The new tax cuts, when combined with tax cuts passed since 2013, will mean $3.5 billion in less revenue every year for the state.
The new two-year state budget passed by lawmakers included another package of tax cuts that will further limit the amount of revenue available for public investments. The latest tax cuts will reduce annual available revenue by $900 million and, when combined with tax cuts passed since 2013, result in an estimated $3.5 billion in less annual revenue compared to the tax system that was in place prior to tax changes in 2013.
The new budget shows only $521 million of the $900 million in annual revenue loss, due to the way in which lawmakers phase in the tax cuts. The tax cuts kick in starting January 2019 – the second half of the second year of the two-year budget. Thus, lawmakers were not required to account for roughly $400 million of the annual cost of the tax cuts, as the fiscal impact of the tax cuts only reflect half of fiscal year 2019 (January 2019 through June 2019). However, future lawmakers will have to address the unaccounted for $400 million reduction in revenue availability, as the state’s constitution requires lawmakers to pass a balanced state budget.