Altered States

Grass-roots tax revolts grow

They were attractive Democratic candidates who easily captured the crucial states of Ohio and Michigan, succeeding retiring Republican Governors. Their wins last fall were viewed by nervous G.O.P. strategists as a grim signal to Ronald Reagan and his economic programs.

But now Ohio's Richard Celeste and Michigan's James Blanchard are in trouble over their own economic programs. Although they sidestepped the issue of tax hikes during the campaign, both new Governors quickly made taxes a top priority in order to combat their states' mounting budget deficits. Blanchard estimated Michigan's deficit at $900 million, and Celeste projected a $528 million shortfall.

In Ohio, Celeste made permanent a temporary 50% personal income tax hike passed by former Republican Governor James Rhodes and, on top of that, steered through a 40% increase. Blanchard last spring engineered a 38% Increase in personal income tax, with provisions for a partial rollback in 1984.

The backlash was not long in coming. On opening day of the baseball season in Cleveland last April, Celeste faced an embarrassing chorus of boos as he threw out the first ball. "Substantial tax increases are not popular," said Celeste matter-of-factly. "I recognize and respect the anger of the people." But the anger in both states grew more insistent, and grass-roots groups fighting the increases began to burgeon.

In Ohio, a coalition incorporated as SET (Stop Excessive Taxation), proposed two amendments to the state constitution. One would repeal all taxes enacted since January 1983. The second would mandate that all tax bills require a three-fifths majority approval in the legislature. By Aug. 10, volunteers all over the state had collected more than 525,000 signatures for each proposal, about 200,000 beyond what is needed to get both measures on the November ballot.

The battle lines on the repeal are not traditional, nor do they follow party lines. Although SET is masterminded by the conservative wing of the Republican Party and has some major business support from the likes of J. Ray Topper, president of Anchor Hocking, and W.R. Timken Jr. of Timken Co., it is also supported by the rank-and-file members of some labor unions. Leading the opposition is John Mahaney, the Republican president of the Ohio Council of Retail Merchants, who counts the Ohio Education Association and the state AFL-CIO on his side and who hopes to raise $2 million to fight the repeal. Explains State Senator Richard Pfeiffer: "The effects of Proposition 13 are coming home to roost in California, and if the repeal passes, they will eventually come home to roost in Ohio."

Repeal Cheerleader Topper denies that Governor Celeste is the hidden issue. But in Michigan Blanchard is clearly a target of the antitax movement. It started when John Lauve, a GM engineer, sent "the shirt off his back" to the statehouse in Lansing last March to protest the 38% tax increase. His gesture inspired other Michigan voters, and soon a "Recall Blanchard" movement was launched. Within weeks, petitions were circulating across the state to gather the 760,000 signatures necessary to call a special election. Although Lauve and his followers missed the mark, they did get 522,000 names during the allotted 90-day period, a significant rebuff to the tax increase and enough to surprise the initially unconcerned Blanchard.

Petitions are also being circulated to remove state legislators who voted for Blanchard's tax package. There is a fledgling lobbying effort, similar to the one in Ohio, to put on the November 1984 ballot an amendment to the state constitution that would roll back the tax levels to those that existed on Dec. 31, 1981, and require a four-fifths approval of the legislature to pass any new taxes.

Strategists for both parties are speculating about the effect of these tax revolts on the 1984 elections. Republicans in both states may be helped in their local legislative races. And, with his antitax stance, Reagan may benefit in Ohio, where a close presidential vote is expected. This file is automatically generated by a robot program, so viewer discretion is required.