Daily Tax Report ®

Anti-Tax Initiative Targets Billions in Washington Revenue

Aug. 19, 2019, 8:45 AM

Billions of dollars of Washington tax revenue will disappear over the next 10 years if anti-tax crusader Tim Eyman gets his way.

Eyman has started circulating initiative petition 1082, which would require legislatively imposed tax increases to expire one year from their effective date unless approved by a majority of the state’s voters. It would also kill any tax increase imposed in 2019 or 2020 without approval from the electorate.

The campaign is dubbed Term Limits on Taxes, though the formal name of the initiative if enacted would be the Taxpayer Protection Act. The act would terminate new taxes already enacted in 11 bills. According to Senate Transportation Committee Chairman Steve Hobbs (D), it would also potentially degrade the state’s ability to finance projects through bonds.

“They really went bonkers raising taxes this legislative session,” Eyman said Aug. 9. “I wanted to give the voters a chance to veto those if they want to. Do they really think 11 new taxes costing $27 billion is a good idea?”

‘Impossible to Sell Bonds’

The measure hasn’t attracted much attention yet. Eyman has until the end of the year to gather the 259,622 valid signatures needed to get the measure on the ballot in 2020. Another Eyman offering—Initiative 976— is front and center for the coming election in November. It would cut the budget by an estimated $4.24 billion over six years, in part by repealing the 0.3% sales tax on vehicle purchases and dropping weight fees for cars and light-duty trucks to a flat $30.

“It would be incredibly destructive” if I-1082 were to be implemented, said Andrew Villeneuve, executive director of the Northwest Progressive Institute. “You’re talking about blowing up the budget,” he said Aug. 15.

Eyman’s $27 billion projection is generally in line with the official 10-year estimates by the state Office of Financial Management. However, Eyman used a 10-year revenue estimate about $845 million higher than that used by OFM for one of the 11 bills and projected $8.66 billion for another of the bills for which OFM didn’t generate a 10-year estimate.

The transportation committee’s Hobbs opposes the initiative. If it passed, “it would be virtually impossible to sell any bonds” for at least a year or two, he said. “The revenue sources are being attacked constantly.”

Investors thinking of buying Washington infrastructure bonds may decide to go somewhere else if initiatives that threaten the financing keep coming up, Hobbs said Aug. 14.

‘Attack on Public Education’

“It’s another Eyman attack on public education and the public services that Washington families rely on,” said Rich Wood, spokesman for the Washington Education Association, which represents K-12 and higher education employees across the state.

Wood said Aug. 16 that while the union doesn’t take official positions on initiatives that have yet to qualify for the ballot, “we’re proud of the investment our state has made in public education, and this initiative would torpedo that progress. We’ve opposed many of Eyman’s initiatives in the past.”

Villeneuve, who has been opposing Eyman initiatives for the better part of two decades, said Eyman looks at the revenue bills he proposes killing and says it’s money that has been taken from taxpayers. “That’s the wrong way to look at it. The right way to look at it is to see these revenue reforms as investments. We are pooling our resources to afford more things that we need like education, especially college education,” he said.

He also cited new state funding for behavioral health infrastructure and programs spurred in part by court orders. “We’ve been underinvesting in behavioral health for years.” Citing the court orders, he said the loss of funding would put the state in legal jeopardy. “We need to make those investments, and we are.”

To contact the reporter on this story: Paul Shukovsky in Seattle at pshukovsky@bloomberglaw.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; Megan Pannone at mpannone@bloombergtax.com

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