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    Most ballots lack tax issues

    BY Dennis Cauchon
    10/14/2004
    by Dennis Cauchon on 10/14/04.

    The angry voter using ballot measures to cut taxes or demand more services from state and local government is taking a sabbatical this election campaign.

    Major ballot issues on taxing and spending are on the ballot Nov. 2 in only 13 states, a reduction in the role voter initiatives have played since 1978, when Californians approved Proposition 13 to slash property taxes.

    Supporters of some key initiatives in other states this year collected enough signatures to submit them to voters. But they kept the measures off the ballot because the presidential election has siphoned off campaign money and public attention.

    "Unless a ballot measure brings out certain voters for the presidential election, it got tossed aside this year," says Kristina Wilfore, executive director of the Ballot Initiative Strategy Center, a research group that supports ballot issues that advance what it calls a "progressive political agenda."

    The result is a drop in the number of ballot measures seeking voter approval for tax cuts or increases and bond issues that raise money for government spending.

    Policy experts who follow ballot measures attribute the decrease in part to easing of anti-tax sentiments in some parts of the nation. Most states and cities cut the growth of their spending in the past two years because their tax revenue was slumping.

    In addition, most state and local governments automatically reduce property tax rates to limit the increase in tax bills from rising property values.

    Focus on property tax

    Most pocketbook ballot initiatives this year tinker with the property tax, expanding homestead exemptions or adding tax breaks for veterans or seniors. They respond to concerns that increasing home values are pushing property tax bills too high, especially for low-income homeowners.

    Although fewer in number than 2002, the tax-and-spend ballot measures this year are important because they could trigger copycats if they succeed.

    Ballot issues to watch:

    Washington. Voters will decide whether to increase the state sales tax by one penny on the dollar to pay for $1 billion per year in new education spending. The tax would rise from 6.5% to 7.5%, the highest in the nation. When combined with local sales taxes, people would pay nearly 10% in some parts of the state.

    The initiative is important nationwide because it proposes both a huge spending increase and a way to pay for it. Traditionally, spending and tax-cut proposals are kept separate. California and Florida voters, for example, have approved multibillion-dollar annual programs to reduce class sizes but provided no way to pay for them. The financial crisis plaguing California's state government is partly the result of voters approving spending increases in one ballot initiative and tax cuts in another.

    In Washington, supporters say the sales tax hike would reduce class size, raise teacher pay, expand college scholarships and create 32,000 slots for college students.

    Gov. Gary Locke, a Democrat, and Microsoft, Starbucks and other businesses support the initiative. Wealthy high-tech executives, including Microsoft chairman Bill Gates, are among contributors to a $1.5 million fund to support the initiative. Opponents will spend less than $50,000.

    "We oppose it because increasing taxes would have a disastrous effect on our state's economy," says Jamie Daniels, president of the state chapter of Citizens for a Sound Economy, a national organization that supports low taxes.

    Initiative supporter Natalie Reber says a higher sales tax may not be ideal but reflects the tax system voters and legislators have approved. "Even low-income families will benefit more than they will pay in additional taxes," she says. Washington does not have a state income tax for individuals. It also exempts food and prescription drugs from the sales tax.

    Maine. Voters will decide whether to limit property taxes to 1% of a home's assessed value — the same tax cap imposed under California's Proposition 13. It also would roll back the value of homes to 1996-97 levels.

    Opponents say it would cut tax revenue nearly $600 million a year and force cities and towns to reduce spending on police, fire protection and schools. Supporters say the cuts would not be drastic and the tax limit would help homeowners, especially those along the Atlantic Coast, where property values have soared.

    South Dakota. Voters will decide whether to exempt food from the state's 4% sales tax and local sales taxes of up to 2%. The South Dakota Democratic Party led the petition drive to exempt food. Republican Gov. Mike Rounds wants to keep the tax on food.

    The proposal reflects an attempt by Democrats to take the lead on tax cuts. Exempting food would cut about $40 million from the state's $2.9 billion budget.

    "We've struggled for a long time in the Legislature to repeal the tax on food, which is unfair and regressive, but the Republican majority wouldn't allow it," says Judy Duhamel, state Democratic chairwoman. "I find it amusing that the Republican governor is now crusading against tax relief for everyone."

    Rounds says ending the tax on food would be fiscally irresponsible. He supports a program that gives low-income families refunds for the sales tax paid on food.

    Failing to qualify

    Initiatives that don't appear on the ballot this year may be as important as those that do.

    Anti-tax groups in Florida collected more than 400,000 signatures in an attempt to increase the amount of a home's value that is exempt from property taxes from $25,000 to $50,000. But the Florida Supreme Court knocked the proposal off the ballot because the proposed summary for voters did not fairly describe its financial effect.

    In Nevada, anti-tax groups failed to get enough signatures for a measure that would repeal an $800 million tax hike passed in 2003.

    In Colorado, a well-organized effort to loosen restrictions on state spending was dropped. Supporters had gathered more than 100,000 signatures, enough to get on the ballot. But polls showed it would be a tough sell to voters, and financial supporters were donating money elsewhere.

    "It wasn't the right time," says Wade Buchanan, president of the Bell Policy Center, a Denver organization that describes itself as progressive. "We have a competitive (U.S.) Senate race, a couple close House races, and we're suddenly a swing state in the presidential campaign. Anybody who has any money is using it elsewhere."