Top State Tax Ballot Initiatives to Watch in 2018

Arizona

Proposition 126 would prohibit new or increased taxes on services performed in the state. This would make expanding the sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. more difficult, and higher rates more likely.

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California

Proposition 2: Redirect $140 million per year from California’s millionaire’s tax (1 percent on income over $1 million) from mental health services to back $2 billion in bonds for homelessness prevention. The millionaire’s tax generates approximately $2.2 billion per year.

Proposition 5: Current law allows homeowners age 55 or older to transfer their Proposition 13 limited assessment to another home only if the home is equal or lesser in value, in the same county or in a county that permitted it, and purchased within two years of selling the original home. Proposition 5 removes these restrictions, allowing homeowners age 55 or older to transfer their tax assessment to a new home anywhere in the state regardless of the new home’s market value.

Proposition 6: Repeals S.B. 1 of 2017, which increased the gas taxA gas tax is commonly used to describe the variety of taxes levied on gasoline at both the federal and state levels, to provide funds for highway repair and maintenance, as well as for other government infrastructure projects. These taxes are levied in a few ways, including per-gallon excise taxes, excise taxes imposed on wholesalers, and general sales taxes that apply to the purchase of gasoline. from 29.7 cents per gallon to 41.7 cents per gallon, added a new per-vehicle fee, and imposed a $100 fee on electric vehicles. Read our full analysis here.

Barstow Measure Q: Increase sales tax from 7.75 percent to 8.75 percent.

Carpinteria Measure X: Increase sales tax from 7.75 percent to 9 percent.

San Francisco Proposition C: Increase business gross receipts taxA gross receipts tax, also known as a turnover tax, is applied to a company’s gross sales, without deductions for a firm’s business expenses, like costs of goods sold and compensation. Unlike a sales tax, a gross receipts tax is assessed on businesses and apply to business-to-business transactions in addition to final consumer purchases, leading to tax pyramiding. from 0.65 percent to 1.34 percent, and the alternative business payroll taxA payroll tax is a tax paid on the wages and salaries of employees to finance social insurance programs like Social Security, Medicare, and unemployment insurance. Payroll taxes are social insurance taxes that comprise 24.8 percent of combined federal, state, and local government revenue, the second largest source of that combined tax revenue. from 1.4 percent to 2.9 percent, raising approximately $250 million to $300 million per year for homelessness programs. Read our full analysis here.

Santa Ana Measure X: Increase the sales tax from 7.75 percent to 9.25 percent from April 2019 to April 2029, then to 8.75 percent until April 2039, then reverting to 7.75 percent.

Santa Maria Measure U: Increase the sales tax from 8 percent to 9 percent.

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Colorado

Amendment 73: Changes Colorado’s flat 4.63 income tax into a five-tier income tax with a bottom rate of 4.63 percent on income up to $150,000 and a top rate of 8.25 percent on income over $500,000. Change’s Colorado’s corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. from 4.63 percent to 6 percent. The additional $1.6 billion per year in revenue from the tax increases would be designated for education spending. The amendment also modifies the interaction between the Gallagher Amendment and the Taxpayer Bill of Rights (TABOR) to prevent the residential property school tax assessment ratio from falling below 7 percent.

Proposition 109: Issues $3.5 billion in bonds for transportation projects, to be repaid out of the state budget. If both Propositions 109 and 110 pass, only the one with the higher number of votes will take effect.

Proposition 110: Increases Colorado’s statewide sales tax from 2.9 percent to 3.52 percent, from 2019 through 2038, to fund $6 billion in transportation projects. If both Propositions 109 and 110 pass, only the one with the higher number of votes will take effect.

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Florida

Amendment 1 would create a homestead exemption on the portion of home values between $100,000 and $125,000. As a result, that margin of $25,000 in home value would be exempt from property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. es other than school district taxes.

Amendment 2 would make permanent the 10 percent cap on annual nonhomestead parcel assessment increases, which is set to expire on January 1, 2019. The cap does not apply to school district taxes. Nonhomestead parcels include nonhomestead residential properties, such as second homes and rental apartments, as well as commercial property and vacant land.

Amendment 5 would require a two-thirds vote of each chamber, instead of a majority vote, to enact new taxes or fees or increase existing ones. Currently, 15 states require a supermajority vote for at least some tax increases, and Colorado requires voter approval for tax increases.

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Georgia

The Georgia Forest Land Conservation and Timberland Properties Amendment would allow the legislature to change the formula for calculating the tax on forest land conservation use property. This measure would remove the constitutional requirement that the legislature use a “formula based on current use, annual productivity, and real property sales data” to calculate the tax on forest land conservation use property (FLCUP). This amendment would authorize the legislature to create an ad valorem taxation assessment for timberland property.

