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Fiscal cliff to impact area taxpayers

By Glenn Evans
Dec. 16, 2012 at 11 p.m.


Government services at all levels would be impacted if lawmakers fail to reach a deal to avoid automatic $110 billion in cuts to entitlements and national defense in 2013.

That would be the first wave of sequestration, a $9-word for the $1.2 trillion in automatic cuts occurring during 10 years if Congress and President Barack Obama can't steer the country off what's more familiarly called the fiscal cliff.

"The fiscal cliff is real and will affect everybody," Sen. Kevin Eltife, R-Tyler, said. "But, the future debt of this country will be much worse than any fiscal cliff if we don't deal with it."

The national debt, now at $16.3 trillion, drove leaders in Washington, D.C., to create the fiscal cliff as part of a deal that allowed the U.S. to raise the limit on how much debt the federal government can create.

Eltife said he was concerned about federal reimbursements on state spending as state lawmakers look to their every-other-year session beginning Jan. 8. The only bill required of any legislative session is the state's two-year budget.

Much of that budget includes so-called pass-through money the federal government sends the states to use for a wide array of projects - from transportation to health care, education, environmental and agricultural programs.

Gregg County Judge Bill Stoudt said the county's budgets rely heavily on many of those pass-through dollars - for indigent health care, services for the mentally ill, ongoing airport improvements and more.

"You'll see infrastructure grants that go to counties like Gregg to form partnerships with (Texas Department of Transportation) go away," he said, noting the effects would go far beyond county government services.

"You could see employment benefits go away. You could see lots of the grants that go to our non-profits go," Stoudt said. "It clearly will have an effect on the people walking down the streets. There will be increases in taxes, on capital gains and stocks, and in 401(k)'s."

Everybody will share the concussion if the country falls off the fiscal cliff, he said.

"Whether it be governments, financial works, housing, banking, no one likes uncertainty - bottom line," he said. "When you have uncertainty, people tend to shut down their finances, their investment, the normal conduct of business. ... If that cliff does happen, it's my guess you'll see all kinds of spending down at all levels."

The judge was not in a forgiving mood toward Congress and the president.

"Washington has got to get off the partisan issues," he said. "This country's 230-something years old, and it has been built on compromise. I want to see both parties come together for the good of the country and quit this damaging, my-way-or-the-highway."

U.S. Rep. Louie Gohmert isn't happy with either side of the private debate that continues in Washington, D.C.

"Our system was never intended to have the most important legislation secretly negotiated behind closed doors," Gohmert wrote in response to a request for comment. "The sooner President Obama and Speaker (John) Boehner realize that, the better off we all will be."

Gohmert did not comment on the cuts to entitlements being bandied about, but was concerned about the effects Obama's tax proposal could have in Northeast Texans.

Two-thirds of American businesses are not incorporated, and their owners file individual tax returns on them, Gohmert wrote. That means those businesses with greater than $200,000 income will feel the tax hike the president says is meant for wealthier individuals.

The congressman estimated the president's tax hike aimed at corporate oil could dry up independent producers instead.

"The devastating tax changes in the president's jobs act would likely eliminate over 90 percent of the drilling operations in East Texas," he wrote, adding that local loss would have widespread economic consequences.

Citing the conservative Heritage Foundation, Gohmert said the pending expiration of tax cuts will mean " ...the average income tax in 2013 is estimated to go up by $2,570 per tax return for our own current East Texas district."

Some struggling owners have already said they will have to let people go to pay the extra taxes, Gohmert said. This means more people out of work, less people paying taxes and overall less tax revenue coming in.

At the municipal level, federal money funded the Child Sexual Predator and Internet Crimes Against Children programs with the Longview Police Department in 2012, at $73,000.

It also provided $6.8 million for housing programs in Longview, city spokesman Shawn Hara reported. Another $940,000 Federal Transit Authority pass-through fuels 63 percent of the Longview Transit budget, the bus system.

"Transportation is one of the big ones," Hara said. "Because, the (Metropolitan Planning Organization) is 100 percent funded by federal dollars."

The MPO is a federally established panel that oversees highway work in a 50-mile radius of Longview. Its three employees, including Director Karen Owen, hope they're not going anywhere if the country goes over the cliff.

"Most of our local funding (outside property and sales taxes) is filtered through some federal agency," Hara said. "Where we all are right now is a wait-and-see approach."

So are middle class taxpayers, for whom federal income tax will rise 4.4 percent, according to the Washington Post citing multiple nonpartisan think tanks. Top-tier federal income tax payers will see their rates rise 11.8 percent as part of the $5.1 trillion automatic tax increase.

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