ESSB 5513 passes WA State Senate Unanimously. Now Awaits a House Vote

The Washington State Senate passed ESSB 5513 by a 47/0 Vote on Feb. 13, 2018. The bill has been sent to the House for a vote..ESSB 5513 is a substitute bill that has removed the provision that discretionary tax exemptions must be voted on as part of the biennial budget process every two years. It is still a significant step in trying to make Washington State’s almost 700 tax exemptions more transparent and accountable.  ESSB 5513 would require the Washington State Department of Revenue to update its Tax Exemption Report every 2 years instead of 4 years. The Governor’s Budget forecast documents must include a listing of all discretionary tax exemptions (some 450) and their fiscal impact on the proposed state budget in terms of potential revenue not collected.

Here is a summary of the ESSB 5513 as reported by the Senate Ways and Means Committee:

Summary of Engrossed First Substitute Bill:

The DOR Tax Exemption Report (Report) is updated every two years instead of every four years. The Report must include recommendations by JLARC and the Commission if the tax preference has been reviewed.

The November budget outlook materials must include the projected fiscal impact of
discretionary tax preferences in the current biennium and subsequent biennium. The
summary must separate discretionary tax preferences by category—business incentive, agriculture, nonprofit, etc.—as provided in the DOR Report.

The Governor’s budget documents must include a detailed listing of discretionary tax preferences and the listing must be included on the websites of the Office of Financial Management, Economic Revenue and Forecast Council, and Office of the Governor. The listing must provide the following information:
– a brief description of each discretionary tax preference;
prior and future estimated fiscal impacts for each discretionary tax preference;
– the stated public policy objective, if any, of the discretionary tax preference; and
– any recommendations by JLARC and the Commission with regarding to continuing,modifying, or eliminating the discretionary tax preference.

Discretionary tax preference is defined to be a tax credit, exemption, deduction, or
preferential tax rate, which is not required by the state constitution, United States
Constitution, or federal law.:

ESSB 5513 is scheduled for a hearing in the House Finance Committee on Thursday Feb. 22nd, 2018 at 3:30 PM. If you can not attend to testify, please call or send e-mails to the legislators in the House.Finance Committee, urging them to vote this bill out of committee so that the full House can vote on it. also contact your own Legislators. The remaining session is short. Do not assume your Representatives know about this bill or that it will pass in the flurry of bills demanding attention at the end of the session. Please help by contacting  Legislators today. Thanks.

 

Committee Members

Representative e-mail Phone
Lytton, Kristine (D)
Chair
kristine.lytton@leg.wa.gov (360) 786-7800
Frame, Noel (D)
Vice Chair
noel.frame@leg.wa.gov (360) 786-7814
Nealey, Terry (R)
Ranking Minority Member
terry.nealey@leg.wa.gov (360) 786-7828
Orcutt, Ed (R)
Asst Ranking Minority Member
ed.orcutt@leg.wa.gov (360) 786-7990
Condotta, Cary (R) cary.cordotta@leg.wa.gov (360) 786-7954
Dolan, Laurie (D) laurie.dolan@lwg.wa.gov (360) 786-7940
Pollet, Gerry (D) gerry.pollet@leg.wa.gov (360) 786-7886
Springer, Larry (D) larry.springer@leg.wa.gov (360) 786-7822
Stokesbary, Drew (R) drew.stokesberry@leg.wa.gov (360) 786-7846
Wilcox, J.T. (R) jt.wilcox@leg.wa.gov (360) 786-7912
Wylie, Sharon (D) sharon.wylie@leg.wa.gov (360) 786-7924

You can also leave messages for your own Legislators by going  to the bill page for  ESSB 5513 and looking  to the right on the page you will see a box to “comment on this bill”  Thank your Senator for voting to pass this bill  (It was a 47/0 vote) and urge your two House members to vote to pass this bill.  Thanks

WA SB 5513 – the Tax Exemption Transparency and Accountability Act

Testimony in support of SB 5513 – the Tax Exemption Transparency and Accountability Act

Washington State Senate Ways and Means Committee, Jan. 18, 2018

Steve Zemke – Tax Sanity

 Thank you for this opportunity to testify on this legislation.

This is the fifth year this bill has been before you and each year it picks up additional support.  Senate SB 5513 has 14 sponsors and its companion bill in the House HB 1500 has 33 sponsors. This is almost one third of our state Legislators.  

