NCPA - National Center for Policy Analysis


February 4, 2010

Faced with severe budget shortfalls after a steep economic recession, state legislatures and governors are trying to raise money without raising taxes -- at least not technically, says the Washington Times. 

A fee hike, an increased penalty or fine, the elimination of a tax exemption -- none of these technically counts as a tax increase, as far as many state lawmakers are concerned.  Fiscal conservatives argue that tax hikes are exactly what they are, but their arguments are likely to fall on deaf ears for legislators and governors wrestling with some of the worst budget deficits since the Great Depression, says the Times: 

  • The National Conference of State Legislatures found that 35 states and Puerto Rico are facing deficits for fiscal 2011, despite the Obama administration's $787 billion recovery package, which pumped tens of billions of dollars into state coffers last year.
  • A report issued in December by the National Association of State Budget Officers (NASBO) and the National Governors Association found that states raised taxes and fees by $23.9 billion in fiscal 2010, nearly tripling the $8.1 billion in such increases implemented the previous year.  

"I predict we're going to see more, whether state park fees or hunting licenses," said Pattison.  "But, I'm assuming not as many as before, because we're going into an election year, and well over half the governors are up for re-election." 

  • On Monday, the Colorado House of Representatives approved eight bills eliminating tax exemptions on items ranging from online sales and farm equipment to restaurant napkins and plastic foam containers. The bills passed with no Republican support.
  • In Oregon, voters gave their blessing last month to a so-called millionaire's tax, which raises taxes on household incomes of more than $250,000; they also approved a measure to set a higher minimum tax on corporations.
  • In New York, Gov. David A. Paterson, a Democrat, has proposed slicing the state's projected $7.4 billion deficit by, among other things, slapping a tax on soda and adding another $1 to the cost of a pack of cigarettes.  

Source: Editorial, "Budget-strapped states avoid the word 'taxes,'" Washington Times, February 3, 2010. 

For text: 


Browse more articles on Tax and Spending Issues