This Washington
Privatization Proponents Say I-1105 Wouldn't Hurt Revenues. Opponents Disagree.
This post has been updated with comments from I-1105 spokeswoman Charla Neuman.
After last Sunday's PubliCola debate over the two liquor privatization initiatives at Town Hall, Charla Neuman, spokeswoman for Initiative 1105, handed PubliCola a legal brief by attorneys at Perkins Coie that she said demonstrated that I-1105 wouldn't reduce state tax revenues.
I-1105 would privatize liquor sales, retain the wall between distributors and retailers, and end the tax on liquor sales, directing the state liquor control board to "recommend to the legislature a new tax on the sale of spirits" high enough to generate at least $100 million in new state funding over five years.
"If the voters vote for 1105, it is their clear intent ... for this new tax on liquor sales to generate at least $100 million in additional revenue," Neuman said Sunday.
In his analysis for 1105 consultant Strategies 360, Perkins Coie attorney Kevin Hamilton agreed, arguing that the "recommend" language effectively requires the legislature to adopt a new tax to replace the one 1105 eliminates.
"Although of course it is possible that the legislature might ignore the plain intention of the initiative, and fail to adopt the proposed spirits tax, that, too, seems highly unlikely" given the language in the legislation and the potential impact on state and local revenues, Hamilton writes.
However, state Rep. Brendan Williams (D-22) hotly disputed that claim on Sunday, barking, "the idea that somehow all of this [tax revenue] will be replaced by the legislature---give me a break. ...We couldn't tax big oil and close a Wall Street bank loophole this last session, and yet we're to believe that some of the same forces [who fought] those efforts … are going to stand out of the way [and let the legislature] restore this lost revenue? I don't believe that for a second."
Williams also points to a previous Eyman initiative, I-900, that stated clearly that the intent of the measure, which required performance audits by the state auditor, was to "identify solutions to our public policy problems, saving the taxpayers billions of dollars." (That language is from the initiative itself). Instead of identifying billions in savings since I-900 passed in 2005, state auditor Brian Sonntag has come up with a far more modest $285 million in potential savings. Meanwhile, the state legislature has had to cut billions from the state budget.
Additionally, Williams argued that if Tim Eyman's Initiative 1053, which would require a two-thirds vote of the legislature to raise taxes, passes, it will be impossible for Democrats to pass any tax increase next session.
"We did not have a single Republican vote" to raise the cigarette tax this past session, Williams said, "which means that had it been an Initiative 960 vote or, in the future, an Initiative 1053 vote, we would not have been able to increase the cigarette tax" to pay for public safety programs, Williams said.
However, in his memo, Hamilton argues that 1053 would only apply to taxes that "actually result in increased state revenue" because a new liquor tax would be revenue-neutral and therefore wouldn't count as "raising taxes" under 1053. (I-1105 spokeswoman Charla Neuman says that if 1053 passes, tax revenues from liquor sales would be limited to the amount the state currently collects, making it revenue-neutral. "That is the worst-case scenario," Neuman says.)
"The same amount of state tax revenue would be placed in state-controlled funds both before and after this legislative act," Hamilton writes.
Dave Ammons, spokesman for Secretary of State Sam Reed, says he believes that if I-1105 and I-1053 both pass, "it would take two-thirds" of the legislature to create a new liquor tax. However, he said that because the two initiatives are essentially contradictory (one says the voters want to remove then restore the liquor tax; the other makes it virtually impossible for the legislature to raise taxes), "there could be an interesting legal battle" in the courts if both initiatives pass.
Unlike I-1105, Initiative 1100, the other liquor-privatization initiative, would keep the existing tax on liquor in place.
After last Sunday's PubliCola debate over the two liquor privatization initiatives at Town Hall, Charla Neuman, spokeswoman for Initiative 1105, handed PubliCola a legal brief by attorneys at Perkins Coie that she said demonstrated that I-1105 wouldn't reduce state tax revenues.
I-1105 would privatize liquor sales, retain the wall between distributors and retailers, and end the tax on liquor sales, directing the state liquor control board to "recommend to the legislature a new tax on the sale of spirits" high enough to generate at least $100 million in new state funding over five years.
"If the voters vote for 1105, it is their clear intent ... for this new tax on liquor sales to generate at least $100 million in additional revenue," Neuman said Sunday.
In his analysis for 1105 consultant Strategies 360, Perkins Coie attorney Kevin Hamilton agreed, arguing that the "recommend" language effectively requires the legislature to adopt a new tax to replace the one 1105 eliminates.
"Although of course it is possible that the legislature might ignore the plain intention of the initiative, and fail to adopt the proposed spirits tax, that, too, seems highly unlikely" given the language in the legislation and the potential impact on state and local revenues, Hamilton writes.
However, state Rep. Brendan Williams (D-22) hotly disputed that claim on Sunday, barking, "the idea that somehow all of this [tax revenue] will be replaced by the legislature---give me a break. ...We couldn't tax big oil and close a Wall Street bank loophole this last session, and yet we're to believe that some of the same forces [who fought] those efforts … are going to stand out of the way [and let the legislature] restore this lost revenue? I don't believe that for a second."
Williams also points to a previous Eyman initiative, I-900, that stated clearly that the intent of the measure, which required performance audits by the state auditor, was to "identify solutions to our public policy problems, saving the taxpayers billions of dollars." (That language is from the initiative itself). Instead of identifying billions in savings since I-900 passed in 2005, state auditor Brian Sonntag has come up with a far more modest $285 million in potential savings. Meanwhile, the state legislature has had to cut billions from the state budget.
Additionally, Williams argued that if Tim Eyman's Initiative 1053, which would require a two-thirds vote of the legislature to raise taxes, passes, it will be impossible for Democrats to pass any tax increase next session.
"We did not have a single Republican vote" to raise the cigarette tax this past session, Williams said, "which means that had it been an Initiative 960 vote or, in the future, an Initiative 1053 vote, we would not have been able to increase the cigarette tax" to pay for public safety programs, Williams said.
However, in his memo, Hamilton argues that 1053 would only apply to taxes that "actually result in increased state revenue" because a new liquor tax would be revenue-neutral and therefore wouldn't count as "raising taxes" under 1053. (I-1105 spokeswoman Charla Neuman says that if 1053 passes, tax revenues from liquor sales would be limited to the amount the state currently collects, making it revenue-neutral. "That is the worst-case scenario," Neuman says.)
"The same amount of state tax revenue would be placed in state-controlled funds both before and after this legislative act," Hamilton writes.
Dave Ammons, spokesman for Secretary of State Sam Reed, says he believes that if I-1105 and I-1053 both pass, "it would take two-thirds" of the legislature to create a new liquor tax. However, he said that because the two initiatives are essentially contradictory (one says the voters want to remove then restore the liquor tax; the other makes it virtually impossible for the legislature to raise taxes), "there could be an interesting legal battle" in the courts if both initiatives pass.
Unlike I-1105, Initiative 1100, the other liquor-privatization initiative, would keep the existing tax on liquor in place.
