District 54 Rep. Tim Quinn’s House Bill 441, which would have amended state tax law, had people wondering why, with a $1.1 billion surplus, low unemployment levels and consistent job growth in the state, tax reform is even necessary.
More than 80% of the budget surplus came from income taxes, which lawmakers can only use for education, according to the state constitution. The general fund, which pays for everything from roads to social services and is funded by sales taxes, hasn’t grown, as spending habits change from goods to services. District 28 Rep. Brian King says the Legislature didn’t do a good job of conveying why tax reform is a problem that needs solving.
"When you earmark those funds, and you have healthy growth in the income tax revenue and less robust growth for sales tax and other sources for the general fund, you get to this question that Rep. Quinn has identified," King said. "Which is well, wait a second, we've got other needs, whether they’re Medicaid expansion or social service programs or transportation—how are we going to fund those things?"
Across the political spectrum, lawmakers seem to agree that there is a revenue sourcing problem; how to solve that problem, though, is anyone’s guess. A tax reform task force will look at the issue this summer. It hasn’t been formed yet, and even Quinn doesn’t know if he’s part of the task force, but he says that no option is off limits.
“We need to make sure we understand that not only will 441 and whatever foundation or framework that created be on the table but adding sales tax back to food, which I'm vehemently opposed, to will be on the table," Quinn said. "A statewide property tax, which I'm not in favor of, will be on the table. A constitutional amendment to remove that firewall that Rep. King spoke about will be on the table. So, there will be a lot that we can discuss too rectify this problem.”
Quinn says until tax reform happens, the state’s budget will have constraints. That was visible during the session, when funding to address some of the state’s biggest issues, such as $24 million for affordable housing, wasn’t allocated. Quinn argues tax reform isn’t holding other priorities hostage, but until a reform happens, it limits funding options.
“Ultimately, what we did is we passed a full budget, but we took about $330 million of what would be ongoing funds and turned them into one-time funds, so that next legislative session we do have 330 million worth of options.”
A special session for tax reform has yet to be announced, but Quinn anticipates it will happen in September or October.