Thursday, November 8, 2007

Death & Taxes: Two of Life's Certainties

Several famous authors have uttered lines about this title.

• The first was Daniel Defoe, in The Political History of the Devil, 1726:

"Things as certain as death and taxes, can be more firmly believed."

• Benjamin Franklin (1706-90) used the form we are currently more familiar with, in a letter to Jean-Baptiste Leroy, 1789, which was re-printed in The Works of Benjamin Franklin, 1817:

"'In this world nothing can be said to be certain, except death and taxes."

• Another thought on the theme of death and taxes is Margaret Mitchell's line from her book Gone With the Wind, 1936:

"Death, taxes and childbirth! There's never any convenient time for any of them."
Both these topics do not rank high on most people's lists of favorites, but they do represent parts of reality as we know it.

So here is some good news & bad news, you pick which is which.
Presented below, without embellishment, is the text of an e-mail communication from the Association of Washington Cities [AWC]:

Supreme Court rules on Initiative 747 and Initiative 960 passes

Supreme Court Rules on Initiative 747
The Supreme Court ruled today that Initiative 747 is unconstitutional. I-747 was passed in 2001, limiting annual property tax increases to one percent. The court's opinion states that the initiative failed to accurately inform voters of the impact of the change, because the text of the law used in the initiative showed that the initiative reduced the general property tax levy from a limit of two percent to one percent. However, in reality it reduced the limit from six percent (or IPD for cities and other districts over 10,000 population) to one percent. I-722 implementing the two percent limit had been declared unconstitutional by the Supreme Court earlier that same year. This court decision means that the law is back to what it had been prior to the passage of I-747 in 2001 - a 6% cap.

This issue will be the subject of debate during the next several weeks and the Legislature is very likely to address it early in the 2008 legislative session.

We realize many cities are in the process of adopting their budgets. Cities should strongly consider the political and legal ramifications and use extreme caution if considering property tax increases above 1%. Some in Olympia have already discussed requests for reconsideration by the Supreme Court which would delay the effective date of the decision. Others are asking for the inclusion of a retroactive clause in a bill next year that would impact 2008 levies set in 2007. And the Governor is asking local governments not to increase their property taxes as a result of this decision – see below for a complete copy of her statement.

Supreme Court Opinion:

Statement from Governor Gregoire on Overturn of I-747:

"I know that voters must be disappointed by the court decision to overturn I-747. As we know, voters approved I-747 by a wide margin in 2001.

As Governor, I am asking the state, counties, cities and all other 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.

We heard loud and clear on Tuesday evening that 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."

Initiative 960 passes November 6 General Election
I-960 (concerning tax and fee increases imposed by state government) passed this week with 52% of the vote. The initiative requires voter approval or two-thirds of both the Senate and House to increase taxes. The initiative also expands the current legislative fiscal note process to include additional public notification when the Legislature considers tax bills, including voting records on proposals, and a 10-year estimate of the costs of legislation for all versions of the proposed bills at each state of the legislative process.

The initiative also:

• requires legislative approval of state fee increases, and 
• requires an advisory vote during the next general election for all revenue increases approved by the Legislature that are not otherwise approved by the voters.

While the initiative does not directly impact cities, we anticipate significant secondary impacts given the constraints this initiative will place on the State.

Some have already questioned the constitutionality of this initiative and we do expect legal challenges.

Initiative Measure 960:

OFM summary of fiscal impacts: