Beyond car tabs: I-695's impact on taxing power

By David Postman Seattle Times Olympia bureau

OLYMPIA - If voters approve Initiative 695 in November and cut their annual car taxes to a flat $30 per car, they also will approve a major curb on the power of politicians.

Officials overseeing everything from public hospitals to local cemetery boards would lose their power to raise taxes and fees. Under the initiative, that power would rest with the voters.

A vote for I-695, then, is also an implicit agreement that voters will take a more active role in democracy.

The initiative's sponsor envisions citizens going to the polls as often as every other month to pass judgment on issues now decided by the Legislature, city and county councils, school boards, fire districts and parks boards.

The initiative cuts a wide swath. It would give citizens the right to decide whether school-lunch prices should go up a dime to cover a rise in the cost of milk, and whether to boost taxes on Boeing and other manufacturers.

To supporters, it's a last-ditch effort to get meaningful tax relief for average citizens and force politicians to look for alternatives before raising taxes.

"All taxes that used to be increased in smoke-filled rooms at meetings only politicians attended will be forced to have much more public scrutiny, and they will have to make their case that the tax increase is necessary," said initiative sponsor Tim Eyman.

"There is such voter apathy. People just feel they are spectators in the whole thing. Our initiative is forcing the taxpayer to be involved."

To critics, I-695 is an attack on America's republican form of government, a gut shot to representative democracy.

"It's just going to really strangle the system," said Secretary of State Ralph Munro.

Tax-vote clause won signatures

Initiative 695 was sold primarily as the "$30 License Tab Initiative." It would cut the state's annual car-registration tax, which now follows a sliding scale that ranges from $23 for a 1979 Datsun station wagon to thousands for a new recreational vehicle.

Both would cost $30 under I-695.

But Eyman says that, without the clause requiring voter approval of all tax and fee increases, the initiative never would have received enough support to win a place on the ballot, much less attract a near-record number of signatures.

An initiative he filed in 1998 to cut car taxes didn't include the tax-vote clause. Eyman says people told him there was no point in cutting car taxes unless politicians could be prevented from raising other taxes to make up for the loss of revenue.

That initiative didn't attract enough signatures to qualify for the ballot. The fix this year was a line added to the initiative that says, "Any tax increase imposed by the state shall require voter approval."

The definition of "tax" in the initiative includes sales, property and fuel taxes as well as permit and impact fees and "any monetary charge by government."

The definition of "state" is broad, too, and covers any government body with the power to impose taxes or fees.

The initiative does provide a few exceptions. It would not stop tuition increases at state colleges and universities, or restrict increases in court fines. Also, if two-thirds of the members of the Legislature approve, an emergency tax could be imposed that would expire after 12 months.

School-lunch elections

Since the initiative was certified for the ballot last month, opponents have ridiculed it for requiring an election for even the smallest fee increase.

"I just don't see how you can have that many things on the ballot, and how you can make government function, to have fees for (government-owned) driving ranges, golf courses, subject to a vote of the people, to have the fees for use of recreation halls and softball fields subject to a vote of the people," Gov. Gary Locke said this month.

"That is going to be very, very difficult, and I just wonder if the public will even study these issues."

`Death by a thousand taxes'

The Washington State School Directors' Association has voted unanimously to oppose the initiative. Dwayne Slate, associate executive director, said I-695 would make it impossible for school districts to raise driver-education fees, gym-towel fees or even the price of a hot dog at a football game without an election.

Eyman doesn't dispute that the initiative would require an election before a school board could raise the price of a school lunch. But he doesn't think such elections will happen often. Instead, he said, a school board needing to raise lunch prices would first look for ways to cut expenses or for other ways to avoid a vote. Raising fees would be a last resort, Eyman said, and any proposal would be accompanied by a full debate. Now, he said, small fees and taxes are raised with little or no public discussion.

"I call it death by a thousand taxes," Eyman said. If the initiative passes, he said, most small increases won't make it as far as an election - they simply won't be proposed. For those that are, he said, politicians "are going to be forced to explain it to the average taxpayer."

One veteran of high-profile initiative battles said forcing elections on tax questions would bring people a greater awareness of what their government is doing.

"My populist instinct tells me it would be good for the people to become educated on those kind of issues and to understand how those decisions are made," said Tom McCabe, executive vice president of the Building Industry Association of Washington, which has not yet taken a position on the initiative.

"We ask them to do it on school bonds, and I think they do a pretty good job. The school district has to clean up their act to ask people for the money, and that's how it should be."

`Why have representatives?'

Voters first restricted legislators' power to spend tax money when they passed Initiative 601 in 1993. A two-thirds vote of the Legislature is needed to raise state taxes, and a vote of the people is required if lawmakers want to collect more revenue than allowed under the initiative's spending cap, determined by inflation and population growth.

There are lawmakers in both parties, though, who question the broader power shift built into I-695.

"If we're going to be legislating everything by the people, then why have representatives of the people?" said Rep. Tom Huff, R-Gig Harbor, co-chairman of the House Appropriations Committee.

"That is a slow and laborious system. That was not the intent of our forefathers."

Rep. Hans Dunshee, D-Snohomish, co-chairman of the House Finance Committee, said voters may be taking on more than they realize if they approve 695.

"If I was a voter, I would look at all the work, and I would be hesitant to take it on," Dunshee said. "You've got to read all those tax bills, and you've got to understand why the park department needs to charge $1 more for a camping permit. That's a lot of work.

