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Voters Decide Tax Measures in Several States

Posted on Nov. 10, 2022

Voters in the 2022 midterm election weighed in on numerous state tax policies, including in California, where they rejected a Lyft-backed tax on the rich to fund electric vehicle adoption.

Separately, as of press time November 9, voters appeared to have approved a tax on millionaires in Massachusetts, although the margin was close, and measures in Colorado to reduce the state's income tax rate and limit deductions for higher earners. Vote counts also indicate that Arizonans potentially passed a constitutional amendment that would require that ballot measures to increase taxes be approved by a supermajority of voters. However, the final tally wasn't known.

Several states voted on legalizing and taxing recreational marijuana, with voters in Arkansas, North Dakota, and South Dakota rejecting such measures and voters in Missouri and Maryland approving them.

Several states also approved measures providing property tax relief to disabled veterans and their surviving spouses.

Alabama

Alabama voters approved Amendment 6, which allows municipalities to levy and collect ad valorem tax revenue to fund capital improvement projects on a pay-as-you-go basis in addition to paying bonds and interest debt. The amendment received 60.71 percent of the vote, according to the state’s unofficial election results.

Arizona

Voters appeared to have approved Proposition 130 with 63.5 percent in favor as of press time. The proposition would modify the state constitution to allow disabled veterans and their surviving spouses to receive a property tax break. The tax break was previously struck down in court because of an unconstitutional requirement for disabled veterans to have been Arizona residents before joining the military. The proposition also modifies the constitution to consolidate property tax exemptions into one section and allow the Legislature to determine the qualifications for, and amounts of, property tax exemptions.

The proposition was placed on the ballot via SCR 1011.

Proposition 132 also appeared to be passing, with 50.95 percent in favor as of press time. The measure would require a three-fifths vote of approval by the public to pass a ballot initiative or referendum to approve a tax. The measure was placed on the ballot by Arizona’s Republican majority Legislature, partly in reaction to the simple majority approval in 2020 of Proposition 208, a tax measure to fund education spending. The tax was overturned by a lower court earlier this year after a state supreme court fight. Republicans, conservatives, and business groups in the state, who opposed Proposition 208, argue that tax measures should require a voter supermajority to pass.

However, opponents, including progressive groups, called the measure an effort by the state’s conservative political leaders to curtail voters’ power.

A third measure, Proposition 310, appeared to be failing at press time, with 51.79 percent of voters opposed. It would create an additional 0.1 percent sales tax to generate revenue for a fund that would support fire safety districts in the state.

Arkansas

Arkansas taxpayers voted against a constitutional amendment (Issue No. 4) allowing cannabis possession and sale of cannabis to adults. Per the state’s unofficial election results, 56.25 percent of voters opposed the measure. The proposed amendment would have created a sales tax of up to 10 percent for cannabis retail sales, with a portion of tax proceeds going to stipends for certified law enforcement.

California

Voters in California appeared to have rejected ballot measures to increase taxes on the rich and to legalize and tax online and in-person sports betting.

Easily the most high-profile tax measure in California, Proposition 30 proposed to create a 1.75 percent tax on income over $2 million for up to 20 years. As of press time, it appeared to have been rejected with 59.1 percent of voters opposed.

Revenue from the tax — estimated to be $3.5 billion to $5 billion annually — would have gone toward incentives for people to buy electric vehicles, charging infrastructure for EVs, and efforts to combat wildfires in the state. It would have temporarily raised the state’s top marginal income tax rate to 15.05 percent for income over $2 million until several temporary tax rates expire in 2030. The tax itself could also have expired as early as 2030 if state climate goals were met early, but would otherwise have been authorized until 2043.

The backers of Proposition 30 included Lyft, which along with other app-based ride-hailing businesses must transition to providing 90 percent of rides arranged through its platform via EVs by 2030. Opponents of the ballot measure included Gov. Gavin Newsom (D), who argued that Lyft was seeking to use the tax to shift the cost of that transition to higher earners. Notably, the ballot measure split progressive groups in the state — it was supported by the state’s Democratic Party but opposed by the powerful California Teachers Association.

Proposition 26 also appeared to be defeated, with 70.1 percent of voters opposed. It would have allowed for in-person sports betting at tribal casinos and four major horse-racing tracks in California, with a 10 percent tax on racetracks’ sports-betting revenues; the tax revenue would have been allocated to programs addressing gambling problems, mental health, and education and public safety. Native American tribes would have developed their own agreements with the state to share sports-betting revenue. The ballot measure was projected to generate tens of millions of dollars annually.

