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[Piecake]

Overall, the state of the nation’s economy is is fairly healthy. But for individual states? Not so much.

A few examples: Louisiana is laying off 30,000 state employees and cutting social programs. Illinois is stuck in the middle of partisan battles over how to close a $5 billion budget deficit that’s caused the state to stop paying social-service providers, which have in turn slashed services. Governor Sam Brownback of Kansas is cutting spending on state universities even as courts say he slashed K-12 funding to unacceptable levels, leaving schools in poor and minority areas underfunded. North Dakota—one of the few states that saw a budget surplus during the Great Recession—is cutting agency budgets and dipping into its rainy-day fund. In December, Oklahoma declared a “revenue failure,” which means the state failed to bring in as much money as it had planned for and thus had to cut spending. And Alaska—one of the most conservative states in the union—is thinking about implementing an income tax for the first time in 35 years to help close its $3.6-billion budget deficit.

Why are these states having so many problems at a time when the country’s economy as a whole finally seems to be on more stable footing?

“There are conscious policy decisions being made here as well.” What’s happening across the country is that state legislatures have made decisions about taxation that don’t jive with the 21st-century economy. They’ve tried the supply-side model pushed by Reagan economist Arthur Laffer, who said cutting taxes could help spur job growth and spending to such a degree that revenue would not be significantly affected. They’ve found that this theory has not played out, and that although the recession is over, they’re still cash-flow negative

Of course, there are states that are doing just fine, that have changed their tax codes so they can actually increase spending on government programs to improve their schools and prepare their populations for a 21st-century economy. Hawaii, New Mexico, and South Dakota have applied taxes to all purchases, which can be a more effective way of collecting revenue from all the transactions in a state, Davis said.

Perhaps states can learn a lesson from everybody’s favorite utopia, Minnesota.

That state had tried cutting personal income taxes, as other states are doing now, in 1999 and 2000, and the state struggled, Governor Mark Dayton said in his 2016 State of the State address. State funding for higher education and K-12 funding dropped and the state had to cut funding for elderly care and mental-health services.

But it has since reversed course. In 2013, the state passed a budget that called for $2 billion in new taxes, increasing income taxes on high earners and adding a $1.60 per pack cigarette tax. The state is now increasing funding for learning scholarships for early-childhood education and in 2014 rolled out full-day kindergarten. Despite those investments, the state has a $1.9 billion budget surplus.

http://www.theatlantic.com/business/archive/2016/03/state-budget-crisis/473157/

State's that have massively cut taxes are struggling. Shocking I know.

 

[entremet]

That was an informative article.

I didn't know Illinois had a flat income tax.

 

[Shake Appeal]

No, see, the problem is we haven't cut them enough yet.

 

[Team Alucard]

Minnesota seriously lucked out in 2010.

They were less than 10,000 votes away from getting fucked over by a tea party governor like what has happened to the rest of the midwest.

 

[Protein]

No, see, the problem is we haven't cut them enough yet.

Wrong. These states would be doing great if it not for an Obama economy!

 

[bomma_man]

This article assumes that they are acting in good faith when they do this.

 

[Bam Chowder]

Minnesota seriously lucked out in 2010.

Wow, I moved to Minnesota in '09 and did not realize this (I regrettably was ignorant of politics until recent years). I'm not a huge fan of Dayton, but it's frightening to think about the alternative.

I'm surprised there haven't been more states pushing for marijuana legalization after the huge gains in tax revenue in Colorado. I guess even that revenue would be a drop in the bucket compared to some of those deficits :/