Imagine if the government returned some of your tax money during years when the economy was strong and their coffers full.
It’s actually happening in several states that have so-called tax-trigger policies aimed at keeping a lid on government growth. Among the states paying back residents this year are Colorado, North Carolina and Oregon, according to a Bloomberg report.
Seven states have such policies, and another four are considering implementing them. Critics worry that sending back excess cash could leave the states without reserves in the event of another recession. They also point out that the bulk of the cash goes to the wealthiest taxpayers, who likely paid the most in taxes in the first place.
In Oregon, for example, the state will credit taxpayers more than $400 million on their 2015 returns, with a median credit of $124 -- and a credit of $4,614 for the top 1 percent.
General fund revenues grew an estimated 3.7 percent in fiscal 2015, up from 1.6 percent in 2014, according to the National Association of State Budget Officers. Revenue growth for 2016 is projected to increase another 3 percent.
States had a total of $39.5 billion in their rainy day funds in 2015, or 5.4 percent of their expenditures. That’s about 13 percent less than last year. NASBO expects reserves to remain relatively stable next year at $40.8 billion and 5.4 percent of expenditures.