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Bare-Bones Budget Could Be A Sign Tax Hike Is Coming

Associated Press

Legislative budget writers are scratching together a Spartan 1998 state budget. They are slashing pay hikes, ignoring pleas for new programs, deferring maintenance and raiding special funds - all to reduce the drain on the general tax treasury.

Those may be signs of a major tax increase around the corner from the next election.

It was the same tactic the overwhelming Republican majority used a dozen years ago to avoid raising taxes during the two sessions before the 1986 gubernatorial election.

But less than five months after the polls closed, the special funds were essentially cleaned out, spending had been held at critically low levels and the string had run out.

Taxes rose some $70 million -the state’s last general tax increase.

While there may be disagreement this winter between the House and Senate over just how much state cash public schools should get next year, there is consensus in the overwhelmingly Republican majority and GOP Gov. Phil Batt that taxes will not be raised this year or next.

But there seems to be no guarantee about what happens after 1998’s gubernatorial election.

“This year’s been tough enough,” admits Atwell Parry, the conservative chairman of the Senate Finance Committee who helped make the same kinds of decisions in the mid-1980s.

“Unless the economy really takes off, we’re going to have to find another revenue source,” Parry said. “We just can’t keep scraping these budgets like we have been.”

After a momentary interruption, budget writers stuck to the script legislative leaders agreed on 10 days ago - no money for state employee pay hikes, a wary eye toward any new spending and the general attitude that if the state can get through another year without it, fine.

Variously, leaders blame a possible spring flooding emergency or too much optimism about the state economy’s tax-generating capability.

Skeptics lay the current financial crisis at the feet of the ballyhooed 1995 property tax cut that will siphon $50 million from the state treasury this year without quelling the vocal minority demanding even more.

House Speaker Michael Simpson defends the property tax package, arguing that putting that $50 million in the state budget would have only aggravated today’s problem.

That, Simpson maintains, would have required only deeper cuts than being contemplated now to hold spending within what more than a few of his colleagues see as woefully inadequate revenues.

But there are circumstances beyond the Legislature’s control ready to undermine its strategy.

The state faces tens of millions of dollars in additional corrections expenses even if it can find a private company to build the prisons for an inmate population expected to double in just a few more years.

Dozens of school districts are pressing the courts to order the state to come up with the money to finance over $700 million in backlogged school construction. That case resumes later this year since lawmakers have no plans to address the issue this winter.

And policy makers are betting on businesses to come up with the thousands of jobs needed to make welfare reform work. Without them, welfare costs they hoped would at least stabilize if not decline will skyrocket.

“I’m not hearing anybody out there say, ‘Raise taxes,”’ Senate President Pro Tem Jerry Twiggs says. “But I’m not saying that down the road that may not be what happens.”

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