• Numerous Ballot Issues in the Works for the November Election
  • August 31, 2016 | Authors: David D. Ebersole; David M. Kall; Susan Millradt McGlone
  • Law Firms: McDonald Hopkins LLC - Columbus Office; McDonald Hopkins LLC - Cleveland Office
  • Voters will see a number of ballot initiatives when they go to the polls this November, including the legalization of recreational and/or medical marijuana, income tax increases, and transit taxes. Here is a rundown of some of them:

    MARIJUANA

    Arizona, California, Massachusetts, Maine, and Nevada all have initiatives for the legalization of recreational marijuana set for their November ballots. The use of medical marijuana will appear on ballots in Arkansas, Florida, and Missouri.

    All of these initiatives provide for the taxation of marijuana sales. For example, if passed in California, the new law would impose a 15 percent sales tax, along with a cultivation tax of $9.25 per ounce for flowers and $2.75 per ounce for leaves, with exceptions for qualifying medical marijuana sales and cultivation.

    Massachusetts’ proposal calls for a 3.75 percent excise tax, in addition to the state’s current sales tax rate of 6.25 percent. There is also a local taxing option that gives cities and towns the choice of imposing a local sales tax of up to 2 percent on the sale or transfer of marijuana or marijuana products by a marijuana retailer.

    It can be difficult to predict the amount of revenue a new law will bring in, as seen in Colorado. There, voters approved medical marijuana in 2000, and recreational marijuana in 2012. In February, Marijuana Politics, citing data from the Colorado Department of Revenue, reported that total tax revenues in calendar year 2015 of about $135 million surpassed original projections, and far exceeded the costs associated with regulating the system. Colorado imposes a 2.9 percent sales tax on medical and retail marijuana, and a special tax of 10 percent on retail marijuana.

    STADIUM FUNDING

    San Diego’s ballot initiative to fund a new stadium will go before voters in November. Mayor Kevin Faulconer supports the measure, which authorizes public funding for a new San Diego Chargers stadium, as a way to keep the team in the city. It has been considering relocating to Los Angeles, and in January, the National Football League approved such a move. The $1.8 billion stadium there was itself made possible by an initiative that qualified for the June 2016 ballot; ultimately, it did not go to vote because the Inglewood City Council approved it directly.

    GAS TAX ALLOCATIONS

    Voters in New Jersey will choose whether to create a constitutional amendment that dedicates all revenue from gas taxes to transportation projects, rather than a mere majority of the funds. As it now stands, all of the 10.5 cent tax on unleaded gasoline, and 10.5 cents of the 13.5 cent tax on diesel fuel, are appropriated for transportation projects. The Gas Tax Dedicated to Transportation Funding Amendment allocates the remaining three cents to transportation costs.

    This could be an important step in helping New Jersey out of its infrastructure-funding catastrophe. As we explained last week, Gov. Chris Christie issued a State of Emergency at the end of June because lawmakers were unable to agree on a plan to replenish the Transportation Trust Fund Authority’s coffers.

    INCOME TAX INCREASES

    The Cleveland City Council adopted legislation that will give voters the chance to decide whether to increase the city’s income tax from 2 percent to 2.5 percent on November 8, 2016. The measure would generate about $80 million annually to expand city services, hire additional police officers, purchase new equipment, and pursue capital projects.

    Cleveland.com reported that Mayor Jackson supports the increase as necessary to help fund the court-mandated police department reforms that were the result of the consent decree that the city and the Department of Justice (DOJ) settled upon in May of 2015. This, in turn, stemmed from the DOJ’s investigation of whether the Cleveland Police Department engaged in a pattern or practice of using excessive force in violation of the United States Constitution.

    The article noted that the reforms will likely cost $11.7 million over the next four years, but that the police department wants less than 10 percent of that for itself. Even so, council members argue that without the increase, city services will have to be cut to plug a $40 million hole in the budget.

    In Maine, the Public Education Surcharge Initiative would establish the Fund to Advance Public Kindergarten to Grade 12 Education. The revenue source would be a 3 percent surcharge on taxable income over $200,000, beginning with tax years beginning on or after January 1, 2017. Projected annual revenue from the surcharge is $157 million.

    Proponents cite investment in education as an important way to improve the economy. On the other hand, Maine’s Governor Paul LePage argues that the tax would only affect those who already contribute the most revenue to the economy and tax base, 2 percent of the population, with the result of driving that group’s total income tax rate over 10 percent. Furthermore, he contends, academic results are not improving despite regular increases in local school budgets.

    TRANSIT TAXES

    In California, a plan to impose a one-half cent sales tax on Los Angeles county residents, and extend the existing tax, received approval from the Los Angeles County Metropolitan Transportation Authority. Southern California Public Radio reported that these measures would raise $120 billion. The next step is approval by the Los Angeles County supervisors, who also serve on the Metro board, and then placement on the November general election ballot with a two-thirds approval required for passage.

    TECH-TAXES

    The city of San Francisco is considering the Homelessness and Technology Tax, which would impose a 1.5 percent special tax on the payroll expense of technology companies engaged in business there, effective January 1, 2018. The tax is intended to fund affordable housing and homeless services. The measure would also reduce the business registration fee on persons with $1,000,000 or less in gross receipts, and increase San Francisco’s appropriations limit by the amount of the new tax, until November 8, 2020.

    In fiscal year 2015-16, San Francisco had a $9 billion budget, allocated as follows:

    • 32 percent: public works, transportation, and commerce
    • 19 percent: community health
    • 15 percent: general city responsibility
    • 13 percent: public protection
    • 10 percent: human welfare and neighborhood development
    • 8 percent: general, administrative and finance
    • 3 percent: culture and recreation
    The city is facing significant deficits, and officials have gone so far as to create a website to educate the public on its budget challenges. The site, referring to projections issued by the Mayor’s Office, the Controller’s Office, and the Board of Supervisors’ Budget and Legislative Analyst, reveals that experts anticipate shortages of $86 million in fiscal year 2016-17, $161 million in fiscal year 2017-18, for a total deficit of approximately $246.4 million over the next two years.

    Business Insider reported that the tax could raise $140 million annually, which would help San Francisco manage its economy as the tech boom slows down. Ironically, tech firms have been enjoying the so-called “Twitter tax break,” a $34 million incentive program designed to keep tech firms from re-locating to Silicon Valley.