Class Warfare in the Statehouses


June 17, 1991|By NEAL R. PEIRCE

Are the states to be the crucible of class warfare in America in the '90s?

It won't happen as a Marxian revolt of the proletariat. (We're not likely to see a governor guillotined.) But in state after state, the interests of the poor are on a collision course with those of affluent middle- to upper-income taxpayers. The struggle is coming into bold relief on the issues of budget cuts, diminished urban aid, tax increases and court orders for equal spending among rich and poor school districts.

In Connecticut, lawmakers are grappling over proposals to cover a Himalayan deficit by passing the state's first income tax. If they can muster the political courage to do so, it would be welcome news for Connecticut's desperately poor inner cities -- Bridgeport, Hartford, New Haven and Waterbury among them.

In the face of a $17 million budget shortfall, Bridgeport this month became the largest city ever to file for federal bankruptcy protection. Hartford is so desperate it's talking of a wage tax on commuters. The city manager stunned the suburban # establishment when he suggested Hartford might ''divest'' itself some of its poor by tearing down public-housing projects and sending 1,000 or more families to the well-to-do towns that ring the city.

Grim statistics now support the obvious: Inner-city poverty escalated in the '80s, exacerbating income differentials with the suburbs.

A couple of decades ago, city-suburban income levels were roughly equal. Not now. Latest figures compiled for the National League of Cities show city dwellers' income at only 59.5 percent of suburbanites' in 62 cities. The Cleveland figure is 42.8 percent, Baltimore 47.4 percent, Philadelphia 48.9 percent, New Orleans 58.1 percent and Dallas 66.1 percent.

This year's state-budget crises have forced legislatures to trim some of the middle class' favorite programs, such as parks, roads and education. School-aid cuts will force painful property-tax increases in some suburbs.

But on the pain scale, the poor will suffer more. A congressional report shows that after adjusting for inflation, state parsimony has already cut the value of welfare payments on average by 42 percent since 1970. Yet in many states this spring -- California, Michigan, Massachusetts, Ohio, Illinois among them -- governors have chosen basic welfare benefits for some of their biggest cuts.

Citizens for Tax Justice, a Washington-based research group, compiled figures on the share of income various groups pay in taxes. Only two states -- Vermont and Delaware -- come close to overall progressive tax systems. At the other extreme are ten states whose tax burdens hit poor families proportionately up to five times as hard as the wealthy -- Nevada, Texas, Florida, Washington, South Dakota, Tennessee, Wyoming, New Hampshire, Pennsylvania and Illinois.

Progressive federal taxes, plus generous federal aid for poor urban and rural communities, once masked some of these inequities. In the wake of the Reagan revolution, much of that equalization is gone.

Is there hope that state taxes could turn more progressive? Not until regressive sales and property taxes are balanced with substantial, progressive state-income taxes. Eight states on the Citizens for Tax Justice ''Terrible Ten'' list have no broad-based income tax. The two that do -- Pennsylvania and Illinois -- have minimal flat-rate income taxes, not progressive structures.

Pressures are mounting on such states as Connecticut, Florida, Tennessee, Texas and New Hampshire to embrace an income tax. Resistance is fierce, but another year of fiscal crisis may break the logjam.

Another explosive issue in the courts is whether it's constitutional that suburbs can restrict their property-tax wealth to educate their own kids to the exclusion of poor districts. Judges increasingly are lowering the boom. Court pressure recently forced Kentucky and New Jersey into radical school refinancing, with poor districts (urban and rural) the big winners.

This year's mega-struggle has been waged in Texas, where the state supreme court, noting an average $2,000 per-child per-year differential between affluent and poor districts, ordered the legislature to devise a more equitable system. Fearful of voter backlash if they enacted an income tax to pay the bill, Texas legislators reluctantly devised a jerry-built, Robin Hood-style plan shift hundreds of millions of dollars between rich and poor districts.

More than a dozen other school-finance cases are in the pipeline in various states, according to Steven Gold of the State University of New York. Each time one succeeds, more litigants for poor communities in other states come forward.

If the courts assert themselves and knock the rawer edges off class inequities and conflict in today's politics, it won't be the first time: Precedents are civil rights and the malapportionment that plagued state legislatures for a century and more. The courts have had to step in before to goad us toward fairer democracy. It looks as if they will have to again.

Neal R. Peirce writes a column on state and urban affairs.

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