Washington Voters Decide on Constitutional Change for WA Cares Tax

Washington voters are set to make a critical decision regarding the management of billions in taxpayer dollars. The first item on their ballots is Senate Joint Resolution 8201, a proposal that seeks to amend the state constitution to allow investments of payroll taxes collected for the long-term care program, known as WA Cares, in the stock market. If approved, this measure would enable the Washington State Investment Board to manage these assets similarly to public pension and retirement funds.

Potential Benefits and Concerns

Supporters of the proposal argue that investing in the stock market could yield higher returns for the WA Cares program. According to Heather Weiner of the Approve 8201 campaign, the average annual returns for Washington’s pension funds since 1992 have been around 8.9%. This figure suggests that a shift in investment strategy could significantly benefit the program’s beneficiaries. Weiner emphasized, “This doesn’t mean day trading, taking big risks on a stock market. This means smart long-term investing so that in 50 years when people in this audience today will need long-term care, that fund will be there for you.”

Opposing voices include State Sen. Bob Hasegawa, who raised concerns about the potential risks associated with stock market investments. “Our fiduciary responsibility is to the people,” he stated during a recent debate. Hasegawa cautioned that economic downturns are unpredictable, and the vote centers on maintaining prudent fiscal management of taxpayer dollars.

The Washington State Legislature approved the ballot measure earlier this year, passing it with significant margins: 86-9 in the House and 42-7 in the Senate. If more than 50% of voters endorse it on Tuesday, the amendment will become law.

Funding and Future Access

WA Cares was established by a law enacted in 2019 and is funded through a 0.58% payroll tax on most Washington workers. Starting in July 2026, eligible individuals can access a lifetime benefit of $36,500, with future adjustments for inflation. A pilot program is slated to begin in January in selected counties. As of summer 2023, over $2.5 billion had been accumulated in the Long-Term Services and Supports Trust Account.

Currently, the state constitution restricts public funds from being invested in the stock of private companies, forcing state and local governments to rely on safer but lower-yielding fixed-income securities. If the proposed amendment passes, the long-term service account would be added to a list of funds exempt from these restrictions, allowing for a broader range of investment options.

The 2020 ballot included a similar proposal but was defeated, gaining approval in only three counties: King, Jefferson, and Whatcom. Weiner noted that this year’s proposal includes a provision mandating that any earnings from investments must be reinvested into the WA Cares Fund, aiming to prevent lawmakers from reallocating those funds to other budgetary needs.

Support for the measure includes endorsements from Democratic Governor Bob Ferguson and Senate Minority Leader John Braun, alongside organizations like AARP, the Washington State Nurses Association, and the Washington State Council of Fire Fighters. The Service Employees International Union (SEIU) 775, which represents over 55,000 long-term care workers across Washington, Montana, and Alaska, has funded the campaign, reporting a budget of $2.5 million as of last week, significantly higher than their expenditure in the previous election cycle.

As the vote approaches, Hasegawa has pointed out the absence of a funded opposition campaign, echoing sentiments from the last ballot fight. He, along with three Republican state lawmakers, contributed to the voters’ pamphlet statement opposing the measure. Voter statements from both proponents and opponents, along with a detailed explanation prepared by the attorney general’s office, will be accessible on the secretary of state’s website.