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Issue Brief


Election 2006: How Taxpayers Fared at the Ballot Box
NTU Issue Brief 160

December 13, 2006
By Pete Sepp
By Kristina Rasmussen

Introduction

Although the November 2006 election featured an unusually large number of tax and spending ballot questions, Election Night media coverage focused almost exclusively on the Congressional races that ultimately led to a new Democratic majority in the House and Senate. Yet, any attempt to get a reading of the electorate's mood without a serious study of the initiative and referendum outcomes does the taxpaying public a disservice. For this reason, the National Taxpayers Union (NTU) carefully analyzed the issue-based ballot results after the hoopla over the change in government subsided. The bottom line: voters may have given control of Congress to the party of FDR and LBJ, but many of them also expressed a desire for limited government.

In advance of the election, NTU published Ballot Guide 2006: A Taxpayer's Perspective, which described 92 state ballot measures and their likely effect on the size and cost of government. Out of the 79 non-bond state ballot questions identified by the Guide, measures that could lower taxes or control government were approved 67.3 percent of the time (for a total of 31 initiatives passed), while measures that could raise taxes or expand government were approved at a rate of 63.6 percent (for a total of 21 initiatives passed).

Table 1. Results from State Ballot Questions Highlighted in NTU's Ballot Guide 2006

 

Total Number

Number Approved

Number Rejected

Measures that would lower taxes/limit government

46

31

15

Measures that would raise taxes/expand government

33

21

12

This Issue Brief further explores taxpayer victories and losses in the 2006 general election in the areas of tax limits, government spending limits, tax hikes, eminent domain reform, minimum wage increases, ethics issues, and budget process matters.

Tax Limits

Proposals aimed at limiting property taxes coasted to victory in most states. In South Carolina, voters gave the nod to a plan that will limit the rise in taxable property values, while Arizonans approved a law protecting future public referendums for certain property tax hikes. Louisianans opted to remove municipalities' authority to levy property taxes on motor vehicles, and Washingtonians expanded the exemption level for personal property taxes. A modest New Jersey ballot measure that could allow at least some property tax relief passed handily. Various new or increased exemptions for homeowners (particularly for veterans and the elderly) were adopted in several other states, including Colorado, Florida, Louisiana, Tennessee, and Utah.[1]

Voters in South Dakota appeared to be the only Americans to defeat a statewide proposal for property tax relief. The measure was a Constitutional Amendment that would have rolled back property values for tax purposes to 2003 levels and capped assessment increases at 3 percent annually. Nonetheless, a stunning 13 out of 14 proposals to ease current or future property taxes succeeded at the polls.

Table 2. Property Tax Propositions[2]

State

Number

Subject

NTU Guide

Approved

Rejected

AZ

101

protection against property tax increases

+

x

 

CO

E

property tax exemption for disabled veterans

+

x

 

FL

6

property tax exemption for low-income seniors

+

x

 

FL

7

property tax exemption for disabled veterans

+

x

 

LA

1

property tax exemption for disabled veterans

+

x

 

LA

3

property tax exemption for medical equipment

+

x

 

LA

4

repeal municipal car taxes

+

x

 

LA

5

property tax exemption for consigned art

+

x

 

NJ

1

property tax relief

+

x

 

SC

6

property tax cap

+

x

 

SD

D

property tax cap

+

 

x

TN

2

permit property tax exemption for elderly

+

x

 

UT

1

permit property tax exemption

+

x

 

WA

CA

increased property tax exemption

+

x

 
Note: A "+" sign indicates a measure to lower taxes, as reported in NTU's Ballot Guide 2006.

Measures targeted at lowering other types of taxes generally did not win enactment. South Dakotans rejected a repeal of a gross receipts tax on wireless services, a tax that ultimately falls upon consumers. Washington voters declined to kill the state's punitive death tax.

Spending Limits

Comprehensive approaches to limiting government spending growth to inflation and population increases failed at the polls in Maine, Nebraska, and Oregon. However, the percentage of defeat in Maine is smaller than the margin for a property tax limit that failed in 2004, suggesting that voters there are warming to the idea of tax and spending caps. Past history shows that such proposals must often take several trips to the polls before being ratified (as in the case of both Proposition 13 in California and Amendment 1 in Colorado). Opponents of tax and expenditure limits (TELs) also achieved early successes by knocking similar questions off ballots in at least five other states via court challenges or other methods. Since the measures in several of these states were polling well before being yanked from their election slates, the nationwide results for TELs might have been less lopsided had citizens been allowed to vote on these proposals.

