Two-thirds majority tax law may go up in smokes
PETER CALLAGHAN
Why are a small chain of roll-your-own cigarette stores and a Tri-Cities woman who just wanted cheaper smokes in the center of one of the most contentious political issues in Washington state?
To paraphrase Ronald Reagan, who was paraphrasing Jack Dempsey, “Honey, they forgot to duck.” The growing – but still small – roll-your-own business was in the way when legislators were looking for money to help balance the budget. By adding cigarettes rolled by customers on machines provided by tobacco stores to the existing cigarette tax, the state could raise about $12 million a year.
That’s not much, but every bit helps, even in a multi-billion-dollar budget shortfall. And the roll-your-own tax had an added benefit because lawmakers figured it wouldn’t require the two-thirds majority created by initiative in 2010.
While some Democrats think that requirement is unconstitutional, litigation on that issue is still pending. A ruling is months away.
The roll-your-own tax passed after presiding officers of both the House and Senate assured members it required only a simple majority. It was signed into law and was set to take effect this Sunday.
Dana Henne, a Pasco smoker, is the lead plaintiff in a suit challenging the roll-your-own tax. Also suing is Half Price Smokes, which has stores in Kennewick and Tacoma, and RYO Machine LLC, an Ohio company that makes and sells the machines customers of Half Price use to make their own cigarettes.
It doesn’t appear that any of the plaintiffs are tax fighters. The stores just want to stay in business. Henne wants to keep getting cigarettes at roughly half what she’d pay for familiar brands like Camel and Marlboro. But to get what they want, they had to argue that it was indeed a new tax and therefore in need of a two-thirds vote.
The lawsuit starts with an odd premise, that because the plaintiffs think Senate Bill 2565 required a two-thirds majority, it didn’t actually pass the Legislature.
“The Senate thereafter declined to pass the proposed legislation,” wrote attorney Chris Weiss. “The Senate defeated ... HB 2565, with a vote of 27 yeas and 19 nays, short the two-thirds requirement. Undeterred, certain members of the Legislature passed the defeated bill onto the governor.”
This suggests some late-night skullduggery, some extralegal activities by “certain members of the Legislature.” What actually happened was quite familiar and very much in the open. Sen. Mike Padden, R-Spokane, asked Lt. Gov. Brad Owen to rule on the number of votes required. Owen determined the roll-your-own bill wasn’t a new tax, but a change in how an existing tax was applied.
Had he ruled that it needed a two-thirds vote, it might have reached that threshold, as it did in the House. But he didn’t and according to legislative procedures, 27 was enough.
“Having received a constitutional majority, Senate Bill 2565 is declared passed,” Owen said, before banging his gavel.
A Franklin County Superior Court judge issued an injunction Monday that will stop collection of the tax on roll-your-own smokes. And while Judge Bruce Spanner only had to conclude that the plaintiffs had a likelihood of winning the case and would face irreparable harm, he also concluded that they have already proven their case.
He will likely be appealed. If so, Dana Henne and Half Price Smokes may have inadvertently done what opponents of the two-thirds initiatives have been unable to do – create a set of facts that might finally force the state Supreme Court to rule on the merits.
Given this court’s tendency to avoid this important but politically dicey issue, the justices could still avoid deciding whether a two-thirds majority requirement can be imposed by initiative rather than constitutional amendment. They could instead agree with Owen that the bill did not trigger the requirement for a two-thirds majority (or a vote of the people).
But they could also take on the bigger issue. And if a majority agrees that the latest two-thirds initiative is unconstitutional, the small roll-your-own industry and its frugal customer could end up scoring a small-but-temporary victory while losing a much bigger war.
peter.callaghan@thenewstribune.com 253-597-8657
blog.thenewstribune.com/politics @CallaghanPeter
