Tax & Budgets
Progressive Cities Could Indicate Future of State Taxation
August 13, 2020 | Ryan Maness
Twenty-five states are currently facing a revenue shortfall, which is a marked improvement over our report from last
Hanging over all of these forecasts is the uncertainty created by federal tax reform, with wide variation in how the new legislation will affect state finances. For example, a Montana study found that the state could lose up to $123 million; Wisconsin lawmakers fear that the federal changes could lead to higher state income taxes; Missouri is expecting only minimal impact, though it is unclear whether it will be
As we've noted before, compiling a list of budget deficit states is a complicated process. There are three main reasons for this: (1) the data is not centralized within individual states; (2) data and terminology are not consistent between states; and (3) the data is often misleading. We have tried to make our findings as transparent as possible by linking to our information sources.
Please note: three states (Maryland) did not have updated revenue forecasts as of publication and we are therefore unable to definitively determine whether they are facing a revenue shortfall.
States with expected revenue shortfalls are shown
Updated Jan. 10, 2018: This report has been updated to reflect announcement of new revenues in Connecticut and the fact that neither Arkansas nor Missouri will have budget deficits in 2018.
Tae Aderman contributed to this post.