State legislators debate pros, cons of user fees as revenue source
A growing number of revenue-hungry state and local governments are considering new or increased user fees rather than tax boosts. But by no means is there any consensus taking shape yet.Skip to next paragraph
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Among state lawmakers there is little agreement as to either the potential or the soundness of the user-fee funding approach, where the public is charged for the use of services or facilities. These can include everything from road tolls to state university tuition charges.
To sit in on the ninth annual convention of the National Conference of State Legislators (NCSL) this week was to listen to considerable concern over the need for improved public services and for replacing worn-out roads, bridges, sewers, and water lines.
Few legislators view user charges as ''a panacea.'' Some suggest that it is a ''fairer way'' than taxes to finance certain programs, especially those that benefit only certain segments of the public.
Some legislators and others close to the state and municipal fiscal scene say that user charges are particularly attractive where large sums are at stake. Mark Ferber of the investment firm of Kidder Peabody & Co. suggests funds be earmarked for a specific need rather than dropped into the general fund, where their use is entirely at the discretion of public officials.
Mr. Ferber, a former aide to the Massachusetts Senate Ways and Means Committee, says funds produced through user fees could often be best used for organizational changes prompted by expansion rather than for day-to-day operations of an agency or program.
Some others are considerably less enthusiastic about the equity of financing more and more government programs through user charges. They warn that such levies tend to ''put a disproportionate chunk of the funding load on the poor and middle class.''
New Jersey Assembly Speaker Alan J. Karcher challenges the suggestion that the user fee is an efficient, fair, and people-popular approach. User charges, he says, cannot be deducted from federal income taxes, like personal property taxes can. Thus in the long run it is more expensive ''for those who can least afford it.''
The New Jersey legislator concedes that in some instances user fees make sense, such as when the funds are raised for a purpose that will benefit the public as a whole.
Illinois state Sen. Dawn Clark Netsch doubts that state governments will move quickly in the user-fee direction. Especially distasteful, even to many pro-user-fee lawmakers, is the possibility of tuition boosts for state universities and colleges.