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Anti-Racist State Budgets: Progressive Revenue

This primer is part of a series on anti-racist state budgets. To understand the concept of creating anti-racist state budgets, it is important to understand the difference between racist and anti-racist ideas and policies. The following excerpts are from How To Be An Antiracist (2019) by Ibram X. Kendi: 


Racist vs. Anti-racist Ideas

A racist idea is any idea that suggests one racial group is inferior or superior to another racial group in any way. Racist ideas argue that the inferiorities and superiorities of racial groups explain racial inequities in society. . . An antiracist idea is any idea that suggests the racial groups are equals in all their apparent differences – that there is nothing right or wrong with any racial group. Antiracist ideas argue that racist policies are the cause of racial inequities.

Racist vs. Anti-racist Policies

A racist policy is any measure that produces or sustains racial inequity between racial groups. An antiracist policy is any measure that produces or sustains racial equity between racial groups. . . There is no such thing as a nonracist or race-neutral policy. Every policy in every institution in every community in every nation is producing or sustaining either racial inequity or equity between racial groups. 

For additional race-equity concepts and definitions, please visit the Racial Equity Tools glossary webpage.

Overview

We all benefit from funding for education, health care, infrastructure, and other vital services regardless of race, gender, or income level. But the wealthy few have used an army of lobbyists and complicit lawmakers to drive down their own tax rates and to rig the rules. This has created regressive state tax systems that too often exacerbate income inequality across both race and income.[i] In “Progressive Wealth Taxation,” UC Berkeley economists Emmanuel Saez and Gabriel Zucman explained that the top marginal federal income tax rate dropped from more than 70% between 1936 and 1980 to only 37% since 2018, and “when combining all taxes at all levels of government, the U.S. tax system now resembles a giant flat tax.”[ii]

Flat taxes, and even worse, tax codes that levy higher taxes on low- and middle-income families, worsen income inequality and widen the racial wealth gap. Tax structures in 45 states exacerbate income inequality—in the 10 most regressive states, families at the bottom 20% of the income distribution pay up to six times as much in taxes as the state’s wealthiest families.[iii] While the investments made possible by taxes are a powerful force in combating racial inequities, the way those taxes are collected, and from whom, remains deeply inequitable. Regressive state tax policies have deep and lasting roots in anti-Blackness,[iv] and in tandem with discriminatory and exploitative policies that embedded racism across all social and economic systems (e.g., in ownership of land and access to housing, education, and credit[v]), state tax policies have not meaningfully addressed the growing racial wealth gap; and in many states, especially in the South,[vi] these policies actually make racial disparities worse. As of 2016, Black and Latinx families had a median net worth of $17,600 and $20,700, respectively, compared to $171,000 for white families.[vii] A recent study concluded that “if you belong to a historically marginalized racial or ethnic group, your racial status is the stronger predictor of your economic position than your education, income, and in this case, employment status and position.”[viii]

Line chart shows the share of net worth of all U.S. households from 1989-2019. In 2019, White Americans held 85.5% of the country’s net worth; black Americans, held 4.2%. (Data source: https://www.vox.com/2020/6/17/21284527/systemic-racism-black-americans-9-charts-explained)


Strong communities and thriving families are built upon a foundation of public investments that benefit us all. Investments in good schools, affordable health care, and transportation infrastructure pay off for everyone. Research shows that higher levels of income inequality create a drag on economic and state tax revenue growth.[ix] States with fairer tax codes enjoy faster economic growth, faster income growth, and increased employment levels than states that are reliant on regressive taxes like sales and excise taxes.[x]

Under a lopsided tax code, a state’s poorest families are paying the most in taxes, while also bearing the brunt of disinvestment when tax revenues decline. During the Great Recession, states slashed education and health care budgets in the face of revenue shortfalls, with lasting consequences for low-income Black, brown, and white communities.[xi] Years of public disinvestment have left the same communities less prepared to weather the COVID-19 public health crisis and future economic downturns. For example, many states have used budget surpluses to push for “shortsighted, costly, permanent tax cuts,”[xii] which leaves these communities more vulnerable to future budget cuts,[xiii] especially as states again grapple with the risk of budget shortfalls.[xiv]

It doesn’t need to be this way; together we can rewrite tax codes to benefit us all. We’ve done this before, so we know that progressive revenue can stimulate economic growth, reduce income inequality, and narrow the gaps in income and wealth created through centuries of racism and discrimination.

Policy Considerations

Policymakers have the power to generate needed revenue by revamping their existing state’s tax codes. They can implement innovative approaches that build a more equitable future and center the needs of communities of color and low-income communities. When considering ways to promote racial equity and reduce wealth inequality in state tax systems, state legislators should refer to the following policy options and work with national and local advocates, especially those groups that center race equity, to develop the best policies for their state.

The wealthy use a range of tax avoidance strategies,[xv] including characterizing income from labor as business income, with pass-through business income in the form of long-term capital gains or dividends, all of which are taxed at a lower rate than ordinary personal income. The wealthy can also defer realizing capital gains and their inheritors can avoid taxes on these gains after they die. As explained by USC professor and tax law expert Edward J. McCaffery in his law journal article “The Death of the Income Tax,” the current tax code is really a wage tax, not an income tax, and those in the 1% of net wealth do not rely on their wages but instead use their assets as collateral to borrow tax-free.[xvi] The uber-wealthy are able to avoid income taxes and create generational wealth by relying on wealth instead of income through a process that McCaffery refers to as “buy, borrow, die.”[xvii] Therefore, we start with one of the most impactful progressive revenue reform ideas to address these loopholes: the wealth tax.

Group of diverse students at daycare or classroom

WEALTH TAX

Wealth taxes apply to either an individual’s net worth (total assets net of all debts) or some targeted asset class, which could include financial assets such as bank accounts, bonds, stocks, and/or non-financial assets such as real estate, yachts, sports cars, or other luxury goods. A wealth tax on a household above an exemption threshold is a critical tool for capturing revenue from the most affluent members of society who possess substantial wealth but may have comparatively lower incomes.

It is possible for the wealthiest households to have low taxable income because our tax codes have been designed to allow them to escape taxation in different ways. For example, the tax code does not address unrealized capital gains since until these assets are sold, they are not “taxable income” and thus, much of one’s wealth would not appear on their annual tax returns. (See Center on Budget and Policy Priorities’ report on the issue of special tax breaks for the wealthy for more information.)[xviii]

Estimates from UC-Berkeley professors Saez and Zucman indicated that a federal tax of 2% on net wealth above $50 million and 3% on net worth over $1 billion would only impact 0.1% of (or 75,000) American households and raise $2.75 trillion over a 10-year period.[xix]

Examples of Wealth Tax Legislation

Wealth Tax Design

An OECD study of European wealth taxes includes the following policy recommendations:[xxii] Low tax rates, especially if the net wealth tax comes on top of capital income taxes;Progressive tax rates;Limited tax exemptions and reliefs;An exemption for business assets, with clear criteria restricting the availability of the exemption (ensuring that real business activity is taking place and that assets are directly being used in the taxpayer’s professional activity);An exemption for personal and household effects up to a certain value;Determining the tax base based on asset market values, although the tax base could amount to a fixed percentage of that market value (e.g., 80%-85%) to prevent valuation disputes and take into account costs that may be incurred to hold or maintain the assets;Keeping the value of hard-to-value assets or the value of taxpayers’ total net wealth constant for a few years to avoid yearly reassessments;Allowing debts to be deductible only if they have been incurred to acquire taxable assets—or, if the tax exemption threshold is high, consider further limiting debt deductibility;Measures allowing payments in installments for taxpayers facing liquidity constraints;Ensuring transparency in the treatment of assets held in trusts;Continued efforts to enhance tax transparency and exchange information on the assets that residents hold in other jurisdictions;Developing third-party reporting;Establishing rules to prevent international double wealth taxation; andRegularly evaluating the effects of the wealth tax.

ESTATE TAX

Another way states can tax wealth is through an estate tax, which is levied on the estate (money and property) of the most affluent individuals who have passed away. While there is a federal estate tax[xxiii] on estates valued over $12 million (as of 2022), only 12 states and the District of Columbia have their own estate tax.[xxiv] More states have considered implementing this extremely progressive tax because it helps to prevent the growth of “dynastic wealth” by directly targeting the intergenerational transfer of wealth and addressing the racial wealth gap. In 2016, 9 out of 10 households with assets above the federal estate tax threshold of $5.5 million were white.[xxv]

Examples of Estate Tax Legislation

INHERITANCE TAX

While an estate tax is a levy on one’s estate, an inheritance tax is levied on those who inherit money or property of a person who has died. Inheritances are a major contributor to growing wealth inequality and disparities between white households and households of color. One reason white families hold more wealth is they are considerably more likely to receive an inheritance, a gift, or additional family support.[xxvi] Specifically, nearly 30% of white families report having received an inheritance or gift, compared to about 10% of Black families, 7% of Hispanic families, and 18% of other families. More robust taxation of inherited wealth not only reduces the transfer of concentrated wealth from one generation to the next, but it also serves as a progressive source of revenue for critical services that we all depend on.

Examples of Inheritance Tax Laws

Only six states impose inheritance taxes. Of these states, Nebraska (NE Stat. 77.2004, 77.2005, and 77.2006) has the highest top rate at 18% as of 2022. The state’s inheritance tax is imposed on all property inherited from the estate of the deceased. The value of such property is based on the fair market value as of the date of death, and the amount of the tax depends upon the recipient's relationship to the deceased. The surviving spouse pays no inheritance tax, children and other close relatives pay a 1% tax beyond an exemption amount, and more distant relatives pay a maximum 13% tax. In all other cases, the rate of tax is 18% on the clear market value of the beneficial interests in excess of $10,000. Unfortunately, recently enacted legislation (2022 NE LB 310) will reduce many of these rates and/or raise the exemption amounts starting in 2023.

