States Resisting Urge to Spend
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States are showing fiscal restraint, experts say, piling up cash for
the next rainy day and sometimes giving money back to taxpayers through
rebates and tax cuts. This reverses past practices during economic booms
when states used increased tax revenues to make up for spending cuts or
enacted programs postponed by an earlier recession.
State officials also appear wary about future financial aid from the
federal government. The surpluses are the result of five years of relatively
decent economic growth.
- Last year, states on average held spending increases to four percent
-- not much above inflation -- while their revenues grew more than six
percent.
- Personal income taxes accounted for 36 percent of revenue, general
sales taxes brought in one third of the total and taxes on corporations,
tobacco and alcohol made up most of the rest.
- Nine states expect revenues to be above projected budget figures, and
Texas, Michigan, Minnesota and Indiana expect to have surpluses of more
than $1 billion each.
- This year, tax cuts or rebates will take effect in 27 states.
In the last two years, tax reductions were enacted by 32 states. Republican
governors in New York and New Jersey effected tax cuts of $4.2 billion and
$2.8 billion, respectively, since assuming office. Nevertheless, state tax
cuts nationwide have only amounted to less than one percent of revenues
over the past three years.
Some budget officials say that states have generally preferred to build
up surpluses, being unsure how much will be needed for jobless and welfare
benefits in some future recession.
- States collected 6.2 percent more in revenues in the second quarter
of 1996 than in the comparable period a year earlier, according to the
Center for the Study of the States.
- In that quarter, state income taxes withheld from paychecks grew at
10 percent of more in nine states.
According to the National Conference of State Legislatures, no state
is presently considering raising income, sales or business taxes.
Source: David Cay Johnston, "States Resisting Urge to Use Up Tax
Windfalls," New York Times, January 27, 1997.
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Urban Planners in Oregon
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"New Urbanism" is an urban planning movement that wants to
redesign cities across the United States using land use controls and funds
intended for roads and highways. In Portland, Ore., critics say the New
Urbanists want people to live in high-density housing and use mass transit
-- despite their preferences for suburban living and automobiles.
Metro, Portland's regional government, plans to create 35 downtown population
centers and corridors through zoning and land-use controls in the three
counties and 24 cities in the Portland area. These will be linked by an
extensive light-rail system.
Despite Portland's explosive growth, Metro has a 50-year plan for land
use and transportation that would stop development outside existing "urban
growth boundaries."
- New developments inside the boundaries must average more than 15 units
per acre, and lot sizes in single-family home developments must average
4,100 square feet -- less than half the typical lot size.
- Population densities in designated centers would quadruple, even in
existing single family residential areas, and mix residential and retail
development.
- The light rail system will absorb 75 percent of total spending on roads
and transportation, with one 11-mile route costing an estimated $1.5 billion.
Despite a disappointing experience with the existing light rail system,
voters continue to fund it. (More than half the construction funds come
from the federal government.)
- Transit planners in Portland projected that ridership on the light
rail line completed in 1986 would reach 41,500 people per day within five
years.
- Ten years after its completion, ridership is only about 27,000 people
per day --and the average speed of the line is only 19 miles per hour.
Even Metro admits that under its plan congested roads will quadruple
from 160 miles to 620 miles, the number of people using mass transit will
remain below 5 percent and air pollution will worsen. The solution of one
Oregon state agency: a rule requiring all major cities to reduce per capita
auto use by 20 percent in the next 30 years.
Source: Randal O'Toole, "Coming Soon to a City Near You," Liberty, January 1997.
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