Facilitating Veteran Employment: Strategies to Engage Veterans in Apprenticeships

By Rachel Wright and Mary Wurtz 

Each year, approximately 200,000 veterans transition to civilian life, but many struggle to find employment upon re-entry. Research shows that only a little more than half of U.S. veterans find a job within six months of the start of their search. Furthermore, those who do find employment are 37% more likely to experience underemployment than nonveterans.  

Efforts are being made at the state level to increase the number of veterans in registered apprenticeships, including establishing tax-credits for employers that recruit veterans, augmenting funding streams for programs that recruit veterans, designating state agencies to promote and monitor veteran participation in apprenticeship and requiring public sector contractors to establish plans and goals for recruiting veterans. 

Apprenticeship as a Tool to Help Veterans Overcome Barriers to Employment 

Registered Apprenticeships – training programs that are registered with the U.S. Department of Labor or state apprenticeship agency – provide participants with paid, on-the-job learning and tailored classroom instruction. Apprentices work one-on-one with a mentor that helps them navigate workplace culture and build strong support networks. Apprentices also earn a nationally recognized, portable credential upon completion of their program. 

Apprenticeship can help veterans overcome common barriers to employment, such as: 

Difficulty Translating Skills to the Civilian Workforce 

Veterans often face underemployment because they experience difficulty converting skills learned in the military to the civilian workforce. They also frequently lack professional networks outside of the military that can help them find a job that is consistent with their level of work experience. Apprenticeship addresses veteran underemployment by providing veterans with a clear pathway into a career that builds upon their skills and work experience without requiring a bachelor’s degree. The Department of Labor can even provide veterans with advanced standing in their program if their military training and experience is in a similar occupation.  

Lack of Support in the Workplace  

Studies show that veterans often leave their first civilian job because they encounter a lack of support and an unfamiliar work culture. Through apprenticeship, veterans receive individualized training with an experienced mentor who provides long-term support throughout the program.  

Lack of Professional Development Opportunities and Avenues for Advancement  

Many veterans may struggle to adjust to civilian work due to a lack of opportunities for professional growth and advancement – a key feature of apprenticeship programs. Through apprenticeship, veterans work one-on-one with a mentor to identify and engage in opportunities for growth. Apprenticeship also provides participants with progressive wage increases and a nationally recognized, portable credential. 

Additionally, veterans can utilize GI Bill benefits for approved apprenticeship programs, including tax-free money for books and supplies and a monthly housing allowance. 

State Strategies to Engage Veterans in Apprenticeship 

Recognizing these benefits, state policymakers have employed the following strategies to increase veterans’ access to apprenticeships:  

Establishing tax credits for employers that hire veterans as apprentices  

In South Carolina, the legislature enacted Senate Bill 0901 in June 2022. The bill provides a tax credit to any taxpayer that hires a veteran as part of a registered apprenticeship program. In the first year of employment, the employer will receive $3,000 for each eligible employee. An employer can receive this credit for three years. 

Montana offers a tax credit of $1,500 to employers for each new registered apprentice hired that is a veteran. The tax credit can be applied for the length of each apprentice’s training program or up to five years. 

Augmenting funding streams for programs that recruit minority groups – including veterans – into apprenticeships  

Michigan enacted House Bill 5783 (2022) providing $250,000 in funds to a national nonprofit program connecting military service members with skilled training and quality career opportunities in the construction industry. A portion of these grant funds must be used to help veterans transition into apprenticeship programs in the state. 

Similarly, Maryland enacted legislation establishing a Clean Energy Workforce Account to provide grants to support apprenticeship training programs. The fund set aside $750,000 for the recruitment of individuals, including veterans, to pre-apprenticeship and Registered Apprenticeships programs. 

Designating state entities that are responsible for promoting and monitoring veteran participation in apprenticeship  

To better monitor veteran participation in apprenticeship, the Colorado General Assembly enacted House Bill 21-1007 (2021) establishing the State Apprenticeship Agency and the Interagency Advisory Committee on Apprenticeship. The advisory committee was tasked with, among other things, providing annual reports to the executive director of the Department of Labor and Employment on apprenticeship data disaggregated by age, race, gender, veteran status, disability and industry. 

Similarly, California enacted Senate Bill 103 in 2018, directing the Department of Transportation to sponsor, fund or partner with apprenticeship programs engaged in specific efforts to increase participation in the construction industry among certain groups, including disabled veterans. 

Requiring public sector contractors to establish plans and goals for recruiting underserved groups – including veterans – in apprenticeships  

The Oregon legislature enacted Senate Bill 5701 (2022), requiring any company contracting with public universities to establish and execute a plan for outreach, recruitment and retention of underserved groups in “apprenticeable occupations.” Plans should have a target of having at least 15 percent of total work hours performed by women, minority individuals and/or veterans. 

Massachusetts enacted House Bill 3770 (2021) regarding construction of the Holyoke Soldiers’ Home. The bill specifies that as part of the construction project, an agreement must be made with the appropriate labor organization that facilitates the entry of interested veterans into the building and construction trades. The labor organization must designate an entity or organization to serve as a resource for preliminary orientation, apprenticeship programs and other needs to foster veteran employment opportunities. 

Apprenticeships can help veterans in their transition to civilian life by providing opportunities to earn competitive wages, refine and apply existing skill sets and engage in opportunities for professional development. States, along with the federal government, have continued to take steps to increase veteran participation in apprenticeships.  

For more information on state initiatives to further engage veterans in apprenticeship, please reach out to the education and workforce team at The Council of State Governments Center of Innovation. 

