Prop*50

California: no on cigarette tax hike, yes to amending term limits

Californians rejected a proposed five-cent hike on each pack of cigarettes sold. The revenue would have funded research on cancer and other tobacco-related diseases. The vote runs somewhat contrary to historical trends:  since 1992, voters had approved seven of the 11 proposed tobacco tax hikes on statewide ballots. This is a striking exception from voter behavior on most proposed tax increases. Over the 1992-2011 period, voters just 32% of the 73 tax increases that appeared on statewide ballots, but they approved 63.6% of the proposed tobacco tax increases. Perhaps Californians just don't like to pay more for their tobacco though -- they rejected another proposed tobacco tax hike back in 2006. That was Prop. 86, and like yesterday's Prop. 29, the revenue would have funded health care. As of Wednesday morning, the "yes" vote on Prop. 29 was 49.2% (that's still unofficial, since provisional and absentee ballots remain to be counted).

Proposition 28 fared much better, garnering a 61.4% "yes" vote in unofficial results. This measure amends the state's strict term limits law for legislators. Currently, a person may serve up to six years in the Assembly and eight years in the Senate; after that, you're out for good. These "lifetime" term limits are the nation's strictest. Prop. 28 reduces the total number of years a person can serve in the Legislature from 14 to 12, but removes the chamber-specific limits. This would allow someone to serve the full 12 years in one chamber, or divide it among the two. It also removes a provision that had allowed some members to serve as long as 17 years by discounting partial terms from the limit.

The aim of the measure is to allow lawmakers to avoid the political musical chairs forced by the shorter, chamber-specific limits, and instead allow more time in a single office. The advantage is that with more time in office, lawmakers can develop deeper expertise on issues, state government, and the rules and procedures of the Legislature.

Voters rejected an initiative that was very similar to Prop. 28 back in 2008. The key difference was that the 2008 measure, Prop. 93, would have allowed members currently in office at the time it passed to serve up to 12 years in that chamber, regardless of previous service in the other chamber. This year's Prop. 28 applies only to members elected after the passage of the initiative.

Legislatures in Arkansas, Michigan and Missouri have considered legislation similar to Prop. 28, but to date, none of these measures has made its way to the ballot for voter approval.

Colorado's Prop. 103 fails

With 98% of precincts reporting, just over a third of Colorado voters -- 36.4% -- voted in favor of Proposition 103. Sponsored by state senator Rollie Heath, Prop. 103 would have temporarily raised income and state sales taxes for a period of five years to make up for cuts to education.

Prop. 103 was the only proposed statewide tax increase on the ballot in 2011. Last year, voters in Arizona and Oregon approved tax increases.

In a May 18, 2010, special election, Arizona voters approved Proposition 100, which instituted a temporary 1% transaction and use tax for three years. Two-thirds of the revenue raised goes to public education and one-third to health and human services and public safety.

In a January 2010 special election, Oregon voters approved two tax increases that were enacted by the legislature and then subjected to voter approval through the popular referendum process. Measure 66 raised income tax rates for individuals earning $125,000 or more and households earning $250,000 or more. Measure 67 raised minimum taxes for businesses and corporations.

The last election in which voters approved a tax increase proposed by a citizen initiative was in 2006. That year, Alaska voters approved a new tax on cruise ships, and voters in Arizona and South Dakota approved increases in tobacco taxes.

Read more about Prop. 103 in the Denver Post.

Washington: Initiatives and the budget

An article in today's News Tribune takes a hard look at five initiatives and one legislative referendum on the November ballot in Washington, and the impact they could have on the state's budget if passed.

With the state already facing a $3 billion shortfall next year, four of the five initiatives would cut state revenues by hundreds of millions of dollars, possibily billions, if passed, and cut local government revenues by half a billion dollars over the next five years.  On the other hand, the fifth initiative -- Initiative 1098, a new tax on incomes above $200,000 for single filers and $400,000 for joint filers -- would bring in as much as $2.2 billion in future years if voters approve it.  A legislative proposal to conduct energy upgrades on public and school buildings could cost as much as $937 million over the next five years for debt service payments.

Washington isn't the only state facing even more precarious fiscal conditions if initiatives pass this year.  In Colorado, the combined fiscal impact of three proposed initiatives (Amendments 60 and 61 and Proposition 101) would cut over $3 billion from the state budget.  This year's budget is $6.9 billion, so that's not small change.  In Massachusetts, a proposed sales tax cut would cost the state $2.5 billion annually.

In recent election years, voters have generally been unwilling to sign off on drastic revenue-cutting measures.  That includes 2008, when voters rejected a repeal of the state income tax in Massachusetts, significant cuts in personal and corporate income tax rates in North Dakota, and an opportunity to make federal taxes fully deductible on state income taxes in Oregon. 

Conveying the complex information that enables voters put the cost of proposed initiatives in the context of the state budget and existing programs and services is an ongoing challenge in all of the initiative states.  It is information that is too nuanced for the pro and con campaigns to address in a 30-second radio or television ad.  The idea of cutting taxes is appealing to most voters, yet the reality is that tax cuts mean cuts to programs that voters may value as well.  It remains to be seen how voters will weigh the costs and benefits of state programs and services in relation to a personal tax savings in 2010.

Montana: 4 initiatives close to qualifying

Friday was the deadline for county officials to turn initiative petitions over to the secretary of state.  Officials in the secretary of state's office will work throughout the weekend to count valid signatures, and results should be available early next week.

As of now, it appears that four initiatives are close to qualifying and could make the ballot next week:

• Initiative 160:  prohibits trapping animals and birds on public lands
• Initiative 161:  prohibits outfitter-sponsored nonresident hunting
• Initiative 164:  regulates interest rates charged by payday lenders
• Constitutional Initiative 105:  prohibits new taxes on real estate transactions

Third initiative qualifies in Washington

Initiative 1098, which would impose a new income tax on wages earned above $200,000 for an individual or $400,000 for a couple filing jointly, has been approved for the November ballot in Washington.  The measure would also reduce property taxes and certain business and occupation taxes.  Bill Gates Sr., father of the Microsoft founder, has been a champion of I-1098.