Taxed to the max: Many states can't get by on spending cuts alone

States struggling to keep government running and balance their budgets are turning to higher taxes and fees to do the job, potentially doubling the load of new taxes this year and erasing much of the savings from the high-flying 1990s.

An Associated Press analysis of budget work in all 50 states found many are trying to target their tax increases or raise fees — allowing politicians to make claims that they did not raise income taxes. But those states that have raised across-the-board taxes such as income, sales or property taxes will get more money.

Smokers, drinkers and gamblers are top targets. So are drivers and traffic offenders. Businesses, too, small and large, are being forced to pay more as states confront billion-dollar gaps.

Few will escape the pain, whether it is someone buying a new tire ($2.50 more in New York), hoping to hunt game in Wyoming ($200 more for some licenses) or seeking care in a nursing home (a $6.50 daily fee per patient in Colorado, charged to nursing-home owners).

So far, in the 21 states with budgets signed into law for the fiscal year that begins in July for all but four states, residents will pay $4.3 billion in new taxes and $2.3 billion in new fees.

Another $14 billion in proposed taxes and $2.4 billion in possible fees remain on the table in 29 states, including some of the most expensive proposals in states like California, Connecticut and Pennsylvania. In 10 of those states, legislatures have passed spending plans but governors have not yet signed them.

The increases are chipping away at the $35.7 billion in state taxes cut during the 1990s. Since the economy went sour, states raised $9.1 billion in new taxes; this year, more than twice that is possible now — some $18.3 billion in new and proposed taxes.

While states scramble for money, the federal government is cutting taxes. What does that mean to the average American? Some will pay more to their state than they get back from Washington, others will come out ahead — depending on where they live and their habits, like smoking, drinking or speeding.

At Congress' insistence, President Bush's federal tax law gives states $20 billion over the next two years. That could ease pressure for taxes and fees, though many policy-makers say the money will go mainly to putting off program cuts or into near-empty reserves.

Governors and legislators say they reluctantly raised taxes and fees because budget problems were too severe to be solved by spending cuts alone.

Each choice is difficult, because it has immediate pocketbook consequences for workers, poor people and families. And each decision could bring political consequences, whether for governors living up to campaign promises or legislators worrying about elections.

"Nobody ever likes any tax," said Pennsylvania Gov. Ed Rendell. But he vowed during his campaign last year to tackle the state's tax system, which he says underfunds schools.

So he proposed a sweeping restructuring that would raise income taxes and cut property taxes. Rendell, a Democrat and former Philadelphia mayor, said the state would thrive with stronger education and business opportunities, while the wealthy would pay more and the middle class slightly more. He braced for criticism.

"You have no choice. Any revenue-raising item, you're going to tick people off," he said. Pub owners complain about the tripling of the malt-beverage tax. Cellphone users don't like higher bills. Said Rendell: "You try to be as fair as you can in spreading the tax burden."

Now, he faces a challenge getting his way in a GOP-controlled Legislature, where budget deliberations are just beginning.

Much work remains in 18 other states, where lawmakers also are looking at cuts in services — usually, before they resort to taxes — to fill in their states' financial holes. Governments will earmark some tax and fee increases for a specific purpose, like fixing potholes, to try to preserve that service.

In the streets and corporate offices of the country, demands for more state money have upset taxpayers.

Allen Young, a security guard in midtown Manhattan who steps onto the sidewalk three or four times a day for a smoke, can't escape the rising cost of government. New York state raised its cigarette tax last year; New York City and Connecticut raised it this year; New Jersey is weighing higher cigarette taxes for next year.

"It's unfair," said Young, who has tried nicotine patches to shake his addiction. "They figure if we're still going to smoke our cigarettes, we'll pay any price for it."

Responses like that have convinced policy-makers: Seventeen states have proposed or passed higher cigarette taxes this year.

