Faced with the worst fiscal crisis in a generation, city and state officials across the nation are hiking hundreds of fees rather than raising taxes, a tactic that places a disproportionate burden on poor and working-class Americans.
In New York, subway and bus fares will jump 33 percent in May, and state officials plan a 7 percent tuition hike for public colleges, a combined annual hit of nearly $2,000 for the average student. New Yorkers already pay twice as much this year to use public tennis courts and baseball fields. And they pay more to obtain a marriage license or birth certificate, to pay off parking tickets and to make a cell phone call.
In California, the governor has proposed a blizzard of fees, including increasing the cost of car licenses and fees for college students. In Maine, the governor wants to charge more for hunting and fishing licenses, and for admission to museums and parks. In Massachusetts, Gov. Mitt Romney (R) has proposed charging $50 for tuberculosis tests -- and wants to charge a $400 fee when someone tests positive.
The D.C. Department of Motor Vehicles increased some fees by 30 percent last month. Car registrations now cost $72, up from $55, and a driver's license is $34, an increase of $9. Fairfax County has increased fees at parks, recreation centers and golf courses.
Most analysts regard the income tax as the most progressive levy, their theory being those who make the most money can afford to pay the highest taxes. But most governors and legislatures shy from talking of such taxes, fearing a revolt in these tax-leery days. To date, only 14 state legislatures have discussed raising income taxes. In California, Gov. Gray Davis (D) has proposed raising the income tax rate for the wealthiest voters, and he has been slammed by Republican legislators.
New York is more typical. Mayor Michael Bloomberg (R) has increased fees by $139 million this year -- and proposed slashing the city income tax rate.
"There's a lot of resistance to broad-based taxes so politicians turn to fees," said Marcia Van Wagner, chief economist at the Citizens Budget Commission, a business-funded research group here. "There is a tendency to nickel and dime in hard times, and it adds up a pretty regressive hit."
The Center on Budget and Policy Priorities in Washington has charted the rising tide of fee increases. "The fees have no relationship to ability to pay," said Nick Johnson, director of the center's State Fiscal Project. "What may seem fairly innocuous to a middle- or upper-income family may be more burdensome to a family having difficulty making ends meet."
That's the case in New York, which faces a $3.5 billion budget shortfall. For the city's 13,000 millionaires, a $100 tennis fee -- up from $50 last year -- and a subway fare increase are a nuisance cost. But for most city residents, whose median family income is $41,887, such increases represent a substantial slice in their disposable income.
High on a hill in upper Manhattan at City College -- which is part of the city university system -- working-class students tabulated the potential hit on their wallets from proposed fee increases.
"Do these fees affect me? Big time," said Mathew George, a junior in computer engineering, as he stood in a school courtyard off Convent Avenue. "Fifty cents more a day on the subway means less for lunch and a rumbling stomach."
He figures the subway fare hike will cost $150 a year. A tuition hike adds hundreds more dollars to that tab. He already works 30 hours a week and carries a full course load. He lives at home with his parents, immigrants from India who work minimum wage jobs. Sixty percent of the 220,000 students in the city university system come from families making $30,000 or less annually.
"For the higher classes, these are little amounts of money," George said. "For us, it's the difference between staying in school and not."
City and state officials defend a growing reliance on fees on several grounds. In New York, Bloomberg depicts the strategy as born of necessity. He's raised the property tax by 18 percent, and he has proposed a commuter tax that would raise close to $1 billion.
But Gov. George Pataki (R), whose approval is needed, opposes a commuter tax. State officials also threaten to veto any proposal to increase city income taxes.
So the mayor has turned to all manner of fees. He has raised parking rates at city garages, converted meters from six days to seven days, hiked fire inspection fees for nonprofit groups and raised the cost of softball and volleyball permits. He has quadrupled the fee for sidewalk cafes and hired 300 new traffic enforcement agents. And he has talked of installing tolls on the Brooklyn Bridge.
In Massachusetts, Romney offers a broader, philosophical defense of fee increases. He has proposed a broad array of fees that would impose higher co-payments for Medicaid patients and force hospitals to pay for a greater share of caring for the indigent -- with hospitals expected to pass some of that cost onto paying patients. He draws a distinction between broad-based taxes and "user fees." He has said that taxes, particularly in a high-cost state such as his own, should be reserved only for the broadest services.
"Fees go for direct service," Romney spokeswoman Nicole St. Peter told the Boston Globe recently. "Taxes are something that is assessed that everyone has to pay."
That distinction, critics rejoin, can blur upon closer inspection. From schools to highways to tuberculosis screening and motorcycle and court fees, every service is used by some people more than by others. "Fees are a slick way for a politician to avoid a tax increase," said Eric Goia, a city council member in Queens, N.Y. "It's sneaky, and it hurts those who work hardest and make the least."
California faces the worst of all possible budget deficit worlds. Its deficit is so mountainous -- topping $30 billion -- that politicians have responded with a proposed income tax increase and dozens of fee increases. The governor has proposed a 25 percent student fee increase at state universities and two separate library user fees. State legislators have jumped in, proposing fees on alcoholic beverages, bottled waters and car washes.
"They are using fees as a surrogate for taxes to fund . . . general government operations," said Larry McCarthy, president of the California Taxpayers Association. "It's a dangerous time."
As government leans more on fees and fines, it risks hammering vulnerable economic sectors in an unintended fashion. In Inwood, a working-class enclave tucked at the far north end of Manhattan, sits Patrick's Pub. It's strictly a neighborhood pub, and the owner is dying a death by inspection.
The last time city health inspectors showed up, owner Joe Kowalczyk received 12 violations. He appealed and knocked them down to one -- which cost him $100. His bartender didn't wear a hairnet when cutting lemons.
"You ever see a bartender with a hairnet?" Kowalczyk asked. He said he believed inspectors have been cracking down on local businesses to force them to pay fines as a way to raise revenue.
This isn't just idle whining. In New York, sanitation citations and parking tickets have been hiked to about $100 apiece. For business owners, that's money they can't plow back into their establishments. Likewise, a schoolteacher who pays $30 more each month for the subway may forgo lunch at a delicatessen or buying a new shirt. There's simply no margin for error.
"If government takes more money from moderate income people in fees and fines, that's less money flowing through the economy," said Van Wagner, the Citizens Budget Commission economist. "And that's an unplanned loss for the entire city."
Special correspondent Kimberly Edds in Los Angeles contributed to this report.