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1996 State Tax Initiatives
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Topic
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Voters across the country took a stand on a wide array of state tax initiatives during November’s elections. This Information Brief summarizes major tax initiatives and their outcome by state.
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State
Initiatives
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| Arizona
| Voters narrowly passed a constitutional $50,000 personal property tax exemption for industrial, commercial, and agricultural businesses. The measure, intended to benefit small businesses, will: add a provision to the Arizona constitution specifically exempting the first $50,000 of business personal property from the current 1 percent tax; provide that businesses would not have to file tax paperwork on personal property for which they do not owe tax; and give the Legislature the power to direct the state revenue to index the exemption for inflation.
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| Arkansas
| Two tax amendments were narrowly approved by Arkansas voters. The first will impose a sales tax of one-eighth of 1 cent for the benefit of four state environmental agencies. The other sets a minimum property tax of 25 mills for maintenance and operation in all school districts in the state - directly affecting only about six districts who don’t already impose at least that much.
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| California
| Voters defeated an initiative to reinstate recently expired personal income tax rates for the wealthiest 1 percent of Californians. The measure would have extended temporary five-year income tax rates that were increased in 1991 to help the state meet its budget shortfalls. The $700 million in increased state revenues would have been funneled to schools and local government services.
Californians approved a second measure to limit local governments’ ability to levy taxes. Implementation is projected to result in the loss of at least $100 million a year in revenue for local governments. The measure prohibits local governments from imposing, extending, or increasing general taxes unless they are approved by a majority vote that is tied to a regularly scheduled general election. It also makes it much more difficult for local governments to adopt or increase fees and assessments that are tied to property-related services such as parks, fire protection, and garbage collection.
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| Colorado
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Colorado voters defeated a ballot measure that would have removed the property tax exemption for most non-profit groups. The amendment would have required all churches, synagogues, temples and mosques to pay taxes on real property. It also would have taxed currently-exempt real property owned by hospitals, pre-schools, medical clinics, food banks, Boy and Girl Scouts, arts and cultural organizations, YMCAs, zoos, medical research facilitates, job training and rehabilitation centers and blood banks. It would have continued the exemption for colleges and universities, community corrections, orphanages, and housing for low-income elderly, abused, disabled, or homeless people.
Voters also defeated a referendum referred to the ballot by the General Assembly which would have allowed unemployment insurance taxes to be increased without voter approval.
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District of
Columbia
| An initiative allowing third-party interventions in commercial property assessments appeals passed by a wide margin. The measure will allow any taxpayer to: appeal or intervene in any assessment of Class 4 or 5 commercial property; create a public advocate for property tax assessments; and require that all information presented at property tax assessment appeals board hearings be open to the public.
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| Florida
| An amendment to the state’s constitution to require the support of two-thirds of voters for any new constitution-based tax or fee - including a state income tax - passed easily. Voters also approved a second tax-related initiative that restores a state commission’s power to consider tax or budget-related constitutional changes.
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| Georgia
| By a wide margin, voters approved repeal of the state’s intangible personal property tax. The intangible personal property tax, a tax on personal financial assets such as stocks, bonds, and cash on hand, generated about $30 million annually that went to the counties in which it was collected. The tax had its origins in the 1940’s as a way to compensate counties for homestead exemptions on their property tax rolls.
Voters also approved a measure that will allow special local option sales taxes to be used for school capital projects. Under the measure, a countywide one-cent sales tax could be imposed by county school boards for a period of up to five years, or a specific dollar amount, for financing capital projects or to pay off school bonds.
A third measure eliminating property taxes on church vans and Masonic lodges also passed.
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| Idaho
| Idaho voters defeated an initiative that would have limited property taxes to 1 percent of assessed value. The measure would also have shifted school funding totally away from local property taxes to the state. Had the measure passed, it would have meant an annual loss of $154 million in property taxes to public schools and another $75 million loss to local governments.
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| Louisiana
| Voters approved a constitutional amendment to allow the state Legislature to expressly exempt businesses from state and local sales taxes. At issue was a 1994 state Supreme Court decision in which the court originally held that when the state exempts a certain business or activity from sales taxes, they are automatically suspended at the local level. The amendment that passed allows different sales and use tax exemptions to exist at different levels of government, and authorizes the Legislature to specifically state whether an exemption is to be granted at the state level, the local level, or both.
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| Missouri
| Missouri voters approved a ten-year extension of a 0.1 percent state-wide sales tax to fund operation of the park system and soil conservation program. The tax was first approved in 1984. In Missouri, 0.1 percent taxes must be considered every ten years and passed by a simple majority of voters to remain in place. The tax, which funds about 85 percent of the total operating budget of the park system, is projected to generate $700 million between 1998 and 2008.
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| Oregon
| Oregonians passed an initiative to increase the state’s cigarette tax and approved a constitutional amendment to cut and cap property taxes.
The cigarette tax measure will increase the state’s current 39 cents per pack tax by another 30 cents to make it the third highest in the country. Under the initiative, 90 percent of the additional tax money, or about $76 million annually, will go to maintain and expand the Oregon Health Plan; the cigarette tax revenues will now fund 30 percent of the state’s share of the health plan.
The property tax initiative would make a number of changes to the state Constitution. It would limit property taxes to the level of the 1994-95 tax year or 10 percent less than the 1995-96 tax year, whichever is less, and would limit increases to 3 percent annually, with exceptions for increases to voter approved bonded indebtedness.
A third tax initiative failed by a wide margin. This constitutional amendment would have required a majority of registered voters to pass tax-related measures at the polls, meaning that registered voters not voting would be counted as “no” votes.
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| South Dakota
| Voters overwhelmingly approved a constitutional amendment that requires a two-thirds majority in both houses of the Legislature for any new tax to take effect.
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| Utah
| A proposition repealing an article of the state constitution concerning valuation and assessment of mines and mining claims and the assessment of various types of mining property was approved.
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| Summary
| Dozens of tax initiatives came up on state ballots in the 1996 election, ranging from successful attempts to expand the sales tax in several states to a defeat of a proposed increase in the income tax of one. In a number of states taxpayers appeared to be looking for greater control of the taxing process, with varying degrees of success. Property tax initiatives also played a significant role in state referendums, again with mixed results.
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For further
information
please contact:
| Stacey Mazer, Senior Staff Associate
National Association of State Budget Officers
444 NorthCapitol Street, N.W., Suite 642
Washington, D.C. 20001-1511
Phone: (202) 624-5382 Fax: (202) 624-7745
email: smazer@sso.org
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NASBO Information Brief
November 13, 1996
Volume 4, Number 2
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Policy Resources