By Ryan Wynne
With effects of the recession still rippling through Washington state, it’s not surprising to see an anti-tax initiative make the general election ballot, but this ballot won’t have just one. On Nov. 2, voters will decide whether to approve two anti-tax measures: I-1053, which would require a supermajority to raise taxes, and I-1107, which would roll back some recently increased taxes.
Millions of dollars have been pumped into campaigns supporting the initiatives, mainly from notable, large businesses and organizations such as BP, the American Beverage Association, and the Washington Restaurant Association. Supporters say there should be more checks on government spending, especially while businesses and individuals are grappling with effects of the recession, but the initiatives also have their opponents.
Certain groups are particularly spooked because recession-related lagging tax revenues have led to funding cuts to state programs and budgeting nightmares for legislators, who recently held a special session to close a $2.8 billion shortfall. That gap was closed by, among other things, cutting $755 million in spending and increasing taxes by $591 million.
But it’s unlikely tax increases would have been an option just two months earlier. That’s when they suspended I-960, a 2007 initiative that established the same tax-raising requirements as I-1053.
It may take a village to raise a tax
I-1053 is the latest from initiative activist Tim Eyman to go before voters. If it passes and lawmakers want to raise taxes, they would either need to convince two-thirds of legislators to approve the increase, or get voter approval (think levy).
According to the Public Disclosures Commission (PDC), the Washington Restaurant Association has contributed $59,000 toward initiative campaign support efforts. Bruce Beckett, director of government affairs for the organization, said it supports I-1053 because the supermajority requirement spurs more discussion, and more debate should take place before lawmakers raise taxes.
“It brings about a transparency that doesn’t occur otherwise,” Beckett said.
The association’s members have had to weigh priorities and make cuts, Beckett said, and lawmakers should do the same.
“I think it would be appropriate for the Legislature to do the type of evaluations that our businesses have had to do,” Beckett said. “A very large number of these small businesses can’t afford to pay more taxes.”
In addition to representing its members, Beckett said the association also supports the initiative because voters have demonstrated their support of similar initiatives in the past and I-1053 would just reestablish voter-approved government spending parameters.
I-1053 has other notable supporters. According to PDC records, oil companies, including BP, Conoco Philips and Tesoro, have contributed at least $230,000. The campaign’s other major donor, the Washington State Farm Bureau, has contributed $50,000.
So far, the two committees campaigning for I-1053 have raised more than $1 million. At the same time, the opposition has not even formed an anti-1053 committee, and thus has no campaign contributions to report to the PDC. However, opposition is not lacking.
The Washington State Labor Council (WSLC) is one group to publicly oppose I-1053. Part of the reason for that opposition is a fear that Washington could end up in the same predicament as California if raising taxes requires a two-thirds vote again, said Kathy Cummings, communications director for the WSLC.
The Golden State isn’t so golden lately — it’s facing a $19.9 billion deficit. Many, at least partially, blame the shortfall on the state’s supermajority requirement to increase taxes.
“[I-1053] really is an attempt to jam up the whole government,” Cummings said. “Revenue is extremely important, and to have that held hostage by the minority is just not the way a democracy is suppose to work,” Cummings said.
Rolling back the Tootsie Roll tax
I-1107 would also make tax revenue harder to come by. The initiative calls for the rolling back of some recently approved tax increases on candy, soda, bottled water and certain processed foods. Those taxes were increased, along with taxes on items such as beer and tobacco, to offset part of the state’s budget shortfall.
In addition to increasing taxes, lawmakers also made millions of dollars in cuts to areas such as education, state government, and correctional facility capacity. If the initiative passes, more cuts could occur. According to the Washington State Office of Financial Management, it would mean a loss of more than $435 million over the next five years.
That’s why the Washington State Hospital Association has contributed $30,500 to the campaign to defeat I-1107 and keep the new taxes in place, said Cassie Sauer, vice president of the association. She said the association is worried about the effect rolling back these taxes could have on state-provided health care, which provides coverage to children, people with disabilities, the elderly, and low-income workers.
“We are very concerned about there being enough funding for health care for people who need health care in our state,” Sauer said.
Sauer said the association is also concerned because, if Medicaid is cut, hospital staff members will be laid off, which will not only affect hospital operations, but also the timeliness of care for patients.
As of Aug. 20, the committee to defeat I-1107 had raised $268,000. Some major contributors include the Washington Federation of State Employees, the Community Health Network of Washington and the Washington Education Association.
The side to defeat I-1107 is, so far, impressively outweighed in terms of financial might. The committee campaigning for the initiative has raised more than $10 million, and with the exception of a few contributions of $50 and less, the money has come from the American Beverage Association.
Kathryn Stenger, campaign spokesperson for “Yes On 1107,” said the Washington Beverage Association has a couple dozen members in Washington who represent thousands of jobs, so it’s not surprising they have contributed so much to the campaign.
“They have a reason to want to watch out for their members,” Stenger said.
In addition to putting a financial strain on businesses in a time when so many residents are out of work, Stenger said the new tax legislation is simply confusing in the way it’s written, and that taxing groceries is wrong.
“We just don’t want government in our grocery carts, that’s the bottom line right there,” Stenger said.
Voters will decide whether to pass these initiatives Nov. 2, but that doesn’t mean the decision will stick. Legislators can suspend a voter-approved initiative within the first two years of its adoption if they get a two-thirds vote in the Legislature. Once that two-year window closes, a simple majority will do.