With budget deadlines looming, many states felt that there were no alternatives to balancing the budget other than raising taxes or adding new ones. More than half of all states were considering significant tax changes to fill gaping holes… What a difference a few weeks and some angry taxpayers make.
New Jersey recently “found” more money than it had hoped for after setting up an amnesty program. Other states are filling holes by trimming budgets.
Consider Pennsylvania. Governor Ed Rendell had indicated that a 10% increase in income tax would be necessary to head off a budget crisis. It was all but settled until yesterday when a Democratic budget proposal yanked $1.3 billion in funding for some colleges and student-loan programs. The result is a $29.1 billion budget offered by Rep. Dwight Evans (D – Phila), chairman of the Appropriations Committee. And Governor Rendell may be on board. Republicans oppose the plan, offering their own version of a bill that makes deeper spending cuts but reportedly lacks about $1 billion of needed revenue. Nonetheless, both parties have agreed that a tax increase isn’t necessarily the answer.
And despite concerns that talks of a tax increase may resurface next year, Illinois managed to pass a budget this week that results in no additional tax. Governor Pat Quinn had indicated that a 50% tax increase would be necessary to keep the state going but this week, the Senate and House voted overwhelmingly to borrow funds and delay other spending. The result is a budget that, for now, keeps Illinois out of a deficit and allows taxpayers a reprieve in tax increases.
Does this mean that tax increases are off the table? Not at all. But it is proof that legislators are listening to taxpayers – the answer doesn’t always have to be “raise taxes.” Other states – from North Carolina to Oregon to California – should take notice.