 Legislation to create a Tax Expenditure Budget has been increasingly supported by numerous groups in our state, including the Washington State Budget and Policy Center, All in for Washington,   Washington State Labor Council,  League of Women Voters of Washington, Washington’s Paramount Duty,  Washington State Democratic Party,  Washington Education Association, SEIU 775, Northwest Progressive Institute, Washington Federation of State Employees, Washington State Council of Firefighters,  Faith Action Network, Puget Sound Advocates for Retirement Action, and others.

 Why are these groups supporting this legislation? Because they believe that a system of tax expenditures that gives away more in revenue from the tax base than it collects is a broken system.  They believe that tax exemptions need transparency and accountability and fairness. That does not exist now.

 Tax Exemptions, preferences, deductions, credits, and deferrals are off budget expenditures. They lack the transparency and accountably that exists for other expenditures the state makes as part of the biennial budget process. According to the Department of Revenue’s projection in their 2016 Tax Exemption Report for the 2015 to 2017 biennium they projected that while the state would collect some $7.4 billion in B&O taxes, they would exempt from the same tax base some $11.4 billion. This gap has widened since the last biennium.

Including the rest of the tax exemptions in their report, the Department of Revenue projected that off budget tax expenditures would total almost $40 billion while only collecting revenue totaling some $32.6 billion.

Of the 694 tax exemptions in that report about 450 are discretionary.  The Department of Revenue projected that in the 2017 to 2019 Biennium that of the $54 billion in projected tax expenditures, some $30 billion would fall into “potential revenue gains”. 

  This legislation does not mandate wholesale repeal of tax expenditures.  It asks for accountability and transparency and biennial review and gives the legislature the ability to act to end exemptions if they do not meet the priorities of government the same as expenditures in the regular biennial operating appropriations budget must.

 Concern about the current system includes a quickly dated Tax Exemption report by the Department of Revenue that is only updated once every 4 years.  Most other states in the country update their report every 2 years or less. California updates their Tax Expenditure report every year.

Companies like Microsoft, Starbucks, Expedia, Adobe and Boeing all must report to their stockholders every year and issue quarterly profit and loss statements.  Their financial statements are scrutinized by their stockholders. It does not make sense that Washington State only updates its Tax Exemption Report every 4 years. It will next be updated in 2020. It should at a minimum be updated two years just as the state biennial budget is..

Only 73 of the 694 listed exemptions in the 2016 Tax Exemption Report have sunset provisions. This means 89% of the tax expenditures have no sunset provision and never require the Washington State legislature to ever vote on them again. Meanwhile all expenditures in the regular operating appropriations budget are scrutinized and voted on every 2 years with adjustment made in the 2nd year of the biennium.

 Also in the Tax exemption report, 54 exemptions are listed as “unable to disclose” the amount of revenue involved.  Businesses and other entities are benefiting from state tax law in getting exemptions and lower or no taxes. The public has a right to know the value of these exemptions. 

 The public has a right to know that these exemptions are creating jobs or providing valuable services to Washington State citizens just as they expect expenditures in the regular budget appropriations bill to produce.

  We require that accountability in the regular budget appropriations process – we don’t say we’re spending state revenue but the public doesn’t have the right to know because the recipient doesn’t want us to know what they are getting.

 With the current lack of accountability and transparency and sound fiscal review and evaluation as to whether current tax expenditures meet the state priorities of government and have clear measurable objectives as to their effectiveness in meeting state needs, taxpayers and citizens in this state increasingly believe state government and the legislature are not doing their job.

Please step up and vote to fix this broken tax expenditure system that severely lacks needed transparency, accountability and sound fiscal management of our total state budget.

 Steve Zemke

 Director Tax Sanity

steve@taxsanity.org

www.taxsanity.org

Hearing Jan 18, 2018 on SB 5513 -The Tax Exemption Transparency and Accountability Act

SB 5513 will have a Hearing in the Washington State Senate Ways and Means Committee on Thursday, Jan 18, 2018 at 3:30 PM  in  Senate Hearing Room 4 in Olympia. The information below explains the legislation and can also be cut and pasted to be an information handout.

End Tax Exemptions as Off-Budget Spending

By Adding Them as Tax Expenditures to the State Budget!

