As we begin the fourth week of the session, it has become clear the dominant issue is the $400 million hole in the budget and how we are going to deal with it. In the legislative coffees with Sen. Janis Lee and Rep. Eber Phelps, this is about the only topic that comes up during the question-and-answer periods.

In order to take care of the shortfall, the state has only three choices. We cannot spend money we do not have and the budget must balance, so that is what limits our choices. The three choices are to pass revenue enhancements, cut spending or a combination of the two.

Much has been said about how no more cuts can be made without doing damage from which we might not be able to recover. Gov. Mark Parkinson has said he is not willing to make any more cuts to education. Public safety is at risk of being compromised if we begin to release prisoners before their sentences have been served. These and other services the state provides are in danger of being eliminated. If more cuts are made, there are no good programs from which to choose.

Revenue enhancements simply mean raising taxes. In general, I oppose tax increases at this time because of the negative effects on our already bad economy. Research has shown just the talk of raising taxes has a bad effect because when consumers hear the talk, they react by cutting back.

The majority of money coming into the general fund comes from sales tax and income tax. With the economy as it is, people are not spending so sales taxes are down and many do not have jobs, so income taxes are down.

Gov. Parkinson proposed raising the sales tax by 1 percent. He did so because estimates say it will come close to filling the hole and it is probably the easiest tax to pass. The bad thing about sales tax is it is worse for those least able to pay and bad for the automobile industry and the big ticket items. These are parts of the economy that are very important, that we must encourage rather than discourage. The good thing about sales taxes is everyone pays when they buy.

The House Tax Committee is considering sales tax exemptions. This has been done several times since I have been here. None has been eliminated and, in fact, it seems each time more are added. I do not see the votes to make many changes.

Income taxes are probably the most fair. If the payer makes the money, the theory is that person should be able to pay. If there are no jobs, the workers are not making the money. This tax is probably difficult to pass.

Sin taxes are an easy target, but not necessarily easy taxes to pass. Gov. Parkinson's plan to tax tobacco products is being considered, but parts of the state where most of the population resides are close to other states and consumers simply will drive across the line to make their purchases. This will hurt business in these border towns.

Property tax is the most disliked tax of them all. It is about the only way local governments are able to raise funds. It has no consideration of the owner's ability to pay.

The following are estimates of amounts each of the taxes will provide:

* Statewide property tax, 1 mill will provide $29.5 million per year;

* Statewide sales tax, 1 percent will provide $368.9 million;

* Statewide sales tax, 0.1 percent will provide $40.6 million.

The House Tax Committee already has voted to reject the governor's tax increase plan. I do not believe any tax increase will pass in the House at this time. If any taxes are increased, it will be late in the session, and it will be a combination of cuts and taxes.

Dan Johnson represents the 110th District. djohnson@ink.org