And Proposition 27, which was backed by online sports-betting companies such as FanDuel and DraftKings, also appeared to be defeated, with 83.3 percent of voters opposed. It would have allowed online sports betting to be offered by California tribes and by sports-betting companies through agreements with tribes in the state. Larger companies — like the ones backing the measure — would have been allowed to develop agreements to offer sports betting using their own branding. A 10 percent tax would have applied to adjusted gross receipts from online sports betting, and operators would have paid an initial license fee of $10 million, renewed for $1 million every five years. Larger companies operating under their own brands would have paid a $100 million initial license fee and a $10 million renewal fee every five years. Most of the hundreds of millions of dollars of annual revenue would have gone to fund efforts to combat homelessness, and 15 percent to tribes that don’t provide online sports betting. Gaming tribes vigorously opposed it as a bid by out-of-state sports-betting companies to take control of the industry in the state.

Colorado

Colorado voters opted to lower the income tax rate and extend property tax exemptions for veterans' spouses.

Proposition 121/Initiative 31, per unofficial results from the Colorado secretary of state's website, received 65.5 percent, or 1,194,817 votes in favor. The initiative reduces the Colorado state income tax rate from 4.55 percent to 4.4 percent.

And according to the state election website, roughly 88 percent of voters approved Amendment E, which allows property tax exemptions for surviving spouses of armed forces service members who died in the line of duty or veterans who died from a service-related injury or disease.

Proposition GG also received a vote of 70.8 percent in favor. The proposition requires that ballot measures proposing income tax rate changes include a table that shows how the proposed tax change would affect taxpayers at different income levels.

Voters also appeared to have narrowly approved Proposition 123/Initiative 108, which directs a portion of income tax revenue (0.1 percent) from the state’s general fund to a statewide affordable housing fund — notably, by doing so it reduces funds available for Taxpayer Bill of Rights refunds. The initiative had received 50.7 percent of the vote in favor as of press time.

And voters also approved Proposition FF, which would fund a healthy meals program for public school students by limiting itemized or standard deductions for state taxpayers earning $300,000 or more; the measure received 55.1 percent of the votes, according to the state’s election results.

Florida

As of press time, Florida’s proposed constitutional amendments to expand property tax benefits and allow property assessment protection for homes with installed flooding safeguards appeared to have failed to reach the 60 percent majority vote needed for approval.

Amendment 1, which received roughly 57.3 percent votes in favor, would have allowed the Legislature to prohibit the assessment of improvements made to protect a property from flood damage, thus ensuring the improvements don’t increase the property’s taxable value. The amendment was placed on the ballot by lawmakers via H.J.R. 1377, which was sponsored by Rep. Linda Chaney (R).

Amendment 3 had received just 58.7 percent, or 4,208,364 votes in favor, according to unofficial results from Florida’s Division of Elections. The constitutional amendment would have authorized the Legislature to create an additional homestead property tax exemption for the portion of the assessed value of a residence that’s between $100,000 and $150,000 if the residence is owned by a public service worker, including teachers, first responders, child welfare service professionals, and members of the armed forces. The exemption wouldn’t have applied to school district levies. The amendment was placed on the ballot by lawmakers via H.J.R. 1, which was sponsored by Rep. Josie Tomkow (R).

Georgia

Georgia’s three tax-related ballot measures appeared to have passed, expanding tax breaks for farms and timber producers and allowing property tax relief for disaster victims.

Voters approved Referendum A, which extends property tax exemptions for agricultural equipment to timber producers’ equipment used for heavy timber production, reforestation, and harvesting. The ballot measure was approved by 59 percent of voters. The measure was put on the ballot as a result of the approval of H.B. 997 Act No. 859, signed into law May 10. The exemption will take effect January 1.

Voters also approved Referendum B, which allows family-owned farms that merge with one another to continue to qualify for a property tax exemption on farming equipment and some products. The measure, which was approved by 76.5 percent of voters, also extends the tax break to dairy products and unfertilized eggs. Referendum B was placed on the ballot as a result of the approval of H.B. 498 Act No. 260.

And an overwhelming 91.9 percent of voters said “yes” to Constitutional Amendment 2, allowing local governments to temporarily adjust property taxes after a natural disaster. The amendment will require enabling legislation to frame the precise means through which tax authorities will provide this post-disaster relief. The amendment was referred via H.R. 594, Resolution Act No. 803.

Louisiana

Louisiana voters approved two of four constitutional amendments concerning tax on the ballot, according to unofficial results released on the Louisiana secretary of state’s website November 8.

