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Issue Brief


Election 2010 Results: How Taxpayers Fared at the Ballot Box
Issue Brief #181

November 10, 2010

Introduction

     The economy dominated the 2010 Midterm Elections, and the campaigns for state and local ballot measures were no exception. While much attention has focused on a “national wave” that swept dozens of fiscal conservatives into Congress, that wave could also be seen in varying degrees at the state and local level. Last month, the National Taxpayers Union (NTU) published its 2010 Ballot Guide: The Taxpayer’s Perspective, which analyzed nearly 100 statewide and more than 450 local ballot measures in 33 states that impacted fiscal policy and taxpayers. Now that the votes have been counted, we look back on the results to see how taxpayers fared at the ballot box.

     NTU identified a total of 93 statewide measures with an impact on taxpayers, including 43 tax-related measures, 13 bond spending issues, 30 government reform questions, and seven in direct response to Congressional action. The good news for taxpayers is that voters approved 71 percent of the measures we identified as having the potential to lower taxes or limit government. Citizens also approved 58 percent of measures that would raise taxes or expand government; however, if bond issues are excluded from the total, the majority of measures in this area went down to defeat.

     Results from State Ballot Questions Highlighted in NTU’s 2010 Ballot Guide:

 

Total Number

Number Approved

Number Rejected

Measures that would lower taxes/limit government

57

40

17

Measures that would raise taxes/expand government

36

21

15

     This Issue Brief further explores home runs and strike-outs for taxpayers in the 2010 election season in the areas of taxes, bond spending, and government reform in several states across the United States. While several victories signaled an unwillingness to accept higher taxes in order to balance bloated state budgets, some golden opportunities were missed to further reduce government’s burden on taxpayers’ wallets.

Taxes

     Taxes were probably the area where limited government advocates were most successful in capitalizing on the “wave election”. This year taxpayers voted on a total of 43 measures we identified as having potential impact on tax burdens. Of those 43 measures, taxpayers voted in support of limited government on 30 of them (roughly 70 percent). The following table illustrates the results for statewide tax measures on the ballot, including an indication of whether NTU’s Ballot Guide marked it as a potential expansion or limitation of government.

State

Number

Subject

NTU Guide

Result

AL

1

allow state to levy fee to conduct property tax assessments

Rejected

AL

2

allow special education taxes to be levied by simple majority vote, rather than 3/5 supermajority vote

Rejected

AL

4

prohibit a municipality not located entirely in Blount County from imposing any ordinance, regulation, or tax in its police jurisdiction in Blount County

+

Rejected

CA

21

vehicle license fee increase

Rejected

CA

23

suspend AB 32, state’s cap-and-trade bill

+

Rejected

CA

24

repeal of business tax relief

Rejected

CA

25

repeal 2/3 vote requirement to pass state budget

Approved

CA

26

require 2/3 vote to increase fees

+

Approved

CO

101

 reduce income tax, cap vehicle taxes, end telecommunications taxes, except 911 fees

+

Rejected

CO

60

allow petitions for elections to lower property taxes, set expiration dates for certain tax rate and revenue increases, prohibit extension of expiring property taxes without election, reduce current school district mill levies by 50 percent over 10 years 

+

Rejected

CO

61

prohibit state from incurring debt

+

Rejected

CO

R

eliminate property taxes for businesses that use government-owned property for private benefit 

+

Rejected

FL

2

property tax exemption for active duty members of U.S. military and Florida National Guard deployed outside the U.S. 

+

Approved

GA

2

impose $10 registration fee on motor vehicles

_

Rejected

GA

 

A

exempt businesses inventory from state property taxes

+

Approved

HI

 

2

give Legislature discretion to direct excess tax revenue into a reserve fund

_

Approved

IN

 

1

cap property taxes on residences and businesses

+

Approved

IA

 

1

divert three-eighths of sales tax increases to a Natural Resources and Outdoor Trust Fund

_

Approved

LA

 

2

increase share of severance taxes returned to parishes

+

Approved

LA

 

3

allow for elections to exempt the first $150,000 of value from homes of disabled veterans from taxes

+

Approved

LA

 

4

limit property tax increases by several non-elected governments to 2.5 percent

+

Rejected

LA

 

5

grant two-year extension of the homestead exemption for homeowners unable to occupy their homes due to natural disaster

+

Approved

LA

 

6

require 2/3 majority vote to authorize  benefits for state employees adding cost to taxpayers

+

Approved

MA

 

1

repeal sales tax on alcoholic beverages

+

Approved

 

MA

 

 

3

reduce the state’s sales and use tax rate from 6.25 percent to 3 percent

 

+

Rejected

MO

 

2

exempt disabled prisoners of war from property taxes

+

Approved

MO

 

