Spin Control: Voters deserve fiscal statement for 3 state initiatives on the ballot, judge says

Washington’s November ballot will be one of the longest in years, thanks to the races for president, U.S. Senate and House, various statewide and local elections, plus three initiatives state lawmakers refused to approve after sponsors got enough signatures to send those proposals to the Legislature.

It will get a bit of extra length from a financial statement – technically known as a Public Investment Impact Disclosure statement – that will say what might happen to state programs the money supports if those initiatives were to pass. That 2022 law requires the attorney general’s office to come up with 10-word explanations of a foreseeable fiscal impact any time voters are asked to increase or decrease a tax or a fee.

While it is generally acknowledged throughout the political spectrum that knowledge is power and voters should know what they are voting on, the need for disclosures on these three initiatives was challenged in court recently by the original sponsor of the ballot measure.

State Sen. Jim Walsh, who is also the chairman of the Washington Republican Party, asked Thurston County Superior Court Judge Allyson Zipp for special court orders, known as writs of mandamus, that would tell the attorney general’s office not to write and the secretary of state’s office – which controls elections – not to include such statements on the ballot.

At first glance, the three would seem good candidates for such an explanation. Initiative 2109 would repeal the capital gains tax. Initiative 2117 would repeal the Climate Commitment Act, which allows the state to auction off pollution allowances as a way to reduce carbon emissions. Initiative 2124 would allow workers around the state to opt out of the Washington Cares long-term insurance program, and therefore its premiums.

The arguments against that were, to put it charitably, creative. Walsh’s attorney Joel Ard suggested a disclosure was not needed for the capital gains tax initiative because the Legislature had essentially repealed that tax earlier this year when it passed one of Walsh’s other initiatives, I-2111, which prevents the state or any local government from imposing an income tax as defined under federal law. Opponents of the cap gains tax have long argued it should be considered an income tax as it is under federal statutes and in most other places, but the state Supreme Court has ruled it’s an excise tax.

I-2111 will soon take effect, so there will be no capital gains tax, and thus repealing it would have no impact, so there’s no need for a disclosure statement, Ard said.

But when the Legislature passed I-2111, lawmakers were clear that it was prospective and didn’t affect existing taxes, said Noah Purcell, state solicitor general. If the capital gains tax was repealed by the Legislature passing I-2111, the voters wouldn’t need to vote on I-2109.

The law for a Public Investment Impact Disclosure statement covers taxes and fees, but the Climate Commitment Act creates “commodity charges” that are auctioned off and might be resold or exchanged. The Washington Cares Act levies premiums. Neither are taxes or fees, so they don’t need a PIID, Ard argued.

Commodity charges and premiums have both been determined to be fees by the state Supreme Court, Purcell countered.

Zipp refused to keep the impact statements off the ballot. The type of order Walsh was seeking – having the court order an elected official not to do something they believe is their legal duty – is an “extraordinary remedy” with a demanding burden of proof, she explained.

I-2111, which blocks any income tax, is open to interpretation, she said. But when that happens, the court has to try to determine Legislative intent, and she wasn’t persuaded that lawmakers intended to repeal the capital gains tax when they passed that initiative. During consideration of the initiative, Walsh himself said it was forward looking and would not affect current taxes, Zipp noted.

So the initiative to repeal the capital gains tax that voters are being asked to consider would have a financial impact and does need a disclosure.

Supreme Court precedents say that the Climate Change allowances and the Washington Cares premiums are similar enough to taxes or fees to require the explanations on the ballot under the expressed purpose of the law requiring impact statements on the ballot, Zipp said.

The initiative process in which the voters pass laws, including those affecting the budget, is a cherished power in the state, she said. The impact disclosure law should be viewed through a “broad lens,” not in a cramped or limited manner, she added.

“The people are entitled to know the fiscal impact their vote will have on public investments at the time that they cast their ballots,” Zipp said, quoting from the statute.