Statement:
The budget proposal just released by Democratic leadership in the Senate would strengthen investments in our communities, but it misses an important opportunity to begin to rebalance our upside-down tax code. Highlights of the Senate’s proposal include robust investments in key areas, such as providing nearly $900 million in additional funding to schools, an effort to finally fulfill the state’s duty per the Supreme Court’s McCleary decision, and strengthening investments in mental health.
The Senate’s plan would also reduce the state property tax rate by 11 percent in 2019, which would result in about $400 million in lost revenue for the state. But instead of championing common-sense fiscal policies like closing the tax break on capital gains – which would generate over $700 million a year – to make up for that lost revenue, Senate leadership is proposing to draw down our state’s rainy day fund over the next several years to pay for the tax cut.
Providing across-the-board tax cuts without replenishing the lost revenue is ill-advised. And drawing down the rainy day fund – especially as our economy is booming – to pay for those tax cuts is fiscally irresponsible. The bottom line is that the rainy day fund represents emergency savings that our state will need to maintain schools, health care, and other critical investments when the next economic downturn inevitably hits. The House and Senate should reject this short-sighted approach and instead enact common-sense policies that will clean up our tax code and provide the resources we need to move forward as a state.
