Our Summary of the 2010 Initiatives
A look at this year’s ballot initiatives and their impact on Washington state.
- Initiative 1107 would repeal mostly temporary taxes on non-essentials at a cost to the state;
- Initiatives 1100 and 1105 would privatize the liquor system, which would also cost the state resources;
- Initiatives 1053 would require a supermajority to raise taxes or fees, making it more difficult to take a balanced approach to dealing with our priorities;
- Initiative 1098 would create a high-income tax to help fund education and health care;
- Initiative 1082 would allow private insurers to sell workers compensation insurance, also at a cost to the state.
The measure would repeal the extension of the sales tax to candy, gum, and bottled water, along with an excise tax on carbonated beverages.
Analysis: The approval of these taxes was pivotal to preventing even deeper cuts this year. Their repeal would significantly reduce state resources for important priorities like education and health care. Indeed, the fiscal gap faced by the state in the next three years would grow by some $272 million. The likely result? More cuts.
It’s important to note these taxes are mostly temporary and quite common around the county.
The two initiatives would dramatically change the state’s liquor system and would cost the state millions for public investments. Though different in many respects, both I-1100 and I-1105 would eliminate all state-owned liquor stores and the state’s centralized distribution center. These measures would instead allow liquor to be distributed through private wholesalers and be sold at grocery and convenience stores.
Analysis: Both initiatives could significantly reduce state resources in coming years:
- Under both I-1100 and I-1105, privatizing retail and wholesale liquor sales would cost the state more than $70 million per year in state markup revenues;
- I-1105 would also repeal all existing state taxes on liquor, which generated about $220 million in fiscal year 2009. Only a small portion of these revenues would be replaced by new taxes on distributors and retailers;
- I-1105 would require the state Liquor Control Board to propose a new per-liter liquor tax to the Legislature. But nothing in I-1105 requires lawmakers to act. Additionally, should I-1053 pass, the proposed tax would have to be approved by a supermajority (two-thirds vote) in the Legislature or by a vote of the people;
- The state Office of Financial Management (OFM) estimates that I-1100 would have a five-year cost to the state general fund of $115 million-$123 million. OFM estimates that I-1105’s five-year cost would be $513 million-$547 million.
Tim Eyman’s latest measure would reinstate a requirement that tax increases, no matter how small, be approved by a supermajority in the Legislature or by a public referendum vote.
Analysis: The supermajority requirement would allow a small minority of lawmakers to block any revenue proposal. It would make it virtually impossible for legislators to take a balanced approach to Washington’s ongoing economic problems. The result would likely be more damaging cuts.
The measure would reduce taxes for homeowners and small businesses while providing additional resources for education and health care through a new tax on high incomes.
Our analysis: I-1098 would enact important long-term reforms to our state’s inadequate revenue structure. The proposed tax on high incomes would generate about $2.9 billion per year for Washington state. About 55 percent ($1.6 billion) of the revenue would be spent on improvements to Washington’s education system. Another 15 percent ($393 million) would be used to lower property taxes for homeowners and businesses. The remaining revenues would be spent on new funding for health care ($686 million) and lowering B&O taxes for small businesses ($259 million).
This measure would allow private insurers to sell industrial insurance policies (also known as Worker’s Compensation) in Washington state. The insurance covers the costs of medical care, and missed time at work for injured workers. It also provides a pension for those who are unable to return to work as a result of a serious injury.
Analysis: OFM identifies a range of potential costs – including lost premium payments from state employees, higher administrative and oversight costs for the state Office of the Insurance Commissioner and the Department of Labor & Industries, and legal costs associated with higher numbers of rejected injury claims. That adds up to $202 million over the next five years in lost state resources.
The Washington State Budget & Policy Center does not take positions on initiatives.