Voters Decide on WA Cares Tax Investment in Stock Market

Voters in Washington State will have the opportunity to influence how billions of taxpayer dollars are managed through a proposed amendment to the state constitution. The measure, known as Senate Joint Resolution 8201, seeks to allow investments of payroll taxes collected for the long-term care program, WA Cares, in the stock market. If passed on November 7, 2023, the Washington State Investment Board would be authorized to manage these funds similarly to its pension and retirement assets, potentially enhancing returns for the program.

The proposal is designed to ensure that any earnings from these investments would be used exclusively for the beneficiaries of WA Cares. Heather Weiner, a spokesperson for the Approve 8201 campaign, emphasized this point during a debate at the University of Washington, stating that the approach would be “safe and risk averse” while generating greater returns. She highlighted that Washington’s pension funds have averaged annual returns of 8.9% since 1992, significantly outperforming government bonds.

Concerns Over Investment Risks

Despite the potential benefits, some lawmakers express caution regarding the measure. State Senator Bob Hasegawa, a Democrat from Tukwila, voiced his opposition, arguing that the responsibility to manage taxpayer money prudently should take precedence. “No one is going to know when the economy or stock market crashes,” he stated during the debate. “This vote is about whether we keep prudent fiscal management policies of our tax dollars.”

The constitutional amendment was placed on the ballot after receiving overwhelming support in the Legislature, passing with margins of 86-9 in the House and 42-7 in the Senate. To become law, it requires more than 50% approval from voters.

Funding and Future Benefits

WA Cares, established by legislation in 2019, is financed through a 0.58% payroll tax on most workers in the state. Starting in July 2026, eligible individuals will be able to access a benefit amounting to $36,500, which is set to increase over time to account for inflation. A pilot program will commence in January in select counties, with over $2.5 billion already collected in the Long Term Services and Supports Trust Account as of summer 2023.

Currently, Washington’s constitution restricts public investment in private company stocks, limiting state and local governments to fixed-income securities that carry lower risks but also yield lower returns. If the proposed amendment is approved, the long-term service account would join pension and retirement funds as an exception to this rule, allowing the state investment board to consider investing in private equity and stock.

In a previous attempt to change the investment strategy, voters rejected a similar measure in 2020, which only gained support in three counties: King, Jefferson, and Whatcom. Weiner noted that this year’s proposal includes a mandate ensuring that profits from investments will directly benefit the WA Cares Fund, preventing lawmakers from reallocating those funds for other budgetary needs.

Support for the ballot measure spans across political lines, with endorsements from Democratic Governor Bob Ferguson and Senate Minority Leader John Braun, a Republican from Centralia. Additionally, various organizations, including the Washington State Nurses Association, Washington State Council of Fire Fighters, AARP, and the Washington Health Care Association, have shown their backing. The Service Employees International Union 775, representing over 55,000 long-term care workers across Washington, Montana, and Alaska, has actively funded the campaign, raising and spending $2.5 million as of last week, marking a fivefold increase compared to their efforts in the 2020 election.

Opponents of the measure, including Hasegawa and several Republican state lawmakers, have prepared statements for the voters’ pamphlet against the proposal. These statements, along with official explanations from the attorney general’s office, are accessible on the Washington Secretary of State’s website, ensuring voters have the necessary information to make an informed decision.