WA voters want to keep carbon and capital gains taxes

After the first ballots were counted statewide, here’s where the four statewide initiatives stood: 

• Initiative 2117 to repeal the cap-and-invest program: 38% voted Yes to repeal, 62% voted No to keep. 
• Initiative 2109 to repeal the capital gains tax: 37% voted Yes to repeal, 63% voted No to keep.
• Initiative 2124 to make the state’s long term care insurance program optional: 45% Yes, 55% No.
• Initiative 2066 to ban natural gas bans: 51% Yes, 49% No.

Gov. Jay Inslee spoke at an election night watch party for the Washington State Democrats after the results. He criticized conservative organization Let’s Go Washington, which raised more than $8.5 million to promote four initiatives on the ballot.

“When people came into our fair state and tried to destroy our ability to take care of our senior citizens, to destroy our ability to get money for our schools and bring fairness to our taxes, to destroy our ability to save our grandchildren’s future from climate change – we did not just defeat them. We thrashed them, we humiliated them, we dominated them, we hammered them,” Inslee said. “This was not a win. It was a tidal wave.”

Brian Heywood, founder of Let’s Go Washington, the organization that has pushed for the initiatives, said at an organization election night event he felt that it's possible to introduce initiatives and get widespread support for them. He noted that the group was outspent.

“If Olympia steps out of line ... we’ll be pushing back against it, and I’ve figured out how to do that in a way that’s economical,” Heywood said. “We’ve got a group of volunteers now that can make things happen fairly quickly.”

Rep. Jim Walsh, chairman of the Washington State Republican Party, said he was a “bit disappointed" by the initiative results so far but was encouraged to see I-2066 leading by a wide margin. Walsh who spoke at a party election watch event believed that it was possible that the others could pass as votes are counted.

Walsh said that he expected that more initiatives would be proposed to address policies he felt are broken in the state, such as sanctuary city policies.

“There are points in policy that are badly broken and need to be fixed, and the initiative process is a good one for fixing it,” he said.

A multimillion-dollar battle over I-2117, the attempt to repeal the state’s new carbon pricing system, brought in big-name supporters like Microsoft co-founder Bill Gates, who donated $1 million to the No On 2117 campaign. In total, two groups opposing the initiative raised $17 million to stop it.

Let’s Go Washington said I-2117 has increased gas prices and driven up energy costs; however, fuel prices have fluctuated since the program began in early 2023. 

The year-old program sells carbon credits to polluting companies which are then reinvested in projects to reduce greenhouse-gas emissions. 

The cap and invest program is part of the state’s 2021 Climate Commitment Act, which aims to reduce greenhouse-gas emissions by 95% by 2050. It was modeled after a California program that held its first carbon auction in 2012. 

So far the program has raised about $2 billion for environmental projects such as electric ferries, electric-car charging stations, alternative-energy source projects and salmon habitat restoration.    

Capital gains tax: I-2109

Washington’s 7% capital gains tax tax is levied on earnings in excess of $262,000 from the sales of stocks, bonds and other investments. The sales of homes and farms are exempt. Roughly 0.2% of Washington’s residents pay this tax.

Some voters expressed confusion over the initiative as a vote Yes was a vote to reject the capital gains tax and a vote No was a vote to keep it. 

In fiscal 2023, its first year of collection, Washington’s capital gains tax collected $847.5 million, according to the Office of Financial Management. The OFM is predicting $363 million in fiscal 2024, for a total of $1.215 billion for the two-year budget cycle. 

In fiscal 2023, $500 million of Washington capital gains revenues went to the Education Legacy Trust Account, which covers preschools, child care subsidies, special education and community and technical colleges, according to the OFM. The first $500 million each year goes to this account. The remaining $347.5 million in 2023 went to a school construction account. 

An OFM analysis concluded that passage of I-2109 would take away $2.2 billion in state revenue over the next five years.

Long-term care insurance: I-2124

Since 2019, Washington has been piloting WA Cares, the country’s first state-run long-term care insurance program. The program currently runs on a mandatory payroll deduction of $0.58 per every $100 earned – which employers then forward to the state.

According to the Washington Office of Financial Management, approximately 3.9 million workers are currently paying into the fund. The goal, by July 1, 2026, is for the fund to go public – and WA residents will be able to individually access up to $36,500 in professional care and health care equipment.

WA Cares is neither a leave program nor a form of medical insurance, but can be used in tandem with the two. The point of long-term care is to support an ill or disabled person with services to help them perform everyday activities on their own: think assisted living, wheelchair ramps, meal delivery and more.

However, workers who choose to opt out of the payroll tax will not be entitled to any of its benefits. Opting out is already an option, but the process is somewhat complicated, and the initiative aimed to make participation completely optional. 

Ballot Initiative 2124 was pushed at the behest of the state’s Republican Party following an earlier struggle to strike down the WA Cares Fund. In 2019, multiple conservative legislators voted against the bill – a move in line with the party’s general dislike for increased taxes.

Then, in 2021, both Republican and Democrats voted to delay collecting the tax from paychecks until 2023 due to the pandemic. One year in, and the program has already managed to generate an estimated $1.3 billion.

Advocates in support of Initiative 2124 argue that the current $36,500 cap doesn’t account for the rising cost of care – and would, at best, cover only “about five months” worth of expenses. 

Those on the other side of the alley contend that nixing the mandatory program would leave millions of Washingtonians reliant on far less affordable options for care. According to the American Association for Long-Term Care Insurance, the average annual premium for a $165,000-benefit policy would set a 55-year-old man back $900 a year, and $1,500 for a 55-year-old woman.

Natural gas: I-2066

Opponents of the natural gas initiative argued that no one intends to ban the use of natural gas in the state, and that the initiative could have unintended consequences including its impact on other energy initiatives. 

The Building Industry Association of Washington and Washington Hospitality Association came up with the proposal, with support from the Republican Party and conservative initiative organization Let’s Go Washington. They say that a new law the Legislature passed last spring, along with recent guidance from the Washington State Building Code Council, combined to push for the gradual phasing out of natural-gas usage in Washington. They want to preemptively forbid any future natural-gas bans.

House Bill 1589 created a complicated roadmap of how Puget Sound Energy will provide energy to its 870,000 natural gas and 1.2 million electric customers in the future. HB 1589 didn’t affect any other utility in Washington, and did not require nor encourage PSE to phase out of providing natural gas, according to the sponsors. 

Meanwhile, the State Building Code Council updated its energy code in 2021 to comply with an updated national energy code. That state update did not forbid installation of gas appliances in new buildings, nor did it call for them to be removed in retrofits of older buildings. 

Critics of the new building code say these plus some local ordinances are pushing toward municipal natural gas bans. And they point to evidence they have found in other regulations that make banning a gas ban essential. 

Update: 10:02 p.m. This story has been updated with a quote from Gov. Jay Inslee. Updated 10:50 p.m. to include quotes from Brian Heywood and state Rep. Jim Walsh.