States are poised to pass as much as $24 billion in tax and fee hikes in coming weeks, as they try to balance their budgets without drastically reducing spending, a report released Thursday found.
The recession has caused tax collections to plummet. State officials are scrambling to close last-minute budget gaps that opened after April tax revenues came in below already-lowered estimates. States may be forced to impose even more stringent spending cuts to balance their budgets before their fiscal years end on June 30.
Governors’ proposed budgets for fiscal year 2010 show a 2.5% decrease in general fund spending, which comes after an estimated 2.2% decline in the current fiscal year. State spending usually rises 6% a year.
They don’t get it do they. If you lose a wage earner in your household, would you reduce your spending by more than 2.5%?
Tax hikes abound – California, which is trying to close a $21.3 billion budget gap, accounts for $11.3 billion of the hikes. Illinois makes up another $4.4 billion, while New York is proposing $4 billion in additional levies.
Hikes in personal income taxes account for $8.8 billion, while sales taxes are set to rise $6.5 billion. Higher cigarette taxes would bring in $1.5 billion, while corporate taxes would rise $539 million.
State officials are searching for ways to rape the citizenry at a time when tax collections are falling off a cliff. Corporate income tax revenue is expected to be down 15.2%, personal income down 6.6% and sales tax down 3.2%.
28 states have proposed cutting spending on higher education and personnel, while 27 want to reduce funding for K-12 education. Another 25 states have proposed cuts to Medicaid and corrections, while 23 are reducing funds for public assistance.