Revenue Generation
From Crumbs to Creating New "Pie""The true severity of the present budget crisis may best be understood by the extent to which it is forcing elected officials with reputations for cutting taxes — both Republicans and Democrats — to propose tax increases. Although it is early in the budget season, 17 governors of both political parties all have called for increases in taxes in their states, indicating that such tax increases are necessary to avoid even more devastating reductions in public services. "
From Is the State Fiscal Crisis Real?
Nicholas Johnson, Center on Budget and Policy Priorities, 2003
ON TAXES…
Given the current realities, it makes sense for us to look at a mix of revenue mechanisms -- especially when we are looking for ways to support health programs that tend to increase in cost over time (regardless of their long-term savings in other areas). One possible option is to look at restructuring income taxes in a more equitable or, in tax policy terms, progressive way. Income brackets are the increments at which a tax agency levies income taxes. The lowest income bracket is the minimum amount of money one would have to make in order to owe taxes, say $5,000 to $6,500 a year. The amount of taxes increase with each higher increment of annual income, with the highest bracket being the highest amount of tax levied. Of the 41 states with income taxes, a number of those states have top income brackets under $25,000 per year. This means that a person making $200,000 a year and a person making $25,000 a year will pay the same amount of income taxes. In states like Idaho and Alabama, the top bracket is even lower.
Another important source of revenue is the federal match for state Medicaid spending. This amount is extremely low and considered unfair by many at the state level. State level advocates can join forces to push for increased matching funds. Working on these kinds of initiatives in addition to excise taxes can help build more stable revenues for programs and provide better support services and help soften the effects of regressivity. Of course, we still need to raise those tobacco excise taxes and even tie them to inflation when we can.
Why Budget Work Matters
Adequate funding is critical to realizing our long-term community organizing and policy advocacy goals. The follow-through, implementation, and oversight of our wins are often times just as important as the victory itself. Budget advocacy is a critical part of this follow-through. The good news is that, when crafted properly, advocacy on budget issues can avoid many of the lobbying restrictions faced by non-profit organizations and can even be considered "self defense" lobbying (lobbying to ensure your organization is in existence). In many cases, "self defense" lobbying isn't as restricted as other forms of lobbying. Remember: Laws vary from state to state, different funders have additional restrictions, and the federal context changes, so be sure to confirm the propriety of any activity before undertaking it.
Follow the links below to resources that will guide you in identifying key budget areas and potential sources of information. Please note that the worksheets are general and it will require some research to identify specific programs or budget line items. For example, a worksheet may lead you to advocate for increased funding to a state health insurance program but will not tell you the name of that program in your state.
- Worksheet: Identifying & Evaluating Budget Issues (MS Word, 56K)
- ProTex’s The Real Budget – a model state alternative budget
See Center on Budget and Policy Priorities' comprehensive series on the state fiscal crisis at http://www.cbpp.org/statecrisis.htm including:
- Center on Budget and Policy Priorities report, President’s Claim of Nine Percent Increase in Aid to States Is Highly Misleading by Richard Kogan and Iris J. Lav
- Center on Budget and Policy Priorities report, The State Fiscal Crisis Is Impeding Economic Growth; Federal Aid to States Would Be Most Effective Stimulus By Iris J. Lav
