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nomic expansion, state revenues naturally continue to rise

substantially from year to year, particularly in states with

progressive income tax codes.  Furthermore, in many cases

the tax cuts of 1994-98 have not fully reversed the massive

tax hikes of 1990-92.  As a result, since 1990 total state

and local revenues as a share of incomes have risen from

22.2 percent to 25.1 percent.

State taxpayers fare worse today when it comes to the

litany of fees, tolls, and excise taxes imposed by states.

"Voters will no longer tolerate big broad hikes," notes a

December 1997 Wall Street Journal editorial titled "Sales

Tax Mania."  "So politicians simply have started picking

targets they hope voters won't notice.  Hence, the recent

spate of gas taxes, hotel12taxes, car-rental taxes, ciga-

rettes taxes, and so on."

A case in point is Wisconsin's

Tommy Thompson, who has earned accolades in the past as an

anti-tax-and-spend CEO.  In his 1998 budget Thompson re-

quested an increase in the gasoline tax and the cigarette

tax as well as a tax on Internet sales.  Governor Whitman of

New Jersey has hiked the gas and cigarette taxes.

Of course, it is still unquestionably true that the

current group of governors is far more fiscally conservative

than the Florios, Cuomos, Weickers, and Caseys they re-

placed.  On balance, the most onerous state and local

taxes--income, property, and sales taxes--have fallen in re-

cent years.

Nonetheless, rumors of the takeover of state government

by fiscal conservatives have been greatly exaggerated.  In

our 1996 report card, we wrote that "from Albany, to Tren-

ton, to Lansing, to Phoenix, the culture of big government

liberalism is in clear r3etreat in the states and fiscal con-

1

servatism on the rise."

That statement was made after 21

states slashed taxes in 1995.  But now we are not so confi-

dent of a genuine conservative paradigm shift in state capi-

tals.  We are deeply discouraged, for example, that more of

this year's revenue windfalls went for spending increases

than for tax cuts.  And as the example of Tommy Thompson in-

dicates, even many of the most celebrated fiscal downsizers

in the statehouses have caught the spending bug--particu-

larly in this election year.

State Tax Rates Are Falling

In the 1990s the states have undergone a dramatic

about-face on tax policy.  The years 1990-92 brought record

tax increases to attempt to balance state budgets in the re-

cession.  Since then the states have, by and large, pursued