Table 3. Tax and Expenditure Limit Propositions

State

Number

Subject

NTU Guide

Approved

Rejected

ME

1

Taxpayer Bill of Rights tax and expenditure limit

+

 

x

NE

423

Stop OverSpending expenditure limit

+

 

x

OR

48

Rainy Day Amendment expenditure limit

+

 

x

Note: A "+" sign indicates a measure to lower taxes, as reported in NTU's Ballot Guide 2006.

In any case, this chapter of TEL history is hardly closed, since activists in three states (Maine, Montana, and Nevada) have already vowed to launch new ballot drives.  

Tax Hikes

Over one-third of the 33 measures to expand government concerned tax increases, and fewer than half succeeded. Californians rejected a $4 billion tax hike on oil production in the state (a proposal once considered a slam-dunk for passage), and nixed a higher business tax earmarked for publicly-funded campaigns. Voters in Alaska said "no" to a new tax on natural gas resources, but Louisiana voters said "yes" to increasing the severance tax collected on some natural resources. Tobacco tax hikes, often a weapon of first resort to would-be revenue raisers, did not receive blanket approval – such proposals were defeated in California and Missouri, while they were enacted in Arizona and South Dakota.

Even the so-called politically "safe" topic of increased education budgets did not always push citizens into backing higher taxes. Idahoans voted against a one-cent rise in the sales tax that would be earmarked for education, while Californians gave a collective thumbs-down to a new per-parcel property tax that would have raised school funding. In the loss column, Wyoming residents did delete a cap on property tax redistributions among school districts, while Alabamians established a mandatory minimum property tax levy for school finance (which will result in tax increases for residents in some jurisdictions).

Table 4. Tax Hike Propositions

State

Number

Subject

NTU Guide

Approved

Rejected

AK

2

new tax on natural gas resources

 

x

AL

2

minimum property tax levy for school finance

x

 

AZ

201

cigarette tax increase

x

 

AZ

203

cigarette tax increase

x

 

CA

86

cigarette tax increase

 

x

CA

87

tax on oil producers

 

x

CA

88

new property tax for education

 

x

CA

89

corporate tax increase for publicly-funded campaigns

 

x

ID

1

sales tax increase for education

 

x

LA

2

increased severance tax on natural resources

x

 

MO

3

cigarette tax increase

 

x

SD

2

cigarette tax increase

x

 

WY

B

delete cap on property tax redistributions for schools

x

 
Note: A "-" sign indicates a measure to raise taxes, as reported in NTU's Ballot Guide 2006.

Eminent Domain Reform

Property rights measures did well at the polls, with 9 out of 11 possible states adopting new protections against eminent domain abuse. In the wake of last year's Kelo v. New London decision by the U.S. Supreme Court, states and localities have been emboldened to seize private property for purposes of economic development (i.e., higher revenues) rather than public uses (such as roads and schools). The resounding backlash against this misguided ruling was amplified at the ballot box.[3]

Table 5. Eminent Domain Protection Propositions

State

Number

Subject

NTU Guide

Approved

Rejected

AZ

207

eminent domain protection

+

x

 

CA

90

eminent domain protection

+

 

x

FL

8

eminent domain protection

+

x

 

GA

1

eminent domain protection

+

x

 

ID

2

eminent domain protection

+

 

x

MI

(06-4)

eminent domain protection

+

x

 

ND

2

eminent domain protection

+

x

 

NH

1

eminent domain protection

+

x

 

NV

2

eminent domain protection

+

x[4]

 

OR

39

eminent domain protection

+

x

 

SC

5

eminent domain protection

+

x

 
Note: A "+" sign indicates a measure to limit government, as reported in NTU's Ballot Guide 2006.

Minimum Wage

Six states voted on increasing existing (or creating new) state-mandated minimum wages, most of them indexed to grow with inflation. Across-the-board passage of these proposals will further encourage proponents of an increase in the national minimum wage rate to press their case in Congress next year.

