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News / Northwest

GOP backers sue to keep fiscal impact of WA initiatives off the ballot

By Claire Withycombe, The Seattle Times
Published: June 5, 2024, 8:11am

OLYMPIA — The GOP backers of three initiatives that could repeal or alter a trio of significant state policies are suing to keep information about the possible budget implications of each measure from appearing on voters’ ballots in November.

State analysts have said the initiatives, if passed, could reduce funding for education and environmental projects by billions of dollars. The long-term care initiative could potentially dismantle the state’s public long-term care insurance program.

A 2022 state law requires the state attorney general to spell out how state funding and services could be affected by initiatives that repeal, impose or change any tax or fee, or cause a net change to state revenue. The upcoming general election is the first time the disclosure law has become a factor because no initiatives qualified for the ballot in 2022 or 2023.

But the chairs of the state Republican Party and the Mainstream Republicans of Washington, Jim Walsh and Deanna Martinez, respectively, contend the law does not apply to the measures on Washington’s capital gains tax, carbon market and public long-term care insurance program.

“They were very specific when they passed the warning-label law,” Walsh, a state representative from Aberdeen who filed the three initiatives, said in a statement Monday. “But they were so specific that the law doesn’t apply to any of the initiatives that go before voters this year. The case is so clear-cut I am surprised we have to take this to court.”

They are asking a judge to bar Attorney General Bob Ferguson from preparing, and Secretary of State Steve Hobbs from certifying, the statements and to compel Hobbs to instruct county elections officials to print ballots without them.

Lawyers for the state, meanwhile, argue with equal certainty that the measures require descriptions of their budget implications.

“Under state law, the public has a right to have those fiscal impacts described on the ballot,” lawyers for the state wrote in court documents. “This Court should reject Plaintiffs’ cynical attempt to keep voters in the dark.”

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The case is scheduled for a hearing in Thurston County Superior Court on Friday.

A coalition that opposes the initiatives commissioned polling last year that they argue shows that including information about the effect of each initiative drove up respondents’ opposition to each, compared to when respondents were asked about the initiatives without that information.

“They know that they’ll lose if voters understand the impacts of their initiatives,” said Aaron Ostrom, the executive director of the progressive group Fuse Washington.

Martinez criticized the legislation requiring the statements in the first place.

“The law should never have been passed in the first place, because it gives one of the most partisan elected officials in Washington state an opportunity to blast away at ballot measures he doesn’t like,” Martinez said, referring to Ferguson, who is the leading Democratic candidate in the governor’s race.

Breaking down the arguments

On Initiative 2117, which would repeal the state’s carbon market, Walsh and Martinez argue the measure doesn’t require a disclosure statement because it’s not a tax or a fee, but instead created allowances for carbon emissions and authorized the state’s Department of Ecology to auction them off.

Lawyers for the state in response say that the state’s Office of Financial Management found that the law that created the market, the Climate Commitment Act, did raise a tax or a fee. A fiscal note prepared during the legislative process said auctions generated nearly $2 billion in 2023.

On Initiative 2124, which will decide whether Washingtonians must pay into WA Cares, the state’s public long-term care insurance program, Walsh and Martinez argue the state statute creating the program refers to the payments as premiums, not taxes or fees.

State lawyers volleyed back that WA Cares is funded via mandatory payroll deductions, and that OFM determined the legislation creating the program raised a tax or increased a fee, and prepared a fiscal note, and that it was placed on the ballot for a nonbinding advisory vote because it imposed a tax increase. (The Legislature passed a law halting advisory votes in 2023.)

A fiscal impact statement prepared during the legislative session for I-2124 said that while passing the initiative would mean a reduction in revenue if workers were no longer required to pay in, the impact was “indeterminate.” Supporters of the program say that making the program fully voluntary would in effect repeal it because that could cause the program to collapse.

And on I-2109, which would repeal the capital gains tax, Walsh and Martinez allege the fiscal impact statement prepared by the Legislature during this year’s session is incorrect in asserting that the initiative would reduce state revenue.

They contend a separate initiative, I-2111, also bars the collection of the capital gains tax. Legislators adopted the measure this past legislative session, prohibiting the state and local governments from imposing taxes on “any form of personal income.” Washington doesn’t have an income tax.

The state’s lawyers said it didn’t repeal other state statutes.

Barring the capital gains tax, they say, wasn’t the intent of legislators when they adopted that measure — or Walsh’s, surfacing an email from him to the state’s solicitor general in January, which appears to contradict his argument in the lawsuit.

“It is not my intent that it would affect any currently existing state taxes,” wrote Walsh, who sponsored the income tax initiative.

Lawyers for the state also said the OFM prepared a budget impact statement for the legislation that created the capital gains tax in 2021, and there was an advisory vote on the ballot as well. They added that the capital gains tax brought in more than $890 million in revenue last year. And, after I-2111 was passed in March, taxpayers still paid the capital gains tax.

When lawmakers were considering the initiative to repeal the capital gains tax, analysts estimated that if it were passed, state revenues would decrease by $596 million in the 2024 fiscal year and by $833 million in the 2025 fiscal year.