It's taxing time for states as drive to limit levies slows
Would-be tax choppers have fallen on hard times. The wallet-relief revolution spurred by California's Proposition 13 appears to be over for now, and movement is increasingly in the opposite direction.
None of the states that either cut or clamped a lid on property taxes during the past half decade or so are about to abandon the measures. But most, faced with major money needs, are hard at work hiking other levies. So, too, are many state, county, and local governments across the nation.
Since January, for example, at least 26 states have raised one or more taxes or extended or made permanent so-called temporary increases initiated in the last two years. Already 1983 tax-hike action has topped last year's record.
As of Monday, the fifth anniversary of California's overwhelming voter approval of Proposition 13 property tax rollback law, 1983 levy hike measures enacted include:
* Personal income tax increases or extensions in eight states.
* Temporary or permanent boosts in sales tax rates in nine states.
* New or hiked business taxes in eight states.
* Gasoline tax increases in 13 states, with a similar measure awaiting gubernatorial action in a 14th.
* Cigarette tax increases in six states and extension of a temporary boost in a seventh.
* New or increased severance taxes on natural gas, oil, or coal depletion in three states.
* Liquor tax boosts in four states.
Increased revenue from this action is expected to top $3.5 billion. Some close to the scene suggest that by year's end the measures passed and those pending could swell state government coffers by $5 billion.
Noting that ''this has been one of the busiest tax years ever,'' John Gambill of the Federation of State Tax Administrators says the increased burdens on states stemming from the recession and cuts in federal funds for various programs has forced lawmakers to raise taxes.
Property tax rollbacks or even ceilings have forced municipalities and counties to lean more and more on states to underwrite local government programs , observes Michael Lawson of the Advisory Committee on Intergovernmental Relations (ACIR).
Various state and local levy or spending curbs now on the books in nearly half of the states have for the most part been ineffective.
''In terms of significant reductions outside of California and Massachusetts, there has been little real movement,'' concludes Robert Schleck of Tax Foundation Inc.
Steven Gold of the National Conference of State Legislatures, who has analyzed the impact of tax reduction and limitation measures, says they are ''often ineffective because of loopholes'' or because any restrictions can be relaxed or set aside by lawmakers.
He notes that property tax controls ''are much older than Proposition 13, some efforts in that direction dating back to before Wor d War I.
''Limits on state spending and taxing are much newer,'' Dr. Gold explains, suggesting that ''down the road a ways there could be some reversals'' in such restrictive legislation.
Many of the newly approved state tax boosts, including several temporary ones , are intended to head off threatened budget deficits for fiscal 1983, the 12 -month spending cycle that for most states ends June 30. The rest are aimed at providing additional dollars to make it through fiscal 1984 in the black.
Last December it appeared that over half the states were heading for fiscal 1983 deficits. Most, however, have through budget reductions, tax increases, and plans to postpone payments of certain obligations until after July 1, brought accounts into balance.
Despite the property tax reductions or lids imposed in California, Idaho, and Massachusetts between 1978 and 1980, the yield from such levies nationwide increased 14 percent last year, from $76.3 billion to $86.8 billion. Meanwhile, the intake from all local taxes, including those on property, grew by only 12.5 percent.
By contrast, state taxes produced an even more modest revenue gain of 4.8 percent, the ACIR's Bob Cline observes.
The growth in property tax yield, he points out, stems not only from higher rates in some places but also from expanded tax rolls through new construction.
Nebraska officials this week are expected to approve a nine-month increase in the sales tax from 3.5 percent to 4 percent, a boost in the personal income tax from 18 percent to 21 percent, and perhaps a hike in the corporate income tax.
Illinois lawmakers, whose legislative session is in its final month, are weighing a major revenue package filed by Republican Gov. James R. Thompson. Included are hikes in state personal income, liquor, and gasoline taxes.
Legislators in Wisconsin are considering a $950 million tax-boost program filed by Democratic Gov. Anthony Earl. The pending measure embraces a 5 percent boost in the personal income tax.
Also proposed is a rise in the corporation tax from 7.9 percent to 8.7 percent and temporarily a surcharge of 10 percent on both the personal income and business levies.
Earlier this year lawmakers there made permanent a 1982 temporary increase in the sales tax from 4 percent to 5 percent and cigarette tax increase from 20 to 25 cents a pack.
Massachusetts legislators, who in late March enacted a levy placing an 11 -cent-a-gallon floor on the gasoline tax, now are advancing approval to a 4 -cent-a-pack hike in the cigarette tax, proposed by Democratic Gov. Michael S. Dukakis.
Besides increasing levies, including user fees, several states in recent months have either set aside temporarily or decided to postpone tax restriction measures.
Colorado, for example, has dropped for the next two years an indexing plan under which the income tax is tied to the cost of living.
States hiking their personal income taxes so far this year include Michigan, New Mexico, North Dakota, Ohio, Rhode Island, Vermont, and West Virginia.
Permanent sales tax boosts went on the books in Idaho, Iowa, New Mexico, North Dakota, and Washington; temporary hikes gained approval in Arizona, Colorado, and Utah; and a standby increase, if needed next fall or winter, was enacted in California.
Corporate income or other business taxes of various types were raised in Idaho, New Mexico, New York, Ohio, Rhode Island, Utah, Washington, and West Virginia.
Gasoline tax increases were approved in Connecticut, Florida, Idaho, Kansas, Maine, Massachusetts, Minnesota, Montana, North Dakota, Rhode Island, Vermont, Washington, and West Virginia.
New cigarette taxes increased since January came in Arkansas, Kansas, Montana , Nevada, New York, and North Dakota.
Liquor tax hikes were approved in Arkansas, New Mexico, New York, and Utah.
Alabama, Kansas, and New Mexico have in recent months boosted or imposed new severance taxes on natural gas, oil, or coal depletions.