion two-year state budget that avoids major tax hikes, provides new dollars for municipalities and social services, tax relief for restaurants and the working poor, and now heads to the Senate. The budget uses $1.75 billion in federal coronavirus relief grants and totals $22.7 billion in fiscal 2022, an increase of 2.6 percent, and $23.6 billion in fiscal 2023, a 3.9 percent increase. The state received an upgraded bond rating from four credit agency firms. The governor announced a plan to pay a $1,000 signing bonus to the first 10,000 long-term unemployed workers who land a job. The General Assembly approved a new highway usage tax on large commercial trucks to bolster the state’s transportation network. The state is projecting an operating surplus of $470.5 million for fiscal 2021.
Delaware’s budget limit was raised by $429.3 million to a total of more than $5.9 billion for fiscal 2022, with a projected surplus of $875.2 million for fiscal 2021 and $238.4 million more in fiscal 2022 revenue than previously forecasted. Delaware State awarded $730,000 in debt relief to recent graduates facing financial hardship using American Rescue Plan Act funds. The state has seen a 35 percent increase in the number of people experiencing homelessness in the past year, with almost 60 percent of the increase from children. The governor announced the first round of businesses receiving grants to encourage people to get vaccinated with the program providing a one-time $5,000 grant to offer discounts, free food and other gifts to vaccinated individuals.
Florida’s governor signed a $101.5 billion budget into law for fiscal year 2022 after vetoing $1.5 billion in spending; the budget includes $10.2 billion in federal relief money. The governor also signed a nearly $200 million tax holiday package, setting dates hurricane preparedness and back to school sales tax holidays. Lawmakers approved a series of gambling bills that opens the door for sports betting in the state. Florida announced it will discontinue the enhanced unemployment benefit of $300, effective June 26.
Georgia officials announced increased tax collections of $3.59 billion through the first 11 months of the year compared to the prior year. The state plans to sell $1.1 billion in construction bonds, including for schools and college buildings, as the state retained its AAA bond rating. The state will use $95 million in federal relief funds to temporarily pay all the costs of child care for 50,000 children enrolled in subsidized child care services. Following the release of guidance on spending federal relief funds, the governor is expected to announce committees that will take applications for the funds and develop recommendations. The governor announced the state would discontinue the enhanced unemployment benefit of $300, effective in June.
Hawaii is now projecting a 5 percent increase in tax revenues for this fiscal year, compared to a 2.5 percent decrease previously forecasted, which would lead to a $635 million budget surplus. However, revenue is still expected to come in below pre-pandemic levels. The state university system faces a $90 million state funding cut over the next biennium based on the budget approved by the legislature.
Idaho’s governor outlined the state’s fiscal 2022 enacted budget and highlighted accomplishments during the 2021 legislative session on key priorities, including education, tax relief and infrastructure. The legislature adjourned its session, the longest in state history, after approving a major transportation package that will divert more state sales tax revenues to road and bridge projects. The state Supreme Court will review arguments on the legality of new requirements for ballot initiatives that were approved by the legislature.
Illinois’ legislature passed a $42 billion fiscal 2022 budget that was bolstered by increased revenue projections and $2.5 billion in federal aid and includes $350 million extra for public schools that was previously held back. The governor said he will sign the budget and commended the legislature for violence-prevention, affordable-housing and youth-employment initiatives in the budget. Other legislation passed during the session included an ethics package, 2022 election changes, legislative maps, to-go cocktails, a union amendment, and college athletes endorsement deals. Recreational marijuana sales set another record in the month of May. Earlier, the governor announced a six-year, $20.7 billion construction plan to improve roads and bridges throughout the state.
Indiana will begin programs with the help of increased federal funds designed to prepare students for college and improve workers’ skills. The state has seen a large increase in lottery ticket sales during the pandemic. Tax collections in May exceeded April’s revised forecast and the state is nearly $2 billion above its budget plan with one month remaining.
Iowa’s legislature passed an $8.1 billion fiscal 2022 budget that increases spending 3.7 percent including $100 million for expanded broadband services, and does not allocate all available revenue. Earlier the legislature reached agreement on a series of changes to taxes and mental health funding. The legislature also approved other bills impacting in-person learning, protest-related crimes, voting laws, and the purchase and carrying of handguns. The governor has signed a number of the bills into law, including a charter school expansion.
