House passed 1.5% cut ($18.7 million) from operating budget 3/5/02. The House\’s version of the revised budget does not contain the 3% raise that Gov. Don Siegelman had proposed for 35,000 state workers. "There won\’t be room there for growth to additional services, but there\’s enough room to maintain the same level of services we have at the present time," said Rep. John Knight (D-Montgomery), chair of the House Ways and Means Committee (The Birmingham News, 3/6/02).

Subcommittees in the House began cutting agency budgets this week in preparation for the House Finance Committee\’s revised version of the budget. The House natural resources subcommittee, for example, cut $1 million from the state parks division. Other agencies slated for cuts include the restaurant inspection program and the state Division of Subsistence (Fairbanks Daily News-Minor, 3/7/02).

Gov. Jane Hull threatened to veto a state employee pay hike 3/5/02 if legislators won\’t reduce and delay the raises. The Senate has not agreed to the pay hike, but if they vote to approve the House version of the revised budget (which includes the hike), Gov. Hull has promised to veto even the smallest pay increases (Arizona Republic, 3/6/02).

Gov. Bill Owens and the Joint Budget Committee are at odds over the budget. Gov. Owens vetoed part of the JBC\’s plan to deal with the 2001-02 budget shortfall because he favors a guaranteed fund for transportation, while the JBC supports transferring funds from various sources to protect next year\’s spending level. House Speaker Doug Dean is rumored to be considering the removal of Reps. Brad Young and Gayle Berry because they did not work out a compromise with the Governor to resolve budget difficulties. Both Representatives are members of the JBC, and Rep. Young is chairman of the committee (Denver Post, 3/7/02).

The House voted 3/5/02 to pass a no-tax-increase revised state budget totaling $48 billion. The Senate will begin budget revision debate 3/7/02, and will likely include the elimination of $878 million in sales tax exemptions as part of its version. Both the House and Gov. Jeb Bush consider the elimination of the exemptions proposed by Senate President John McKay a tax increase (Orlando Sentinel, 3/6/02). Senate Majority Leader Jim King broke ranks with Senate President John McKay by announcing his opposition to McKay\’s plan. King\’s announcement was a big win for Gov. Jeb Bush, who leads the opposition to McKay\’s plan (St. Petersburg Times, 3/7/02).

The Democrat-controlled Senate will likely pass a number of tax increases 3/6/02, despite dissent from the three Republican Senators. Tax increases, or new taxes proposed, include marriage, burial, liquor, airline passenger travel, driver education, and long-term health care taxes (Star Bulletin, 3/5/02). The House passed a $100 million plan to tap the Hurricane Relief Fund to plug the state\’s spending shortfall 3/5/02 (The Honolulu Advertiser, 3/5/02).

Gov. Vilsack released a revised budget proposal 3/7/02 including an additional 3% cut to some state agencies, saving $14.2 million. State agencies were cut 4.3% across-the-board in November, and 1% in February to make up for a projected spending shortfall of $132.5 million this year (Des Moines Register, 3/7/02).

Senate and House lawmakers are still trying to forge a compromise on H.B. 1004, a massive bill to revise the state budget to account for a spending shortfall. Both the House and the Senate plans increase the sales tax by 1% for a new total of 6%, both increase gambling and cigarette taxes, and both increase some business taxes in order to cut others, like reducing or eliminating the inventory tax. The Senate plan, however, includes more property tax relief than the House version, but raises the income tax. The House plan shifts half of the school funding responsibility from property taxpayers to the state, while the Senate version shifts total responsibility from property taxpayers to the state. The Senate plan attempts to restructure taxes, while the House plan increases cigarette and gambling taxes (Indianapolis Star, 3/7/02).

H.B. 677 would increase by 32% the gross receipts tax on wholesale sales of smokeless tobacco, cigars, loose tobacco, pipe tobacco, and would increase the per-pack cigarette tax by $0.44. The tax increases are slated to fund a children\’s dental care fund. H.B. 677 resides in the Joint Committee on Revenue and Appropriations (3/7/02). Both Gov. Paul Patton and Senate President David Williams said that a revenue-neutral tax reform plan is a possibility this session, although Gov. Patton entertained the idea of calling a special session to work through the details. But Sen. Williams also voiced support for tax reform that would produce more revenue for the state in future years. The Governor proposed similar tax reform two years ago but the proposal died in the Senate when it was discovered to contain tax increases (The Courier-Journal, 3/7/02).

