Eyman initiative ruled unconstitutional

The State Supreme Court today found Initiative 747, the tax-limiting measure passed by voters in 2001, unconstitutional.

In a narrow, 5-4 decision, the high court found voters were deceived when they voted on the measure sponsored by anti-tax activist Tim Eyman.

The ruling upholds a lower King County court decision last year in which Judge Mary Roberts found the initiative was unconstitutionally deceptive.

"A voter reading the text of the initiative would have perceived a much smaller impact on government coffers than would actually occur under I-747," the justices ruled. "The text of the initiative misled voters about the substantive impact of the initiative on existing law."

Eyman appealed to the state Supreme Court.

Gov. Christine Gregoire called on local governments and 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.

In a statement, Gregoire said Tuesday's vote on a handful of tax-related measures shows 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," she said.

The measure, passed by voters in 2001, limited increases in state and local property-tax collections to 1 percent a year, unless voters approved more. When it was argued before the high court last May, the state estimated that in the six years since it passed, the measure blocked an estimated $1.6 billion in property-tax increases.

In tossing out the initiative, Roberts found that voters had been told they would be reducing the tax-increase cap to 1 percent from 2 percent, although the initiative actually was reducing the cap from 6 percent to 1 percent.

An earlier Eyman initiative, I-722, had put a 2 percent limit on property-tax increases, but that was found unconstitutional months before voters approved I-747. Roberts ruled that in 2001, voters were incorrectly told I-722 was being amended, but it was no longer law, so voters were asked to amend a non-existent law.

The majority of the high court justices agreed. They found that a lower-court judge had ruled I-722 unconstitutional five months before the signatures on I-747 were submitted to the state, and there was a permanent injunction issued banning the implementation of I-722.

"I-722's property tax increase limitation never took effect and the definition of limit factor remained at either six percent or the lesser of six percent or the rate of inflation," the justices wrote.

The decision brought immediate strong reaction from those on both sides of the measure.

"The Washington Supreme Court has sent a clear message to Tim Eyman: There will be no deception in our initiative process,"said Gwynne Skinner, one of the lawyers who argued against I-747 and a visiting law professor at Seattle University School of Law. "Tim Eyman can predict chaos, which won't occur, but he needs to get his own chaotic and deceptive tactics in order."

But state Sen. Mike Hewitt of Walla Walla, the Republican leader in the Senate, condemned the ruling.

"Voters spoke very clearly when they passed I-747 six years ago, saying they didn't want local governments to be able to collect more than 1 percent in additional property taxes each year unless those governments came to them for approval," he said. "Unfortunately, their will has just been overturned. The lid now just jumped from 1 to 6 percent, opening the door to massive property tax increases."

The decision came just two days after Eyman's latest initiative, I-960, appeared to be passing statewide. It makes it tougher for the Legislature to boost taxes, reaffirming and broadening an existing state law that requires a two-thirds vote by lawmakers to increase taxes.

In a statement today, Eyman said because of the ruling, "taxpayers now face the nightmare scenario. We're in for absolute chaos."

He said each local government now has the power to increase property taxes 30 percent this fall without a vote of the people. "Washington state's crushing property-tax problem is a powder keg and it will explode if Gov. Gregoire and the Legislature ignore the voter's clear mandate."

The coalition that sued to overturn I-747 included Whitman County, one of only two counties in which most voters turned down against the initiative, and several statewide organizations, including Washington Citizen Action.

In a dissent signed by four justices, author Justice Charles Johnson wrote, "There is no confusion, ambiguity or uncertainty in this initiative. The ballot title and text clearly disclose the effect of the new legislation to reduce taxes and amend current legislation allowing higher yearly tax increases.

"If a voter were to simply read the text of the initiative, the voter would have understood that I-747 reduced the property tax levy limit to one percent. This is not misleading."

Knoll Lowney, attorney for those challenging the initiative, said the measure was deceptive. and had a huge impact on counties, cities and taxing districts."The court today confirmed that the Constitution protects voters from being misled," Lowney said. "Here, Eyman's initiative misled voters by understating the impact of I-747 five fold. If the measure had been truthful, it never would have gained majority voter approval."

Susan Gilmore: 206-464-2054 or sgilmore@seattletimes.com