The following states also levy a tax on inheritance. See below for details on their tax rates:

Black and Brown families wait to cross the street at the light in the Bronx, New York

PROGRESSIVE INCOME TAX

When the political realities do not allow for a wealth tax of some kind, an incremental step toward reducing the racial wealth gap is to design state personal income tax systems to better ensure that the wealthiest pay their fair share. As of 2021, nine states do not even have a broad-based state income tax,[xxvii] many of which heavily rely on sales and excise taxes, a practice that the Institute on Taxation and Economic Policy (ITEP) deemed a characteristic of the most regressive state tax systems.[xxviii] States such as California, Minnesota, New Jersey, and Vermont have highly progressive income tax brackets and graduated-rate tax structures that allow them to tax different income at different rates.[xxix] In addition, at least eight states (CA, CT, HI, MD, MN, NJ, NY, and OR) and D.C. have enacted long-lasting millionaires’ taxes since 2000.[xxx] A 2022 ballot initiative in Massachusetts would raise the income tax rate for incomes above $1 million from 5% to 9%.[xxxi]

Examples of Progressive Income Tax Legislation & Ballot Initiatives

The graduated income tax structure ensures the most affluent individuals, who are mostly white,[xxxii] pay a greater percentage of their income in taxes than their lower- and middle-income counterparts.

Millionaire Migration/Tax Flight Myth

This myth refers to the idea that taxing the wealthiest individuals will encourage them to leave and migrate to other states with lower taxes. Anti-tax advocates and politicians often use this myth to advocate for more tax cuts and regressive tax systems. However, the people who tend to move most frequently are not the rich, but instead are typically young college graduates and the lowest income residents who earn below-market incomes and want a better quality of life.[xxxvii] While a very small number of wealthy households may leave as a result of tax increases, migration rates for higher-income earners are low and have little effect on the millionaire tax base.[xxxviii] Research has shown that increasing tax rates on affluent households results in a net positive fiscal impact over time.[xxxix]  

CAPITAL GAINS TAX

States should also consider strengthening their taxes on capital gains income—the profits an investor realizes when selling an asset that has grown in value, such as shares of stock, mutual funds, or real estate investments. The Brookings Institution has a resource on capital gains reforms that discusses the current state of capital gains taxes on a federal level and different ways policymakers can use such taxes as a progressive source of revenue.[xl]

While some states levy a tax on personal income and capital gains at the same rate, as of 2021, nine states provide the wealthiest households with special tax preferences for their capital gains by taxing long-term capital gains at a lower rate than ordinary income.[xli], [xlii] These special tax breaks and preferences prioritize investors’ capital gains income at the expense of the wages and salaries earned by working families and lower-income households of color.

Examples of Capital Gains Tax Legislation

Note on the Carried Interest Loophole

Investment funds—such as private equity and hedge funds—are often organized as partnerships. These partnerships typically have two types of partners: general partners and limited partners. General partners manage the fund, while limited partners typically only contribute capital to the partnership. General partners can receive two types of compensation: a management fee tied to a percentage of the fund’s assets and a profit share; or “carried interest,” tied to a percentage of the profits generated by the fund. In a common compensation agreement, general partners receive a management fee equal to 2% of the invested assets plus a 20% share in profits as carried interest. The management fee, less the fund’s expenses, is subject to ordinary federal and state income tax rates (the top federal income tax rate for individuals in 2020 is 37%) and the federal self-employment tax. However, taxation of the carried interest is deferred until profits are realized on the fund’s underlying assets, when at such time, the carried interest is taxed [the same] as investment income received by the limited partners. Thus, if the investment income consists solely of capital gains, the carried interest is taxed only when those gains are realized and at a lower capital gains rate on the federal level (the top capital gains tax rate in 2020 is 20%, plus a 3.8% net investment income tax). (Source: Fiscal and Policy Note for 2021 MD SB 288)[xlv]
Asian toddler playing on laptop with mother

EXCESSIVE EXECUTIVE COMPENSATION TAX

In addition to a lack of progressive taxes, another contributing factor to the rise in income inequality is the excessive pay for chief executive officers (CEOs). Rather than raising the wages for their workers, corporations are increasing the wealth of their CEOs who make hundreds—sometimes thousands—of times more than their employees. Research has shown that excessive executive pay is not based on value of a CEO’s work and has a spillover effect that “helps pull up pay for privileged managers in the corporate and even nonprofit spheres.”[xlvi] Policymakers can work to address corporate greed and fight for wealth equity by closing the CEO-worker pay gap through an excessive executive compensation tax.

Examples of Excessive Executive Compensation Legislation

RAISING PROGRESSIVE MUNICIPAL REVENUE

While legislatures have the power to reform their state’s tax codes, they also have the ability to increase municipal revenue through progressive strategies. However, there are states that limit municipal powers from implementing progressive taxation structures. For example, some states have statutory and constitutional limits on the amount of property taxes that can be levied at the local level.[xlviii] As property tax revenues often support locally provided public services and amenities, state limitations on such taxes prohibit local governments from fully investing in such services. As a result, municipalities are forced to reckon with deep spending cuts, resulting in severe consequences for and decreasing the quality of life of their residents.

Income inequality is an issue that significantly affects communities on not only a national and state level, but on a local and regional scale as well. In order to effectively address disparities in wealth, state policymakers can consider legislation to promote progressive tax structures within municipalities, including repealing any state preemption of local revenue-raising authority. (See Local Progress’s 2015 report for more information about the major obstacles of raising municipal revenue, along with policy recommendations for cities, regions, and states to make local tax collections more progressive.)[xlix]

Mother nursing baby while toddler jumps on bed

Public Opinion Polling

The following sample of public opinion polls over the last few years demonstrates a strong support nationally and in sampled states for increasing taxes on the rich, including through a wealth tax, and for protecting key public programs.

NATIONAL POLLS

60% of Americans say billionaires don’t pay the full amount they owe in taxes - YouGov poll [l]

The Need for a True Wealth Tax to Support Those Most in Need Due to the Coronavirus - Data for Progress and the Justice Collaborative Institute [li]

Economy Poll - Reuters/Ipsos [lii]

January Tracker Poll - GSG, GBAO, and Navigator [liii]

Voters Support the Thrive Agenda - Data for Progress [liv]

Voters in Key States Support a Wealth Tax - Data for Progress [lv]

Small Businesses Support Raising Taxes on the Wealthy - Businesses for Responsible Tax Reform [lvi]

ALG Research for Tax March/ATF [lvii]

PBS NewsHour/Marist [lviii]

New York Times/SurveyMonkey [lix]

Financial Times/Peterson Foundation [lx]

STATE POLLS

Massachusetts - WBUR (May 2018) [lxi]

New Jersey - Rutgers/Eagleton/FDU (April 2019) [lxii]

Illinois - Paul Simon Public Policy Institute at Southern Illinois University (Spring 2020) [lxiii]

New York - Hart Research (January 2020) [lxiv]

Arizona, Colorado, Georgia, Iowa, Kansas, Kentucky, Maine, Michigan, Mississippi, North Carolina, and Texas - Data for Progress (September 2020) [lxv]

Wisconsin - Public Policy Polling (July 2019) [lxvi]

Florida - Public Policy Polling (June 2019) [lxvii]

 

Additional Resources

Endnotes

[i] Wiehe, M., Davis, A., Davis, C., Gardner, M., Christensen Gee, L., & Grundman, D. (2018). Who Pays? A Distributional Analysis of the Tax Systems in All 50 States. Institute on Taxation and Economic Policy. https://itep.sfo2.digitaloceanspaces.com/whopays-ITEP-2018.pdf

[ii] Saez, E., & Zucman, G. (2019). Progressive Wealth Taxation. Brookings Papers on Economic Activity, Fall 2019. https://www.brookings.edu/wp-content/uploads/2020/10/Saez-Zuchman-final-draft.pdf

[iii] Wiehe, et al. (2018). Who Pays?

[iv] Leachman, M., Mitchell, M., Johnson, N., & Williams, E. (2018). Advancing Racial Equity With State Tax Policy. Center on Budget and Policies Priorities. https://www.cbpp.org/research/state-budget-and-tax/advancing-racial-equity-with-state-tax-policy

[v] Kent, A. H., Lanier, N., Perkis, D.F., & James, C. (2022). Examining Racial Wealth Inequality. Federal Reserve Bank of St. Louis. https://research.stlouisfed.org/publications/page1-econ/2022/03/01/examining-racial-wealth-inequality

[vi] Das, K. (2022). Creating Racially and Economically Equitable Tax Policy in the South. Institute on Taxation and Economic Policy. https://itep.org/creating-racially-and-economically-equitable-tax-policy-in-the-south/

[vii] Dettling, L. J., Hsu, J. W., Jacobs, L., Moore, K. B., Thompson, J. P., & Llanes, E. (2017). Recent Trends in Wealth-Holding by Race and Ethnicity: Evidence from the Survey of Consumer Finances. Board of Governors of the Federal Reserve System. https://doi.org/10.17016/2380-7172.2083

[viii] Addo, F. R., & Darity, W. A. (2021). Disparate Recoveries: Wealth, Race, and the Working Class after the Great Recession. The Annals of the American Academy of Political and Social Science. https://doi.org/10.1177/00027162211028822

[ix] Petek, G. J., Bovino, B. A., & Panday, S. (2014). Income Inequality Weighs On State Tax Revenues. Standard & Poor's Ratings Services. https://s3.documentcloud.org/documents/1301747/s-amp-p-income-inequality-weighs-on-state-tax.pdf

[x] Davis, C., & Buffie, N. (2017). Trickle-Down Dries Up: States without personal income taxes lag behind states with the highest top tax rates. Institute on Taxation and Economic Policy. https://itep.sfo2.digitaloceanspaces.com/trickledowndriesup_1017.pdf

