From Marijuana to Gas: Tax Issues on the Ballot in 2015

A rundown of the most important tax-related measures facing voters this November.
by | August 18, 2015

When people go to the polls this November, just a few states will vote on ballot measures regarding taxes. Major issues include marijuana, gas and how a legislature can increase taxes in the future.

In Ohio, voters will decide whether or not to legalize and tax marijuana. The initiative -- one of several pot measures likely to appear this year and next -- qualified for the ballot last week and would make Ohio the fifth state to legalize recreational marijuana.

But Ohio's ballot will have competing measures. The legalization measure, sponsored by a group called Responsible Ohio, would impose a 5 percent tax on all marijuana retail sales, along with a flat tax of 15 percent on profits at production facilities, and give only 10 designated farms the legal right to grown the drug. The other measure, which was approved by the legislature in June, would prohibit "a monopoly, oligopoly or cartel" involving federally controlled substances.

Secretary of State Jon Husted said that if both pass, the legislative referendum would take precedence and marijuana would effectively not be legalized. If that scenario plays out, the matter is bound to wind up in the courts.

In Colorado, where voters legalized marijuana back in 2012, they will now decide whether or not to allow the state to keep revenues from taxes on weed. Under the state's TABOR law, or taxpayers bill of rights, revenues that exceed budget estimates have to be returned to taxpayers. The measure, referred to voters by the legislature, would allow the state to keep $58 million that otherwise has to be returned.

An employee rings up a customer at a recreational marijuana store. (AP)

Another upcoming tax-related ballot measure was written in direct response to a court decision.

After voters in Washington state approved a 2012 measure to require a two-thirds vote instead of a simple majority for any tax increase, the state Supreme Court ruled it unconstitutional. Undaunted, Tim Eyman is back this fall with a new attempt to require the legislature to refer to voters a constitutional amendment to require two-thirds supermajority votes for tax increases. If they fail to do so by April 15, 2016, the sales tax will decrease by a penny, from 6.5 percent to 5.5 percent.

"There is an ongoing battle between the legislature and Eyman, who for a decade or more has run anti-tax ballot measures," said Michael Leachman, director of state fiscal research at the Center on Budget and Policy Priorities. "This is kind of the latest round."

Eyman's initiative is getting universally bad reviews from editorial writers. The Tacoma News Tribune called it "an uncommonly bad measure." The newspaper argued the initiative is coercive by nature and would upend majority rule in the legislature.

"A handful of legislators could kill even the most sensible effort to end tax breaks for industries," the paper argued.

Ever since the recession, states have generally been reluctant to raise taxes. But several states -- even Republican-led ones like Georgia, Idaho and South Dakota -- have raised fuel taxes this year to pay for roads. And they may not be the last.

Washington state voters will decide whether to approve or repeal an 11.9 cent increase in the gas tax that was signed into law last month. And after some 80 percent of Michigan voters rejected a proposed sales tax increase to pay for roads in May, a coalition of unions announced that they're collecting signatures to ask voters to raise corporate income taxes to fund infrastructure again in November.

But measures like those are rare.

"We are still in an anti-tax mood," said Sujit CanagaRetna, senior fiscal analyst with the Council of State Governments. "The few measures on the ballot this year are not indicative of a broad trend away from this anti-tax stance."