Policy Clearinghouse

Gearing Up for Ballot Budget Battles

This November, in addition to picking their Congressional Representatives, voters will decide on a host of important ballot measures.  That is nothing new.  Last year, an off-year election, voters in six states decided on 26 statewide ballot measures ranging from gay marriage to gambling to medical marijuana.  This year, however, many of billions of dollars will be at stake on the ballot.

According to the National Conference of State Legislators, 146 statewide measures have qualified for the ballot this November.  Many of those measures will have serious ramifications on state budgets and taxpayers.  For example, voters in Washington State (one of 9 states without an income tax) will decide whether to follow Oregon's lead and tax individuals who earn more than $200K per year.  The measure would generate more than $1 billion in new state revenue.

Voters in other states will have the option to slash state revenue or reduce spending.  Two separate proposals in Colorado would cut property, income and motor vehicle taxes by $3.1 billion.  In Florida, voters can save billions by rolling back the class size requirements they established in 2002.

Stateline.org has compiled a list of key measures to follow - Guide to state ballot measures for 2010

For further analysis, check out the Stateline.org article - Billions on the ballot

Non-Profits Beware of Hard-Up Governments

An article released today by NPR reports on efforts by state and local governments to generate revenue from tax-exempt groups.  From proposing service fees to challenging some organization's tax exempt status, municipalitiesare targeting private schools, hospitals, charities, churches and other non-profits as they seek to close budget gaps.  University towns and state capitols are particularly vulnerable to this type of proposal because so much of their property is already off the tax rolls.

With workloads up and contributions down, these kinds of proposals couldn't come at a worse time for most non-profits.  Of course, you already know that.  We'll keep this issue on the radar screen.

Click to read or listen to the story from NPR: Amid Red Ink, Tax-Exempts Asked To Add To Coffers

State UI Debt

Do you know how much money state unemployment trust funds owe the federal government for emergency loans?

The answer is that as of February 19, 2010, 27 states and the US Virgin Islands owe a combined sum of $32,323,094,836.53 on outstanding loans from the Federal Unemployment Account.  That figure is up more than $22 billion since July 1, 2009.  For specifics and the latest figures, click HERE for the US Dept of Labor.

The potential ramifications of this debt on the business community are huge.  For example, the Philadelphia Business Journal reports that New Jersey businesses will face a $1 billion payroll tax increase costing $300 to $1000 per employee starting July 1, 2010 if a solution for the UI trust fund gap is not found.

This is a tough, immediate issue without a clear solution.  Many chambers are pushing for comprehensive UI reform, but that still leaves 27 states with staggeringly large debts.  Please share your thoughts...

Oregonians Vote For Taxes

Last week voters in Oregon approved two ballot measures that amount to a $700 million tax hike.  While the decision to increase taxes was made via popular vote, the burden for generating new tax revenue will fall primarily on Oregon's businesses and business owners.

The two ballot measures, 66 and 67, were both very targeted.  Measure 66 raises income taxes by 2% on individuals earning more than $125,000 a year and on couples whose income exceeds $250,000. Measure 67 raises taxes on businesses, including a rise in the corporate minimum tax.

The statewide campaign to approve this tax hike was largely funded by public employee unions who outspent a coalition of chambers, trade associations and tax advocates by more than $2 million.  Television and radio advertising supporting the taxes played heavily class themes to win 54% support.

Support for this kind of tax hike plays off growing populist sentiment and is fanned by anger at Wall Street.  Other states could face similar tax proposals, particularly as the reality of budget deficits set in.

To read more about Oregon Measures 66 and 67 check out these two articles:

• Wall Street Journal - Taxpayer Ambush in Oregon
• New York Times - Voters in Oregon Approve Tax Increases

Click for info the coalition opposing the tax hike - Oregonians Against Job-Killing Taxes

Pittsburgh Tuition Tax Proposal

Like most American cities, Pittsburgh faces a budget deficit.  Howver, their mayor's proposed solution to the budget gap is much less common - he plans to tax college tuition.

