Washington Mandatory Performance Audits, Initiative 900 (2005)

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The Washington Mandatory Performance Audits Initiative, also known as Initiative 900, was on the November 8, 2005 election ballot in Washington as an Initiative to the People, where it was approved. I-900 directed the state auditor to conduct performance audits of state and local governments, and dedicates 0.16% of the state’s portion of sales and use tax collections to fund these audits. I-900 was sponsored by Tim Eyman, a well-known ballot initiative activist.

Election results

Washington Initiative 900 (2005)
ResultVotesPercentage
Approveda Yes 994,757 56.4%
No767,84443.6%

Election results via the Washington Secretary of State.[1]

Text of the measure

The language that appeared on the ballot:[2]

Initiative Measure No. 900 concerns performance audits of governmental entities.

This measure would direct the State Auditor to conduct performance audits of state and local governments, and dedicate 0.16% of the state’s portion of sales and use tax collections to fund these audits.

Should this measure be enacted into law?[3]

Fiscal impact statement

The 2005 State of Washington Voter Pamphlet lists the fiscal impact statement as follows:

Summary of Fiscal Impact

Initiative 900 would reduce state sales-and-use tax revenue flowing to the state fund that finances general government services. It directs that 0.16 percent of this revenue go to a new Performance Audits of Government Account to pay for performance audits of state and local governments. An estimated $17 million would be deposited in the account instead of the state General Fund in the 2005-07 Biennium, and an estimated $25 million would be deposited in the 2007-09 Biennium. Tax revenue in the General Fund pays for state services including education, social, health, and environmental services, and general government activities.

Assumptions for Fiscal Analysis of I-900

The estimates of the amount of sales-and-use tax revenue that would be deposited in the Performance Audits of Government Account is determined by applying the 0.16 percent diversion rate specified in the Initiative to the sales-and-use tax collections projected in the June 2005 revenue forecast produced by the state Economic and Revenue Forecast Council. The General Fund reduction of $17 million estimated for the 2005-07 Biennium assumes an effective date for the Initiative of Dec. 8, 2005. The General Fund reduction of $25 million that is estimated for the 2007-09 Biennium reflects the fiscal impact of the Initiative over a full, 24-month biennium.[3]

Performance audit definition

I-900 defines a performance audit as:[4]

Performance audits entail an objective and systematic examination of evidence to provide an independent assessment of the performance and management of a program against objective criteria as well as assessments that provide a prospective focus or that synthesize information on best practices or crosscutting issues. Performance audits provide information to improve program operations and facilitate decision making by parties with responsibility to oversee or initiate corrective action, and improve public accountability. Performance audits encompass a wide variety of objectives, including objectives related to assessing program effectiveness and results; economy and efficiency; internal control;11 compliance with legal or other requirements; and objectives related to providing prospective analyses, guidance, or summary information. Performance audits may entail a broad or narrow scope of work and apply a variety of methodologies; involve various levels of analysis, research, or evaluation; generally provide findings, conclusions, and recommendations; and result in the issuance of a report.[3]

Support

These arguments in support appeared in the official State of Washington Voter Guide:[5]

STATE AND LOCAL GOVERNMENTS SPEND OVER $40 BILLION EVERY YEAR, YET IT’S ILLEGAL FOR US…

  • …to learn if these revenues are being spent as cost-effectively as possible. That’s absurd and I-900 changes that. I-900 provides the State Auditor with substantial, stable funding – about $10 million per year – to independently investigate both the efficiency and effectiveness of state and local governments, their agencies and programs. I-900 dedicates a tiny portion of the existing sales tax to fund this long-overdue reform. $10 million to ensure $40 billion is spent effectively? That’s a bargain.

THERE ARE OVER 2000 GOVERNMENTAL ENTITIES IN WASHINGTON – I-900 PUTS THEM ALL ON NOTICE

  • I-900 gives the State Auditor the authority to examine any state or local government, agency, program, or account. I-900 grants the Auditor subpoena power to obtain all budgets and internal documents necessary for a full accounting. Savings will not only be realized from agencies audited, but from all state and local governments who realize that under I-900, they could be next. It’s called accountability.

WASHINGTON IS THE 8TH HIGHEST TAXED STATE IN THE NATION (WWW.TAXFOUNDATION.ORG) – I-900 KEEPS US…

  • ...from hitting #1. I-900 will identify wasteful, ineffective, and unnecessary government programs and agencies, showing politicians how to reform government and prioritize spending without raising taxes. I-900 will change government forever.

OLYMPIA’S LAST MINUTE ALTERNATIVE TO I-900 ISN’T EVEN CLOSE – I-900 IS THE 900 POUND GORILLA

  • Olympia prohibited independent audits for over 40 years, but when they saw the popularity and support for I-900, they frantically passed a weak alternative. Olympia’s version lets a “citizen” commission, all handpicked by Olympia politicians, decide who does and who doesn’t get audited – I-900 gives the State Auditor that authority. Olympia’s version lets local governments off the hook – I-900 holds all levels of government accountable. I-900 provides stable funding – Olympia’s version doesn’t.

REBUTTAL OF STATEMENT AGAINST:

  • Opponents’ only objection is that I-900 is “unnecessary” because Olympia passed its own audit bill. But the lead sponsor of that legislation, Democrat Mark Miloscia, admits that he’s voting for I-900. He thinks I-900 is dramatically better than Olympia’s watered-down bill. So do we. Hearing politicians complain about I-900’s cost is laughable $10 million per year to ensure cost-effective spending of $40 billion per year? That’s a bargain. Taxpayers demand accountability. Please vote yes.[6]

Opposition

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

I-900 GOES TOO FAR AND WASTES TAXPAYER’S DOLLARS

  • Everyone wants government to operate efficiently, and performance reviews are a tool to achieve efficiency when done wisely and with common sense. But, this initiative lacks common sense:
  1. Local citizens and their locally elected officials should establish their own goals and priorities, not Olympia;
  2. Local governments will have to spend scarce staff time and local taxpayer dollars to collect data for the audits;
  3. One size does not fit all. There are over 2,000 units of local government, from large metropolitan cities and counties to small rural mosquito control and irrigation districts.

They all have different purposes and responsibilities. Is it really appropriate to compare a unit of government of 300 to a unit of government of 300,000?

I-900 IS UNNECESSARY AND DUPLICATIVE

  • The 2005 Legislature passed two performance audit bills, one for Department of Transportation programs and another for state agencies. Many local governments already provide accountability by conducting their own performance reviews. This initiative is an unnecessary duplication that would add another layer of government and cost tens of millions of tax dollars. Before you vote, ask yourself – Would you really trust one partisan elected state official to tell your local government what to do?

REBUTTAL OF STATEMENT FOR:

  • It’s flat wrong to claim it’s illegal to learn how revenues are spent. Local government budgets are public documents – open to scrutiny and adopted with public input. Local governments are already most accountable to their citizens. It’s more important to be accountable to local voters than to a partisan state official. Current legislation requires an impartial citizens advisory board set performance criteria for state agencies. I-900 instead creates a bureaucratic, costly process. Please Vote No.[8]

Consequences and aftermath

Democrats in the state senate sponsored legislation in spring 2008 to reimburse educational service districts and school districts for the costs they incur in providing needed information to perform audits mandated by I-900.[9]

Amber Gunn, a spokesperson for the Evergreen Freedom Foundation, said "It is bad public policy to single out one agency to get special treatment because it opens up the door for other agencies to come in and ask for funds." She also described the bill as a raid on the auditor's funds.

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