- The Washington Times - Monday, June 16, 2003

Fines, fees, surcharges, taxes: Whatever you call it, the bottom line is that cash-strapped states are seeking billions of new dollars from their residents.

An analysis of budget plans in all 50 states found that many are trying to target their tax boosts or increase fees, allowing politicians to say they did not raise income taxes.

The targets: smokers, drinkers, gamblers, drivers and traffic offenders, and businesses small and large.

“I don’t think they have much sympathy for me,” said Pete Giannopoulos, a brew pub owner in Phoenixville, Pa., who could see beer taxes triple.

In the 21 states with budgets signed into law for the fiscal year that begins in July, people will pay $4.3 billion in new taxes and $2.3 billion in new fees.

An additional $14 billion in proposed taxes and $2.4 billion in proposed fees remain on the table in 29 states, including some of the most expensive proposals in states such as California, Connecticut and Pennsylvania. In 10 of those states, legislatures have passed spending plans, but governors have not yet signed them.

The increases are chipping away at the $35.7 billion in state taxes cut during the 1990s. Since the economy went sour, states raised $9.1 billion in new taxes; this year, more than twice that — $18.3 billion in new and proposed taxes — is possible.

In Maryland, property taxes went up by $48 on a $100,000 home to cover a bond fund raided to balance the state budget. Republican Gov. Robert L. Ehrlich Jr. vowed to put the money back next year and reverse the increase.

Virginia raised more than $8 million without raising taxes by increasing costs for state parks, driver’s licenses, court filings and fees paid by drug offenders.

Governors and legislators say they raised taxes and fees reluctantly. Budget problems were too severe to be solved by spending cuts alone.

“Nobody ever likes any tax,” said Pennsylvania Gov. Edward G. Rendell, a Democrat. But he vowed during his campaign last year to tackle the state’s tax system, which he says underfunds schools.

He proposed a sweeping restructuring that would raise income taxes and cut property taxes. Mr. Rendell said the state would thrive with stronger education and business opportunities, while the wealthy would pay more and the middle class slightly more.

“You have no choice,” he said. “Any revenue-raising item, you’re going to tick people off.” That includes members of the Republican-controlled legislature, where Mr. Rendell faces a challenge in getting his budget approved.

Much work remains in 18 other states, where lawmakers are also looking at service cuts, usually before they resort to taxes, to fill their states’ financial holes.

“Sin taxes” — on cigarettes, beer and gambling — are the most popular targeted tax. About $1.5 billion in sin taxes is being considered nationwide, with $455 million passed into law.

Broad-based taxes — income, sales and property taxes — bring in the most new revenue simply because they affect nearly everyone.

But broad-based taxes make people angry. In many states, fees are the choice.

Massachusetts’ Gov. Mitt Romney, a Republican, relied heavily on fees in his spending plan. One proposal would charge blind people $10 for a certificate of blindness so they could access state services.

“The injustice of it, of course, is that the wealthy have benefited greatly from tax cuts,” said Bob Hachey, blind since birth and a member of the Bay State Council of the Blind. “And here they are trying to charge little fees on the poorer folks.”

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