[xi] Johnson, N., Oliff, P., & Williams, E. (2011). An Update on State Budget Cuts: At Least 46 States Have Imposed Cuts That Hurt Vulnerable Residents and the Economy. Center on Budget and Policies Priorities. https://www.cbpp.org/research/an-update-on-state-budget-cuts

[xii] Institute on Taxation and Economic Policy. (2022). State Tax Watch. https://itep.org/state-tax-watch/

[xiii] Auxier, R.C. (2022). How Post-Pandemic Tax Cuts Can Affect Racial Equity: An Examination of How State Tax Changes Affected Different Income Groups and Representative Households in Arizona, Maryland, New Mexico, and Ohio. Urban Institute. https://www.urban.org/sites/default/files/publication/105447/how-post-pandemic-tax-cuts-can-affect-racial-equity_1.pdf

[xiv] Dadayan, L. (2022). States Forecast Weaker Revenue Growth Ahead of Growing Uncertainties. Tax Policy Center. https://www.taxpolicycenter.org/taxvox/states-forecast-weaker-revenue-growth-ahead-growing-uncertainties

[xv] Batchelder, L. L., & Kamin, D. (2019). Taxing the Rich: Issues and Options. SSRN. http://dx.doi.org/10.2139/ssrn.3452274

[xvi] McCaffery, E. J. (2019). The Death of the Income Tax (or, the Rise of America's Universal Wage Tax). USC Law Legal Studies Paper No. 18-26. http://dx.doi.org/10.2139/ssrn.3242314

[xvii] Ibid.

[xviii] Marr, C., Jacoby, S., & Bryant, K. (2019). Substantial Income of Wealthy Households Escapes Annual Taxation Or Enjoys Special Tax Breaks. Center on Budget and Policy Priorities. https://www.cbpp.org/research/federal-tax/substantial-income-of-wealthy-households-escapes-annual-taxation-or-enjoys

[xix] Saez, E., & Zucman, G. (January 18, 2019). [Letter to U.S. Sen. Elizabeth Warren on impact of proposed wealth tax]. Retrieved from https://www.warren.senate.gov/imo/media/doc/saez-zucman-wealthtax.pdf

[xx] Leiserson, G., & McGrew, W. (2019). Taxing wealth by taxing investment income: An introduction to mark-to-market taxation. Washington Center for Equitable Growth. https://equitablegrowth.org/taxing-wealth-by-taxing-investment-income-an-introduction-to-mark-to-market-taxation/

[xxi] Invest In Our New York, (2021). Invest In Our New York Act [Fact sheet]. https://www.investinourny.org/media/pages/home/1f8653f0b6-1614711481/ionyactsummary_outlines_updatedmar02-2021.pdf

[xxii] OECD. (2018). The Role and Design of Net Wealth Taxes in the OECD. OECD Tax Policy Studies, 26. https://doi.org/10.1787/9789264290303-en

[xxiii] Tax Policy Center. (2020). Key Elements of the U.S. Tax System: How do the estate, gift, and generation-skipping transfer taxes work? The Tax Policy Center’s Briefing Book. https://www.taxpolicycenter.org/briefing-book/how-do-estate-gift-and-generation-skipping-transfer-taxes-work

[xxiv] Urban Institute. (n.d.). State and Local Backgrounders: Estate and Inheritance Taxes. Retrieved July 5, 2022, from https://www.urban.org/policy-centers/cross-center-initiatives/state-and-local-finance-initiative/state-and-local-backgrounders/estate-and-inheritance-taxes

[xxv] Maxwell, C., & Solomon, D. (2017). 4 Ways Repealing the Estate Tax Would Expand the Racial Wealth Gap. Center for American Progress. https://www.americanprogress.org/article/4-ways-repealing-estate-tax-expand-racial-wealth-gap/

[xxvi] Bhutta, N., Chang, A. C., Dettling, L. J., & Hsu, J. (2020). Disparities in Wealth by Race and Ethnicity in the 2019 Survey of Consumer Finances. Board of Governors of the Federal Reserve System. https://doi.org/10.17016/2380-7172.2797

[xxvii] Wiehe, et al. (2018). Who Pays?

[xxviii] Ibid.

[xxix] Ibid.

[xxx] Tharpe, W. (2019). Raising State Income Tax Rates at the Top a Sensible Way to Fund Key Investments. Center on Budget and Policy Priorities. https://www.cbpp.org/research/state-budget-and-tax/raising-state-income-tax-rates-at-the-top-a-sensible-way-to-fund-key

[xxxi] Ballotpedia. (n.d.). Massachusetts Tax on Income Above $1 Million for Education and Transportation Amendment (2022). Retrieved July 5, 2022, from https://ballotpedia.org/Massachusetts_Tax_on_Income_Above_$1_Million_for_Education_and_Transportation_Amendment_(2022)

[xxxii] USAFacts. (2020). White people own 86% of wealth and make up 60% of the population. Retrieved July 5, 2022, from https://usafacts.org/articles/white-people-own-86-wealth-despite-making-60-population/

[xxxiii] Institute on Taxation and Economic Policy. (2019). How Does Your State Tax Income? https://itep.org/personal-income-tax-rate-structure-by-state/

[xxxiv] Ballotpedia. (n.d.). Illinois Allow for Graduated Income Tax Amendment (2020). Retrieved July 5, 2022, from https://ballotpedia.org/Illinois_Allow_for_Graduated_Income_Tax_Amendment_(2020)

[xxxv] Sturm, V. (2020). Gov. J.B. Pritzker’s graduated-rate income tax: Here’s what you need to know. Chicago Tribune. https://www.chicagotribune.com/politics/ct-cb-illinois-pritzker-graduated-income-tax-20200820-g3lrqjqp2ne7rkjxkjammf2ub4-story.html

[xxxvi] Ballotpedia. (n.d.). Arizona Proposition 208, Tax on Incomes Exceeding $250,000 for Teacher Salaries and Schools Initiative (2020). Retrieved July 5, 2022, from https://ballotpedia.org/Arizona_Proposition_208,_Tax_on_Incomes_Exceeding_$250,000_for_Teacher_Salaries_and_Schools_Initiative_(2020)

[xxxvii] Institute on Taxation and Economic Policy. (2018). No Need for the MythBusters, the Millionaire Tax Flight Myth is Busted Again. https://itep.org/no-need-for-the-mythbusters-the-millionaire-tax-flight-myth-is-busted-again/

[xxxviii] Young, C., Varner, C., Lurie, I. Z., & Prisinzano, R. (2016). Millionaire Migration and Taxation of the Elite: Evidence from Administrative Data. American Sociological Review, 81(3) 421–446. http://cristobalyoung.com/development/wp-content/uploads/2018/11/Millionaire_migration_Jun16ASRFeature.pdf

[xxxix] Tannenwald, R., Shure, J., & Johnson, N. (2011). Tax Flight Is a Myth. Center on Budget and Policy Priorities. https://www.cbpp.org/research/state-budget-and-tax/tax-flight-is-a-myth

[xl] Enda, G., & Gale, W. G. (2020). How could changing capital gains taxes raise more revenue? Brookings Institution. https://www.brookings.edu/blog/up-front/2020/01/14/how-could-changing-capital-gains-taxes-raise-more-revenue/

[xli] McNichol, E. (2021). State Taxes on Capital Gains. Center on Budget and Policy Priorities. https://www.cbpp.org/research/state-budget-and-tax/state-taxes-on-capital-gains

[xlii] Grundman O’Neill, D., & Wiehe, M. (2016). The Folly of State Capital Gains Tax Cuts. Institute on Taxation and Economic Policy. https://itep.org/the-folly-of-state-capital-gains-tax-cuts-1/

[xliii] Campbell, G. (2019). Fiscal Note on H.541: An act relating to changes that affect the revenue of the State- Committee of Conference. Vermont Legislative Joint Fiscal Office. https://ljfo.vermont.gov/assets/Publications/House-Bills/7bb5bb90ee/GENERAL-340238-v5-Final_Revenue_Bill_Fiscal_Note.pdf

[xliv] WA Dept. of Revenue. (2021). Capital gains tax Q&A (2019-21 proposal). Office of Financial Management. https://ofm.wa.gov/budget/state-budgets/gov-inslees-proposed-2019-21-budgets/proposed-2019-21-budget-and-policy-highlights/revenue-changes/capital-gains-tax-qa

[xlv] Rehrmann, R. J. (2021). Fiscal and Policy Note for Senate Bill 288. MD Dept. of Legislative Services. https://mgaleg.maryland.gov/2021RS/fnotes/bil_0008/sb0288.pdf

[xlvi] Baker, D., Bivens, J., & Schieder, J. (2019). Reining in CEO compensation and curbing the rise of inequality. Economic Policy Institute. https://www.epi.org/publication/reining-in-ceo-compensation-and-curbing-the-rise-of-inequality/

[xlvii] Institute for Policy Studies. (n.d.). CEO-Worker Pay Resource Guide. Retrieved July 25, 2022, from https://inequality.org/action/corporate-pay-equity/

[xlviii] Lav, I. J., & Leachman, M. (2018). State Limits on Property Taxes Hamstring Local Services and Should Be Relaxed or Repealed. Center on Budget and Policy Priorities. https://www.cbpp.org/research/state-budget-and-tax/state-limits-on-property-taxes-hamstring-local-services-and-should-be

[xlix] Sebastian, S., & Kumodzi, K. (2015). Progressive Policies for Raising Municipal Revenue. Local Progress and The Center for Popular Democracy. https://localprogress.org/wp-content/uploads/2013/09/Municipal-Revenue_CPD_040815.pdf

[l] Orth, T. (2022). 60% of Americans say billionaires don’t pay the full amount they owe in taxes. YouGov. https://today.yougov.com/topics/politics/articles-reports/2022/04/01/americans-say-billionaires-dont-pay-full-taxes