Interstate Compacts: Dentists and Dental Hygienists

By Isabel Eliassen

As society becomes more mobile, the need for workers to begin or continue careers in new states is a critical concern. This is especially true for those in state-licensed occupations. When individuals in these fields move across state boundaries, it can take months to receive an occupational license in their new state and resume practicing.

Both dentists and dental hygienists are included in this category of professions that face licensure challenges when moving across state lines. Although states have considerable similarities between education, examination and other licensure requirements for dentists and dental hygienists, acquiring a new license before a dentist or dental hygienist begins practicing in a new state can be time-consuming and costly.

This issue is especially prevalent for military families, who move between states with greater frequency than other population groups. As part of an ongoing effort by The Council of State Governments (CSG) and the Department of Defense (DOD) to help alleviate burdens related to interstate occupational licensure, dentists and dental hygienists will soon have an interstate licensure compact.

Interstate compacts are legislatively enacted contractual agreements between states. They allow practitioners to obtain the authority to practice in multiple states without needing to maintain multiple licenses. Interstate compacts also allow for greater public protection, as states share data about licensees and licensing concerns via a compact data system.

In September 2020, DOD and CSG started working together through a collaborative agreement to develop several new interstate licensure compacts. In March 2021, the Department of Defense selected the first round of professions to receive funding and technical assistance for compact development after a competitive application process. The selection of professions included dentists and dental hygienists. In partnership with the American Dental Association (ADA) and the American Dental Hygienists’ Association (ADHA), CSG began developing the compact for dentists and dental hygienists.

The compact development team first conducted a comparison of licensing requirements across states. Using this research, CSG convened a technical assistance group made up of regulators, administrators, legislators, dentists, dental hygienists and dentistry students to outline goals for the compact. A smaller group, the document team, subsequently worked on applying the compact goals to the provisions of the legislative language in the compact, while also defining other technical aspects of the compact. The draft was made available for public comment for two months to inform further revisions of the compact. CSG is currently working to finalize changes to the document with the document team before the compact legislation is available for state adoption.

States who are interested in joining the compact will need to enact the compact through their standard legislative process. At that point, they will become a participating state. Participating states each appoint a commissioner who collectively administers the compact via a compact commission. Through the commission, the compact will continue to reflect the will of the participating states through rulemaking and other administrative policies

The compact is expected to be available for state adoption in 2023. In addition to dentists and dental hygienists, CSG is also working to develop compacts for massage therapists, cosmetologists, teachers and social workers. For more information about the Dentist and Dental Hygienist Compact visit compacts.csg.org.

Slavery and Involuntary Servitude as a Punishment in the United States

By Blair Lozier

Please note that this article is based on projected results and may change with certified election results. 

The 13th amendment to the United States Constitution states reads,“…that neither slavery nor involuntary servitude, except as a punishment for a crime, where the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction”. As of October 2022, 20 state constitutions still included language permitting enslavement or servitude (typically as criminal punishment or for debt payments). During the 2022 midterm elections, five states – Alabama, Louisiana, Oregon, Tennessee and Vermont voted on whether to remove constitutional language that allows the use of slavery and involuntary servitude. Four of these states voted to approve these ballot measures, while Louisiana did not. This article analyzes the ballot measures and results in each of these states.

Alabama approved the Recompiled Constitution Ratification Question on the ballot as a legislatively referred constitutional amendment. The updated and recompiled state constitution was drafted to:

  • Arrange it in proper articles, parts and sections.
  • Remove all racist language.
  • Delete duplicative and repealed provisions.
  • Consolidate provisions regarding economic development.
  • Arrange all local amendments by county of application.

Section 32 of Article I, which stated: “That no form of slavery shall exist in this state; and there shall not be any involuntary servitude, otherwise than for the punishment of crime, of which the party shall have been duly convicted.” was removed from the constitution by the adoption of this ballot measure. This measure received support from 76.5% of voters (as of noon on Nov. 10).

Oregon passed Measure 112 which repeals language from the state constitution that allows the use of slavery and involuntary servitude as criminal punishment and adds language that authorizes an Oregon court or a probation or parole agency to order alternatives to incarceration for a convicted individual as part of their sentencing. Voters approved removing slavery as a criminal punishment with a 55.2% majority (as of noon on Nov. 10).

Tennessee Constitutional Amendment 3 amends the state constitution to remove language that allows the use of slavery and involuntary servitude as criminal punishments and replace it with the statement, “slavery and involuntary servitude are forever prohibited.” Tennessee passed Constitutional Amendment 3 with 79.5% of the vote (as of noon on Nov. 10).

Vermont Proposal 2 repeals language stating that persons could be held as servants, slaves or apprentices with the person’s consent for the payments of debts, damages, fines or costs. The amendment adds that “Slavery and indentured servitude in any form are prohibited” to the state constitution. Vermont passed Proposal 2 with an 89% majority (as of noon on Nov. 10).

Louisiana Amendment 7 would have removed language from the state constitution that allows involuntary servitude as punishment for a crime and adds language to the constitution that prohibits slavery and involuntary servitude except when used as part of the lawful administration of criminal justice. Louisiana did not pass Amendment 7, with 60.9% of voters voting no to the amendment (as of noon on Nov. 10). This may be due to the legislative sponsor of Amendment 7, State Representative Edmond Jordan (D), urging voters to reject the measure as written due to the unclear and ambiguous wording of the amendment. Representative Jordan hopes to bring the amendment back next year with clearer language.

Additional Resources:

CSG will continue to provide initial results on key topics as well as more in-depth analysis in the days following the election. Find those articles on Twitter (@CSGovts) and at csg.org/state-talk.

A First Glance at Election Results and Trends: State Races and Ballot Measure Results

Please note that this article is based on projected results and may change with certified election results.