 Why is SB 5513 /  HB 1500The Tax Exemption Transparency and Accountability Act needed?

Washington State is currently giving away more revenue in tax exemptions than it is collecting from the same tax base. Of some 694 exemptions, ninety percent have no sunset provision. This is a broken system.

We don’t generally think of them as such but tax exemptions, preferences, deductions, credits and deferrals are off budget expenditures. They lack the accountability and transparency that exists for other expenditures the state makes as part of the biennial budget process.

Taxpayers deserve to know who is receiving these tax expenditures, how much money is involved and for what reason they are given.

Washington State has created some 694 tax exemptions over the years. Over 450 of these are discretionary tax exemptions, not required by Federal or State constitutional law.

According to the Washington State Department of Revenue’s  2016 Tax Exemption Study, while the State expected to collect some $7.4 billion in B&O tax revenue in the  2015 -2017 biennium, it exempted from collection some $11.4 billion. When sales and use taxes were included with the analysis, the results are similar – the state expected to collect some $18.9 billion in revenue from sales and use tax, while exempting some $16.9 billion in revenue.

Including property tax exemptions the 2016 Department of Revenue Report projected that in total, Washington State will see as off budget tax expenditures almost $40 billion in tax exemptions this biennium while only collecting revenues of $32.6 billion for the Legislature to fund its biennial budget.

HB 1500 introduced by Rep. Gerry Pollet and 32 other sponsors would require the governor to propose and the state legislature to adopt a tax expenditure budget every 2 years as part of the biennial omnibus operating appropriations act. The companion bill, SB 5513 has been introduced in the WA State Senate by Senator David Frockt with 13 other sponsors.

SB 5513 / HB 1500 would give the Washington State Legislature an opportunity to periodically evaluate the need and effectiveness of the state’s tax exemptions in meeting current state needs. They would do this at the same time they are making budget decisions about prioritizing other state expenditures for public services as part of the biennial budget appropriations process.

What would SB 5513HB 1500 – the Tax Exemption Transparency and Accountability Act do?

 This measure would require new and existing discretionary tax exemptions to be authorized every two years in a tax expenditure budget. It will add much needed transparency and accountability to the hundreds of exemptions and preferences, along with their cost and how each decision to spend money on an exemption or preference is a choice to expend funds for this purpose with particular beneficiaries.

The tax expenditure budget would detail the fiscal impact, purpose, and effectiveness of each tax exemption in meeting the state’s priorities of government in the state budget.

 Tax exemptions not included in the tax expenditure budget would expire at the end of the calendar year in which the budget is adopted.

 Action item- Contact your Legislators and urge them to enact the Tax Exemption Transparency and Accountability Act.

Urging your Legislators to pass SB 5513  and companion bill HB 1500  is easy. You can leave them a message by going to http://www.leg.wa.gov, entering 5513 or 1500 for the bill number after clicking the bill information link and then clicking on “comment on this bill.”

Or call the Legislative hotline at 1-800-562-6000 and leave a message to your legislators and the Governor to support SB 5513 and HB 1500 to create a tax expenditure budget as part of the biennial budget appropriations process. And be sure to thank your legislators if they are a sponsor of this legislation. Their support is appreciated.

 Legislators sponsoring HB 1500 – Pollet, Farrell, Appleton, Tarleton, Ryu, Wylie, Santos, Marci, Doglio, Jinkins, Orwall, Tharinger, Stonier, Kagi, Fitzgibbon, Kloba, Stanford, Berquist, McBride, Ortiz-Self, Goodman, Dolan, Cody, Pettigrew, Riccelli, Sells, Hudgins, Kirby, Lovick, Frame, Peterson, Ormsby, Pellicciotti

Legislators sponsoring SB 5513 – Frockt, Hasegawa, Miloscia, Rolfes, Saldana, Keiser, Wellman, Conway, Chase, Billig, Kuderer, Hunt, McCoy, Darneille

For more information:

Contact Steve Zemke – Director – Tax Sanity,

steve@taxsanity.org, www.taxsanity.org ,   Facebook – Tax Sanity

 

Wisconsin Gives Foxconn $3 Billion Tax Break

Foxconn grabs $3 billion tax break from Wisconsin. As the New York Times reports

“Foxconn’s plan for a $10 billion factory in Wisconsin is certainly good news for President Trump and Republican politicians Gov. Scott Walker and Speaker Paul D. Ryan, whose district the plant would call home.