The Wall Street Journal says the proposed 1% tuition tax on college tuition, "appears to be a one-of-a-kind."  It would bring in $16 million in new revenue.

The city has argued that the 1% tax, which would cost $409 a year for Carnegie Mellon undergrads, isn't much for students who receive a great deal of city services.  The city has also pointed out that, due to the large number of non-profit and charitable organizations, 40% of city property is tax exempt, thus leaving few options for raising new funds.

The proposal,  announced by Mayor Ravenstahl last month, has created a lot of controversy.  The plan has made headlines nationwide, and the Pittsburgh Council on Higher Education is lobbying state lawmakers to prohibit taxing students.

Talk about Town-Gown relations!

Click HERE to read more from the Wall Street Journal.

Gas Tax on the Table

Increasing the Federal gas tax is very much on the discussion table in Washington these days.  Rep. James Oberstar (D-MN), Chair of the House Transportation and Infrastructure Committee, is pushing for a $550 billion federal transportation program that would include a 5-cent federal gas tax increase.  Speaking in relation to the gas tax, Congressman Oberstar said:

"The maintenance and improvement of our transportation infrastructure has fallen well behind our needs...An increase in the tax that funds these projects is long overdue."  Click HERE for more.

Currently the Federal Gas Tax is set at a fixed rate of 18.4 cents per gallon.  It hasn't increased since 1993, and overall revenue from the tax has declined as automobile efficiency has improved.

Transportation Secretary LaHood has mentioned indexing the federal gas tax, along with tolling, bonds, and a miles traveled tax, as a possible revenue stream to fund transportation infrastructure projects.  At a summit in Texas this week LaHood said:

"Congress wants to pass a very robust transportation bill in the neighborhood of $400 billion or $500 billion, and we know the highway trust fund is just deficient in its ability to fund those kinds of projects."

Click to read more from the Fort Worth Star-Telegram.

The Feds aren't the only ones looking to increase revenue per gallon of fuel, states leaders are also looking at gas tax hikes.  Some legislators in West Virginia are at odds with the Governor over his plan to keep a 5 cent fixed portion of the state's gas tax in place past its original expiration date in 2013.  In Texas, Governor Perry has rebuffed State Senate Transportation Committee Chair and fellow Republican John Corona's proposal to raise the state's gas tax by $.10 per gallon.

Every community has a lane expansion, interchange improvement, or light rail project in planning that would improve mobility and quality of life, how to pay for them is the question.  State bond ratings and public opinion may preclude more debt, and force government at all levels to look at alternative sources of revenue.  Please share comments about gas tax proposals in your city, county or state.

Bangor Chamber Opposes TABOR

An update to last week's posting about the TABOR ballot referendum in Maine - The Bangor Chamber has come out in opposition to the measure.  Here is their statement in relation to Question 4 (TABOR) and Question 2 (excise tax reduction)

“While we fully support efforts to improve Maine’s business climate and economic development, our board does not believe that either of these ballot proposals would accomplish that,” said John N. Diamond, chairman of the Chamber’s board of directors. “Both proposals contain elements that the board believes could seriously undermine local infrastructure as well as Maine’s economic competitiveness. In light of that, the board believes that passage of either proposal would be detrimental to our region and our state.”

Click for the whole news item from the Bangor Daily News

The Portland (ME) Regional Chamber also opposes TABOR.  Their website offers a great history of Tax and Expenditure limiting legislation in Maine over the past 20-25 years.  Click HERE for that brief history.

TABOR in Maine

Last month we featured a blog post about a TABOR (Tax Payer Bil of Rights) ballot referendum in Washington State.  Well, it is on the ballot in Maine too.

Voters in the Pine Tree State will decide on Question 4 - The Maine Tax Relief Initiative.  This is state's second vote on a TABOR provision, a similar measure was rejected in 2006.

Like other TABOR laws, the measure would cap government spending at the previous year's budget with and adjustments for inflation and population growth.  Any spending over the set limit would require voter approval via ballot referendum.  The cap applies to the general fund, but also special revenue funds like transportation.  This proposal would use 2010, a year of significantly reduced tax revenue, as the baseline budget  year. 

