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.”
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