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Judge dismisses Eyman lawsuit on Rainy Day Fund

On Friday, a Thurston County Superior Court judge dismissed the Eyman v. Davidson, et al. case which claimed the state legislature unconstitutionally diverted funds away from the “Rainy Day Fund” during the 2018 legislative session.

The lawsuit stems from an amendment to SB 6614, the school funding bill passed at the end of the 2018 legislative session, that altered the timeline for property tax relief and added $935 million into the Education Legacy Trust Account for the support of common schools. During floor debate on the amendment, Senate Republicans argued that the additional revenue brought into the state should go toward the state’s Rainy Day Fund, rather than be used for a one time deposit into the Education Legacy Trust Account.

By putting the funds into the education account, Republicans argued that the Democrats were ignoring a 2011 voter-approved initiative that requires the legislature to transfer additional general state revenues to the Rainy Day Fund in times of “extraordinary revenue growth.”

Senator John Braun, ranking member of the Senate Ways and Means Committee, referred to the amendment as a “raid on budget reserves” and a “felony budget gimmick.” Braun also argued that Democrats had found a workaround to avoid needing a supermajority vote to use money from the Rainy Day Fund. SB 6614, along with the controversial amendment, passed out of the Senate on 25-23 vote.

Following the conclusion of the legislative session, at the end of March Tim Eyman filed a lawsuit against State Treasurer Duane Davidson and the state legislature claiming their actions were unconstitutional. The lawsuit states,

“Unless this dangerous precedent is challenged and overturned, future constitutionally mandated transfers into the Rainy Day Fund will be at the discretion of the Legislature.

Plaintiff asks the court to declare the diversion of revenues in SB 6614 unconstitutional, enjoin the Defendants from spending those diverted revenues, and order the State Treasurer to fulfill his constitutional obligation to ensure the integrity of the Rainy Day Fund by ensuring the transfer of extraordinary revenue growth into the Rainy Day Fund as required by Article 7, section 12 of the Constitution. No one is above the Constitution, not even the Legislature.”

In oral arguments Friday morning, Jeffrey Even, acting on behalf of Davidson and the legislature, argued that the revenue stream in question was never part of “general state revenue,” and therefore not required to be put into the Rainy Day Fund. Instead, he says the revenue was levied for a specific purpose (for common schools) and placed in a dedicated fund (the education account), which excludes it from the constitutional definition of “general state revenue.”

In response, Joel Ard, representing Eyman, argued that the legislature’s actions are a “conscientious effort to avoid the constraints that are put on them.”

“[The legislature] avoided putting money in the Rainy Day Fund by simply labeling money, that otherwise would undoubtedly fall within the definition of general state revenue, as a dedicated fund.”

Following the arguments, Judge John C. Skinder said he was able to draw a “clear conclusion” and promptly dismissed the case.

Senator Christine Rolfes, who sponsored the amendment during session, released the following statement in response to the ruling:

“As chair of the Senate committee responsible for crafting our state budget, I take my duty to the people of this state extremely seriously, and I know my colleagues do as well. Earlier this year, we worked closely with our expert staff to write a budget that met our state’s pressing needs while also providing needed tax relief. The budget was certainly unique by including the first general property tax cut in decades, but in no way was it unconstitutional. I’m pleased the court agreed with a swift dismissal and taxpayers will not be further burdened by this political distraction.”