The President\’s Jobs and Growth tax bill contained $20 billion of aid to cash-strapped states. This money should be used to forego planned tax hikes in those states.
WASHINGTON – When President Bush signed into law the $350 billion Jobs and Growth plan he had pushed through Congress, state governments got a serious helping hand from the federal government. The President\’s plan contained $20 billion of direct assistance to state governments to help them get through their current budget difficulties.
The state aid was meant to help states balance their budgets without resorting to tax increases – higher taxes at the state level could offset the economic advantages from the President\’s tax cuts. But Gov. Kenny Guinn of Nevada, Gov. Jim McGreevey of New Jersey, Gov. Ed Rendell of Pennsylvania, Gov. Janet Napolitano of Arizona, Gov. Ruth Ann Minner of Delaware, Gov. Dirk Kempthorne of Idaho, Gov. Bob Holden of Missouri and others seem ready to go ahead with their massive tax increases unchanged.
"Is this $20 billion just a payoff to state governors, or is it a genuine attempt to relieve struggling states?" asked taxpayer advocate Grover Norquist, president of Americans for Tax Reform. "If state leaders continue with planned tax hikes and spend their federal assistance on other things, it will demonstrate clearly where their priorities lie. In addition, tax increases in the states would be the worst policy choice for state leaders. The Bush tax cuts are meant to get the economy moving again, but a state tax hike could negate the benefits of the tax cut within that state."
The dollar amounts that states will be receiving are based on population and are quite high – California will get $2.39 billion, New York will get $2.04 billion, Ohio will get $769 million, Illinois $780 million, Oregon $242 million and Washington State $401 million.
"For those states that have made the tough choices and have balanced their budgets WITHOUT tax hikes, they should use their federal assistance to cut taxes, rather than spending the money on unnecessary projects just because more money appeared," continued Norquist.
"Taxpayers must hold their state leaders\’ feet to the fire. States should reduce proposed tax increases, dollar for dollar, by the amount of federal assistance they receive."