Taxes Are Up in 23 States, Expected to Go Up in 13 More

States are increasingly dipping into Americans’ pockets to replenish their cash-starved coffers.

Faced with gaping budget holes, 23 states have raised taxes this year, and 13 more are considering doing so as they set out to approve 2009-2010 budget agreements, according to a report by the Center on Budget and Policy Priorities, a liberal think-tank. In most cases, the tax increases come on top of cuts in public services.

The raises include income, sales and business taxes and take aim at anything from slot machine licenses to motel room taxes. Another popular target is alcohol and tobacco. New York, which estimated its budget gap at 29% in its 2010 budget, will charge 30 cents more on beer and wine. Similarly, seven states will race the price of a pack of cigarettes anywhere between 2 cents and $3.46.

This, however, may be just the beginning. In most cases, the actual deficits states will have to balance are wider than they estimated in the budget plans they’ll pass in the next few weeks. As the Journal reported on Thursday, a recent survey of 37 states found that revenues from income taxes fell by more than most states’ legislators expected in the first four months of 2009.

This will leave an additional gap, with which current budget plans don’t come to grips. In New York, for example, where the fiscal year kicked off on April 1, legislators have already announced that the skimpier-than-expected income tax harvest for Jan-April 2009 has left an additional hole of between $400 and $700 million in the state’s finances, according to Don Boyd, a senior fellow at the Rockefeller Institute, a non-profit.

Expect more tax hikes and services cuts in six months.

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