But the deal with Foxconn, the Taiwanese electronics supplier, comes with a heavy price tag for Wisconsin taxpayers: $3 billion in state tax credits that dwarf the typical incentive package companies receive from local governments.”

Washington State currently gives away more in tax expenditures (tax breaks) than it collects as revenue from the same tax base. Wisconsin is obviously following the same route.  However the real question is whether these huge tax breaks to lure business to a state make sense or are just more corporate welfare for Big Business at taxpayer expense.

As the New York Times article goes on to mention:

“Over all, the subsidies for the Foxconn plant, which would produce flat-panel display screens for televisions and other consumer electronics, equal $15,000 to $19,000 per job annually.

That compares with $2,457 per year in the usual incentive arrangement, according to Timothy J. Bartik, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich. The new Foxconn jobs are expected to have an annual salary of at least $53,000 plus benefits, according to Mr. Walker.

“It’s a very, very costly package, and I’m skeptical that the benefits justify such big incentives,” Mr. Bartik said. “This is well beyond the typical deal.”

Instead of Foxconn paying $53,000 per year to their workers, they have the state pick up $15,000 to $19,000 of that cost.  What a great deal for Foxconn and its stockholders.

As noted by Greg LeRoy:

“If Foxconn lives up to its investment commitment and receives the full $3 billion tax break, it will be the fourth-largest incentive deal in United States history, according to Greg LeRoy, executive director of Good Jobs First, a nonpartisan nonprofit research group in Washington that tracks economic development subsidies.

“We can only describe this as a gift from Wisconsin taxpayers to Foxconn shareholders,” Mr. LeRoy said. “This is a guaranteed loser for the state.”

Whatever happens to the the old Republican mantra of conservative economics that the goal of the  free enterprise system and limited government meant that they did not pick winners and losers? It certainly looks like they picked Foxconn to be a winner and state taxpayers to be the losers here.

Tax Sanity Urges House Finance Committee to pass HB 1500

Testimony in support of HB 1500 – the Tax Exemption Transparency and Accountability Act

Washington State House Finance Committee, Jan. 31, 2017

Steve Zemke – Tax Sanity

 

Thank you for this opportunity to testify on this legislation.

This is the fourth year this bill has been before you and each year it picks up additional support. HB 1500 has 33 sponsors this year and its companion bill in the Senate SB 5513 has 13 sponsors. This is almost one third of our state Legislators.  Legislation to create a Tax Expenditure Budget has been supported by numerous groups in our state, including the Washington State Budget and Policy Center, the Washington State Labor Council, the Washington State Democratic Party, SEIU 775, Northwest Progressive Institute, Faith Action Network, Puget Sound Advocates for Retirement Action, and others

Why are they supporting this legislation? Because they believe that a system of tax expenditures that gives away more in revenue from the tax base than it collects is a broken system.  They believe that tax exemptions need transparency and accountability and fairness. That does not exist now.

Tax Exemptions, preferences, deductions, credits, and deferrals are off budget expenditures. They lack the transparency and accountably that exists for other expenditures the state makes as part of the biennial budget process. According to the Department of Revenue’s projection in their 2016 Tax Exemption Report for this 2015 to 2017 biennium they projected that while the state would collect some $7.4 billion in B&O taxes, they would exempt from the same tax base some $11.4 billion. This gap has widened since the last biennium.

Including the rest of the tax exemptions in their report, they projected that off budget tax expenditures would total almost $40 billion while only collecting revenue totaling some $32.6 billion.

Of the 694 current tax exemptions about 450 are discretionary.  The Department of Revenue projected that in the 2017 to 2019 Biennium that of the $54 billion in projected tax expenditures, some $30 billion would fall into “potential revenue gains”.  This legislation does not mandate wholesale repeal of tax expenditures.  It asks for accountability and transparency and biennial review and gives the legislature the ability to act to end exemptions if they do not meet the priorities of government the same as expenditures in the regular biennial operating appropriations budget must.

Concern about the current system includes a current quickly dated Tax Exemption report by the Department of Revenue every 4 years.  Most other states in the country update their report every 2 years or less. California updates their Tax Expenditure report every year.

