Timeline of Olympia Income Tax Ballot Measure

Oct 4, 2016

Thurston County Auditor's Office has posted the Pro/Con statements for the Olympia income tax proposal (Measure 1). Although this income tax proposal is limited to the city limits of Olympia, its approval could have a huge future impact on taxpayers statewide. This is due to the fact this Olympia income tax proposal is really about creating a test case to see if the state Supreme Court will allow a statewide income tax without constitutional amendment. So how did the Olympia income tax proposal make the ballot in conflict with not only 80 years of case law banning graduated income taxes but also a very clear state law prohibiting local income taxes?

Here is a timeline for the income tax proposal Olympia voters will be considering this fall: 

  • February 4 – State Supreme Court in a 9-0 ruling says that illegal local ballot measures can be kept off the ballot (a different standard is applied to the broader statewide initiative power). In an apparent conflict with this ruling, the Appeals Court will later allow the Olympia income tax proposal to remain on the ballot. From the unanimous Supreme Court ruling: "Courts generally avoid reviewing ballot initiatives before they have been enacted into law, but a few limited types of challenges can be appropriately reviewed prior to election: procedural challenges (such as sufficiency of signatures and ballot titles) and challenges asserting that the initiative is not within the scope of the legislative authority granted to local residents."
  • April 19 – Olympia City Council holds public hearing with its attorney Hugh Spitzer to discuss legality of Olympia income tax proposal. The Olympian reports: “Spitzer sees the Olympia proposal as a ‘test case’ that will attempt to address the constitutionality of the state’s ban on an income tax. However, he predicts that a court will rule that code cities such as Olympia cannot tax individual income. ‘People will wind up being quite disappointed,’ Spitzer told the council.”
  • May 17 – Olympia City Council discusses proposing an alternative income tax proposal due to “flaws” in Measure 1, such as how city will receive tax information from citizens. The Olympian reports: “One major challenge is that the Internal Revenue Service is prohibited from sharing confidential tax information, meaning that the city would rely on taxpayers to voluntarily disclose that data . . . City staff also reports that the ordinance lacks a provision for penalties and enforcement in case a household refuses to pay.”
  • July 22 – Olympia City Council files an injunction to keep Measure 1 off the ballot as an illegal proposal: The Olympian reports: “At Tuesday’s council meeting, [Mayor Pro Tem Nathaniel] Jones called the current initiative ‘fatally flawed’ and said it creates false hope among voters. ‘It would be irresponsible to place this measure on the ballot knowing it would definitely fail in the courts,’ Jones said. ‘This is a setup for failure.’ Mayor Cheryl Selby said city staff has devoted ‘hundreds of hours’ toward a complex issue in a failed effort to come up with an alternative that can withstand an inevitable court challenge.”
  • August 24 – Thurston County Superior Court rules Measure 1 is an illegal proposal and removes it from the ballot. The Olympian reports: “A judge has ruled that a proposed income tax initiative for Olympia residents is invalid and cannot appear on the November ballot. The decision was made Wednesday in Thurston County Superior Court by Pierce County Judge Jack Nevin, who said the initiative extends beyond the city’s powers and conflicts with the state law that bans income taxes.”
  • August 31 The Olympian runs an editorial titled "Judge wise to block city income tax proposal." From the editorial: "King County activists wanted to use Olympia as a test case for the legality of a graduated income tax, but it was clear early on that cities lack authority to enact such a tax. That is exactly what Judge Jack Nevin ruled. Besides the illegality of the measure, the costs for an election and inevitable legal fights over the constitutionality of such a tax — if approved by voters — were not welcome."
  • September 2 – An Appeals Court Commissioner surprisingly stays the ruling removing Measure 1 from the ballot while the full appeal continues. The Olympian reports: “The appeal allows the initiative to appear on the November ballot, but it does not address the initiative’s validity, said City Attorney Mark Barber. The city argues that the initiative is full of inconsistent legal language and loopholes — such as a lack of enforcement and penalty provisions — that would fail to withstand an inevitable and costly court challenge if it passes in November.”
  • September 14 – A different Thurston County Superior Court judge orders the words “income tax” removed from the ballot title for Measure 1 saying those words would “prejudice” voters against the proposal. The Olympian reports: “The city submitted the ballot title last week, but drew an immediate challenge over the summary’s language, which introduced Proposition 1 as ‘the establishment of a 1.5 percent income tax within the city.’ Attorneys for Opportunity for Olympia said the ballot title’s description ‘creates prejudice against the measure’ because it refers to an income tax before saying that it would create and fund a college grant program.”
  • November 8 – Election Day
  • November/December – New legal challenge?