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November 15, 2005

Voters Showed Less Appetite for Tax Cuts

By JOHN M. BRODER

LOS ANGELES, Nov. 14 - Has the American voter's ardor for cutting taxes and shrinking government cooled?

Voters in California, Colorado and Washington State rejected ballot measures this month that would have rolled back tax increases or limited state spending. Some say the votes could mark a turning point in a decades-old revolt against high taxes that got its symbolic start in California in 1978 with Proposition 13, which sharply limited property tax increases for homeowners and cut deeply into state services.

It may be, some analysts suggested, that after the terrorist attacks of Sept. 11, 2001, and this year's Gulf Coast hurricanes, Americans saw the value of government investment in infrastructure, public safety and other services and are now more willing to pay for it.

"It looks like that to me," said John G. Matsusaka, president of the Initiative and Referendum Institute at the University of Southern California Law School. "The public sector did a lot of belt-tightening during the last recession, and the public now appears to be letting it out a few notches. I think we saw that in Washington State and Colorado."

On Nov. 1, Colorado voters approved a ballot proposition that would allow the state to keep a projected $3.7 billion in tax revenue over the next five years rather than return it to taxpayers.

In California last Tuesday, voters resoundingly defeated Proposition 76, supported by Gov. Arnold Schwarzenegger. The measure would have limited state spending and given the governor broad new powers to cut spending when state revenue lagged.

And in Washington, an initiative put on the ballot by antitax groups failed last week by a six-point margin, letting stand a 9.5-cents-a-gallon gasoline tax passed by the Legislature.

In California, Mr. Matsusaka said, voters ignored Mr. Schwarzenegger's appeals to give him more power to cut state spending and tuned out television advertisements warning that the rejection of Proposition 76 would mean a big tax increase next year.

In New Jersey, which has the highest property taxes per person in the nation, voters elected Senator Jon S. Corzine, a Democrat, as governor last week, even though he promised a more modest reduction in property taxes than his Republican opponent, Douglas R. Forrester.

"People are still concerned about spending, but it's not a front-burner issue for them," Mr. Matsusaka said. "They're more concerned about wanting to put money in for education."

Advocates of cutting taxes and limiting public spending said, however, that the three ballot results were responses to specific situations and did not mark the beginning of some sort of backlash.

"I don't see it," said Grover Norquist, president of Americans for Tax Reform and one of the nation's most vocal tax opponents. "I would be very sensitive to it and sweating over it if it were happening."

California voters, Mr. Norquist said, were in a sour mood over the special election last week when they voted down the spending cap and all seven other measures on the ballot. Washington voters succumbed to warnings that roads and bridges were crumbling and that the gas tax was needed to avert disaster.

And, he said, Colorado voters were hoodwinked by a "traitor" Republican governor, Bill Owens, into voting for a huge tax increase. (Governor Owens's argument was that limits had locked spending at levels that were far too low to handle the state's increasing population and cost of services.)

"All trends start with small sets of data points," Mr. Norquist said when asked if the three votes could mark a major shift in public opinion. "But if you flesh in the picture for the year, that's not the case at all."

Mr. Norquist pointed to a proposal in Oklahoma in September that would raise gasoline taxes to pay for highway construction and maintenance. It was defeated by 87 percent to 13 percent. He said that while Colorado residents voted to lift the spending cap, they also turned down a $2.1 billion bond issue for transportation. Voters in West Virginia also rejected a big bond issue to underwrite the state's pension funds.

Mr. Norquist said he was working with tax-limitation groups in Maine, Nevada, Ohio, Oklahoma and Oregon to put spending limits before voters in 2006. He said lawmakers in several other states were also considering new caps on state spending, using a variety of formulas involving population growth and inflation.

Kim Rueben, a public finance economist at the Tax Policy Center at the Urban Institute, said the outcome of the votes this year was not sufficient to establish a trend. But Ms. Rueben said that for the past several years voters had been willing to increase taxes or approve bond issues when they were designated for tangible improvements.

On Tuesday, voters in Maine, New York and Ohio approved bond issues totaling nearly $5 billion to pay for transportation projects, water systems, college buildings and research programs.

"Starting in the late 1990's, there has been more emphasis on the state of state infrastructure, and effort to get new money in and new things built," Ms. Rueben said. "I think in general people want roads and are happy to fund them. But they are less willing to just turn over money to the state and let officials decide how to spend it."

That was how Gov. Christine Gregoire of Washington, a Democrat, went about trying to save the gasoline tax increase that barely passed the Legislature on the last day of the session in May.

After the tax bill squeaked through, opponents quickly gathered 400,000 signatures to put a measure on the Nov. 8 ballot to repeal the increase, which will take effect in increments over the next three years. The money is dedicated to the repairing and seismic retrofitting of the state's highways, bridges and tunnels.

Governor Gregoire said in an interview that two rockslides that closed the Interstate 90 pass through the mountains of eastern Washington and the damage along the Gulf Coast from Hurricanes Katrina and Rita helped her cause, by showing what can happen when state infrastructure is in poor condition.

"Their levees are our bridges," Ms. Gregoire said, referring to New Orleans. "People here were skeptical, but Katrina brought the message home loud and clear."

She added, "People here who have been antitax for a number of years now said: 'We're not going to leave our safety at risk; we're not going to leave this to our kids. We're going to invest.' "

The repeal measure was voted down by 53 percent to 47 percent, but a look at a map of how Washington residents voted is revealing.

Twenty-nine of Washington's 39 counties voted to repeal, many of them by margins of 20 or even 30 percentage points. The measure failed because the heavily populated, more liberal counties around Seattle and two college towns in eastern Washington voted against it.

In other words, when it comes to taxes, Americans are still divided.