“Public investment impact disclosures” would not be a good addition to ballot titles

By: Emily Makings
1:01 pm
January 13, 2022

Two similar bills have been introduced that would require “public investment impact disclosures” in ballot titles for initiatives and referenda that make tax changes. The bills give the impression of transparency but would not provide meaningful context for voters.

Under current law, the Office of Financial Management must prepare a fiscal impact statement for initiatives and referenda (RCW 29A.72.025). These are similar to fiscal notes for legislation and must describe the estimated revenue and expenditure changes that would occur under the ballot measure. The fiscal impact statement is included in the voters’ pamphlet. These fiscal impact statements provide valuable information for voters because they estimate the direct costs of the proposal.

The new bills purport to give more information as to how the proposal would impact the broader budget.

HB 1876 is scheduled for public hearing on Jan. 19. It would require the attorney general to prepare a “public investment impact disclosure” for any ballot measure that repeals, levies, or modifies any tax or fee. The disclosure would also be required for measures that are estimated to cause a net change in state tax revenue. The disclosure would be in the ballot title, in this format: “This measure would (increase or decrease) funding for (description of services).”

Similarly, SB 5850 would require the attorney general to prepare a “public services impact disclosure” for any ballot measure that repeals or changes any tax or fee—if there is a net decrease in state revenue. The disclosure would be worded like this: “This measure would reduce funding for (description of services).”

Under both bills, the description could not exceed 10 words, unless its impact would be to the general fund. In that case, it could be up to 15 words and must list the top three categories of state services funded by the general fund. Neither bill clearly defines what is meant by “categories.” HB 1876 says that the description

must be sufficiently broad to reflect the subject of the investments that will be impacted by the change in revenue that will result from adoption of the measure, but also sufficiently precise to give notice of the subject matter of the investments that will be impacted by the change in revenue that will result from adoption of the measure.

(The wording in SB 5850 is similar.)

Under both bills, although the disclosure would be placed in the ballot title, “after the concise description and before the question,” the disclosure would not be subject to ballot title legal requirements or appeal.

In general, such disclosures would not be useful for voters because not only do they not provide meaningful context but in many cases they would be giving false information.

There is no direct connection between a tax change in an initiative and the appropriation of state funds. Thus, it would be factually incorrect for a ballot title to state that a measure would cut education (for example)—unless the text of the initiative specifies that that would happen. In the event of a tax initiative passing, the Legislature may very well choose to balance the budget in another way.

Also, state revenues change for legislative and economic reasons. If the economy is growing, tax cuts could be made such that no services need to be cut. HB 1876 and SB 5850 do not account for that. Nor would the disclosures indicate the magnitude of the proposed tax change and the potential budget impact.

For example, say there’s an initiative next year that would cut the sales tax rate by 0.1%. This would reduce revenues to the general fund–state. With HB 1876, the ballot title would include a statement like this: “This measure would decrease funding for education, low-income health care, and social services.”

First, there would be no reason to expect the Legislature to choose to cut education, health care, and social services in response to the initiative.

Second, the disclosure would not say that the tax cut would be about $300 million to a budget of $59 billion. The ballot title would also not say that because of strong economic growth, the state has a surplus of over $8.6 billion—so there would be no need to cut current services at all.

Categories: Budget , Tax Policy.