Voters Send Mixed Messages on Ballot Initiatives

Tracy Gordon
Tracy Gordon
Tracy Gordon Co-Director and Acting Robert C. Pozen Director - Urban-Brookings Tax Policy Center, Urban Institute

November 4, 2010

Anyone trying to figure out what message voters were sending this election about taxes and spending won’t find easy answers in results from state-level ballot propositions. While Republicans won governorships and state legislatures across the country, voters were apparently in no mood to tell their newly elected leaders exactly how they want state budgets fixed.

In Colorado, for example, voters said no to a constitutional amendment that would have prevented the state from issuing new debt and required voters to sign off on any local borrowing. They also declined cutting local property taxes in half and slashing taxes on income, vehicle sales, and telecommunications. If passed, these measures would have cost the state $2.1 billion. Massachusetts voters agreed to keep a recently enacted sales tax hike, allowing the state to keep $2.5 billion in revenue.

But in Washington, they snubbed a state income tax backed by Bill Gates Sr. — despite pledges to use the funds for education and health care — and they repealed a new sales tax on soda and candy. In deep-blue Massachusetts, they rejected a sales tax on alcohol. California voters showed how much they loved their cars by slamming a vehicle license fee for parks and natural resources. They also let corporations keep a tax break that had been on the chopping block, forgoing an extra $1.3 billion in revenues. Property tax caps were popular in Indiana, Louisiana, and Missouri.

On the spending side, Florida voters said no to relaxing school class size limits to save the state hundreds of millions of dollars. In Arizona, they vetoed eliminating special funds for conservation and early childhood education in order to help prop up the state General Fund.

Although voters demurred on specific tax and spending proposals, in several states they showed that they still want to influence the budget process. Washington voters reinstated a 2/3 legislative vote requirement for taxes and fees. (The legislature had recently voted to rescind it.) Voters in Virginia, Hawaii, and South Carolina strengthened state rainy day funds.

In perhaps the most significant measure to pass Tuesday, California voters lowered the threshold for the legislature to pass a new budget from 2/3 to a simple majority. (The state’s 100-day late and several billion dollars short budget this year undoubtedly had something to do with this outcome.) At the same time, they required a 2/3 vote for all new fees and prohibited the state from going after local transportation funds. Together, these actions will pressure the governor and Democratic legislature to pass difficult budgets on time and without new revenues.

In this dilemma, California is hardly alone. Polls suggest that most Americans want their state government to balance its budget without tax increases or help from the federal government. At the same time, when asked which spending area they would be willing to cut, the most popular answer is “none of the above.”

Most economists believe that state revenues will not be coming back for another three to five years while spending pressures will continue to increase, particularly because of rising health care costs and aging populations — the same pressures busting the federal budget. The governors’ Class of 2010 will thus have its hands full. Perhaps some of them will even wish that voters had selected “None of the above.”