NTU Findings Question States' Claim To Federal Tax Dollars

by Mike Godfrey, Tax-News.com, Washington

02 May 2003

A recent poll conducted by Fabrizio, McLaughlin and Associates on behalf of the National Taxpayers Union (NTU) found a mixed response amongst taxpayers as to the extent to which the federal government should subsidise the states at a time when many are facing fiscal crisis.

In response to the question: “Some states now find themselves in financial difficulty due to the sluggish economy, new homeland security measures, and rapid growth in spending programs over the last decade. Which of the following statements is closer to your opinion?” some 36% of respondents replied that Washington should only provide extra assistance to states for the purpose of fighting terrorism. The remainder of the poll was more or less evenly divided between those who felt the states had created their own fiscal problems, and therefore should not be entitled to federal aid (27%); and those who believed that federal tax dollars should be used to assist any state in genuine need (26%).

John Berthoud, President of the NTU has little sympathy with the state legislatures, and commented recently that: “The economic downturn combined with the War on Terrorism provided many free-spending states with the excuse they needed to request federal assistance, however these poll results reveal that the general public isn’t ready to write a blank check.” “In assigning the blame of state budget woes, taxpayers haven’t overlooked the decisions of many Governors and State Legislatures to enact huge spending increases over the past decade,” he added.

Earlier this month, Congress passed the 2003/2004 budget resolution which stipulated that “any legislation enacted to provide economic growth for the United Sates should include not less than $30 billion for state fiscal relief over the next 18 months.”

However, a study prepared by Berthould earlier in the year appears to indicate that the states' fiscal revenues are not as unhealthy as first thought. According to these figures, the states saw inflation adjusted tax revenues rise by 4.2% year on year throughout the last decade and despite the claims of a revenue crisis, state coffers actually recived more money as a percentage of GDP in 2002 than they had the previous year.

“Until states learn to control spending, this year’s federal Budget Resolution will continue to be seen as a convenient solution for states’ fiscal woes,” concluded Berthoud, adding: “And, regardless of which level of government is handing out the money, it all comes from the same place: the overburdened taxpayer’s pocket.”

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