Gov. Locke joins lawsuit to block Referendum 53


from Governor Locke's office

Gov. Locke joins lawsuit to preserve legislative fix to close unemployment insurance loophole, support business competitiveness

OLYMPIA - Gov. Gary Locke today joined a lawsuit filed by a coalition of business and labor organizations to preserve a legislative fix that closed an unfair unemployment insurance loophole that benefits only a select group of Washington businesses.

The governor today moved to intervene in a case filed Monday with the state Supreme Court. Locke also joined the petitioners' request that the court make a swift ruling, saying the state's business competitiveness depends on it.

The 2002 state Legislature passed a tax fairness bill that would eliminate a loophole that has unfairly benefited select businesses with large numbers of seasonal workers. In short, these select businesses regularly pay in less to the unemployment system than they extract in benefits, forcing all other Washington employers, many of whom have more stable workforces, to subsidize the resulting unemployment benefits.

The legislation, which Locke signed in March, was recommended by the governor's Competitiveness Council and won wide margins in both the House and Senate. It was set to go into effect in June and over time would have resulted in lower unemployment insurance taxes for about 80 percent of Washington businesses. (This legislation and lawsuit have no impact on taxes paid by individuals.) Opponents of the legislation, primarily the construction industry, filed Referendum 53 to stop the legislation from going into effect.

"The tax fairness legislation that the Legislature passed and I signed benefits the vast majority of Washington businesses," Locke said. "This case is about making our business climate more competitive and closing a loophole that has unfairly benefited a select group at the expense of the majority of Washington businesses. Our ability to maintain business competitiveness ultimately translates into jobs - both created and retained - for Washington families."

The lawsuit before the Supreme Court says Referendum 53 is unconstitutional because referendums cannot be used to undo laws that are necessary for the support of the state government and its existing public institutions, such as the unemployment insurance system. Such laws can be modified only by an initiative, not a referendum. A previous state Supreme Court case created precedent for the governor's and the coalition's position.

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Contact: Governor's Communications Office, 360-902-4136 or visit the governor's website at

Roger Nyhus Communications Director Office of Governor Gary Locke T 360-902-4116 P 360-971-8173

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