A progressive Legislature, not Eyman’s 1366, can fix Washington’s regressive tax system

With­in hours of Elec­tion Night 2015, after it had become appar­ent that Tim Eyman’s hostage-tak­ing I‑1366 had too much of a head start in ear­ly bal­lots to be defeat­ed, mul­ti­ple com­men­ta­tors with a thirst for pro­gres­sive tax reform began float­ing the idea of using I‑1366 as a spring­board to get the job start­ed, rea­son­ing that some­thing good might as well come out of some­thing bad.

First out of the gate was Don Smith, writ­ing at Wash­ing­ton Lib­er­als, who opined:

There’s a sim­ple way to beat Tim Eyman and his ini­tia­tive I‑1366. At the same time we’ll help the envi­ron­ment, and, option­al­ly, raise rev­enue to fund schools. And we can even do it in a rev­enue-neu­tral way, there­by mak­ing it palat­able to Repub­li­cans… Let’s go ahead and low­er the sales tax […] but at the same raise tax­es on car­bon, cap­i­tal gains, and/or income to make up the loss.

Two days lat­er, Jeff Reif­man made a sim­i­lar argu­ment on his per­son­al blog, though he chose to be more provoca­tive with his call to action:

Tim Eyman may have acci­den­tal­ly done us all a favor.

Leg­is­la­tors, please lis­ten to the vot­ers on I‑1366. It’s time to cut the state’s sales tax and col­lect rev­enue more even­ly from cor­po­ra­tions, prop­er­ty own­ers and res­i­dents. Pro­gres­sives, drop the law­suit against I‑1366 — it’s time to chal­lenge Olympia to rep­re­sent res­i­dents and stop sub­si­diz­ing cor­po­rate share­hold­er profits.

And yes­ter­day, Dan­ny West­neat echoed both of them, writ­ing:

That Eyman. He has us in anoth­er pick­le, doesn’t he? Maybe not. Maybe there’s a third way — one that could be “win-win-win” in that it pre­serves the state bud­get, makes tax­es fair­er and, most impor­tant, gives some relief to the poor and work­ing class of the state.

Eyman’s ini­tia­tive will slash the state sales-tax rate from 6.5 per­cent to 5.5 per­cent on April 15, 2016, unless the Leg­is­la­ture first pass­es a two-thirds tax-vote con­sti­tu­tion­al amend­ment. The intent, for him, is to coerce law­mak­ers to do the amend­ment. But there’s noth­ing in Eyman’s mea­sure that says they can’t go ahead and cut the sales tax, then replace that lost rev­enue with some­thing else.

While we at NPI cer­tain­ly applaud the yearn­ing to make lemon­ade out of one of the biggest lemons of an ini­tia­tive in Wash­ing­ton State his­to­ry, Smith, Reif­man, and West­neat are all engaged in wish­ful thinking.

First, allow­ing I‑1366 to go unchal­lenged, as Jeff Reif­man has pro­posed, would set a ter­ri­ble prece­dent, con­sid­er­ing that I‑1366 is an out­ra­geous hostage-tak­ing scheme that is beyond the scope of the ini­tia­tive pow­er. Let­ting I‑1366 stand would invite fur­ther mis­chief in the future from oth­er enti­ties active in Wash­ing­ton pol­i­tics. Abuse of the ini­tia­tive (by Tim Eyman and by oth­er actors) has become a seri­ous prob­lem in our state, and it is a prob­lem that will get much worse if I‑1366 is not struck down by the Wash­ing­ton State Supreme Court.

King Coun­ty Supe­ri­or Court Judge Dean Lum has already ruled I‑1366 beyond the scope of the ini­tia­tive pow­er. I‑1366 is prob­a­bly also uncon­sti­tu­tion­al in its entire­ty in addi­tion­al respects (there’s a strong case that it vio­lates the sin­gle-sub­ject rule, for instance). I‑1366 will con­tin­ue to be fought in court, as it must be.

Sec­ond, the idea that the Leg­is­la­ture will respond cre­ative­ly to use I‑1366 as a spring­board for pro­gres­sive tax reform (in the event the Supreme Court does not act) is total­ly unre­al­is­tic. This isn’t 2007. The Leg­is­la­ture no longer has Demo­c­ra­t­ic super­ma­jori­ties. Mil­i­tant Repub­li­cans gained con­trol of the Sen­ate with Rod­ney Tom’s pow­er coup in 2012 and have whit­tled the Demo­c­ra­t­ic major­i­ty in the House down to a bare min­i­mum of fifty, fol­low­ing their vic­to­ry in the 30th LD.