Polls are closed on the 2022 general election where voters in 46 states decided on 6,278 state legislative races, 36 governors and 133 statewide ballot measures. The Council of State Governments, the nation’s only nonpartisan organization serving all three branches of state government, will provide coverage and analysis of state elections with attention to state races and the impact of ballot measures. This article provides an overview of the results and trends in state races and ballot measure results based on projections made through midday Nov. 9.

States are seeing increased diversity in elected candidates.

Several races, projected by Ballotpedia, are historical firsts, expanding gender, race and age representation amongst elected officials. Governor Sarah Huckabee Sanders (R), former press secretary for President Donald Trump, made history in Arkansas as the first female governor in Arkansas. Governor Maura Healy (D) of Massachusetts and Governor Kathy Hochul (D) of New York also made history as the first female elected governor in their respective states. Governor Healy is also the first openly lesbian governor in the US and the first openly gay governor in Massachusetts. U.S. Representative Marcy Kaptur (D) became the longest-serving female member of Congress with reelection to Ohio’s 9th District. Governor Wes Moore became the first Black governor of Maryland and his lieutenant governor, Aruna Miller (D), is the first immigrant and first Asian American to be elected to statewide office in Maryland. In Rhode Island, Chinese American Victoria Gu (D) and Japanese American Linda Ujifusa (D) became the first Asian candidates elected to the state legislature, and Shri Thanedar (D) became the first Indian American U.S. Representative for Michigan. Maxwell Frost (D) won Florida’s 10th Congressional District race, making him the first Democratic member of Congress from Gen Z and the first Afro-Cubano to head to Congress.

Partisan legislative and state control remains steady with Democrats consolidating power in some states.

So far, Democrats have consolidated power in several states – Maryland, Massachusetts, Michigan and Minnesota. Previously, these states were under a divided government. No new state government trifectas have been called for Republicans yet, and no state governments that were trifectas controlled by one party have moved to divided government yet. However, these results may change as more state elections are called. Partisan legislative control remains relatively steady as election results are projected. The Democratic Party in Minnesota has consolidated legislative power from previously split control, and Michigan has flipped from Republican legislative control to Democratic control. Results have not yet been projected for six states which may change these results.

Incumbent Governors are being re-elected and the Democratic party has gained some control.

This year there are 36 governor seats up for reelection, currently, 32 of the races have been called. Seven governors did not seek reelection. Democrats have picked up two governor seats in Maryland and Massachusetts. Currently, every incumbent governor that was up for reelection has won. There are currently six newly elected governors; Maura Healy (D) Massachusetts, Sarah Huckabee Sanders (R) Arkansas, Jim Pillen (R) Nebraska, Josh Green (D) Hawaii, Josh Shapiro (D) Pennsylvania and Wes Moore (D) Maryland. Governor races that have not been confirmed yet are Alaska, Arizona, Nevada and Oregon. In the US Territories incumbent Lou Leon Guerrero (D) won reelection in Guam. Incumbent Albert Bryan (D) won reelection as governor of the US Virgin Islands while incumbent Ralph Torres (R) is facing a runoff versus Arnold I. Palacios (I).

With his win in Maryland, Wes Moore is a growing figure nationally among Democrats. Governor Ron DeSantis handedly won reelection in Florida by wide margins and continues his growth as a leader in the GOP and potential presidential candidate in 2024.  

States have passed ballot measures addressing state legislative authority, election administration and voting-related policies and state tax changes.

On the ballot this year were several possible changes to some states’ constitutional amendment processes. So far, Arizona’s Proposition 132 is too close to call. If enacted, this measure will require a 60% majority for future constitutional amendments that approve new taxes. In Arkansas, Issue 2 was defeated. This measure would have required a 60% majority for future constitutional amendments.

Some states considered changes to voting policy and election administration. Nebraska voters approved Initiative 434, requiring a photo ID for voting. Ohio passed Issue 2, prohibiting local governments from allowing anyone who does not meet the qualifications for an elector (e.g. a non-citizen) to vote in local elections. Connecticut voters approved Question 1, allowing the legislature to establish early voting. Michigan approved Proposal 2, which made several changes to voting procedures including creating a 9 day early voting period, requiring photo ID, requiring military and overseas ballots postmarked by election day to be counted, prohibiting voter intimidation and several other changes. A proposed photo ID requirement in Arizona and Nevada’s possible adoption of ranked choice voting are still too close to call.

At least six states proposed ballot measures changing state tax laws. In California, voters rejected Proposition 30, which would have raised taxes on those making more than $2 million to subsidize electric vehicle infrastructure and wildfire prevention. Colorado voters passed Proposition 121, lowering the income tax from 4.55% to 4.40%. West Virginia failed to pass Amendment 2, which would have allowed lawmakers to exempt property taxes on motor vehicles and personal property used by businesses. The results of Arizona’s Propositions 130 and 310, allowing lawmakers to pass a personal tax exemption and increasing sales taxes to fund fire districts, are too early to call. Massachusetts voters passed Question 1, imposing an additional 4% tax on those making over $1 million to fund education and transportation. Idaho approved the Advisory Question, which asked voters for their opinion on tax changes including additional rebates to taxpayers, reduction of the corporate tax rate and allocation of tax revenue to education.

States have passed ballot measures addressing the regulation of marijuana, abortion and enslavement.

Several state elections included ballot measures addressing marijuana, abortion and enslavement. According to the Pew Research Center, Millennials are at the forefront of the recent rise in public support for the legalization of marijuana and abortions. It is likely that these ballot measures motivated Millennials and younger generations to vote in the 2022 elections.