"For me, as an elected representative, it makes my job easier. I'm going to say, `Here, you do it.' " But Rep. Brian Thomas, R-Renton, co-chairman of the House Finance Committee, disputes the notion that I-695 would take something from lawmakers.

"When I pull out my magic Constitution to the state of Washington, the very first thing (it says) is that all political power is inherent in the people," he said.

"The whole idea that somehow we are striking at the heart of the government is just nonsense, because the whole idea of this is individual people have power, and that it's their choice whether to give some of that power to the government. And if they do, and they don't like what the government does with it, they have the right to take it back."

Some say I-695 is an expression of frustration by taxpayers unhappy with the Legislature's track record of giving most tax breaks in recent years to businesses, not individuals.

Similar frustrations prompted tax-limitation measures in other states, said Pete Sepp, vice president for communications for the fiscally conservative National Taxpayers Union. "If the political establishment responded to these concerns in a timelier fashion, or at least had a more open line of communications with taxpayers, none of these things would be necessary," he said.

`The skies have not fallen'

Sepp recently wrote a study of citizen tax limitations and said he found that "the longer these restrictions remain in place, the more ridiculous the arguments of opponents appear. In fact, the skies have not fallen."

But that doesn't mean they have worked as designed.

"From an economic standpoint there is no evidence that these measures do any harm," Sepp said. "Some question how much good they do, and that is open to debate."

But Thomas said voters focus on the message, not the details.

"I think that people will see this not only as a limitation on the amount of taxes they'll get, but it will be a slap at government, a slap at the Legislature, a slap at the bureaucrats," Thomas said.

"I don't think people are going to think too much about how it would be a hellish thing to try to interpret."

Similar measures in other states

Voters in Colorado, Missouri and Montana already have approved measures that require a public vote to raise many taxes.

In 1998, though, the Montana measure was thrown out by the state Supreme Court. Missouri requires a public vote for state tax increases of more than $50 million or 1 percent of state revenues, whichever is less. It has yet to be invoked.

Colorado is the best place to see the long-term effects of requiring voter approval for tax and fee increases.

In 1992, after three failed attempts, Colorado voters approved the Taxpayer's Bill of Rights. It required voter approval of all state and local tax and fee increases, and set spending limits based on increases in inflation and population growth.

Opponents included Colorado businesses, teachers and school officials and a bipartisan group of politicians, including then-Gov. Roy Romer. There were claims that schools would be overcrowded, and that prisoners would be released from jail early because there wouldn't be the money to keep them behind bars.

Romer, a Democrat, compared the measure to a bomb and called its sponsor a terrorist.

Since the measure took effect, 698 proposals have been referred to voters by local governments throughout the state, according to the Rocky Mountain News of Denver. Of those, 76 percent have been approved.

The Colorado General Assembly this year also cut taxes by $490 million because of restrictions imposed by the Taxpayer's Bill of Rights.

`Not as bad as people said'

Even former critics say the dire warnings of 1992 have not come to pass. "It is not as bad as people said it was going to be," said Larry Kallenberger, executive director of Colorado Counties Inc. Kallenberger was one of the naysayers. As director of state Department of Local Affairs under Romer, Kallenberger was a prominent opponent of the Taxpayer's Bill of Rights.

But he said predictions that voters would reject most tax-related ballot measures haven't come true, in part because elected officials have been selective in what they put on the ballot.

Cities, however, have been more successful than the counties Kallenberger represents. "People will vote yes on tax or rate increases provided they know exactly what it is going for," he said, "and with cities, voters can almost look out their window or drive down the street and see the improvement."

Government leaders, he said, must respect the will of the voters, not patronize them or make excuses.

"I don't share the belief that the citizens just didn't understand what they were doing," Kallenberger said.

"I think they have a general sense of what they are doing.

"And what they are doing if they vote yes is, they are saying no to government and saying no to what they see as the endless capacity of some governments to just keep building itself bigger and bigger."

Government officials are being tested under the strict regime of the Taxpayer's Bill of Rights, Kallenberger said.

"The day will come - I think sometime in the next decade - where America will face a crisis," he said. "When that crisis comes, if we have done a good enough job that we can be trusted, people will say, `We need government to help us out of this.'

"But if we keep acting like citizens are our enemies and we have to fight with them all the time, I don't think we will be in that position."

David Postman's phone message number is 360-943-9882.

-- C. Garrison (cegarrison@yahoo.com), August 16, 1999

Answers

I don't know why this didn't get more comment when it was posted. I ususally look at the recent responses first, and missed this one. People have talked a lot about I-695 being like what was passed in Colorado, but look at this again:

"In 1992, after three failed attempts, Colorado voters approved the Taxpayer's Bill of Rights. It required voter approval of all state and local tax and fee increases, and set spending limits based on increases in inflation and population growth."

Can someone explain how it works when revenue increases require voter approval, but spending can go up based on increases in inflation and population growth? Don't tell me more people just naturally means more money, because under I-695 the way a tax is defined that is just not true for many local governments that depend on the property tax for all or most of their revenue. Does anyone know enough about the Colorado initiative to identify the similarities and differences?

-- dbvz (dbvz@wa.freei.net), September 10, 1999.

"Don't tell me more people just naturally means more money, because under I-695 the way a tax is defined that is just not true for many local governments that depend on the property tax for all or most of their revenue. " Yea! Our initiative kicks Colorado's initiative's butt!!!!

The Craigster .

-- Craig Carson (craigcar@crosswinds.net), September 10, 1999.