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Fiscal challenges present opportunities for states, municipalities

Thu, Jul 9, 2020 (2 a.m.)

State and local governments are facing unprecedented budget shortfalls that make the Great Recession look like an empty swimming pool next to the Grand Canyon. But some states and municipalities are finding opportunities to innovate and modernize revenue structures, as shown in a recent report by a team of graduate students from the University of Chicago’s Harris School of Public Policy.

Here are some examples the students spotlighted:

• With more economic activity occurring online due to the pandemic, states like North Carolina, Missouri, Florida and Georgia are looking at how to better capture tax revenue from the rapidly growing e-commerce sector, such as Amazon and Etsy purchases, Uber Eats, Instacart, etc. Restructuring government revenue streams to mirror shifting consumer behaviors has never been more important.

• Demand surged for legalized recreational marijuana, online sports betting and mobile gaming, all of which are revenue generators for governments in areas that offer them. Policy leaders representing states without these legalized markets will be taking a second look at these products, and states ahead of the curve on legalization will likely be considering ways to expand their offerings, such as allowing drive-thru cannabis and alcohol purchases.

• Municipalities with traffic infraction cameras, such as New York City and Los Angeles, noted an increase in traffic violations despite less traffic being on the road. New York City issued twice as many speeding tickets as normal, which brought in much-needed revenue.

ν Reliance on fuel taxes has long been a concern due to more fuel-efficient vehicles on the road. Now is the time for an honest conversation on leveraging this opportunity to move forward with a vehicle mileage tax or something of that nature to fund transportation and infrastructure projects, which also create jobs. Oregon and Utah have authorized plans to do this, while Washington state began taking a serious look when the pandemic began.

I commend the governor and Legislature for their leadership during these difficult times. Finding ways to respond to a changing economy and being innovative in how we bring in revenue to pay for public services will ensure we come out stronger post-recovery.

The special report can be found online at wsnevada.com. It was compiled by masters students at the University of Chicago’s Harris School of Public Policy and published by WS (Woods Strategies) Nevada, a consulting, analytics and policy research firm based in Las Vegas.

Andrew Woods is CEO of Woods Strategies.

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