Bush tax cuts worry cash-strapped states
Tim Jones
Chicago Tribune (KRT)
WASHINGTON — Facing the
bleakest financial conditions in
more than a decade, state budget of
ficials voiced alarm about the
prospect of future fiscal woes after
President Bush offered his econom
ic stimulus package.
Analysts were studying the presi
dent’s proposal late Tuesday, but the
emerging response to the plan was
alarming. Some experts said the
elimination of the tax on stock divi
dends could cost deficit-troubled
states an additional $4 billion. The
expected move to the stock market
by investors will make it more ex
pensive for states and local govern
ments to borrow money on the bond
market, they said.
The uncertainty over tax policy as
Congress and the White House fight
over the measure will make prepara
tions for budgets difficult because
states will not know what they can
expect in revenue as they plan for
the next budget year.
“We are walking into our legislative
sessions with no certainty of funding
for shared responsibilities, such as
homeland security costs, election re
form and children’s health insurance
money,” said Michael Bird, federal af
fairs counsel for the National Associa
tion of State Legislatures.
“There is the potential for state fi
nancial conditions to be further ex
acerbated,” he said.
Changes in tax policy almost al
ways have trickle-down effects for the
states, which individually must deal
with projected budget deficits that
range from less than $100 million to,
in the case of California, $34.8 billion.
The National Governors Association
recently characterized the states’
overall financial condition as the most
dire since World War II. Except for
Vermont, all states have laws requir
ing a balanced budget.
The stumbling economy and the
fall of the stock market have hit state
budgets hard: first with a drop in in
come tax revenue as joblessness in
creased and tax revenue from capi
tal gains plummeted, and second
with a decline in retail sales. Income
taxes and sales taxes comprise about
two-thirds of the revenue states col
lect every year.
Even after raising minor taxes and
cutting many services to balance
budgets last year, more than half of
the states face budget shortfalls in
the current cycle. The deficit in Illi
nois is forecast to be about 01 billion
for the current year, and $3 billion
for the budget year beginning in July.
The efforts by state legislatures
scrambling to balance their budgets
are likely to include cuts in pay
ments to local governments, reduc
tions in health-care services, addi
tional college tuition increases and
new tax hikes.
Among state and local officials,
there is mounting anger toward the
federal government as it has piled
additional security requirements
onto them without providing the
funding. At the same time, state offi
cials have complained that Washing
ton has not provided money for new
federal mandates, nor has it offered
financial assistance to meet the
states’ mushrooming health-care
costs, primarily Medicaid.
The tax changes proposed by
Bush, if approved, will add to the fi
nancial pressure, they said.
© 2003, Chicago Tribune. Distributed
by Knight Ridder/Tribune Information
Services.
Hispanic leaders seek support of race-based policy
Maryanne George
Knight Ridder Newspapers (KRT)
ANN ARBOR, Mich. — A group of
national Hispanic leaders will ask
President George W. Bush on
Wednesday to officially support the
University of Michigan’s admissions
policies, which are being contested
in two cases before the U.S.
Supreme Court.
The high court is expected to hear
arguments in the cases, challenging
the use of race in law school and un
dergraduate admissions policies, in
late March or early April.
The court is considering the issue
for the first time since it ruled that
colleges could consider race as a fac
tor in admissions decisions in the
landmark 1978 Bakke case. The
court’s ruling, expected this summer,
is expected to influence admissions
policies across the nation.
Twelve groups, including the Mex
ican American Legal Defense and
Education Fund, the United States
Hispanic Chamber of Commerce
and the Hispanic Associations of
Colleges, will unveil an open letter to
Bush on Wednesday at a press con
ference at the National Press Club. It
will ask Bush to file legal briefs with
the court supporting the University
of Michigan.
White House officials reportedly
are lobbying Bush on both sides of
the issue, according to a recent
Washington Post report. Solicitor
General Ted Olson is said to be ea
ger to file a brief opposing the uni
versity’s policies, while White
House counsel Alberto R. Gonzales
is said to be urging Bush to support
the policies.
Neither Olson nor Gonzales could
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be reached for comment Tuesday.
The question of whether to weigh in
on the cases “remains under re
view,” according to a statement re
leased by the White House.
Pilar Avila, a spokeswoman for
the coalition, said members of
the group have discussed the case
with Gonzales.
A high court decision against the
University of Michigan would have
an adverse effect on higher educa
tion for all students, not just minori
ties, Avila said.
“This is not a diversity or a Latino
issue,” Avila said. “This issue con
cerns the entire nation. ... A diverse
student body increases the quality of
education.”
University spokeswoman Julie
Peterson said officials are pleased
with the support of the Hispanic
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“They have strongly articulated
the reasons why access to higher ed
ucation is so crucial for the Hispanic
community, and their concerns
about the impact on related pro
grams, including financial aid.”
Sheldon Steinbach, general coun
sel for the American Council on Ed
ucation in Washington, D.C., said
many people are contacting the
White House and asking for support
of the use of race in admissions.
The council, an umbrella organi
zation for 1,800 colleges and univer
sities, expects to file a brief support
ing the university on behalf of
several dozen educational groups,
Steinbach said.
© 2003, Detroit Free Press. Distributed
by Knight Ridder/Tribune Information
Services.
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