Table 6. Minimum Wage Increase Propositions

State

Number

Subject

NTU Guide

Approved

Rejected

AZ

202

minimum wage increase

x

 

CO

42

minimum wage increase

x

 

MO

B

minimum wage increase

x

 

MT

151

minimum wage increase

x

 

NV

6

minimum wage increase

x

 

OH

2

minimum wage increase

x

 
Note: A "-" sign indicates a measure to expand regulations and government, as reported in NTU's Ballot Guide 2006.

Ethics and Budget Reform

In a reflection of recent federal-level scandals, restrictions on pay and perks for politicians proved popular. Although term limits in Colorado and Oregon did not succeed, Missourians adopted a Constitutional Amendment to deny pensions to politicians removed from office, and Oklahomans chose to bar state pay for legislators convicted of a crime. A pay raise for state lawmakers was nixed in Arizona, and Nevadans declined to increase the pay and perks of their elected officials. South Dakota's voters put a ban on the use of official state aircraft for personal travel and decided not to lift legislators' expense limitations. Coloradans and Montanans shut the revolving door by forbidding high-level state officials from becoming licensed lobbyists for a two-year period after they leave the government.

In the area of budget policy, a Michigan scheme to guarantee a minimum level of school funding that would go up with inflation lost by a wide margin. With regard to improvements, Floridians approved a measure that would make several modest revisions to the state's budget process and create a new Government Efficiency Task Force. Rhode Islanders further strengthened their state's "rainy day fund" by ensuring future appropriations do not exceed 98 percent of projected revenues for a fiscal year. Nevada's Legislature will be required to decide on funds for K-12 education before any other state government function, with the intention of stopping the use of a Constitutional education spending mandate as an excuse for tax hikes.

Table 7. Ethics and Budget-Related Propositions

State

Number

Subject

NTU Guide

Approved

Rejected

AZ

302

salary increase for state legislators

 

x

CO

38

strengthen ballot measure proposal rights

+

 

x

CO

40

term limits for judges

+

 

x

CO

41

new ethics rules for public officials

+

x

 

CO

F

weaken provisions for recall of officeholders

 

x

FL

1

budget process reforms

+

x

 

MI

(06-5)

mandatory minimum for education funding

 

x

MO

7

no state pensions for officeholders convicted of felony

+

x

 

MT

153

lobbying reform

+

x

 

NV

1

state legislature must decide education funding first

+

x

 

NV

11

increased legislative pay and perks

 

x

OK

724

no state pensions for legislators convicted of felony

+

x

 

OR

45

term limits

+

 

x

RI

3

strengthen rainy day fund

+

x

 

SD

5

limit legislative travel

+

x

 

SD

F

lift legislative expense limits and open meeting rules

 

x

Note: A "+" sign indicates a measure to limit government, as reported in NTU's Ballot Guide 2006; a  "-" sign indicates a measure to expand regulations and government.

Conclusion

A simplistic reading of the 2006 general election would indicate a sizable shift to the left – or at least a loss for conservatives – with Democrats gaining power in Congress and in many state houses. But a closer examination of the non-candidate questions posed to voters on November 7 reveals that the election was no mandate for more tax, spending, and regulatory burdens. Out of the non-bond ballot questions identified to be of significant importance to taxpayers, voters opted to limit rather than expand government by a 3:2 ratio.

Looking at the specific proposals, voters proved to be skeptical of most tax hike schemes and were concerned about taxes on their property, along with protecting it from improper seizure. The passage of ethics reforms and budget process improvements underscores a wariness of elected officials and their exercise of power.

If anything, the sheer number of measures considered lends itself to the notion that advocates of policy change are increasingly seeking alternative routes, such as initiatives and referendums, to achieve results that have proved elusive via the legislative route. According to a post-election re-cap compiled by the National Conference of State Legislatures, only the elections of 1914 and 1996 had more initiative questions on the ballot. While an increasing number of ballot questions could lead to voter fatigue, the initiative and referendum process provides a critical path for achieving reforms that government officials trying to protect perks and turf would normally be loath to enact. Taxpayers should eagerly look to increase victories – and guard against the possibility of losses – in future election cycles.

Notes

[1] The measures in Tennessee and Utah would permit the Legislature to authorize tax exemptions.

[2] The tables that follow include many of the 79 non-bond ballot questions identified by NTU, but not all are categorized.

[3] The California and Idaho measures that failed included more extensive "takings" compensation requirements along with eminent domain protections. Louisianans passed an eminent domain reform measure in their September 30 primary election.

[4] Must be approved again in 2008 for passage.