Companies like Microsoft, Starbucks, Expedia, Adobe and Boeing all must report to their stockholders every year and issue quarterly profit and loss statements.  Their financial statements are scrutinized by their stockholders. It does not make sense that Washington State does not have more accountability and transparency in its tax expenditures as part of sound fiscal policy.

Only 73 of the 694 listed exemptions have sunset provisions. This means 89% of the tax expenditures have no sunset provision and never require the Washington State legislature to ever vote on them again. Meanwhile all expenditures in the regular operating appropriations budget are scrutinized and voted on every 2 years with adjustment made in the 2nd year of the biennium.

Also in the Tax exemption report, 54 exemptions are listed as “unable to disclose” the amount of revenue involved.  Businesses and other entities are benefiting from state tax law in getting exemptions and lower or no taxes. The public has a right to know the value of these exemptions.  We require that accountability in the regular budget appropriations process – we don’t say we’re spending state revenue but the public doesn’t have the right to know because the recipient doesn’t want us to know what they are getting.

With the current lack of accountability and transparency and sound fiscal review and evaluation as to whether current tax expenditures meet the state priorities of government and have clear measurable objectives as to their effectiveness in meeting state needs, taxpayers and citizens in this state increasingly believe state government and the legislature are not doing their job. Please step up and vote to fix this broken tax expenditure system that severely lacks needed transparency, accountability and sound fiscal management of our total state budget.

Steve Zemke

Director Tax Sanity

steve@taxsanity.org

www.taxsanity.org

End Tax Exemptions as Off Budget Spending by Adding Them to the State Budget

 End Tax Exemptions as Off-Budget Spending

by Adding Them as Tax Expenditures to the State Budget!

Washington State HB 1500 -the Tax Exemption Transparency and Accountability Act of 2017 will have a hearing in the State House Finance Committee on Tues. Jan 31st.  Please attend the hearing or comment on the bill on line at www.leg.wa.gov.

 Why is HB 1500 needed?

We don’t generally think of them as such but tax exemptions, preferences, deductions, credits and deferrals are off budget expenditures. They lack the accountability and transparency that exists for other expenditures the state makes as part of the biennial budget process.

Taxpayers deserve to know who is receiving these tax exemptions, how much money is involved and for what reason they are given.

According to the Washington State Department of Revenue’s  2016 Tax Exemption Study, while the State expects to collect some $7.4 billion in B&O tax revenue in the current 2015 -2017 biennium, it exempts from collection some $11.4 billion. When sales and use taxes were included with the analysis, the results are similar – the state expects to collect some $18.9 billion in revenue from sales and use tax, while exempting some $16.9 billion in revenue

Washington State has created some 694 tax exemptions over the years. Over 450 of these are discretionary tax exemptions, not required by Federal or State constitutional law. These discretionary tax exemptions will account for over $28.3 billion in B &O and sales/use tax revenue not collected in the current biennium..

Including property tax exemptions the 2016 Department of Revenue Report projects that in total, Washington State will see as off budget tax expenditures almost $40 billion in tax exemptions this biennium while only collecting revenues of $32.6 billion for the Legislature to fund its biennial budget according to the Department of Revenue.

HB 1500 introduced by Rep.Pollet and 32 other sponsors would require the governor to propose and the state legislature to adopt a tax expenditure budget every 2 years as part of the biennial omnibus operating appropriations act. A companion bill, SB 5513 has been introduced in the WA State Senate by Senator David Frockt with 12 other sponsors.

HB 1500 / SB 5513 would give the Washington State Legislature an opportunity to periodically evaluate the need and effectiveness of the state’s tax exemptions in meeting current state needs. They would do this at the same time they are making budget decisions about prioritizing other state expenditures for public services as part of the biennial budget appropriations process.

What would HB 1500 /SB 5513 – the Tax Exemption Transparency and Accountability Act do?

 This measure would require new and existing discretionary tax exemptions to be authorized every two years in a tax expenditure budget. It will add much needed transparency and accountability to the hundreds of exemptions and preferences, along with their cost and how each decision to spend money on an exemption or preference is a choice to expend funds for this purpose with particular beneficiaries.

The tax expenditure budget would detail the fiscal impact, purpose, and effectiveness in meeting the purpose of each tax exemption.

 Tax exemption not included in the tax expenditure budget would expire at the end of the calendar year in which the budget is adopted.

