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Supermajority Budget and Tax Rules WWW.URBAN.ORG Supermajority Budget and Tax Rules 14 states imposed supermajority How Voting Requirements Affect Budgets rules to pass a budget or raise Kim Rueben and Megan Randall taxes in 2015. November 2017 Supermajority budget rules require a state to obtain more than a majority vote of the legislature, typically two-thirds or three-fifths of the votes, to pass a budget bill. Such budget rules are rarer than rules requiring supermajorities to raise new taxes (i.e., tax restrictions). Critics of supermajority rules argue they can cause late budgets and political gridlock; proponents claim they restrain government spending. Most research, however, suggests both assertions are overstated.1 Fiscal Effects of enact new taxes is more likely “Vetogate” is the term some researchers to lead to increased spending. use for supermajority rules because Supermajority Rules such rules grant the minority party more One explanation is that obtaining a power than it would otherwise have in the Studying the effects of supermajority supermajority requires buy-in from budget process, creating an informal veto budget rules can be difficult because more district representatives, which point for legislation. so few states have adopted these leads to representatives exchanging provisions. Also, fiscal and political favors or making deals to secure votes. conditions vary across states, making it Supermajority Rules in difficult to disentangle the perceived ■ Do they cause late budgets? Practice: California Pundits and voters have long relationship between supermajority California’s tendency to pass a late budget postulated that supermajority rules and budget outcomes. was often attributed to its supermajority budget rules make consensus ■ Do they restrain spending? requirement, which was in place from among lawmakers difficult, in turn 1933 to 2010. Contrary to the perception that causing late budgets. A 2012 study, supermajority rules will restrain however, found no relationship However, California has a history of spending, higher spending may be between supermajority voting divided government, and research has necessary to form a winning budget rules and late budgets. Rather, this shown that both split legislatures and split coalition. A 2015 study examining and other research have found that branches can drive late budgets. data on states from 1970 to 2007 divided government (where no single ■ Before 2010, California was one found that, in states with many party is in control of the legislature of the few states that required a legislative districts, requiring a and governor’s office) and budget legislative supermajority to pass supermajority to pass a budget or complexity are more likely to be a budget. associated with a late budget. Urban Institute 2100 M Street NW Washington, DC 20037 202.833.7200 WWW.URBAN.ORG WWW.URBAN.ORG ■ In the 1990s, the California Citizens Budget Commission recommended that WHICH STATES IMPOSE the state drop its two-thirds majority budget rule, arguing that the provision did SUPERMAJORITY RULES nothing to reduce spending and merely contributed to With the removal of the California political gridlock. requirement, only Arkansas, Louisiana, Nebraska, and Rhode Island require a ■ A 2008 report also concluded that the supermajority rule did not effectively constrain spending. The report found that California’s spending and revenues were supermajority to pass a budget. Thirteen similar to outcomes in less institutionally constrained states. states (including California, Arkansas, Louisiana, and Rhode Island) have ■ In 2010, California voters passed Proposition 25, or the On-Time Budget Act, supermajority rules to pass new taxes which reduced the requirement to a simple majority. But other state budget or revenues. analysts questioned whether the proposition would correct the state’s most pressing budget woes. 1 For more information, see Megan Randall and Kim Rueben, Sustainable Budgeting in the States: Evidence on State Budget Institutions and Practice (Washington, DC: Urban Institute, 2017). Supermajority Budget and Revenue Rules in the States, 2015 Supermajority required both to raise revenue and to pass budget Supermajority required to raise revenue Supermajority required to pass budget None AK ME WI VT NH WA ID MT ND MN IL MI NY MA OR NV WY SD IA IN OH PA NJ CT RI CA UT CO NE MO KY WV VA MD DE AZ NM KS AR TN NC SC DC OK LA MS AL GA Source: National Association of State Budget Officers, Budget Processes in the States HI TX FL (Washington, DC: National Association of State Budget Officers, 2015). The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. This fact sheet was funded by the Laura and John Arnold Foundation. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. Funders do not determine research findings or the insights and recommendations of Urban experts. Copyright © November 2017. Urban Institute. Permission is granted for reproduction of this file, with attribution to the Urban Institute. We would like to express our gratitude to Yifan Zhang for her input in the development of this fact sheet..
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