Can It Get Any Better Than This?

• Author: Eckl, Corina

Prosperity abounds as the national economy continues its record-setting pace. When times are good, everyone has something to celebrate.

What do black fly control, Georgia's World Congress Center and a courtroom of the future have in common? They are all beneficiaries of the economic boom sweeping the country.

The current economic expansion, which began in March 1991, has put most states in their healthiest financial position in decades. With each passing year, the fiscal outlook has improved. Now, between the unspent revenues in their general funds and the growing balances in their rainy day funds, state reserves top 9 percent, a level last seen 20 years ago.

"It's hard to believe that this economy continues to perform so well," says Assemblyman Paul Tokasz of New York. "It makes for an interesting dynamic. We're moving forward with confidence, yet glancing back occasionally to see when the other shoe is going to fall."

For now at least, state revenues are piling up, and policymakers have scrambled to allocate them. Their decisions on what to do with the extra funds have been diverse and creative, with almost every interest getting a share.

GIVE IT BACK

Taxpayers in most states are enjoying another round of tax reductions. Lawmakers reduced taxes by almost $5 billion in 1999, marking the fifth consecutive decrease. Although the aggregate reductions have been modest each year - representing about 1 percent of total tax collections - several states have slashed taxes significantly. Altogether, 49 states lowered taxes at least once in the last five years with 11 states cutting net taxes in every year of the five.

Tax cuts have been all over the board, ranging from permanent reductions in the personal income tax rate to sales tax exemptions on food. Policymakers have been a little more creative, too. Florida and Texas are celebrating holidays from sales taxes on clothing. Beginning next April, New York will exempt clothing and footwear costing under $110 from its 4 percent sales tax. Taxpayers in Arizona and California will see their auto excise taxes lowered.

Uncertain about the length of the current boom, Connecticut and Minnesota are providing sales tax rebates. The amounts are considerable. Connecticut's $50 rebate for state residents will return almost $100 million to taxpayers. But that amount is dwarfed by Minnesota's plan, which will return $1.3 billion. Rebate checks will range from $212 to as much as $5,186 for taxpayers in the highest tax bracket. The plan also has an interesting twist. Nonresidents who prove they paid Minnesota sales taxes in 1997 can claim rebates, too. Between the sales tax rebate and permanent reductions, Minnesota cut taxes by $2 billion, a...