State and local finance
The State and Local Finance Initiative is an Urban Institute project in the Urban-Brookings Tax Policy Center. The initiative equips policymakers, citizens, and the media with tools to understand and address the fiscal challenges and opportunities facing state and local governments.

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  • Research Report How Post-Pandemic Tax Cuts Can Affect Racial Equity

    State policymakers across the country are considering tax cuts in 2022. While there are many reasons and ways to cut taxes, state policymakers should keep in mind that the pandemic’s negative effects were unequal and that future state revenue growth is uncertain. This report, using the Tax Policy Center state tax model, analyzes 2021 tax cuts passed in Arizona, Maryland, New Mexico, and Ohio, showing how each state’s tax cut affected different income groups and representative households from different racial and ethnic groups. In general, states that expanded refundable tax credits provided larger benefits to representative Black and Latino households.




    Policy Centers Urban-Brookings Tax Policy Center
    Research Areas Taxes and budgets
    Tags State and local tax issues

    Featured Experts
    Sol Price Fellow
    Project director, State and Local Finance Initiative
    Senior Policy Associate
    Senior Research Associate

    Events
    About

    The State and Local Finance Initiative is an Urban Institute project in the Urban-Brookings Tax Policy Center. The initiative equips policymakers, citizens, and the media with tools to understand and address the fiscal challenges and opportunities facing state and local governments. The State and Local Finance Initiative provides current, reliable, and unbiased research, data, and analysis. The initiative integrates knowledge across policy domains and government levels to give decision makers the best possible information to navigate among competing options and understand tradeoffs.

    The Initiative gratefully acknowledges support from the John D. and Catherine T. MacArthur Foundation, the Laura and John Arnold Foundation, the Ewing Marion Kauffman Foundation, and two anonymous funders.

     

    Advisory Board

    Jeffrey R. Brown University of Illinois at Urbana-Champaign

    William Fox University of Tennessee

    Robert Inman University of Pennsylvania

    Nicholas Johnson Center on Budget and Policy Priorities

    Therese McGuire Northwestern University

     

    Current Projects

    Fiscal Innovations

    State leaders face many challenges in their quest to develop sound fiscal policy. The Fiscal Innovations project aims to help states navigate those challenges. The project currently delivers coordinated technical assistance to Colorado, Kansas, Minnesota, and Washington, DC, and will potentially expand to more states in the future.

    Economic Development Strategies

    State governments have a range of policies available to spur economic development including tax incentives, cash grants, workforce training, and building and maintaining reliable infrastructure. But which programs lure and maintain businesses and help drive outcomes such as more and better jobs, higher wages and incomes, and higher tax revenue? This project examines what states are doing, what works, what doesn't, and how better policy analysis and government coordination can improve results.

    State Tax and Economic Review

    The State Tax and Economic Review is the preeminent source of data and analysis on state tax collections. We regularly collect data and information from all 50 states, use this information to adjust national and state data from the US Census Bureau, and then provide the most timely, accurate, and in-depth look at how states are faring. We also examine the economic factors driving state tax collections based on data from US federal agencies like the Bureau of Economic Analysis, Bureau of Labor Statistics, and Federal Housing Finance Agency.

    Modeling State Taxes and Federal Interactions

    The Tax Policy Center uses its state-of-the-art microsimulation model to provide comprehensive, rigorous, and objective analyses of federal tax policy changes and major tax reform proposals. The State and Local Finance Initiative expanded the Tax Policy Center model to include effects of state tax policies and interactions between the state and federal tax systems. These enhancements allow us to answer questions such as how proposed federal tax changes affect residents of individual states and what is the combined effect of federal and state taxes on families of various sizes and income levels.

    State Spending and Revenues

    As state and local governments confront budget problems caused by the COVID-19 pandemic and recession, it will be more important than ever for state and local officials and their constituents to have the most timely, relevant, and actionable budget information. This project develops tools to aid budget decisions, including interactive web tools highlighting how policy choices, economic conditions, and demographic trends all drive tax and spending outcomes.

    Taxes and Growth

    When states cut taxes does it create economic growth? Research offers mixed evidence but policymakers often face very strong pressures from the business community to create and maintain generous tax breaks. This project investigates how state taxes affect economic growth by analyzing relationships among marginal tax rates, employment, earnings, and investments.

    Building State Budgets: Effective Process and Practice

    All 50 states must create a budget that addresses its needs and maintains fiscal health. But rules and institutions vary. Our digital feature highlights what we know about state budget practices and how they can be improved. We discuss fiscal institutions that fall into three core categories: (1) budgeting timelines, baselines, and forecasting; (2) budget requirements and restrictions; and (3) budget transparency measures. In each section, we compare differences in design and implementation across states and highlight best practices from the literature.

     

    Related Projects

    Staff

    • Equity Scholar
      Research Associate
    • Research Analyst
    • Senior Policy Associate
    • Senior Research Associate
    • Research Associate
    • Research Associate
    • Senior Research Associate
    • Research Assistant
    • Vice President of Tax Policy
      Codirector, Urban-Brookings Tax Policy Center
      Acting Robert C. Pozen Director, Tax Policy
    • Research Assistant
    • Senior Fellow
      Director, Program on Retirement Policy
    • Senior Fellow, Research
    • Institute Fellow
      Director, Economic Policy Initiatives
    • Senior Fellow
    • Research Assistant
    • Sol Price Fellow
      Project director, State and Local Finance Initiative
    • Senior Fellow