Attorney General Says I-695 Stands Up to Constitutional Challenges

Business Wire, Dec 22, 1999

Business Editors, News & City Desks

OLYMPIA, Wash.--(BUSINESS WIRE)--Dec. 22, 1999

Attorney General Christine Gregoire today issued a "common-sense, legally sound" interpretation of Initiative 695 that she believes is in keeping with the understanding of the voters and will preserve its constitutionality in the face of legal challenges.

In answers to two complaints challenging the tax measure, Gregoire asserted that the initiative complies with the Washington Constitution, and courts should therefore permit the state to implement it.

In a separate memorandum, the AG's office advised state agencies that increases in the price of goods and services that government commonly sells in a business or "proprietary" capacity -- such as food and liquor, real property sales and rental agreements -- do not require a public vote under the initiative.

"We believe I-695 is constitutional and have taken the first steps to defend the initiative on behalf of the State of Washington," Gregoire said. Under state law, the Attorney General is responsible for defending all legislation passed by the Legislature and initiatives passed by the people.

Gregoire has assigned a team of experienced state attorneys to defend the measure and provide consistent legal advice to state agencies.

I-695, passed in November, repeals Washington's motor-vehicle excise tax and imposes a flat annual fee of $30 for vehicle-license tabs. It also requires voter approval on future tax increases proposed by the state.

Plaintiffs in the two lawsuits answered today are Amalgamated Transit Union Local 587 and the Vashon-Maury Island Community Council. The now-consolidated cases ask the King County Superior Court for a permanent injunction barring enforcement of I-695. The plaintiffs claim the law violates three provisions of the state Constitution.

The state's answer to the complaints calls on the court to dismiss the lawsuits and declare I-695 constitutional in all respects. The answer asserts that:

-- The initiative meets the Constitution's one-subject requirement

on legislation because I-695's provisions all relate to a single

matter, taxation;

-- The initiative's voter-approval requirement is a constitutional

exercise of the people's legislative power;

-- The initiative does not conflict with constitutional limits on

amending laws because those limits don't apply to the kinds of

statutory changes included in I-695.

The cities of Bremerton, Bainbridge Island and Lakewood have filed another I-695 case in Thurston County, but the AG's Office is seeking to have it transferred to King County. Several public utility agencies also have filed suit in Thurston County, seeking interpretations on Initiative 695's impact on utility-related charges. The AG's office has 20 days to answer those suits.

One or more of the I-695 cases is expected to reach the state Supreme Court next year.

The separate memorandum released by the Attorney General's Office today is intended to provide state agencies with guidance on which tax and fee increases would be subject to the initiative's voter-approval provision.

The initiative's definition of tax includes sales, excise, and property taxes, as well as certain fees and other monetary charges by government.

"Our challenge was to distinguish between various monetary charges in a way that is consistent, principled and legally sound," Gregoire said. For purposes of I-695, the AG memorandum concludes that increases in charges for traditional governmental activities or services -- such as fees to ride a ferry or use a state park -- are subject to voter approval.

However, increases involving purely proprietary transactions, such as selling liquor or providing medical services at a public hospital, do not require voter approval.

"The language of I-695 shows voters want decision-making authority over government charges that have the look and feel of a tax," Gregoire said. "That doesn't mean they want to approve the price of hamburgers in a school cafeteria or firewood at a state park."

The memorandum is intended to provide general guidance to Assistant Attorneys General who will be advising state agencies on the scope of proposed fee increases covered by I-695. "In some instances, additional analysis may be necessary to determine how these principles should apply to particular programs and transactions," the memorandum said.

For a copy of the AG memorandum, as well as copies of the complaints and answers in the I-695 lawsuits, visit the Attorney General's webpage at http://www.wa.gov/ago