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State coffers flush, but voters want some back

NEW YORK (Reuters) - With Treasury coffers bulging in many states across the nation, voters will be flexing their political muscle in November ballot issues to put some of the money back in their pockets.

"People are saying 'We've paid our dues, we want some of that back,"' said Dane Waters, president of the Initiative and Referendum Institute, a Washington, D.C.-based non-profit and non-partisan educational and research organization.

In Oregon, voters could pass measures that would require a public vote on any new tax or fee increase, and allow full deductibility of federal income taxes on state tax bills.

If passed, the measures would make Oregon the least-taxed state in terms of individual tax burden, Waters said.

But it will also have a large impact on funding for schools and other public needs, he said, in a state that has seen tremendous population increases.

"The concern is that when this passes, how will the state put in place the infrastructure necessary to handle this growth," he said.

If approved, another Oregon measure would require citizens to vote on even the tiniest fee increases, on library fines and fishing licenses for instance.

With more than 1,000 different fees in the state, that would prove cumbersome, said Jeannie Berg, an analyst with the Ballot Initiative Strategy Center, a progressive, non-profit group that tracks and assesses ballot measures.

Moreover, cities and towns would be hit especially hard, because they don't have large enough budgets to pay for the numerous elections that would be necessary to increase fees on everything from building permits to parking fines, she said.

William Raabe, a professor of taxation at Samford University in Birmingham, Ala., and the author of numerous books on the subject, is also negative about the measure.

"You can't make the tax law a referendum. If for no other reason, the public only sees tax changes in one way and that is to reduce taxes. There are certain times when tax increases are needed and logical and rational and they're just not going to get a fair shake if everything's put to a referendum," he said.

Oregonians will also decide whether they can fully deduct their federal income tax from their state taxes, a move that could take $1 billion out of the state budget, Waters said.

"It will force the legislature to make some hard decisions about what to fund and what not to fund," he said.

In Colorado, voters could approve individual tax cuts in each of six local categories, such as property and utility taxes by $25 starting in 2001 and increasing $25 yearly.

The measure is popular and has a good chance of passage, Waters said, but many officials, including Gov. Bill Owens, are concerned about the fiscal impact on the state.

"The Legislature in Colorado will be severely limited in their ability to do things," Waters said.

Local newspapers have reported that Pueblo County officials say the progressive $25 cuts in the county property tax alone would "cripple" county governments.

Several other states have tax-related questions on the ballot that could seriously crimp state and local budgets, analysts say. Among them is Massachusetts, which could lose $2 billion in revenues if voters approve two ballot proposals, according to the Massachusetts Taxpayers Foundation.

At issue is a plan to cut the state income tax to 5 percent by 2003 and a proposal to give individuals and corporations a tax credit for tolls paid on interstate highways.

In Maine, voters will decide on whether to allow the horse racing industry to place video poker machines at race tracks, with 40 percent of all proceeds going to property tax relief.

In Alaska, a question to cap property taxes could force local governments to make hard cost-cutting decisions about budgets. In Anchorage, officials estimate the cap would eliminate a quarter to a third of the revenue used to run the state's largest city and its schools.

And in California, a construction boom could result if voters there pass an initiative that would lower the current two-thirds majority required to pass bond issues to 50 percent.

"If that passes, you'll see a tremendous rush to pass new bonds and to increase school construction and build new roads," Waters said.

Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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Monday, October 23, 2000


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