Showdown Tuesday morning in I-976 challenge

Tuesday morning Initiative 976 will face its first test, when a court case challenging its constitutionality has a hearing before a King County Superior Court judge.

The issue at hand tomorrow is whether the judge should grant a preliminary injunction blocking the implementation of the initiative. The plaintiffs, including the City of Seattle and King County, filed a motion for preliminary injunction early last week. The State Attorney General’s office, which by law is required to defend the initiative, filed a response opposing the motion last Friday, and this afternoon the plaintiffs filed their reply.

 

 

Here’s a quick rundown of the issues in dispute, that the court will need to address in its ruling.

According to the courts, in order to get a preliminary injunction, the plaintiffs need to prove three things:

1. that they have a clear legal or equitable right: they are likely to succeed on the merits of their claim, the balance of interests between the parties tips in their favor, and an injunction is in the public interest;
2. that they have a well-founded fear of immediate invasion of that right;
3. that the act complained of will result in actual and substantial injury.

Most of the ink in the legal briefs is spent arguing about the merits of the claim that I-976 is unconstitutional, so let’s start with that. The plaintiffs have five separate arguments why it’s illegal:

It violates the “single-subject” rule, Article II Section 19 of the state Constitution, both by containing multiple subjects not germane to each other, and by having a title that is misleading and isn’t germane to parts of the initiative. The two sides squabble about whether the title is “general” or “restrictive,” because there are different standards for what is germane based upon that. The state argues that it’s general, and has the better argument of the two, but stretches too far its argument for rational unity between all the different pieces of I-976. The plaintiffs mock this in their reply (emphasis in the original):

The subjects of I-976 are not all germane to that general subject, nor to each other. I-976 combines a reduction in state vehicle registration taxes with elimination of locally voted registration taxes with elimination of the one-time vehicle sales tax with the repeal of local voter authority to issue vehicle fees with a purported requirement that Sound Transit repay outstanding bonds with a change in the valuation schedule only used by Sound Transit with a reduction in Sound Transit’s authority to issue future MVETs should it not repay its bonds. A voter may have supported I-976 because they did not like the state MVET, or a locally voted MVET, or the MVET valuation schedule, or Sound Transit.

The plaintiffs also focus their energies on what might be their strongest point: that when I-976’s title says that it will “limit annual motor-vehicle license fees to $30, except voter-approved charges,” it is being intentionally deceitful, for three reasons:

1. the statement could be read to mean that existing voter-approved charges will still be in effect (while the bill repeals all of them);
2. I-976 repeals nearly all authority to impose voter-approved license fees, so there is effectively no real possibility to have any voter-approved charges except at the state level;
3.  I-976 doesn’t actually cap the fees at $30, because it leaves several of the existing fees listed in RCW 46.17 in effect.

The state argues that everything in the initiative is related to “motor vehicle taxes and fees,” and points to the state Supreme Court ruling on Initiative 776, the precursor to I-976, in which the Court found it didn’t violate the single-subject rule. As with most of the cases challenging an initiative under the single-subject rule, there is enormous room for interpretation. But the courts have said that it should be “liberally construed in favor of the legislation,” so the bar is fairly high for a judge to find a violation here.

 

It amends the law without setting out the changes in full, violating Article II Section 37 of the state Constitution. The plaintiffs argue two violations here. First, the lack of clarity on whether the fees in RCW 46.17 are still in effect is a catch-22: if they are in effect, as the state argues, then (as described above) the subject-in-title rule is violated; if they are repealed, then the changes to the law have not been set out in full because RCW 46.17 is not amended by I-976.

Second, the plaintiffs argue that having repealed RCW 82.80.140 but left references to it in two other sections (RCW 36.73.040 and 36.73.065) is another failure to set out the changes in full; the state argues that the consequences of the repeal of 82.80.140 is “clear” and its impact on the other sections is “incidental” so there is no violation.

 

It infringes on local authority. The plaintiffs argue that a statewide initiative cannot repeal a local voter-approved tax. The state argues, however, that local taxes, whether enacted by a local legislative body or by voters, may only be enacted if the state expressly delegates taxing authority to the local jurisdiction; that is not in dispute. But the flip side is that the state may also repeal the delegation of taxing authority to a local jurisdiction, as the courts have ruled: “The legislature or the people legislating by initiative may rescind by general laws the authority previously granted.” And in so doing, any taxes imposed with that authority are also repealed.  This is very different than, for example, if a statewide initiative purported to repeal one of Seattle’s tenant-protection ordinances, because of the need for an explicit grant of authority to tax from the state government. The state has a strong argument, supported by case law, and the plaintiffs have no good response.

 

It exceeds the scope of initiative power by intruding on administrative functions. Initiatives are an expression of the citizens reserving legislative power for themselves — but that is expressly restricted to legislative acts, not administrative (i.e. executive branch) or judicial ones. The plaintiffs argue that I-976 intrudes into administrative powers in two ways: first by requiring Sound Transit to repay outstanding bonds (an administrative act, it claims); and second by conditioning the effective dates of sections of the initiative on whether and when Sound Transit decides to repay its bonds, effectively delegating the selection of effective dates to a third party. The state counters first by pointing out that all of the plaintiffs’ case law cited on this issue refer to local initiatives, not statewide ones — and the courts have recognized that local initiative power, derived from state and local laws, is more restrictive than statewide initiative power that is derived directly from the state Constitution.  Second, the state points to several case law examples finding that laws conditioning the effectiveness of a law on a third party are constitutional. This one will be messy for the court to sort out.

Finally, the plaintiffs argue that I-976 impairs contractual bond obligations, violating the state Constitution’s prohibition on laws impairing bonds. The state argues that I-976 is specifically constructed to avoid impairing bonds by allowing car-tab fees to continue on (though at a reduced level) until the bonds that they are pledged to are repaid. And further, it argues that the bonds that the plaintiffs have put forth are “double barreled” because the government issuing them had made an “express commitment to the bondholders that they could rely entirely on the full faith and credit pledge” of the relevant government body to repay the bond debt. The courts have previously found that “double barreled” bonds are not impaired by laws such as I-976, the state suggests.

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Beyond the arguments on the merits of I-976’s constitutionality, the parties also wrestle over whether the plaintiffs have met the other requirements for a preliminary injunction. They argue back and forth about where the balance of interests lies between various governmental bodies each claiming to represent “the people,” and what is in the public interest. The plaintiffs argue that they will be immediately harmed in their ability to deliver critical transportation services to their residents if they can no longer tax residents, and can always refund the money later; the state counters that the greater public interest is in leaving the money with the taxpayers in the first place, and that a large-scale refund program will be cost-prohibitive. The state also argues that by their own admission the plaintiffs won’t feel impacts in the short term, at least long enough to see this court case through to its resolution. Additionally, the state contends that the plaintiffs have other financial resources available to them to compensate for the repeal of the car-tab fees and other taxes. The state’s strongest argument here is sowing doubt over what is in the public’s interest; its weakest is trying to make the case that there aren’t short-term impacts to transportation and to organizations such as Sound Transit.

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With so many issues to sort out, and such a short time-frame since the case was filed, it’s very unlikely that the judge will issue a ruling from the bench tomorrow morning.  But with most sections of I-976 becoming effective next Thursday (December 5), we will likely hear back within a week.