The next big tax battles: state by state

As voters and pundits focus on the inexorable winnowing to select a president, another national political effort could determine the ability of governors and state lawmakers to manage their finances. In the end, this could have as much impact on individual Americans as whoever occupies the White House next year.

Secure in the knowledge that President Bush and the Republican-led Congress are unlikely to raise federal taxes, antitax groups now are focusing on states. Such Washington groups as Americans for Tax Reform, the National Taxpayers Union, and Citizens for a Sound Economy are fanning out around the country, building local support and providing financial backing and political muscle to limit state taxes.

The focus now is on Oregon, where a ballot measure tuesday asks voters to decide between an $800 million revenue package and what some analysts warn could be dramatic cuts in education, healthcare, and other services if the measure - trailing in the polls - fails.

National antitax groups see the vote as a key test of their ability to influence public policy and politics beyond the Capital Beltway. And they bring to the battle considerable political clout. Citizens for a Sound Economy is headed by former House majority leader Dick Armey (R) of Texas. Grover Norquist, president of Americans for Tax Reform and one of the most influential activists in Washington, has been described as "the field marshal" of Mr. Bush's tax-cutting plan.

They've already proved their ability to influence events in Alabama, where Mr. Armey's group played an important role in the overwhelming ballot-box defeat of Republican Gov. Bob Riley's $1.2 billion tax package.

Although state economies are recovering from the recession of 2001, many still struggle with budget shortfalls. Faced with constitutional requirements that they balance their budgets (unlike Uncle Sam, who enjoys the cushion of deficit financing), some 20 states have raised sales or income taxes to avoid the most politically painful cuts in programs and services.

Virginia's Gov. Mark Warner (D) is arguing for a $1 billion tax increase to cover budget shortfalls on the way to an overhaul of the state's tax system.

But when voters themselves are given the chance to decide such things, their general inclination is to say "no." According to the National Taxpayers Union, 90 percent of the 50 major tax increases that appeared on state ballots over the past five years have been defeated. Last year's ouster of California Gov. Gray Davis and election of Arnold Schwarzenegger (who ran promising not to raise taxes) is only the most spectacular part of this trend.

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