Insight: Florida Shouldn’t Go Down Flawed “Supermajority” Path on Taxes

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

A simple legislative majority may not be enough to raise taxes in some states. In this article, the Center on Budget Policy and Priorities’ Samantha Waxman discusses the impact of requiring a legislative supermajority to approve tax increases.

Samantha Waxman

By Samantha Waxman

Samantha Waxman is a Research Associate at the Center on Budget and Policy Priorities.

Florida voters this fall will consider a constitutional amendment requiring a supermajority vote of state lawmakers to approve any revenue increase. As the recent budget struggles in Oklahoma show, these kinds of short-sighted supermajority requirements can hamstring lawmakers and take away the tools that help states invest in roads, schools, health care, public safety, and other foundations of strong communities.

Taxes No Lower in Supermajority States

While legislatures in most states (34 states plus the District of Columbia) can approve tax bills with a simple majority vote in each house, in 16 states some or all tax bills require a supermajority vote —ranging from 60 percent to 75 percent — of each house.

Most of these states impose supermajority requirements only in limited circumstances. But seven require a supermajority vote of each house (plus the governor’s signature) to enact any bill that increases revenue, even by repealing a tax break.

States don’t need supermajority requirements to ensure that taxes will remain manageable and that lawmakers will think very carefully before raising taxes. As the graph shows, supermajority states levy taxes at a nearly identical level as other states, on average. That’s in part because states usually enact major tax increases only after recessions, when revenues have fallen well short of the cost of maintaining public services — and generally accompany them with deep spending cuts.

Supermajority Requirements Cause Variety of Problems

Supermajority requirements aren’t just unnecessary. They also harm a state’s ability to properly handle its finances and make critical investments in health care, schools, disaster preparedness, and other priorities.

That’s because supermajorities:

  •  Protect outdated or ineffective tax breaks, since in a state where any revenue increase requires a supermajority vote, tax breaks have more protection than other types of spending, which lawmakers can change by a simple majority vote;
  •  Expand the power of special interests by allowing a small minority of lawmakers and special-interest lobbyists to hold even popular legislation hostage;
  •  Limit states’ ability to respond to recessions (when states often need to raise revenue to limit hardship and keep the economy from free-falling) and to natural disasters;
  •  Make it difficult to pay for capital investments for projects such as schools and roads, as research shows that investors are less willing to buy bonds from states with supermajority requirements; and
  •  Shift costs from some residents to others by increasing states’ use of fees, which often aren’t subject to the requirements but fall hardest on people who can least afford to pay.

Oklahoma Requirement Derailed Bipartisan Tax Reforms

Oklahoma, whose constitution requires three-quarters of legislators to approve any tax increase, is just the latest example of the damage that supermajority requirements can cause. Oklahoma has cut support deeply for K-12 education, higher education, Medicaid, and other services over the past ten years; spending of state revenue has fallen by 18 percent since 2009, after adjusting for inflation. This is in part because lawmakers cut taxes in good economic times but then couldn’t raise them after the economy declined.

Early this year a bipartisan coalition of business and civic leaders proposed a plan called Step Up Oklahoma, which included a number of long-overdue tax reforms and lowered the supermajority requirement from 75 percent to 60 percent.

Almost two-thirds of lawmakers approved the plan in February, but because of the three-fourths requirement the bill was still 13 votes short, so it failed. Without new revenues, Governor Mary Fallin had little choice but to impose across-the-board cuts to all state agencies through June 30. House Speaker Pro Tempore Harold Wright lamented that “it has been impossible to pass necessary revenue measures to provide for adequate core services in Oklahoma: roads and bridges, public safety, education, public health and corrections.”

States Should Focus on What Works to Boost Economies and Improve Lives

Despite the track record of supermajority requirements in Oklahoma and elsewhere, some states are still considering adopting them — like Florida, where the ballot proposal would require two-thirds of lawmakers to approve any revenue increases, including setting a new fee or tax or closing a loophole or tax break.

In Florida (as in other states), schools, towns, and counties stand to lose big from a supermajority requirement even though it doesn’t apply to measures raising local revenue. That’s because school districts and many counties depend heavily on state financial support. Those dollars are at risk if there is a budget squeeze and lawmakers can’t overcome the strict supermajority requirement to raise new revenue. Rural areas also could be disproportionately harmed, since they rely most on state aid.

Floridians will have a choice this fall between artificially limiting the state’s ability to invest in public services and other priorities or ensuring that lawmakers have the tools they need to build a thriving state, both now and in the future. They — and other states considering supermajority requirements — should instead focus on measures that would boost state economies and help residents make ends meet, such as :

  •  Investing in education and health to unleash residents’ potential and boost productivity
  •  Launching public infrastructure projects to create jobs, spur growth, and promote equity
  •  Boosting household incomes for shared prosperity through measures such as the Earned Income Tax Credit
  •  Cleaning up the tax code, in particular monitoring all tax expenditures and repealing wasteful and ineffective ones

Copyright © 2018 Tax Management Inc. All Rights Reserved.

Request Daily Tax Report: State