Stateline Story

Talk of Tax Hikes Grows Louder

Election-year tax hikes are usually the last thing politicians want to consider, but that's just what officials in Arizona, Pennsylvania and Washington state are talking about this week.

Republican Arizona Gov. Jan Brewer — bucking her party's traditional aversion to tax increases — has long sought an increase in the sales tax to help her state through one of its rockiest fiscal periods ever. Late last week, the GOP-controlled Legislature approved Brewer's plan to send a temporary, 1-cent sales tax hike to the voters on May 18, The Associated Press reported .

If approved, the plan would generate up to $1 billion over three years for the state, which faces a shortfall of at least $2.6 billion on a $9.5 billion spending plan for the fiscal year that starts in July, AP reported. A November study by the Pew Center on the States , of which Stateline.org is part, found that Arizona is the state in greatest "fiscal peril," after California and its well-publicized money problems.

Brewer cast the sales-tax proposal in dire terms, telling The Arizona Republic "there's no other way."

In Washington state — where Democratic Gov. Chris Gregoire also has said a tax hike is likely to be part of the budget equation, despite campaigning in 2008 on a pledge not to do so — lawmakers this week removed a key obstacle to raising taxes. The Democratic-controlled Legislature suspended a portion of a voter-approved initiative that requires a two-thirds majority to raise taxes, The Seattle Times reported .

Under state law, the Legislature can change voter-passed initiatives with a simple majority after two years, The Times said. The initiative in question — supported by Tim Eyman, the state's prominent anti-tax activist — passed in 2007. Majority Democrats have said they will raise taxes in order to avoid deep cuts to social services, though the exact form of those tax hikes remains unclear.

In Pennsylvania, where Democratic Gov. Ed Rendell last year failed to win support for a 16-percent personal income tax hike, his budget proposal for the coming fiscal year calls for an elimination of sales-tax exemptions on dozens of goods and services, the Pittsburgh Post-Gazette reported .

While Rendell's plan would lower the state's basic 6-percent sales tax to 4 percent, it would apply the levy to a broad range of goods and services that are currently untaxed. According to the Post-Gazette , those products include candy, gum, newspapers, magazines, personal hygiene items, firewood, flags and dry cleaning. Rendell estimated that the changes would raise an extra $531 million in the first year, money he said the state desperately needs as the federal stimulus runs out.

Rendell's budget also calls for a new tax on natural gas extracted from Pennsylvania's expansive Marcellus shale, the Post-Gazette reported.