The Georgia Portion of Revenue from Outdoor Recreation Equipment Sales Tax Dedicated to Land Conservation Fund Amendment would authorize the legislature to dedicate up to 80 percent of revenue from the sales and use tax on outdoor recreation equipment to the Georgia Outdoor Stewardship Trust Fund. The revenue would be used for land conservation and to support state parks and trails, etc.

The Georgia School Sales Tax Referendums Amendment would authorize a school district or group of school districts within a county to call for a sales and use tax referendum to impose, levy, and collect a sales tax. The tax rate would be 1 percent and would be authorized for up to five years. Revenue would be divided among school districts within the county.

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Hawaii

The Hawaii Surcharge on Investment Properties to Fund Public Education Amendment would allow the state legislature to apply a special statewide property tax surcharge on investment properties. The Hawaii constitution currently allows only counties to charge property taxes. Read our full analysis here. Update 10/24: the Hawaii Supreme Court has removed the initiative from the ballot for being impermissibly vague.

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Indiana

Public Question 1 would require Indiana to adopt a balanced budget each year, though in effect the state does each year anyway.

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Louisiana

Amendment 4 would change the state constitution to prevent gas and motor fuel tax revenues from being used for state police funding.

Amendment 5 would introduce special property tax assessment methods for property in trust of disabled veterans and surviving spouses of a person who died in the line of duty as an active duty member of the military, law enforcement, firefighter, or first responder.

Amendment 6 would require that reappraisals of property that increase the market value of the property by more than 50 percent be phased in over four years.

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Maine

Question 1: Imposes several new taxes impacting taxpayers with Maine adjusted gross incomeFor individuals, gross income is the total pre-tax earnings from wages, tips, investments, interest, and other forms of income and is also referred to as “gross pay.” For businesses, gross income is total revenue minus cost of goods sold and is also known as “gross profit” or “gross margin.” exceeding the federal Social Security “taxable maximum” ($132,900 for income earned in 2019). In effect, these new taxes would create a new top marginal individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. rate of 9.05 percent (10.95 percent for the self-employed). Funds would be used to create a new Universal Home Care Program. Read our full analysis here.

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Maryland

Gambling Revenue Dedicated to Education Lockbox Amendment: Phases in the dedication of tax revenue from casino gaming to the Education Trust Fund, with all gaming revenues dedicated to education by fiscal year 2023. This revenue would supplement the state’s minimum required education funding levels and not count toward their attainment.

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Michigan

Proposal 1 would legalize the recreational use of marijuana for adults 21 and older and create an excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. of 10 percent, which would be levied on marijuana sales by retailers and microbusinesses. Revenue would be allocated to local governments, K-12 education, and road and bridge maintenance. Municipalities would be allowed to ban or limit marijuana retail establishments within their boundaries. Read our full analysis here.

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Missouri

Amendment 2: Legalizes medical marijuana and imposes a 4 percent ad valorem excise tax on sales through a state constitutional amendment. Revenues are dedicated to health-care services for military veterans. Annual revenue is estimated at $24 million. As it is one of two medical marijuana constitutional amendments on the ballot, should both amendments pass, the one with the higher vote share would prevail. Read our full analysis here.

Amendment 3: Legalizes medical marijuana and imposes a 15 percent ad valorem excise tax on sales through a constitutional amendment, with revenues dedicated to the funding of a new state Biomedical Research and Drug Development Institute researching currently incurable diseases. Annual revenue is estimated at $66 million. As it is one of two medical marijuana constitutional amendments on the ballot, should both amendments pass, the one with the higher vote share would prevail. Read our full analysis here.

Proposition C: Legalizes medical marijuana and imposes a 2 percent ad valorem excise tax on sales through an initiated state statute, with revenues dedicated to veterans’ services, drug treatment, education, and public safety. Annual revenue is estimated at $10 million. Some uncertainty surrounds the question of what would happen if Proposition C, a statutory measure, passed in tandem with one of the constitutional amendments, though the most straightforward interpretation would be the implementation of two separate excise taxes. Read our full analysis here.

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Montana

Initiative 185 would raise the excise tax by $2 on a pack of cigarettes to $3.70 per pack. Taxes on moist snuff would increase to 83 percent of wholesale price or $3.70 per 1.2 ounces, whichever is greater. All other products in the Other Tobacco Products category would increase by 33 percent of the wholesale price. A new tax on vapor products would be created, equivalent to the tax on Other Tobacco Products category. Read our full analysis here.