Kansas’ governor signed an education package that funds K-12 at the levels she proposed, while also expanding school choice. The governor also signed legislation that increases funding for Kansas courts, provides extra dollars for higher education and funds a new state health laboratory. The governor vetoed legislation extending short-term insurance plans, while calling for Medicaid expansion. The governor also vetoed legislation reserving federal COVID-19 relief funds for Kansas businesses saying it violated federal rules by placing conditions on local governments’ use of the money. A state panel is examining the equitable distribution of federal aid. Tax collections in May were above April’s revised forecast.
Kentucky is accepting applications for its first infrastructure development plan funded by the American Rescue Plan Act. Some in the legislature have called on the governor to end the $300 per week federal unemployment benefit. Kentuckians choosing to be vaccinated against COVID-19 will be eligible for three $1 million prizes or, for students aged 12-17, 15 full-ride scholarships to a Kentucky public university, college, technical or trade school; funding for the incentives will come from federal Coronavirus Relief Fund dollars. Revenues for the first eleven months of the fiscal year have grown 14.3 percent, well above the official budget estimate of 1.2 percent for fiscal 2021.
Louisiana’s legislature finished its budget weeks ahead of its June 10 adjournment date, including a public school funding plan authorizing pay raises of $800 for public school teachers and $400 for support workers. The operating budget also contains pay raises for college faculty and other states employees, fully funds the Taylor Opportunity Scholarship, provides more funding for the needs-based Go Grant aid program, gives tuition aid to community college students, and gives a rate increase to foster parents. A Senate proposal would appropriate $1.6 billion from the American Rescue Plan Act with funding going toward road projects, sewer and water system upgrades, hurricane recovery, the state’s unemployment insurance trust fund, tourism marketing, and industry-specific programs. A Senate committee approved a House-passed bill to gradually free up nearly $400 million per year for roads and bridges.
Maine’s governor has proposed spending $997.5 million of American Rescue Plan Act funds with $258.4 million for short-term economic recovery programs, $294.5 million for long-term economic initiatives, and $418 million for infrastructure improvements. Funding would be used for economic recovery grants for businesses, broadband expansion, energy efficiency upgrades, and capital improvements at state parks, state-run fish hatcheries and wastewater treatment plants. The University of Maine System’s board of trustees will vote on a tuition increase for students at varying rates across its eight universities. Moody’s Investors Service and S&P Global Ratings have affirmed their credit ratings and stable outlook for the state’s general obligation debt.
Maryland casinos generated $172.4 million in May, outpacing the previous single-month record of $169.2 million, and contributed $73.4 million to the state. The governor vetoed several bills, including legislation that would have tightened rules for emergency purchases by state officials and limited midyear emergency budget cuts to 25 percent for certain state programs. The state is expected to receive about $3.7 billion in federal relief funds in one tranche based on the unemployment rate; the Comptroller’s Workgroup on Pandemic Spending held its first meeting to review state and federal pandemic-related spending in the state. The governor announced the state would discontinue the enhanced unemployment benefit of $300, effective July 3.
Massachusetts’ Senate passed a $47.72 billion budget for fiscal 2022 that includes no new taxes with the Senate’s version of the budget about $7.9 million over the House’s bill; several key differences will be negotiated including the future of a film tax credit. Lawmakers voted to place a proposed millionaire tax constitutional amendment on the November 2022 ballot that would add a 4 percent surtax on the portion of an individual’s annual income that exceeds $1 million and would generate about $2 billion in annual revenue to be used for education and transportation. Casinos and slots parlors reported positive revenue figures for the month of April, generating the largest monthly state tax levels since February 2020. Preliminary revenue collections are $3.9 billion, or 14.9. percent more than the year-to-date benchmark. Total MassHealth enrollment is reaching 2.025 million, based on early figures for April.
Michigan’s governor and legislature continue to work on a number of issues in finalizing the budget before the state’s September 30 deadline including the use of federal funds, spending for schools, and infrastructure costs. Earlier, the governor and legislature reached agreement on some issues concerning pandemic restrictions, budget priorities and executive authority. Recently, the Consensus Revenue Estimating Conference increased its revenue forecast by approximately $2 billion for this fiscal year and $1.5 billion for fiscal 2022. The governor has proposed spending some federal money on expanding preschool for four-year-olds. The governor also said she wants to distribute nearly $1 billion in federal funding to small businesses, payroll and childcare under a new economic restart plan.
