Legislative Report from Rep. Ruth Kagi, D-32

Dear Neighbors,

It has been another busy week in Olympia.  Tuesday was cut-off for policy committees in the House, meaning that any bill in a policy committee that did not receive a vote will not likely be moving forward this session.  The Senate had policy cut-off today. 

Initiative-960 Update
                The Senate introduced legislation this week to amend parts of I-960.  Senate Bill 6843 was heard in the Senate Ways and Means committee on Thursday.  I want to take this opportunity to explain some key provisions of this bill and why I am supporting it.

I have great respect for the initiative process and support our citizens’ right to participate in government through initiatives.  Just like laws passed by the legislature, however, initiatives are very often changed after the first couple of years – for a variety of reasons. 

For example, two of the most popular initiatives ever passed by the people of Washington – I-728 (classroom size reduction, approved by 72% of voters) and I-732 (teacher COLAs, approved by 63% of voters) – have been suspended temporarily in bad economic times, simply because there is was enough money available to fund them.  The decision to suspend initiatives was a tough one, but came with bi-partisan support.

I-960 (approved by 51% of voters) is no different and is not being singled-out. Legislators are elected by those same voters to make common-sense changes to laws when circumstances require it.

·         SB 6843 proposes to suspend parts of I-960. It suspends for one year the requirement for a two-thirds vote in the legislature in order to eliminate existing tax exemptions or increase any tax. This will provide legislators with some flexibility to manage the unprecedented economic downturn.  It also allows lawmakers to make reasonable changes to our tax code that you would probably expect us to make regardless of whether we’re in the midst of a recession. 

The House outlined more than a dozen needed updates to our tax codes in HB 3176 this week, but with I-960, most of those fixes are impossible.  For example, under I-960, we cannot close the tax loophole that allows certain companies to form LLCs just for the purpose of avoiding taxes. Tax attorneys love that loophole but it will cost the state $54 million next biennium.  Nor can we update a tax code from 1949 that charges only $125 to license a million-dollar private plane so it matches the licensing costs of a million-dollar-boat.

We cannot fix court decisions that unfairly tax our in-state business while favoring out-of-state businesses – which can cause companies to move jobs elsewhere and will cost the state $95 million.  I don’t think most people would consider fixing such things “raising taxes,” but these and other common-sense actions are not possible under I-960.

The bill also proposes some permanent changes to I-960:

·         25 percent of bills introduced never receive a public hearing, so public notice of bills that affect revenue will begin only when a bill is scheduled for a hearing instead of when it is introduced.  This will save valuable state resources without dampening the public’s right to know what’s going on.

·         Since anything beyond a six-year economic projection is nothing more than a guess,

SB 6843 permanently changes the cost projection from a 10-year outlook to a 6-year outlook, making it more reliable and consistent with fiscal note projections already performed by the Office of Financial Management.

·         To enable legislators to make reasoned changes in our tax code, the bill changes the definition of “increasing taxes” to exclude changing or repealing tax preferences, fixing court decisions that reduce revenue, and transferring existing revenues between state accounts.

When I-960 passed in 2007 the majority of the residents of the 32^nd district voted to reject the initiative by a 58% margin. I will be supporting the effort to amend I-960 and temporarily suspend the 2/3^rd requirement for tax increases.  I hope you will support me in this effort so we can update our tax codes and bring in new revenues to our state during a time of a severe budget crisis.

Reps. Kagi, Chase to hold Feb. 20 town halls

State Reps. Ruth Kagi and Maralyn Chase will host two local town hall meetings on Feb. 20^th for constituents of the 32^nd Legislative District. The meetings offer an opportunity to learn about the issues facing the 2010 Legislature — now in session through mid-March — and to share concerns and ideas about the issues being considered by the Legislature.

Town hall meetings on Saturday, Feb. 20, 2010:

10 a.m. - noon

Upper Level, Third Place Commons

Lake Forest Park Town Center

17171 Bothell Way NE

Lake Forest Park, WA  98155

1-3 p.m.

Shoreline Historical Museum

749 North 175th Street (175th and Aurora next to Shorewood High School)

Shoreline, WA  98133

Best Regards,

Ruth