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Home / Legislative Action Center / Issues - Budget & Taxes / Points of View: Initiative 960: Reaffirming taxpayer protections |
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Points of View: Initiative 960: Reaffirming taxpayer protections |
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Written On: September/October 2007 |
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Written By: by Jason Mercier |
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Jason Mercier is director of the Center for Government Reform at the Washington Policy Center.
In November, voters will consider whether to reaffirm the taxpayer protections of the 1993 voter-approved Initiative 601 tax and spending limit, while adding various transparency requirements to tax and fee increases. Initiative 960, co-sponsored by Tim Eyman, would reassert I-601’s provision requiring that state tax increases be adopted with a two-thirds vote in the Legislature, require legislative approval for all fee increases and non-binding public advisory votes on tax increases not approved by voters, and provide voters with a detailed cost analysis of all proposed tax and fee increases. The initiative would not cover local governments.
To fully understand the intent behind I-960 it’s important to look back at I-601 and how the Legislature has conducted itself under its provisions. Adopted by the voters in 1993, I-601:
• Limited the growth of state spending to the Fiscal Growth Factor, a calculation based on inflation and population growth.
• Required a two-thirds vote by the Legislature fortax increases.
• Required legislative approval of any fee increases in excess of the Fiscal Growth Factor.
• Required voter approval of any tax increase that would exceed the established spending limit.
In the decade before I-601 took effect, state spending rose an average of 17.3 percent per biennium. Since then, state spending increases have averaged 8.9 percent, almost half the previous rate. This average includes the past two budgets adopted under Gov. Gregoire, with their combined 25.1-percent increase in spending. The Gregoire budgets reflect the higher spending increases allowed under changes the Legislature made to I-601 in 2005.
Since I-601 became law, it has been amended 12 times by the Legislature. While most of these amendments were minor, the Legislature has suspended the two-thirds vote requirement twice (2002 and 2005) and enacted major changes to the way the spending limit is calculated on four occasions (1998, 2000, 2005 and 2006), allowing higher spending increases to occur.
Despite the suspension of the supermajority vote requirement for tax increases in 2005 for the 2005-2007 biennium, a lawsuit was filed against the Legislature for violating I-601. At issue is $400 million in tax increases enacted with a simple-majority vote and without voter approval in 2005.
The lawsuit, filed by a host of trade and tax watchdog groups, argues the tax increases were illegal since they were above the spending limit and did not receive voter approval.
Agreeing with the Legislature’s critics, Snohomish County Superior Court Judge James Allendoerfer ruled in March 2006 that the Legislature violated Initiative 601 when it adopted the 2005-2007 budget and enacted several tax increases without a vote of the people. The case has been appealed to the state Supreme Court, and a ruling is expected soon.
The heart of the case focused on whether the same money could be spent twice to artificially increase the spending limit. In an attempt to raise the spending limit high enough so that the taxes adopted during 2005 would not be subject to a vote of the people, the Legislature engaged in a merry-go-round scheme, shuffling $250 million between three state bank accounts.
During oral arguments before the state Supreme Court, Justice Susan Owens called this budget maneuvering by the Legislature a "shell game" designed to avoid a vote of the people.
Responding to the machinations of the Legislature in 2005, the sponsors of I-960 attempted to eliminate the possibility of similar budget maneuvers being used in the future to avoid the I-601 spending limit.
Opponents to this initiative base their strongest criticism on this section of the measure, claiming the changes would lead to budget gridlock by requiring a two-thirds vote to adopt the budget or transfer funds. To reach this conclusion, however, one would have to ignore the overall statutory structure into which Initiative 960 fits, as well as the rest of the initiative text itself.
Nowhere in the ballot title, summary, intent section or text of Initiative 960 does it say that a two-thirds vote requirement for adopting the budget or transferring funds is being created.
Initiative 960 would close the loopholes carved out of I-601 by the Legislature over the past decade. However, I-960 is not a spending limit, and it would not have much impact on state expenditures. In fact, the measure does nothing to restore the original I-601 Fiscal Growth Factor, meaning the change made in 2005 to base the limit on the 10-year average of personal income growth would remain in effect. The major impact I-960 would have on the new state spending limit, if passed, is that the Legislature would be forced to follow the rules it imposed upon itself when it amended I-601 back in 2005.
Intent section of Initiative 960 (in part):
"With this measure, the people intend to protect taxpayers by creating a series of accountability procedures to ensure greater legislative transparency, broader public participation, and wider agreement before state government takes more of the people’s money. This measure protects taxpayers and relates to tax and fee increases imposed by state government. This measure would require publication of cost projections, information on public hearings, and legislators’ sponsorship and voting records on bills increasing taxes and fees, allow either two-thirds legislative approval or voter approval for tax increases, and require advisory votes on tax increases blocked from citizen referendum."
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