Opportunity for Olympia threatens lawsuit as income tax goes to Nov. ballot

Olympia voters will get to cast ballots in the Nov. 8 general election on whether to create a local public college tuition fund funded by the state’s first income tax.

In the meantime, a complicated legal battle over the unprecedented initiative continues to unfold, including a potential lawsuit as well as accusations that the city of Olympia violated campaign laws in its effort to keep the initiative off the ballot.

Backed by a group called Opportunity for Olympia, the initiative calls for establishing a college fund funded by a new 1.5 percent tax on all household income within city limits that exceeds $200,000 a year.

Despite qualifying for the November ballot with thousands of valid signatures, the initiative faced opposition from the Olympia City Council, which refused to send the initiative to voters as required by law. Instead, it filed an injunction that forced a judge to determine whether Olympia has the legal authority to impose or collect an income tax — and that prompted a series of legal actions between the city and initiative supporters. At one point, the initiative was not going to appear on the ballot; now, it is.

In response to a Wednesday court order, the city has submitted a ballot title — a summary of the initiative — to the Thurston County Auditor’s Office. Because the voters pamphlets for the November election were printed without the initiative, the auditor’s office must now print a separate pamphlet for Olympia voters and include it with the ballots that are mailed to homes.

County Auditor Mary Hall said the city of Olympia will need to cover the estimated $10,000 printing cost.

Meanwhile, attorneys for Opportunity for Olympia filed an appeal to the ballot title Thursday. They say the ballot title’s description of the initiative is full of errors and “creates prejudice against the measure.” A key point of contention is that the ballot title refers to Proposition 1 as establishing an income tax instead of first saying that it would create and fund a college grant program.

“It is prejudicial and awkward to describe the funding sources before the program being funded, and to include only one of the two funding sources,” according to the appeal, which seeks an amendment to the ballot title. “The proposed statement of subject suggests that this initiative is simply about imposing a tax, which is incorrect and prejudicial. Proposition 1 is driven by education policy, and the excise tax and private fundraising supports that educational policy.”

In addition, Opportunity for Olympia’s attorneys sent a letter Sept. 2 to Attorney General Robert Ferguson and Thurston County Prosecutor Jon Tunheim to announce an intention to sue within 45 days if the two officials do not file a lawsuit of their own against the city.

The proposed lawsuit alleges that the city of Olympia has violated state campaign laws by using public money to oppose the initiative.

In response, City Attorney Mark Barber cited an interpretation by the state Public Disclosure Commission (which regulates campaigns) that any expenses made by a government entity to defend its official actions — as in this case — are not subject to reporting as campaign expenditures.

“The issue of whether or not it’s invalid, that remains for another day,” Barber told The Olympian about the original initiative. He also called Opportunity for Olympia’s potential lawsuit “ridiculous.”

The city has opposed the initiative, saying not only does it contain loopholes and inconsistent legal language, but it will lead to a costly court challenge over its constitutionality if passed by voters. The city has estimated that a legal fight to block it from the ballot will cost between $50,000 and $60,000.

Pierce County Superior Court Judge Jack Nevin ruled Aug. 24 that the initiative extends beyond the city’s powers and clashes with a state law that bans income taxes. Opportunity for Olympia’s attorneys immediately filed an appeal, arguing that by keeping the initiative off the ballot, the court is denying the First Amendment rights of local voters.

A state appellate court commissioner issued a stay of Nevin’s ruling Sept. 2, effectively allowing the initiative to appear on the ballot. However, the decision does not address the initiative’s legal validity.

As for the ballots, the auditor’s office is required to mail more than 6,000 general election ballots to military and overseas voters by Sept. 24. With this in mind, the deadline for final general election ballots is Sept. 14, with pro and con statements submitted by Sept. 16 and rebuttals submitted by Sept. 19, according to a declaration filed in court by the auditor.

This story was originally published September 8, 2016 at 5:01 PM with the headline "Opportunity for Olympia threatens lawsuit as income tax goes to Nov. ballot."