Western govs break the bad news on taxes

LOS ANGELES, Jan. 9 (UPI) -- Western governors were breaking the bad news to their constituents this week about the need for some form of tax increase to keep their states during a nationwide budget crisis.

Idaho's Dirk Kempthorne proposed moving up the start date for a sales tax increase as he announced a bare-bones budget Thursday while Nevada governor Kenny Guinn conceded late Wednesday that his ever-growing state needed more than $704 million in new revenue over the next two years just to pay for education and other existing state programs.

"You can't have your income going down and your population going up," Guinn told reporters during a budget briefing in Carson City. "We drawn thousands of new school-age children in the last six years. It's a matter that has caught up to us."

Nevada's budget battle won't begin until after Guinn's State of the State speech on Jan. 20, however the lines were already being drawn over a proposed tax on gross business receipts that the governor supports and the business community opposes.

"We have very legitimate reasons why we believe it's an unfair tax," Las Vegas Chamber of Commerce spokeswoman Kara Kelley told television station KVBC. "It's a very burdensome tax that treats different businesses differently."

The explosive growth in the Las Vegas area has put a huge strain on Clark County's public schools, and Guinn told reporters that the district alone would soak up $220 million of the $700 million needed to plug the state's gaping budget hole.

"Business people can't afford to have our schools in disarray," Guinn said. "They can't afford to have the Clark County School District, which is the economic engine of this state, shut down because they have to cut $220 million out of their budget."

Idaho businesses will feel the effect of Kempthorne's call to move up the implementation of a 1.5-cent boost in the state sales tax; however the governor said Thursday that $19.5 million in cuts made last summer had already "cut into the muscle" of the budget.

"We are not asking our citizens to pay more to expand government," Kempthorne said in his budget address. "We are asking them to participate in ensuring that we can meet the critical needs of the people of Idaho today and into the future."

An increase in the sales tax was scheduled to take effect in June and would generate an estimated $240 million a year. Kempthorne said moving the start date to May 1 would "generate one month worth of additional revenue to help with our current budget."

Otherwise, Kempthorne proposed a "bare bones" spending plan that included addressing a $200 million shortfall with spending cuts in virtually every department.

Education was spared, in part because of state laws guaranteeing an increase in funding of $16 million.

"It (the budget) is lean, recognizing that we are in tough times, but it meets all statutory requirements, showing our commitment that in good times or bad, we will continue to invest in the education of our children," Kempthorne said.

Meanwhile, California Gov. Gray Davis was scheduled to unveil his new budget on Friday. The Golden State faces a staggering $34.8 billion deficit over 18 months that is the largest state budget deficit in the nation.