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Nevada

Question 2: Creates a state and local sales tax exemptionA tax exemption excludes certain income, revenue, or even taxpayers from tax altogether. For example, nonprofits that fulfill certain requirements are granted tax-exempt status by the Internal Revenue Service (IRS), preventing them from having to pay income tax. for feminine hygiene products. Read our full report on this issue here.

Question 4: Constitutionally requires the legislature to exempt durable medical equipment, oxygen delivery equipment, and mobility-enhancing equipment from state and local sales taxes.

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New Hampshire

The New Hampshire Taxpayer Standing to Bring Legal Actions Against Government Amendment would give taxpayers the right to take legal action against state or local government where the taxpayer resides to declare that the government spent, or has approved spending, of public funds in violation of a law.

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North Carolina

The Income Tax Cap Amendment would lower the maximum income tax rate to 7 percent. The state currently has a rate cap of 10 percent in its constitution. The state’s current top rate is 5.499 percent.

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Oklahoma

Question 800 would amend the state constitution to require 5 percent of the state’s oil and gas development tax revenue into an investment fund. Each year 4 percent of the fund’s capital would transfer into the general fund.

Question 801 would allow local voter-approved property tax levies to fund school operation as well as construction.

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Oregon

Measure 103 would prohibit consumption taxA consumption tax is typically levied on the purchase of goods or services and is paid directly or indirectly by the consumer in the form of retail sales taxes, excise taxes, tariffs, value-added taxes (VAT), or an income tax where all savings is tax-deductible. es (sales, excise, value-added or gross receipts tax) on groceries.

Measure 104: Oregon’s constitution currently requires a three-fifths legislative vote to pass legislation that would raise revenue. Courts have interpreted the term “raise revenue” narrowly to only include tax increase. Measure 104 would expand its definition to include “any tax or fee increase, whether accomplished by the creation, imposition or increase of any tax or fee, or by the modification, elimination or change in eligibility for any exemption, credit, deduction or lower rate of taxation.”

Portland Measure 26-201 would create a 1 percent tax on gross receipts of retailers with national sales over $1 billion (with at least $500,000 in Portland sales). It excludes “basic groceries, medicines, and health care services.” Funds to be used for “clean energy projects.” Read our full analysis here.

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South Dakota

Initiated Measure 25 would increase the state’s cigarette tax by $1 to $2.53 on a pack of cigarettes. The tax on the Other Tobacco Products category would be raised from 35 percent of wholesale price to 55 percent of wholesale price. The measure would dedicate the next $20 million in excess of already dedicated revenue to support technical education and workforce training.

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Utah

Constitutional Amendment A: Change eligibility for the active duty property tax exemption from 200 days of active duty per calendar year to 200 days of active duty per 365-day period.

Constitutional Amendment B: Exempts from property tax any private property leased by a state or local government.

Nonbinding Opinion Question 1: A nonbinding advisory measure asks whether the state gasoline tax should be increased from 29 cents per gallon to 39 cents per gallon, with the revenue from the additional 10 cents used for education and roads. Together with the enactment of H.B. 293 (which prevented ratchet-downs in property taxes), the group Our Schools Now agreed to drop a proposed income tax increase ballot initiative.

Proposition 2: Legalize medical marijuana and exempt it from the sales tax but require the imposition of fees to cover state costs of implementing the proposition.

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Virginia

Question 1: Permits a surviving spouse of a disabled veteran to continue to receive a property tax exemption even if he or she moves to a new place of residence. Currently, the exemption only applies to a primary residence which had been occupied by the deceased spouse.

Question 2: Constitutionally empowers the legislature to authorize local governments to provide a partial property tax exemption for parcels subject to recurrent flooding if improvements have been made to the property to prevent flooding or long-term damage from flooding.

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Washington

Initiative 1631: Imposes a carbon taxA carbon tax is levied on the carbon content of fossil fuels. The term can also refer to taxing other types of greenhouse gas emissions, such as methane. A carbon tax puts a price on those emissions to encourage consumers, businesses, and governments to produce less of them. as of January 2020, beginning at a rate of $15 per metric ton and increasing by $2 per year until all the state’s greenhouse gas reduction goals for 2035 are met and all those for 2050 are on track to be met. The state’s goals include reducing overall emissions to 25 percent below 1990 levels by 2035, and by 50 percent below 1990 levels (or 70 percent below the state’s expected emissions for that year) by 2050.

Initiative 1634: Prohibits local governments (but not the state government) from imposing sales or other taxes or fees on groceries. Existing taxes would be grandfathered in but could not be increased, and alcohol, tobacco, and marijuana products would be excluded from the definition of groceries for purposes of the initiated statute. Read our full analysis here.

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