Washington State Supreme Court rejects legal challenge to tax initiative.

LOS ANGELES -- The Washington State Supreme Court this week dismissed a legal challenge to a tax-revolt initiative without ruling on whether the measure is constitutional, raising the likelihood of additional court challenges, market observers said yesterday.

In a 7-to-2 decision announced on Tuesday, the state Supreme Court granted a motion to dismiss a challenge to Initiative 601, which narrowly won approval by voters last November and limits state expenditures, taxes, and fees.

The court "did not decide the merits of the initiative; whether it is unconstitutional is still an open question,"said Paul Lawrence, chairman of the litigation department for Preston, Gates & Ellis, the Seattlebased municipal finance law firm that represented plaintiffs who challenged the initiative.

Lawrence said the challengers have two options: they can ask the court for reconsideration within 20 days or start a new legal action at the trial-court level. Initiative 601 ties the growth of state spending to the rate of population growth, plus the inflation rate. It curtails the state legislature's ability to tax and limits how much lawmakers can spend without voter authorization.

The high court sidestepped addressing substantive issues brought by the plaintiffs, merely stating that "the action is not properly before the court on an application for a writ of mandamus."

"They didn't role whether it is constitutional -- they just said nobody is hurt yet," state Sen. Sid Snyder, DLong Beach, said yesterday. He is one of several plaintiffs, a group including citizens and educators, who challenged Initiative 601.

Snyder said he was disappointed by the ruling. "I don't think the court stepped up to the challenge. They made a political decision rather than a judicial one."

While he has not been in any "strategy sessions" regarding additional legal challenges, Snyder said he would not rule anything out. Snyder said lawmakers could approve a tax increase with a majority vote, "then have it challenged as unconstitutional because it did not receive the two-thirds vote required under Initiative 601."

The spearhead behind Initiative 601, state Sen. Linda Smith, R-Vancouver, said yesterday that she is prepared for additional lawsuits, but "even if it is challenged again, we will win. The seven justices sent a strong message."

Smith said the court case was "brought for political reasons. The Supreme Court justices reviewed it and said they shouldn't even be hearing the case."

Writing for the majority, Justice Bob Brachtenbach said: "The main contention of the petitioners seems to be that the legislature is having difficulty raising taxes, a political problem that was resolved by the voters when Initiative 601 was enacted to limit the ability of the government to raise taxes."

But in a separate opinion, Justice Bob Utter, joined by Justice Charles Johnson, dissented.

"This case presents several issues which if resolved would not only provide essential guidance to legislators whose current decisions are heavily dependent on the viability of Initiative 601, but would assist the government and public in understanding how and if an initiative can amend the state constitution," Utter wrote.

Initiative 601 challengers had sought a writ of mandamus prohibiting the state from implementing and enforcing the measure. They also asked for a judgment declaring the initiative to be unconstitutional and a permanent injunction barring its operation. The high court rejected every request.

Under Initiative 601, tax increases approved by legislators before July 1, 1995, require a public vote. After that date, lawmakers can increase taxes to bring revenues up to the spending limit, but they need twothirds majorities in both legislative houses. New taxes that would allow the spending limit to be exceeded require two-thirds majorities in both houses and voter approval.

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