The booze and soft drink tax meets a People’s Veto

    Opponents of the beverage tax have done something no one else has done in Maine for more than 50-years now: suspend a tax measure approved by the legislature before it had a chance to take effect.  Though it’s too early to tell how the voters themselves will act in November, the People’s Veto petitioners have already made history in a dramatic use of one of the more potent weapons in the arsenal of referendum government.
    One reason why the effort is so unprecedented is that both new as well as controversial tax increases coming out of Augusta are typically passed by a two-thirds legislative vote. Such a vote guarantees both immediate implementation of the tax while at the same time closes the door on any People’s Veto petition. Both our sales and income taxes, for example, were put on the books by this two-thirds vote or “emergency” legislation method, so-called.
    This year’s beverage tax was different: it wasn’t passed by the usual two-thirds vote of the house and senate that often accompany controversial revenue measures. It thus allowed a brief window – amounting to about 60-days – within which opponents could gather up the 55-thousand signatures needed to put it on the ballot. Maine also decrees that when the People’s Veto method is used the law cannot go into effect until voters weigh in.
    What’s going to happen this year to the beverage tax? For one thing, the result is more difficult to predict than a candidate election because there are fewer political party overtones to which to anchor the result. There was a time in Maine, however, when People’s Tax veto referenda were more common than they have been in recent years. Consulting the experience of this earlier era may thus be a guide as to what may be “in store” for the beverage vote.
    Tail fins were almost as high as they would ever get when in March l958 voters were last given the chance to veto a revenue measure before it hit the books. At issue were a $l increase in the drivers license fee — up from the $2 it had been since l9l2 — and somewhat more complicated increases in vehicle registration fees. These were advocated both by both Governor Muskie, a Democrat, and GOP leaders as a way of paying for an already approved $24-million highway bond issue.
    Leading the charge against the fees and forcing the measure onto the ballot was noted Lisbon Falls author and humorist John Gould. As chair of the Maine Car and Small Truck Owners Association and allied with railroad unions, Gould argued that the highway bonds should instead be financed by out-of-state truckers, then exempted from registration fees. By a six to one margin, l07,000 to 22,000, voters rebuffed the political establishment and canceled the increased fees. (Gould continued writing his weekly columns for the Christian Science Monitor for a record 60-years until shortly before his death at age 94 in 2003.)
    Three successful People’s Veto campaigns have blocked increases in the state tax on gasoline. The first of these was a l929 proposal to hike the tax from four to five cents a gallon, one advocated as a way to finance a highway building bond issue put out to referendum at the same time. Voters defied the legislature, voting over two to one against the tax increase even though they simultaneously approved the bond issue.
    That the Depression didn’t make raising taxes any easier was illustrated by the l932 People’s Veto of the same gas tax increase defeated in l929. This time the rebuke administered was even more decisive. By a l0 to l margin, 220-thousand voters defeated the increase.
    In l94l, voters yet again vetoed a gas tax increase, even though this time the hike was half a cent. In voting that occurred just three days after Pearl Harbor, the outcome was 32,000 to l4,000 against the increase. The tax stayed where it had been since the l920’s, four cents a gallon, until after the War. (How the gas tax gradually crept up to today’s 28.4 cents a gallon is the subject for another column; the rate does, however, today take a far smaller share of the cost of a tank than it did in ’4l when it took a nearly 50-percent share.)
    The earliest People’s Veto referenda on tax issues came in l928. This was designed to overturn a law the legislature passed to reduce taxes on the state’s railroads. Up until then railroads paid a tax on their gross revenues. The new law allowed consideration of net income, in other words whether the railroads were actually making a profit. This was passed despite the opposition of Governor Owen Brewster.
    The Maine State Grange, long a railroad antagonist, then took up the cause and came through with the l0,000 signatures then required to suspend the law. By a ll9,000 to 52,000 margin the people this time sided with the legislature and the railroads against Brewster and the Grange, proving that even a tax reduction for perceived deep pockets – particularly at the apex of the late l920s economic boom — could win popular support.
    This fall’s beverage tax vote is a variety of a species that has long been slumbering in the habitat of state government. How will it behave for the first time in a 2lst century environment? Will financing health this century be as difficult as funding highways in the 20th? These are questions to which we will soon have an answer, though if history is a guide Dirigo Insurance may need to be looking for another way to pay its bills.
    Paul H. Mills is a Farmington attorney well known for his analyses and historical understanding of Maine’s political scene. He can be reached by e-mail: pmills@midmaine.com.