Getting 73 percent of the vote, Amendment 2 modifies and expands an existing property tax exemption for disabled veterans and their surviving spouses. The amendment, placed on the ballot by H.B. 599, exempts the total assessed value of a property for completely disabled veterans or those who are 100 percent unemployable. It also provides an exemption of $2,500 of the assessed value, after the $7,500 homestead property exemption, for veterans with a disability rating between 50 and 69 percent and of $4,500 of the assessed value for veterans with a disability rating between 70 and 99 percent. Veterans with a 100 percent disability rating and their surviving spouses are currently allowed a property tax exemption of $7,500 of assessed value, in addition to the $7,500 homestead property tax exemption.

Amendment 8 was also approved, with 55 percent of the vote. The amendment, placed on the ballot by H.B. 395, removes the requirement that permanently and totally disabled homeowners and their surviving spouses recertify their income annually to receive the property tax special assessment level.

Only 43 percent of voters approved Amendment 5, which would have allowed a taxing authority to increase ad valorem property tax rates to the maximum rate approved by the state constitution and the taxing authority until the rate expires, without voter approval. Under current law, a taxing authority can, with a two-thirds vote of its governing body, increase the property tax rate to the prior year’s maximum authorized rate.

The ballot question for Amendment 5 asked, “Do you support an amendment to allow the levying of a lower millage rate by a local taxing authority while maintaining the authority's ability to adjust to the current authorized millage rate?”

And Amendment 6, which restricts the increase in the assessed value of residential property in Orleans Parish following reappraisal to 10 percent of the prior year’s assessed value beginning in 2023, looked to be defeated with 642,262 “no” votes (50.3 percent) and 635,559 “yes” votes.

Maryland

Question 4 appeared to have passed with 65.5 percent of the vote in favor as of press time. It would amend Maryland’s constitution to allow possession and use of marijuana by adults over 21 beginning July 1, 2023, and allow lawmakers to regulate and tax it. The amendment was placed on the ballot by lawmakers via H.B. 1.

Massachusetts

A surtax on individual incomes exceeding $1 million was gaining a slim majority of votes as of press time, although the results were too close to call.

The surtax, listed as Question 1 on the Massachusetts ballot, would amend the state constitution to levy a 4 percent surtax on individual income exceeding $1 million to fund education and transportation measures. According to the Associated Press and WBUR, 51.8 percent, or 1,078,308 voters, are in favor of Question 1. About 48.2 percent, or 1,002,499 voters, voted against the ballot item. As of press time, 85 percent of the votes on Question 1 were reported, according to AP.

The constitutional amendment could generate an estimated $2 billion in annual revenue but could reduce the state's economic output by around $6 billion by the end of 2025, according to a Tax Foundation report. The ballot item was challenged in court earlier this year, but the Massachusetts Supreme Judicial Court allowed it to proceed.

Question 1, also known as the Fair Share Amendment, was first introduced in 2019 by Sen. Jason Lewis (D) and Rep. James O’Day (D).

Missouri

Amendment 3 was approved with 53 percent of the vote, legalizing recreational marijuana for adults over 21 years of age and establishing a tax of 6 percent on the retail sale of recreational cannabis to fund services for veterans, drug treatment, and increased funding for public defenders of low-income residents. Localities will be able to separately enact their own taxes of up to 3 percent on retail sales with voter approval. Marijuana sellers will also be able to take a state income tax deduction for typical business expenses.

According to the state, the tax could generate annual revenue of approximately $40.8 million or more. Local annual revenue would be $13.8 million or more.

North Dakota

Initiated Statutory Measure No. 2 was opposed by 54.95 percent of voters, according to the state’s unofficial election results at press time. According to its final petition, the measure would have allowed “for the production, processing, and sale of cannabis and the possession and use of various forms of cannabis” for adults 21 years and older. The petition doesn’t address taxation or sales revenue of cannabis products.

South Dakota

Per the state’s unofficial election results, 53 percent of votes were against Initiated Measure 27, which would have legalized the production, use, and distribution of cannabis. Notably, a 2021 fiscal note from the South Dakota Legislative Research Council said the measure wouldn’t legalize the sale of cannabis, “and therefore no tax revenue from marijuana sales would come to the State.”

It added that “additional tax revenue from the sale of marijuana accessories would be possible but is not calculable at this time.”

West Virginia

Amendment 2 was at press time failing to pass, with 64.6 percent opposed and just 35.4 percent in favor. It would have authorized the State Legislature to eliminate various categories of personal property from being subject to taxation, including cars and business inventory and machinery. Gov. Jim Justice (R) and various localities opposed the amendment, expressing concerns about the amount of potential local revenue loss. Head lawmakers and the business community supported the amendment and asserted that the state’s taxation of business property makes it uncompetitive.

Audrey Fick, Emily Hollingsworth, Christopher Jardine, Andrea Muse, and Benjamin Valdez contributed to this article.

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