In 1999, look out for falling taxes across the US

It doesn't have the fervor of the tax-cut movement of the late 1970s, but a mini-bandwagon has begun for lower taxes at the state level in 1999.

The trend is propelled by Republicans, who dominate the states with 31 governorships.

They are acting not only on behalf of their own local interests, but also in hopes of sending a message to their national party leadership that cutting taxes is a cornerstone of a winning formula for elections in 2000.

"If you were to poll the Republican governors, the overwhelming majority would say it's important for the Republican Congress to have a strong agenda going into 2000, and that tax reform needs to be a central part of that agenda," says Clinton Key, executive director of the Republican Governors Association.

By contrast, tax reduction as a Republican national issue in November's elections was "nonexistent," adds Mr. Key.

As governors begin their new terms, they're leading by example.

In speeches at state capitols across the country, new and returning governors are chanting a mantra of lower taxes, often couched in sweeping new millennium rhetoric and backed by several years of swelling revenues thanks to a thriving economy.

The mantra is particularly noticeable from those positioning themselves for possible national office in 2000, such as Gov. George W. Bush of Texas.

Key to GOP victory

Generally, tax reform and education are the top two issues for governors of both parties. But championing tax cuts may have more political significance for Republicans than either issue does for Democrats.

That's not just because of its traditional role in Republican ideology but also because of the widespread perception that it is a key, and some would say forgotten, component to GOP victory at the polls.

"Tax cuts have been popular with both parties. But with Republicans there is a deep-seated yearning for the good old Ronald Reagan days," says Donald Kettl, a political science professor at the University of Wisconsin in Madison. He adds: "I see an effort by state Republicans, particularly in light of what is going on in Washington, to redefine the nature of the Republican Party."

Largest tax cut in Texas history

Texas Governor Bush, the Republican presidential front-runner in early polls, made lower taxes a central component in his recent State of the State speech in Austin. "The spotlight is on us, let us show Texas knows how to fund priorities, balance our budget and cut taxes," he said, proposing a list of tax reductions that total $2.7 billion, the largest in state history.

Michigan Gov. John Engler, who came to power in 1990 on a promise of lower taxes, kicked off his third term with a promise to "begin the new century with across-the-board cuts in Michigan's income tax."

And New York Gov. George Pataki, also seen as a possible national player in 2000, has introduced an austere budget that included cuts in health care and education to help cope with a substantial cut in property taxes that took effect this year and will accelerate through 2001.

Some 32 states anticipate substantial tax cuts in 1999, according to the National Conference of State Legislatures in Denver. That's up from 20 that had tax reduction plans a year ago.

Because surpluses actually grew for many states last year, the number enacting tax cuts expanded throughout the year, according to Ron Snell, director of the NCSL's economic and fiscal division.

He says several years of rising revenues and the robust nature of the current economy could result in even more tax cutting this year than what is promised now by the 32 states.

The nature and depth of the tax cuts being proposed vary widely, from a reduction in the marriage penalty tax in Idaho to a $1 billion reduction in income and sales taxes proposed by Reform Party Gov. Jesse Ventura of Minnesota.

Bipartisan bandwagon

Republicans certainly have no lock on the issue.

In Indiana, for instance, Democratic Gov. Frank O'Bannon is calling for the largest tax cut in the state's history by trimming property taxes by $1 billion over the next four years.

Missouri Gov. Mel Carnahan (D) has also kicked off his new term with a proposed reduction in income taxes and lower taxes for small businesses and for the self-employed in that state.

In some states, such as Wisconsin, the only partisan difference is over which tax to cut. There, Democrats favor reducing property taxes, while Republicans want cuts in income taxes.

The fat economic times of the past several years have allowed governors and legislatures to do a number of things simultaneously. They've been able to sock away some of the extra revenue in rainy-day funds, increase spending for favorite programs like education, and still manage reductions in certain taxes. Some analysts believe a heightened focus on tax cuts this year may result from growing confidence that the good economic times will last, at least through the year.

And there is also the conviction, particularly among Republicans, that tax cuts helped a number of governors at the polls last November and will strengthen the party's performance from local to presidential in 2000.