New initiative drive intended to restore state's I-601 tax, spending limits

Richard Davis; News Tribune columnist

Olympia, WA - 4/4/02 - Sen.  Dino Rossi (R-Sammamish) wants to give state taxpayers a chance to
defend themselves.


Rossi, ranking member of the Senate Ways and Means Committee, supports an
initiative to re-establish the state tax-and-expenditure limit adopted by
the voters in 1993.

He says "if everything goes right" the Legislature will return next year
facing a billion-dollar shortfall, and it could be worse.  That's because
lawmakers relied on shaky assumptions and used one-time tactics to pull
revenues into the operating budget, gimmicks that won't be available next year.

"They've set us up for one of the largest tax increases in Washington
history," he says of the Democrats who control the Legislature.

Since voters passed Initiative 601 following the 1993 legislative session -
in which business taxes were increased by nearly a billion dollars -
lawmakers have been compelled to operate within stringent budget
guidelines.  I-601 links spending growth to a formula based on increases in
state population and inflation and requires a two-thirds majority for tax
increases and transfers from the emergency reserve fund.

Under Washington law, however, initiatives can be amended after two years
by a simple majority vote.  So, voting largely along party lines, the
Legislature simply suspended the supermajority requirements of I-601.  Once
the governor signed the bill, lawmakers were able to tap reserves and raise
taxes.  The looser rules are in effect through June 30, 2003.

To avoid substantial tax hikes next year, Rossi contends, voters need the
protection of a strengthened tax-and-spending limit.  With a small
leadership group, he's drumming up support among business groups and
seeking the endorsement of major corporations.

The effort is young.  The initiative has yet to be assigned a number, and
the campaign organization hasn't settled on a name (at present, it is the
Save Our Spending Limits Committee).

Nonetheless, Lindsay Echelbarger, the group's chairman, expresses
confidence in their eventual success.  A Snohomish County businessman
active in Republican circles, Echelbarger acknowledges that business groups
have generally been skeptical of initiatives, preferring to work through
the Legislature.

"We have to accept the world as we find it," he says.  "We have an
initiative process in this state, and it was intended to address the big
issues.  Setting an outer boundary on state spending is one of those
large-scale, substantive issues."

Besides, as he and Rossi observe, Washington state has had nearly a decade
of experience with the I-601 limits.  Their proposal extends a measure that
has already demonstrated its worth.

"The mess we're in right now," Rossi says, "would have been much worse if
601 hadn't been in place." He cites tax relief, slower expenditure growth
and the building of budget reserves as significant accomplishments in years
immediately after 601 was adopted.  Similar benefits will follow passage of
a new limit, he believes.

"If they can't go to the revenue side," he says of legislators, "they'll
have to look at the size and growth of state government."

One obstacle he faces: Many business leaders have made passage of the
statewide transportation package, which includes a 9-cent gas tax increase,
their top ballot priority this fall.
Some fear that having a tax limit on the ballot would bring out voters
likely to oppose the gas tax.

Echelbarger says the measures are complementary and notes that he and most
members of the Save Our Spending Limits Committee support the
transportation package.

Backers of the gas tax must realize that many grass-roots conservatives are
distrustful of government, he says.  With a limitation measure sharing the
ballot, such voters can be more confident that their support of a
transportation tax won't be followed by another round of tax increases in
Olympia.

Most likely, with or without active business involvement, the campaign for
a new tax-and-spending limit will succeed in qualifying the
initiative.  While many voters don't remember I-601, when it's described to
them, they like it.

The best justification for the initiative process is that it checks the
power of the Legislature, including the power to tax and spend.  Unlike
recent special interest initiatives, well-crafted tax-and-expenditure
limits preserve the Legislature's ability to set budget priorities within
reasonable constraints.  In a more nearly perfect political world, such
limits would not be necessary.

That, however, is not the world in which we live.
- - -

Richard S.  Davis, president of the Washington Research Council, writes for
this page every other Wednesday.  His columns do not necessarily reflect
the views of the council.  Write Davis at rsdavis@researchcouncil.org or
Washington Research Council, 108 S.  Washington St., Suite
406, Seattle, WA 98104-3408.