Q and A on the Surpeme Court's Reveral of I -747

How does the court ruling affect me?

By Susan Gilmore and Eric Pryne

Seattle Times staff reporters

In a decision that could affect every property owner in Washington, the state Supreme Court today struck down voter-approved Initiative 747.

Here are the answers to some frequently asked questions:

Q: What is Initiative 747?

A: It's a Tim Eyman-sponsored measure, passed by voters in November 2001, that limited property-tax growth to 1 percent a year.

Q: My property taxes went up more than 1 percent this year. Doesn't that violate Initiative 747?

A: No. The 1 percent limit doesn't apply to individual property-tax bills. It's a limit on the annual increase in total regular property-tax collections by the state and local governments.

That 1 percent limit doesn't apply to property taxes approved by voters. Those voter-approved levies are the chief reason property-tax bills are going up, King County Assessor Scott Noble has said.

Q: If voters passed I-747 in 2001, why are the courts just now getting around to ruling on its constitutionality?

A: While many attorneys said the initiative raised constitutional questions, no one formally challenged it until 2005, when Whitman County, one of only two counties in the state that voted against I-747, and several statewide organizations filed a lawsuit against it. (King County also voted against I-747.)

Q: Why did the court strike down I-747?

A: A 5-4 majority of the court said the initiative was deceptive. It purported to amend an earlier, voter-approved Eyman initiative, I-722, that had been ruled unconstitutional before I-747 went to voters. Voters were being asked to amend a nonexistent law.

Q: Will my property taxes now be higher?

A: That's possible, although not certain. With I-747 out of the way, local governments would be free to set higher property-tax levies when they adopt their 2008 budgets.

Q: Would there be any limits on property taxes?

A: Yes. Referendum 47, which I-747 supplanted, is now the law again. That measure, approved by voters in 1997, sets looser limits on annual increases in non-voter-approved property-tax collections. For larger jurisdictions, R-47's cap is the rate of inflation, but that can be increased to 6 percent if two-thirds of the members of a jurisdiction's governing board agree.

Q: Could governments go back now and collect the property taxes that I-747 prevented them from collecting before the ruling?

A: No. But the ruling could be retroactive in a sense.

Under state law, cities, counties or other local governments can "bank" unused property-taxing authority. Under I-747, for instance, if a government used only 0.5 percent of the 1 percent increase authorized by the law, it could reserve the remainder and use it the next year.

Noble has said it appears local governments could contend they had banked much more — the difference between their actual increases and the rate of inflation — for each of the past five years. In addition to seeking an increase of up to 6 percent next year, they could attempt to raise property-tax collections by that total "banked" amount as well, he has said.

Q: How much money has I-747 saved the typical homeowner?

A: That's impossible to say. No one knows how much local officials would have raised property taxes without I-747. But last year, Mike Gowrylow, spokesman for the state Department of Revenue, estimated property taxes in 2006 were about 5 percent lower than they would have been without the initiative.

That assumed every eligible jurisdiction has increased property-tax collections by 1 percent since I-747 passed and that each one would have raised collections the maximum allowed by R-47 otherwise.

I-747 ruled unconstitutional

Eyman initiative ruled unconstitutional

By Susan Gilmore

Seattle Times staff reporter

The State Supreme Court today found Initiative 747, the tax-limiting measure passed by voters in 2001, unconstitutional.

In a narrow, 5-4 decision, the high court found voters were deceived when they voted on the measure sponsored by anti-tax activist Tim Eyman.

The ruling upholds a lower King County court decision last year in which Judge Mary Roberts found the initiative was unconstitutionally deceptive.

"A voter reading the text of the initiative would have perceived a much smaller impact on government coffers than would actually occur under I-747," the justices ruled. "The text of the initiative misled voters about the substantive impact of the initiative on existing law."

Eyman appealed to the state Supreme Court.

Gov. Christine Gregoire called on local governments and taxing districts "to assure me that they will not increase property tax levies for their upcoming budgets as a result of the court decision. In addition, I will be asking the Legislature, in January, to work with me to thoughtfully reinstate a property tax cap.

In a statement, Gregoire said Tuesday's vote on a handful of tax-related measures shows voters are concerned about their tax burden.

"I believe that it is our responsibility to move quickly, recognizing taxpayers' concerns and reinstating the will of the voters," she said.

The measure, passed by voters in 2001, limited increases in state and local property-tax collections to 1 percent a year, unless voters approved more. When it was argued before the high court last May, the state estimated that in the six years since it passed, the measure blocked an estimated $1.6 billion in property-tax increases.

In tossing out the initiative, Roberts found that voters had been told they would be reducing the tax-increase cap to 1 percent from 2 percent, although the initiative actually was reducing the cap from 6 percent to 1 percent.

An earlier Eyman initiative, I-722, had put a 2 percent limit on property-tax increases, but that was found unconstitutional months before voters approved I-747. Roberts ruled that in 2001, voters were incorrectly told I-722 was being amended, but it was no longer law, so voters were asked to amend a non-existent law.

