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Washington Education Trust Fund Sales Tax Increase, Initiative 884 (2004)

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The Education Trust Fund Sales Tax Increase, also known as Initiative 884, was on the November 2, 2004 ballot in Washington as an Initiative to the People, where it was defeated. I-884 was an attempt to increase the state's sales tax by 1% in order to create an education trust fund to pay for "smaller classes, extended learning programs, certain salary increases, preschool access, and expanded college enrollments and scholarships."[1]

About $3.2 million was spent by I-884's supporters to urge a "yes" vote, while those urging a "no" vote spent only $1,870.[2]

Election results

Washington Initiative 884 (2004)
ResultVotesPercentage
Defeatedd No1,654,11259.99%
Yes 1,102,996 40.01%

Election results via the Washington Secretary of State.[3]

Text of the measure

The language appeared on the ballot as:[4]

Initiative Measure No. 884 concerns dedicating funds designated for educational purposes.

This measure would create an education trust fund for smaller classes, extended learning programs, certain salary increases, preschool access, and expanded college enrollments and scholarships, funded by increasing retail sales tax by 1%.

Should this measure be enacted into law?[5]

Fiscal impact statement

The 2004 State of Washington Voters Pamphlet lists the fiscal impact statement, as prepared by the nonpartisan Washington Office of Financial Management, as follows:[6]

Initiative 884 would generate approximately $1 billion in new education funding annually by increasing the state sales/use tax rate from 6.5% to 7.5%. In the first five years of implementation, $4.7 billion would be distributed as follows:
  • $2.3 billion for K-12 investments in class size reduction, extended learning opportunities, certain salary increases, and professional development.
  • $1.9 billion to increase state-funded higher education enrollments by at least 25,000 students, expand financial aid, and boost state-funded research.
  • $464 million to expand preschool opportunities for low-income three- and four-year old children.
  • $23 million for citizen oversight and statewide projects.

Assumptions for Analysis of I-884

  • A one-penny per dollar increase in the state retail sales and use tax would be effective April 1, 2005, raising the state rate from 6.5 percent to 7.5 percent. The impact of Initiative 884 on individual consumers would depend upon the total amount of taxable goods purchased by the individual in any given year. When applied to a household at the state median income level of about $50,000 per year, a one-penny per dollar increase in the state sales tax is estimated to result in an additional $215 per year in state sales tax paid.
  • Receipts from the additional sales tax would be deposited into the Washington Education Trust Fund. The additional tax is estimated to generate $4.7 billion for the fund in the first five years of implementation.
  • Initiative 884 would cap the amount of the state property tax that is dedicated to specific education activities, resulting in an additional $484.1 million of state property tax revenue for the General Fund during the first five years of implementation. Partly offsetting this additional revenue would be a decrease in general fund sales and use tax collections caused by the estimated impact that a higher sales tax rate would have on consumer spending. The table below illustrates the estimated revenue impact to the state general fund (dollars in millions).
  • Revenue and expenditure estimates are based on June 2004 forecasts of the Economic and Revenue Forecast Council and the Caseload Forecast Council.[5]

Support

Supporters

Supporters of I-884 as listed in the official Voter's Guide included:

  • Bill Gates
  • Meg Bushnell, President, Washington State PTA
  • Gary A. Livingston, described as a K-12 and higher education leader
  • Nick Hanauer, Chairman, aQuantive, Inc.
  • Paola Maranan of the Children’s Alliance
  • Lisa MacFarlane, of the League of Education Voters.[1]

Arguments in favor

These arguments in support appeared in the official State of Washington Voter Guide:[7]

DELIVERING ON OUR PROMISES

For years Olympia politicians have under-funded our schools and compromised the promises we have made to children and families:

That every child starts school prepared and ready to learn. That class sizes are small, and struggling students get the help they need. That teachers are better paid and supported. That every student who works hard has a place in higher education. That workers can get the retraining they need. That every student who needs it has financial aid.

I-884 - THE EDUCATION TRUST - WILL MAKE THESE PROMISES A REALITY

I-884 funds 16,000 lower income kids for quality pre-school every year. I-884 lets schools reduce class sizes, increase teacher pay and help struggling students. I-884 creates 32,000 new state-funded enrollments at 2 and 4-year colleges and universities, and increases both student aid and Promise Scholarships that reward academic achievement.

AN EDUCATION TRUST PROTECTED FROM POLITICAL MEDDLING

I-884 establishes a dedicated Trust Fund only for improvements in pre-school, K-12 and higher education. With a Citizen Board, full accountability, regular audits and oversight by the State Auditor, I-884 builds a firewall between the Trust and the Legislature. Unless we citizens act to protect education, the politicians will keep ignoring the problem.

