As I write this (May 2007), the State Legislature has yet to balance the budget for the current fiscal year, which is half over. There is an $800 million shortfall, and since the Single Business Tax will end September 30, there is a huge deficit for the coming fiscal year. The wrangling over the budget seems to go on endlessly, leaving little energy to address other issues.
I would solve the problem once and for all by requiring the State Treasurer to adjust the Individual Income Tax rate each quarter so that total revenues match expenditures. In effect, the rate would “float” to keep the budget in balance.
Legislators would no longer set the Income Tax rate, but they would control it indirectly by their actions. A spending increase, for example, would result in a tax increase. So would a cut in another revenue source such as business taxes. Legislators would no longer be able to avoid the consequences of their actions. To claim credit for cutting the Individual Income Tax, they would have to either cut spending or increase other taxes.