While voters delivered an historic rebuke of the economic and tax policies of the Trump administration as affordability concerns became a flashpoint, voters also decided on major tax ballot questions that will raise and protect revenue and do more to tax the rich in Washington, California, and Colorado. Still yet, other measures will hamstring state and local governments’ ability to raise revenue for core services – today and in the future.
Read more from ITEP on the web of state tax ballot measures here.
Major State Tax Proposals and Developments
- Votes are still being counted in WASHINGTON state at the time of writing, but the state’s popular new millionaires’ tax appears likely to survive the attempt to repeal it at the ballot, with close to 60 percent of voters opting to keep the tax on the state’s richest households and the projected $3.5 billion it is expected to raise each year for schools, healthcare, and other shared priorities. – DYLAN GRUNDMAN-O’NEILL
- CALIFORNIA voters weighed in on more than a dozen ballot measures, passing Proposition 3 which will make the state’s current top income tax rates permanent and secure vital ongoing funding for education and other priorities. The state appears likely to reject Proposition 40 which would have created a one-time wealth tax on billionaires, while passing Proposition 42 which will ban new wealth tax efforts going forward if not reversed. Meanwhile, voters seem poised to reject Proposition 43, which would have mandated supermajorities for local ballot measures to create special taxes. – ELI BYERLY-DUKE
- COLORADO ballot initiatives Amendments 87 and 136 remain too close to call., but at the time of writing Amendment 87 is ahead and 136 behind in vote counts. Amendment 87 would replace the state’s constitutional flat tax with a progressive rate structure to raise money for healthcare and education while reducing taxes on 97 percent of Coloradoans. Amendment 136 would cap the income tax rate for personal and corporate income taxes at 4.4 percent. – NEVA BUTKUS
- Voters in FLORIDA approved a ballot measure to increase the state’s non-school property tax homestead exemption to $250,000 by 2028, at which point it would also be indexed to inflation. On top of that, current non-homestead properties’ assessed values cannot rise by more than 10 percent a year, but the measure would lower that cap to 5 percent a year. Local governments expressed deep concern over the amendment leading up to election day, as it will jeopardize funding for services such as libraries, public safety, mosquito abatement, hospitals, and more. – NEVA BUTKUS
- NORTH CAROLINA voters approved two constitutional amendments that cap the state’s income tax and impose limits on local governments’ autonomy to increase property taxes. The first caps the state’s maximum allowable income tax at 3.50\ percent, reducing the cap from its previous 7 percent rate. The state’s personal income tax rate is currently 3.99 percent, scheduled to decrease to 3.49% in 2027. The property tax amendment gives lawmakers the authority to limit local governments’ ability to increase property taxes by creating a levy limit, but it does not specify what the limit would be, leaving it to future lawmakers to set the levy limit. – MILES TRINIDAD
- WYOMING voters rejected Initiative 1, which would have created a 50 percent property tax exemption on primary residences. The proposal did not align with existing exemptions and was widely opposed, including by past governors of both parties and groups representing hospitals and teachers. If passed, the property tax cuts would have forced massive cuts to local government revenues, especially in counties without large oil and gas operations. – ELI BYERLY-DUKE
State Roundup
- ARIZONA passed Proposition 141 and Proposition 316. Prop 141 amends the Arizona Constitution to prevent state and local governments from implementing taxes based on the number of miles a person drives, limiting the state’s ability to fund things like road maintenance in the future. Currently, four states have vehicle miles traveled (VMT) programs (Oregon, Utah, Virginia, and Hawai’i). Proposition 316 limits the local tax rate on groceries to 2 percent and requires voter approval to increase the tax rate.
- A CONNECTICUT panel of residents who were convened to study the state’s property tax system released recommended tax changes to fund the state’s schools and services and reduce property taxes. The Citizens’ Assembly on Property Taxes recommended that the state income tax levy an additional 1 percent on income above $1 million, which would fund education, childcare, healthcare, and reduce property taxes and vehicle taxes. The recommendations come as Connecticut struggles with affordability and lags neighboring states that have implemented taxes on the wealthy to finance state services or tax cuts for low- and middle-income households.
- Voters in Boulder, COLORADO, seem poised to approve the state’s first vacancy tax. The tax starts at $4,000 annually for any property vacant for more than six months of the year, going up to a maximum $7,000 fee.
- Cook County, ILLINOIS, voters approved a non-binding referendum to advise the state to enact a 3 percent income tax surcharge on income over a million dollars. The referendum also approves earmarking 50 percent of the revenue for property tax relief.
- IOWA voters approved Constitutional Amendment 1, which will require a two-thirds supermajority in both state legislative chambers to increase the state’s personal or corporate income tax rate.
- KANSAS state and local governments came to agreement on a $3 billion stadium project for the Kansas City Chiefs. Sixty percent of the funding for the project will come from state and local sales tax and revenue bonds.
- LOUISIANA voters approved a handful of constitutional amendments on property taxes, including expanding property tax exemptions for spouses of deceased, disabled veterans and giving local government the ability to increase homestead exemptions for seniors.
- MASSACHUSETTS voters seem likely to reject Question 5, a ballot measure that would have tightened limits on the state’s revenue and limited spending on state priorities like education, infrastructure, and public safety.
- MISSOURI voters have roundly rejected Constitutional Amendment 7, which would have created but not funded a permanent sovereign wealth fund with the goal of eliminating all taxation. The measure did not have a funding source or specified spending priorities.
- NEBRASKA’s revenue forecasting board’s latest projection, which will be finalized later this month, left the state’s current-budget shortfall at about $200 million and increased the projected shortfall for the upcoming biennial budget to about $1.2 billion. Both will have to be addressed in the 2027 legislative session that begins in January.
- NEW HAMPSHIRE voters were asked to create local school property tax caps with wording that confused many voters. Question 2 asked voters statewide to create two-year revenue caps without any additional revenue from the state. New Hampshire has the lowest per-pupil funding from the state of any state in the country.
- In a mid-budget update from the NEW YORK budget division, the state’s strong economy and progressive taxes helped shrink the total gap projected over the next three years from $14.7 billion to $8.9 billion. The biggest changes are in projected revenues from the progressive personal income tax and business taxes, while regressive consumption tax estimates did not change much. Still, officials are urging caution and asking agencies to keep budgets flat, as much of that growth is dependent on the AI sector.
- A legal challenge to NEW YORK City’s pied-à-terre tax on luxury second homes has been thrown out by an appeals court, eliminating one significant hurdle to implementing the highly progressive tax that is expected to raise up to $500 million per year for city needs.
- OKLAHOMA voters declined to pass Question 847, which would have reduced the annual growth limit on property tax valuations. Had it passed, the measure would have cut funding for local government services without replacing any of the revenue.
- UTAH voters rejected Amendment B which would have increased the voter threshold for any citizen ballot measure that expanded, changed, or created new taxes. Critics saw Amendment B as a question of whether the legislature should have more power than citizens over the question of taxation.
- Voters in TENNESSEE overwhelmingly voted to ban a statewide property tax. The measure will not affect current local property taxes, and the state has not had its own property tax since 1949.
- Voters in WISCONSIN voted to narrow the governor’s expansive veto powers by prohibiting use of the partial veto to create or increase a tax.
What We’re Reading:
- The National Conference of State Legislatures is tracking the significant gains Democrats are seeing in state legislative elections where they gained government trifectas and broke Republican trifectas or supermajorities.
