State of the State Addresses 2018

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Governors’ annual State of the State addresses and budget statements can provide insight about how upcoming legislative sessions, state budgets, and responses to tax reform will affect foundations and charitable nonprofits.

New York Governor Cuomo outlined numerous cuts and spending freezes, along with $750 million in new taxes and fees. He is seeking to fill a projected $1.8 billion budget deficit. He also reiterated his concerns about the federal tax law and vowed that "we will explore the feasibility of a major shift in tax policy, and are developing a plan to restructure the current income and payroll tax system." Nebraska Governor Ricketts, after reducing the state workforce by four percent last year, announced he is preparing to reduce the budget through additional across-the-board cuts of two percent this year and four percent next year. He charged lawmakers to “remain laser-focused” through cutting red tape, balancing the budget, and delivering tax relief.

Kentucky Governor Bevin is proposing a two-year state budget that would eliminate about 70 state government programs and cut spending at many state agencies by more than five percent, all reportedly to fund the Commonwealth’s public pension programs, which have more than $40 billion in unfunded liabilities. The Kentucky Nonprofit Network responded to the budget proposal by calling “on the Governor and members of the General Assembly to take a balanced approach to getting Kentucky’s fiscal house in order,” and noting that “Kentucky cannot cut its way to prosperity.”

New Mexico’s Governor is proposing using the growing revenue surplus of up to $330 million (after years of shortfalls) to increase spending, add to the state’s reserves, and “give a big chunk of that back to the taxpayers.” However, New Mexico Thrives warns that Governor Martinez’s proposed state tax reform “could have devastating impacts on how nonprofits operate” as charitable nonprofits and foundations get swept into “faulty assumptions and a misunderstanding of the complexity” of tax exemptions vital to the nonprofit sector.

State of the State addresses also give governors the opportunity to show a little respect for the work nonprofits do every day. Arizona Governor Ducey hailed nonprofits, specifically foster care and adoption, childcare, veteran’s services, and foodbanks, for providing vital human services. Separately, the Governor of Mississippi praised museums as a place where “political agendas melted with the morning snow.” Both mentioned strains caused by the federal government for programs affecting their states, namely the Children’s Health Insurance Program and Medicaid and Medicare funding.

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