Taxing decisions: a few states are dipping their toes into new revenue streams.

• Author: Jacobson, Louis
• Position: FISCAL MATTERS

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Across the country, in blue states and red, governors and lawmakers are avoiding tax increases like the plague. If they're not cutting taxes outfight, they're at least promising not to raise them. In New Hampshire, the GOP-dominated legislature introduced a constitutional amendment to prohibit an income tax. In Oklahoma, the Republican governor has a proposal to reduce, and then eliminate, the state income tax. In Oregon, a Democratic governor kept his promise to propose a budget with no tax increases. West Virginia's Democratic governor and Legislature are in the process of phasing out a food tax entirely. In Massachusetts, the Democratic legislature has rejected a Democratic governor's proposal to hike the tobacco tax and close loopholes on candy and soda taxes. The Republican-dominated Indiana legislature went so far as to give residents a refund.

The confluence of deep-seated voter aversion to taxes, years of ideological gains by supply-siders, and fears that raising taxes could endanger the fragile economic recovery have most states dodging any serious consideration of tax increases. There's also less pressure as the recovery continues, albeit unevenly.

In the last two legislative sessions, however, a few states have tested the waters, and they are among the country's largest. In those states that are either considering tax increases now or have recently enacted them, efforts have been driven by politicians in both parties.

* In California, Democratic Governor Jerry Brown, stymied by a failure to secure the required two-thirds vote in the Legislature, is asking voters to approve a ballot measure to increase the income tax on high earners and the sales tax. It will be a high-stakes vote: Brown's proposed FY 2013 budget is premised on the measure passing in November, with "trigger cuts" to take effect if it fails at the ballot box.

* In New York, Democratic Governor Andrew Cuomo and a Legislature under split control faced expiration of a tax on high earners. They agreed to legislation that restructured the tax categories, hiking taxes for the state's richest while easing the tax burden for many of those further down the income chain.

* In Maryland, a bid by Democratic Governor Martin O'Malley to raise gasoline taxes fizzled, but lawmakers and the governor agreed on income tax hikes instead. After initially adjourning in April without enacting anything, a special session in May produced a tax increase on people earning $100,000 or more and couples earning $150,000 or more.

* In Nevada last year, Republican Governor Brian Sandoval took heat from some in his own party for extending a series of business taxes that had been scheduled to expire.

* In Ohio, Republican Governor John Kasich proposed increasing severance taxes to as high as 4 percent on oil and natural gas drillers in his state, possibly generating $1 billion by 2016. The plan, however, has stalled in the GOP-controlled legislature.

* In Arkansas, the Democratic-controlled legislature voted, by lopsided margins, to let voters decide whether to raise the sales tax by a half-cent to fund highway infrastructure improvements. It will be on the November ballot.

* Finally, in Kentucky, Democratic Governor Steve Beshear established a commission consisting primarily of private-sector leaders to review the overall fairness and adequacy of the state's tax system. Recommendations are due later this year.

Fiscal Dynamics

Colorado offers an example of the fiscal dynamics at work. The state was a pioneer in the tax-restricting policy known as TABOR and will, in 12 years, generate only enough sales, income and other general tax revenue to pay for "the three largest programs in the general fund--public schools, health care and prisons," according to a study by the University of Denver Center for Colorado's Economic Future. "There will be no tax revenue for public colleges and universities, no money for the state court system, nothing for child-protection services, nothing for youth corrections, nothing for state crime labs and nothing for other core services of state government."

Some believe this is what should be happening with government--the "starve the beast" approach. Others...