Initiative Measure No. 1366

By Jason Mercier
Initiative 1366, the "Taxpayer Protection Act," has qualified for the November ballot. Here is the official ballot title and summary for I-1366:
Ballot Title
Initiative Measure No. 1366 concerns state taxes and fees.
This measure would decrease the sales tax rate unless the legislature refers to voters a constitutional amendment requiring two-thirds legislative approval or voter approval to raise taxes, and legislative approval for fee increases.
Should this measure be enacted into law? Yes [ ] No [ ]
Ballot Measure Summary
This measure would decrease the state retail sales tax rate on April 15, 2016, from 6.5 percent to 5.5 percent. The sales tax rate would not be decreased if, by April 15, 2016, two-thirds of both legislative houses refer to the ballot a vote on a constitutional amendment that requires two-thirds legislative approval or voter approval to raise taxes, and majority legislative approval to set the amount of a fee increase.
Opponents of I-1366 have filed a lawsuit in King County Superior Court to keep the measure off the ballot claiming it exceeds the scope of the people's power of initiative by trying to amend the constitution. A hearing has been scheduled for August 14.
According to the lawsuit:
“Initiative 1366 ('I-1366' or 'the Initiative') seeks to amend the Washington Constitution. The Washington Constitution, however, does not allow the initiative process to be used to amend the Constitution. As such, I-1366 is beyond the scope of the legislative power reserved to the people via the initiative and should not be placed on the ballot . . . The fundamental and overriding purpose of I-1366, as evidenced by its text, its title and its advertising, is to invoke the process to amend the Constitution to require a two-thirds legislative supermajority or a public vote for approval of any measure that 'raises taxes.'”
While it is true the header on I-1366 does say "2/3 Constitutional Amendment" and the sponsor has made repeated reference to the failure of the Legislature to refer to the voters a constitutional amendment to implement the tax restriction approved by the voters on five separate occasions (most recently with support in 90% of the state's legislative districts), the actual text of I-1366 does not require the Legislature to do anything it chooses not to nor does it indicate a preference from the voters on whether the sales tax cut authorized should remain in effect or if the Legislature should exercise the option to void the sales tax cut by referring a constitutional amendment to the voters for approval or rejection.
According to the intent section of I-1366 (in-part):
“The people declare and establish that the state needs to exercise fiscal restraint by either reducing tax burdens or limiting tax increases to only those considered necessary by more than a bare majority of legislators.
Since 1993, the voters have repeatedly passed initiatives requiring two-thirds legislative approval or voter approval to raise taxes and majority legislative approval for fee increases. However, the people have not been allowed to vote on a constitutional amendment requiring these protections even though the people have approved them on numerous occasions.
This measure provides a reduction in the burden of state taxes by reducing the sales tax, enabling the citizens to keep more of their own money to pay for increases in other state taxes and fees due to the lack of a constitutional amendment protecting them, unless the legislature refers to the ballot for a vote a constitutional amendment requiring two-thirds legislative approval or voter approval to raise taxes and majority legislative approval for fee increases. The people want to ensure that tax and fee increases are consistently a last resort.”
A legal analysis of I-1366 by the sponsors focuses on whether the Legislature is forced to do anything under the measure:
“Does the initiative 'force' the Legislature to put a constitutional amendment on the ballot?
No. In section 2, the initiative institutes a simple statutory requirement that the state sales tax rate be reduced from 6.5 % to 5.5% effective April 15, 2016. Nothing in the state Constitution requires the sales tax to be any particular rate. In fact, over the preceding decades, the state sales tax rate has been changed many times by the Legislature. The Legislature could, if it was so inclined, reduce the sales tax rate; therefore, the people may as well.
Section 3 provides a contingency: if the Legislature, prior to April 15, votes to refer to the ballot a 2/3 constitutional amendment, then the reduction in the sales tax expires on April 14. The Legislature has the power to refer a constitutional amendment to the ballot. It may choose to; it may not. It is the Legislature's choice.”
The Office of Financial Management's fiscal impact statement for I-1366 also makes it clear the Legislature is provided a choice:
“The initiative presents the Legislature with a choice that leads to two possible and mutually exclusive scenarios. The Office of Financial Management (OFM) cannot predict how the Legislature will act. For the purposes of this fiscal impact statement, OFM describes the fiscal impact of each scenario.
Scenario 1 – The Legislature does not refer a constitutional amendment to voters prior to April 15, 2016. On April 15, 2016, the state retail sales tax rate would decrease from 6.5 percent to 5.5 percent . . .
Scenario 2 – The Legislature refers a constitutional amendment to voters prior to April 15, 2016. The constitutional amendment would appear on the November 2016 general election ballot.”
Though the general political assumption is that the Legislature will not want the sales tax cut from 6.5% to 5.5% leading to it forwarding a constitutional amendment to the voters, the text of I-1366 does not specify a preference on which action should occur, only that taxes should either be cut or tax increases restricted - whichever option the Legislature chooses. While a constitutional amendment could be proposed to void the sales tax cut, I-1366 doesn't require the Legislature to do so unless it decides to make that policy decision to keep the current sales tax rate.
Of course, there are significant policy implications for either choice, something we'll take a closer look at in the coming month.
One last side note on the lawsuit against I-1366, among the plaintiffs are King County Director of Elections Sherril Huff and Thurston County Auditor Mary Hall. They both object to I-1366 being on the ballot claiming they will "suffer irreparable harm from incurring the expense of an invalid and needless election as well as the harm caused to all taxpayers by unlawful government action."
This claim of being forced to hold an "invalid and needless election" is very interesting. I was under the impression that there were several local elected offices and ballot measures to be decided in King and Thurston County this November other than just I-1366.