How the Federal Tax Overhaul Could Reshape State Budgets – CNN Money
Congress may have finished its tax overhaul last year, but for state governments, the scramble has just begun.
No two states will be effected in the same way, and legislative budget offices across the country now face the daunting task of figuring out what the new law means for their budgets and their citizens’ tax burdens.
Benjamin Orr, executive director of the Maryland Center on Economic Policy, a liberal public policy nonprofit, worries about Congressional Republicans’ plans to follow tax reform with cuts to federal programs — particularly Medicaid — which make up about third of state revenues. Maryland is particularly affected by federal spending reductions because so many federal workers live there, and reductions in headcount at federal agencies headquartered in the state — like the Social Security Administration, Food and Drug Administration, and National Institutes of Health — could be a big hit to employment.
“This one-two punch is why we believe that Governor Hogan’s proposal to cut state revenues is shortsighted,” Orr said. “when what Maryland is actually going to have to do is pick up the slack.”
