States Being Taxing Services

March 31, 2010— -- Cash-strapped states across the country are looking to their cash-strapped residents for even more money – by taxing services they buy, not just goods. Everything from car repairs and dry cleaning to personal training and party clowns are being targeted for new taxes.

Personal Trainer Kelly Garner is outraged, telling ABC News, "another tax is not what we need right now." State budget officers disagree.

The new taxes are hitting citizens of states across the country. Hawaii, New Mexico, Washington, South Dakota and Delaware already tax a number of services. Other states are quickly following their lead.

Nebraska lawmakers are considering new taxes on everything from shoe shines to farm equipment repairs. In Kentucky, the state is considering taking a cut of lawn services and limousine rides. Maine could decide to tax the fun out of performers like clowns and jugglers. And, in Pennsylvania, accountants and even plumbers could have their labor visited by the tax man for the first time ever.

Consumers do two-thirds of their spending on services, and with massive budget deficits, state governments say they can't afford not to consider another source of revenue.

Lost jobs and sagging property values have taken a drastic toll on state coffers.

Sujit Canagaretna, of the Council of State Governments, said that only two states, Montana and North Dakota, are operating in the black. The other 48 are seriously dire need of money. "The environment we are in currently has not been experienced since the Great Depression. Sates are floundering in red ink."