Democ­rats no longer have the abil­i­ty to pass bills in the House on their own unless all of their mem­bers are present, and in agree­ment. In the Sen­ate, Democ­rats are the minor­i­ty; con­se­quent­ly, they have have very lit­tle power.

Majori­ties mat­ter in leg­isla­tive bod­ies. When you’re in the major­i­ty, your par­ty sets the agen­da, decides when to work and sched­ule votes, con­trols the com­mit­tee struc­ture and the com­po­si­tion of com­mit­tees, and deter­mines what bills come to the floor and which ones do not. Right now, the Repub­li­cans have a major­i­ty of twen­ty-six in the Wash­ing­ton State Sen­ate. They decide what hap­pens there.

Now, this would­n’t be an issue if Repub­li­cans were inter­est­ed in pro­gres­sive tax reform, as the more rea­son­able wing of their par­ty was in the 1970s when Dan Evans was gov­er­nor. Sad­ly, they’re not. The days when the Evans Repub­li­cans were in charge are long gone. The Repub­li­can Par­ty has mor­phed into a rabid, rad­i­cal right wing anti-pub­lic ser­vices and anti-com­mon wealth par­ty… a par­ty in which Grover Norquist wannabe Tim Eyman wields tremen­dous influence.

Read­ers not famil­iar with the inner work­ings of the Wash­ing­ton State Leg­is­la­ture may not be aware that Tim Eyman has a tight rela­tion­ship with many mem­bers of the Repub­li­can cau­cus­es. Spend enough time on the grounds of the Capi­tol dur­ing ses­sion, and you may catch a glimpse of Eyman walk­ing around with the likes of Don Ben­ton, or dis­ap­pear­ing into a con­fer­ence room to chat with Repub­li­cans on a key com­mit­tee. They con­sult with him reg­u­lar­ly, and take cues from him.

After the Pub­lic Dis­clo­sure Com­mis­sion released the find­ings of its inves­ti­ga­tion into Eyman’s finan­cial machi­na­tions dur­ing the I‑517 and I‑1185 cam­paigns in 2012, Eyman turned to his friends in the House and Sen­ate Repub­li­can cau­cus­es to sub for him on the cam­paign trail. He deployed Ed Orcutt, Doug Erick­sen, and Pam Roach as sur­ro­gates to make appear­ances or sign ghost­writ­ten op-eds, and announced endorse­ments from still more Repub­li­can lawmakers.

The fol­low­ing Repub­li­cans are all known sup­port­ers of Tim Eyman’s I‑1366:

It is impor­tant to under­stand that Eyman devel­oped I‑1366 to give mil­i­tant Repub­li­can leg­is­la­tors like these more pow­er. I‑1366 is not aimed at the Leg­is­la­ture as a whole. I‑1366 is aimed specif­i­cal­ly at Demo­c­ra­t­ic leg­is­la­tors. It is intend­ed to put them in a bind, giv­ing Repub­li­cans lever­age to push through an amend­ment to require a two-thirds vote to raise or recov­er rev­enue forever.

The notion that Eyman’s elect­ed Repub­li­can co-con­spir­a­tors would vol­un­tar­i­ly give up their lever­age so that Wash­ing­ton State can have pro­gres­sive tax reform is ludi­crous. These are not rea­son­able peo­ple. They’re mil­i­tant extrem­ists who are total­ly opposed to pro­gres­sive tax reform. Pro­gres­sive tax reform would reduce the appeal for Eyman ini­tia­tives in the future, result in the Repub­li­cans’ wealthy bene­fac­tors hav­ing to pay more in dues to the state, and pos­si­bly also increase pub­lic con­fi­dence in state gov­ern­ment. That’s about the last thing they want.

Their endgame is to sab­o­tage our state Con­sti­tu­tion, which requires a major­i­ty vote to pass bills. Repub­li­cans, again tak­ing their cues from Eyman, want to mess with Arti­cle II, Sec­tion 22 (the major­i­ty vote pro­vi­sion) to require their con­sent for any rev­enue bills to pass. They intend to achieve this by requir­ing a two-thirds vote for all such bills, in vio­la­tion of the prin­ci­ples our state was found­ed upon.

Keep in mind that when a two-thirds super­ma­jor­i­ty is required, it means a sub­ma­jor­i­ty is in charge of the out­come. The inverse of two-thirds is one-third. Nor­mal­ly, as stip­u­lat­ed by Arti­cle II, Sec­tion 22, it takes fifty votes in the House to pass a bill, and twen­ty-five in the Sen­ate. When the thresh­old is two-thirds, the num­ber changes to six­ty-sev­en in the House and thir­ty-three in the Sen­ate. As few as sev­en­teen sen­a­tors or thir­ty-three rep­re­sen­ta­tives can block majori­ties in both hous­es from tak­ing action when a two-thirds vote is required.

