Tax measures on ballots reflect economic unease

CHICAGO (Reuters) - The still-struggling U.S. economy is at the root of most of the state and local tax and debt measures on ballots that could drive voters of a more fiscally conservative bent to the polls on November 2.

With governments and their constituents feeling financial pain due to the recession, many of the questions on general election ballots concern budgets, taxes and revenue, including $15.8 billion in requests for new debt.

“It’s the economy for sure,” said Jennie Bowser, an elections analyst at the National Conference of State Legislatures, noting that financial measures are more prevalent than social issues, such as gay marriage and abortion, in the upcoming election.

The measures will be on ballots as the country votes for all 437 seats in the U.S. House of Representatives, 37 of the 100 Senate seats and a string of state governors, attorneys general and treasurers.

The electorate looks set to punish President Barack Obama’s Democrats over the economy and high unemployment, with opinion polls showing that Republicans are likely to take control of the House.

Pete Sepp, executive vice president of the nonpartisan and nonprofit National Taxpayers Union, said the fiscal focus of ballots stems from a perceived need to limit government power to drive up deficits and impose taxes.

The measures “are likely to attract fiscal conservatives and motivate them rather than bring out those who consider themselves leftist center,” he said.

The recession is driving some states to seek voter approval for more revenue to deal with huge budget deficits, while attempts to repeal legislatively approved tax hikes are also on ballots, according to Nick Johnson, director of the State Fiscal Project at the Center on Budget and Policy Priorities, a federal and state fiscal policy think tank.

In Massachusetts, voters will determine whether to cut the state sales tax rate by more than half -- to 3 percent from 6.25 percent. If approved, the tax cut would cost the state $2.5 billion, raising its fiscal 2012 deficit to $4.5 billion, according to the Massachusetts Taxpayers Foundation.

The move could also cost the state its high bond ratings in the AA and AA-plus categories, the group has warned.


Colorado voters, meanwhile, will weigh three constitutional amendments to reign in taxes that the Denver Post’s editorial page has dubbed “Armageddon on Colorado ballots.”

One amendment would restrict or cut property taxes through a variety of measures. Another would ban future state borrowing and require voter approval for local government borrowing. A third would limit government fees, cut the state income tax rate, reduce vehicle ownership taxes, and end state and local telecommunication taxes and charges with the exception of those earmarked for 911 services.

The measures “essentially threaten to shut down debt issuance in this growing state,” according to Richard Ciccarone, managing director and chief research officer at McDonnell Investment Management.

California ballots will be stuffed with propositions that would affect the state’s finances. One would ease California’s majority vote requirements for legislators to pass a state budget and another would raise vehicle license fees to fund state parks.

Another ballot measure in California would ban the state government from raiding local revenue raised by local taxes or local public transit and transportation funds, and another would repeal certain corporate tax breaks.

Perhaps the most controversial ballot measure in California is an initiative that would allow marijuana possession and permit local governments to regulate and tax its commercial production and sale.

Voters in the state of Washington, which lacks a state income tax, are being asked to impose the tax on higher-income earners, while lowering property and other taxes. Also on the ballot is an initiative that would make it harder to pass state tax increases and another that would repeal new taxes imposed by the state legislature to plug a budget gap.


Four states -- Iowa, Maryland, Michigan and Montana -- will decide on whether to hold constitutional conventions, which could open the door to future restrictions on taxes and debt issuance.

“It is highly probable that some tightening of fiscal conditions would take place if the conventions were held,” Ciccarone said.

Three states, Oklahoma, South Carolina and Virginia, have measures to increase their budget reserves or rainy day funds. In Hawaii, there is an amendment to allow the legislature to decide whether to put surplus revenue into a reserve fund or continue to issue taxpayer rebates.

The $15.8 billion in more than 430 ballot measures to finance schools, libraries, roads, sewer and water systems and other projects is up from the $9.8 billion on the November 2009 general election ballot, but considerably less than the nearly $67 billion of bonds in 2008, according to data compiled by The Bond Buyer newspaper and Ipreo, a data company.

Billions of dollars poured into infrastructure projects by the federal stimulus program have eased the need for bond issuance, although with the stimulus money ending soon, bond requests are likely to zoom higher in 2012, according to a report from the state legislatures’ group.

Alaska is asking voters to approve nearly $1 billion of general obligation bonds, with one measure totaling $600 million of bonds for a residential mortgage purchase program for veterans and a second for $397 million of bonds to design and build library and educational research facilities.

Voters in the state of Washington will decide on $505 million of GO bonds to fund projects to increase energy efficiency in school buildings.

Reporting by Karen Pierog, additional reporting by Jim Christie in San Francisco, Joan Gralla in New York and Lisa Lambert in Washington