Massachusetts voters yesterday over-whelmingly approved Proposition 2 1/2, the controversial measure slashing state property and auto excise taxes.

With 50 per cent of the vote tabulated, the proposition (Question 2 on the ballot) was winning with 50 per cent or about 700,000 votes. Preliminary returns in Cambridge, however, showed voters disapproving of the question.

At the Parker House hotel, where both proponents and opponents of the measure met, many backers sported Proposition 2 1/2 buttons on one lapel and Ronald Reagan buttons on the other and cheered throughout the evening as they heard election returns.

Gregory Hiatt, legal counsel for Citizens for Limited Taxation (CLT), the proposition's chief sponsor, said yesterday high property taxes in cities made residents vote for the proposition. "The opponents look at it from the point of view of the cities. We look at it from the point of view of the people who live in those cities," he said.

Many proponents of Proposition 2 1/2 attributed their victory in part to "overkill" tactics by the measure's op- ponents, including officials who used municipal funds to fight the question and painted scenarios of cities devasated by the loss of public services.

"We all expected the teachers' union wouldn't have the sense to quit while they were ahead. They overkilled. People don't like their kindergarteners to come home crying and telling them not to vote for Proposition 2 1/2," Barbara Anderson, director of CLT, said last night.

Upstairs in the Parker House penthouse, the measure's opponents grimly greeted their defeat. Some joked they had been given the top floor of the hotel to make it easier to jump.

Carol Doherty, president of the Massachusetts Teachers Association (MTA), denied that the opponents of the proposition had overplayed their positions. She said massive media play on the measure was necessary to educate voters, and that until a few days ago, a large minority of voters were completely unfamiliar with the issue.

Several CLT members stressed that they won despite having less campaign money than their opponnets, who included municipal unions, the League of Women Voters and the MTA.

Proposition 2 1/2 will gradually reduce property taxes to 2 1/2 per cent of market value, and thereafter will prohibit raising the taxes by more than 2 1/2 per cent a year. It will also cut auto excise taxes about 60 per cent.

The measure will eliminate fiscal autonomy for school committees and binding arbitration for police and firefighters' unions.

City Manager James L. Sullivan, an outspoken foe of the question, predicted last night that Proposition 2 1/2 will cut about one-third of Cambridge's budget--about $44 million. "I will use every bit of influence I have in the legislature to ensure that Cambridge and cities aren't destroyed," he added.

The state legislature can amend or even abolish the proposition, but Sullivan said he does not think "they have any idea how to address this problem."

The proposition would become effective 30 days after the secretary of state certifies the votes, meaning that cities would begin losing revenue this year from the auto excise tax. Sullivan estimated that Cambridge would lose $900,000 this year.

"It's unconscionable the way we use the property tax. But it's also unconscionable to take it away without providing another source of revenue," Sullivan added.