States move to cut grocery taxes

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Oklahoma Gov. Kevin Stitt on Tuesday signed a bill to eliminate the state’s sales tax on groceries. With the 4.5% tax gone, that leaves 11 states that impose a grocery tax—a number that is swiftly shrinking.

Stitt called it the largest single-year tax cut in state history. Oklahoma will see more than $415 million less in revenue a year.

“To us in leadership, the grocery tax was one of the most regressive taxes that we had,” Stitt said at the bill’s signing. “It affected people on the lower income bracket much more than people that made a lot of money.”

Stitt said the measure is needed to combat higher inflation, which has led to climbing food prices and has strained the finances of many low-income households. Rising food prices have pushed many of the states that levy the regressive tax to consider tossing it out. 

And indeed, Oklahoma is just the latest in a growing number of states that have eliminated or are looking to eliminate sales taxes on groceries, according to Aidan Davis, state policy director at the Institute on Taxation and Economic Policy, or ITEP.

In his State of the State last week, Illinois Gov. J.B. Pritzker called for the sales tax on groceries to be permanently abolished. The governor had temporarily suspended it as part of his 2022 budget. “If it reduces inflation for families from 4% to 3%, even if it only puts a few hundred bucks back in families’ pockets, it’s the right thing to do,” he said.

In November, Utah voters will have the option to change the state constitution, which would indirectly get rid of the grocery tax. Similarly, an effort is underway in South Dakota to get a measure on the ballot in the fall that would eliminate the 4.2% state sales tax on groceries.

In recent years, Virginia eliminated its state grocery sales tax, and Kansas OK’d a phase-out of the tax that will be complete in 2025. Like Oklahoma’s measure, Virginia did not eliminate the local sales tax on groceries. (Oklahoma did prohibit cities and counties from increasing it until July 1, 2025.)

Last year, Alabama enacted a law to gradually reduce the grocery sales tax rate over the next two years. Similarly, Arkansas and Tennessee have also reduced their grocery sales taxes. A bill is currently winding its way through the Tennessee Legislature to completely eliminate it.

Of the 11 states that still impose a tax on groceries, two do so at the full state sales tax rate, and the rest offer a lower tax rate for groceries than the general sales tax rate or provide a tax credit to offset some or all of the sales tax on groceries.

Cutting or repealing the grocery tax is generally seen as helping families with low incomes. But ITEP’s Davis cautioned that a more effective and targeted way to do that may be through refundable tax credits. In 2022, Utah considered a refundable grocery tax credit, targeted to low- and moderate-income families. Under that plan, a family of four with an annual income up to $60,000 would have received a $240 annual grocery tax credit. 

Eliminating the grocery sales tax benefits high-income earners the most, said Davis. “People who shop at Whole Foods are going to see the biggest benefit,” she explained. “If you really want to help low-income families, refundable tax credits is another way to get more money into their pockets.”

Jared Walczak, vice president for state projects at the Tax Foundation, made a similar argument in a report about the regressivity of the grocery tax. He suggested a more comprehensive approach would be to broaden sales taxes to include groceries and consumer services—something high earners use more—and pairing that with a grocery tax credit and income tax reductions.

Davis added that in many states a key conversation is not happening in the rush to eliminate the grocery tax. “Oklahoma will see $400 million annually in lost revenue,” she said. “There is a need to have a conversation about how you are going to offset that loss. That conversation is very few and far between. States aren’t having it, which is very concerning.”

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News to Use

Trends, Common Challenges, Cool Ideas, FYIs and Notable Events

• HEALTH CARE: Alabama Legislature passes bills aimed at protecting IVF. The legislation approved on Thursday extends criminal and civil immunity to in vitro fertilization (IVF) providers, in an effort to address the fallout of an Alabama Supreme Court decision that declared frozen embryos children. The two bills garnered bipartisan support in both chambers, although Democrats questioned if it would be enough to protect IVF in the state. They accused Republicans of pursuing anti-abortion policies that led to the court’s decision. Both sponsors of the bills described them as temporary fixes aimed at reopening IVF programs and said a long-term solution would be needed. Meanwhile, Republican legislators in Florida hit the pause button on a “fetal personhood” bill that would have given any “unborn child” new protections after opponents raised concerns it would impact women’s reproductive rights in ways similar to the Alabama IVF ruling.


• IMMIGRATION: Federal judge blocks new Texas immigration law. A federal court on Thursday blocked a Texas law that would allow state and local police officers to arrest migrants who cross from Mexico without authorization, siding with the federal government. The Biden administration argued that the new state law, which had been set to go into effect on March 5, violated federal statutes and the U.S. Constitution. It will now be put on hold while a federal lawsuit to overturn the law moves forward. In granting a preliminary injunction, Judge David Ezra, who was appointed to the bench by President Ronald Reagan, said that the federal government was likely to eventually win the case on the merits.


• HEALTH CARE: Mississippi House passes state's first Medicaid expansion bill. The state is one step closer to giving more than 210,000 residents access to health care. A Medicaid expansion bill passed the House by a vote of 98-20, with no vocal opposition. It will now be considered by the Senate, where GOP leadership has also introduced a bill to expand Medicaid. If passed, the expansion would cover working people in the state who make 138% of the federal poverty line, or about $20,000 per year. Despite the historic nature of the bill passed through the House Wednesday, Republican Gov. Tate Reeves is still publicly opposed to the legislation.