So-called sin taxes on cigarettes, beer and gambling are the biggest targeted tax (meaning they're aimed at only one segment of the population). They're easy money with little risk: People like their vices, and rarely speak up when they're taxed, and the levies hit a relatively small group. Some $1.5 billion in sin taxes are being considered nationwide, with $455 million already passed into law.

But in New York, a proposal to impose a 1 percent tax on junk food, video games and television commercials to pay for an obesity-prevention program faces stiff opposition from lawmakers and business groups.

Business taxes are also climbing. So far, the 21 states that have passed their spending plans hope to raise at least $329 million from new or higher taxes — and from closing loopholes or ending tax exemptions — on business. Another $1.2 billion is being debated.

Broad-based taxes — income, sales and property taxes — still bring in the most new revenue, simply because they tax nearly everyone. Even though they've passed in only six states so far, the first $3 of every $4 in increased taxes that has been approved has come from such taxes.

But broad-based taxes can also make a lot of people angry. In many states, fees are the choice.

Like officials in Florida and Colorado, Massachusetts' Republican Gov. Mitt Romney relied heavily on fees in his spending plan. One proposal would charge blind people $10 for a certificate of blindness so they could access state services.

"The injustice of it, of course, is that the wealthy have benefited greatly from tax cuts," said Bob Hachey, blind since birth and a member of the Bay State Council of the Blind. "And here they are trying to charge little fees on the poorer folks."

The fee is only an "annoyance," he said — but one that's a symbol of the sweeping cuts for health and social services that denied the visually impaired coverage for glasses and prosthetic eyes. "It's just a tip of the iceberg."

Florida turned to fees, too, with many lawmakers proud to avoid a tax increase. Some skeptics, however, said the state was just relying on borrowing and financial gimmicks to get by.

"The day of reckoning is coming," warned Republican state Sen. Tom Lee at Florida's end of session. "I have voted for my last budget in the state of Florida that's put together with Band-Aids and paper clips."

Understandably, the big states have the biggest impact — New York's $2.6 billion in higher taxes and canceled tax breaks accounts for nearly half of the country's total new taxes, so far. California alone has proposed $7.5 billion in new and higher taxes.

Businesses in many states say they're being unfairly targeted, and warn the result will be a weaker economy.

MaryKaye Cashman already laid off 300 employees since falling gold prices damaged her heavy-equipment dealership in Nevada and California, with its dependence on mining. But new business taxes Nevada lawmakers are considering would hit her bottom line again.

"It's not a question of me laying off employees, it's a question of me not hiring additional employees," said the chief executive of Cashman Equipment. She said she's being forced to rethink plans to expand the company and the future of her employees' health benefits.

Steeper fees for fishing licenses? "I think it's fair," said Prague, Okla., angler Aaron Fridrich. "The way I look at it, you're going to get back a lot more than what you pay for."

Weaker-than-expected revenues left states overall facing an estimated $80 billion deficit in the fiscal year that begins in July. Every state except Vermont is required to balance its budget, so the money gaps must be resolved — either through a stronger economy, higher taxes and fees, cuts or borrowing.

Tax and fee proposals nationwide, even if all became law, account for less than a third of that $80 billion. Cuts, borrowing and short-term maneuvers are covering the rest of the gap.

Even in those states where people won't see higher taxes or sweeping fee increases, lawmakers are keeping their fingers crossed for next year.

Hawaii got by with no significant fee or tax increases — except lawmakers built their budget estimating a rosy 4.3 percent growth in tax revenues. Through April, growth was just 0.4 percent.

In Montana, compromises between conservative and moderate Republicans left the state with a considerably higher cigarette tax and tens of millions of dollars in cuts.

"This is just like those rough years in a family's life, when you just have to pull in your belt," said Montana Gov. Judy Martz, a Republican. "It leaves out some. You can't just be there for everyone. It hurts."

If government would learn the word "your fired", or declare bankruptcy and force layoffs like private companies, a lot of these financial problems would go away. The government is loaded with over-stuffed mid-level managers. Its called redundant laziness. Thank your lovely labor unions for this tenured bloated government employee nightmare. Don't hold your breath waiting for government to change. Too many votes in dem dar government workers.