Before the elections, marijuana was legal in 19 states and D.C. Of those 19 states, 13 and D.C. had legalized marijuana through the ballot measure process. During the 2022 midterm elections, Maryland and Missouri passed ballot measures legalizing marijuana. Arkansas, North Dakota and South Dakota rejected ballot measures legalizing marijuana.

There were five ballot measures addressing abortion in the midterm elections. California, Michigan and Vermont voted to add “reproductive freedom” to their state constitutions, and Kentucky voted no to a constitutional amendment stating nothing in the state constitution creates a right to abortion or requires government funding for abortion. Montana results are not confirmed, but current results look like abortion rights will remain.

As of October 2022, 20 state constitutions included language permitting enslavement or servitude as criminal punishment or debt payments. During the 2-22 midterm elections, five states had ballot measures repealing such language. Alabama, Oregon, Tennessee and Vermont have voted to repeal language allowing slavery or involuntary servitude as criminal punishments. Louisiana voted not to repeal language allowing involuntary servitude as criminal punishments which may be due to confusion with the wording of the ballot measure.

CSG will continue to provide initial results on key topics as well as more in-depth analysis in the days following the election. Find those articles on Twitter (@CSGovts) and at csg.org/state-talk.

Pre-Apprenticeships: A Pathway for Career Success in North Carolina

By Enmanuel Gomez Antolinez

Learning and upskilling can be a life-long pursuit in the dynamic, constantly changing U.S. economy. Educational opportunities for youth and young adults with disabilities (Y&YAD) should reflect this reality. But all too often, they encounter barriers to acquiring knowledge, learning new skills and accessing general workplace experience.

Apprenticeships are an important and rapidly expanding pathway for all individuals, including Y&YAD. In the 2021 fiscal year, more than 241,000 new apprentices entered the national apprenticeship system. However, research demonstrates apprenticeships are not always accessible to everyone since they may require certain skills or experiences to enter. Pre-apprenticeships are one pathway that prepares Y&YAD for apprenticeships and makes apprenticeships more accessible by providing work-based learning, academic knowledge and professional skills. Several states, including North Carolina, are developing pre-apprenticeships specifically for Y&YAD to support them in their path to apprenticeship and full-time employment.

According to the U.S Department of Labor “pre-apprenticeships are designed to prepare individuals for entry into Registered Apprenticeship Programs (RAP) or other job opportunities.” These programs can play a valuable role in initiating career pathways for anyone, including Y&YAD. Pre-apprenticeships are available in a range of industries including health care, information technology, manufacturing, hospitality and retail.

A notable resource for policymakers is Getting Started with Pre-Apprenticeship: Partnership’s Primer, which provides detailed information on pre-apprenticeships, partnerships, program development and funding.

As outlined in the primer, pre-apprenticeships benefit both states and Y&YAD because they:

  • Have the potential to increase annual earnings and employment of workers with disabilities.
  • Are designed to give people of color, women, Y&YAD and other underrepresented populations the skills, confidence and connections they need to be successful.
  • Provide an effective workforce development strategy that results in a net benefit to society and diversifies the talent pipeline of skilled workers.
  • Provide academic knowledge and skills training tailored to specific jobs and industries for participants who face barriers to employment.

The North Carolina Career Launch is an example of a state-supported pre-apprenticeship for Y&YAD. This program provides a series of curricula that give students opportunities to gain knowledge, experience and credentials that lead to jobs in high-demand fields and a living wage. One of the North Carolina Career Launch programs within the health care industry is the Pre-Nursing Careers Vocational Rehabilitation Youth Apprenticeship. This pre-apprenticeship program provides paid on-the-job learning to high school students with disabilities as well as employment and professional development skills and work and training preparation.

In order to successfully implement these programs and provide the right support and practical skills to students with disabilities, there must be a clear relationship with vocational rehabilitation offices to pilot the program, as well as register the program statewide so it does not have to be replicated again. State agencies can collaborate to provide Y&YAD with pre-apprenticeship opportunities like the one in North Carolina.

Diverse pre-apprenticeships have the potential to support Y&YAD to access a career path that offers living wages and benefits. These jobs are an opportunity to prepare and support students for success and ensure they are prepared to be successful in their apprenticeship.

For more information about pre-apprenticeships, please visit: https://www.apprenticeship.gov/help/what-pre-apprenticeship

How States Can Use American Rescue Plan Act Funding for Affordable Housing

By Blair Lozier

The U.S. Department of the Treasury has updated guidance that expands the use of the American Rescue Plan Act State and Local Fiscal Recovery Funds for affordable housing.

The Treasury released a How-to Guide that demonstrates how recipients can leverage the fiscal recovery funding with other sources to maximize resources to meet housing needs. This article summarizes the expanded options that states may pursue to invest State and Local Fiscal Recovery funding in affordable housing.

The guide discusses two options available to states.

Option 1: State and local governments can use recovery funds for affordable housing projects that are categorized in the American Rescue Plan Act under Public Health and Negative Economic Impact. Recipients are presumptively eligible for additional funding if they already qualify for related pre-existing federal programs.

Expanded Presumptive Eligibility

A project is deemed to be presumptively eligible if it meets standards for pre-existing federal programs set by the Treasury. If the housing units or development in question meet the presumptive eligibility requirements, no further approval process will be required.

The Treasury presumes that the following affordable housing investments are eligible uses of fiscal recovery funds in response to the negative economic impacts of COVID-19: 

Projects already in process under authorization by another federal housing programProjects for developing, repairing or operating affordable rental housing with certain requirements for tenant income and affordability.