The majority of the high court justices agreed. They found that a lower-court judge had ruled I-722 unconstitutional five months before the signatures on I-747 were submitted to the state, and there was a permanent injunction issued banning the implementation of I-722.

"I-722's property tax increase limitation never took effect and the definition of limit factor remained at either six percent or the lesser of six percent or the rate of inflation," the justices wrote.

The decision brought immediate strong reaction from those on both sides of the measure.

"The Washington Supreme Court has sent a clear message to Tim Eyman: There will be no deception in our initiative process,"said Gwynne Skinner, one of the lawyers who argued against I-747 and a visiting law professor at Seattle University School of Law. "Tim Eyman can predict chaos, which won't occur, but he needs to get his own chaotic and deceptive tactics in order."

But state Sen. Mike Hewitt of Walla Walla, the Republican leader in the Senate, condemned the ruling.

"Voters spoke very clearly when they passed I-747 six years ago, saying they didn't want local governments to be able to collect more than 1 percent in additional property taxes each year unless those governments came to them for approval," he said. "Unfortunately, their will has just been overturned. The lid now just jumped from 1 to 6 percent, opening the door to massive property tax increases."

The decision came just two days after Eyman's latest initiative, I-960, appeared to be passing statewide. It makes it tougher for the Legislature to boost taxes, reaffirming and broadening an existing state law that requires a two-thirds vote by lawmakers to increase taxes.

In a statement today, Eyman said because of the ruling, "taxpayers now face the nightmare scenario. We're in for absolute chaos."

He said each local government now has the power to increase property taxes 30 percent this fall without a vote of the people. "Washington state's crushing property-tax problem is a powder keg and it will explode if Gov. Gregoire and the Legislature ignore the voter's clear mandate."

The coalition that sued to overturn I-747 included Whitman County, one of only two counties in which most voters turned down against the initiative, and several statewide organizations, including Washington Citizen Action.

In a dissent signed by four justices, author Justice Charles Johnson wrote, "There is no confusion, ambiguity or uncertainty in this initiative. The ballot title and text clearly disclose the effect of the new legislation to reduce taxes and amend current legislation allowing higher yearly tax increases.

"If a voter were to simply read the text of the initiative, the voter would have understood that I-747 reduced the property tax levy limit to one percent. This is not misleading."

Knoll Lowney, attorney for those challenging the initiative, said the measure was deceptive. and had a huge impact on counties, cities and taxing districts."The court today confirmed that the Constitution protects voters from being misled," Lowney said. "Here, Eyman's initiative misled voters by understating the impact of I-747 five fold. If the measure had been truthful, it never would have gained majority voter approval."

Susan Gilmore: 206-464-2054 or sgilmore@seattletimes.com

Eyman lays groundwork for I-985

Tim Eyman's great year 1/28/08

You might love to hate him, but the populist initiative king is having a banner year — and even liberals are finding some areas where Eyman's laws are helping. Maybe you should send him a thank-you card.

By Knute Berger
Few political obits are as much anticipated as Tim Eyman's, but rumors of the Mukilteo watch salesman-turned-populist-crusader's demise are, as Mark Twain once said about his own, greatly exaggerated. In fact, these days, Eyman is in his prime. Maybe there's a reason his email-Christmas card depicted him as a dancing elf.

His victory prance seems anomalous since the state's Blue-ward shift has marginalized the state conservatives. Democrats control Olympia and they've taken much of the suburbs from the GOP. But Eyman has advantages as a political player: he doesn't need to lead, he can cherry pick his issues, he's not a party animal, and sometimes, he does things that prove to be popular not only with Reds, but Blues and Purples too. That freedom has turned him, despite the vitriol of his opponents, into a political player on a par with Gov. Christine Gregoire and House Speaker Frank Chopp. Arguably, he's the most influential conservative in the state.

Let's take a quick survey of his domain.

Last fall, voters approved the Eyman initiative, I-960, that makes it more difficult for the legislature to raise taxes. It also requires that the public get email alerts when tax legislation is proposed with estimates of how much they will cost. The Seattle Post-Intelligencer reports that the initiative is already working, indeed, it's "rattling" Olympia as constituents are demanding to know the details of proposed tax increase bills and legislators are thinking twice about wallet-draining proposals.

Also late last year, the state Supreme Court knocked down another Eyman initiative, I-747, that put limits on property tax increases. Another failure for Eyman, right? Hardly. With the moral leverage of the I-960 passage, a looming election year for Gregoire, and Democrats looking to expand their conquest of swing districts, the Democrat-led legislature leapt into action in a special session to codify the basics of Eyman's anti-tax initiative into law. Was it a win-win? No, it was an "I win." Eyman dissed the legislature as panderers while also claiming credit for the legislative victory.