3

prohibit taxing real estate sales or transfers

+

Approved

MO

 

A

repeal authority of cities to levy an earnings tax

+

Approved

MT

 

105

prohibit state or local governments from imposing any new tax on sale or transfer of property

+

Approved

MT

 

161

abolish certain hunting licenses and increase fees on non-resident big game hunters

_

Approved

NE

 

1

expand revenue sources local municipalities can draw on to finance economic development

 

_

 

Approved

NV

 

3

allow legislators to make administrative changes to sales and use tax without voter approval

_

Rejected

NM

 

4

exempt congressionally chartered veterans’ organizations from state property taxes

+

Approved

OK

 

757

increase the amount of surplus revenue into the rainy day fund from 10% to 15%

+

Approved

OR

 

75

authorize construction of casino in Multnomah County and create 25 % tax on gross revenues

_

Rejected

SC

 

3

increase the amount going to state’s “rainy day fund” from 3 percent to 5 percent of previous year’s revenue

+

Approved

UT

 

C

exempt non-profit entities providing public uses from property taxes

+

Approved

VA

 

1

allow localities to exempt seniors and the disabled from property taxes

+

Approved

VA

 

2

exempt a disabled veteran or a surviving spouse from property taxes

+

Approved

VA

 

3

increase size of rainy day fund from 10 percent to 15 percent of average income and sales tax revenues for the last three fiscal years

+

Approved

WA

 

1053

require two-thirds majority vote  or a popular vote to approve a tax increase

+

Approved

WA

 

1098

levy an income tax on individuals making over $200,000 and couples making over $400,000

_

Rejected

WA

 

1107

repeal expansion of sales tax to candy, bottled water, and soft drinks

+

Approved

     Note: A “+” sign indicates a measure to limit government and a “–” sign indicates a measure to expand government, as reported in NTU’s Ballot Guide 2010.

     On several efforts to expand the size of government, voters answered with an especially vocal “no”. Washingtonians overwhelmingly defeated (by a 2 to 1 margin) Initiative 1098, which would have imposed an income tax for the first time in the state’s history. At the same time, Washington voters approved Initiative 1053, which reinstates a supermajority requirement to raise taxes that the Legislature had recently gutted, and Initiative 1107, which repeals the recent sales tax expansion to candy, bottled water and soft drinks.

     In Missouri, citizens resoundingly approved (again, by a 2 to 1 margin) Proposition A to repeal the authority of cities to levy an earnings tax. The measure also requires voter approval for the continuation of earnings taxes in Kansas City and St. Louis at the next municipal election, and requires any earnings tax not approved by voters to be phased out over 10 years. This measure was one of several efforts nationwide to give taxpayers a more direct voice in determining their tax burdens.

     Meanwhile, several states passed structural reforms to taxation, including Indiana’s approval of a measure enacting a constitutional cap on annual property tax increases. Public Question 1 caps property taxes on residential property at 1 percent, rental property in residential areas at 2 percent, and taxes for business at 3 percent. In California, voters approved Proposition 26, which will make it harder to raise “stealth taxes” in the form of fees by subjecting more of these levies to a 2/3 supermajority vote requirement.

     In addition, voters in states like Florida, Georgia, Louisiana, Missouri, New Mexico, Utah, and Virginia heavily supported a variety of smaller tax exemptions and reductions for businesses, non-profit entities, and individuals such as military veterans.

     Still, the news was not all good for taxpayer activists. In California, voters rejected the highly contested Proposition 23, a measure that sought to suspend a California-only “cap-and-trade” bill that may lead to higher tax burdens and energy prices. Californians also approved Proposition 25 repealing the current 2/3 supermajority vote requirement to pass state budgets, making it easier for lawmakers to enact tax increases in budget debates.

     Voters in Colorado turned down three separate tax-related measures. Proposition 101 would have reduced the state income tax and various motor vehicle fees and taxes, as well as state and local charges to telecommunication services. Amendment 60 would have limited how property taxes are raised and cut mill levies in half by 2020. Amendment 61 would have prohibited state borrowing and required voter approval for local government borrowing.

     In Massachusetts, citizens rejected a rollback of the state sales tax from 6.25 percent to 3 percent. Recently elected officials had raised the rate by 1.25 percentage points, so supporters saw the proposed tax reduction as an opportunity to give an extra boost to the state’s competiveness in the region.

     In all of these states, taxpayer advocates faced strong opposition from labor unions, especially those representing public employees and other special interests that benefit from government spending. These groups contributed millions to advertising and get-out-the-vote activities to help ensure that these limited government efforts failed. For example, nine of the 13 top donations to the campaign to enact California’s Proposition 25 came from labor unions.