Expanded Presumptive Eligibility Programs

Previous ProgramsExpanded ProgramsIn January 2022, Treasury designated two U.S.
Department of Housing and Urban Development programs that would allow recipients to be
presumptive eligible.
Housing Trust Fund
HOME Investment Partnerships Program        Treasury allows housing projects to be presumptively eligible if they meet existing requirements for the following federal programs.  
Individuals
Project-Based Rental Assistance 
Section 811 – Supportive Housing for Persons with Disabilities Program 

Developers
Low-Income Housing Tax Credit
National Housing Trust Fund
Public Housing Capital Fund
Section 202 – Supportive Housing for the Elderly Program 

State and Local Governments
HOME Investment Partnerships Program
Multifamily Preservation and Revitalization Program 

Tribal Governments
Indian Housing Block Grant Program 
Indian Community Development Block Grant Program 
Bureau of Indian Affairs Housing Improvement Program

Option 2: Allow State and Local Fiscal Recovery Funds to be used if the housing units funded serve households at or below 65% of the average median income for at least 20 years.

Blended Funding

Blended funding is the merging of funds from different sources for the delivery and increased impact of services. States can blend fiscal recovery funds with other resources as long as projects are eligible under all programs from which funds are drawn. Blending State and Local Fiscal Recovery Funds with other government funding must adhere to all federal requirements for cost-sharing/matching.

Funding new and substantial affordable housing. Funds can be used to finish construction projects by bridging gaps in financing. It can also be used to expedite the construction or transformation of affordable housing projects.

Pre-Existing Federal ProgramsState and Local Fiscal Recovery Funding OpportunitiesLow Income Housing Tax CreditFour to nine percent can be allocated for new construction or preservation of affordable housing.Federal Housing Administration Multifamily Mortgage InsuranceFunding can be provided to cover the cost of the project.HOME Investment and Housing Trust FundParticipating jurisdictions may use recovery funds to meet affordable housing production and repair goals.HOME Investment Partnerships American Rescue Plan ProgramFunding can be blended with other American Rescue Plan Act resources to support the acquisition or construction of rental houses for eligible populations.Project-Based VouchersFunding can be blended with local public housing authorities to be used to build or rehabilitate affordable housing units.Recapitalization of Public Housing through a Rental Assistance DemonstrationFunding can support transactions to add new affordable housing.Community Development Block Grants and Section 108 Loan Guarantee ProgramFunding can be blended to invest an annual installment to support conversion or reconstruction projects; also, can be used to make eligible affordable housing investments.

Existing properties that will be transformed into affordable housing

Recipients can acquire market-rate rental properties, hotels, motels or properties that will be converted to affordable housing. Other allowable uses include acquiring or preserving existing publicly-supported affordable housing or financing retrofits to and weatherizing of existing properties to improve energy efficiency.

Opportunities for Blended Funding with Federal Housing Administration Multifamily Mortgage InsuranceMortgage insurance for purchase or refinancing of existing multifamily rental housing under
Section 223(f) of the National Housing ActThe fiscal recovery fund provides support to finance or refinance a property acquisition.Risk Share Section 542 (c )The fiscal recovery fund allows a risk share loan for the acquisition or refinance of affordable properties.

Opportunities for Blended Funding for Vacant or Abandoned Properties in Disproportionately Impacted CommunitiesSection 108 of the Loan Guarantee Program and
HOME Investment or Housing Trust FundFunding can be used for the eligible housing portion for mixed-use development.

Whether the project is entirely or partially funded through the State and Local Fiscal Recovery Fund, the government must report the obligating of funds to the Treasury by Dec. 31, 2024, and must expend funds by Dec. 31, 2026.

State Examples Presumptive eligibility was expanded to respond to questions and concerns about allocation of fiscal recovery funds. The Treasury established four core requirements for presumptive eligibility:

Resident income restrictions.Tenant protections.Housing quality standards.Affordability period for assisted units.

The Illinois The Housing Development Authority allocated $75 million in recovery funds to provide gap financing and underwriting for affordable housing developments. Grant funding will support 1,023 units in 19 affordable developments.

The Rhode Island Rebounds Production Fund Program is using $15 million for the production of new affordable housing and provides grants for households with incomes at or below 80% of average median income in the state.

Additional examples of states using the State and Local Fiscal Recovery Funds for affordable housing as reported from the Treasury can be found here.

Additional Clarification

About $350 billion was dedicated to developing, repairing and operating affordable housing units under the State and Local Fiscal Recovery Fund. As of March 31, 2022 Treasury data showed that over 600 state and local governments budgeted about $12.9 billion in funds toward affordable housing. The initiatives focused on lower housing-related costs and creating and preserving affordable housing developments.

The Treasury has clarified that states can reinvest the money from affordable housing long-term loans once the revenue is received. The income from reinvesting in affordable housing does not need to be repaid to the Treasury.

Recipients have the flexibility to design affordable housing projects if they are related or proportional to addressing the negative impact of COVID-19. Additional information is available in the Treasury’s Frequently Asked Questions.

Other Resources

Coronavirus State and Local Fiscal Recovery Funds Website:

https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-recovery-funds

Affordable Housing How-To Guide:

https://home.treasury.gov/system/files/136/Affordable-Housing-How-To-Guide.pdf

Compliance & Reporting Guidance:

https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf

Final Rule Frequently Asked Questions:

https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-FAQ.pdf

Email: [email protected]

Infrastructure Investment and Jobs Act Funding Opportunities for States

By Blair Lozier

On August 15, the Biden administration posted a document highlighting funding opportunities in the Infrastructure Investment and Jobs Act. The Council of State Governments has identified the opportunities available to state, territorial and tribal governments. Deadlines for funding applications range from September 2022 to March 2023.

