California Rejects Legal Marijuana as Washington Defeats Income Tax Plan

California rejected a proposal to legalize marijuana for recreational use, Massachusetts defeated a plan to slash its sales tax and Washington state struck down a bid to impose an income tax on its wealthiest residents.

The measures were among the 159 ballot issues decided in 36 states yesterday. California’s Proposition 19 was rejected by 54 percent of voters, with 78 percent of precincts counted, according to the Associated Press. The measure would have made it legal for people 21 or older to have, grow and transport marijuana for personal use.

“There is an undercurrent running in California of people who were hoping that Prop 19 might mobilize young voters and Democrats and that that might help candidates in California,” Jennie Bowser, an elections analyst at the Denver-based National Conference of State Legislatures, said in a telephone interview.

Taxes were a central theme among the ballot measures, which came as Republicans gained control of the House of Representatives in a blow to the Obama administration. Voters also considered measures to boost so-called rainy-day funds, change congressional redistricting rules and a ban on state borrowing.

Massachusetts Sales Tax

Massachusetts voters rejected reducing their state sales tax to 3 percent from 6.25 percent as of Jan. 1. Governor Deval Patrick, who won his re-election bid, and his Republican opponent, Charlie Baker, opposed the measure.

The measure would have cut state revenue by more than $2 billion a year, according to the Los Angeles-based Initiative & Referendum Institute at the University of Southern California. It would have yielded $900 in annual tax savings per family and $688 per worker, said Carla Howell, chairwoman of the Alliance to Roll Back Taxes, a Wayland, Massachusetts-based group formed to add the proposal to the 2010 ballot.

In Washington, one of seven states without an income tax, voters declined to impose one on the adjusted gross income of individuals earning more than $200,000 and couples earning more than $400,000.

“Washington has a long history of not having an income tax, and I think voters there were afraid that what starts out as a fairly narrow and targeted income tax might have expanded to be something broader over time,” Bowser said.

Bill Gates Sr.

Bill Gates Sr., father of Microsoft Corp.’s co-founder, was a leading advocate for the proposal.

The proposal would have generated an $11.2 billion increase in state revenue over five years that would have been directed to education and health services, according to the state’s Office of Financial Management.

“Those to whom it would apply are people who have not been called upon to pay their fair share of the costs in the state,” Gates said in an Oct. 27 conference call with reporters.

Redmond, Washington-based Microsoft, the world’s largest software company with about 90,000 employees, opposed the measure, called Initiative 1098.

In California, the marijuana vote blocks efforts to expand the industry beyond medical use in the most populous U.S. state, the first to make medical marijuana use legal, in 1996.

California Majority

Californians were also leaning toward allowing the Legislature to pass a spending plan with a majority instead of the current two-thirds vote. Fifty-four percent of voters backed the change, with 78 percent of precincts counted, AP said.

The requirement contributed to a record 100-day delay in approval of a budget this year as negotiators struggled to broker a compromise that would draw the higher threshold of support.

Voters in California also rejected a proposal to suspend a state law requiring reduced greenhouse-gas emissions until the state’s unemployment rate, which was 12.4 percent in September, drops below 5.5 percent for a year. Sixty percent of voters opposed the measure, while 40 percent supported it, with 79 percent of precincts counted, according to AP.

In Colorado, voters decided not to amend the constitution to ban state borrowing beginning in 2011. The vote would have made Colorado the only state barred from issuing bonds to fund infrastructure projects, according to a report by the legislative conference. The measure also would have limited future borrowing by municipalities.

The state issues an average of $2.9 billion in new bonds annually and spend about $2 billion a year to repay debt, according to a Sept. 13 booklet released by the Legislative Council of the Colorado General Assembly.

Virginia, South Carolina and Oklahoma voters agreed to proposals to boost rainy-day funds.

To contact the reporter on this story: Alison Vekshin in San Francisco at avekshin@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.

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