Spending limit's legality placed in spotlight

OLYMPIA — As Republicans complain that the newly minted state budget violates the state's spending limit, Washington's Republican attorney general says a key provision of the limit is likely unconstitutional.

In a court filing this week, Attorney General Rob McKenna's office says the spending limit's requirement for a public vote on some tax increases is "of doubtful validity."

McKenna is not asking that the spending limit — established in 1993 by Initiative 601 — be thrown out. In fact state lawyers say the court "need not and should not" reach that conclusion in deciding a lawsuit that alleges that lawmakers violated the limit when they approved tax increases without a public vote last year.

The state's position is that Gov. Christine Gregoire and the 2005 Legislature followed the law as set out in the voter-approved spending limit, but even if they didn't, the judge shouldn't require a public vote because that part of Initiative 601 could be unconstitutional.

"It's convenient to say 13 years after the fact, 'We haven't broken the law but even if we did it is unconstitutional,' " said Jason Mercier, senior budget analyst with the Evergreen Freedom Foundation, the conservative group that filed the lawsuit last year.

It's the first time the state has made that claim in court. And it could attract a constitutional challenge to the voter-approved spending limit.

Initiative 601, which requires a public vote to raise any taxes above an annual limit for state spending, faced a legal challenge soon after becoming law. But the state Supreme Court dismissed the case because, it said at the time, the plaintiffs could not show any harm from the spending limit.

The court papers filed this week come in a lawsuit filed by the Evergreen Freedom Foundation, a budget watchdog group, as well as the Washington State Farm Bureau and organizations that represent small-business owners.

They allege that the Legislature and Gregoire manipulated the law to increase the spending limit and avoid a public vote on about $480 million in tax and fee increases last year for the biennial budget.

The suit, filed in Snohomish County Superior Court, seeks to invalidate those taxes.

The state says the spending limit was followed and that the plaintiffs rely on a preliminary spending-limit calculation to make their claim.

This year, Republicans say the limit is being manipulated again to increase the amount of money that ruling Democrats want to spend in the supplemental budget expected to be approved today.

Questions about the constitutionality of the public-vote requirement stem from a 2000 state Supreme Court ruling on Initiative 695, which eliminated the state car tax and required that any tax increase be approved by voters, whether or not it exceeded the spending limit.

The court threw out I-695 on several grounds.

It said the public vote on each tax increase was unconstitutional because it conflicted with the state Constitution's provision for voter referenda — which requires a petition signed by 4 percent of state voters — and conflicted with the Legislature's constitutional powers to approve spending and taxes.

The state is not trying to invite a challenge to the spending limit, said Deputy Solicitor General Jeffrey Even, the state's lawyer on the spending-limit case.

"It's a matter of being up front with the court and making sure that the landscape is known when the judge makes a ruling," Even said.

Sen. Joe Zarelli, R-Ridgefield, says the intent of I-601's spending limit is good, but the law has been manipulated over the years by whichever party has been in control of the Legislature.

He's proposing a constitutionally mandated savings account as a way to control spending increases.

Zarelli and Mercier, of the Evergreen Freedom Foundation, agree that there could be some value in scrapping I-601.

"The Legislature has to make a choice," Mercier said. "Either say, 'We are going to honor 601, there is merit to have a spending limit to keep us fiscally disciplined,' or just repeal it and stop playing these games."

David Postman: 360-943-9882 or dpostman@seattletimes.com