States Try to Nickel, Dime Their Way to Fiscal Health

It’s more expensive now to get a divorce in Colorado and register an all-terrain vehicle in Maine, and it may soon cost more to buy ammunition in California and visit a brothel in Nevada.

State politicians, loath to raise income and sales taxes, are adopting new fees and “nickel-and-dime” taxes, or increasing old ones, to generate tens of millions of dollars across the nation to make up budget deficits without angering the public.

Some of the increases, including higher tuition and fees at colleges, and higher vehicle registration fees, are drawing complaints in California and elsewhere that they will disproportionately affect lower-income families.

But other revenue sources, from higher cigarette taxes to increased fees to visit state parks, are considered politically palatable.

“States have huge budget gaps to close and they’re shying away from increases in the major taxes,” said Nick Jenny, senior policy analyst at the Nelson A. Rockefeller Institute of Government in Albany, N.Y.

“They don’t want to cut budgets more deeply than they have to, and they’re running out of rainy-day reserve funds.

“Fees are an attractive way of raising revenue without raising taxes. Nobody’s ever been voted out of office for raising fees too much.”

Smokers are among the most popular targets. Last year, 20 states, but not California, raised cigarette taxes, collecting an additional $3 billion in income, said Gene Rose of the National Conference of State Legislatures.

More states are expected to follow suit this year, he added.

New Mexico already has increased its cigarette tax by 70 cents a pack, and Nevada is debating the same, while Washington is considering a 50-cent per-pack increase.

While politicians in Nevada and New Jersey are reluctant to raise taxes on casinos, New Jersey is debating raising the $2 casino-parking fee, which is collected by the state, to $3. The increase would generate about $30 million.

“Non-tax sources of state revenue are receiving a higher degree of interest from lawmakers, given their general reluctance to pursue broad-based tax solutions to their current fiscal crisis,” Rose said.

Michigan is considering raising its daily vehicle permit fee to enter state parks by 50%, to $6, while Utah will no longer exempt people over age 65 from paying state park entrance fees, ranging from $5 to $7.

“The budget stress drives a look at state policy issues,” said Lynne Warde, director of the Utah Governor’s Office of Planning and Budget.

“Should seniors get a free ride if they’re driving up in a $100,000 RV?”

Most fees, already adopted or under consideration as state legislatures race toward budget deadlines, target users of specific services, minimizing widespread political fallout.

To offset state funding cuts to their courts budget, the Colorado state judiciary has increased various court-filing fees by 50%.

Besides increasing the fee to file for divorce to $144 from $90, filings for adoptions and grandparent visitation rights, among others, also cost more.

“We have no programs that can be cut,” Colorado Chief Justice Mary Mullarkey said in announcing the fee hikes.

“We simply cannot handle the growing caseloads with the shrinking resources available to us.”

While many fees are considered nickel-and-dime increases, others are more dramatic -- including tuition and fee hikes at colleges and universities to offset cutbacks in state support.

Trustees at Ohio’s Miami University will this week consider raising the tuition of in-state students to $16,300, the same amount charged out-of-state students. Ohio residents currently pay $7,600. Lower-income families would be eligible for additional student aid.

Public universities in Iowa and Kansas have increased their tuition this year by about 20%, and across the country, increases are averaging 10%, according to the National Assn. of State Universities and Land-Grant Colleges.

Campuses are facing higher costs and more students at a time when they’re getting less state support, said Sally O’Briant, spokeswoman for the association.

“It’s not going to be a pretty picture,” she said. “The impact on students will be severe.”

In Sacramento, thousands of students last month protested the governor’s proposal to double the fees at two-year colleges while reducing the number of classes and laying off teachers.

“You’ll get reaction [to fee increases] when fees start piling up in a certain kind of business, such as higher education,” said Jenny, the Rockefeller Institute analyst. “But if you raise 20 different fees scattered all across the place, nobody will react to that in a coordinated way.”

In California, the Legislature is debating whether to assess a dime on the sale of each bullet and shotgun shell and to add a nickel tax on each drink at a bar or each bottle of alcohol, to help pay for emergency hospital services. It is also considering a $3 levy on the production of each gallon of perchloroethylene, a dry-cleaning solvent, to help fund a new clean-air initiative.

The Nevada Legislature is debating an entertainment tax on admission to movie theaters and concerts as well as on video rentals. Assemblywoman Sheila Lesley wants the bill to include the state’s legal houses of prostitution. She is supported by the brothel industry, she said, because it would add further legitimacy to their businesses.

“If we’re going to have an entertainment tax ... it should include all forms of entertainment, including charging customers of brothels,” she said.

Projecting income from a proposed 6% brothel fee is difficult, officials say, because brothel charges are negotiated.

But legislators aren’t sure how to define the brothel industry. One bill proposes that it be assessed the entertainment fee; another bill includes brothels for new fees on service industries.

“Either way, I just figure that if we’re going to tax video rentals, we should tax brothel customers,” Lesley said.