[li] Markovits, D. (2020). The Need for a True Wealth Tax to Support Those Most in Need Due to the Coronavirus. Data For Progress and The Justice Collaborative Institute. https://www.filesforprogress.org/memos/wealth-tax-coronavirus.pdf

[lii] Ipsos. (2020). A majority of Americans agree that the very rich should contribute an extra

share of their total wealth to support public programs [Press release]. https://www.ipsos.com/sites/default/files/ct/news/documents/2020-01/topline_reuters_economy_poll_pt_1_01_10_2020_0.pdf

[liii] Global Strategy Group & GBAO. (2020). Navigator January Tracker [Survey data]. https://navigatorresearch.org/wp-content/uploads/2020/01/Navigator-January-Tracker-Toplines-F01.24.20.pdf

[liv] Deiseroth, D., Mulholland, M., & NoiseCat, J. B. (2020). Voters Support the Thrive Agenda. Data For Progress. https://www.filesforprogress.org/memos/voters-support-thrive-agenda.pdf

[lv] Winter, E. (2020). Voters in Key States Support a Wealth Tax. Data For Progress and Roosevelt Forward. https://www.filesforprogress.org/memos/voters-in-key-states-support-a-wealth-tax.pdf

[lvi] Businesses for Responsible Tax Reform. (2019). POLL: Small Businesses Want to See Presidential Tax Returns, Support Raising Taxes on the Wealthy. https://docs.wixstatic.com/ugd/4a8609_130cf041386d48ae9409bc191bcf8cdb.pdf

[lvii] ALG Research. (2019). Online Nationwide Tax Poll [Survey data]. Americans for Tax Fairness. https://americansfortaxfairness.org/wp-content/uploads/Baseline-Nationwide-Tax-Online-Poll-March-15-20-2019.pdf

[lviii] Marist Institute for Public Opinion. (2019). NPR/PBS NewsHour/Marist Poll of 1,346 National Adults [Survey data]. http://maristpoll.marist.edu/wp-content/uploads/2019/07/NPR_PBS-NewsHour_Marist-Poll_USA-NOS-and-Tables_1907190926.pdf#page=3

[lix] Wronski, L. (2020). New York Times|SurveyMonkey poll: November 2020. https://www.surveymonkey.com/curiosity/nyt-november-2020-cci/

[lx] Peter G. Peterson Foundation. (2020). Majority of Voters Support Higher Taxes for Wealthy and Corporations — and Want Next President to Pay for His Priorities. https://www.pgpf.org/infographic/majority-of-voters-support-higher-taxes-for-wealthy-and-corporations-and-want-next-president-to-pay-for-his-priorities

[lxi] Brown, S. (2018). WBUR Poll: Ballot Questions On Sales Tax Rollback And 'Millionaire's Tax' Maintain High Support. WBUR. https://www.wbur.org/news/2018/05/31/sales-tax-millionaires-tax-ballot-poll

[lxii]  Rutgers-Eagleton/FDU. (2019). Joint Rutgers-Eagleton/FDU Poll: New Jerseyans Support Millionaires Tax [Survey data]. https://eagletonpoll.rutgers.edu/wp-content/uploads/2020/04/release_04-04-19.pdf

[lxiii] Paul Simon Public Policy Institute. (2020). Simon Poll, Spring 2020 (statewide) [Survey data]. https://opensiuc.lib.siu.edu/cgi/viewcontent.cgi?article=1017&context=ppi_statepolls

[lxiv] Molyneux, G., & Garin, G. (2020). New Yorkers’ Support for New Taxes on Billionaires and

Ultra-Millionaires [Poll memo]. Hart Research Associates.

[lxv] Winter. (2020). Voters in Key States.

[lxvi] Williams, J. (2019). Wisconsin Voters Strongly Support Raising Taxes on the Rich [Poll memo]. Public Policy Polling. https://taxmarch.org/wp-content/uploads/2019/07/Wisconsin-Voters-Strongly-Support-Raising-Taxes-on-the-Rich.pdf

[lxvii] Williams, J. (2019). Florida Voters Strongly Support Raising Taxes on the Rich [Poll memo]. Public Policy Polling. https://taxmarch.org/wp-content/uploads/2019/06/Florida-Voters-Strongly-Support-Raising-Taxes-On-The-Rich.pdf

Anti-Racist State Budgets: The Social Safety Net


About This Primer

This primer is part of a series on anti-racist state budgets. To understand the concept of creating anti-racist state budgets, it is important to understand the difference between racist and anti-racist ideas and policies. The following excerpts are from How To Be An Antiracist (2019) by Ibram X. Kendi:

Racist vs. Anti-Racist Ideas

A racist idea is any idea that suggests one racial group is inferior or superior to another racial group in any way. Racist ideas argue that the inferiorities and superiorities of racial groups explain racial inequities in society … An antiracist idea is any idea that suggests the racial groups are equals in all their apparent differences—that there is nothing right or wrong with any racial group. Antiracist ideas argue that racist policies are the cause of racial inequities.

Racist vs. Anti-Racist Policies

A racist policy is any measure that produces or sustains racial inequity between racial groups. An antiracist policy is any measure that produces or sustains racial equity between racial groups … There is no such thing as a nonracist or race-neutral policy. Every policy in every institution in every community in every nation is producing or sustaining either racial inequity or equity between racial groups.

For additional race-equity concepts and definitions, please visit the Racial Equity Tools glossary.

Introduction

Latina mother teaches daughter how to wash vegetables in kitchen sink

We all benefit when public policies move us closer to realizing our nation’s promise of full and equal opportunity for all. Social safety net programs that help people get back on their feet during hard times and build thriving communities have proven that ending poverty is within reach. To continue our march toward prosperity for all, we must first confront and dismantle a long history of racism and discrimination in our nation’s response to poverty.

For decades, the modern social safety net has kept millions of Americans out of poverty, many of them children. These public assistance programs represent our shared investment in ensuring that all families, regardless of their income, can keep food on the table and go to work knowing that their children are in a safe and enriching environment. Without our social safety net, 37 million more Americans, including 7 million children, would be living in poverty.

Public assistance programs were originally designed as temporary supports for those who fall on hard times, but more and more, they have supplemented the earnings of workers trapped in a lopsided economy rigged in favor of the wealthy and large corporations at the expense of the working class. Walmart, for example, employs the most workers receiving SNAP, leaving taxpayers on the hook for $6.2 billion annually to help their workers make ends meet and access healthcare, all while using tax breaks and loopholes to avoid an estimated $1 billion in federal taxes each year.

In this report, we consider state policy changes to the Temporary Assistance for Needy Families (TANF) program, the Supplemental Nutrition Assistance Program (SNAP), and the child care subsidy program. Though there are additional safety net policies that state lawmakers can consider, like tax credits for low-income families, school nutrition and early childhood programs, or housing assistance, in this report, we focus on three federally funded, means-tested assistance programs that are generally administered through state human services agencies.

The Pervasive Legacy Of Racism In The Social Safety Net

Exterior of convenience store in Philadelphia; signs read "EBT Aceptamos" and "ATM here" Jana Shea / Shutterstock.com
Jana Shea / Shutterstock.com

Public assistance programs should be accessible and effective in moving families out of poverty. But since its inception, racism has shredded the nation’s social safety net, weaving in discriminatory policies designed to leave out Black families and other families of color. Over time, these policies have not only failed the people they were intended to exclude, but they have also left all communities worse off for generations.

A Brief History of Racism in the Social Safety Net

The construction of arbitrary obstacles to prevent people of color from accessing social welfare programs is as old as the nation’s first safety net policies. Federal and state lawmakers have turned anti-poverty policy on its head, using it not to help those living in poverty, but as a tool to preserve a racist economic system dependent on the exploitation of Black workers and other workers of color. Though not a comprehensive historical overview, the following racist ideas and movements were instrumental in the design of the modern social safety net:

Racism Undermines Anti-Poverty Policy

The cumulative result of decades of racist policymaking in the social safety net has undermined its effectiveness in reducing poverty and helping families achieve long-term financial security. The decentralization of TANF administration with the passage of the PRWORA left recipients at the mercy of states with a long history of political and economic disenfranchisement of people of color. Nearly three decades later, the unmistakable legacy of the 1996 reforms was its orchestration of a flawed response to child poverty that disproportionately failed the nation’s Black children. Indeed, research shows that the least accessible and least generous cash welfare programs are in states with higher shares of Black residents. By one estimate, equalizing the differences in how states use TANF funds to address poverty would narrow the Black-white child poverty gap by 15 percent.

While many of the changes contained in the PRWORA had the effect of reducing access to the safety net for Black families and other families of color, the changes have undermined our nation’s efforts to reduce poverty overall. Research shows that in the long term, the changes contained in the PRWORA failed to improve the well-being of families in poverty. Additionally, the work-centric reforms to the social safety net resulted in an alarming long-term trend: growing shares of families living in deep poverty. Fifteen years after PRWORA, the share of households living on less than $2 per day had increased by 153 percent. The rise in deep poverty was especially pronounced for children of color: in the first ten years after the 1996 changes, the percentage of Black children in deep poverty increased from 4.1 percent to 5.8 percent, and from 5.8 percent to 6.8 percent for Latinx children, while the deep poverty rate declined slightly for white children.

Building an Anti-Racist Social Safety Net

child reaching for strawberries on kitchen counter

We all have a role in ensuring that no child goes hungry, that parents can afford the childcare they need to go to work, and that families living in poverty have what they need to make ends meet. Policymakers have the power to confront and dismantle the legacies of racism in their states’ public assistance programs. At the state level, there are significant opportunities to reverse harmful policies of the past and make investments in policies to strengthen the reach of the safety net:

When considering ways to build an anti-racist social safety net, state legislators should refer to the following recommendations and work with national and local advocates, especially groups that center race equity, to develop the best policies for their states, which may include administrative solutions in addition to the legislative options highlighted below.

