States knocking at taxpayers' doors
Boston — You may have already noticed: Taxes have been climbing in the last year. State legislatures, some faced with whopping budget deficits, have been turning to new or increased levies for help.
During the last year a record $7.5 billion in state tax boosts were imposed, and another $3 billion in temporary taxes that were due to expire were extended.
Only 11 of the 50 states made it through 1983 without a single levy hike, and at least four of these helped make it through the year by speeding up tax collections.
While more tax hikes can be expected in 1984, these will be fewer and smaller , say experts.
Even with a strong economy, several states - including those that are heavily dependent on revenues from oil, natural gas, or coal, and were hit hard by falling prices - may find it necessary to increase taxes, suggests Robert Schleck of Tax Foundation Inc.
The overall trend, however, will be one of ''consolidation and standing pat with what they have and using any surplus money to build up cash reserves,'' he predicts. While there may be some tax reductions over the coming months, Dr. Schleck anticipates that ''most of the giving back probably won't come until 1985.''
Steven Gold of the National Conference of State Legislatures (NCSL), similarly foresees some tax boosts during 1984, but ''nowhere as many as this past year.'' If temporary levies that are allowed to expire or are repealed are counted as reductions, these and other tax cuts ''may outweigh increases,'' he suggests.
''Some states are doing quite well, but others still have serious fiscal problems,'' Dr. Gold notes, adding that pressures for increased education funding are building in several states.
Tax increases in 1984 ''will be all but nonexistent,'' says Joseph Carson, senior economist at Merrill Lynch, Pierce, Fenner and Smith. He suggests that less than a handful of states will enact anything approaching significant levy boosts, noting that it will be an election year and that many states have at least modest surpluses.
Both the number and extent of 1983 tax boosts exceeded by far the expectations of most analysts. Jack Lavery, chief economist at Merrill Lynch, for example, had forecast passage of $5 billion in new taxes. That figure proved to be one-third short of the mark.
The $7.5 billion in 1983 state tax increases compares with $3.5 billion in 1982 and $2.5 billion in 1981. The large 1983 tax boosts, however, will increase total revenues by only slightly more than 5 percent, says Gold.
Tax increases enacted this year include:
* Permanent, temporary, or extended personal-income tax hikes in 20 states. Four other states postponed scheduled tax limits keyed to growth of the economy.
* Higher business taxes in 20 states.
* Boosts in sales-taxes in 18 states (four on a temporary basis) and expansion of the levy's base in at least five others.
* Increased gasoline taxes in 18 states.
* Cigarette tax hikes in 14 states, and previously imposed increases made permanent in three other others.
* Boosts involving all or some liquors in 16 states.
* Increased severance taxes on oil, natural gas, coal, or other energy-producing resources in five states.
Within the past four months, lawmakers meeting in special session in at least four fiscally hard-pressed states raised one or more taxes. The latest action, completed Dec. 13 in Louisiana, involved chopping personal exemptions under the state income tax from $6,000 to $4,500 for single taxpayers and from $12,000 to additional $136 million a year.
In mid-November Mississippi legislators, facing a state revenue shortfall, approved a sales-tax boost from 5 to 6 percent, effective Dec. 1. The increase is to expire next July 1, but it is expected to be extended. An annual $60 million yield is projected.
Two weeks earlier, Arkansas lawmakers seeking education funds raised the state sales tax from 3 percent to 4 percent. This is expected to bring in an additional $160 million a year.
The biggest move to increase revenue, however, was in Colorado, where a package of levy-related measures, expected to yield $139 million in fiscal 1984, was enacted. It embraces a five-cent-a-pack rise in the previous 10-cent cigarette tax, and extends for five additional months a temporary .5 percent hike in the state sales tax.
Most of the newly approved tax legislation involved increasing existing levies, usually high-yield ones. Among the more notable 1983 exceptions include taxation of beano, local lotteries, and card games in Nebraska; hotel-room occupancy in Nevada; capital gains on real-estate transactions in New York; radioactive waste disposal in South Carolina; and coin-operated amusement devices in Tennessee.
At least 18 states - including Delaware, South Dakota, Texas, and Virginia, none of which increased taxes this year - brought in additional revenue on a one-time basis through accelerated tax collections.
Despite the heavy volume of levy boosts this year, state tax increases overall were smaller than the $30 billion saved by taxpayers in the 10 percent federal income-tax reduction, according to an NCSL study.
Gold and his colleagues found that 40 states ended fiscal 1983 with treasury balances of 3 percent or less of their general-fund spending. Eleven of them had deficits.
The year's biggest-yielding state tax-hike packages were $1.2 billion in Ohio , $1.1 billion in Illinois, $1 billion in Michigan, $694 million in New York, $ 753 million in Washington, $678 million in Pennsylvania, and $57 million in Minnesota.
Besides Arkansas and Mississippi, sales-tax rates in Arizona, Colorado, Idaho , Illinois, Iowa, Nebraska, New Mexico, North Dakota, Utah, and Washington were increased at least on a temporary basis. And previously enacted ''temporary'' rate boosts in Minnesota, Tennessee, and Wisconsin were made permanent. A temporary 1 percent contingency sales-tax increase in California also was enacted, but implementation has not been necessary.
The biggest personal-income tax increase was 90 percent in Ohio. Voter efforts to repeal this and other levy hikes enacted last spring failed on the November ballot by a 3-2 margin. Similarly downed by Ohio voters was a companion initiative that would have made it considerably more difficult for state legislators to impose future tax increases.
Other states raising their personal-income tax rates during 1983 were Illinois, Michigan, Minnesota, New Mexico, North Dakota, Oregon, Pennsylvania, Rhode Island, Vermont, West Virginia, and Wisconsin.