Bonding Measures

     As an alternative to raising taxes, lawmakers often turn to borrowing to finance everything from school construction to transportation projects. Thirteen bonding measures appeared on statewide ballots in seven states[a], with all but one being approved. Although excessive state and local debt has become an increased source of concern, this was not reflected in success rates for state-level bond measures in 2010.

State

Number

Subject

NTU Guide

Result

AK

A

allow state to guarantee payment of principal and interest on $600 million in bonds of the Alaska Housing Finance Corporation

_

Approved

AK

B

authorize $397 million bond package to fund new state facilities

_

Approved

ID

4

allow public medical facilities to take on debt without voter approval

_

Approved

ID

5

allow public airports to take on debt without voter approval

_

Approved

ID

7

allow public electric utilities to take on debt without voter approval

_

Approved

ME

2

authorize the issuance of $5 million in bonds to establish a dental clinic and upgrade other clinics

_

Approved

ME

3

authorize the issuance of a $9.7 million bond to fund land, waterfront, and park conservation

_

Approved

MT

164

cap yearly interest rates of payday and title loans at 36 percent

_

Approved

OR

72

allow state to borrow in excess of $50,000 for construction or repair of state owned property

+

Approved

RI

2

allow the state to issue up to $78 million in general obligation bonds for school projects

_

Approved

RI

3

authorize state to issue up to $84.7 million in bonds for transportation projects

_

Approved

RI

4

allow state to issue up to $14.7 million in bonds for conservation projects

_

Approved

WA

52

authorize $500 million in bonds and extends sales taxes on soda, bottled water, and candy

_

Rejected

Government Reform

     NTU identified 30 government reform measures that could have a potential fiscal impact on taxpayers, ranging from expansions of rainy day funds to privatization initiatives. Voters supported limited government in 17 instances (about 57 percent).

State

Number

Subject

NTU Guide

Result

AL

3

divert $1 billion over 10 years from rainy day fund for transportation projects

_

Rejected

AR

3

repeal provision restricting the issuance of economic development bonds to major projects; authorizes Legislature to set new criteria for bond issues

_

Approved

AZ

112

require petitions for citizen initiatives to be filed with Secretary of State 6 months prior to an election

_

Rejected

AZ

301

transfer $123.5 million from land conservation fund into the general fund to help balance the budget

+

Rejected

AZ

302

repeal First Things First program and transfer remaining $325 million to the general fund to help balance the budget

+

Rejected

CA

22

prohibit state from using tax revenues intended for local government

+

Approved

FL

1

repeal taxpayer financing of statewide political campaigns

+

Rejected

FL

4

require elections to make any changes to pre-approved comprehensive land use plans

_

Rejected

FL

8

repeal constitutional class size mandate in public schools

+

Rejected

FL

Budget

Question

ask Congress to add balanced budget to the U.S. Constitution

+

Approved

ID

101

lift ban on charging students tuition at the University of Idaho

+

Approved

IL

Recall

Amendment

allow voters to circulate a petition to recall the governor

+

Approved

LA

1

require salary increases for elected officials not be implemented until a subsequent term of office

+

Approved

MI

2

ban state or local officeholder convicted of a felony involving deceit and fraud from holding public office for 20 years

+

Approved

NJ

1[b]

dedicate wage assessments to employee benefits

+

Approved

NV

4

prohibit government from taking private land to give it to another private party

+

Rejected

NM

2

extend term limits limit for elected county office holders from two to three terms

_

Rejected

OK

744

require Legislature to fund public education to at least the per-pupil average of neighboring states

_

Rejected

OK

747

establish lifetime limit of two four-year terms for statewide elected offices

+

Approved

OK

750

reduce the number of signatures required to initiate a constitutional change, a statutory change, or a referendum

+

Approved

OR

71

require the Legislature to meet every year instead of every two years

_

Approved

OR

76

continue lottery funding for park, beach, wildlife, and watershed protection beyond 2014

_

Approved

SC

4

require that the first priority Capital Reserve Fund is to replenish the rainy day fund

+

Approved

SD

L

reduce mandatory annual transfers of money out of a trust fund created from the sale of a state-owned cement plant

+

 

Rejected

SD

12

extend  ban on smoking indoors to most establishments statewide

_

Approved

UT

D

create legislative ethics commission

+

Approved

WA

8225

redefine interest in the state Constitution to make the state eligible for federal “Build America Bonds”

_

Approved

WA

1082

privatize the state’s industrial insurance compensation program

+

Rejected

WA

1100

privatize the state’s liquor stores and authorize the sale, distribution, and importation of alcohol by private parties

+

Rejected

WA

1105

privatize the state’s liquor stores, but maintain price controls on liquor sales

_

Rejected

     Several key victories for taxpayers were secured in the area of government reform. Notable examples include Oklahoma, which enhanced initiative and referendum rights by approving Question 750, and Utah, which implemented a legislative ethics commission.

