GOP governors propose tax raises

Some leaders switching gears in face of budget shortfalls

Republican governors across the nation are proposing tax increases -- and backing off pledges to cut taxes -- in the face of budget shortfalls and pent-up demands from constituents after years of budget cuts.

"My jaw dropped," Assemblyman Michele Fiore, a conservative Republican in Nevada, said after hearing Republican Gov. Brian Sandoval propose a $1.1 billion tax increase for education this month. "Whether we kill it by five votes or 15 votes or 25 votes, we are going to kill it."

At least eight Republican governors have proposed increases: There are proposals for raising the sales tax in Michigan, a tax on e-cigarettes in Utah, and gas taxes in South Carolina and South Dakota, to name a few.

In Arizona, the new Republican governor has put off, in the face of a $1 billion budget shortfall, a campaign promise to eliminate the unpopular income tax there.

"It's not based on partisanship. It's based on common sense and good government," said Gov. Rick Snyder of Michigan, a Republican who has urged voters to support a ballot measure that would raise $1.9 billion by increasing the sales tax and gas tax.

Republican governors are now in office in 31 states -- the highest number since 1998 -- and they have not stepped away from the party's bedrock platform of smaller government and lower taxes. Some of the proposed tax increases are part of broader proposals that would result in net tax reductions, usually by cutting income taxes.

Many of these tax increases face tough sledding in Republican-controlled legislatures like Nevada's. And a host of Republican governors are pushing for cuts or holding the line on taxes.

Grover Norquist, the president of Americans for Tax Reform and a driving force in pressing Republicans to sign no-tax pledges, said he was annoyed by some governors who were calling for tax increases, such as Sandoval, whom Norquist described as "really bad on taxes."

But these Republicans are the exception, he said, in a party that remains as united against taxes as ever.

"You can't just look at governors these days," Norquist said.

"You've got to look at the legislatures. The Legislature in North Carolina is much more pro-growth and anti-tax than the governor."

The financial picture for states has stabilized, with five straight years of revenue and spending increases. But when those numbers are adjusted for inflation and population growth, they are still far below their pre-recession peak.

The National Association of State Budget Officers recently warned that revenue growth was not strong enough to both maintain basic services and meet the growing demand to spend more on such things as higher education and prisons.

And the recovery is uneven: In 20 states, revenue in the current fiscal year is lower than expected, according to a December survey by the association.

The governors are responding in different ways to this unsteady ground.

In South Dakota, Gov. Dennis Daugaard proposed an increase to the gas tax and several taxes and fees related to motor vehicles because highway funding is falling short.

Gov. Gary Herbert of Utah has increased the tobacco tax, proposed extending the tobacco tax to e-cigarettes and said he was open to an increase in the gasoline tax.

Gov. Nikki Haley of South Carolina said she would allow the state to raise its gas tax, a move she had previously promised to veto, but only if the legislature cut the income tax by almost a third and changed the state Transportation Department.

And Gov. Doug Ducey of Arizona, who was elected in November, has moved away from his campaign pledge to eliminate the income tax, which provides about one-third of the state's budget.

On the other side of the ledger, Republican governors in Arkansas, Mississippi and Nebraska have proposed cutting taxes.

There are also several states, such as Illinois and Maryland, where Republican governors have not suggested tax increases despite serious budget shortfalls.

In some cases, governors are proposing increases in the sales tax and other levies only to offset the cost of a larger goal: eliminating the personal income tax.

In Maine, Gov. Paul LePage called for increasing the sales tax and subjecting more goods and services to taxation, but only to offset the cost of lowering the income tax and eliminating the estate tax.

Sandoval, in laying out his tax increase plan to the Nevada Legislature, said he expected it to face opposition but argued that the state needed to do something to improve its education system.

"What we must all agree on is that another generation of young Nevadans cannot move through our schools without more resources, choice and reform -- and that we must modernize our revenue system," he told lawmakers.

If Republicans were distressed by Sandoval's speech, Democrats were excited.

"I never thought I'd see the day when a Republican governor was proposing all the things we've been proposing for the last 20 years," said state Sen. Moises Denis, D-Las Vegas.

A Section on 01/25/2015

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