Taxpayers' revolt nationwide begins to hit its limits

After two years blazing across the United States, the Proposition 13-sparked tax-cut fires appear to be dying down. But they are not out. The June 3 California voter rejection of a measure to halve state income taxes may simply mean that the flames of revolt for lower state and local spending are contained on one front.

Just to the east, and on the same day, citizens of Arizona approved aoverwhelmingly a package of state and municipal tax reductions and controls.

And two weeks earlier Oregon voters, also by a wide margin, approved extension of the state's 1979 tax relief law, which was to have expired next December.

Similar proposals to lower certain state or local levies or to restrict taxes to a percentage of total personal income or property valuation have been under consideration by at least a dozen other state legislatures during the past few months.

So far this year, however, little progress has been made by lawmakers toward significant tax whittling.

Instead, major emphasis during the past several months has been on capping spending. In Massachusetts, for example, a measure now pending would limit what the common-wealth could spend so that all levies -- state and local -- could not take a bigger bite from personal incomes than those in the 17 industrial states with which it competes.

The legislation is aimed at heading off voter approval of a Proposition 13 -like initiative for slashing municipal property taxes. The latter, which does not address itself to state spending, is headed for next November's statewide ballot.

Voters in several other states, including Arkansas, Michigan, Nevada, North Dakota, and Utah, also will be deciding this fall various tax-cutting or tax-stabilizing measures.

Proposals in Arkansas would empower the Legislature to grant partial property tax exemptions on residences to homeowners age 65 or older, adn permit local tax rollbacks when real estate reassessments result in more than a 10 percent levy increase over the previous year.

At issue in Michigan will be a initiative to chop property taxes by 50 percent and a Legislature-sponsored alternative for more modest reductions in this levy.

The ballot proposal in North Dakota would, if approved, strip the Legislature's standby authority to impose a state property tax.

The Utah proposal seeks to exempt food from the state's 5 percent sales tax. Also on the November ballot there is a constitutional amendment capping state spending.

Pending in Nevada is final approval of a constitutional amendment, given initial voter passage two years ago, to place a ceiling on state and minicipal spending. It would replace a 1979 tax-cut package which included exemption of food from the 3 percent state sales tax.

The newly provided Arizona tax relief measures, most of which carried by a nearly 5-to-1 vote, limit spending by local governments and regional school districts, put a 2 percent limit on increases in property taxes in any year, and exempt food from the state's 4 percent sales tax.

The Oregon tax-cut retention, endorsed nearly 6 to 1 by the electorate May 20 , limits to 5 percent the increase in total property tax value in any year and reduces by 30 percent what a city or town can collect in taxes from a taxpayer's home. The state is to make up the shortfall in revenue caused by the partial exemption. Both homeowners and renters benefit.

All but a handful of states now have either through referendum or by legislation stabilized, if not reduced, at least one major tax since 1978's Proposition 13 so-called taxpayers' revolt in Calofornia.

Noting this and the increased uncertainties over future revenues due to continuing inflation coupled with an economic recession, those close to the scene anticipate less activity on the tax-cut front in the coming months.

And some, like analysts for the Washington (D.C.)-based Tax Foundation, suggest that a reverse of the 1978-1979 trend may be developing.

During the past four months at least seven states -- Indiana, Kentucky, Minnesota, Nebraska, South Dakota, Virginia, And Wisconsin -- have either increased or moved to stabilize gasoline taxes.