State Tax-cut Plans Tempered By Caution In 2013

By DAVID A. LIEB

JEFFERSON CITY, Mo. (AP) â¿¿ Emboldened by big majorities and eager to lure businesses, Republican legislators and governors across the Midwest and South are planning to pursue hundreds of millions of dollars of tax cuts in the new year.

Oh yeah, they might raise some taxes, too.

In many states, the exuberance to cut taxes during the 2013 legislative session suddenly has been chilled by worry about the potential consequences. Cautious state officials are now talking about the need for "thoughtfulness," warning that they'll "have to see how their numbers work out" and suggesting that tax cuts in one area may need to be offset with increases in another.

The change in tune comes as Republicans struggle to balance a core belief in lower taxes and bold campaign promises against the practical need to pay their government's bills. Political obstacles are less of a problem. A party that swept into power in many statehouses in the 2010 elections won even bigger majorities in 2012.

The case study for the new mood â¿¿ caution mixed with conflicting impulses â¿¿ is Kansas. The Republican-dominated state slashed income taxes in 2012, enough to save taxpayers a projected $4.5 billion over six years. Now it's facing a self-inflicted budget gap of roughly $300 million for the fiscal year that starts July 1 and wrestling with whether to cut services or extend a sales tax hike that is scheduled to expire. In neighboring Missouri, Republican supermajorities in the Legislature are under intense pressure to pass their own tax cuts out of fear that businesses and employees will flow across the border.

"We don't live in a vacuum. It is ever more pressing that we are responsive, because other states are being much more aggressive than the state of Missouri is," said incoming Senate President Pro Tem Tom Dempsey. But he added: "This philosophy of, 'OK we'll cut the taxes and people will come' â¿¿ it takes a lot more thoughtfulness."

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