Legislatures with supermajority requirements have been the site of protracted political battles. California, now known for its fiscal stability, saw perennial fiscal crises until the state’s voters rolled back the two-thirds threshold for enacting a budget to a simple majority.
More recently, in Oklahoma, which requires a vote of three-fourths of lawmakers in both chambers to hike taxes, legislators struggled to cover budget shortfalls near $1 billion after oil and gas prices collapsed, said David Blatt, executive director of the Oklahoma Policy Institute. Rather than raise taxes, for years lawmakers enacted steep cuts to education and other services, he said.
It wasn’t until the threat of a teachers’ strike earlier this year that lawmakers passed tax increases -- their first in over 25 years -- to raise revenue for education funding, according to the Center on Budget and Policy Priorities.
Political Consequences
Oklahoma conservatives that were staunchly opposed to the tax hikes paid a political price, with a dozen Republican incumbents losing their primary election to more moderate opponents, Blatt said. "If politicians are even thinking about their own political survival, Oklahoma tells them that when you have a supermajority requirement in place it can have real political consequences," Blatt said. "It doesn’t allow you to govern, and the voters pay attention to that."
In North Carolina, the measure to lower the constitutional cap on the personal income-tax rate to 7 percent from 10 percent is a chance for Republican lawmakers in the Tar Heel State to exert their influence, even if they lose control of a legislative chamber in the midterm election. All 170 state seats are up for re-election this year, according to the N.C. State Board of Elections and Ethics Enforcement.
Cutting the maximum tax rate wouldn’t affect the state’s AAA credit rating, but it could "create unnecessary budgetary challenges" if the state experiences fiscal stress and needs to raise taxes, S&P Global Ratings said in a report. The state relies on income taxes for more than half of its general fund revenues. The income-tax rate is currently 5.5 percent.
North Carolina State Treasurer Dale Folwell, a Republican, said the change would provide better certainty to businesses thinking of relocating to the state. "As the keeper of the public purse, I would tell you if I had any concerns about this state’s ability to be solvent or to prosper," he said.
Other ballot initiatives will also gauge anti-tax sentiment. Arizona voters will decide on Proposition 126, a constitutional amendment that would ban the state and any local government from enacting new or increased taxes on any services, unless they were already in place by last year. Oregon voters will also decide whether to ban taxes on groceries. Washington voters will consider a measure that would stop local governments from enacting new taxes on certain food and beverages, a step seen as a response to Seattle’s new tax on soda.
Mark Hass, a Democratic state senator in Oregon, said tax-policy changes are too complicated to be decided by ballot measures. While "nobody" likes to raise taxes, making it tougher for lawmakers to raise taxes would be too limiting, he said.