I see no reference to "cuts", many references to tax increases in all forms. The title to this piece is misleading. The many States are virtually bankrupt, but not one program defunded. The two party cartel marches on, straight into ruin. I tried to tell folks that the States would gobble up any measly tax cut from the feds, meaning there will be no economic stimulus ahead, too many gubermint programs to run. We need sweeping change in attitude which will not come from those currently feeding at the trough! Some I've discussed this with seem to think we can go on forever like this, bunk! They've reached the bottom of my wallet. We need to have a 90% turnover at all level's of gubermint this next election cycle, I'm sick of all of them. Throw the lying scum, one and all, out on their butt's. Blackbird.

I tried to tell folks that the States would gobble up any measly tax cut from the feds

I've been saying the same thing. I live in New York and the tax increases will cost me considerably more than the federal tax cut.

As popular clamor rises agaisnt these tax and fee hikes, watch for the Washington Monument Defense, coming soon to a state or city near you. Police protection and emergency services will be the first to get the axe. Cities will slash garbage pickup and raise the price of water. But redistribution programs and government services for the poor will go untouched. Not one bureaucrat or social worker will even feel a breeze.

It's time to dig in for a siege.

Freedom, Wealth, and Peace,
Francis W. Porretto
Visit The Palace Of Reason:
http://palaceofreason.com

When private citizens can't make ends meet they don't get to go steal money from other people. They don't get to target other revenue sources or raise any fees that others HAVE to pay. They don't get to say, "Gee, my neighbor is too fat, I think I'll steal some of their money," or, "Gee, my neighbor smokes, I think I'll steal some of their money." When a private citizen can't make ends meet, they cut spending.What is so difficult to understand about that?

Campaign slogan for the next round of elections: CUT THE FAT! CUT THE FAT! CUT THE FAT!

Governors and legislators say they reluctantly raised taxes and fees because budget problems were too severe to be solved by spending cuts alone.

That is a lie, and the politicians who make this claim are scumbags.

"Nobody ever likes any tax," said Pennsylvania Gov. Ed Rendell. But he vowed during his campaign last year to tackle the state's tax system, which he says underfunds schools.

LOL, here's the biggest lying scumbag of them all! Rendell is passed back and forth between the education mafia and the trial lawyers like he's their prison wife. Eddie just smiles and enjoys himself.

It's already started in the land of fruits and nuts--

WEST SACRAMENTO, Calif. -- For the first time in its history, the California Highway Patrol is sending out hundreds of layoff notices in anticipation of extensive budget cuts.

It's certain that it will happen, but the CHP is making plans to layoff 469 officers. Warning notices could be sent out in the next week. Veteran officers would be safe, with new officers and cadets the first to go.

The possible layoffs are clouding the future for the latest class of cadets, scheduled to graduate from the academy Friday.

"A lot of people are down about it ... they're worried about their families," CHP Cadet Thomas Kindhart said.

CHP Commissioner Spike Helmick Thursday talked about possible cuts in service if the layoffs prove to be necessary.

Helmick said areas that could see cuts would include CHP presence at truck scales, including anti-terrorism inspections of big rigs and a vehicle safety program for migrant farm workers in the Central Valley might have to be scaled back. He also said academy instructors might be put back on the road.

More... http://www.thekcrachannel.com/news/2267695/detail.html

What's missing in this article as well as any others on the subject of state finances is the fact that state "budgets" do not accurately reflect the TRUE revenues and expenses of these states crying poverty. They never disclose their CAFR's (Comprehensive Annual Fin'l Reports) to the public which details what ACTUALLY occurred financially during a given period. I'm certainly not an expert but from some of the reports I've seen on the subject there are huge sums of $ collected by certain states than can exceed what was budgeted. Where the $ go and how they're accounted for in the financials is the key question.

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