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Washington Policy Center: How a Fee Becomes a Tax
Over at the conservative leaning Washington Policy Center, Jason Mercier has a meaty post up about the "fee vs. tax" debate that's bothered Olympia all session long. Passing fees—a charge for a government service or license that generates related revenue (liquor license fees could go to alcoholism programs), only require a simple majority vote. Taxes, general sales taxes, property taxes, and business taxes, for example, which support the state's general fund, require a two-thirds vote.
Mercier is trying to tease out whether or not revenues from fees are ultimately used for the general fund or for a dedicated services, as mandated.
After citing rulings by the US Government Accountability Office and Washington State's Department of Revenue—"Even if something is clearly a fee, it can become a de facto tax increase if the funds are swept for general spending purposes ... This is why 'dedicated' accounts should become truly dedicated and not easily swept"—Mercier points to $1.2 billion in fund transfers during the current biennium.
Mercier argues that the money grabs are being used to "circumvent the two-thirds requirement" laid out in I-1053 and previous two-thirds initiatives. He says "dedicated tax and user-fee accounts should be protected by a higher threshold to sweep their funds." We've covered some of the fund transfers this session legislators have used to close the budget shortfall, here , here, and here.
Mercier has a solution, saying the legislature can end these backdoor tax increases by "[requiring] a supermajority vote in order to raid a dedicated account. Dedicated tax and user-fee based accounts could also have some type of breaker formula to help reduce the tax/fee level after a certain fund balance is reached so balances don’t get too large and become targets of fund sweeps in the first place."
Mercier is trying to tease out whether or not revenues from fees are ultimately used for the general fund or for a dedicated services, as mandated.
After citing rulings by the US Government Accountability Office and Washington State's Department of Revenue—"Even if something is clearly a fee, it can become a de facto tax increase if the funds are swept for general spending purposes ... This is why 'dedicated' accounts should become truly dedicated and not easily swept"—Mercier points to $1.2 billion in fund transfers during the current biennium.
Mercier argues that the money grabs are being used to "circumvent the two-thirds requirement" laid out in I-1053 and previous two-thirds initiatives. He says "dedicated tax and user-fee accounts should be protected by a higher threshold to sweep their funds." We've covered some of the fund transfers this session legislators have used to close the budget shortfall, here , here, and here.
Mercier has a solution, saying the legislature can end these backdoor tax increases by "[requiring] a supermajority vote in order to raid a dedicated account. Dedicated tax and user-fee based accounts could also have some type of breaker formula to help reduce the tax/fee level after a certain fund balance is reached so balances don’t get too large and become targets of fund sweeps in the first place."
