State Rep. Jim Walsh, R-Aberdeen, speaks at a rally in support of six initiatives to the Legislature, on the steps of the state Capitol in Olympia, Wash., Feb. 23, 2024. (Bill Lucia/Washington State Standard)
Supporters of three citizen initiatives voters will decide this November are suing the state over information it is required to include on ballots warning how the measures could affect Washington’s budget.
Under a 2022 law, the attorney general – currently Democratic gubernatorial hopeful Bob Ferguson – is required to draft the “public investment impact disclosures” for initiatives that could have fiscal fallout.
But backers of this year’s three initiatives – which propose scrapping the state’s cap-and-trade system, ending its capital gains tax, and making a long-term care program optional – argue that the measures don’t fit the criteria for these disclosures. Each of the three initiatives is expected to erode significant state revenue if approved.
In an effort to keep the statements off the ballot, Jim Walsh, state representative and Republican Party chair, and Deanna Martinez, chair of Mainstream Republicans of Washington, filed a lawsuit last month against Secretary of State Steve Hobbs, Office of Financial Management Director David Schumacher and Ferguson.
A hearing in the case is scheduled for Friday in Thurston County Superior Court.
“They were very specific when they passed the warning-label law,” Walsh said in a statement. “But they were so specific that the law doesn’t apply to any of the initiatives that go before voters this year. The case is so clear-cut I am surprised we have to take this to court.”
Meanwhile, the state’s attorneys call the lawsuit “meritless” and are urging the court to reject the “cynical attempt to keep voters in the dark,” according to court documents.
The 2022 law requires disclosure statements if a ballot measure repeals, levies or modifies a tax or fee, and if it would cause a net change in state revenue, as determined by the Office of Financial Management.
The Office of Financial Management is determining what the fiscal impacts of the initiatives would be and is awaiting information related to recent legislation, revenue forecasts and emissions allowance auctions before finalizing estimates, according to spokesman Hayden Mackley. It has until July 23 to submit its analyses.
If the process is not blocked in court, Ferguson’s office would write 15-word or less statements breaking down OFM’s analyses. These statements, which would appear alongside the initiatives on the ballot, would be due to the secretary of state by July 23.
The secretary of state would then give the statements final approval and instruct county auditors to include them on ballots.
Fuller analyses from the Office of Financial Management would be printed in state voter guides.
The arguments
In their lawsuit, Walsh and Martinez argued that I-2124, which would allow Washington residents to opt out of the state’s long-term care program, would not repeal or modify a tax or fee.
Most Washington workers have 0.58% of their paycheck deducted to pay for the program, known as WA Cares. But Walsh and Martinez in court documents described this as an insurance premium, not a tax.
In their response, attorneys for the state say this argument ignores “extensive history and case law” about WA Cares. When the law was enacted in 2019, they argue, the measure was subject to an advisory vote on that year’s ballot because the state concluded that the policy raised taxes.
Although I-2117 would repeal the state’s Climate Commitment Act, backers of the initiative again argue it wouldn’t end or modify a tax or fee. The cap-and-trade program created under the Climate Commitment Act requires top air polluters in the state to meet an emission cap and, if they cannot, they must purchase allowances from the state.
Walsh and Martinez argue there is no tax or fee associated with the law, only a program where people can purchase the allowances if needed.
Meanwhile, the state argues that because polluters are required to pay based on the amount of carbon they emit, there is a tax or fee associated with the program.
Lastly, Walsh calls on the court to remove an impact disclosure statement from I-2109, which would repeal the capital gains tax. The tax has generated about $1.2 billion in state revenue since collections began last year.
Although he acknowledges the initiative would repeal a tax, Walsh argues that because a separate initiative approved by the Legislature earlier this year bans the state from collecting any tax on personal income, which he says includes capital gains, the tax is now defunct, and therefore does not have any fiscal impact if repealed.
State attorneys said Walsh’s argument for removing a financial impact statement was based on a “bizarre view” that the Legislature already silently repealed the capital gains tax by passing a separate initiative to prohibit any income tax. That argument misreads the income tax initiative’s text and the Legislature’s intent when approving it this session, they wrote.
‘A partisan political attack’
Because there were no ballot measures in the 2022 and 2023 elections, this year is the first test of the financial impact disclosure statements.
When the bill passed two years ago, no Republicans voted for it, arguing that it gives the attorney general too much power.
“It gives one of the most partisan elected officials in Washington state an opportunity to blast away at ballot measures he doesn’t like,” Martinez said in a statement.
She added that voters’ pamphlets should be an objective source of information, not a place for “a partisan political attack that masquerades as a neutral financial statement.”
“Washington voters never asked for Bob Ferguson’s help,” Martinez said. “Now we need a court to tell him not to interfere.”
Standard reporter Jerry Cornfield contributed to this report.
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