     Yet, some important issues including budget-balancing efforts in Arizona, the repeal of taxpayer funding for statewide political campaigns in Florida, and privatization of state liquor sales in Washington fell short at the ballot box.

Responses to Congressional Action

     Beyond the traditional issues of taxation and spending, voters decided on seven measures in six states that were a direct reaction to developments in the United States Congress. In two of the three states that voted on it, citizens strongly supported preventing the imposition of an “individual mandate” to purchase health insurance. Four states also voted to guarantee the right to a secret ballot in union organizing elections, in response to federal “card check” legislation.

Health Insurance Mandate

State

Number

Subject

NTU Guide

Result

AZ

106

bars any rules or regulations requiring anyone to participate in a health care system

+

Approved

CO

63

forbid state from requiring any person to participate in a private or public health plan

+

Rejected

OK

756

prohibits requiring a person or employer to participate in a health care system

+

Approved

Secret Ballot in Union Organizing

State

Number

Subject

NTU Guide

Result

AZ

113

guarantees the right to a secret ballot in union organizing elections

+

Approved

SC

2

declares secret ballot as fundamental right in determining if workers are to be represented by a specific labor organization

+

Approved

SD

K

guarantees right to a secret ballot in any election for public office, initiative or referendum, or in union organizing

+

Approved

UT

A

guarantees right to a secret ballot in any election for public office, initiative or referendum, or in union organizing

+

Approved

Local Measures

     Voters also had to sort through hundreds of local tax, spending, and accountability measures on the November 2nd ballot. In California, dozens of measures were approved to authorize the issuance of millions of dollars in school construction and maintenance bonds, which will increase local government indebtedness and may lead to higher property taxes. Similar measures were also on the ballot and approved in Colorado, Illinois, Michigan, Ohio, Oregon, Washington, and Wisconsin.

     A number of communities also approved increases in local taxes. In California, Costa Mesa approved a measure that would increase the city’s hotel tax by two percent. Additionally, citizens in several localities, including the California towns of Guadalupe and Placentia, approved measures to expand taxes on telecommunications to more services, such as wireless telephones, Internet telephones, and text messaging. Voters in Boulder County, Colorado approved both a sales tax increase earmarked for open space preservation and a property tax increase earmarked for human services.

     But taxpayers did not accept all efforts to increase spending or taxes. Although voters approved scores of bonds, in California, Illinois, and Ohio they also defeated many measures that would increase borrowing.

     The California town of La Palma, in Orange County, approved a measure that would require annual reductions in the city’s utility users’ tax. Notably, San Francisco rejected both an increase in the city’s hotel tax and an effort to tax online hotel reservations. In Polk County, Florida a measure that would have increased the county’s sales tax to fund public transportation projects failed.

     Several communities embraced measures to make government more accountable. The California towns of Roseville and Fullerton approved a measure limiting city council members to three consecutive terms. San Francisco enacted a measure repealing a provision in the city charter that guarantees transit workers high salaries. In Florida’s Brevard County, citizens adopted a measure allowing them to make recommendations to the County Commission on government efficiency and effectiveness.

     Concerns about the ballooning costs of public employee pensions were also of importance to voters. In California’s San Diego County, citizens gave the nod to a measure requiring popular referendums for any future increases in public safety employee benefits. Additionally, several communities in Illinois’ DuPage and Lake Counties approved measures calling on the state to take immediate steps to implement meaningful reforms to pensions for public safety workers.

Conclusion

     While the 2010 election was generally a success for fiscal conservatives, it was not without its surprises. On tax policy, there was relatively broad opposition to higher burdens and support for targeted reductions. Meanwhile, several states’ voters took the relatively rare step of using their own ballots to directly protest efforts by the federal government.

     Ballot measure contests in other years may have recorded bigger waves of victories for taxpayer activists. The late 1970s, early 1980s, and early 1990s saw passage of landmark laws that restricted the growth of future taxes through a variety of procedures. Still, 2010   represented a palpable change in fiscal tide, one that empowered tens of millions of Americans to decide for themselves just what government should (and shouldn’t) do. That alone is a victory for taxpayers of all political stripes.

About the Author

Joseph Moser is Policy Analyst for the National Taxpayers Union Foundation.



[a] New Mexico approved three statewide bond measures, but information about these measures was not available at the time NTU prepared and published its 2010 Ballot Guide.

[b] New Jersey added this measure to its ballot following publication of NTU’s 2010 Ballot Guide, but we were able to send a summary of the measure to our New Jersey members in time for the election.