WA voters send anti-tax message on initiatives

Recession-weary Washington voters delivered a strong anti-tax message Tuesday, rejecting a state income tax on the richest 1 percent while also rolling back increased snack taxes and making it harder for the Legislature to raise taxes in the future.

The results will have immediate and longer-term effects on the state's budget, which already faces another multibillion-dollar deficit when legislators meet in January.

Anti-tax activist Tim Eyman, who sponsored one of the successful measures, said the voters' verdicts shouldn't be surprising.

"Families and businesses are tightening their belts and making due with less," Eyman said. "Voters firmly believe it's long past time for government to do the same."

The proposed high-earners income tax, known as Initiative 1098, was rejected with about 65 percent of the vote to 35 percent in unofficial returns.

I-1098 would have instituted a state income tax on the top 1 percent of incomes to pay for education and health programs while trimming state property and business taxes.

Washington remains one of seven states without a personal income tax. I-1098's defeat marks the fifth time Washington voters have rejected a personal or corporate income tax since 1934.

"I don't think we're going to see that kind of initiative back anytime soon," said Republican former Sen. Slade Gorton, a I-1098 opponent.

The $6.4 million "yes" campaign was supported largely by labor unions, particularly those representing government employees. Nearly $2.3 million came from various branches of the Service Employees International Union. The public face of the campaign was Bill Gates Sr., a longtime proponent of tax reform.

Gates and other supporters said the state's revenue system unfairly focuses on sales taxes, which consume a larger percentage of lower-income people's dollars. They also point out that state budgets have been in trouble lately, and I-1098 would generate about $2 billion per year for key programs.

The $6.3 million "no" campaign was bankrolled by some of the most prominent names in Washington business, including Microsoft Corp. CEO Steve Ballmer, who contributed $425,000, and Amazon.com Inc. founder Jeff Bezos, who donated $100,000.

Opponents said the tax would harm business and make it more difficult to attract top talent to major companies. They pointed out that the Legislature could change the tax brackets with a simple majority vote in two years, raising the possibility that more people could pay in the future.

Initiative 1107 rolled back higher taxes on pop, candy, gum, bottled water and certain processed foods. It was approved with about 63 percent to 37 percent in unofficial returns.

The higher taxes on snacks and drinks were part of a revenue package that the Democrat-controlled Legislature enacted earlier this year to help avoid deeper cuts to state spending.

The repeal campaign was led by the national soda lobby's American Beverage Association, which contributed nearly all the effort's nearly $16.8 million treasury. The campaign focused on how the taxes would apply to products outside typical junk food, employing a grocery-cart logo and the motto "Stop the tax hikes on food and beverages."

Opponents were vastly outspent. They raised less than $500,000 from unions, health clinics, and others who rely on the state spending bankrolled by the tax increases.

The state Revenue Department estimated the rollback would drain about $55 million from the state treasury for the rest of the current budget period, and nearly $218 million for the upcoming two-year budget cycle.

Eyman's Initiative 1053 resurrects an old idea that voters have supported at least twice before: Instituting a higher bar for legislative votes to raise taxes. It was approved with about 66 percent to 34 percent in unofficial returns.

I-1053 requires the Legislature to get a two-thirds majority on tax-hike votes rather than the simple majority required for most legislation. Lawmakers also could send taxes to Washington voters for approval.

Some of I-1053's many business supporters - such as the oil industry and banks - were looking to protect themselves during next year's legislative session, when Olympia will be grappling with yet another major budget deficit.

Opponents stressed that I-1053 would allow a small slice of the Legislature to overturn the usual principle of majority rule. Critics also argued the concept is legally questionable because the state constitution says most legislation is passed by a simple majority vote.

Supporters raised about $1.3 million, with a large chunk spent on the early signature-gathering phase. Opponents compiled a $1.6 million campaign, led by unions and health-care companies.