• OPIOIDS: Oregon Legislature set to roll back controversial drug experiment. The Oregon House on Thursday voted to make minor drug possession a misdemeanor crime, bringing the state a step closer to ending its pioneering and fraught experiment with decriminalization. The bill passed in a bipartisan 51-7 vote. It is expected to get a floor vote Friday in the Senate, where it is also expected to pass. In addition, the House signed off on an estimated $211 million in spending on a wide-ranging array of projects and programs intended to expand access to substance abuse treatment, including in jails and via mental health services.


• CRIMINAL JUSTICE: Louisiana Legislature passes “tough-on-crime” bills. The package of legislation represents a fulfillment of Republican Gov. Jeff Landry’s campaign promises and a major victory early in his term. Some of the new laws roll back bipartisan criminal justice policy adopted under former Gov. John Bel Edwards, a Democrat, in 2017. Those changes were designed to save the state money by reducing incarceration, and some of the savings were invested in victims’ services, funding for which is now in question. Landry’s proposals will potentially put more people in prison and keep them there longer in a state that already has one of the highest incarceration rates in the nation. Lawmakers also legalized the carrying of a concealed firearm without a permit, provided more ways to execute people on death row and will grant the public access to previously confidential juvenile court records. Landry’s enacted agenda is expected to cost the state tens of millions of dollars annually, though legislative fiscal analysts have struggled to put together exact figures. The governor and his allies have touted the proposals as justice for victims and a necessary step to increase public safety.


• HOMELESSNESS: Why are so many homeless people dying? For many people, living on the streets is a death sentence. That’s according to a recent study that took the first deep look into mortality rates in homeless communities throughout the country. It found the death rate more than tripled between 2011 and 2020. The study’s co-author, Matthew Fowle of the University of Pennsylvania, said the 238% increase was astonishing. “It’s unlike any other mortality trend that we really see in demography,” he said. “It’s comparable to something like a natural disaster or war.” Overdoses played a major role in the deaths studied. But people also are dying at increased rates of things that might be avoided if they had a home or regular access to preventative medical care, such as heat and cold exposure, traffic injuries, cardiovascular disease and diabetes.


• REDISTRICTING: New York Democrats reject bipartisan congressional map. Democrats in the New York Legislature on Monday rejected a congressional map drawn by the state’s bipartisan redistricting commission, setting the stage for the party to craft lines that help Democrats in battleground House races that could determine control of Congress. The Democrat-dominated state legislature will now have to submit and approve a new set of congressional lines, which is expected in the coming days. Republicans are already threatening a legal challenge. Congressional races in New York, particularly suburban contests, are expected to determine which party controls the House after the November elections, adding major significance to even the slightest tweaks in how districts are drawn. 


• ELECTIONS: Pennsylvania launches election security task force ahead of 2024 elections. Gov. Josh Shapiro on Thursday announced the state would revive a task force first convened during Gov. Tom Wolf’s administration to mitigate threats to Pennsylvania’s elections processes and protect voters from intimidation. The Election Threats Task Force will be overseen by the secretary of state and will include officials from several government agencies, including law enforcement, emergency management and homeland security. According to the release from Shapiro’s office, the primary goal of the task force will be coordination of plans and sharing of intelligence among the offices who oversee segments of election safety that don’t always intersect.


• ECONOMIC DEVELOPMENT: Utah submits bid for 2034 Winter Olympics. “OK, ready, 1-2-3. There we go.” The key backers of Utah’s bid to host the 2034 Winter Games joined together to tap the submit button on a laptop in the ornate Gold Room of the state Capitol Thursday, sending thousands and thousands of pages of details about their hosting plans to the International Olympic Committee. While the IOC’s final decision on the site of the 2034 Olympics won’t come until July 24, turning in the massive submission required after Salt Lake City was named the “preferred host” in December, marks a “monumental step” after more than a decade of bidding. Salt Lake City Mayor Erin Mendenhall said what sets Utah’s bid apart is that the state has maintained the competition venues used in 2002 for community and athlete use, including international competitions. Still to come for the bid is submitting a series of financial guarantees from federal, state and local governments that ensure the costs of the more than $2.45 billion event would be covered if the private funding from the sale of sponsorships, broadcast rights and tickets falls short. 

Picture of the Week

A vast and growing wildfire, one of several burning in the Texas Panhandle, has now become the largest on record in state history, scorching more than a million acres, devastating cattle ranches, consuming homes and continuing to rage out of control, The New York Times reported. The sparsely populated area is home to most of the state’s cattle, and wildfires are nothing new for Panhandle ranchers. But the fire named Smokehouse Creek is unlike anything seen before. It ignited on Monday, and as of Friday was still burning uncontrolled. Officials warned that warm, windy and dry weather expected to return over the weekend could fan the flames. Five fires were still active in the area on Friday morning, according to the Texas A&M Forest Service. Three of them were more than 50% contained, but the largest—the Smokehouse Creek Fire—was only 15% contained as of Friday morning. (Photos by Greenville Firefighter Association/ Handout /Anadolu; Texas A&M Forest Service/Anadolu; and Brett Coomer/Houston Chronicle via Getty Images)

Government in Numbers

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The number of people out of 2,529 that accepted an offer for a free subscription to their local newspapers, the Pittsburgh Post-Gazette and the Philadelphia Inquirer. That’s less than 2%, reports an academic study set to be published this year in the American Journal of Political Science. The purpose of the research was to assess practical ways to increase interest in local or regional news for an audience that seems more interested in national, partisan media outlets. (The pool of those offered subscriptions was made up of locals who had previously responded to political surveys.) The findings add context to what has been a difficult start to 2024 for American media.