States Plan Further Tax Cuts In 2000

The economic prosperity most states enjoyed in the 1990s shows no signs of abating in the new millennium, with 12 states and the District of Columbia expecting to cut taxes further in 2000, a National Conference of State Legislatures (NCSL) survey shows.

The 50-state survey shows that a number of other states expect to follow suit as soon as they can piece together formal tax-cutting plans.

Within the 12 states where concrete tax-relief proposals have been made, it has been suggested that:

  • Colorado implement $100 million in permanent taxes.
  • New York provide $1.4 billion in phased in cuts.
  • Florida repeal its intangibles tax.
  • Georgia, further reduce its property tax.
  • Maryland scrap its state inheritance tax.
  • Minnesota make permanent reductions in personal income and sales taxes.
  • Oklahoma cut personal income and motor vehicle taxes.
  • Utah permanently reduce its levy on unemployment insurance.

A handful of states are facing the prospect of imposing new taxes in 2000. They include Kansas, which has to make up for a projected budget shortfall, and Tennessee, where Gov. Don Sundquist has proposed implementing a 3.75 percent flat income tax. Wyoming and Alaska are two more states where legislatures will probably be asked to approve tax hikes.

One state enters 2000 expecting to raise and decrease taxes. Kentucky Gov. Paul Patton wants to raise gasoline taxes for transportation improvements, and there's a simultaneous movement afoot to give low-income wage earners an income tax break.

Overall, "states appear to be in very good shape financially as they enter the year 2000, which is basically a repeat of the last four or five years," says Arturo Perez, an NCSL senior policy analyst.

In six states - Arkansas, Montana, Nevada, North Dakota, Oregon and Texas - lawmakers probably won't have to wrestle with fiscal matters this year, because those states aren't convening a regular legislative session in 2000.

In states where regular sessions are scheduled, a key fiscal issue on many legislative agendas is how to divide the multi-billion dollar tobacco settlement awarded to states, according to NCSL. Education funding remains a huge priority, as always, as does tax relief, funding capital construction and coping with large year-end balances.

Rounding out the list are welfare spending, steadily rising prison costs and the ramifications of electronic commerce on state sales tax revenues, Perez says.

In Virginia, sales tax collections have pumped revenue growth up by 8 percent through the first part of the fiscal year, surpassing an estimate of 4.8 percent, NSCL said.

Alaska is also enjoying better than projected revenue growth at 38 percent, along with Alabama (12 percent), Maryland (6.7 percent) and South Carolina (5.3 percent).

When it comes to bringing projects in on budget, states have good news to report in that area, too. Most major projects are said to be progressing within budgeted levels, according to NCSL. Twenty-nine states have submitted supplemental budget requests for unanticipated spending needs, but revenue collections are projected to cover supplemental budgeting in just about every case.

If the robust economy continues through February, that would propel the states into uncharted economic waters, the NSCL's Perez said. February would bring about 109 months of sustained economic growth, eclipsing a milestone established from 1961 to 1969.

"Once you get into record territory, there's really little you can compare your experience with," Perez said. "Can this go on?

"Obviously the states are in incredible shape for the most part."