T Word Taboo In Most Legislatures

By: - May 1, 2002 12:00 am

Deficits abound in the states and so do spending cuts, but rare is the lawmaker proposing major tax increases.

It’s not that states couldn’t use the money. They could, given an aggregate budget deficit estimated at $27 billion.

But this is a major election year. And no politician wants to be accused of grasping for loose change in voters’ pockets when his or her political future is on the line.

“Neither party wants to be caught using the “T” word. And so they would prefer to cut,” says University of North Carolina professor Thad Beyle, an expert on state and local politics.

The evidence backs Beyle up.

At least 40 states have cut spending since last July or plan to do so soon in an effort to close their deficits, according to the National Conference of State Legislatures (NCSL).

By way of contrast, only two states Nebraska and North Carolina have increased broad-based taxes, such as sales or income taxes, since last July, reports NCSL. And to hedge their political bets a bit, lawmakers made the increases temporary.

In September, months after the budget deadline had passed, North Carolina lawmakers raised the sales tax by a half-percent and hiked income taxes on households earning more than $200,000. The tax increases will be phased-out after two years.

In April, Nebraska legislators overrode Gov. Mike Johann’s veto to approve a bevy of tax increases, including a half-cent sales tax increase, a 2.2 percent income tax increase and an expansion of the sales tax to include some services. The sales and income tax increases will be phased-out in 2003.

The rarity of such increases is not surprising given the present anti-tax leaning of the body politic, analysts say.

“The closest thing we have to a mandate in the United States is: Don’t raise taxes,'” says Rutgers political science professor Alan Rosenthal, an expert on the politics of state legislatures. “If taxes at all, then cigarette taxes. The public is perfectly willing to let somebody else pay.”

And so are state lawmakers it seems.

One effect of state spending cuts is less money flowing to city and county governments. Due to the fixed nature of many of their expenses, local lawmakers will be forced to raise property and excise taxes, raising voters’ ire in the process.

“In our state there’s some real anger from the local elected officials toward the state,” says Beyle. “The local level politicians have no choice [but to raise taxes]. If you’ve got a lot of kids coming to school, you’ve got to cover those kids.”

Many local lawmakers will pay with their jobs, says Beyle.

One factor that sets this election year apart from others is the stridently anti-tax message emanating from Washington, D.C.

“You have the Republicans in Washington, in the White House and Congress, trying to make tax cuts the cornerstone of their domestic policy. So when you get governors going against this policy there are consequences to pay,” says political analyst Norm Ornstein, resident scholar at the American Enterprise Institute, a Washington, D.C.-based think tank.

During the last recession, this was not the case, as the political climate of the early 1990’s seemed more amenable to tax increases. At that time, states raised taxes to the tune of $36 billion two-thirds of the states’ aggregate budget deficit.

“You could raise taxes then. It was a political issue, but at that time there was no mandate against raising taxes,” says Rutgers’ Rosenthal.

Nevertheless, many state leaders found out soon enough that tax hikes were not without significant political consequences.

Just ask former New Jersey Gov. Jim Florio, a Democrat who successfully pushed a tax increase in 1990 to cover a $600 million shortfall in the state budget and comply with a court order to better fund poor schools.

One year later, Republicans tapped into voter anger over the tax increase, wresting control of the state legislature from Democrats for the first time in 18 years.

Three years later, Florio himself was bounced from office by Republican Christine Todd Whitman.

Since then, Florio’s name has become a dirty word in Garden State politics, used repeatedly over the years by Republicans to tar and feather Democratic opponents.

Analysts say the lesson for state lawmakers is clear: Don’t raise taxes if you want to keep your job.

A few months into this election year, it appears most state lawmakers have learned that lesson well.

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