Voters Nationwide Push Back Against Local Tax Cuts

While Tuesday's midterm elections signaled landmark political changes across the U.S., they also underscored some apparently pragmatic financial decisions by voters in several states, when it comes to local tax issues.

A ballot question to cut Massachusetts' sales tax by over 50% was defeated by voters there. Opponents of the measure claimed it would slash state revenues by $2.5 billion a year -- hurting public education, public safety and local economies. "By causing the sudden layoff of so many teachers, firefighters, police officers, social workers and others while we are still coping with a recession," says the Vote No on Question 3 website, "a cut of this size could halt -- or even reverse -- the state's economic recovery."

Californians approved Proposition 22, which "prohibits the state, even during a period of severe financial hardship, from delaying the distribution of tax revenues for transportation, redevelopment, or local government projects and services."

Colorado Voters Defeat "Ugly Three"

And three controversial and highly-publicized measures in Colorado -- that would have cut property taxes, limited any new state borrowing and reduced a variety of state taxes and fees -- were soundly defeated. Opponents of the measures, which they dubbed the "Ugly Three" in their advertisements, reportedly spent nearly $7 million on their campaign -- while supporters raised just over $30,000.

In the midst of a recession, and at a time when the Tea Party slogan of "Taxed Enough Already" seems a clarion call for a growing number of voters, it may seem surprising that many communities are willing to keep their tax burdens at the status quo. But according to Dr. Bob McGowan, professor of management at the University of Denver's Daniels College of Business, "we oftentimes short-change the voters. They're not as simple as they're made out to be. Today, with the Internet and technology, they're a lot more savvy [about] these issues than...used to be the case."

Voters Savvy About Tax Issues

Colorado's "Ugly Three" tax measures, he says, shows the electorate are willing to listen to well laid-out arguments against tax cuts. The Ugly Three's opponents "did a better job of getting out their message, of what the impact would be if people voted for those initiatives." he notes. "[Proponents] basically got out-managed on those issues."

Campaigns to cut taxes are hardly a new phenomenon. In fact, McGowan points to California's Proposition 13, the 1978 measure that limits property tax rates in the state, as the event responsible for much of the Golden State's current financial woes. "That was one of the first initiatives where a state capped property taxes," he says. "It was great when the economy was doing well, but with the added recession . . . it was like a double-whammy."

Exit polls from Tuesday say a lot more voters ages 65 and older took part in these elections compared to 2008 -- and McGowan wonders if the age issue was a factor with some these tax cut proposals."Historically, elderly citizens tend to vote down school bond issues," he says. "I'd love to see the demographic breakdown on these ballot initiatives."

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McGowan expects taxes to remain a high-profile issue with voters during the next several election cycles, especially if the economy doesn't improve and more people start making hard financial choices. "The other issue too for a lot of these voters is 'what services am I willing to surrender?'" he says. "I do this in class; I say [to students] okay, what do you want to get rid of? It turns out there's always someone in the group that wants something. But when you start talking about cutting education, people say wait a minute, that means bigger class sizes, fewer teachers, consolidated schools and school districts. And when you start hitting them in that area, you start to get push-back."