CSG created a timeline of when applications are due. Funding programs are identified by a color that corresponds with their category.

ProgramFederal Agency or DepartmentDeadlinePotential Funding Amount (in millions)Who Qualifies?Transportation ProgramsSafe Streets and Roads for AllDepartment of Transportation9/15/2022$50*Tribal GovernmentsAll Stations Accessibility ProgramFederal Transit Administration9/30/2022$343State Governments [i]Railroad Crossing Elimination ProgramFederal Rail Administration10/4/2022$573State and Tribal Governments [ii]Reconnecting CommunitiesDepartment of Transportation10/13/2022$100*State and Tribal Governments [iii]Power and Clean Energy ProgramsAdvancing Equity through Workforce PartnershipsDepartment of
Energy9/13/2022*$1.5State and Tribal Governments [iv]Preventing Outages and
Enhancing the Resilience of the Electric Grid – Formula
Department of
Energy9/30/2022$459State, U.S. Territories and Tribal Governments [v]Resilience and Legacy Pollution ProgramsMarine DebrisNational
Oceanic and
Atmospheric
Administration10/5/2022$56State, U.S. Territories and Tribal Governments [vi]Coastal Resilience and Habitat RestorationNational
Oceanic and
Atmospheric
Administration10/5/2022$10State, U.S. Territories and Tribal Governments [vii]Community Wildfire Defense Grants Northeast-Midwest Region Southern Region Western Region Tribal GovernmentsForest Service10/7/2022$10*State[viii], U.S. Territories and Tribal Governments [ix]Brownfields ProgramEnvironmental
Protection
Agency11/1/2022$300State and Tribal GovernmentsAbandoned Mine LandsDepartment of
the Interior3/31/2023$72State and Tribal GovernmentsBroadband ProgramsMiddle Mile Broadband Infrastructure ProgramNational
Telecommunications and Information
Administration9/30/2022$980State and Tribal GovernmentsDrinking Water and Clean Water State Revolving FundsEnvironmental
Protection
AgencyOngoingState funding may varyState and Tribal Governments*Funding amount listed is the maximum award per applicant.
All applications are due at 11:59 pm Eastern Standard Time.

[i] Eligible applicants under this program must be designated recipients that operate or allocate funds to inaccessible pre-Americans with Disabilities Act—or “legacy”—rail fixed guideway public transportation systems, and states, territories, Washington, D.C. and local governmental entities that operate or financially support legacy rail fixed guideway public transportation systems and corresponding legacy stations/facilities.

[ii] Eligible applicants are: 1. A state, Washington D.C. and U.S. territories and possessions. 2. A political subdivision of a state. 3. A federally recognized Indian Tribe. 4. A unit of local government or a group of local governments. 5. A public port authority. 6. A metropolitan planning organization. 7. A group of entities described in any of paragraphs (1) through (6).

[iii] Nonprofit organizations, metropolitan planning organizations, units of local government and transportation facility owners are eligible for a capital construction grant individually or in partnership with other applicants eligible for a planning grant. See Notice of Funding Opportunity and Frequently Asked Questions on the website for additional details on eligibility.

[iv] The Department of Energy will only accept new applicants for this funding opportunity.

[v] States may deem other entities as eligible.

[vi] All entities should be able to demonstrate the status of an underserved community.

[vii] All entities should be able to demonstrate the status of an underserved community.

[viii] States and U.S. territories applying for Community Wildfire Defense Grants must apply in their assigned region (i.e., Northeast-Midwest, Southern, Western). See the grant webpage for states and territories that qualify under each region.

[ix] Tribal governments that are not federally recognized are eligible for funding.

State Approaches to Taxing Recreational Marijuana

By Blair Lozier

Recreational marijuana has been legalized in 19 states since 2012. Washington and Colorado were the first states to collect taxes on recreational marijuana. As of June 2022, 12 states have data available on taxes collected: Alaska, Arizona, California, Colorado, Illinois, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont and Washington. Seven states – Connecticut, Montana, New Jersey, New Mexico, New York, Rhode Island and Virginia – have legalized the recreational use of marijuana, but tax collection data is not yet publicly available.

As more states legalize recreational marijuana use, new tax collection methods have been developed. Six states legalized recreational marijuana in 2021, and each one uses a different tax structure to collect revenue on those transactions.

Below is a graph demonstrating the number of states by year that recreational use of marijuana was legalized.

Source: Insurance Institute for Highway Safety Marijuana Laws by State in Detail

Tax Collection Methods

There is no federal regulation on how states can collect marijuana taxes. States have commonly used three methods for collecting taxes.

1. Percentage-of-price

The consumer pays a tax on the total price of the purchase. The tax varies by state/local district and is set at a higher percentage than regular sales taxes.

2. Weight-based

The distributor is responsible for paying an initial tax based on the weight of the product within various categories of marijuana. Then, the retail distributor adds a tax to the closing price of the retail sale. Different types of marijuana and different parts of the marijuana plant can be taxed separately. For example, states can establish a tax on the flower of a marijuana plant that is different from the tax established on marijuana leaves.

3. Potency-based

The tax level is based on the amount of THC (Tetrahydrocannabinol) in the product being sold. Tax percentages vary across states.

State Approaches

The percentage of price is the most common method of taxing recreational marijuana sales (12 states).  Maine is the only state that collects the tax through the weight-based method. Illinois is the only state to collect through just the potency-based method. Alaska, California and New Jersey collect taxes through weight-based and percentage-of-price. Connecticut and New York collect taxes through potency-based and percentage-of-price.

