State referendums on taxes were split in 2020

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A customer smokes marijuana at the Lowell Cafe, a cannabis lounge in West Hollywood, California. On Election Day, Arizona, Montana, New Jersey, and South Dakota voters agreed to legalize recreational marijuana. Mississippi and South Dakota voters legalized medical marijuana.

Statewide referendums on taxes had mixed results on Election Day while eight measures in five states to legalize marijuana and in three states offering tax breaks for veterans received universal approval.

Voters around the nation approved around two-thirds of the 124 statewide ballot measures they faced on Nov. 3, according to the National Conference of State Legislatures.

Although three major tax initiatives in Alaska, California, and Illinois were rejected, others in Arizona, Arkansas and Colorado were approved.

Amanda Zoch, a policy fellow for the National Conference of State Legislatures, said voters often are split on statewide taxing issues. And 2020 held true to that trend.

Among the tax measures, Arizona voters approved increasing income taxes on incomes over $250,000 with the revenue going toward teacher salaries and schools.

Arizona’s Joint Legislative Budget Committee estimated the ballot measure would raise $827 million annually for education. Half of the money will be spent on hiring and raising the salaries of teachers and other certified employees, such as guidance counselors and nurses.

Arkansas voters approved a continuation of the current 0.5% sales tax on tangible personal property that funds the state’s four-lane highway system, county roads, and city streets.

Colorado voters approved the repeal of the Gallagher amendment which set property tax assessment rates in the state constitution and prevents future cuts to the property to property taxes and stabilize revenue for schools and local governments.

Colorado, however, also approved an income tax reduction and a measure requiring voter approval on all new fee based state enterprises which is part of the state's taxpayer Bill of Rights.

Alaska’s Ballot Measure 1, which would increase oil production taxes on fields in the state’s North Slope and generate about $1 billion annually when prices return to the $55- to $65-a-barrel range, was rejected by 58% of voters.

California’s Proposition 15, which would have eliminated the state’s annual cap on property taxes increases for commercial real estate, appears to have lost with 51.9% of the ballots opposed.

It was placed on the ballot through a petition campaign by education advocates to secure additional funding for education and the California Legislative Analyst's Office estimated it could bring in up to $11.5 billion per year in new property taxes.

California had just over 1 million ballots yet to be processed as of the end of the day on Wednesday. Eight days after Election Day, more than 720,000 of the uncounted votes were listed as mail-in ballots.

In Illinois, 54.5% of voters rejected a constitutional amendment repealing the state's requirement for a flat rate on personal income and corporate taxes. The measure, which would have raised about $3.6 billion annually, would have allowed Illinois to use graduated rates with lower rates on lower income households.

Zoch said that one area of taxation that typically gets overwhelming support is tax deductions and exemptions for veterans and sometimes their spouses.

“That was no different this year when measures in three different states passed with large margins,” Zoch said. “In Florida the measure actually passed with about 90% of the vote, which is a pretty big deal.”

Florida approved extending its discounts on ad valorem taxes on homestead property for surviving spouses of disabled veterans until that spouse remarries or sells the property.

Virginia voters approved an exemption for one automobile or pickup truck from state and local property taxes to veterans who have a 100% service-connected, permanent, and total disability.

New Jersey voters approved extending the veterans’ property tax deduction and veterans’ property tax exemption to certain veterans who did not serve in time of war or other emergency.

Mississippi and South Dakota voters agreed to legalize medical marijuana while Arizona, Montana, New Jersey and South Dakota all legalized recreational or adult use marijuana.

Oregon and District of Columbia voters agreed to legalize psilocybin mushrooms which are commonly referred to as magic mushrooms.

Oregon voters also passed a measure decriminalizing small amounts of other drugs such as cocaine and heroin.

According to Zoch, “That same measure created a drug addiction treatment and recovery program, which will be funded in part by the state's prison savings.”

At the national level, state tax revenues from marijuana sales remain a minimal factor in state budgets. Colorado’s marijuana tax revenue rose to $250.7 million in 2018 from $25.3 million in 2014.

In addition, state legislation to legalize recreational marijuana remains a controversial topic because cannabis-related activities that have been legalized in some states nonetheless violate the federal Controlled Substances Act.

Also on Election Day, Colorado and Oregon approved new taxes on cigarettes and nicotine.

Oklahoma rejected a proposal that would have reallocated money from the state's tobacco settlement and endowment trust fund in order to fund the state's Medicaid program. Oklahoma voters approved an expansion of Medicaid during the primaries earlier this year.

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