OLYMPIA, April 21.—The state’s business community appears to be getting behind anti-tax crusader Tim Eyman’s latest initiative, just like the last time he ran it — and suddenly the odds have gone up a thousand-fold on Initiative 1185.
The Association of Washington Business and the Washington State Farm Bureau have both announced endorsements of Eyman’s new ballot measure, which would continue the tough voting requirements that have made it difficult for the Legislature to raise taxes at a time when they are particularly tempting. The new measure is a re-run of I-1053, which passed in 2010 with 64 percent of the vote. “We will be soliciting and asking our members to support 1185, the same way they did with 1053,” says Gary Chandler, government affairs director for AWB.
AWB’s endorsement, approved at a board meeting in March, means Eyman’s latest campaign stands a chance of raising the million dollars or so that it will take to fund a paid signature drive. That’s the single biggest hurdle in re-imposing the supermajority rule that has hamstrung the Democratic majority at the statehouse for four out of the last five sessions. When the issue is put before voters, they say yes — four times so far in the last two decades.
Business-community support made all the difference in the 2010 campaign. At a point when it looked like Eyman would run out of money for his 2010 signature drive, business got behind him in a big way for the first time, and provided the hundreds of thousands of dollars that were needed to put him over the finish line.
The supermajority rule, the bane of the Democratic caucuses that have controlled the statehouse for most of the last three decades, requires a two-thirds vote of the House and Senate before taxes can be increased. Taxes also may be referred to the ballot with a simple majority. But the Legislature is the focus, because it is easier to pass taxes in a political body of 147 members. Because Democrats don’t have a two-thirds majority, the rule gives Republicans blocking power.
The rule has proven a difficult hurdle for any tax increase proposal, though not an impossible one. It is one of the reasons opponents are challenging it in court for the fourth time. Their lawsuit is awaiting a decision in King County Superior Court. But there’s another way around it. Washington’s constitution makes it easy for lawmakers to overturn an initiative two years after passage. All it takes is a simple majority vote. They’ve done it three times so far. Business is worried that next year they’ll do it a fourth. Which explains why this one is back.
Early Endorsements are Critical
Though Washington voters seem happy to put the handcuffs on the Legislature, it’s not easy putting the matter before them. It takes 241,000 valid signatures to make the ballot, a requirement that virtually mandates a paid signature drive. Eyman, the most successful initiative promoter in state history, has an army of volunteers after making the statewide ballot 13 times in the last 14 years. But even with volunteers gathering signatures, it can cost as much as $1 million to obtain all the signatures that are required.
Two years ago, when contributions to I-1053 flagged, Eyman was forced to take out a $250,000 second mortgage on his home and loan money to the campaign. “It’s always like that with these initiatives,” he said. “Once you jump out there, it’s kind of like you’re grabbing the flag and running forward and saying ‘follow us into battle, and sometimes you turn around and find out there’s nobody behind you.”
He appealed to the state’s business community for help. And in a development that stunned many, business said yes. AWB made an uncharacteristically early endorsement. Until then it had traditionally reserved endorsements until September. But by starting early the group was able to launch its own campaign to raise money for the initiative, contributing $300,000 directly to the signature-gathering company and raising another $300,000 for an independent fall campaign. The endorsement also prompted businesses to contribute directly to Eyman’s effort. Business contributions ranged from as little as a hundred bucks to as much as $50,000. And while opponents of a “progressive” stripe tried to make an issue of contributions from banks and oil companies, the business effort was considerably broader and involved enterprises of every type.
Those early endorsements raise the possibility we’ll see the same the same sort of campaign this year. Eyman started gathering signatures April 2. Fund-raising reports aren’t due at the state Public Disclosure Commission until May 10. For now, Eyman isn’t saying a word about the campaign’s finances.
But one thing that can be said at present – at the very least business is declaring its support.
Plenty to Fear
The two-thirds rule is the only way to ensure balance in the debate, says AWB’s Chandler. “You have to be more bipartisan, and have both sides of the aisle work on coming up with a different revenue stream,” he said. “I think that when you have that two-thirds vote, the Legislature has to work fairly hard with both sides of the table to come up with a package.”
The problem is that the moment time runs out on a supermajority initiative, the Legislature will ditch it, Chandler says. Business learned that the hard way in 2010. For two years, the previous two-thirds initiative, I-960, effectively blocked tax hikes. The Legislature had to live with it, because the constitution stipulates that during the first two years following passage of an initiative, it takes a two-thirds vote of the Legislature to repeal or modify it. That’s the same hurdle as the tax-vote requirement. The 2010 session was the first time the measure could be repealed with Democratic votes alone. The opportunity came right in the middle of the worst recession since the Great Depression, just as it was becoming clear that spending plans adopted in boom times could not be sustained. I-960 was the first thing to go. And then, as Republicans yowled, Democrats passed a tax plan that totalled $2.3 billion over three years, $4.7 billion over 10. For business, what made it sting was the fact that the fact that lawmakers targeted those tax hikes at specific industries and classes of businesses, rather than adopting a general tax increase that would be shouldered by the populace as a whole. It prompted an initiative campaign that year by the soda-pop industry that repealed a small portion, but most taxes remained.
It’s not as if the issue has gone away. That taxing debate is likely to return next year because the coming budget problem is starting to look every bit as challenging as it has for the last few sessions. So far there is no official projection. But a recent analysis by the Washington Research Council suggests that even if lawmakers don’t leave a dime in the bank, they will run at least a half-billion dollars short of the amount needed to enact a big-spending K-12 education plan. And that’s the best case. They might be as much as $1.7 billion short.
Tipped Their Hand
Democratic lawmakers have already tipped their hand, argues Dan Wood of the Washington State Farm Bureau, which endorsed Eyman’s measure last week. In 2010 the organization was one of the biggest contributors to I-1053 at $50,000, though the organization hasn’t decided yet what sort of commitment it will make to 1185.
If you want to see what might happen if I-1185 isn’t in place, Wood says all you have to do is look at what was introduced this year and didn’t pass. Some of those proposals might have been more serious than others, but the two-thirds rule stopped them all.
Wood points to a bill sponsored by state Rep. Reuven Carlyle, D-Seattle, that would have eventually canceled $4 billion in existing business tax preferences over a five-year period, either forcing their reenactment or casting them aside. About a half-billion dollars of that would have hit agriculture. Other proposals introduced this year with no chance of passage included capital gains taxes, income taxes, and property taxes. There was talk of oil taxes, “windfall profits” taxes for financial institutions, and taxes on new-car sales; the governor also proposed a sales-tax increase for the ballot.
“I don’t think we are going to be short of examples of the Legislature exhibiting behavior that needs to be curbed by the initiative,” Wood said. “They have not failed to disappoint.”
Eyman acknowledges the business community is critical to the campaign. And what happened in 2010 ought to show the reverse, he says – that the campaign is critical to the business community. But once those signatures are gathered, Eyman and his new allies in business will face a second challenge. For the last two years, 1053 has blocked any serious talk of major tax hikes in the middle of a recession. Eyman does best when the Legislature manages to outrage the public, but because of the two-thirds rule, it hasn’t.
You just have to imagine what things would have been like without it, he says. “There were three tax increases this year totaling maybe $10 or $20 million. But what would it have been if it wasn’t for the two-thirds? I don’t think it takes too much imagination to see it would have been a tax-hiking, mind-blowing orgy down there. It was really the only thing restraining them.”