TANF Family Cap

During the height of welfare changes in the 1990s, 24 states adopted “family cap” policies that punished families receiving cash assistance through TANF for having another child. Without any evidence beyond racist and sexist stereotypes of welfare recipients, proponents of family caps falsely claimed that cash assistance programs incentivized low-income mothers to have more children to receive additional public assistance.

Family cap policies are a modern recasting of 20th century eugenics laws that promoted reproductive control and forced sterilization of people of color, people living in poverty, and people with disabilities. Within cash assistance programs, the family cap policy is the latest in a long history of policies intended to exert reproductive control over Black women, including contraceptive requirements, “suitable home” laws, policies barring unwed mothers from eligibility, and even forced sterilization. In spite of its racist roots, family cap policies remain in place today in 12 states, even though conclusive research confirms that the policy drives families deeper into poverty and does not affect or reduce childbearing among recipients.

Lawmakers in California (2016 CA AB 1603), Massachusetts (2019 MA H 4800), Minnesota (2013 MN SF 1034/HF 1233), New Jersey (2020 NJ S 2178/Chapter 99), and Virginia (2020 VA SB 690) recently enacted legislation to repeal the family cap in their TANF programs. Legislators in Georgia considered, but failed to pass, such a bill (2021 GA HB 741).

In Connecticut, families with children born after the initial ten months of receiving TANF cash assistance receive a 50 percent reduction in the benefit. Additionally, families with children born within ten months of program participation are prohibited from qualifying for an exemption from program time limits. A bill (2021 CT HB 6635) that was recently introduced, but failed to advance, would have eliminated both family cap penalties.

Work Requirements

Strict work and reporting requirements within the social safety net ignore steep and multiple barriers to steady employment, which disproportionately affect Black workers. Behavioral science research also shows that work reporting requirements add another burden while also promoting harmful narratives among agency staff. The urgency of this failed policy design has been intensified by the pandemic recession, in which the lowest quartile of workers lost 7.9 million jobs, while the highest quartile gained nearly 1 million jobs.

Work requirements and penalties are used more harshly against Black and Latina women than white women, and ample evidence shows that work requirements have failed to increase employment and reduce poverty among participants. For the most part, adults receiving TANF and SNAP are subject to work requirements under federal law, but states have some flexibility in both programs to establish exemptions, set the severity of sanctions, and define work activities.

TANF Sanctions

In the TANF program, states have broad authority to determine sanctions for non-compliance with work requirements that range from an initial warning to penalties as severe as immediate case closure and a loss of benefits. All but three states—California, New York, and Vermont—adopted full-family sanctions that cut off benefits to the entire family. In recent years, several states have repealed these harsh sanctions and no longer prevent children from receiving benefits for work-related sanctions.

The District of Columbia amended (2017 D.C. Law 22-33, § 5002/D.C. Code § 4-205.19f) its TANF non-compliance sanctions to minimize the impact of a benefit reduction on children by capping the sanction at 6 percent of the total benefit amount.

Illinois lawmakers enacted a bill (2019 IL HB 3129) that designated 75 percent of the TANF benefit for the children in a household and 25 percent for adult members, and provided that no part of the benefit designated for children shall be reduced due to a sanction. Under the new law, sanctions for cases of non-compliance are limited to 30 percent of the adult portion of a benefit.

Legislation (2020 MD SB 787/HB 1313) enacted in Maryland establishes a similar designation of benefits for children and adults, and limits the reduction of benefits for non-compliance to 30 percent of the adult portion, and prohibits the reduction or termination of any portion of the child or children’s benefit.

In Maine, lawmakers enacted a bill (2021 ME LD 78) to repeal the state’s full-family sanctions and limit the termination of benefits to the non-compliant adult and allow the children and compliant parents to continue receiving benefits.

Volunteers load food into the trunk of vehicles during a ''Let's Feed L.A. County'' drive thru food distribution by the Los Angeles Regional Food Bank, April 23, 2021, in Rosemead, California. Ringo Chiu / Shutterstock.com
Ringo Chiu / Shutterstock.com

SNAP Requirements and Sanctions

In SNAP, most adults must comply with basic work-related requirements, such as registering for work or not voluntarily leaving a job. States can require participation in job training activities, which range from job search requirements to educational programs, in addition to setting the number of hours required. Employment and training (E&T) programs must meet some federal requirements, but states have broad latitude in program design. Many states enroll participants in E&T programs on a voluntary basis, which is more effective than mandatory programs.

States can also set sanctions and disqualifications for SNAP recipients who fail to comply with work requirements. There are federal minimums for disqualification that apply only to the individual who is out of compliance (which allows the household to receive a reduced benefit amount), starting with a 1-month sanction for the first instance, and escalating to 6 months for the third instance. States can use the minimum, or use some combination of a longer disqualification period, or extend the disqualification to the entire household. The range of sanctions includes 26 states that use the federal minimum, and the most punitive state, Mississippi (Miss. Code Ann. § 43-12-37), which applies sanctions against an entire household and imposes a permanent sanction for non-compliance after the third instance.

Legislation introduced in Texas (2021 TX SB 1912/HB 1353) would roll back the state’s disqualification policy to the federal minimum by allowing a household to continue to receive benefits when an individual is out of compliance.

Similar legislation was introduced, but failed to pass, in Nebraska (2020 NE LB 1037) to limit the disqualification to the non-compliant household member.

TANF and SNAP Bans on Individuals with Prior Drug-Related Felony Convictions

The federal lifetime ban on individuals with drug-related felony convictions gave states the option to opt out of or modify the ban through state legislative action. Not only does the ban establish a lifetime punishment for a drug conviction, but it also effectively extends the punishment to the children and family of the individual, as the household receives a smaller benefit as a result of the ban.

The ban—which applies to no other type of felony conviction—plainly targets Black and Latinx people, who are disproportionately arrested and imprisoned for drug offenses, despite similar drug use rates among Black, Latinx, and white people. Drug arrests of women, who are more likely to be the primary caregivers of children, have increased by 216 percent in the past 35 years, compared to 48 percent for men. Access to TANF and SNAP has been shown to reduce the risk of recidivism within the first year of release by 10 percent.

Many states have lifted the ban in either or both programs, while others have modified their bans to limit those affected by narrowing the types of felonies, shortening the length of the ban, or providing an exception for those that have successfully completed treatment or parole requirements.

Legislators in Illinois (2021 IL HB 88) and South Dakota (2020 SD SB 96) enacted legislation to lift the ban in TANF, lawmakers in Michigan approved a bill (2020 MI SB 1006) to lift the ban in SNAP, while lawmakers in Kentucky (2021 KY HB 497) and Virginia (2020 VA SB 124/HB 566) enacted legislation to lift the bans in both programs.

A bill (2021 NV AB 138) enacted by Nevada lawmakers would lift the bans in both SNAP and TANF. Under current law, the state’s modified bans require participation in, or successful completion of, a substance use disorder treatment program, which can be costly and difficult to access.

Drug Testing for TANF Applicants and Recipients

The passage of the PRWORA also gave states the option to require drug tests for TANF recipients, and to establish penalties for those who test positive for drugs. Eligibility requirements for SNAP are more narrowly prescribed, and state efforts to impose drug testing in the program have been blocked by the federal government. Some states have circumvented the federal prohibition on drug testing in SNAP by requiring drug tests as a part of their modified ban on individuals with drug-related felony convictions, requiring it for unemployed SNAP recipients participating in state employment and training programs, and carrying over drug-testing disqualifications from TANF to those also receiving SNAP.

Drug testing requires a reasonable basis or suspicion; Michigan and Florida enacted “suspicionless” drug testing for TANF applicants and recipients, which required drug testing without reasonable suspicion of drug use, that were later rejected by courts as a violation of the Fourth Amendment. Subsequently, at least 13 states currently require applicants to submit to drug screening questionnaires that are used, along with other information, including criminal history records or even “visual observations” by agency staff, as a basis for reasonable suspicion to require drug testing. Drug screening and testing policies are also costly and ineffective; an analysis of 13 states with existing drug testing policies found that, collectively, the states spent over $200,000 and identified only 338 positive tests, or 1 percent of all applicants.

Legislators in Utah enacted a bill (2016 UT HB 172) that, as introduced, would have repealed the state’s drug screening and testing requirements. As amended, TANF applicants who are screened as likely drug users would be required to take a drug test only upon the recommendation of a licensed clinical social worker.

In Wisconsin, the 2021-23 Executive Budget (2021 WI AB 68/SB 111) proposed by Governor Evers would repeal the state’s drug screening and testing requirements in the SNAP Employment and Training program, but lawmakers declined to include the recommendation in the final enacted budget.

Exterior window of retail store; sign reads, "EBT Accepted here! SNAP"
Child Support

Cooperation with child support enforcement is required at varying degrees within the social safety net as a cost recovery mechanism, but many non-custodial parents cannot keep up with payments. A quarter of non-custodial parents live in poverty, and 300,000 of them fell into poverty from paying child support. Children with parents living outside of the home are much more likely to be living in poverty and are more likely to be Black or Latinx. As a result, child support enforcement efforts leave low-income children no better off, since the payments collected are oftentimes reimbursed to the state and not the child, while pushing non-custodial parents into financial precarity and debt.

Under federal law, subject to good cause exemptions, families must cooperate with child support enforcement programs to receive TANF benefits. For SNAP and childcare subsidy recipients, states can require both custodial and non-custodial parents receiving benefits to cooperate with child support enforcement and impose their own sanctions for failure to cooperate.

Child Support Pass-Through and Disregard in TANF

As a condition of receiving TANF benefits, applicants must cooperate with child support enforcement agencies in establishing and collecting support. Child support payments collected on behalf of current TANF participants are shared between the state and federal governments, but the federal government waives its share for child support that is passed through to the family and disregarded as income for eligibility purpose, up to $100 per month per child, or $200 for two or more children.

