Narrow Tax Hikes Win Support in Several States

Last Tuesday, voters in several states approved modest tax hikes. Increasingly, states are using ballot measures to determine whether to support new taxes. Some of these referenda are binding, others just advisory. But in 2013, voters in several states seem to be hungering for more revenue—though sometimes from unusual sources and decidedly not by raising income taxes—at least in one state.

Here is a rundown of the results:

  • Colorado: Voters approved a 25 percent state-wide tax on marijuana, on top of some additional county dope taxes. But they soundly rejected adding a new top rate to their income tax. While some of the new state marijuana tax revenue is designated for school construction, the public education system missed out on $1 billion in new aid when voters rejected the income tax hike.
  • New York: Let the games begin. New York State voters expanded gaming to allow seven new casinos including three in New York City after seven years. Until now, legal betting has been restricted to “racinos” (horse racing tracks with slot machines and video gaming), charitable gambling such as bingo, and state approved lotteries. The recession stopped the growth nationally in state gaming revenue, but several states have expanded their gaming venues to try and keep some of this money at home.
  • Texas: Lone Star State voters decided to tap the state’s rainy day fund for…water. Texas managed to keep a sizable reserve fund through most of the recession. This measure authorizes the transfer of $2 billion from the Economic Stabilization Fund, which has a balance of about $8 billion, to two funds that will be used for water infrastructure projects.  Under the heading “Tax Law That Probably Didn’t Need a Citizen Referendum,” Texas voters also increased the number of days that property imported for the manufacture of airplanes could remain in the state as exempt personal property. Since the exemption is in the Texas constitution, amending it had to go to the voters. Texas, according to Ballotpedia.org, has the longest constitution and every other year there are about 16 more amendments to vote on.
  • Washington State: Voters in the Evergreen State get to pass judgment on laws that have already been enacted. On August 1, 2013, the state imposed the same levy on landline phones faced by wireless users. On November 5, voters called in their response:  They didn’t like it. Voters barely endorsed an increase in the estate tax and a switch from a personal property tax on commuter airlines to an airplane excise tax–both of which have also been enacted already. All these votes were purely advisory, however, and the legislature is not bound by the results.

Even when they are non-binding, these ballot measures are a useful look at voter moods, especially in off-year elections. They are one of the few opportunities for the voters to be heard on specific issues. Coloradans are ok with a new tax on pot but like their flat income tax just as it is and Texans are willing to spend a little of their savings when it is as important as water.