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State Tax Update Archive
[2003 - 2004] [2002 and Older]

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Volume 8, Issue 4

Alaska Income Tax? HECK NO!!
A seven-member subcommittee of the Fiscal Policy Caucus began meetings 2/27/02 to plan a 4% state income tax (costing taxpayers $350 million/year), use Permanent Fund revenues, hike the alcoholic drink tax by $0.10 (costing $30 million/year), discuss a cruise ship $30 head tax, increase the motor fuel tax, and increase contributions from the oil and gas industry. Senate President Rick Halford and Finance Co-Chairman Dave Donley said broad-based taxes will not pass the Senate (Anchorage Daily News, 2/28/02).


By Wednesday night, the $30 cruise ship head tax was added to a tax increase package including the 4% income tax by the fiscal caucus subcommittee. The income tax proposal includes "triggers" that would reduce the tax to 2% and then 1% depending upon how revenue collection responds in future years. The subcommittee also accepted and recommended a new means of calculating dividend checks from oil revenues so that the state absorbs more revenue and taxpayers take home less, and the dime-per-drink tax that would cost taxpayers $30 million/year. The total estimated cost to taxpayers by 2004 is $1.352 billion, more than enough to fill the projected $1.1 billion spending shortfall (Juneau Empire, 2/28/02).

Gov. Rowland Breaks Pledge to Connecticut Taxpayers
At 2:00 a.m. on the morning of 2/28/02, the state House passed 75-67 a cigarette tax increase of 61 cents. The Senate passed an identical increase late 2/27/02, 24-10, and Governor Rowland is expected to sign the tax into law. The cigarette tax increase is the first major tax increase of any kind to pass in CT in seven years; the increase more than doubles the current per-pack tax in CT, making Connecticut's the nation's third largest cigarette tax (The Hartford Courant, 2/28/02). Gov. John Rowland signed the 61-cent per-pack cigarette tax increase into law at 3:30 p.m. on 2/28/02, breaking his pledge to taxpayers that he would "oppose and vote against any and all efforts to increase taxes." Gov. Rowland signed the pledge 2/19/02 (The Hartford Courant, 3/1/02).

Minnesota Legislature Overrides Governor's Veto
Both the House and the Senate voted to override Gov. Jesse Ventura's veto of a budget late this week with almost no debate and without consulting the Governor. The budget includes $374 million in permanent spending cuts and $1.5 billion from budget reserves and special funds. But to balance the budget just through 2003, lawmakers still must cut $440 million in spending or further tap reserves, necessitating a second round of negotiations (Pioneer Press, 3/1/02).

New York State Budget Almost Never Passes On Time
Republicans in the State Assembly's minority support a plan to require an Assembly-Senate committee rather than the closed-door negotiations policy that takes effect when the Governor and legislative leaders fail to pass a budget within 60 days of the April 1 deadline. Republicans in the Assembly also support using the previous year's budget if negotiations last longer than 60 days. The Governor and the Legislature have missed the April 1 deadline 27 times since 1974 (Times Union, 3/1/02).

Good News for Oklahoma Shoppers!
The state Senate approved 2/27/02 a sales tax holiday for back-to-school shoppers, meant to compete with a Texas holiday that drives many Oklahomans across the border. The Oklahoma version is identical to the Texas version, both of which relieve taxpayers of paying the state sales tax on items costing less than $100 for three days the first weekend in August. The Texas holiday has occurred every year on the same first weekend in August since 1999 (The Oklahoman, 3/1/02).

Virginia Regional Sales Tax Referendum
Both the Senate and the House of Delegates included almost identical language to allow the Northern Virginia 0.5% sales tax increase referendum to appear on the November ballot, costing taxpayers $350 million/year. But the Senate and the House sharply disagree on education spending, stalling any movement on the referendum. Both Houses approved a local referendum authority for southeaster Hampton Roads county to increase their local sales taxes by 1 penny (Washington Post, 2/27/02).

Good News for West Virginian Shoppers, Too!
Gov. Bob Wise's sales tax holiday plan passed unanimously through the House of Delegates 2/28/02. The three-day holiday will occur the first week in August on items costing less than $100, and was approved for just one year (Charleston Gazette, 3/1/02).