Half of the states keep all of the child support and do not pass it to the family, but in 26 states, the state agency collects child support payments on behalf of children receiving TANF, but then passes the payment, fully or partially, onto the child. Pass-through policies provide a meaningful boost to TANF recipients, who receive benefits that are woefully inadequate and have been declining relative to the cost of living over the years. Research shows that pass-through policies incentivize cooperation for non-custodial parents while also increasing compliance with child support orders among non-custodial parents.

Many states’ pass-through policies reflect the amounts waived by the federal government, while others pass through smaller amounts, and some pass through the full amount collected to the TANF family, above the federal amount waived.

Legislators in Colorado enacted a bill (2015 CO SB 15-012) to allow TANF recipients to receive the full amount of the child support that the state collects on their behalf, in addition to ensuring that the additional payments are not counted as income for eligibility in the program. In a recent study, the state’s Department of Human Services reported that the average family received an increase of $167 per month. The state also reported that monthly child support collections increased by 76 percent in the first 18 months of implementation.

Maryland enacted legislation (2017 MD SB 1009/HB 1469) to allow up to $100 per child, or $200 for two or more children, to be passed through to TANF recipients, and to disregard the payment for eligibility for the program.

In New Jersey, a bill (2021 NJ S 2329/A 3905) that was vetoed by the governor would have allowed a portion of child support to be passed through to TANF families, in addition to excluding the pass-through amount from the program’s definition of income.

Child Support Sanctions for SNAP and Child Care Subsidies

States can also choose to impose child support-related sanctions for SNAP and childcare subsidy recipients. Severe sanctions for non-cooperation can have dire consequences, including a loss of subsidies that help parents afford childcare, or reduced food assistance and increased food insecurity for children. Although most states have good cause exemptions for non-cooperation, such as in cases of domestic violence, concerns about how child support enforcement may affect their family relationships can leave some families reluctant to participate.

In Mississippi, where custodial parents can be disqualified from receiving SNAP for failure to cooperate, and non-custodial parents can be disqualified for being in arrears with court-ordered child support payments, legislators considered, but failed to pass, a bill (2020 MS HB 1319) that would have repealed the state’s SNAP enforcement requirements. The state also requires child support enforcement cooperation for child care eligibility, and failed to advance a bill (2021 MS HB 65) that would have eliminated the requirement in the program.

Kansas legislators are considering a bill (2021 KS HB 2371) that would eliminate the requirement for child support enforcement cooperation for SNAP and child care subsidy applicants.

Time Limits in TANF

The passage of the PRWORA in 1996 instituted a dramatic federal 60-month lifetime limit for receiving TANF benefits, though states can—and several states do—impose a shorter limit. Enabled by racist narratives about welfare recipients, proponents argued that the policy would force recipients to find jobs, ignoring the reality that many TANF recipients, especially Black and Latina mothers, face steep and systemic barriers—employment and skills gaps, employment discrimination, lack of access to reliable transportation—to stable jobs that pay enough to make ends meet. Indeed, research shows that time limits are ineffective and do not result in increased long-term earnings.

Black mother and Black father playfully hold their toddler daughter in field outdoors

State lawmakers can ease time limit penalties by providing extensions beyond the 60 months for up to 20 percent of the caseload, by stopping the clock on the time limit for certain groups of families, and continuing benefits for children beyond the time limit. Additionally, state TANF funds are not limited by the federal 60-month limit, so states can use funding flexibly to set their own time limit policies. One way to ensure that families are not punished is by using “good faith” extensions when recipients are participating in work activities but are otherwise prevented from working.

In Washington, where researchers found that time limits were most likely to penalize Black and Indigenous families, lawmakers enacted a bill (2019 WA HB 1603/Chapter 343) that expanded good faith extensions for families facing barriers to work, such as the need for mental health or substance use disorder treatment, or homelessness or risk of loss of housing. Under the new law, recipients are also eligible for an extension if they demonstrate that the time limit would cause undue hardship to the recipient or their family.

Another bill (2021 WA SB 5214) enacted by Washington legislators establishes a hardship exemption for all families receiving TANF since March 1, 2020, when the unemployment rate was equal to, or greater than, 7 percent.

A bill (2020 NJ S 2329/A 3905) that was vetoed by the governor in New Jersey would have continued benefits for children and other household members if at least one adult recipient becomes ineligible as a result of the 60-month lifetime limit.

Arizona legislators considered a bill (2021 AZ HB 2253) that would have increased the state’s lifetime limit of 12 months, the most restrictive in the country, to the federal limit of 60 months.

Asset Limits

Today, the average Black household has just 12 percent of the wealth of white households, and early data shows that the pandemic recession threatens to widen the gap. The racial wealth gap has grown over the course of centuries of discriminatory policymaking and institutional practices that built wealth for white families while preventing families of color, especially Black Americans, from achieving the same generational wealth.

States have broad authority to set asset limits in most public assistance programs. Asset limits introduce unnecessary administrative complexity and cost, and research from states that have relaxed asset limits has seen no effect on the number of monthly applicants and no evidence to suggest that applicants shelter significant assets in order to become eligible for assistance.

Included in that broad authority are the states’ abilities to set asset limits for TANF, though in 7 states, the asset limit has remained unchanged at $1,000 in the four decades since it was first imposed at the federal level, while 8 states have eliminated the asset test altogether. While federal rules set the asset limit in SNAP at $2,250 for most households, states can establish their own limit by adopting broad-based categorical eligibility (BBCE); 37 states have utilized this option to eliminate asset tests in SNAP. In the child care subsidy program, Congress established uniformity for asset limits in 2014, when it required states to allow for self-certification that their assets did not exceed $1,000,000.

In Indiana, legislators considered, but failed to pass, a bill (2014 IN SB 413) that would have eliminated asset limits for SNAP and TANF applicants. The state is one of 14 states that has not eliminated the asset test in SNAP, and one of the seven states where the asset limit is $1,000.

Lawmakers in New York are considering legislation (2021 NY S 742/A 2214) to eliminate asset limits across all public assistance programs in the state. The state has already eliminated the asset test in SNAP, and the bill would eliminate the current asset test of $2,000, or $3,000 for households with someone age 60 or older.

Income Eligibility

Public assistance program eligibility requirements often trap people further into poverty instead of sufficiently counteracting multiple economic forces—labor market discrimination, stagnating wages, and rising inequality, leaving children in households headed by single mothers, especially single Black, Indigenous, and Latina mothers, most likely to live in poverty.

States have considerable flexibility in setting income eligibility requirements across social safety net programs. Aligning income tests with a living wage ensures that people aren’t turned away from the social safety net, even when their jobs don’t pay enough to make ends meet. Rising child care costs that far outpace wages create significant employment instability for parents, especially mothers of young children. By one estimate, a nationwide increase in income eligibility for child care subsidies would result in 270,000 mothers joining the workforce.

Workers who receive a small raise or extra hours at work can also fall farther behind because they lose more in benefits than they received in increased income, in a phenomenon called the public assistance “cliff effect,” which is particularly pronounced for child care subsidies. The cliff effect forces workers into declining pay increases or promotions to maintain the benefits that allow them to pay the bills. Instead of promoting long-term financial stability, the public assistance cliff effect keeps workers on unstable financial footing, which contributes to increased administrative costs resulting from enrollees cycling on and off programs.

TANF Income Eligibility

States have significant flexibility in determining eligibility criteria for cash assistance programs funded by TANF dollars, resulting in wide variation in eligibility for TANF across the country. For example, a family of three in Alabama can earn no more than $268 per month to be eligible for TANF, while the same family in Minnesota would be eligible with monthly earnings of up to $2,231. States can expand access to TANF cash assistance by increasing income thresholds, adjusting income measurement methods, or allowing some portion of a household’s income to be disregarded in determining eligibility.

Young Asian child in wheelchair laughs with caretaker or family member at the park

Lawmakers in Indiana failed to advance a bill (2021 IN SB 233) that would have increased the income threshold for TANF cash assistance to 50 percent of the federal poverty level over the course of 3 years. The bill would increase eligibility while ensuring that the threshold is updated annually as costs rise. Currently, eligibility for TANF in Indiana is based on a fixed dollar amount that was last updated in 1988.

In Maine, legislators enacted a bill (2019 ME LD 1772) to broaden income disregards in determining TANF eligibility. Prior law provided earnings disregards and childcare expenses for calculating benefit levels; the new law applies existing earnings disregards and child care expenses for the purposes of determining eligibility, in addition to significantly expanding disregards for calculating benefit levels.

SNAP Income Eligibility

Within SNAP, states have much less flexibility in setting income eligibility requirements. States that adopt broad-based categorical eligibility can increase the gross income threshold for the program above the federal minimum of 130 percent of the FPL, which 31 states and DC have already done. While some states have considered legislation to accomplish the change, the option can also be adopted through administrative means.

In Illinois, legislators approved a bill (2015 IL SB 1847) to increase the gross income limit in SNAP from the federal minimum to 165 percent of the FPL, or 200 percent for families with an elderly, blind, or disabled household member.

Minnesota lawmakers are considering legislation (2021 MN SF 759/HF 611) to increase the gross income limit for SNAP from 165 percent of the FPL to 200 percent.

Lawmakers in Nebraska overrode a gubernatorial veto to enact a bill (2021 NE LB 108) to increase the gross income threshold from 130 percent of the FPL to 185 percent. As amended and enacted, the threshold is increased to 165 percent of the FPL through September 30, 2023, and includes legislative intent language that the increase shall be funded through new federal funds provided through the American Rescue Plan Act.