Repub­li­cans fig­ure they’ll always have at least sev­en­teen seats in the Sen­ate, and/or thir­ty-three in the House (which has his­tor­i­cal­ly been the case). Pas­sage of the amend­ment they’re demand­ing would give them the abil­i­ty to for­ev­er veto any rev­enue bill they did­n’t like. They’re very hun­gry to have that kind of power.

But, iron­i­cal­ly, any pro­pos­al to change how our plan of gov­ern­ment works needs to get a two-thirds vote to pass. Our founders wise­ly believed in major­i­ty rule for pas­sage of leg­is­la­tion while obtain­ing minor­i­ty con­sent for any changes to our plan of gov­ern­ment. Or, to put it more sim­ply: Major­i­ty rule with minor­i­ty rights.

It would take a two-thirds vote to impose a two-thirds vote thresh­old and sab­o­tage Arti­cle II, Sec­tion 22. Eyman and the Repub­li­cans do not have the votes to do this. So Eyman devel­oped I‑1366 to coerce Demo­c­ra­t­ic law­mak­ers into vot­ing against their val­ues, and their will, by a cer­tain date (April 15th, 2016).

Judg­ing by his emails, it is Eyman’s expec­ta­tion that Democ­rats will capit­u­late and give him what he wants. After all, they have in the past. Gary Locke and Demo­c­ra­t­ic leg­is­la­tors agreed to rein­state I‑695 in 2000 after the Supreme Court struck it down. Chris Gre­goire and Demo­c­ra­t­ic leg­is­la­tors like­wise rein­stat­ed I‑747 in 2007, in a one-day spe­cial ses­sion, after the Supreme Court struck it down, even though we warned them that doing so was a ter­ri­ble, awful, no good idea.

But what Eyman does not seem to real­ize is that times have changed. Elect­ed Democ­rats nowa­days feel the same way about him that the par­ty’s grass­roots base does. Long-serv­ing Democ­rats have gained an appre­ci­a­tion of just how destruc­tive his ini­tia­tives are, hav­ing spent many, many years try­ing to mit­i­gate their harm, while Democ­rats elect­ed more recent­ly sim­ply think of Eyman’s ini­tia­tive fac­to­ry as a can­cer on the state that needs to be fought, no mat­ter what.

If both hous­es of the Leg­is­la­ture were con­trolled by pro­gres­sive Democ­rats, com­pre­hen­sive tax reform would have been on the table last ses­sion. All of Jay Inslee’s bold ideas from last Decem­ber would have got­ten at least a fair hear­ing, and many of them might have become law. But Democ­rats failed to win the Sen­ate in 2014 and lost cru­cial seats in the House. It was a bad midterm.

Elec­tions have con­se­quences, as the say­ing goes. The 2014 elec­tions pro­duced divid­ed gov­ern­ment. A con­se­quence of those elec­tions is that Repub­li­cans can kill Demo­c­ra­t­ic pol­i­cy pro­pos­als with rel­a­tive ease in the Senate.

And they have been doing just that.

Any­one who thinks their atti­tude will be any dif­fer­ent next year needs a real­i­ty check. Repub­li­cans do not care that the Supreme Court is fed up with the Leg­is­la­ture’s reluc­tance to speed­i­ly com­ply with its Jan­u­ary 2012 McCleary deci­sion requir­ing the state to ful­ly fund K‑12 education.

They have noth­ing but con­tempt for the Court right now. Con­sid­er their rhetoric.

When the Supreme Court began fin­ing the Leg­is­la­ture for not com­ply­ing with its orders back in August, the response of many Repub­li­cans was to once again attack the Court. State Rep­re­sen­ta­tive and I‑1366 backer Matt Man­weller, for instance, declared it was time to start draft­ing arti­cles of impeach­ment against the jus­tices.

(And no, I’m not mak­ing this up… fol­low the link above.)

So, again… the notion that I‑1366 can be sal­vaged to pro­duce a “win-win-win” is wish­ful think­ing. I‑1366 was con­ceived to enable mil­i­tant Repub­li­cans in the Leg­is­la­ture to push through an amend­ment giv­ing them per­ma­nent veto pow­er over rev­enue bills. These mil­i­tant Repub­li­cans cam­paigned with Eyman to pass I‑1366; they are the intend­ed ben­e­fi­cia­ries of the black­mail scheme it con­tains. They are not going to give up their lever­age so we can all have pro­gres­sive tax reform.

