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AWB panel warns lawmakers face revenue risks as major tax changes and litigation loom
Summary
Max Martin of AWB said the recent roughly $9.4 billion revenue package includes the state's largest tax increase and sales-tax changes (citing "Senate Bill 5,814"); he warned that litigation over taxing digital advertising could remove an estimated $475 million over four years and that revenue forecasts show a larger out-year shortfall risk.
Max Martin, AWB director of tax and fiscal policy, framed the fiscal outlook as risky heading into the 2026 session. He said the revenue package assembled during the last session totaled "nearly $9,400,000,000" and included what he called the single largest tax increase in state history and major sales tax policy shifts such as those in "Senate Bill 5,814." He warned that portions of the package — especially new taxes on digital advertising and certain services — are the subject of litigation.
Martin cited a Department of Revenue estimate that the disputed portion of the bill could generate about "$475,000,000 over 4 years," a figure the budget relied on. He also cited an Economic Revenue Forecast Council projection that the revenue used to build the recent budget could decrease by about "$720,000,000" and an Office of Financial Management scenario that showed a potential cumulative hit to the general fund of "$2,200,000,000 by 2029." Taken together, Martin said those elements create a "perfect storm" of revenue pressure and uncertainty.
Martin flagged a possible return of a financial-intangibles (wealth) tax described in the session as "$5 per thousand dollar tax on financial and tangible assets in excess of $50,000,000," saying lawmakers and budget writers should be prepared for contentious debate and potential capital-mobility concerns.
AWB encouraged attendees to attend the tax and fiscal breakout session with a representative of the governor's office to examine scenarios and resources; Martin said AWB will cover recent legal developments and resources in that session.
Next steps: AWB urged members to join the tax/fiscal breakout to learn more about the litigation, forecast updates and potential policy changes that may affect budgets.
