2024 State Election Preview: States and Races to Watch

While the news media devotes considerable time and attention to providing insights into federal elections and their consequences, state government races can equally impact the policies that affect taxpayers and citizens.

In this report, we will examine the current legislative makeup of the states, what a Democratic or Republican wave could look like in November, the potential effects of those elections on state tax policy, and one other ballot measure to watch on Election Night.

Current Landscape of State Government Politics

Currently, Republicans have trifecta control (that is, they hold control over the governorship and both legislative chambers) in 23 states, while Democrats have trifecta control in 17 states. Republicans reached their high-water mark for state legislative control following the 2010 elections, where they captured a record number of state offices. Since then, Democrats have been slowly chipping away at the GOP’s control over statehouses.

Ten states have divided government. In Arizona, Kansas, Kentucky, North Carolina, and Wisconsin, a Democratic governor stands opposed by complete Republican control in the legislature. In Nevada and Vermont, Republican governors are contrasted with Democratic control in the legislature. In Pennsylvania and Virginia, the House and the Senate are held by different parties. Finally, in Alaska, a special bipartisan governing coalition gives Democrats de facto authority beyond the number of seats they hold.

As a practical matter, trifecta control does not guarantee that a party will be able to achieve its full legislative agenda, but it does grease the political wheels when all the levers of power are held by one governing coalition. For example, when Democrats established trifecta control of the Minnesota government in 2023, they were able to impose new taxes on international corporate receipts, a fee on the delivery of tangible personal property, and free school lunches. It is also worth noting that when a party regains a political trifecta after years of divided government (as was the case in New York in 2019 or Louisiana in 2024), there is often a flood of new legislation as the newly empowered party rushes to clear its backlog of policy ideas.

2024 Election

There are too many state races to effectively poll every legislative seat, but we still know which state chambers are at play based on the size of current party legislative majorities and the number of competitive elections. For the purposes of this analysis, we will consider what the map could look like if each party is able to outperform the other.

Strong Democratic Showing: Possible Scenarios

If Democrats achieve their electoral goals, we could see Mayor Joyce Craig (D) defeat former Senator Kelly Ayotte (R) for the governorship of New Hampshire, Attorney General Josh Stein (D) defeat Lieutenant Governor Mark Robinson (R) for the governorship of North Carolina, the flipping of legislative chambers in Arizona, New Hampshire, and Wisconsin, and the maintenance of their slim majorities in Michigan, Minnesota, and Pennsylvania.

In New Hampshire, Joyce Craig’s campaign website briefly discusses tax policy, and even then, only through the lens of her other policy goals. The most notable mention is in the “Housing Plan” section of her website, where she calls for establishing a historic rehabilitation credit. In an editorial board interview with a local newspaper, she went into slightly more detail, stating that she would veto efforts to impose a new sales or income tax, but generally opposes efforts to cut taxes for wealthy individuals. If Mayor Joyce does become the state’s top executive, she will likely have little impact on state fiscal policy unless Democrats can also pick up at least five seats in the Senate and four seats in the House.

The North Carolina governor’s race is one of the most closely watched executive elections in the country, and polling currently shows AG Stein with a 9-point lead over his opponent. The attorney general provides almost no tax policy ideas on his campaign website, other than pledging to “[cut] taxes for working families.” Even if Stein does prevail in November, he would likely have limited ability to pursue his own legislative agenda, as Republicans have historically enjoyed veto-proof supermajorities in both legislative chambers. As such, his election would at most provide a Democratic check against Republican policymaking.

Arizona Republicans currently control both the House and Senate by two votes. As Arizona faces a tighter revenue landscape heading into 2025, if Democrats gain control, tax hikes and a curtailing of the state’s education voucher system would both be on the agenda.

The Wisconsin legislature has been under Republican trifecta control for more than a decade, but recent court decisions have threatened the GOP’s hold by forcing the redrawing of legislative maps. Wisconsin is projected to enjoy a $3.1 billion surplus by the end of FY 2025, which could blunt any calls for new taxes.

Democrats currently hold razor-thin majorities in the Michigan House and Senate, the Minnesota Senate, and the Pennsylvania House. Maintaining control of these chambers would continue the status quo in these states.

Strong Republican Showing: Possible Scenarios

If Republicans achieve their electoral goals, we could see the election of former Senator Kelly Ayotte in New Hampshire and Lieutenant Governor Mark Robinson in North Carolina, the regaining of the lower legislative chambers in Pennsylvania, Michigan, and Minnesota, the official regaining of trifecta control of the Alaska legislature, and the maintenance of their legislative control in Arizona, New Hampshire, and Wisconsin.

North Carolina’s Mark Robinson has an extensive “Economic Platform” section on his campaign website that includes calls for cutting taxes on “ALL North Carolinians,” regulatory reform, and workforce investment. Veto-proof majorities have allowed Republicans to pursue their tax cut goals, most notably in 2023, when they accelerated planned cuts to the personal income tax. However, Robinson’s election to the governor’s mansion would remove one potential impediment to achieving their fiscal goals.

Former New Hampshire Senator Kelly Ayotte’s campaign website calls for reducing tax and regulatory burdens on state businesses and pledges her opposition to any new sales or income tax levies. New Hampshire Republicans have been quiet on tax issues recently, apart from a 2023 study on whether to impose mandatory unitary combined reporting.

If Republicans flip the houses in Michigan and Minnesota, they would break up existing Democratic trifectas. Additionally, if they flip the Pennsylvania House, they would gain full legislative control in opposition to Governor Josh Shapiro (D). Divided government in these three states would give the GOP greater negotiating authority over major legislation, such as the Minnesota omnibus bill or the budgets in Michigan and Pennsylvania. As a practical matter, this could have the most impact in Pennsylvania, where Republicans have long called for business tax reduction and reform. 

Another Race to Watch: Oregon Measure 118

In addition to these state legislative and gubernatorial races, the other race with major tax policy implications is Oregon Measure 118, which would increase the corporate minimum tax for large businesses and use the resulting revenue to fund a rebate for every Oregon resident.

Left-leaning groups in Oregon have a history of aggressive tax ballot measures that are both historically expensive and consequential. In 2016, for example, progressives pushed for Measure 97, which would have established a new gross receipts tax in the state. While the measure failed at the ballot box, the campaign was the most expensive in state history (with the two sides raising a combined $40 million) and forced state businesses to negotiate with officials to allow the enactment of the corporate activity tax.

Oregon voters have a history of rejecting major tax hikes in the past; however, Measure 118 takes a novel approach by allocating its proceeds not for an abstract policy goal such as combating homelessness or bolstering education, but as a direct cash transfer to residents. Proponents are currently saying that Oregonians would each receive $1,600 if the measure passes, though this estimate has changed as the campaign has gone along. The promise of a $1,600 universal basic income could allow this measure to succeed where previous state tax hikes have failed.

Beyond Oregon, if progressives can persuade voters to pass Measure 118, it will serve as a playbook for other states that are also considering tax hikes. We would then expect to see more tax measures accompanied by guaranteed rebates and for more of these measures to pass.

Our Ryan advocacy team will continue to monitor these races and will report on the results of the elections and their potential consequences. In the meantime, if you have any questions about how these races will affect your business, please contact the experts listed below.

TECHNICAL INFORMATION CONTACTS:

Holly Reed
Principal
Ryan
469.399.4556
holly.reed@ryan.com

Ryan Maness
Director
Ryan
332.282.5668
ryan.maness@ryan.com

The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com