It looks like you’re referring to Proposition 87 on the Nov 7, 2006 ballot. This was an initiative to impose oil & gas severance taxes that was put on the ballot by citizen petition. The initiative was rejected by a majority of voters, which leaves the slate clean – so the legislature is still free to impose such taxes by passing a law.

It would be different if the citizens had passed an initiative to forbid severance taxes, but that is not what was being voted on in 2006.

That said, if the legislature passes such a tax by a simple majority, it would face several hurdles. 1) the governor could veto, and override would need 2/3rds votes by both houses, which would require Republican votes.

2) Even if the governor lets it become law, it would be subject to an immediate test challenge in the courts that it was an illegal evasion of the law requiring a 2/3rds vote for a tax increase under the guise of calling it a “fee” (which can be passed by a simple majority).

And 3) whether passed by simple majority or by 2/3rds, it could be subject to a referendum vote if citizens collected enough signatures within the prescribed time period.

What is really going on here is a warning shot for the 2010 election and beyond. The Democrats have floated before this “fee” runaround idea in the past but haven’t dared to try this before. They are signalling that they are willing to try this tactic in 2011 if they get a Democratic governor elected (assuming Arnold vetoes, which I think he has already done).

There is also likely be be an initiative in 2010 to overturn (or reduce) the 2/3rds requirement for tax increases and/or overturn (or reduce) the 2/3rds requirement for State budget approval, which at this point is the only leverage Republicans have in the legislature.

Complicated political games going on here…