Minnesota’s legislature is expected to return next week for a special session in hopes of finalizing a two-year budget with leaders from both sides remaining hopeful. Leaders on both sides have discussed dropping certain partisan priorities to help reach an agreement. Without a budget deal, state government services would shut down and the governor has begun warning employees of a potential layoff. Lawmakers did agree on spending $70 million on a state program to expand broadband. The state recently received $1.4 billion in federal stimulus funds with another $1.4 billion expected next year.
Mississippi general fund revenue collections through April totaled $5.35 billion, a 16.5 percent increase over the prior year; monthly collections were 28.5 percent above the budget estimate while year-to-date collections outpaced the estimate by 17.7 percent. The state Supreme Court overturned the state’s medical marijuana program and voided the state’s ballot initiative process, ruling the process is “unworkable and inoperative” without fixes. A legislative study found that between 2010 and 2020 the ratio of active employees to retired employees decreased from 2.02 active to 1 retiree, to 1.35 to 1, a decrease of 33 percent.
Missouri is facing two lawsuits over the state’s failure to fund the voter-approved expansion of Medicaid. Separately, the governor has warned that the state will face budget cuts if it does not extend a tax on health care providers that covers major portions of the state’s Medicaid program. Some legislators have called for a special session on crime in the state. The state’s attorney general signed off an attempt to give voters a say in whether the state’s gas tax should increase. The state budget director said tax collections are doing better than expected although May’s large increase was skewed because of tax deadline shifting.
Montana’s governor signed the state’s $12.6 billion biennial budget into law for fiscal 2022-2023; the budget represents a 2.5 percent increase over the last biennium and spends roughly 1 percent less than what the governor had proposed in January. The budget will reduce state taxes by $60 million annually, with cuts on income taxes, business equipment taxes and capital gains taxes. The governor also signed a package containing more than $500 million for infrastructure projects, as well as legislation to implement and regulate the state’s new recreational marijuana program as well as fund a substance abuse prevention program.
Nebraska’s legislature concluded its session after passing a number of bills including the budget, a series of tax cuts, increased funding for infrastructure and economic development projects, and expanding broadband. The legislature overrode the governor’s vetoes of bills concerning the management of Omaha’s public school retirement plan, food aid and housing assistance. The state is set to receive $65 million in additional federal aid resulting from flooding in 2019. The Department of Corrections is planning on moving forward with its plan for prison expansion. State officials are dropping plans for a two-tier system to cover voter-approved Medicaid expansion.
Nevada’s governor lauded accomplishments this legislative session to promote economic growth, increase school funding, and fix infrastructure. Nevada’s governor signed a bill creating a new state mining tax, expected to generate more than $300 million in additional revenue for education. Before adjourning, lawmakers approved a new school funding framework and restored more than $301 million in planned Medicaid reductions enacted last summer for fiscal 2021 and the next biennium.
New Hampshire’s governor is ending federal pandemic unemployment programs on June 19, including a $300 per week benefit, as the state looks to bring workers back to fill vacant jobs. To entice workers back to jobs, the state is offering $500 to $1,000 bonuses for individuals who get a job and keep it for at least eight weeks. Tax receipts for April totaled $434.1 million, which is about $84.6 million above projections. Business taxes for April totaled $229.3 million, which was $73.8 million above the state's original budget estimates and $140 million above the same month last year. Year-to-date, the state has collected $2.46 billion in tax and fee revenues, which is $212.1 million, or about 9.4 percent, above initial budget projections.
New Jersey is raising its revenue forecast for fiscal 2021 by $4 billion and for fiscal 2022 by $1.1 billion. The legislature remains in budget negotiations and will consider the impact of the increased revenue along with $6.2 billion in American Rescue Plan Act funds. Students who attend New Jersey colleges are now eligible for a one-time scholarship worth up to $3,000 if their families invest in the state’s 529 college savings plan. The governor recently announced plans to close a troubled state prison for women. The Gateway Tunnel project between New Jersey and New York received federal approval.
New Mexico’s governor and lawmakers continue to be in disagreement over which branch has the authority to determine how the state will spend the latest round of federal stimulus funding provided under the American Rescue Plan Act. The state’s lottery scholarship program, funded at $64 million, will cover full tuition for eligible in-state students at public higher education institutions for the first time since 2015.
New York school officials released a plan for recovery learning loss during the pandemic. The legislature continues to consider various criminal justice bills. The state’s share of Medicaid spending is estimated to increase 22 percent under the recently approved fiscal 2022 budget. The legislature passed a bill that would require the Metropolitan Transportation Authority to publish information online. The state recently opened its $2.7 billion rental assistance program. New York is planning a vaccine lottery program with a grand prize of $5 million. Sales tax collections in April were more than forty-five percent higher than the same period last year.