Local governments receive most of their revenues from taxes on property and sales. States often give discretion to localities and municipalities to determine their tax rates.  Every state except Illinois, Maine and Michigan allows local or municipal governments to collect an additional tax on marijuana purchases.

Even if states implement a weight-based system, many allow localities to implement a percentage-of-price system enforced where the marijuana is purchased.

States dedicate revenue generated from marijuana sales toward various government programs. For example, Arizona uses a percentage-of-price based tax system and dedicates 33% of revenue to community college funding, 33% to law enforcement and fire departments, 24% for the cost of enforcing the new marijuana law and 10% for the Justice Reinvestment Fund. The Justice Reinvestment Fund was established in 2006 to identify opportunities for change and improvement in the criminal justice system.

Many states use the revenue generated from marijuana sales to fund socio-economic programs to support individuals with drug offenses, economic development and educational and community-based initiatives. Several states dedicate revenue generated from marijuana sales toward various government programs. Most states have multiple uses for the revenue generated from recreational marijuana. On the other hand, Colorado, Massachusetts, Rhode Island, Vermont and Washington dedicate all the funding generated from recreational marijuana retail sales to one specific purpose. Rhode Island and Washington allocate these funds to public health and health care systems. Colorado and Vermont support education programs. Massachusetts dedicates funds to public safety. All five states collect tax under the percentage-of-price tax system.

StateTaxable AmountRevenue Dedication
AlaskaWeight-based  
$50 per ounce for flowers
$15 per ounce for stems and leaves
$25 per ounce for immature flowers and buds
$1 per clone
Percentage-of-price
Localities can levy a percentage of the price
50% for programs to reduce repeat criminal offenses 
25% for drug education and treatment programs
25% for the state’s general fund
ArizonaPercentage-of-price
16% for fall retail purchase
5.6% state general sales tax
Localities can generate a local sales tax.
33% for community colleges funding
33% for law enforcement and fire departments
24% for the cost of enforcing the new marijuana law
10% for the Justice Reinvestment Fund
CaliforniaWeight-based  
$9.65 per ounce for flowers
$2.87 per ounce for leaves
$1.35 per ounce for fresh plants  
15% state tax on retail purchases  
7.25% for state general sales tax  
Local governments can determine their percentage-of-price and general local sales tax.
Costs of marijuana legalization Programs that address negative impact of drug use, economic development, academic studies and youth programs
ColoradoPercentage-of-price
15% for wholesale transactions  
15% for retail transactions  
Local governments can also levy a general local sales tax.
Education programs 
Connecticut*Potency-based
0.625 cents per milligram for plants
2.75 cents per milligram for edibles
0.9 cents per milligram for other products
Percentage-of-price
6.35% state general sales tax  
3% for local governments
Social equity programs
Drug-prevention and recovery programs
IllinoisPotency-based
10% of the retail price when THC content is 35% or less
25% of the retail price when THC content is 36% or higher  
All marijuana-infused products are taxed at 20% of the retail price.
Costs associated with marijuana legalization
Remaining revenue:
State general fund
Substance abuse programs
Local government transfers
Criminal justice reform programs
MaineWeight-based  
$335 per pound for flowers or mature plants
$94 per pound for trim
$1.50 per immature plant or seeding
$0.35 per marijuana seed
10% excise tax on retail sales price
50% for public health and safety programs 
50% for law enforcement training programs related to the legalization of marijuana
MarylandNot Yet DeterminedDevelopment of the Cannabis Public Health Advisory Council and the creation of the Cannabis Public Health Fund
MassachusettsPercentage-of-price
10.75% for retail transactions
6.25% for state general sales tax on purchases
3% for local sales tax on purchases
Various public safety programs
MichiganPercentage-of-price
10% tax for retail transactions
6% state general sales tax  
Education,
Transportation
Transfers to local government
MontanaPercentage-of-price
20% tax for retail transaction  
Localities can levy 3% for retail sales purchases
Environmental conservation
Substance abuse prevention and treatment
Veterans’ services
Health careLocal government
Resentencing efforts for people previously convicted for
NevadaPercentage-of-price
15% for wholesale transactions
10% for retail transactions
6.85% for state general sales tax  
Localities can levy a sales tax on all retail purchases.
Education programs State’s rainy-day fund
New Jersey*Weight-based  
33% for retail price per ounce for the first nine months   After the first nine months:
$10 per ounce if the retail sale is $350 or more
$30 per ounce if the retail sale is between $250 and $349
$40 per ounce if the retail sale is between $200 and $249
$60 per ounce if the retail sale is less than $199
Percentage-of-price
6.625% for state general sales tax on purchases  
Localities can levy up to 2% local sales tax on purchases
70% for Impact Zones (i.e., neighborhoods affected by prior marijuana laws)
30% for administrative costs for legalization and for the state general fund
New Mexico*Percentage-of-price
12% for retail transactions until July 2025
Each year the tax will rise 1% until it reaches 18% in 2030.  
State and local sales taxes may also be implemented.
Administration of marijuana statutes,
Localities where the sales transactions occur and
Deposit to state general fund
New York*Percentage-of-price
9% state level excise tax
4% local level excise tax
Potency-based
0.5 cents per milligram of THC for flower
0.8 cents per milligram of THC for concentrates
3 cents per milligram of THC for edibles
School districts
Drug treatment
Public Education
Reinvestment grants for community-based organizations
Administrative and research costs for marijuana usage studies
OregonPercentage-of-price
17% for retail transactions  
Additionally, localities can levy up to 3% of the retail price 
Education programs,
Drug prevention and treatment programs
Transfers to local governments
Rhode IslandPercentage-of-price
7% state general sales tax
10% new cannabis tax
3% municipality tax, wherever marijuana is sold
Public health and public safety
Vermont*Percentage-of-price
14% for retail transactions  
6% for state general sales tax  
Local governments can levy a sales tax.
After-school learning programs
Virginia*Percentage-of-price
21% for retail transactions
3% for local excise tax
5.3% state general sales tax  
Local governments can levy a sales tax
Pre-kindergarten programs
Reinvestment grants for underserved communities
Drug prevention and treatment programs
WashingtonPercentage-of-price
37% for retail transactions
6.5% for general state sales tax  
Local governments can levy a local sales tax
Health care programs
*States that have enacted marijuana legislation, but no revenue data has been made publicly available.

