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Friday, January 18, 2019

By Mark Niquette, Bloomberg News (TNS)

WASHINGTON — Republican governors meeting in Washington this weekend said financial conditions in their states have deteriorated so much that they must raise taxes, even if it means crossing their own party.

In the face of a historical antipathy deepened by the Tea Party movement, chief executives in Alabama, Nevada and Michigan among other states are proposing increases this year to address shortfalls or to spend more on faltering schools and infrastructure. They advocate higher levies on businesses, tobacco, alcohol and gasoline, in some cases casting the increases as user fees.

The governors are at a crossroads. They are choosing between the path of Governor Sam Brownback in Kansas, who has refused to change course even after tax cuts provoked furious opposition, and that of Alabama’s Robert Bentley, who has said the state’s perennially precarious budget has reached the breaking point.

“I don’t want to raise taxes, but I also know that we need to pay our debts,” Bentley said in an interview. “We don’t have any choice.”

Governors in about ten states, many led by Republicans, are proposing increases this year, said Brian Sigritz, director of state fiscal studies for the National Association of State Budget Officers in Washington. Several plans involve raising fuel taxes to pay for crumbling roads and bridges, while Republicans including John Kasich in Ohio and Maine’s Paul LePage want higher sales or other levies to offset income-tax cuts. The burden of such taxes falls more heavily on the poor, who spend a larger proportion of their income.

In Nevada, two-term Republican Governor Brian Sandoval has proposed $1.1 billion in new or continued business, tobacco and other taxes to pay for education and initiatives such as expanding full-day kindergarten.

He said he has no choice with a shortfall caused by declining mining and gambling revenue, as well as a need to spend more on an education system that has the worst high-school graduation rate in the U.S.

His proposal has drawn opposition from Republican officials such as Treasurer Dan Schwartz, who said voters rejected two similar proposals in November and that Sandoval has “divorced” himself from state Republicans.

Sandoval said there are Republicans who support his plan, and that business leaders want better-educated workers.

“I knew going in that I was going to receive criticism,” Sandoval said in an interview. “That’s why it’s important for me to explain the ‘why,’ and the ‘why’ is to improve education in Nevada.”

Alabama’s Bentley, a two-term Republican, said he spent four years cutting spending, improving efficiency and making government smaller. Now, more revenue is needed to deliver services and deal with a long-building budget deficit of about $265 million that could reach $700 million by the fiscal year that begins in October.

Bentley said that while he’s still formulating his plan, it won’t involve gambling revenue and will include multiple taxes that the Republican-controlled legislature can approve.

Alabama has a history of opposing tax increases and rejected former Republican Governor Bob Riley’s $1.2 billion plan in 2003. Bentley said he expects backlash this time as well.

“But we’re going to do it with boldness, and this is something that we must do,” he said.

States are feeling pressure to pay for projects and services cut or delayed during the recession that ended in June 2009 and the sluggish recovery, said Michael Leachman, director of state fiscal research for the Center on Budget and Policy Priorities in Washington, which analyzes how fiscal decisions affect the poor.

“Governors of both political parties are faced with those neglected investments,” Leachman said.

The prospects for enacting the proposals are unclear, especially after Republicans extended control of legislatures to 31 states in last year’s elections and now have majorities in a record 69 of 99 chambers.

In Ohio, Republican lawmakers have said that while they welcome Kasich’s plan to cut income taxes, they oppose “tax shifting” to do it.

An exception may be efforts to raise fuel taxes to pay for infrastructure. The purchasing power of levies that haven’t increased in years has declined, roads and bridges are visibly deteriorating, federal funding is uncertain and the political climate may be more forgiving thanks to cheaper gasoline.

More than a dozen states, many with Republican governors, appear poised to increase transportation revenue this year, said Sean Slone, program manager for transportation policy at the Council of State Governments in Lexington, Kentucky.

Republican Governor Terry Branstad in Iowa said he’s not raising taxes. Rather, he’s backing a higher “user fee” to address a $215 million shortfall in annual transportation funding without borrowing, he said.

“I’m an anti-tax person as well,” Branstad said. “People who get the benefits of the roads should pay for it.”

Other Republicans at the National Governors Association meeting held the traditional ground that raising taxes shouldn’t be an option.

“This economy is in a delicate state, and the last thing it needs is higher taxes,” said Indiana Gov. Mike Pence, a potential presidential candidate in 2016.

The White House ambitions of Republican governors including Chris Christie in New Jersey and Scott Walker in Wisconsin may make raising taxes a gamble no matter what the state’s financial condition.

Christie has put a Democrat in charge of transportation spending and said he was open to all options for replenishing a road fund that has gone dry. He didn’t mention the crisis in a speech last week that railed against taxes.