North Carolina’s governor released a proposal for spending $5.7 billion in American Rescue Plan Act funding, identifying support for broadband, grants to parents, affordable housing, water and wastewater projects, businesses, workforce development, and tribal communities. House and Senate Republicans reached a budget agreement to spend 3.45 percent more in fiscal year 2022 and 3.65 percent more in fiscal year 2023 (capped at $25.7 billion and $26.7 billion respectively). The Senate is considering a tax cut plan that would eliminate the 2.5 percent corporate income tax by 2028, while the House advanced a bill to spend $220 million to shore up areas prone to flooding.
North Dakota’s tax collections through April for the two-year budget are 2.2 percent ahead of forecast, while some revenue sources such as sales and oil taxes remain below projections. The state is set to begin a new program which uses earnings from its Legacy Fund to invest in businesses. The governor reflected on accomplishments during the recent session including maximizing the Legacy Fund. A group of legislators chose topics to study before the next session including school funding, state employee compensation, health care, and gambling addiction.
Ohio’s Senate recently passed its version of the state’s two-year budget calling for $75 billion in spending and making changes to issues such as the size of an income tax cut, school funding, rural broadband and access to subsidized childcare. The Senate will now enter into negotiations with the House in an effort to finalize a budget agreement before June 30; the House passed its version of a budget bill in April. The Senate is also asking the state to reexamine a recent Medicaid contract. A pending lawsuit seeks to challenge the constitutionality of the state’s school voucher system. The state saw an increase in demand after announcing its first in the nation vaccine lottery program.
Oklahoma’s governor signed legislation authorizing $9.06 billion in spending for fiscal year 2022 including a 6 percent increase for public schools and an $800 million deposit into a savings account. The governor also signed bills cutting the state’s corporate income tax rate from 6 percent to 4 percent and reduced all individual income tax rates by 0.25 percent. Revenue collections were up 34 percent in May compared to the prior year, with gross production taxes on oil and gas generating nearly 128 percent more than May 2020. The state Supreme Court ruled the governor’s plan to privatize portions of the state’s Medicaid program is unconstitutional.
Oregon’s latest forecast shows that revenues are expected to exceed previous estimates by $1.18 billion for the current biennium and by $1.25 billion for the next biennium. Due to the state’s “kicker” law, this latest forecast means the state could send up to $1.4 billion in personal income tax rebates and $664 million in rebates for corporate income taxes (dedicated to K-12 education). The state pension board is considering lowering its assumed rate of return, an action which would increase contribution costs for school districts and other public employers.
Pennsylvania collected $3.9 billion in general fund revenue in May, which was $1.6 billion, or 65.4 percent, more than anticipated. Fiscal year-to-date general fund collections total $36.6 billion, which is $2.9 billion, or 8.5 percent, above estimate. Lawmakers returned to session with a large June agenda and sharp differences over the future of the state’s finances, schools, energy sector and election procedures. The governor continues to call for putting an additional $1 billion into public education. The House voted on a resolution to end the state’s 15-month COVID-19 disaster declaration.
Rhode Island’s governor signed legislation that increases the minimum hourly wage incrementally to $15 over the next few years with the current $11.50 minimum going up to $12.25 next January 1, then will increase annually until it reaches $15 on January 1, 2025.
The governor also signed into law legislation which makes the Promise program permanent, which provides up to two years of free higher education tuition for eligible graduating high school seniors. The legislature continues to work on the fiscal 2022 budget, while considering issues such as taxes on the wealthy, social services spending and help for small businesses.
South Carolina’s general fund tax revenue is $421.8 million higher than the year-to-date forecast; tax revenue grew 15.1 percent over the prior year and exceeded estimates by 2.7 percent. The legislature adjourned the regular session but will return in special session to allocate up to $5 billion in recurring and one-time funding, including federal relief funds. The governor announced an initiative providing free job training in high-demand jobs at technical colleges to unemployed individuals. More than 100 nonpublic schools received $39 million in federal relief funds through the Emergency Assistance to Non-Public Schools program.
South Dakota sales tax collections are up 10.6 percent through the first ten months of the fiscal year, while state officials continue to examine the long-term impact of increased federal stimulus funds. A legislative summer study committee is examining the shortage of available housing in the state. A task force is preparing a final report on cost-cutting options for higher education. A recent panel discussing the state’s audit report noted the shortage of accountants in state government.