DELIVERING ON OUR FUTURE

Education is the key to a better future for our families. Good schools mean good jobs. As Federal Reserve Chairman Alan Greenspan recently said, what’s critical for individuals is critical for the economy: “rigorous education and on-going training for all members of the society.” Now is the time for citizens to invest in our children and our future.

VOTE YES ON I-884. LET’S MAKE GOOD ON OUR PROMISES

Rebuttal of Statement Against

More tired rhetoric from the politicians who failed our children for a decade.

Student funding is below national average, class sizes too large, colleges turn away qualified students. Half the children who need preschool are left out.

Under 884, citizens, and the State Auditor, take control. Public reporting and strict accountability will see that dollars go to classrooms not bureaucracy.

This one cent increase builds an Education Trust Fund for children — protected from politicians.[5]

Donors

The name of the committee that supported I-884 was "Citizens for the Education Trust Fund." They raised $3,237,683 for their campaign to urge voters to vote "yes."[2]

The top 8 donors were:

  • Nicholas Hanauer: $829,405
  • Microsoft: $200,000
  • James Pigott: $150,000
  • Bill Gates, Sr.: $150,000
  • Charles Simonyi: $100,000
  • Ruthann Lorentzen: $100,000
  • Eric Dillon: $100,000
  • Washington State Democratic Party: $91,944

Opposition

Opponents

Opponents of I-884 as listed in the official Voter's Guide were:

  • Clyde Ballard, former Speaker of the Washington House of Representatives
  • Jamie Daniels, Director of Washington CSE/FreedomWorks
  • Roxanne Husmann, described as a "farmer, small business owner, community volunteer"
  • Tom Huff, former House Appropriations Chairman and retailer
  • Minnie Knych, a former school superintendent and teacher.

Arguments against

These arguments in opposition appeared in the official State of Washington Voter Guide:[8]

SKYROCKETING SALES TAXES WILL DEVASTATE WASHINGTON’S SLUGGISH ECONOMY AND HURT STRUGGLING WORKING FAMILIES

Washington already has one of the highest sales taxes in the nation. Now, politicians want it to be the highest. Increasing the state sales tax rate by 15% will hurt the poor, cost tens of thousands of jobs, and steer customers to tax-free Oregon and the internet. We’re taxed enough. Crushing property taxes, job-killing business taxes, sky-high utility taxes, and hundreds of taxes and fees on virtually every government service. We cannot tax ourselves into prosperity.

WASHINGTON IS THE 7TH HIGHEST TAXED STATE IN THE NATION – WE CAN’T AFFORD BEING #1

Politicians imposed a .3% vehicle sales tax increase last year. Counties are pushing additional sales tax increases this year and Puget Sound politicians have already said they’re pursuing an additional .5% sales tax increase next year. I-884’s $1 billion increase is on top of those increases. Politicians just don’t get it – working families and struggling senior citizens don’t have bottomless wallets!

DON’T LET POLITICIANS HOLD OUR CHILDREN HOSTAGE, DEMANDING A TAX RANSOM FOR A QUALITY EDUCATION

We all know how politicians manipulate us: putting essential services on the ballot while they fund their pet projects with our existing taxes. It’s the same old game with I-884. Don’t fall for it.

VOTE NO AND DEMAND THAT EXISTING EDUCATION TAXES BE SPENT IN CLASSROOMS, NOT FOR BUREAUCRACY

We all want our kids to get a quality education. But we already pay billions in taxes every year, investing more per student than ever before. More than half is eaten by administration and bureaucracy and many dollars are unaccounted for or wasted on failed programs. I-884 will hurt kids by making the problem worse. More money won’t make failed programs work. Vote No and demand that politicians prioritize existing dollars on proven academic programs and in the classrooms.

For further information, call 877.257.9156 or visit www.freedomvoters.org.

Rebuttal of Argument For

Imposing the largest tax increase in state history on the people that can least afford to pay, like our fixed-income senior citizens, isn’t the solution. Education spending has steadily increased without corresponding student achievement improvement. Don’t be misled - I-884 is just another blank check with no reforms, accountability, or prioritization of existing dollars. To improve our economy we need to increase jobs - not taxes - and spend wisely. We’re taxed enough. Vote No.[5]

Path to the ballot

Initiative 884 was filed on February 27, 2004 by Lisa D. Macfarlane of Seattle. Signatures were collected to qualify it for the ballot. The measure was placed on the ballot as provided for by the state constitution.[9] Supporters paid $588,582 to Progressive Campaigns, Inc. for signature-collection.[10]

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