Just Taxes Blog by ITEP

State Rundown 12/13: Supermajority Laws Considered in Some States Even as They Confound Others

State Rundown 12/13: Supermajority Laws Considered in Some States Even as They Confound Others

December 13, 2017

Meg Wiehe
Meg Wiehe
Deputy Director

Supermajority requirements for tax increases are proving a major obstacle to responsible budgeting in Oklahoma, while ballot initiatives are being filed to alter or abolish Oregon‘s similar requirement, but a similar requirement is slowly advancing toward the ballot in Florida nonetheless. Displeasure with agricultural property taxes are spawning both a ballot initiative drive and a possible lawsuit in Nebraska. And revenue woes are causing heartburn in the heartland, as Indiana, Iowa, and Kansas are also dealing with underperforming revenues and budget balancing difficulties.

— Meg Wiehe, ITEP Deputy Director, @megwiehe

  • Oklahoma legislators are expected to return to the capital this Monday for a second special session to address the state’s budget gap. The need to revisit revenue is largely driven by the state’s legislative supermajority requirement for tax increases. The threshold for the requirement, that tax increases be approved by a supermajority of 75 percent in both chambers or by a vote of the people, has not been met since the law’s passage some 25 years ago.
  • Florida Rick Scott’s attempt to create a supermajority obstacle like the one currently hindering Oklahoma legislators passed a procedural hurdle this week. If approved by the legislature, Florida voters will see the question on the 2018 ballot.
  • Dueling state ballot initiatives have been filed in Oregon, seeking either to strengthen or weaken the state’s constitutional requirement of three-fifths majority for tax bills. Business-friendly Initiative Petition (IP) 31 would require the three-fifths requirement for any increase to taxes or fees, including changes to exemptions, credits, and deductions. IP 38 would limit the three-fifths requirement to just personal income taxes, allowing business tax increases to be enacted with a simple majority. And IP 39 would remove the three-fifths requirement altogether.
  • Efforts to reduce agricultural property taxes in Nebraska are heating up. A petition drive to create a state credit for half of local property taxes (without identifying a funding source for the estimated $1.1 billion this would cost) will kick off next week, while others are considering a separate attempt to sue the state over property taxes and school funding.
  • California and Colorado have both been road testing a mileage tax as a supplement/replacement for the gas tax. The results in Colorado were largely positive, but noted ongoing concerns regarding privacy, collecting tax from out of state motorists, and avoiding the public relations problem of appearing to “punish” more eco-friendly drivers.
  • Indiana is experiencing a fifth consecutive month of missed revenue targets thanks once again to higher than expected business refunds.
  • Revenues in Iowa continue to underperform as well, a trend that nearly required a special legislative session and will still require another $35 million of budget cuts soon. Meanwhile, a coalition of 19 groups has formed to push the state to raise its tobacco tax by $1.50 per pack of cigarettes, tin of chewing tobacco, or package of cigars.
  • It’s a painful time to be in charge of balancing budgets at all levels of government in Kansas right now. Cities and localities are already feeling squeezed by a property tax lid that went into effect earlier this year. And in an effort to raise additional funding for public education and close a projected budget deficit, state lawmakers are leaving no rocks unturned, including business tax incentives which are coming under greater scrutiny.
  • In Wyoming, despite funding shortfalls, few tax bills have gained the favor of the state’s Legislative Joint Revenue Committee. Rather, many have drawn criticism – including a proposed leisure and hospitality tax.
  • A politics of “no” in Louisiana around a gas tax increase is making it difficult to adequately maintain state infrastructure.
  • Lawmakers in New Mexico have a new tool to analyze the implications of various tax reforms—specifically as they relate to changing the base or rates of the state’s Gross Receipts Tax. The computer model is the result of a $400,000 study conducted by Ernst & Young.

What We’re Reading…

  • Listen to this NPR program on Kansas as a Cautionary Tale for federal tax reform, including a spotlight on Kansas Center for Economic Growth’s Executive Director, Heidi Holliday!
  • New Jersey Policy Perspective has tallied up $450 million in annual revenue the state could bring in to fund its schools, pension system, or other neglected priorities by closing corporate tax loopholes, reining in business tax subsidies, and revisiting recent business tax breaks, while also helping small businesses and the state economy.
  • A new article out of Northwestern University delves into some of the forces pushing for and against more widespread use of soda taxes.

If you like what you are seeing in the Rundown (or even if you don’t) please send any feedback or tips for future posts to Meg Wiehe at [email protected]. Click here to sign up to receive the Rundown via email.