Rep. Vic Stelly (R-Lake Charles) filed H.B. 18 for the 4/18/02 fiscal session to end a two-year-old tax break on federal itemized deductions. Currently, taxpayers can claim a 50% tax deduction on "excess itemized deductions."

Gov. Parris Glendening proposed delaying the last phase of income tax rollback, costing the average family $75 per year, and raking in $177 million more for state revenue coffers. A broad coalition of left-leaning groups like the Mental Health Association of Maryland, the NAACP, the League of Women Voters, and the Archdiocese of Washington support delaying the scheduled rollback. House Speaker Casper Taylor, Jr. and Senate President Thomas Miller, Jr. support the rollback, however (The Baltimore Sun, 3/7/02).

Republicans in the Senate favor spending $155 million in reserve funds, $219 million from tobacco settlement funds, and $65 million from a construction subsidy fund, rather than increase taxes as Gov. Jesse Ventura has proposed (Pioneer Press, 3/7/02).

Toby McAdam, a taxpayer activist from Livingston, unveiled three constitutional initiatives 3/5/02. The first, I-87, would create a 3% statewide sales tax, a 1% optional county sales tax, a 1% optional city sales tax, and a temporary 1% optional sales tax for cities and counties to adopt for special project funding. In trade, I-87 would eliminate the state income, corporate, inheritance, property, and accommodations taxes. McAdam estimates that resulting tax relief would total $2 billion. I-87 also would require voter approval for any sales tax increase. Second, McAdam proposed I-88 which would reduce the fuel tax from 21 cents per gallon to 18 cents, and create a mandate for public vote over any proposed increase. Third, McAdam proposed I-89, which would lower the state\’s cap on the sales tax by 1%. The 3% resulting cap would be called the "McAdam flat-transaction tax." McAdam must collect 60,000 signatures on each of the three constitutional initiatives for them to appear on the ballot (Billings Gazette, 3/7/02).

New Hampshire
The House voted 3/5/02 to repeal the statewide property tax beginning in 2004, with the intention of putting pressure on the next Legislature to restructure the funding of state education. The property tax passed three years ago as a temporary school funding fix, and the Legislature made it permanent last June rather than allowing the 2003 expiration date to pass. The state Supreme Court ruled in 1997 that the state must reform public school spending (Foster\’s Daily Democrat, 3/7/02).

New Mexico
Gov. Gary Johnson vetoed the Legislature\’s budget 3/6/02, which would have cost taxpayers $3.9 billion, $80 million more than Gov. Johnson said the state can afford (Albuquerque Tribune, 3/7/02).

The House passed a 1% property tax increase 3/6/02 modeled on I-747 in Washington state; the bill caps the amount that maybe levied per year to 1%, and limits the amount of money in total that may be levied in taxes.

Rhode Island
Gov. Lincoln Almond supports a plan to sell the rights to decades-worth of tobacco settlement funds in exchange for $600 million in immediate cash. A similar plan passed in Wisconsin and 7 other states last year. Gov. Almond proposed using these funds to plug the state\’s $278 million budget shortfall and to spend on other programs (Providence Journal, 3/7/02).

A plan offered in the Senate would create a 2% gross receipts tax on services like health care and cost taxpayers $1.25 billion. Another plan would raise the state sales tax to 4.25% and extend the tax to services and exempt goods. The 2% gross receipts tax on services is the most likely to pass, and will be considered by the Senate Finance Committee 3/12/02 (Tennessean, 3/7/02).

A $50 billion budget seems all but ready to pass, legislators in the House and Senate finally coming to agreement 3/5/02. The car tax phase-out was frozen at 70% in the budget. The regional sales tax referendum was defeated again in a House-Senate joint panel. "At this late date in the session, we are nowhere near consensus," said Delegate Jack Rollison III, a member of the joint committee, in response to the referendum issue (Washington Post, 3/7/02).