A recent survey of the Tax Foundation shows that nearly half of the 50 states plan to combat record deficits in fiscal year 1992 with new taxes. Of the $11.8 billion in new taxes already proposed or passed, five states account for 83 percent of the revenue: California, Connecticut, New Jersey, Pennsylvania, and Texas. Since all these states have a statutory balanced budget requirement, the tax-raising and budget cutting fight of the past several years may prove to have been warm-ups for the battle that is shaping up in the coming year.
The nationwide recession, low corporate profits, and sluggish personal consumption have made a mockery of state revenue estimates, the survey says.
While some states plan to limp by with measure such as accelerating tax collections, increasing fees, eliminating tax credits, and extending temporary tax hikes, the magnitude of anticipated budget shortfalls has caused many states to tap the Big Three state revenue sources - sales, individuals and corporate income taxes, with a heavy emphasis in some states on tobacco excises.