For more information on marijuana taxes, please visit The Book of States, produced annually by The Council of State Governments: https://issuu.com/csg.publications/docs/bos_2021_issuu

Important Implications of the Congressional Budget Office’s Long-Term Budget Outlook on State Fiscal Policy 

By: Valerie Newberg 

The Congressional Budget Office released its annual Long-Term Budget Outlook in July. The Long-Term Budget Outlook is a 30-year projection of different economic factors like government spending and revenues. The outlook is used as a tool for policymakers to evaluate the impact of proposed legislation against baseline economic data, such as the gross domestic product (GDP), which measures the total output of the United States economy and provides insight into to economic growth. This year’s report represents a continuation of recent forecasts, predicting a rise in mandatory federal spending on entitlement programs such as Medicare and Medicaid, increased interest costs on the deficit and a historically high debt to GDP ratio. Regardless of how the federal government approaches the unprecedented conditions predicted, states will have to grapple with changes in funding and fiscal practices to ensure their budgets remain balanced. 

Here are three takeaways for state leaders from this year’s report: 

The economy remains volatile, showing signs of slowing. 

There are four main projections calculated in the outlook: the deficit, debt, spending and revenues. While states are trying to predict the forecast and how to prepare, all four factors point to stormy weather and rainy days with potential long-term economic difficulties: 

Under current fiscal practices, the budget deficit is expected to climb from 2.3% of the GDP to 3.9% at the end of 2052. As the deficit continues to grow, the national debt will climb from its projected 2022 total of 98% of the GDP to 185% in 2052, nearly doubling in size and reaching a historic high in 2031.  Even as the end of federal pandemic relief programs results in a dip in federal spending, the budget will ultimately rise from 23.5% to 30.2% of the GDP by 2052. Increases in spending are driven by mandatory expenditures for programs like Medicare and Social Security, which will gain more dependents and experience higher costs as the U.S. population ages. Additionally, interest on the deficit will contribute to historically high spending. Finally, revenues are projected to spike in 2025 as a result of the expiration of the Tax Cuts and Jobs Act of 2017. The CBO’s analysis makes clear the opportunities and feasibility of reducing the deficit through expenditure and tax-based policies and lays out the growing consequences of inaction. But until changes are made, federal spending will continue to outpace revenues. 

While these projections are focused on national trends and policies, states will not be immune to the effects of economic changes; state policymakers can expect economic uncertainty to impact both federal grants to states and the circumstances around state revenue collection. 

Tax changes in 2025 are expected to temporarily increase federal revenues and will continue to impact state budgets and tax codes.  

Scheduled changes to the tax code will have an impact on the national economy and state policies, but this impact will vary across states and income groups. The 2017 Tax Cuts and Jobs Act had disparate effects on state budgets and tax codes, with many states electing to align their tax laws with most or all of the federal tax legislation. Key provisions of the Tax Cuts and Jobs Act that lower taxes for individuals and families are set to automatically expire in 2025, including the expanded Child Tax Credit and the State and Local Tax Deduction. The State and Local Tax Deduction impacts high-income taxpayers in states such as California, New Jersey and New York most aggressively because the $10,000 cap on deductions generally prevents those who pay the most in state and local taxes from deducting their entire liability from their federal taxes. Lawmakers in such states have sought solutions to ease this burden and prevent the loss of high-income residents.  

The future of these provisions is unclear, but the Congressional Budget Office’s analysis of the tax plan shows a nearly $1.5 trillion increase in the deficit over the next 10 years. As such, federal policymakers may look to more wide-sweeping changes to tax codes that would further impact state policies. 

Congress may look to cut discretionary spending for state grants and other projects to decrease outlays.  

The Congressional Budget Office predicts that continued levels of discretionary spending between an average of 6.2% and 7% of the GDP will contribute substantially to federal debt levels. This debt, held by the public, leaves the economy at an increased risk of experiencing a fiscal crisis that would disrupt global financial stability. With adjustments in the largest mandatory spending programs such as Medicare and Social Security requiring a 60-person majority to pass the Senate and 74 percent of Americans saying benefits should not be reduced, it is more likely that funding for discretionary spending programs and grants to states would be reduced to contain expenditure levels.  

Since the federal government provides an average of one-third of state revenues, states are especially vulnerable to disruptions due to changes in federal discretionary spending for programs like Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Head Start, the Low Income Home Energy Assistance Program (LIHEAP), law enforcement training and development assistance, and the Community Block Development Grant. States rely on these programs to provide for their most vulnerable citizens and policymakers will need to remain informed of their options for sustaining them when faced with reductions in federal funding.  

With President Biden signing into law the Inflation Reduction Act, which will reduce the deficit by over $300 million, fiscal consolidation through reduced spending and increased taxes is clearly a top priority for lawmakers in Washington. States should expect to see further action taken, and by remaining educated on the impacts of the federal budget and the CBO’s Long-Term Budget Outlook on their states’ circumstances, leaders can prepare to effectively tackle the economic issues that impact the everyday lives of their constituents.