No government shutdown, but there’s still work to be done. Congress wants to head home for the holidays this week so will spend its time on two last big pieces of business: a $1.1 trillion government-wide spending measure and a roughly $700 billion ($800 billion with interest) effort to renew expired tax breaks for businesses and individuals. The stakes also are high for the Affordable Care Act, as Congress could slap a two-year moratorium on the Cadillac tax on high-cost health insurance plans.
Also at stake: Hundreds of millions of dollars in current Internet tax revenue for states. If Congress makes permanent a now temporary ban on the taxation of Internet access, it could also eliminate a grandfather clause that allowed states to keep levies that were in place before 1998. Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas, and Wisconsin would lose that revenue starting in 2020. The Center on Budget and Policy Priorities estimates it would cost those states a total of $561 million a year.
Oklahoma’s tax cuts are causing some budget pain. In 2013, when crude oil prices were around $100 a barrel and the state was flush, GOP Governor Mary Fallin secured a quarter-point reduction in the top income tax rate. Once the tax cut takes effect on New Year’s Day, the average Oklahoman tax filer will save about $85 a year. But oil prices have plunged to about $40 per barrel, and Oklahoma now faces a budget hole of $600 million to $1 billion for the coming year.
In Ohio, a bill to block tax dollars for charter schools’ advertisements. A Democratic lawmaker thinks charter schools should raise their own revenue to pay for marketing. But a charter school advocate disagrees, arguing that since public universities use tax dollars for advertising so should the private K-12 schools. More food for thought: One Ohio online charter school spent 2 percent of its revenue on ads. If Columbus’ public school district spent the same share of its general fund on such marketing, it would spend $16 million a year, more than the combined advertising budgets of the 2014 winning candidates for state attorney general, auditor, secretary of state and treasurer.
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- © Urban Institute, Brookings Institution, and individual authors, 2016.