October 6, 2005
Raymond J. Keating
In the world of politics, odd-numbered years, such as 2005, are referred to as off-year elections. That is, voters will not be choosing members of Congress or the president. However, that does not mean that the decisions being made at the ballot box in the states don't matter. To the contrary, state and local elected officials and ballot measures are quite important, most assuredly for entrepreneurs and small businesses. For example, Oklahoma voters wisely defeated a ballot measure on September 13 that called for raising the state's gas tax from 17 cents per gallon to 22 cents - a 29 percent increase - for spending on roads and bridges. It went down by an overwhelming 87%-13% margin. That was good news, as every business in the state would have been negatively impacted by such a tax increase. Looking to November 8, voters will have a direct say in a variety of propositions affecting the entrepreneurial sector of our economy. California, of course, always seems to have ballot proposals that warrant attention, and 2005 is no different. Proposition 75 would prohibit public employee unions from using member dues or fees for political contributions unless the employee provides written consent each year. Passage of this measure would be a big plus for the simple reason that public employee unions serve as powerful advocates for bigger government, more regulation and higher taxes. In addition, Prop 76 would establish a constitutional spending growth cap to help bring the size of government under some degree of additional control. However, other ballot offerings in California would not be positives if passed. Both Prop 78 and Prop 79 would set up a new prescription drug benefit, with Prop 79 being the more egregious and costly of the two. The threat and ills of price controls, though, loom large under both of these measures, with government playing a key role in establishing prices. For good measure, Prop 80 would raise electricity costs through assorted regulatory initiatives, including expanded retail electricity sales mandated from renewable resources. Shifting a bit to the east, Colorado faces a very important vote, which actually will be held on November 1. Colorado currently protects taxpayers through its Taxpayers' Bill of Rights, or TABOR, which limits revenue growth for state and local governments -- with excess revenues returned to the taxpayers -- and requires that voters approve all tax increases. Referendum C, being pushed by Republican Governor Bill Owens, would suspend the limit for five years, and let the state spend some additional $3.7 billion. That is, it amounts to nothing more than a tax hike to fund bigger government. In Maine, it's a virtual borrowing and spending frenzy on the state ballot this year. Question 2 calls for $33.1 million for transportation, Question 3 $8.9 million for water systems, Question 4 $20 million for research at Maine universities and various economic development schemes, Question 5 $12 million for buying up land in the name of conservation, and Question 6 $9 million for higher education facilities. Added spending and debt mean added burdens for all taxpayers, including businesses. It's ballot measures for bigger government in New York as well. Proposition Two calls for allowing the state to borrow $2.9 billion for transportation projects, such as mass transit, roads and bridges. State debt already has skyrocketed in New York in recent times to unheard of levels. The voters wisely rejected a $3.8 billion transportation bond act five years ago. Meanwhile, Proposition One in New York is billed as budget reform, but in reality, it would empower state legislators to act with even less fiscal responsibility, and provide them with the ability to spend more. In Ohio, Issue 1 on the ballot foolishly puts forth the notion that government spending and debt generate economic growth. It calls for borrowing $1.85 billion for infrastructure spending, including on private commercial projects. Following the misguided lead in our nation's capital, Issue 3 in Ohio would restrict political speech through limits on campaigns and citizen groups. Down in Texas, Proposition 3 would remove a valuable check by voters on local economic development spending. Under this measure, local government economic development loans or grants would no longer be subject to voter approval. (Only debt supported by ad valorem taxes would be.) Finally, the state of Washington offers a mixed bag of measures. Initiative 330 is a much-needed medical malpractice reform measure that includes limiting non-economic damages and attorney fees. The trial lawyers countered with Initiative 336, which actually would expand government's role, boost costs and raise taxes. Initiative 900 mandates that the state auditor conduct performance audits of state and local government agencies and entities, funded by 0.16% of the state's portion of the sales tax. This would be a valuable weapon in unearthing waste. Initiative 901 would vastly expand smoking prohibitions in the state for public places and workplaces. Current designated smoking areas, such as for restaurants, bars, bowling alleys, etc., would be repealed. This is another example of trampling on individual freedom, and hurting many small businesses. Initiative 912 is a timely effort to repeal the motor vehicle fuel tax hike imposed by lawmakers during the 2005 legislative session. The current increases under the law featured a 3 cents-per-gallon increase in July 2005, followed by 3 cents more in 2006, 2 cents in 2007 and another 1.5 cents in 2008. There are other measures on ballots across the nation, including many at the local level, that will have an impact on the entrepreneurial sector of the economy. Voters, including small business owners, should keep it simple - if it raises costs through more regulation, higher taxes, bigger government or infringing on property rights, then vote ‘no.' If it does the opposite, vote ‘yes.' --------------------------------------------------------------------------------
This column may be reprinted with appropriate credit.
_______ Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.
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