State Supreme Court upholds Referendum 53
April 4, 2003
OLYMPIA, WA(AP) -- The state Supreme Court upheld the results of
Referendum 53 because, Chief Justice Gerry Alexander wrote, the referendum's
opponents didn't prove that the measure would threaten the support
of state government.
The underlying law targeted by R-53 revamped the system for calculating business tax rates. Businesses in Washington pay unemployment taxes, which go into a fund from which unemployment benefits are drawn.
Historically, businesses such as retailers, restaurants and Boeing have paid more in taxes than their laid-off workers use in benefits. The building and construction industry generally pays less in taxes than its workers take out in benefits. The Legislature passed the underlying bill last year and Gov. Gary Locke signed it into law, with the idea of overhauling the system so one type of business doesn't subsidize benefits for another.
The building industry opposed the new law. The changes would have increased its tax rates, and the Building Industry Association of Washington argued that the unemployment tax system needed a more thorough overhaul.
So the building industry sponsored R-53 to put the new law on the ballot, and 59 percent of voters voted to overturn it.
Then a coalition of business and labor, backed by Locke, challenged R-53 in court.
The basic question before the state Supreme Court was whether R-53 overstepped the boundaries of what a referendum can do. The state constitution says the people can't hold a referendum on any law that "may be necessary for the immediate preservation of the public peace, health or safety, or support of the state government and its existing public institutions."
Opponents of R-53 argued that the underlying law, overhauling unemployment taxes, was needed for the support of state government and its existing public institutions.
But they faced a big challenge in making this argument: The underlying law didn't have an "emergency clause."
Emergency clauses are a way for the Legislature to "referendum-proof" bills. An emergency clause parrots the language of the constitution, saying all or part of a bill is necessary for the immediate preservation of the public peace, et cetera.
The underlying law did have one emergency clause, but only for one section that extended unemployment benefits for laid-off aerospace workers.
Opponents of R-53 argued in court that even though only one section of the law had an emergency clause, the whole thing was necessary for support of state government.
The Supreme Court didn't buy that argument.
Alexander found that testimony on the bill claimed that it was "very important" and would prevent "a new round of tax increases" for most businesses.
The legislative history and statements on the bill don't support the claim that it was necessary for supporting state government, Alexander wrote: "Rather they seem to indicate the bill is necessary for assisting business."
Lawmakers have returned to square one in their search for a solution to the problems in the unemployment tax system. Many business owners dislike the system; Boeing officials have said it's one of their biggest complaints about doing business in Washington. The bill that R-53 overturned took several years of planning and negotiations.
Business groups on opposite sides have been working together since January and recently proposed a new, comprehensive fix for the system. Their proposal includes a plan for completely scrapping the existing unemployment tax code and writing a new one.
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