Walker has ignored proposals from his transportation secretary to raise taxes and fees in favor of borrowing $1.3 billion. He also has said he will skip more than $100 million in debt payments to address a $283 million deficit after tax cuts.

In Kansas, Brownback is slowing his push to eliminate the income levy and calling for higher tobacco and liquor taxes because the state faces a $280 million shortfall after previous tax cuts produced greater revenue losses than anticipated. Still, he has said that the state will stay the course.

Connecticut Governor Dannel Malloy, a Democrat, raised taxes to help close a $3.6 billion deficit after taking office in January 2011 and was criticized by Christie and other Republicans for doing so.

Malloy said that while he chafed at the barbs, he’s not celebrating now that some Republicans are in position of having to raise levies.

“In a super-politicized environment — and certainly we have suffered in one of those during this post Great Recession period — some people thought it would never happen to them,” Malloy said in an interview. “They were wrong.”
___
With assistance from Terrence Dopp in Washington.

Photo: Governor Beshear via Flickr

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14 responses to “Tax Increases Much-Regretted Necessity For Republican Governors”

  1. Dominick Vila says:

    I can just imagine how regretful it must be for conservative Governor to have to embrace liberal concepts such as raising taxes to pay for public education, for uncontaminated state sponsored healthcare, and for infrastructure in right to work states where taxation from starvation wages is not enough to buy a Big Mac. Well, I guess this is better than “let’s give our kids the educashon they need at home, instead of in communistic public schools. Were uniforms and praise the Lord every day. Your gonna have to ride burros to work if them pot holes ain’t fixed, and if you is sick, let Nana and the Lord fix you right up”. Yes, this must have been a tough decision for them, and a hard pill to swallow for their obedient flock.

    • robertbubba2 says:

      Nice rant.

      So have you got this framed and on your livingroom wall ?

    • Jmz Nesky says:

      This is the only reason their contemplating the marijuana topic.. They want to embrace the taxation.. Colorado has been showing them that the higher the state fathers tell them how much more taxation must be included into the price, the more the people buy.. Once it hits a point where no one can afford it, then like the fuel farce, it will go down to that point just before everyone balked and the surge will start again THEN these heads will all float over to the ‘pro’ side of legality and one red state after the other will join in and then (again) at least until they find ways to pocket the cash instead of using it for schools (like the lottery proceeds were suppose to cover) and the infrastructure cools off (that registration, road tax and inspections were supposed to supplement) they can re-utter themselves in saying, “No New Taxes” and the butt sniffers will again believe them (until the next crisis).

  2. booker25 says:

    So instead of admitting that cutting taxes was a mistake these red states will now raise taxes or fees on the rest of the state. This is what Romney did in Mass. These Gov will never admit that cutting taxes just doesn’t work even as their states budgets goes into the dumpers.

    • robertbubba2 says:

      Interesting so raising taxes is a good thing ?

      Now we should all be as fical as Illinois 67% tax increase less service and no derease in the 45 billion dollar state budget eh booker25.

      Now what part used to run Illinois ?

      I do believe it was liberals untill this election cycle eh booker 25.

      • booker25 says:

        Kanas, NJ, credit ratings in the dumper, tax cuts for the rich. Trickle down never works, never will, sin tax never will fill the tax void.

  3. Bren Frowick says:

    Notice that not one of them is talking about raising taxes on the wealthy. Instead, every single one of their proposed increases will fall most heavily on those making the least.

    • Bill says:

      That’s the GOP way, they never cared if taxes got raised on the middle class and the poor, that’s why the sales taxes are higher in GOP states, and then they say poor people don’t pay taxes. The only people who won’t pay their fair share taxes are the rich!

  4. kentallard says:

    As is so often the case, they are opting for regressive taxes (or fees as they like to call them, which provides a phony linguistic cover for what is actually a regressive tax), crippling the spending power of the great middle class economic engine, and eviscerating the working poor’s paycheck.

    I wish I could blame it all on the GOP, given the way they have soiled the national nest so diligently in recent years, but the fact is that Democrats like Chicago’s Rahm Emmanuel play the same game. All politicians regardless of party are terrified of increasing the fairest tax of them all, the income tax, out of fear that their wealthy patrons will turn off the money spigot that keeps them in office. Better to club baby seals on the 10 o’clock news than to raise taxes on a billionaire.

    The rich, they seem to say, have suffered enough. Let’s raise taxes on a working stiffs cigars and beer!

  5. dpaano says:

    For some reason, the Republicans think that if they keep cutting here and cutting there, they’ll save money. In fact, all they’re doing is making it hard to pay the bills they already have incurred! Unfortunately, they don’t understand inflation either…..things have a way of going up rather than down price-wise! You have to have money to pay the bills, and if you keep cutting revenue, you have nothing! What’s totally not understandable to me is why they can’t understand this logic!

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