We can cer­tain­ly dis­pense with the idea that the Leg­is­la­ture can use Car­bon­WA’s Ini­tia­tive 732 to avert the con­se­quences of Sce­nario 1 of Tim Eyman’s I‑1366. Smith, Reif­man, and West­neat all made this sug­ges­tion in their respec­tive com­men­taries. Here is how West­neat laid it out in his column:

OK then, how about this: A group of cli­mate activists called Car­bon Wash­ing­ton has more than 300,000 sig­na­tures for their mea­sure that, by cos­mic coin­ci­dence, would cut the sales tax by the exact amount as Eyman does. Except it would replace that cut with a car­bon tax. The pur­pose of Ini­tia­tive 732 is to curb green­house gas­es while being rev­enue neutral.

By a fluke, the Eyman ini­tia­tive and this cli­mate change ini­tia­tive are com­ple­men­tary. The Leg­is­la­ture must deal with both, this spring. There are tim­ing issues to be worked out, but if law­mak­ers embraced the spir­it of both they could com­bat cli­mate change, make the tax code smarter and solve the Eyman prob­lem, all in one fell swoop.

The nice-sound­ing out­come West­neat describes above is utter­ly implausible.

To begin with, I‑1366 and I‑732 are not com­ple­men­tary ini­tia­tives. As I’ve already explained in this post, I‑1366 is a mali­cious hostage-tak­ing scheme con­ceived by Tim Eyman to help mil­i­tant Repub­li­cans in the Leg­is­la­ture push through a con­sti­tu­tion­al amend­ment giv­ing them veto pow­er over rev­enue bills for­ev­er. It is nar­row­ly pass­ing now and due to become law next month.

If the Supreme Court this win­ter rules that I‑1366 is beyond the scope, or uncon­sti­tu­tion­al, or both, I‑1366 will become unen­force­able (null and void), and the Leg­is­la­ture will not need to deal with it in the spring.

I‑732, mean­while, is a well mean­ing but fatal­ly flawed ini­tia­tive to the Leg­is­la­ture to tax pol­lu­tion and use the pro­ceeds to low­er exist­ing tax­es like the sales tax. I‑732 is sup­posed to be rev­enue neu­tral, but we’re not con­vinced that it actu­al­ly is. Our assess­ment is that it is poor­ly writ­ten.

Con­trary to what Dan­ny West­neat says above, the Leg­is­la­ture does­n’t nec­es­sar­i­ly have to deal with I‑732 in the spring either. The Leg­is­la­ture can sim­ply ignore I‑732 if it choos­es, and it will pro­ceed to the Novem­ber bal­lot for vot­ers’ con­sid­er­a­tion. This is what hap­pened with I‑594, I‑591, I‑517, and I‑522.

The Wash­ing­ton State Con­sti­tu­tion is very explic­it about what the Leg­is­la­ture may do with both ini­tia­tives to the Leg­is­la­ture (fol­low­ing qual­i­fi­ca­tion) and ini­tia­tives to the peo­ple (fol­low­ing pas­sage). Ini­tia­tives to the Leg­is­la­ture may be adopt­ed as-is, passed on to the peo­ple, or passed on to the peo­ple with an alter­na­tive. Those are the only options. Ini­tia­tives to the Leg­is­la­ture can’t be amend­ed by the Legislature.

Ini­tia­tives passed by the peo­ple, mean­while, can­not be amend­ed or sus­pend­ed by the Leg­is­la­ture with­in two years of adop­tion — except by a two-thirds vote. Until and unless the Supreme Court does its job and strikes down I‑1366, I‑1366 will thus enjoy pro­tec­tion from the very Con­sti­tu­tion it seeks to undermine.

For the sce­nario pro­posed above by West­neat to work, the Leg­is­la­ture would need to amend I‑732 to remove the lan­guage in I‑732 that low­ers the state sales tax. Oth­er­wise, the sales tax would get low­ered twice: Once by I‑1366, start­ing April 15th, 2016 and then again start­ing July 1st, 2017 by Sec­tion 14 of I‑732. The ini­tia­tive’s oth­er effec­tive dates, mean­while, would need to be moved up.

But, as I just explained, the Leg­is­la­ture can’t amend ini­tia­tives to the Leg­is­la­ture. The Con­sti­tu­tion does­n’t allow it. I‑732 could only be adopt­ed by the House and Sen­ate as writ­ten. Oth­er­wise, it goes to the bal­lot… with or with­out an alternative.

To sug­gest that the Leg­is­la­ture could use I‑732 to get around I‑1366, as Don, Jeff, and Dan­ny have, demon­strates a lack of under­stand­ing of how ini­tia­tives work in Wash­ing­ton State, and how the leg­isla­tive process works.

