Freedom Foundation

Freedom Foundation Complaint Spurs Attorney General Lawsuit Against Union-Funded Nonprofit

In response to a formal Freedom Foundation complaint, the Washington State Attorney General’s office filed a lawsuit this week against the Washington State Budget and Policy Center (WSBPC) for breaking state campaign finance laws by failing to report activity and expenditures in opposition to Initiative 1366 in 2015.

WSBPC is a left-of-center 501(c)(3) nonprofit organization that works to “support the essential role of government in promoting a just and prosperous society.” I-1366 was a ballot measure brought by Tim Eyman that would have lowered the sales tax rate unless the legislature referred a state constitutional amendment to the voters requiring a two-thirds legislative majority to adopt any tax increases.

Despite heavy opposition from government unions and other progressive groups, voters passed  I-1366 with 52 percent support. In May 2016, however, the Washington State Supreme Court struck down the measure as unconstitutional.

During the election, the WSBPC formally opposed the initiative and its staff regularly encouraged voters to reject it. While federal tax law permits nonprofit organizations to engage in limited political activity on ballot measures, state campaign finance law requires nonprofits to report to the Public Disclosure Commission any expenditures made in support of or opposition to ballot measures. In this case, the WSBPC failed to report the value of its staff time spent opposing I-1366.

The WSBPC made its opposition to I-1366 known in no uncertain terms. In an article posted on its website on Sept. 4, 2016, for example, Andy Nicholas, the Center’s associate director of fiscal policy, described I-1366 as “a dangerous proposal” that would “undercut democracy in our state” and called on voters to “reject I-1366 at the November ballot.”

Additionally, as the Freedom Foundation documented and the AG lawsuit recognized, WSBPC “used its funds and staff time to support pre-election litigation to invalidate I-1366 and prevent a public vote.”

WSBPC receives substantial support from government unions in Washington. According to the Freedom Foundation’s analysis of LM-2 financial reports some unions must file with the U.S. Department of Labor, WSBPC received at least $207,639 from government unions like the SEIU and the Washington Federation of State Employees from 2013-2015. As the state’s most powerful and consistent advocates for higher taxes, these government unions led the opposition to I-1366.

The state Fair Campaign Practices Act permits any citizen or entity to formally notify the Attorney General of alleged violations of the Act. If the Attorney General takes no enforcement action within 45 days of the notice and proper procedures are followed, the citizen may file suit to enforce the Act in court on behalf of the state.

After documenting the allegations against the WSBPC, the Freedom Foundation submitted the “45-day letter” to the Attorney General’s office on Oct. 18. The Attorney General’s lawsuit against the WSBPC was filed on Dec. 19.

Government unions and their allies, like the Washington State Budget and Policy Center, were unquestionably engaged in opposing I-1366, a taxpayer-protection measure that would have moved Washington a step closer to adopting the two-thirds requirement for tax increases that voters have consistently approved. Yet the true extent of their opposition was not reported to the voters. This is a very straightforward case and we are pleased to see the Attorney General take action. Unfortunately, it has become far too common for the state’s government unions and their allies to engage in activity that flaunts our state’s election laws and, as in this case, obscures the full extent of their political activity.

The Attorney General’s lawsuit against the WSBPC marks the sixth time in the past year that the state has initiated legal action against government unions or their allies for violating election laws on the basis of Freedom Foundation complaints:

  • Sept. 23, 2016: The Attorney General fined the Washington State Labor Council nearly $26,000.
  • July 15, 2016: The Attorney General fined the Washington Association for Justice over $9,000.
  • Feb. 8, 2016: The Attorney General fined SEIU 925 and its political action committee nearly $45,000.
  • Jan. 29, 2016: The Attorney General fined SEIU 775 and its political action committee nearly $52,000.
  • Dec. 15, 2015: The Public Disclosure Commission fined the Labor Education and Research Center for engaging in unreported lobbying.