State Tax Update Archive
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Volume 7, Issue 16

Arkansas Governor Announces Budget Cuts
Gov. Mike Huckabee (R) announced 11/14/01 that he proposes cutting $143 million from this year's budget, and $160 million from next year's, to address the state's budget shortfall. Gov. Huckabee blamed the shortfall on the economic implications of the 9/11 terrorist attacks, although legislators have warned him for at least a year that his original projection of 5.1% state growth was far too rosy. To his credit, Gov. Huckabee ruled out tax increases to solve the budget shortfall: "What we will not do is propose raising taxes," Huckabee said 11/14/01. "Asking Arkansas families who are already wounded from a hurting economy to pay even more in taxes - that would be like asking a bleeding friend to donate a pint of blood" (Arkansas Democrat-Gazette, 11/15/01).

Connecticut Special Session Already Getting Ugly
A 2.5% spending shortfall in the state budget brought lawmakers back to Hartford on 11/13/01 for a special session. Democrats in the state House and Senate propose a combination of spending cuts, long-term borrowing, and a delay phasing out the death tax to resolve the shortfall. Governor John Rowland (R), who signed ATR's Taxpayer Protection Pledge 2/19/99, expressed disgust for the Democratic proposal. His budget chief, Marc Ryan, said that only $16 million of the Democrats' proposed cuts are "structural, ongoing cuts." A better option, Ryan said, is for Rowland to limit the spending of last year's surplus on planned capital projects (Hartford Courant, 11/15/01).

Illinois Drains Rainy Day Fund
Comptroller Dan Hynes drained the state's $226 million rainy day fund to help fill a budget gap of $700 million so far this fiscal year. Meanwhile, Governor George Ryan encouraged state lawmakers to approve $17 million in homeland security spending, and the Governor may increase spending requests by an additional $13 million in the spring. Gov. Ryan signed the Taxpayer Protection Pledge 4/15/98.

Massachusetts Lawmakers Abandon Tax Increase Ideas
In the last days of the legislative session, state legislators are working to close a $1.4 billion budget shortfall without raising taxes. By the time they vote on the budget on 11/21/01, lawmakers will have made an anticipated $650 million in cuts, tapped $700 million in reserve funds, and spent $50 million from state tobacco settlement funds, according to legislative sources. Acting Governor Swift, who signed the Taxpayer Protection Pledge 4/18/01, will likely veto various line items proposed in the budget. The budget is already 138 days late this year.

Ohio Senate Leads the Fight for Taxpayers
Senate Republicans were accused of being "fiscally irresponsible" by Governor Bob Taft (R) on 11/14/01 for their efforts to pass a budget including a 2% cut to most state agencies. Ohio faces a budget shortfall of $1.495 billion by June 2003. The state Senate passed their version of the budget 11/14/01, S.B. 405, including $1.34 billion in budget-balancing provisions and $170 million in tax increases. The state House version includes over twice as many tax increases as the Senate version, while the Governor's preference includes $465 million in tax increases. Senate President Richard H. Finan said 11/14/01, "I think it takes guts for the Senate to stand up for the taxpayers. You can't tell me there's a cabinet agency in this state that can't take a 2% cut," (Columbus Dispatch, 11/15/01).

South Dakota Task Force Approves SSTP
A task force comprised of legislators, business officials, and local leaders endorsed the Simplified Sales Tax Project (SSTP) on 11/14/01. SSTP is an interstate tax cartel working to "study" Internet taxation. Taxpayers will save $67 million per year (2006 estimate) by not paying Internet taxes. The task force also expressed support for making local taxes uniform. Uniformity would raise the tax on farm equipment and force localities to extend the sales tax to groceries.

Virginia Governor Will Freeze Car Tax Phase-Out
Gov. Jim Gilmore (R) announced 11/15/01 that Virginia cannot afford to eliminate the car tax next year, the final step in the planned phase-out of the tax. Already, Gov. Gilmore has cut 70% of the tax, saving taxpayers $1.15 billion.

Secretary of Defense Donald Rumsfeld is named Hero of the Taxpayer for the month of November for encouraging Congress to vote for a defense authorization bill including base closings. State Rep. Dick Brown (SD-R-14) is named Enemy for chairing the SSTP study group in South Dakota, and supporting Internet taxes.