WASHINGTON, Feb 23 (Reuters) - Republican governors on Sunday shrugged off tax hikes forced on some of their number by the worst fiscal crisis to hit states in decades as an unpleasant but unavoidable sign of the times.
"It's not something that's comfortable for me," Arkansas Gov. Mike Huckabee, whose 5/8-cent sales tax hike proposal has yet to be acted on by state lawmakers, told reporters at the National Governors Association (News - Websites) winter meeting.
"I think it shows we're willing to be leaders. To me, if we're going to talk about the mantra of compassionate conservatism, there's no compassion in telling elderly people, I'm sorry, we're going to take your wheelchair away."
The governors were due on Monday to meet President George W. Bush, elected in 2000 on a platform of "compassionate conservatism" to discuss ways to rev up the sluggish economy, considered the chief culprit behind states' collective budget shortfall this year of up to $75 billion.
Analysts forecast 2004 will be equally if not more gloomy than the current fiscal year, which ends for most in July, with the aggregate 50-state deficit potentially hitting $85 billion.
Unlike the federal government, the states must end the year with a balanced budget and must therefore cut spending or raise revenues as necessary to make ends meet.
With emergency reserves, rainy day funds and other one-time funds mostly spent and as much fat already trimmed from budgets as politically possible, many states are facing an unenviable choice between slicing spending to the bone or raising taxes.
Many already raised so-called "sin taxes" on cigarette products and alcohol to help flesh out the current year's budget, leaving just politically sensitive targets such as individual pocketbooks, corporate income and property.
While Democrats have historically been lampooned as a profligate "tax and spend" party, even Republicans who cut taxes during the fat decade of the 1990s are being forced to hold their noses and bump up revenues to make ends meet.
SIGN OF THE TIMES
"I just didn't feel I could cut any further," Nevada Gov. Kenny Guinn, who has asked lawmakers to consider new or increased sin, sales, property and business taxes to cover a $700 million hole, told Reuters.
"It's a sign of the times and whether you're a Democrat or Republican you don't have a choice," Guinn added, dismissing suggestions that tax hikes would prove a political liability.
"I'm doing what I think is right. I would be in a great deal more trouble if I said, I'm not hiring any more teachers, you're not going to open those new schools..."
Democrats and some think-tanks blame Bush's tax cuts for at least part of the states' current woes and say his reluctance to provide direct cash assistance as part of an economic stimulus package undermines efforts to get the economy moving.
But Republican governors defended Bush and said reform of major spending programs would have greater long-term impact.
"I'm not really in favor of a bail-out," Ohio Gov. Bob Taft, whose alcohol and cigarette-tax increase proposal was rejected this month by state lawmakers, told reporters. "I believe there are systemic issues that must be addressed."
Top of the governors' hit list for reform is the $250 billion Medicaid health care program, serving about 44 million poor and disabled people and paid for jointly by the states and federal government.
Governors said they were still waiting for Bush's administration to release the details of a proposed reform plan that would give states extra money over the next few years but which some analysts and public health care directors fear could hurt states and beneficiaries more in the long run.
The governors later had dinner with Bush at the White House, where the president pledged to work with them to protect the country against terror attacks and get the economy back on its feet.
"We share the responsibility to protect the homeland and to encourage economic growth and jobs," Bush said. "We'll meet these responsibilities together."
(additional reporting by Mark Wilkinson)