Tennessee revenues for the first nine months of the fiscal year exceeded its budget estimate by $2 billion, while April revenues exceeded the estimate by nearly $600 million. State officials announced plans for spending nearly $4.2 billion in federal relief funds on education, with the largest amounts allocated to two programs focused on literacy and learning loss. The state will spend nearly $45 million in remaining CARES Act funds on additional pandemic relief for small businesses and $300 million on eligible state payroll expenses. The governor signed two criminal justice reform bills aimed at reducing recidivism and expanding eligibility for drug court.
Texas legislators approved a $248.6 billion biennial budget that fully funds school improvements, teacher pay raises and local school property tax reductions, and leaves $11.6 billion in unspent rainy day funds. The governor signed two bills making significant changes to the state’s electricity grid including requiring weatherization of generating plants and reforming oversight of the system. The governor announced plans to add consideration of American Rescue Plan Act funds to a fall special session agenda previously planned on redistricting, giving legislators a role in allocation decisions. The state is making $5 billion in federal relief funds, authorized in the December relief bill, available to schools districts.
Utah lawmakers in special session voted to accept $1.65 billion in state fiscal recovery funds under ARPA. They also approved a plan to allocate more than $540 million of the funds, including for state’s unemployment trust fund; grants to small businesses; establishing a mental health institute; grants for water development and conservation programs; broadband and cybersecurity improvements; and other purposes, including revenue replacement. The legislature plans to allocate the rest of the funds during next year’s general session.
Vermont’s governor signed the $7.35 billion fiscal 2022 budget that invests in broadband, affordable housing projects, and measures to address climate change. The budget allocates $599 million of the more than $1 billion in funds from the American Rescue Plan Act, including
$150 million for broadband expansion, $120 million for clean water projects, and $52 million to update state information technology infrastructure. The state announced that $153.3 million in general obligation bonds were successfully sold generating proceeds of $183.1 million, including a premium of $29.8 million; the bonds were issued to fund new capital projects and to refinance existing debt with lower interest rates.
Virginia officials project a $500 million budget surplus by the end of June while state revenues through the first ten months of the year were $1.7 billion ahead of the forecast. The governor directed $20 million for additional staff and upgrades to speed up unemployment processing. The governor announced $135.8 million in grants to support state and local criminal justice programs, with nearly 63 percent of the funding allocated for victim services. A new report found that replacing schools older than 50 years would cost nearly $25 billion, while about 41 percent of public schools are at or above capacity.
Washington’s governor signed a $59 billion operating budget for the fiscal 2022-2023 biennium as well as an $11.8 billion transportation budget and a $6.3 billion state construction budget. The budget invests in public health and behavioral health, homelessness, climate change, broadband access, and child care. A lawsuit currently being considered by the state Supreme Court regarding the legality of the state’s business and occupation tax on banks could also have implications for pending lawsuits over the state’s new capital gains tax signed into law last month.
West Virginia exceeded revenue projections in May and could end fiscal 2021 with a $400 million surplus. May revenue was 44.9 percent more than expected with year-to-date collections 9.5 percent more than estimates. The governor called the first special session of the year to deal with spending federal funds and unexpected state revenue; most federal funds were directed toward substance abuse prevention, aid for needy families and childcare services, while $150 million from the state budget surplus was directed to road projections. The governor announced vaccine incentives including a top prize of $1 million, two four-year scholarships to public state colleges, two custom pickups, 25 state parks weekend getaway packages, five lifetime hunting and fishing licenses, five custom rifles and five custom shotguns; the incentives are funded by federal CARES Act pandemic relief funds.
Wisconsin is now projecting an additional $4.4 billion in revenue through the end of the next biennium; following the announcement, some in the legislature called for tax cuts while the governor has called for increased investments in state programs including K-12. Earlier, the governor said a full veto of the budget is on the table after the legislature voted to authorize less than a tenth of the increased K-12 education funding he requested, a move that put $1.5 billion in federal education funds at risk. The budget writing committee voted to lift an eight-year tuition freeze. The legislature also voted to reject the governor’s call for a special session on Medicaid expansion.
Wyoming’s governor identified his administration’s spending priority areas for the state’s fiscal recovery fund allocation under the American Rescue Plan Act (ARPA), which include health and social services, education and workforce, and economic diversity and economic development; in a recent press release, the governor outlined criteria that will be used to inform the allocation of ARPA funds. The governor and legislative leaders announced there would not be a special session held this summer.