Now, we saw a few months ago that, despite their anti-tax rhetoric, not all Repub­li­cans are not opposed to rais­ing rev­enue in all cir­cum­stances. A num­ber of the Repub­li­cans in both hous­es vot­ed to raise the gas tax as well as vehi­cle fees to pay for high­way projects that some of them wanted.

Our schools remain under­fund­ed, but noth­ing is too good for our cars, it seems.

(Iron­i­cal­ly, one of these Repub­li­cans was I‑1366 boost­er Michael Baum­gart­ner, who could eas­i­ly con­tend for the title of the Leg­is­la­ture’s biggest hypocrite.)

How­ev­er, when Gov­er­nor Jay Inslee pro­posed levy­ing a cap­i­tal gains tax and insti­tut­ing a cap and trade sys­tem — both ideas that Wash­ing­ton vot­ers sup­port, as doc­u­ment­ed by NPI research from two months ago — Repub­li­cans react­ed with scorn and deri­sion. They would­n’t give either idea a fair hear­ing in the Senate.

For Smith, Reif­man, and West­neat’s dream of 1366-cat­alyzed pro­gres­sive tax reform to come true, Sen­ate Repub­li­can lead­er­ship would need to do an an abrupt about-face in 2016 and agree to put a cap­i­tal gains tax, as well as a cap and trade sys­tem, on the Sen­ate floor for a vote. We just don’t see that happening.

Why cap­i­tal gains and cap and trade, you might ask? Because those are the most fea­si­ble options for replac­ing bil­lions in lost sales tax rev­enue. Cap­i­tal gains alone would not gen­er­ate enough fund­ing to address I‑1366 and McCleary.

Both ideas already have the sup­port of Gov­er­nor Jay Inslee and most House Democ­rats. House Democ­rats could prob­a­bly move the nec­es­sary leg­is­la­tion through the Leg­is­la­ture’s low­er cham­ber if Sen­ate Repub­li­cans would agree to allow the leg­is­la­tion through com­mit­tee and on the floor of the upper cham­ber for a vote, where Democ­rats would sup­ply the bulk of the votes need­ed for pas­sage, and Repub­li­cans would pro­vide the rest.

The cap­i­tal gains tax would need to go into effect very quick­ly, so it could start off­set­ting hun­dreds of mil­lions of dol­lars in lost sales tax rev­enue in 2016. Cap and trade would need to kick in not long after.

Amer­i­ca’s sup­posed to be a free coun­try and Wash­ing­ton is sup­posed to be a free state, so any pro­gres­sives who would like to are wel­come to mount a grass­roots lob­by­ing effort to try and per­suade Sen­ate Major­i­ty Leader Mark Schoesler and his deputies John Braun, Ann Rivers, Lin­da Evans Par­lette, Joe Fain, and Jim Hon­ey­ford to get on board. We rather doubt that any of them will respond favorably.

The few Repub­li­cans in the Leg­is­la­ture who are not in Eyman’s pock­et will prob­a­bly be pray­ing that the Supreme Court strikes down I‑1366 very soon, so they don’t have to get into a game of chick­en over the bud­get with Democrats.

Fail­ing that, if Democ­rats refuse to capit­u­late to Eyman and the Repub­li­cans, and Repub­li­cans refuse to give up their lever­age, the sales tax will be cut by default in a mat­ter of months, and the fall­out will be dis­as­trous. Every com­mu­ni­ty every­where in the state will feel the pain of dev­as­tat­ing cuts to pub­lic services.

The best out­come would be for the Supreme Court to do its job and tem­porar­i­ly restore the sta­tus quo by strik­ing down Tim Eyman’s I‑1366.

The Alliance for Jobs and Clean Ener­gy, to which NPI belongs, is prepar­ing an ini­tia­tive to the peo­ple for 2016 to cre­ate a cap and trade sys­tem. Assum­ing that ini­tia­tive is suc­cess­ful, it will solve one piece of the puz­zle. To address the rest, Wash­ing­ton vot­ers will need to elect a pro­gres­sive Leg­is­la­ture pre­pared to work coop­er­a­tive­ly with Gov­er­nor Inslee to ful­ly fund pub­lic education.

There is no orga­ni­za­tion in this state that wants to see pro­gres­sive tax reform hap­pen more than NPI. It’s been the focus of our advo­ca­cy since NPI’s incep­tion. But to get any­where in the Leg­is­la­ture, we need pro­gres­sive majori­ties in both hous­es. And the soon­est we could have such majori­ties is Jan­u­ary 2017.