Sunday, July 15, 2007

"Anything that puts money in the treasury, 'without raising taxes,' is on the table."

The Taxman Hits, in the Guise of a Traffic Cop

July 15, 2007

The New York Times
Copyright 2007

SHORT of cash and long of arm, the State of Virginia recently unveiled the nation’s first $1,050 speeding ticket.

You have to go 20 miles an hour over the speed limit to get that one; but under a new set of rules there are now a whole host of violations considered “reckless driving” that subject errant Virginia drivers to fines of $1,050 to $3,000 — plus court costs, if you fight and lose. The money will be spent on maintaining roads and bridges, safety improvements and closing a $500 million gap that emerged in last year’s transportation budget.

All over the country, supporting safety improvements on the wages of reckless driving has become a tradition. But in the relations between government and its citizens, the four-digit traffic ticket also seems to signal a leap in the use of fines and fees — and just about any other form of enhanced governmental income production — to avoid the dreaded thing itself, a tax increase.

The rising cost of public benefits like pensions, health care and police services, combined with the conventional wisdom that raising taxes is political poison, have led public officials to cast a wide net for this kind of public revenue.

Leasing public bridges in Kentucky. Taxing tattoo parlors in Arkansas. Selling off large chunks of the state highway system in Indiana. Selling off bundles of state student loan portfolios in Missouri. Taxing funeral processions in New Orleans. Those are just some recent measures undertaken or proposed.

“Anything that puts money in the treasury, without raising taxes, is on the table,” said Sujit CanagaRetna, chief fiscal officer for the Council of State Governments, a Washington-based research group that works with state lawmakers. “It is a trend that we see growing tremendously."

This is not new. Remember Candlestick Park and Boston Garden? A decade ago, San Francisco and Boston saved their taxpayers some dollars by peddling the naming rights to those arenas (or their successors), now known as AT&T Park and the TD Banknorth Garden, respectively. Unlovely, perhaps, but far less onerous than the label they came up with in Orange County, Calif., in the 1990s. Officials there, trying to avoid new taxes by investing heavily in the stock market, stuck the whole of Orange County with this title: bankrupt.

But perhaps of all the ways and means of raising money without raising the ire of taxpayers, special assessments on people who violate laws, smoke cigarettes, or dabble in activities formerly known as vices, seem to be as certain as the payroll tax.

It is not just that every state except Utah has a government-licensed gambling enterprise (they call it “gaming” now that it’s legal) or a state-run lottery, or both. Some big states including California, Texas and Illinois are considering measures to increase lottery revenues by leasing or selling their lottery systems to private companies.

Cigarette taxes, including a 60-cent-a-pack rise in federal taxes under consideration in Congress, have been growing steadily in every state, even tobacco states like Kentucky, Virginia and Tennessee.

In Florida, proposals to tax massage parlors and lap dancers have made their way to the Legislature a number of times in recent years, so far without success; and the Texas Legislature has taken up a bill to tax strip clubs, dedicating the money to education.

Just about every state has a criminal and civil forfeiture law that allows local law enforcement to share in the proceeds of the criminal enterprises they dismantle.

And then there are the traffic laws.

According to the driver-advocacy group known as the National Motorists Association, local authorities have turned to these laws as revenue enhancers more aggressively in recent years. “We see this as an abuse of authority, and one that falls hardest on the poor,” said Aaron Quinn, a spokesman for the association.

Small municipalities like Lakewood, Wash., have created their own police departments, at least in part to boost ticket income. The city of Lakewood (population 60,000) took in $1.4 million in traffic fines in 2005 — doubling its ticket revenue in the first year of its police department, according to Andrew E. Neiditz, the city manager.

In the California town of Truckee, near Lake Tahoe, the local newspaper sizzled with letters from irate citizens ticketed last year after the new 25-member police department took to the streets. One resident, Jason Dobbs, complained, “I was pulled over for speeding by four miles per hour.”

All told, however, the issue may be larger than ticket blitzes, forfeited property or the recent leasing of the Indiana Toll Road, (which gives a group of Spanish and Australian entrepreneurs control over 157 miles of state highway in exchange for $3.85 billion cash over the next 75 years). The larger question, says Scott Bullock, chief attorney for the Institute for Justice, a libertarian group in Arlington, Va., is what American citizens really want from their government.

“If cops have to decide whether to crack open an old case file or go out and try and raise revenues, well, I don’t know if you want that,” he said.

Robert Puentes, a metropolitan policy fellow at the Brookings Institution, says the fear of raising taxes coupled with steady declines in federal highway aid have plunged many state governments into “a state of hysterics” concerning their transportation budgets, leading to many faddish solutions.

But in the end, taxes will go up anyway, he said.

“In the end, governments lose more than they gain with these short-term fixes,” he said. “People will eventually recognize that.”

© 2007 The New York Times:

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