Contact your Legislators at www.leg.wa.org and urge them to support the Tax Exemption Transparency and Accountability Act.

 Action item – Urging your Legislators to pass HB 1500 and companion bill SB 5513 is easy. You can leave them a message by going to www.leg.wa.gov, entering 1500 or 5513 for the bill number after clicking the bill information link and then clicking on “comment on this bill.” Or call the Legislative hotline at 1-800-562-6000 and leave a message to for your legislators and the Governor to support HB 1500 and SB 5513 to create a tax expenditure budget as part of the biennial budget appropriations process. And be sure to thank your legislators if they are a sponsor of this legislation. Their support is appreciated.

 Legislators sponsoring HB 1500 – Pollet, Farrell, Appleton, Tarleton, Ryu, Wylie, Santos, Marci, Doglio, Jinkins, Orwall, Tharinger, Stonier, Kagi, Fitzgibbon, Kloba, Stanford, Berquist, McBride, Ortiz-Self, Goodman, Dolan, Cody, Pettigrew, Riccelli, Sells, Hudgins, Kirby, Lovick, Frame, Peterson, Ormsby, Pellicciotti

 Legislators sponsoring SB 5513 – Frockt, Hasegawa, Miloscia, Rolfes, Saldana, Keiser, Wellman, Conway, Chase, Billig, Kuderer, Hunt, McCoy

 

 

 

For more information:

Contact Steve Zemke – Director Tax Sanity, steve@taxsanity.orgwww.taxsanity.org,  

2017 Tax Exemption Transparency and Accountability Act to be Filed in Legislature

Tax Exemption Transparency and Accountability Act 2017

Representative Gerry Pollet and Senator David Frockt are filing updated versions of the Tax Exemption and Transparency Act that we filed in previous sessions of the Washington State Legislature. In the 2015 – 2016 Legislative session it was HB 1239 in the House and had 26 sponsors. The Senate Bill was SB 5492 and had 12 sponsors.

Why is this legislation needed?

Tax exemptions, preferences, deductions, credits and deferrals are off budget expenditures. They lack the accountability and transparency that exists for other expenditures the state makes as part of the biennial budget process. Taxpayers deserve to know who is receiving these tax exemptions, how much money is involved and for what reason they are given.

According to the Washington State Department of Revenue’s  2016 Tax Exemption Study, while the State expects to collect some $7.4 billion in B&O tax revenue in the current 2015 -2017 biennium, it exempts from collection some $11.4 billion. When sales and use taxes were included with the analysis, the results are similar – the state expects to collect some $18.9 billion in revenue while exempting some $16.9 billion in revenue

Washington State has created some 694 tax exemptions over the years. Over 450 of these are discretionary tax exemptions, not required by Federal or State constitutional law. These discretionary tax exemptions will account for over $28.3 billion in B &O and sales/use tax revenue not collected in the current biennium.

Including property tax exemptions the 2016 Department of Revenue Report projects that in total, Washington State will see as off budget tax expenditures almost $40 billion in tax exemptions this biennium while only collecting revenues of $32.6 billion for the Legislature to fund its biennial budget. .

The taxpayers of this state have a right to know:

  • Who is getting these tax breaks?
  • How much money is involved?
  • Are these tax breaks benefiting the public?

Since these tax breaks affect the overall revenue available to the state and shift the tax responsibility onto those who don’t get the tax breaks, taxpayers have a right to know the answers to these three questions.

To be able to answer these questions, there is an urgent need to increase the transparency and accountability of Washington State’s prolific use of tax exemptions.

This legislation would do that by requiring the governor to propose and the state legislature to adopt a tax expenditure budget every 2 years as part of the biennial omnibus operating appropriations act. This would give the Washington State Legislature an opportunity to periodically evaluate the need and effectiveness of these exemptions in meeting current state needs. They would do this at the same time they are making budget decisions about prioritizing other state expenditures for public services as part of the biennial budget appropriations process.

 What would the Tax Exemption Transparency and Accountability Act do:

 This measure would require new and existing discretionary tax preferences to be authorized every two years in a tax expenditure budget. It will add much needed transparency to the hundreds of exemptions and preferences, along with their cost and how each decision to spend money on an exemption or preference is a choice to expend funds for this purpose with particular beneficiaries.

