Conservative Governors Break Tax Orthodoxy
They offered their tax increases in response to yawning budget gaps brought on by the struggling economy, which has put pressure on social service programs and shrunk the states’ tax take, and rising Medicaid costs.
Huckabee proposed raising Arkansas’ sales tax by five-eighths of a percent, generating roughly million a year. Rowland proposed increasing taxes on the wealthy by raising Connecticut’s income tax from 4.5 percent to 5.5 percent for people earning more than million a year.
The governors’ proposals have drawn criticism from some conservative tax activists, who favor program cuts over tax increases.
“I think that no governor should be proposing increasing taxes,” said John Barry, chief economist at the Tax Foundation, an organization in Washington, D.C, that advocates for lower taxes.
Barry sees the states’ budget crisis as a self-made problem. He claims that what states are suffering from now is more a hangover than a crisis.
“During the 90’s, when the economy was roaring ahead, state level spending was out of control nationwide annual increases of over 5 percent after adjusting for inflation. I would call it the roaring 1990’s,” said Barry.
“We’re now at a place where most governors, Republicans and Democrats alike, are going to be faced with a hangover from that. The way you cure a hangover is not by increasing taxes and thereby spending, but by looking at what caused the problem in the first place,” he said.
Barry would prefer that governors balance state books by scaling back many of the programs and policies they implemented and grew during the 1990’s.
But other groups say the fact that fiscal conservatives like Huckabee and Rowland would turn to tax increases shows just how much trouble states are facing.
“Here are two conservative governors from very different states, who were re-elected in part on their reputations as tax-cutters, coming out in favor of tax increases that are broad-based,” said Nick Johnson, fiscal analyst at the Center on Budget and Policy Priorities, a left-leaning research organization in Washington, D.C.
“I have no doubt they have their budget officers working overtime trying to find ways to cut the budget, but the fat just wasn’t there,” he said.
Huckabee defended his proposal earlier this month on his radio call-in program, Ask the Governor, on KARN, Little Rock. During the program, Huckabee turned the blame game around, saying his call for a tax increase was issued in response to the wants and needs of the state residents.
“People want more money for teachers. They want more money for scholarships. They want more money for roads. They want nursing-home patients cared for. . . .They want to go to the doctor and have every diagnostic test the doctor has,” Huckabee said on his program, reports The Arkansas Democrat-Gazette.
“When the public demands it and then the law puts it into force where we have to do it, those two things converge. And that’s kind of where we are,” he said.
Huckabee also blamed Medicaid, a joint state-federal program that provides healthcare to more than 40 million low-income Americans, and federal mandates that won’t allow Arkansas to cut back on coverage for keeping state spending high.
Many callers weren’t buying Huckabee’s line, saying they are “just taxed out” and “sick and tired of tax increases.” Another suggested he wouldn’t have voted for Huckabee had he known he’d try to raise taxes just after the Nov. 5 election. Huckabee’s sales tax proposal came nine days after he won re-election.
Rowland’s call for an income tax increase comes just months after he opposed a similar, Democratic proposal during budget negotiations earlier this year. He said his proposal represents a compromise between his concerns and those of Democrats, who control the House and the Senate.
Rowland’s budget-balancing plan includes million in tax increases, million in spending cuts and million in state employee union concessions. The plan would close only the current fiscal year’s deficit, which is about million. The state is facing an even larger deficit next fiscal year.
Lawmakers are expected to begin debating the proposal on Wednesday (12/18) during a special legislative session.
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