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I-695's small type causing big worries
I-695's small type causing big worries
Craig Welch - Staff writer
Public officials are trying to decipher what a $30 vehicle tab initiative has
to do with the price of schnapps on West Third Avenue in Spokane.
A section of Initiative 695 requiring a public vote before governments boost
any tax, fee or "monetary charge" is so hard to interpret, experts suggest it
could even apply to price hikes at state-owned liquor stores.
"It's a good question," said Jim Pharris, a deputy state attorney general.
"We've kicked that around some ourselves."
Next month, voters will decide whether to shave the cost of licensing their
cars, trucks and motor homes through Initiative 695 -- a decision that would
save the average voter about $142 a year. It would cost the state, cities, counties,
health districts and transit operations $550 million in just the first year.
As sponsors praise the tax cut and opponents condemn the revenue loss, lawyers,
bureaucrats and tax experts contend it's the initiative's vote-for-any-tax-increase
provision that would leave the greatest legacy. Primarily included in the ballot
measure to keep politicians from raising other fees to compensate for lost revenue,
that section of the initiative would change the way business is done in every
local government in the state.
"We have copying fees, permit fees, inspection fees," said Spokane city Councilwoman
Phyllis Holmes. "We have fees all over the place so we don't make all taxpayers
foot the bill for specific services."
Just last month, Spokane School District 81 approved five pages worth of school-related
fees -- about 80 of them.
Administrators contend if the initiative passes, votes would be needed to
boost anything from school lunch prices to the cost of driver's education. Yet,
administrators suspect such elections would be so expensive and unpopular, schools
would absorb inflationary costs by taking money from basic education.
At the Whitworth Water District, officials worry that residents would vote
down tax increases for waterline repairs. But the law requires the district
to maintain the lines -- whether the money's there or not.
And in Stevens County, the auditor frets about having to hold a vote every
time state lawmakers want to raise taxes. The state doesn't share one penny
of the $45,000-a-pop cost of a countywide election.
Even the Spokane Library District director is confused. If someone's property
tax is due to go up because land values have increased, would that require a
public vote?
"It just brings up all these screwy questions," said director Michael Wirt.
Initiative sponsor Tim Eyman doesn't dispute elections
would be required for many seemingly small things. But he argues the cost and
undertaking of an election would force taxing districts to consolidate their
fee systems and only go to voters when they have a solid case.
"When they say they can't make the change because they have so many little
fees they deal with, they're basically making our argument for us," he said.
Still, I-695's tax-vote provision is so simply and broadly written it appears
to conflict with existing law and may not always do what sponsors intended.
Consider:
Taxing districts currently paying off revenue bonds are obligated by contract
-- and by the state constitution -- to raise taxes if their income dips below
a certain point. Bond attorney Roy Koegen contends such a tax boost would be
required even if voters rejected one at the polls.
In addition, the cost of public utilities such as sewer and water can only
be paid for with money received from taxes or surcharges on the use of those
utilities. In other words, "There's a law that says no charge can be less than
the cost of providing utility service," said Bob Beaumier, an attorney with
the city of Spokane.
So if the cost of providing service went up, would voters get a say in whether
the tax went up? Beaumier says no. Eyman says yes.
Meanwhile, state attorneys contend that by eliminating the motor vehicle excise
tax, county assessors would have to deal with cars the way they did before the
tax was put in place in 1937: by viewing them as personal property.
But since I-695 also forbids tax increases without votes, assessors would
have to classify, appraise and tax 5.5 million cars, and then adjust other tax
rates so homeowners' total bills wouldn't rise.
"Just sending out the notices alone could cost $700,000," said Spokane County
chief deputy assessor John Sweetman. "And for what?"
Eyman dismisses such anxiety as fearmongering. The Legislature or the courts
ultimately will be asked to translate what voters meant by passing the initiative,
he said. Either would look to "intent."
"Sure, it's not written in Legislature-speak, but the intent is clear: We
don't want them taking more money from people and businesses without trying
to explain it to them first," Eyman said.
"The critics right now are trying to argue it in the broadest terms possible.
But you watch, if it passes, they'll take the narrowest view possible."
The only real place to turn to see how such a change would work is Colorado.
In 1992, voters there passed a mammoth reform measure called the Taxpayers
Bill of Rights. Led by a Colorado Springs tax activist, voters adopted a spending
cap, a revenue cap and a requirement that no taxes could be boosted without
a public vote.
Larry Kallenberger, executive director of Colorado Cities Inc., an association
representing the state's municipalities, staunchly opposed the measure. But
he admits he's been surprised.
"It's been less disruptive than all the hand-wringing and moaning about it
made people believe it would be," he said.
When cities have sought tax increases and gone to voters, more than 80 percent
have passed, Kallenberger said. Counties have had slightly less success.
"My observation is that when local government does a good job explaining why
it needs something, voters consider that," said Chip Taylor, a onetime legislative
counsel who helped Colorado lawmakers implement the law.
But Colorado is not without its troubles, both men said. Small taxing districts
-- water districts or sewer districts, for example -- have a tougher time getting
tax increases because some voters aren't even aware they exist. Yet those districts
typically are the ones most in need.
And Kallenberger contends that Colorado continues to have a tough time funding
road improvements.
"Roads typically take 10 years of planning to build," he said. "But if you
have to wait until it's a crisis so voters will consider it, it's much more
expensive and people don't like the solution."
And Colorado's system is not quite the same as what's proposed in I-695. That
state exempts fees and utility taxes from the public vote requirement, although
the corresponding revenue cap means fee structures rarely rise.
"In all, I'd say it's made government much more complicated and much more
mystifying to people, but it seems to be working okay," Kallenberger said.
In Washington, I-695's open-ended language has some local governments like
the city of Spokane considering ways to sidestep the measure with semantic changes.
Councilwoman Holmes said I-695 clearly would cap direct user fees, such as
those contractors pay to have a building inspector come and check out their
work.
But what if the city instead eliminated the fee and simply set a policy that
inspectors will charge a certain percentage of what it costs to provide the
service? The rate would be constant, but when the cost of the service went up,
the actual dollar amount contractors paid would also.
"I have proposed that we have a policy like that," Holmes said. "I think it's
what every wise jurisdiction would do to protect the public."
Eyman acknowledged that such a change might exempt those fees from I-695.
But he said it's just another way to subvert the will of the people.
"To me that means they just don't get it," he said.
Staff writer Wendy Harris contributed to this report.