The state biennial omnibus operating appropriations act would be required under this measure to include a tax expenditure budget to approve new and existing discretionary tax preferences, including exemptions, deductions, credits, and deferrals. The tax expenditure budget would detail the fiscal impact, purpose, and effectiveness in meeting the purpose of each tax preference. Tax preferences not included in the tax expenditure budget would expire at the end of the calendar year in which the budget is adopted.

Tim Eyman’s Latest Folly – Initiative 1366 – Rule by the 12%

The Washington State Constitution currently says that a majority vote of our state Legislators is required to pass legislation. That means that 50% of the members of the Washington State House of Representatives and 50% of the members of the Washington State Senate must vote in favor of passing any bill. That includes any bills to raise revenue or repeal a tax exemption or reform our regressive tax system. 50% of the 98 member House is 50 members. 50% of the 49 member Senate is 25 members.

On July 3, 2015 Tim Eyman filed with the Washington Secretary of State some 334,000 signatures on Initiative 1366 to the people. Just over 246,000 valid signatures (8% of those who voted in the last Governor’s race) are required to place an initiative on the November general election ballot. So the odds are very high that this measure will be on the November 3, 2015 ballot.

Initiative 1366 is an extortion style initiative, proposing to cut $1 billion per year from the Washington State budget unless Legislators by June 2016 place a Constitutional Amendment on the Ballot to require a 2/3 vote of both Houses of the Legislature to raise any tax or repeal any tax exemption.

The consequences are staggering if voters pass this measure. Because both Houses of the Legislature would have to pass any bill increasing taxes, as few as 12% of the members of the State Legislature would have the power to overrule a 50% majority vote in both Houses to raise revenue.

It may sound enticing to buy Eyman’s libertarian rhetoric to make it harder to raise revenue by requiring a 2/3 vote of both Houses. But this means that only 1/3 of the Legislators in either the House or the Senate is all that’s required to kill a bill to raise revenue.

The House has 98 members. That means a minority voting block of only  34 House members (or 23% of all Legislators) could kill revenue bills or a budget raising new revenue.

The Senate has 49 members. A 1/3 minority voting block of 17 Senators (or 12% of all Legislators) could kill any bill that increased revenue.

Since a vote to kill any revenue increase under Eyman’s proposed  Constitutional amendment would require a 2/3 vote in both Houses, a minority caucus of only 17 anti tax Senators out of 49 voting NO would prevent passage of any tax or revenue increase  bill. 17 Senators out of a total of 147 Legislators in both Houses is equal to only 12% of the State Legislators.

This is the dirty little secret that Eyman and his anti-tax large funders do not want the public to understand – that I-1366 would turn over the tax setting authority of the state to only 12% of our state Legislators. This is a much easer number of Legislators for Big Oil and Big Corporations and other special interests to elect to office than 50% of our state Legislators. It is much easer for them to convince only 12% of the state legislature to vote NO on closing tax loopholes than 50%..

The consequences of overturning majority rules and imposing Eyman’s minority rules are mind boggling. To go from 50% of Legislators required to pass a revenue bill to allowing 12% of the legislators to prevent passage of a revenue bill would turn democratic rule on its head and give unprecedented power to a tiny group of Legislators. This is totally contrary to the idea of proportional representation and elected Legislators of the state having the power to make decisions by majority votes, including tax and revenue issues.

The founders of our Federal Government very clearly stated the danger of requiring more than a majority of Legislators to pass legislation. The drafters  of the Washington State Constitution also reached the same conclusion – that any so called “supermajority” voting requirement to overrule the will of a majority would allow for a tyranny of a minority.

Vote NO on Initiative 1366 this November. It is Tim Eyman’s Libertarian dream and folly trying to destroy the power of the people to have a government based on majority voting by turning tax setting policy and our ability to pass state budgets  over to a tiny minority ant-tax voting block of 12% of our elected Legislators. It would give unprecedented power to a few to continue to shrink government and allow an oligarchy of a few rich people to literally spend enough money to elect and keep elected an anti-tax minority to keep in place “Rule by the 12%”

Eyman’s proposed constitutional amendment would end majority rules for voting that is in our state constitution and replace a requirement for 50 % majority votes in both Houses with “Rule by the 12%.  

Say NO to Eyman’s latest folly by voting NO on Initiative 1366 on November 3, 2015.

