- The Washington Times - Monday, September 28, 2009

State and local governments are raising taxes and inventing new ones as they scramble to balance their budgets even as the nation’s economy begins to emerge from the deepest recession in seven decades.

State budgets typically take a year or two to reflect improvements in the national economy, the National Association of State Budget Officers and the National Governors Association explained in its latest fiscal survey of states. The report warned that “state fiscal conditions will remain weak in fiscal 2010 and likely into fiscal years 2011 and 2012.”

So, brace yourselves for a deluge of nuisance taxes, sin taxes and “fees,” limited only by the imagination of revenue-starved governors, mayors and legislators.

Raising fees and nuisance taxes amounts to nothing more than “tax adventurism,” said Jonathan Williams of the American Legislative Exchange Council, a nonpartisan organization of state legislators.

Governors and legislators “often raise taxes and increase fees during tough budget times before resorting to hiking broad-based income and sales taxes,” said Mr. Williams, who co-authored the recent book, “Rich States, Poor States.”

Frequently, the targets are out-of-state visitors who find themselves paying higher car-rental taxes and hotel taxes, as they will in Orlando, Fla., Nevada and Hawaii, Mr. Williams said.

The Internet is also becoming a bigger target. New York recently implemented an “Amazon tax,” which will require small businesses to charge sales taxes for goods they sell over the Internet.

Cameras catching speeders and red-light crashers have become more ubiquitous in Montgomery County and the District of Columbia since the recession began in late 2007. Turnpike and bridge tolls have also been rising across the nation. The car toll for the Golden Gate Bridge in San Francisco, for example, jumped 20 percent to $6 last September.

Even “man’s best friend” could not escape the clutches of revenue raisers in Massachusetts. The Democrat-dominated legislature there slapped a $3 state surcharge on municipal licensing fees that dog owners must pay for their pets. Angry Republicans immediately dubbed the bill “Toby’s Law” in honor of Democratic Gov. Deval Patrick’s Labrador retriever.

The costs of getting married — or divorced — are also rising in some jurisdictions.

If the Pennsylvania House gets its way, the state marriage license fee will jump from $3 to $28. The additional revenue from this “marriage tax” will finance domestic programs by the Department of Public Welfare, prompting supporters to declare that one staunch opponent of the increase “clearly has a problem with preventing domestic violence in Pennsylvania.”

In Iowa, the cost of a divorce increased to $100 after the state legislature doubled court fees for filing divorce papers.

States and localities are raising or introducing various sin taxes and fees because revenue streams from other sources are shrinking.

Obviously, as unemployment soared and consumer spending declined during the recession, revenue from income and sales taxes plunged across the country. But these revenues traditionally plummet during economic downturns. Many states responded by raising their income- and sales-tax rates.

However, for the first time, state and local revenues from gambling — impervious to previous recessions — fell during fiscal 2009, according to a recent report by the Rockefeller Institute of Government, which conducts independent research on state and local governments.

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