Here are links to local organizations on both sides of the debate:

• Maine Center for Economic Policy - opponents of TABOR proposal.
• TABOR Now - proponents of TABOR

The Maine Chamber of Commercehas not taken a position on the issue.  In a press release dated Sept 22, the Chamber announced that their board was unable to reach a consensus.

The Androscoggin County Chamber held a forum of the Tabor Initiative July 29, 2009.  Chamber President Chip Morrison moderated.  The panelists provided a clear recap of the arguments for and against TABOR and took questions.  Click HERE to watch video of the forum.

Spokane "Neighborhood Bill of Rights"

This November, Spokane voters will decide on a potentially game changing ballot initiative that could raise taxes, inhibit growth and clog courtrooms all at at once.

Proposition 4, also know as the "Neighborhood Bill of Rights," is a collection of nine amendments to the city charter proposed by a group called Envision Spokane.  Their website claims the collection of amendments, "seeks to build a healthy, sustainable, and democratic Spokane through the recognition of rights for people, workers, neighborhoods, and the natural environment."  Here is a list of the proposed amendments:

1. Residents have the right to a locally-based economy
2. Residents have the right to affordable preventive health care.
3. Residents have the right to affordable and safe housing
4. Residents have the right to affordable and renewable energy.
5. The natural environment has the right to exist and flourish.
6. Residents have the right to determine the future of their neighborhoods.
7. Workers have the right to be paid the prevailing wage, and the right to work as apprentices, on certain construction projects.
8. Workers have the right to employer neutrality when unionizing, and the right to constitutional protections within the workplace.
9. Residents, workers, neighborhoods, neighborhood councils, and the City of Spokane shall have the right to enforce the Community Bill of Rights

For full text of the ballot initiative, click HERE.

The JOBS (Jobs and Opportunities Benefiting Spokane) Coalition, a group which includes Greater Spokane Incorporated, Associated Builders and Contractors; Spokane Realtors, The Spokane Restaurant Association, The Spokane Hotel and Motel Association, disagrees about the impact of Proposition 4.  They claim that the amendments, "will cost the city millions of dollars, stifle growth, and drive jobs away from the city."  In a one-page critique the JOBS Coalition calls the proposal, "a wish list that includes almost everything – healthcare, affordable housing, protecting the aquifer and higher wages.  There’s no way the city could pay for all the things on the list."

Walt Worthy, owner of The Davenport Hotel and a leader of the JOBS Coalition addressed the proposals legal issues saying, "The law is intentionally written in language that is vague and unclear so it will clog up the courts for years with frivolous lawsuits, slowing down job growth and discouraging business in Spokane."

In addition to the scope, cost, and legal concerns about this proposal, Greater Spokane Inc also pointed out that parts are similar to the Hometown Democracy proposal from Florida.  In an email to members they wrote, "Proposition 4 would allow an unelected, small group of activists to block any development in any area of the city, even if it complies with zoning and has been approved." 

Because of the scope and potential impact of this proposal, and the probability that it could become contagious, you owe it to your community to follow what's happening in Spokane.  The ACCE Policy Clearinghouse will be tracking this issue and providing regular updates.  Stay tuned.

Maryland Wants Your Budget Suggestions

Maryland is using the internet to engage citizens in the debate over how to bridge the budget gap.

Through Governor Martin O'Malley's web portal the State of Maryland has, over the past few weeks, requested input from the general public on where to make cuts.  The feedback they've cataloged ranges from thoughtful tax policy changes to this suggestion from Ann Arundel County:

"Sell the Governor's Mansion and live in your own house!"

Additionally, the webpage offers information (including charts) on steps taken to reduce government spending, a forum to discuss proposed changes, and a comparison between Maryland and other states.

If well publicized and well managed, this kind of outlet could help win support for some of the hard budget decisions that will have to be made over the coming years.

Click HERE to link.