Say No to Eyman’s “Rule by the 12%”

 

 

 

Washington State Democratic Party Urges Voters to Reject Initiative 1366

The Washington State Democrats have urged voters to reject Initiative 1366. At their April 12, 2015 meeting in Pasco Washington they passed a resolution opposing Tim Eyman’s Initiative 1366.

Initiative 1366, according to a May 17, 2015 Seattle Times article  is expected to be on the Nov 2015 ballot.

Buoyed by new wealthy patrons, Eyman’s Initiative 1366 — which would punch a $1 billion a year hole in the state budget unless lawmakers refer a tax-limiting constitutional amendment to voters — looks well on its way to the November ballot.

The latest Eyman campaign already has raised more than $1.1 million and spent $750,000 on paid signature gatherers.”

Initiative 1366 adopts Senator Ted Cruz Tea Party style tactics, using extortion tactics to try to impose minority rule over Washington State’s budget and revenue policy. Its purpose is to slash a billion dollars a year from the Washington State budget unless Washington State Legislators place  a constitutional amendment for 2/3 votes to raise revenue or repeal tax exemptions on the ballot.

The Washington State Constitution says only Legislators have the power to place a constitutional measure on the ballot by a 2/3 vote of both houses. The same 2/3 threshold Eyman is trying to impose for raising revenue he is iunable to convince legislators to do for a constitutional amendment. So he  is resorting to extortion and bullying tactics. Who loses are the children in our state if revenue is cut $1 billion/yr.

How can a majority vote compel a 2/3 vote? This is most likely an unconstitutional  abuse of power and not legal. Voters should just reject such extortion style tactics.

Below is the text of the resolution passed by the Washington State Democrats:

Resolution Opposing Initiative Measure 1366

WHEREAS Tim Eyman, Mike Fagan, and Jack Fagan have sponsored and are circulating petitions for Initiative 1366, filed on January 5th, 2015 as an initiative to the people for 2015;

WHEREAS I-1366 would reduce the sales tax, and therefore approximately $1 billion in state revenue every year, thereby preventing the increased spending on K-12 education  required by the McCleary decision, while jeopardizing higher education, transportation  and the social safety net, unless the State Legislature follows the dictates of the initiative  and sends to the voters a constitutional amendment undemocratically requiring a two- thirds vote in each House of the Legislature to raise revenue or repeal any tax loophole;

WHEREAS the Washington State Supreme Court in February 2013, in League of  Education Voters v. State of Washington, struck down as unconstitutional a  requirement of a supermajority vote to raise revenue, and Eyman’s I-1366 comprises a  devious attempt to evade that ruling by coercing lawmakers into colluding in his  underhanded scheme to overturn it by holding all state funding hostage;

WHEREAS either the loss of a billion dollars per annum to our common wealth or the  undemocratic modification of our Constitution to require two-thirds votes to raise and  recover revenue would result in serious long-term damage to the communities of  Washington State;

WHEREAS our state’s founders understood that democracy requires majority rules  with minority rights, and, after much debate and deliberation, they wrote a  Constitution for Washington specifying that bills in the Legislature are passed by a  majority vote, defined as greater than fifty percent – no more, and no less;

WHEREAS any higher threshold for the passage of legislation would result in power  being concentrated in the hands of a few (rather than the many), such as one-third of  one house of the Legislature – as when I-601 and its clones I-960, I-1053, and I-1185 were  illegitimately in effect;

WHEREAS allowing tax exemptions to be created by a majority vote, but repealed only  with a vote of two-thirds or greater, represents an unfair double standard that would  make it nearly impossible to reform our outdated and regressive tax system; and

WHEREAS I-1366 would further violate Article IX of the Washington State Constitution  by making it impossible for the state to fulfill its paramount duty of educating  Washington’s youth;

THEREFORE BE IT RESOLVED that the Washington State Democrats urge all  Washingtonians to refuse to sign Tim Eyman’s Initiative 1366 and, if it is placed on the  ballot, to oppose the measure;

THEREFORE BE IT FURTHER RESOLVED that we encourage every activist and  citizen who supports the values that Washington was founded upon to join the  coalition opposing I-1366.

Here is the official ballot title and summary from the Washington State Secretary of State’s website:

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.

View Complete Text PDF