The Multistate Tax Commission will be providing states with a one-time 10 percent reduction in annual membership and program fees in light of the COVID-19 pandemic.
States are having serious cash flow issues because of the pandemic-related economic downturn and government policy changes implemented in response, including delayed tax filing deadlines. The Federation of Tax Administrators has projected $152 billion in direct state tax revenue losses for the three-month period between April and June, while new data posted by the Urban-Brookings Tax Policy Center shows that in May alone states collected nearly $6 billion less in sales tax revenue compared with May 2019.
The MTC’s Executive Committee on July 15 unanimously agreed to provide the reduction in fees for fiscal 2021, which for the organization started July 1. The committee members cited steps taken by the FTA and Streamlined Sales Tax Governing Board leadership to reduce dues for their own members during the upcoming fiscal year.
“I really liked the optics of what the FTA did,” said Utah State Tax Commission Chair John Valentine. “The fact that the national organization has given us a rebate really helped me as I was working with my budget people” to secure financing for membership dues, he added.
In response to already emerging pandemic-related financial constraints on the states, the MTC Executive Committee in April approved a flat fiscal 2021 budget for the organization. The budgeted state membership and program revenues amounted to just over $7.4 million.
According to Executive Director Greg Matson, on June 30, the last day of the organization’s fiscal 2020, the MTC had an unallocated reserve balance of just over $5.5 million. The Executive Committee agreed to draw from this reserve to provide the one-time 10 percent reduction in proportional membership assessment and program fees.
“Obviously, we want to be mindful that there may be additional need to tap reserves in the future, given the uncertainty and where might we be a year from now,” Matson said. “And we don’t know if we might have some states that have to completely drop out of certain programs for one reason or another.”
Matson said the MTC will be sending out invoices for the membership fees within the next few weeks. Audit program fees differ in that they are invoiced half in the fall and half in the winter unless states request other arrangements.