Even as Republican lawmakers in Washington, D.C., pass tax cut after tax cut, many GOP governors are proposing and signing into law major state tax increases.
These governors, a group that includes Alabama Gov. Bob Riley, Idaho Gov. Dirk Kempthorne, Arkansas Gov. Mike Huckabee, Ohio Gov. Bob Taft and Nevada Gov. Kenny Guinn, are turning to tax increases to close state budget deficits that threaten to curtail health care for low-income workers, close state parks and eliminate jobs of state troopers.
In order to get their proposals passed, these governors must buck their own anti-tax histories as well as the fierce opposition of longtime conservative allies. In doing so, one analyst suggested the Republicans are using a strategy mastered by the unlikeliest of GOP role models, President Bill Clinton, a politician who was ever adept at playing off foes in an attempt to hold the political center.
"Bill Clinton was a master of that in his eight years as president. I think a lot of people are using his political playbook out in the state capitols," said Chris Atkins, a fiscal analyst for the right-leaning American Legislative Exchange Council.
Atkins said Riley's proposal to increase Alabama's income and property taxes by $1.2 billion is the year's best example of Clinton-like political maneuvering.
"Bob Riley is a great example. Someone who was very adamant against tax increases [when serving in the U.S. Congress]. But when he gets in the governor's office. . .he proposed one of the largest state tax increases out there this year," Atkins told Stateline.org.
Riley made his case for tax increases May 19 in a live address to a statewide audience, saying that despite his own anti-tax history he believes raising more revenue is the best way to improve life in Alabama.
"I have spent most of my life fighting higher taxes. While in Congress, I always voted against tax increases because I know the hardships they place on a family and on a business. No one wants to raise taxes - especially me. And I don't like being forced to do it now - but I believe we have no other choice," Riley said.
If enacted, Riley's plan would slash income taxes for Alabama's poorest citizens while raising income taxes on its richest. It also would raise property taxes on most Alabamans. The tax hikes are tied to changes in education, such as the implementation of performance-based contracting for administrators and a college scholarship program for top students.
Legislators approved Riley's tax plan earlier this month and sent it to voters for a Sept. 9 statewide referendum.
Of all the Republican governors' tax proposals, Riley's is perhaps the most ambitious, because it would raise revenue far beyond what is needed to close the state's deficit, with the extra money slated to fund new education programs. But Riley's tax plan is far from the only eye-catching tax development among GOP governors.
Earlier this year, Idaho's Kempthorne signed into law a one cent increase in the state sales tax and a 29-cent increase in the state cigarette tax. A self-styled fiscal conservative who claims to have cut taxes 49 times as governor, Kempthorne said that too many Idahoans would have been hurt if the state did not find new sources of revenue.
"Cutting taxes is in my blood. But I found myself confronted with a serious dilemma raise taxes or seriously cut education. Raise taxes or release inmates. Raise taxes or cut thousands of senior citizens, veterans, pregnant women, children and disabled Idahoans from receiving the health care they need. So, I stood before a joint session of the Idaho Legislature and I proposed a tax increase," Kempthorne said in a recent speech.
Kempthorne's tax proposals rocked Idaho legislators, many of whom favor more cuts. The ensuing standoff led to the longest legislative session in Idaho history, one that adjourned only after legislators reached a compromise on scaled-back versions of the governor's proposed tax increases.
Ohio's Taft is expected to sign a budget that raises the state sales tax by one cent while expanding the tax to cover previously un-taxed items, such as renting storage lockers, towing cars and dry-cleaning clothes. Legislators balked, however, at Taft's more ambitious proposals, which included expanding the sales tax to cover many more services and closing tax loopholes that allow corporations to shift revenues out of Ohio to avoid corporate income taxes.
Nevada's Guinn proposed in January to raise taxes by $1 billion, including increases in property taxes, corporate filing fees, cigarette and gambling taxes, and the creation of an admissions and amusements tax. But the legislature has yet to reach a consensus on most of Guinn's tax proposals, leading to a second special legislative session that began Wednesday (6/25).
Arkansas' Huckabee proposed last winter to raise the 5.125-cent state sales tax by 5/8 of a cent to 5.75 cents. He said recently he would even consider a 1-cent increase if the funds were tied to education reform. Arkansas is under court order to change the way it funds K-12 education. Huckabee recently signed into law a 25-cent increase in the state cigarette tax, raising it from 34 cents to 59 cents per pack.
Other Republican governors approving tax increases include: Alaska Gov. Frank Murkowski (car rental tax), Connecticut Gov. John Rowland (income, cigarette and sales tax), Georgia Gov. Sonny Perdue (cigarette tax), Maryland Gov. Bob Ehrlich (property tax), South Dakota Gov. Mike Rounds (cigarette tax) and Utah Gov. Mike Leavitt (beer tax).
Nick Johnson, a fiscal analyst at the left-leaning Center on Budget and Policy Priorities in Washington, D.C., told Stateline.org that he is not at all surprised Republican governors are raising taxes, because the revenue situation in the states is bad enough that many of them have little choice.
"I think it illustrates what the data were telling us anyway about the severity of the revenue decline. And I think it's consistent with what happened in the early 1990's when most states raised taxes. Given the fact that revenue decline has been greater this time around, I'm not surprised that governors and legislators are looking at tax increases this time too," he said.