Table 11
Revenue Growth in Tax-Cutting States ($ millions)
FY9598
Personal
FY9598 Personal Income
Incom e
Tax Revenue Growth
Tax Cuts
State
Amount
Percentage
Arizona
-$408
$396
28%
California
-$431
$8,433
48%
Connecticut
-$533
$1,160
52%
Georgia
-$140
$1,226
34%
Iowa
-$154
$724
48%
Massachusetts -$395
$1,823
32%
Michigan
-$462
-$1,003
-18%
Minnesota
-$465
$1,076
31%
Nebraska
-$84
$248
35%
New Jersey
-$752
$865
19%
N e w York
-$4,046
$2,469
15%
North Carolina -$226
$1,454
34%
Ohio
-$721
$535
10%
Oregon
-$343
$696
27%
P e n n s ylvania
-$81
$1,299
27%
mous conclusion is that there is no
relief. With more surpluses likely on the way
Per capita
connection between school funding
in 1999, states should consider the following
and school performance.38
steps to restore fiscal discipline.
savings on taxes
would have been
Tax and Expenditure Limitations
New solutions, including choice in educa-
tion, charter schools, teacher pay for perfor-
One successful strategy employed by some
$278 this year if
mance, and ending tenure to get rid of bad
states to prevent squandering budget sur-
every state had
teachers, would seem to be much more
pluses has been to constitutionally require
implemented a
promising ways to improve the schools than
excess tax revenues to be returned to taxpay-
simply writing larger checks to an ailing pub-
ers. Such measures are called tax and expen-
population plus
lic school system.
diture limitations. The evidence suggests
inflation tax cap.
that states with tax and expenditure limita-
tions have done a better job of restraining
Simple Rules for Restoring
state government growth than have states
Fiscal Discipline to the
without such disciplining measures.39
States
California, Colorado, Missouri, and Wash-
ington each have constitutional tax limita-
tions that restrict the growth of revenues to
Over the past several years state politicians
the rate of population growth plus inflation.
have proven themselves either unwilling or
Those states generally require that any rev-
unable to return their multi-billion-dollar
enue in excess of that amount be rebated to
revenue windfalls to taxpayers through tax
24