Child Care Subsidy Income Eligibility

States also have broad authority to set income thresholds for childcare subsidy eligibility up to 85 percent of the state median income (SMI). Recent federal changes to index eligibility to SMI instead of FPL ensures that the threshold moves alongside economic conditions and costs within the state. There is significant variation across the country in access to child care assistance: a family of three can earn no more than 39 percent of the SMI in Nebraska to be eligible for child care subsidies, compared to 85 percent of the SMI in Arkansas, Mississippi, and Vermont.

Virginia legislators enacted a bill (2021 VA HB 2206) that temporarily increased income eligibility for child care subsidies to the federal maximum of 85 percent of the SMI if “the family includes at least one child who is five years of age or younger and has not yet started kindergarten.” The increased threshold is effective through August 1, 2021, though families who become enrolled continue to be eligible for a year.

In Iowa, lawmakers enacted legislation (2021 IA HF 302) to ease the cliff effect in the child care subsidy program by establishing a gradual eligibility phase-out to allow families to continue receiving assistance if their income is between 225 and 250 percent of the FPL, compared to current law under which families lose eligibility when they earn more than 225 percent of the FPL. The bill also establishes a higher threshold of 275 percent of the FPL for families with children needing special needs care.

The Utah legislature recently enacted a bill (2021 UT HB 277) to increase eligibility for child care subsidies, funded by new federal funds available to states, to the federal maximum of 85 percent of SMI. The bill also eliminates the co-payment obligations for families earning up to 75 percent of the SMI. Under existing law and regulations, the income limit is a percentage of the SMI as determined by the Department, and co-payments are required for any family earning more than 100 percent of the FPL.

State-Funded Programs for Immigrants Excluded from Federal Funds

Many states have established state-funded assistance programs for immigrants who are otherwise ineligible for federally funded programs, including cash assistance and nutrition assistance substitute programs. States can also use their portion of spending on TANF, which is already required to receive federal funds, to provide benefits to immigrants who are federally barred from eligibility until they have been in the country for five years. At least 22 states have a state-funded TANF replacement program and 6 states have a state-funded food assistance program available to some immigrants who are otherwise excluded from federally funded programs.

Legislators in California introduced a bill (2021 CA SB 464) that would extend eligibility for the state-funded California Food Assistance Program (CFAP) to any noncitizen, including undocumented immigrants. Current law restricts CFAP eligibility to specific categories of lawfully present immigrants.

New Jersey legislators enacted a bill (2020 NJ S 2329/A 3905), which received a conditional veto by the governor, that would have expanded access to TANF for lawful permanent residents, individuals granted relief through the federal Deferred Action for Childhood Arrivals (DACA) program, and any other non-citizens who are authorized to live in the United States.

In Washington, lawmakers enacted a bill (2019 WA SB 5164) to extend state-funded food and cash assistance to noncitizen victims of human trafficking and other serious crimes, and asylum seekers and their family members. Under the new law, individuals are eligible if they have filed, or are preparing to file, an application with the appropriate federal agency for their status. Prior legislation created the Food Assistance Program (FAP) and the State Family Assistance Program, which helps lawfully present immigrants who are otherwise ineligible for federally funded benefits.

Increasing TANF Benefits

The dismantling of direct cash assistance with the passage of PRWORA was the latest iteration of a long history of anti-Blackness in public assistance policymaking. In handing over substantial policy and programmatic authority to the states, Congress created opportunities for states to misuse vast amounts of public funds intended to help the nation’s poorest children. States took full advantage of the lax requirements, especially states with higher shares of Black residents, by spending increasingly larger amounts of TANF funds on programs for non-impoverished families that it was never intended to fund, or by accumulating vast slush funds instead of providing direct cash assistance to families in poverty. States now spend just 21 percent of TANF funds on basic assistance, with 14 states spending less than 10 percent. At the same time, in every state except for New Hampshire, TANF benefits still leave families in deep poverty because states have failed to adjust benefit levels alongside increases in the cost of living.  

Decades of systematic efforts to disassemble the social safety net have disproportionately fallen on Black children—41 percent of Black children live in states where TANF helps less than 10 families for every 100 living in poverty, and 55 percent of Black children live in states where TANF benefits are below 20 percent of the federal poverty level. Lawmakers can ensure that their states’ TANF funds are spent effectively toward reducing child poverty by increasing direct assistance to families in poverty and providing for automatic annual adjustments to benefit amounts.

A bill (2021 GA HB 92) that failed to advance in Georgia would have allowed for automatic annual increases to the maximum TANF benefit, which has been fixed at the same dollar amount for 30 years, by amending the definition of cash assistance to being “based on a standard of need that is equal to 50 percent of the federal poverty level for the applicable family size, and which equates to a maximum monthly amount equal to 75 percent of such amount for each such family size.” By tying the benefit to the FPL, which is adjusted annually, lawmakers could have reversed the declining value of benefits in the state, which has decreased by 40 percent since 1996.

Latina custodian wearing mask cleans bathroom sink or washbasin with towel

In Mississippi, legislators recently enacted a bill (2021 MS SB 2759) that raises the maximum monthly TANF benefits. Though the state has the highest child poverty rate in the nation, prior to the passage of the bill, TANF benefits in the state were the lowest in the nation; under the new law, a family of three would receive a monthly benefit of $260, an increase from $170 per month.

Massachusetts lawmakers considered legislation (2019 MA S 36/H 102) to increase the monthly benefit annually by 10 percent until the benefit amount reaches 50 percent of the federal poverty level. The bill also would provide an annual adjustment thereafter to align the benefit level with 50 percent of the federal poverty level. The bill failed to advance, but the final FY 2021 budget included a one-time 10 percent increase to the state’s TANF benefit levels. Similar legislation (2021 MA S 96/H 199) has been re-introduced in the 2021 session that contemplates 20 percent annual increases, which are reflected in budgets proposed by both the House and Senate.

In Minnesota, legislators introduced a bill (2019 MN SF 905/HF 799) to increase the benefit amount by $200 gradually in $50 increments through October 2022, and require 2 percent increases annually thereafter. Though the legislation failed to advance, the final enacted biennial budget included a $100 increase to the monthly benefit amount, the state’s first increase in over three decades.

Virginia lawmakers considered a budget amendment in 2020 that would have increased the benefit amount by 18 percent annually until the standard reached 50 percent of the federal poverty level. Although the amendment was not adopted, lawmakers included one-time increases of 15 percent and 10 percent in the 2020 and 2021 budgets. The 2021 budget bill also requires the Department of Social Services to “develop a plan to increase the standards of assistance by 10 percent annually until they equal 50 percent of the federal poverty level.”

Lawmakers in Washington (2021 WA SB 5092/HB 1094) approved a 15 percent increase to benefits for TANF families in the state’s biennial budget, effective July 1, 2021.

Additional Resources

Center on Budget and Policy Priorities (CBPP)

Center for Law and Social Policy (CLASP)

Center for the Study of Social Policy (CSSP)

National Immigration Law Center (NILC)

National Women’s Law Center (NWLC)

Prosperity Now

The Sentencing Project

The Urban Institute

Messaging

Polling

Anti-Racist State Budgets: Transportation Equity

About This Primer

This primer is part of a series on anti-racist state budgets. To understand the concept of creating anti-racist state budgets, it is important to understand the difference between racist and anti-racist ideas and policies. The following excerpts are from How to Be an Antiracist (2019) by Ibram X. Kendi: 

Racist vs. Anti-racist Ideas

A racist idea is any idea that suggests one racial group is inferior or superior to another racial group in any way. Racist ideas argue that the inferiorities and superiorities of racial groups explain racial inequities in society. . . . An antiracist idea is any idea that suggests the racial groups are equals in all their apparent differences – that there is nothing right or wrong with any racial group. Antiracist ideas argue that racist policies are the cause of racial inequities.

Racist vs. Anti-racist Policies

A racist policy is any measure that produces or sustains racial inequity between racial groups. An antiracist policy is any measure that produces or sustains racial equity between racial groups. . . . There is no such thing as a nonracist or race-neutral policy. Every policy in every institution in every community in every nation is producing or sustaining either racial inequity or equity between racial groups. 

For additional race-equity concepts and definitions, please visit the Racial Equity Tools glossary.

The following primer examines how policymakers have impacted low-income communities and communities of color through racist transportation policies and practices and, drawing from existing research, analyzes how state budgets can guide racial equity outcomes. It also outlines progressive considerations for state legislators to take into account when crafting related anti-racist legislation. We hope that a better understanding of the effects of state budgets on transportation equity will support progressive legislative efforts to create transportation systems that promote public health, sustainability, and equitable opportunity. 

History of Racist Transportation Policies

Sculpture of Rosa Parks at the National Civil Rights Museum
Sculpture of Rosa Parks at the National Civil Rights Museum in Memphis, Tennessee. (Photo: Gino Santa Maria / Shutterstock)

Our ability to access affordable and reliable transportation is a basic right that many communities have been deprived of as a result of inequitable transportation investments. Low-income communities and communities of color bear the largest burden of our states’ transportation decisions.

Race and transportation have long been intertwined. In 1955, Rosa Parks became the icon of the Montgomery Bus Boycott by refusing to give up her bus seat to a white rider. Her arrest led Montgomery’s Black community to launch a massive boycott, demanding better treatment for Black riders and equitable access to public transit. In the early 1960s, Freedom Riders challenged segregation laws and asserted their rights to ride interstate transportation.

Although the civil rights movement helped increase the accessibility of transportation, the issue of inequity has persisted. Discriminatory practices, such as redlining, have locked communities of color out of certain neighborhoods and left them without many transportation options. Redlining was followed by other detrimental efforts, such asurban renewal—a nationwide program established by the Housing Act of 1949—that provided federal grants to cities for the purposes of rebuilding their downtowns.