Eyman has always been out of step with Seattle liberals. I remember some years ago, we featured him on the cover of Seattle Weekly in a story in which he provocatively said what he would do "If I ran Seattle." Readers trashed the issue with anti-Eyman stickers and one reader faxed a copy of the cover with a little Hitler mustache drawn on Eyman's face--it looked rather convincing given the brown suit Eyman wore in the cover shot. But the residents on this islet of the Blue archipelago continually under-estimate the fact that much as they hate Tim Eyman, many of his ideas are popular and, dare I say it, not radical but mainstream. Some of Eyman's laws are even producing results that frustrated liberal Seattleites are happy about.

Mainly, I-900, the Eyman performance audit initiative which passed in 2005. It is proving a boon. The idea was to unleash the state auditor, currently Democrat Brian Sonntag, to look into the performance of public entities, ranging from state agencies to local ports, stadium authorities--whatever--and suss out problems. Opponents of I-900 complained that it would be used as a political tool by Sonntag (considered by some in Olympia to be a grandstander) and Eyman, who could use the audits to push initiatives. That's turned out to be true. But is it a bad thing?

Performance audits are squishier than straight-forward financial audits because they inevitably get into policy areas--matters not of math but interpretation, priorities, methodologies, management. Nevertheless, Sonntag's audits are producing information that the public is happy to have. Exhibit A: the audit of the Port of Seattle, a nearly impenetrable public entity that has had the whiff of waste, arrogance and corruption about it for years. The recent audit of the Port has unleashed a firestorm of criticism. It has day-lighted questionable practices and scratched the Port's coat of Teflon that has frustrated the media, citizen activists and Port-watchers for years. It has also goaded the state and the Port to take some action toward reforms, even as they deny there really is a problem.

Eyman is often ridiculed for silly public stunts, like showing up in a gorilla suit. But Eyman's outrage over the Port at a recent meeting seems like the normal, shared outrage many people feel at displays of Port arrogance. No matter what you think of Eyman, it's hard not to cheer him on when the Port is his whipping boy.

Eyman has said he will push a King County initiative to eliminate the Port's ability to levy property taxes--an idea previously pushed by former Port Commission Alex Fisken, a liberal Democrat who works for the city. Eyman also likes the idea of having the county take over the port and wants all of the audit's recommendations implemented. In the meantime, the feds have opened a criminal inquiry into the Port.

Some audit skeptics are waiting to see if there's a there there in terms of criminal activity, but the public has a lesser standard. Proof of waste and abuse of public trust is enough. The bottom line: Tim Eyman passed a law that jump-started the process of getting to the bottom of one of the biggest sinkholes in local governance accountability. There may be some grandstanding going on, but maybe that's what it takes.

Transportation is another area where Eyman's populism might prove popular. Recent audits have prodded and found fault with Sound Transit (they failed to deliver light rail on time and on budget as promised in 1996) and the Department of Transportation (not enough done on congestion relief, slow progress on some repair projects). There are critics of Sound Transit and the WSDOT on both sides of the political aisle who are ready to believe the worst of these entities.

But the roads-friendly Eyman is also honing new plans to deal with congestion and responding to Gregoire's recent declaration that 520 will be tolled. In his 2008 initiative, he'll look to funnel funds into car-friendly congestion relief schemes and he seek to limit how road tolls can be used.

The tolling debate is moving to the front burner and no one is sure where the public stands. I talked recently with a very knowledgeable transportation policy veteran who is part of a group looking at regional tolling. He said that the public is of two minds about tolls, according to polling. The public likes "user fees," but hates "tolls."

While many people would not object to paying a specific toll to pay for a specific bridge's construction (as with the original Lake Washington bridges, or with new Tacoma Narrows), policy makers are looking at tolls as part of more widespread revenue generating schemes. Already, the notion has been put forth that if 520 is tolled, I-90 must be tolled also, otherwise more chaos and congestion will ensue. But by that logic, you can argue that all major commuter routes should be tolled. Some policy wonks do.

Eyman says putting tolls on roads to pay for other projects is simply taxation by another name. He'll likely find support for limiting tolls: from people who hate them on general principle to Seattle area commuters who see limiting tolls as reasonable. Then there are social progressives who object to tolling from a social justice perspective because they fall hard on the poor and are often a precursor to privatization. In short, Eyman's initiative may define the early tolling debate before anyone has a chance to propose anything more ambitious, and it will likely define tolls as unpopular taxes, not acceptable "user fees."

It looks like Tim Eyman good run will continue. More audits rooting out public abuse, hamstrung lawmakers in Olympia, Democrats eager to codify tax limits. Plus, he's in the driver's seat when it comes the future of transportation funding. No wonder he's feeling like a jolly elf. He's got good reason to be frisky

* Knute Berger is Mossback, Crosscut's chief Northwest native. He also writes the monthly Gray Matters column for Seattle magazine and is a weekly Friday guest on Weekday on KUOW-FM (94.9). You can e-mail him at mossback@crosscut.com.

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