Various proposals impacted small businesses ranging from taxes to energy mandates
The 2024 state legislative sessions convened in early January with all but six states in regular session. As in previous years, state legislatures took on various proposals impacting small businesses including taxes, paid leave expansions, unemployment insurance benefits, and energy mandates.
Unemployment Insurance Benefits for Striking Workers
This year, state legislatures across the country considered proposals providing unemployment insurance (UI) benefits to workers involved in labor disputes. Such proposals were fueled by a major surge of labor strikes over the past few years and present challenges for small businesses as the expansion of UI benefits threatens to increase taxes on employers. Washington, Rhode Island, Connecticut, Hawaii, Massachusetts, California, Minnesota, and Maryland are among the states that considered proposals extending UI benefits to striking workers. Efforts to defeat the UI benefits expansion bills were successful in Washington and Hawaii.
Bans on Employer-Sponsored Meetings
Proposals prohibiting employers from holding employer-sponsored meetings to discuss unionization, known as captive audience, were introduced in Illinois, Colorado, California, Vermont, Massachusetts, Washington, Maryland, and Rhode Island. While most of the bills are still under consideration, efforts to defeat the proposals were successful in Maryland but failed in Washington.
Mandated Paid Leave
As of April 2024, 13 states have Paid Family and Medical Leave (PFML) programs in place. The programs vary across states, are largely funded through payroll taxes on employers and employees and provide leave benefits for qualifying life events. This year, several states, including New Mexico and Virginia, considered PFML proposals. New Mexico’s bill would have provided up to 12 weeks of paid leave funded by payroll taxes on employers and employees, while the Virginia bill would have provided up to eight weeks of paid leave. Both bills were defeated this session. Challenges remain in states expanding existing paid leave programs such as Rhode Island, Massachusetts, and Connecticut.
Bans on Fossil Fuels
Proposals limiting and banning greenhouse gas emissions have been a top priority for state lawmakers across the country. Such proposals continue to present challenges for small businesses as they result in burdensome regulations and increase the cost of doing business. The proposals vary across states and include bans on oil and gas drilling, all-electric building mandates, and phasing out gas-powered vehicles. In Illinois, lawmakers considered a proposal that would require the state to adopt California’s revised emission standards that gradually ban the sale of new gas-powered vehicles and light-duty trucks by 2035. Other states, including Massachusetts, Washington, Oregon, and Delaware, have already adopted the standards and are implementing the rules. Delaware, Massachusetts, Connecticut, and Rhode Island also considered proposals mandating all-electric buildings. Efforts to defeat such proposals were successful in Massachusetts. NFIB was also successful in defeating a proposal that would have banned all new oil and gas drilling by 2030 in Colorado. The proposed legislation would have prohibited new drilling activities by 2030 and required owners of closed wells to be responsible for cleanup efforts.
Tax Cuts
State legislatures continue to introduce proposals reducing individual income tax rates. Fourteen states began the new year by enacting income tax cuts passed into law in prior legislative sessions.
In Iowa, the legislature passed a bill that lowers the state’s income tax and accelerates the state’s transition to a flat rate of 3.8%. The legislature also passed a constitutional amendment that would establish a significant threshold for any future attempts to raise taxes in Iowa. In Georgia, the governor signed into law a tax package that accelerates previously passed income tax cuts. In Utah, the governor signed into law the third income tax cut proposal since 2021, further reducing the tax rate from 4.95% in 2021 to 4.55% this year. Challenges to reduce taxes remain in Kansas where the governor recently vetoed a proposal that would have established a flat income tax rate. Following the veto, the legislature passed another tax cut proposal that reduces the state’s income tax by eliminating one of the state’s three income tax brackets. The revised package was also vetoed by the governor.
The 2024 legislative session brought many other major victories on issues of importance to small businesses. In Virginia, the Governor vetoed a proposal that would have increased the state’s minimum wage from $12 per hour to $15 by 2026. In South Carolina, NFIB was on the front line on tort reform proposals that resulted in a tort reform bill being considered on the Senate floor for the first time in 19 years.
With several legislative sessions ending, many are turning their attention to state ballot initiatives. In Oklahoma, a ballot measure has been cleared for signature collection that would raise the state’s minimum wage to $15 per hour by 2029. Ohio’s ballot measure, also in the signature collection phase, would raise the state’s minimum wage to $15 per hour by 2026. In Arizona, voters may see a ballot measure that would overturn the state’s right–to-work law.
