From Tallahassee to Sacramento, lawmakers in state capitals around the United States heeded business leaders? call to ?run government more like a business.? The result: lower taxes, higher revenue surpluses, more incentives for new business, a rush of ?e-government? and information technology initiatives, and greater investment in needed infrastructure projects like roads, bridges, public schools and universities.
At least 12 states and the District of Columbia passed major tax cuts this year during their legislative sessions. Twenty states reported that revenue collections through the remainder of Fiscal Year 2000 would exceed expectations, while another 29 states and the District of Columbia reported that revenue collections would be on target with their original estimates.
Awash in cash surpluses, state legislatures agreed to give much of that money back to their constituents — both individuals and businesses. California led the way with the passage of an historic US$1.5 billion tax relief package, signed by Gov. Gray Davis, that benefits motorists, businesses, seniors and families. In Florida, Gov. Jeb Bush approved a state budget that reduced taxes by $500 million and included the repeal of the state?s intangibles tax. Idaho?s Gov. Dirk Kempthorne signed a broad-based $29 million tax-cut package into law. The bill eliminated the marriage tax penalty in Idaho while increasing the investment tax credit for businesses.
Illinois Gov. George Ryan jumped into the fray by signing bills giving businesses significant tax breaks and providing millions of dollars for technology research and development. Other major tax breaks and reductions included:
A $105 million tax cut over two years for businesses in Indiana. The savings will come from lower unemployment insurance taxes.
- Reduced property taxes for goods in transit in Kentucky.
- A $100 million tax cut in Maine, including a half-percent reduction in the state sales tax.
- $175 million in tax cuts in Massachusetts, including a new tax deduction for charitable giving.
- An increase in the Single Business Tax credits awarded in Michigan.
- Financial incentives under the new Mississippi Advantage Jobs Act to benefit companies that create high-wage jobs.
- A gross receipts tax deduction for aircraft manufacturers in New Mexico.
- New tax reduction credits and real property tax credits, as well as a sales tax exemption for tangible personal property and services, in New York.
- $303 million in tax savings thanks to the Capital Stock and Franchise tax cut in Pennsylvania — part of a record $775 million tax-cut package passed by the state.
- A new Investment Tax Credit and Job Creation Tax Credit in Texas.
- Workers? compensation refund checks totaling $200 million in Washington.
Embracing the New Economy
If there was one theme capturing state capitals this year, it was the movement to embrace the New Economy. In addition to passing tax cuts and new incentives programs, state lawmakers and governors alike rushed to the table to adopt so-called ?e-government? and ?e-business? initiatives aimed at making their states more competitive in the new Information Age.
Part of the goal is to create greater equity in the administration and collection of sales taxes on goods and services bought and sold over the Internet. More than 18 states have begun the process of simplifying the manner in which such sales and use taxes are administered and collected, according to the National Conference of State Legislatures (NCSL).
Model legislation approved by the NCSL?s Executive Committee Task Force on State and Local Taxation of Telecommunications and Electronic Commerce would allow states to participate in discussions with other states on developing a voluntary, streamlined, multi-state system for the collection and administration of existing sales and use taxes.
?States? action on the model legislation represents the first step toward tax equity and fairness between brick-and-mortar businesses and Internet retailers,? said Tennessee Rep. Matt Kisber. ?State governments, like everyone else, need to adapt to the rapidly changing Information Age economy.?
Many state governments continued to adapt to the New Economy this year by launching statewide information technology offices and by creating Web sites that streamline government-business interaction. Typical of these initiatives was the E-BAMA bill signed into law by Alabama Gov. Don Siegelman. The bill creates the Office of Information Technology to develop a long-range plan for technology in Alabama. A similar program was launched in Arkansas, where Gov. Mike Huckabee announced the creation of a statewide information system designed to make the state government operate more efficiently and make information more accessible to businesses and individuals.
?This will make state government more efficient and eventually save the taxpayers? money,? said Huckabee. ?People often talk about running government more like a business. Today, we are actually taking a step in that direction.?
Like many states, Delaware passed a Uniform Electronic Transactions Act providing the legal framework for using digital signatures and enforceable electronic contracts. Florida adopted a One-Stop Permitting Internet System Web site to streamline real estate developers? interaction with government, and Nevada continued the trend by unveiling a new e-government initiative called Silver Source.
Other major Internet-related projects include:
- New Hampshire?s Telecommunications Answer Center.
- The New Mexico Economic Development Dept.?s ePortNM.
- North Carolina government?s new Web portal: NC@YourService.
- North Dakota?s new Web portal: http://www.discovernd.com.
- Oregon?s new Internet Commission.
- Pennsylvania?s Digital Greenhouse, an economic development plan for supporting high-tech industry.
- The appointment of the Texas E-Government Task Force.
- Wyoming?s new portal: www.wyomingbusiness.org.