City of Olympia will fight local income tax petition

The Olympia City Council has decided to challenge a proposed initiative that could create the first income tax in Washington.

Opportunity for Olympia has submitted a petition with nearly 9,000 signatures, and the Thurston County Auditor’s Office confirmed Wednesday that at least 4,702 signatures were valid. That’s the number required for a certificate of sufficiency, which means the council is now required to either enact the ordinance or send it to the Nov. 8 general election ballot.

The proposed initiative calls for a 1.5 percent tax on household income in excess of $200,000 to raise an estimated $3 million a year for a public college tuition fund.

However, the validated petition also opens the door for the city’s legal opposition. At Tuesday’s meeting, the council authorized the city manager to seek a judicial decision in Thurston County Superior Court to determine whether the initiative is lawful. If a judge finds that the initiative is unlawful, the city could then obtain an injunction to keep it off the November ballot.

It’s possible that if voters approve the initiative in November, it could sit in limbo until the city’s legal challenge — including any appeals — has run its course.

“We would take the initiative to court to see if this is within the initiative powers of the city,” said City Manager Steve Hall.

The city estimates its pending legal fight against the initiative will cost between $50,000 and $60,000. Hall also said the initiative will go before the council July 26, and that the council is legally bound to either enact the ordinance outright or send it to voters.

Tuesday’s decision comes after weeks of debating alternatives as well as the initiative’s flaws and consequences. The city at one point attempted to draft its own income tax proposal in an effort to satisfy citizens who have signed the Opportunity for Olympia petition.

A main concern about the initiative is whether it would survive a costly and inevitable court challenge. One obstacle is whether Olympia has the authority to adopt an income tax, when state law prohibits the Legislature from enacting one. Other concerns are about the petition’s inconsistent language and lack of an enforcement provision.

Former mayoral candidate Marco Rosaire Rossi, who is volunteering with Opportunity for Olympia, said he is confident the campaign will move forward.

“We really see this as a people’s initiative,” Rossi told The Olympian. “Our campaign has been actively trying to communicate with the city.”

Tuesday’s council decision included a request for the city’s General Government Committee to study how Olympia residents are affected by the state’s regressive tax system and access to higher education.

Supporters of the initiative say the latter two subjects need serious reform across the state and that Olympia can lead the way. Opponents of the initiative, including three out of seven council members, say the city has no business collecting an income tax or getting into higher education policy.

Jami Lund, a senior policy analyst for a conservative think tank called the Freedom Foundation, told the council Tuesday that the proposal is “unfair and immoral” because it takes money from a small group of citizens and gives it to others.

“The Freedom Foundation will be looking at litigation if it becomes law,” Lund said of the initiative.

Ray Guerra of Opportunity for Olympia said there was no outrage when the council raised the property tax by 1 percent in 2015. He also said that nearly 9,000 signatures on the group’s petition sends a clear message that residents want the city to help reform education funding and the state’s tax structure.

“There is a double standard at work here,” Guerra told the council. “I would encourage you not to squander this opportunity.”

This story was originally published July 13, 2016 at 1:08 AM with the headline "City of Olympia will fight local income tax petition."