Budget decisions could fuel political backlash

[July 21, 2009]  SPRINGFIELD (AP) -- In state after cash-strapped state, lawmakers are fighting a familiar partisan battle over taxing and spending with a new urgency and higher political stakes as they wrestle with multibillion-dollar deficits forcing widespread budget cuts.

Many Democrats have responded to their states' massive budget gaps by seeking a combination of spending cuts and tax increases, which they see as the only way to maintain vital government services. Republicans have generally pushed back hard, calling it foolish to raise taxes during a deep recession.

That leaves lawmakers in murky waters as their decisions provide ample campaign fuel for next year's elections, no matter which side they take.

In reaching a tentative deal Monday to close California's epic $26.3 billion deficit, Republican Gov. Arnold Schwarzenegger -- labeled a bully for backing welfare cuts -- held firm against further tax increases. That stand complicated negotiations with Democrats who hold majorities in both of the state's legislative chambers and fought to preserve social services that include health care for low-income children.

Connecticut Democrats were accused of "an attack on the middle class" for seeking a tax increase. In Illinois, Democratic Gov. Pat Quinn recently cited the Bible to support an income tax hike he said was needed to avert painful cuts.

"Amos the Prophet said, `Woe to those who afflict the poor.' We're not going to afflict the poor in Illinois. We're not going to afflict anyone," Quinn said. "We believe in helping our neighbors."

The debate over taxes and spending can be largely rhetorical in national politics, since the federal government runs deficits as a matter of course. But it's an argument with consequence in the nation's statehouses, where the budgets must be balanced every year. If revenue doesn't match expenses, state officials have to increase revenue, cut expenses or sometimes resort to financial gimmicks.

When the economy sank into recession last year, states saw tax revenues dry up -- income tax revenue dropped 34 percent in California during the first half of the year -- and demand for state-supported services jump.

That left most states with budget deficits, some so huge -- $11.6 billion in Illinois, $8.8 billion in Connecticut -- that lawmakers clashed bitterly over how to close the gap.

Democrats proposed combinations of spending cuts and tax increases in several states including California, Connecticut, Illinois, Minnesota, North Carolina, Pennsylvania and Wisconsin. Republicans rejected them.

Each position carries some political risk. Republicans who favor deep spending cuts could be portrayed as hardhearted toward the people who depend on state services, or as obstructionists for refusing to compromise during a financial emergency.

But the dangers seem greater for those Democrats who proposed both cutting spending and raising taxes. They're essentially offering constituents a "double whammy" that won't please anyone, said Republican Sen. Jake Corman, chairman of the Pennsylvania Senate's appropriations committee.

"My side of the equation is easy. I just tell people I'm for keeping their taxes low, which is what they want," Corman said.

In Pennsylvania, an increasing number of legislative districts are safely in the hands of one party or another, said G. Terry Madonna, a public affairs professor at Franklin & Marshall College. That means lawmakers often take tax positions meant to please their base and prevent a challenge in the primary election. That tends to produce more extreme positions on taxes, whether for or against.

"It's as much about incumbent protection as it is inter-party politics," Madonna said.

Political security may be one reason that some Democrats have retreated from some of their tax proposals. California Democrats dropped the idea of raising oil and gas taxes. Quinn, the Illinois governor, wants to postpone the tax debate until January.

There are also lawmakers breaking from traditional ranks. In Arizona, Republican Gov. Jan Brewer is pushing for a sales tax increase, despite opposition from within her own party. Florida's Republican governor ended up approving $2.2 billion in tax and fee increases. South Carolina raised tobacco taxes and Mississippi did the same -- twice.

Meanwhile, Ohio Democratic Gov. Ted Strickland has joined Republicans in opposing a tax increase of any kind.

"Some say a tax increase during a recession would help kick start the economy," Strickland said recently. "I believe that tax increases during this recession would only kick Ohioans when they are down, undermining the economic recovery that we need."

[Associated Press; By CHRISTOPHER WILLS]

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