African american woman wearing medical mask while travel in public transport

Urban renewal allowed cities to raze and rebuild entire areas, clear slums and blighted properties, and develop highways. This program led to the widespread development outside city centers, also known as urban sprawl. Investments in these developments have changed the urban geographical landscape and displaced communities, disproportionately impacting low-income people and people of color. Similar racist policies and practices persisted after the 1960s and continue today, leading to increased traffic congestion and air pollution, ongoing negative health effects (e.g., respiratory illnesses, lung cancer, and impaired lung development), evictions of marginalized groups, dangerous road conditions for biking and walking, and the destruction of thriving neighborhoods.

Current departments of transportation and transit agencies are still operating systems grounded in racism and guided by the inequitable policies of the civil rights era. Not only do current highway projects continuously displace Black and Brown communities across the country, but also transit agencies have designed their routes and systems around the stereotype that there are only two kinds of riders: “captive” and “choice” riders, with this binary design disproportionately disadvantaging marginalized communities. 

Impacts on Marginalized Communities

Line graph from the US Department of Transportation entitled “Trends in Expenditure by Mode” shows billions of dollars spent on y-axis ($0-$200) and years on the x-axis (2008-2018.) Graph shows significantly higher spend for highways than for public transit. Full graph available at https://explore.dot.gov/views/GTFSVisualizationsUpdated/
Source: U.S. Department of Transportation
Development of Highways & Displacement of Communities

In 2018, state and local governments collectively spent about $70 billion on public transportation. At the same time, these governments devoted over $232 billion to highways. Greater investment in highways is one of many examples of how transportation policy priorities have led to an underinvestment in sustainable infrastructure within marginalized communities. 

Many highway construction projects have also displaced communities by creating changes in the land value of a neighborhood and destroying the units occupied by low-income households and households of color. These projects contribute to a loss of affordable housing and the disintegration of communities, significantly affecting the quality of the neighborhood and its residents. Similar to the ways urban renewal programs destroyed the homes of marginalized communities to resolve urban blight, the prioritization of highway expansion over public transportation projects has inequitable and disproportionate effects on low-income and minority residential neighborhoods.

Accessibility of Public Transit
Wheelchair user at top of stairs subway entrance

Financial Accessibility

Since 1995, public transit ridership has increased by 28%. Contributing to this ridership increase, income and wealth disparities have led many people of color to have relatively less access to cars. As a result, people of color are the ones most likely to rely on public transportation as their main form of travel. Especially in urban areas, Black, Latinx, and Asian people take public transit more often than their white counterparts to access public services and get to work and school. However, the restriction of public funds for transit, along with governments’ prioritization of highways, has shifted resources away from alternative transportation options. If and when municipalities rely on fare increases to manage their budget crises, these increases hurt transit-reliant communities and decrease the financial accessibility of buses. Cities and states can mitigate these issues if they make targeted investments in public transit. One study in Boston found that a 50% reduction in transit-pass costs for low-income riders resulted in about 30% more trips and an increase in trips to health care and social services.

Physical Accessibility

Forty-five percent of Americans have no access to public transportation. Some areas, especially sprawling cities, do not support public transportation due to certain land patterns and the separation of homes from places of work and services, creating longer travel distances and a greater dependence on automobiles. Residents in these areas are then forced to rely on cars, which is an expense many cannot afford, leaving them with few good transportation options and compounding the cycle of poverty. Low-income people of color are already less likely to own a car and their lack of car ownership combined with inadequate and inaccessible public transit further exacerbates their circumstances. Even when people are presumed to have access to transit, these individuals often have to navigate dangerous roadways in order to do so. For more information on the impacts of dangerous road infrastructure, see the section below on Road Safety for Civilians. 

Road Safety for Civilians
person stepping onto bus

Walking, bicycling, and public transit need to be not only accessible to but also safe for everyone. Motor vehicle crash data comparing 2010 to 2019 shows that in urban areas, pedestrian fatalities increased by 62% and bicyclist fatalities increased by 49%, and the proportion of total traffic fatalities that were non-occupant (e.g., bicyclists and pedestrians) fatalities jumped from 15% in 2010 to 20% in 2019. Similar to how states are not investing in public transit, states are also allocating only a small portion of their budgets to improve pedestrian infrastructure. People of color and low-income people often use active transportation to get from one place to another, with Hispanic, African American, and Asian American populations experiencing the fastest growth in bicycling. Yet the street conditions are often more dangerous for these individuals in comparison to the walking and bicycling conditions of their white, middle-class counterparts. 

People of color are already twice as likely to be killed while walking than other groups. Not only do high-speed, multi-lane avenues and poorly designed streets contribute to traffic-related deaths, but they also affect the abilities of communities, especially those composed of low-income individuals and people of color, to be physically active. These conditions have the potential to shorten lives and impair people’s ability to thrive. 

Environmental Effects on Public Health
Air pollution scenic with cars on highway and yellow smoke in city.

The transportation sector emits more than half of the nitrogen oxides in our air and accounts for about 28% of total U.S. greenhouse gas emissions. Urban and metropolitan areas with traffic congestion typically experience the most significant pollution, which is often traced to inefficient land use patterns, sprawling development, and policies that favor highway development over transit. Long-term exposure to pollutants can lead to lung cancer, heart disease, respiratory illnesses, and impaired lung development and function in children and infants. These issues are further compounded when unsustainable transportation projects invade communities where poor air and water quality is already an issue. Oftentimes, it is low-income neighborhoods and communities of color who face greater environmental and health consequences from the underinvestment in sustainable transportation infrastructure.

Traffic Enforcement and the Role of Police
Crowd inside subway train holds straphangers

Instead of investing in equitable transportation projects, 25 states have used portions of their state highway fund dollars to finance highway patrols as of 2017. Dedicating highway fund dollars for state police not only takes away funding for more equitable transit, but also severely affects people’s ability to benefit from the transportation system. Transportation inequities take place in low-income communities and communities of color, which are often over-policed and under-protected in comparison to higher-income, majority-white neighborhoods. 

State and local law enforcement compound such inequities by using traffic laws and minor violations as a pretext for stopping and searching drivers, especially people of color. Coupled with racial bias, these stops often escalate and lead to unnecessary use of force or arrests that disproportionately impact Black people and communities of color. In addition, disparate targeting of fare evasion enforcement on transit systems has led to increased police-civilian interaction for harmless infractions and the criminalization of poverty in Black and Brown neighborhoods. 

Policy Considerations

Union Station lightrail stop in downtown Denver, Colorado

When planning and proceeding with transportation projects, states should promote equity and prioritize community needs by evaluating accessibility in transportation planning decisions and considering the following recommendations:

  1. Incorporate inclusive community engagement practices into transportation planning and decision-making processes. Low-income communities and communities of color bear most of the burden of unsustainable transportation outcomes yet have been historically excluded from the decision-making process. Communities should have the power to decide which transportation projects best meet their needs. Thus, state legislators and departments of transportation should sustain avenues for increased public involvement in transportation planning so communities can directly influence transportation priorities, choices, and budget allocations. 
  1. Develop a mechanism for prioritizing and evaluating transportation projects based on sustainability, accessibility, and community priorities. Car-centric transportation planning often result in policies that physically, economically, and environmentally harm low-income communities and communities of color. To better serve those most impacted by transportation projects, state legislators should create a prioritization process that integrates equity principles and considers community needs.
  1. Increase funding for public transportation to provide and maintain quality and affordable transit facilities and services, especially for transit-dependent communities. Currently, many states rely on outdated technology, tools, and policies to inform their decisions on which transportation projects to prioritize and fund. For example, some states prioritize highway projects because they have constitutional prohibitions that limit the use of gas tax revenues to highways only. To ensure equitable investments in public transportation, state legislators should reallocate funding toward sustainable modes of infrastructure by modernizing the policies and systems of their departments of transportation.
  1. Address our crumbling roadway infrastructure by reallocating funds from highway construction projects to maintenance and infrastructure that benefit disadvantaged communities. Federal law provides states with the flexibility to spend funds they receive from highway formulas. However, such flexibility grants the states the ability to focus on expanding highways instead of fixing crumbling roads first. While it is critical to put pressure on Congress to prioritize highway formula dollars for maintenance, states can also take immediate action by ensuring their statewide transportation packages emphasize repairing potholes, unfixed highways, and crumbling roads over expansion projects. State legislators should also devote a percentage of their transportation funds to low-income or high-need communities.

    In addition, policymakers should consider implementing life cycle cost analysis (LCCA) programs. Such programs enable transportation planners to examine the total costs of a project over its expected life and compare differing life-cycle costs between alternative options. As a result, LCCAs help identify the most beneficial and cost-effective projects and require decision-makers to think more about maintenance over expansion.
  1. Support transit-oriented development and smart growth initiatives that promote community economic development and incorporate equity principles. Transit-oriented development promotes alternative modes of sustainable transportation and increases access to affordable housing, jobs, and schools for low- and moderate-income families. State legislatures should: 

6. Call on municipalities to adopt and implement Complete Streets policies in low-income, high-need communities. Designing transit-friendly streets and safe roadways for all users will make walking and biking safer and more convenient for pedestrians and cyclists. Complete Streets policies promote infrastructure that reduces reliance on cars, resulting in increased engagement in physical activity and a reduction in greenhouse gas emissions. State legislators should encourage the implementation of this policy in high-need communities that have more dangerous street conditions.

7. Redirect funds and responsibilities away from state police and toward investments in communities. Legacies of discrimination and racism pervade our transportation system and policies. Not only do communities of color have a lack of access to mobility options, but they also suffer disproportionately from police-involved violence initiated by traffic stops. In order to achieve transportation equity and ensure safe streets for all populations, states must address both policies that disadvantage biking and walking and the ongoing racist police enforcement of traffic laws that lead to disproportionate harms for Black and Brown drivers. 

Additional Resources

Man wearing protective mask sits on bus during the day

Urban Sprawl and Highway Expansion

Transit Accessibility

Environmental and Public Health Impacts

Active Transportation and Pedestrian Safety

Effects of Traffic Enforcement

Racial Equity and Transportation