Tax Bridge to Nowhere

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

A major hang-up on the budget deal is whether taxes should be extended until the people can vote. However, unanticipated revenues revealed last month should make the tax bridge unnecessary if the vote occurs in a few months.

An election probably would not happen until the beginning of autumn at the earliest and the governor wants to build a tax bridge until the election occurs. Republicans have balked at the idea of continuing taxes beyond their expiration date at the end of the month.

As things are shaping up, the voters would be presented with a package of proposals that include continuing or re-establishing the expired taxes – depending if the tax bridge is built – a short term spending reform and some public sector pension changes.

There will be differing opinions on the reforms – whether a spending limit should be temporary, for instance, or if the pension reforms go far enough. Those debates would occur if all the measures make a fall ballot. But the tax bridge is holding up the agreement.

The tax bridge piece should not be a problem for economic reasons. The governor announced during the May budget revise that the state has $6.6 billion more dollars than expected last January. Democrats have voted to use some of that unexpected revenue to reverse cuts sought by the governor. Instead, that money could help hold the state budget together until the people get to vote in September or October.

The major reason for the tax bridge is election semantics. Will the tax increase on the ballot be a continuation of extended taxes, or new taxes to replace taxes that expired months before? To political consultants, there is a world of difference between extended taxes or new taxes.

If insistence on a tax bridge prevents a deal from getting done, then it will be a tax bridge to nowhere.

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