I N I T I A T I V E P E T I T I O N

Transcription

1 OFFICE OF THE SECRETARY OF STATE DENNIS RICHARDSON SECRETARY OF STATE LESLIE CUMMINGS, PhD DEPUTY SECRETARY OF STATE ELECTIONS DIVISION STEPHEN N. TROUT DIRECTOR 255 CAPITOL STREET NE, SUITE 501 SALEM, OREGON (503) TO: I N I T I A T I V E P E T I T I O N FROM: All Interested Parties Summer Davis, Compliance Specialist DATE: December 21, 2017 SUBJECT: Initiative Petition Certified Ballot Title The Elections Division received a certified ballot title from the Attorney General on December 20, 2017, for Initiative Petition , proposed for the November 6, 2018, General Election. Caption Amends Constitution: Prohibits taxes/fees based on transactions for "groceries" (defined) enacted or amended after September 2017 Chief Petitioners Ron Brake 155 B Avenue, STE 110 Lake Oswego, OR Syd Hannigan 155 B Avenue, STE 110 Lake Oswego, OR Appeal Period Any registered voter, who submitted timely written comments on the draft ballot title and is dissatisfied with the certified ballot title issued by the Attorney General, may petition the Oregon Supreme Court to review the ballot title. If a registered voter petitions the Supreme Court to review the ballot title, the voter must notify the Elections Division by completing and filing form SEL 324 Notice of Ballot Title Challenge. If this notice is not timely filed, the petition to the Supreme Court may be dismissed. Appeal Due January 5, 2018 How to Submit Appeal Refer to Oregon Rules of Appellate Procedure, Rule or contact the Oregon Supreme Court for more information at Notice Due How to Submit Notice Where to Submit Notice 1 st business day after Scan and irrlistnotifier.sos@state.or.us appeal filed with Fax Supreme Court, 5 pm Mail 255 Capitol St NE Ste 501, Salem OR More information, including the certified ballot title and the Secretary of State's determination that the proposed initiative petition is in compliance with the procedural requirements established in the Oregon Constitution for initiative petitions, is contained in the IRR Database available at

2

3 ELLEN F. ROSENBLUM Attorney General FREDERICK M. BOSS Deputy Attorney General DEPARTMENT OF JUSTICE APPELLATE DIVISION December 20, Dec :27 pm Stephen N. Trout Director, Elections Division Office of the Secretary of State 255 Capitol St. NE, Ste. 501 Salem, OR Re: Proposed Initiative Petition Amends Constitution: Prohibits Taxes/Fees Based on Transactions for Groceries (Defined) Enacted or Amended After September 2017 DOJ File #BT-37-17; Elections Division # Dear Mr. Trout: We received comments on the Attorney General s draft ballot title for Initiative Petition 37 (2018) (BT-37-17) from Secretary of State Dennis Richardson, chief petitioners Ron Brake and Syd Hannigan (through counsel, Gregory A. Chaimov), Cyreena Boston Ashby and Terri Steenbergen (through counsel, Margaret S. Olney), and Joe Baessler (through counsel, Steven C. Berman). Secretary Richardson objects to all parts of the draft ballot title except the caption. The chief petitioners object to the No result statement and the summary. The other commenters object to all parts of the draft ballot title. In this letter, we discuss why we made or did not make changes to each part of the ballot title in light of the submitted comments. A. The caption The ballot title must include [a] caption of not more than 15 words that reasonably identifies the subject matter of the state measure. ORS (2)(a). The subject matter is the actual major effect of a measure or, if the measure has more than one major effect, all such effects (to the limit of the available words). Lavey v. Kroger, 350 Or 559, 563, 258 P3d 1194 (2011). To identify the actual major effect of a measure, the Attorney General must consider the changes that the proposed measure would enact in the context of existing law. Rasmussen v. Kroger, 350 Or 281, 285, 253 P3d 1031 (2011). The draft caption provides: Amends Constitution: Prohibits state/local taxes on sale/distribution/purchase of groceries (defined) enacted after September 2017 We received comments and objections to the caption from Ms. Ashby and Ms. Steenbergen and from Mr. Baessler. 1. Comments from Ms. Ashby and Ms. Steenbergen 1162 Court Street NE, Salem, OR Telephone: (503) Fax: (503) TTY: (800)

4 Page 2 Ms. Ashby and Ms. Steenbergen make five objections to the caption. First, they suggest using retroactive rather than enacted after September 2017, in order to have more words available to address their other objections, and they also object to that phrase because the caption does not use the phrase adopted, approved or enacted, which is the phrase used in the measure. Their third objection is that voters will not understand that the proposal reaches taxes or fees that may be imposed on sales of proposed foods at restaurants. Next, they suggest that sale/distribution/purchase is underinclusive because it does not reference receipt. Finally, they contend that the caption does not adequately identify the impact on local authority because it does not say that the measure would preempt local laws. (Ashby/Steenbergen Letter, 6-7). 2. Comments from Mr. Baessler Mr. Baessler makes four objections to the caption, two of which iterate two of Ms. Ashby s and Ms. Steenbergen s objections: first, that sale/distribution/purchase is underinclusive because it does not refer to receipt, and, second, that the caption uses enacted but omits adopted, approved. (Baessler Letter, 4). He also objects to the omission of fees from the caption, because fees are distinct from taxes. (Baessler Letter 3). Finally, Mr. Baessler objects that the caption fails to inform voters that the proposal contains numerous exceptions, including that it does not limit authority to impose a tax on net income. (Baessler Letter, 4-5). 3. Our response to the comments After consideration of the comments concerning the draft caption, we agree that the caption should be revised. We agree with the commenters that receipt should be added to the phrase sale/distribution/purchase, because the measure refers to both a sales tax and a gross receipts tax. However, instead of making that change, we have replaced that phrase with based on transactions. That phrase captures taxes on the transactions themselves sale/distribution/purchase/receipt as well as other taxes that may be based on the transactions, such as the state corporate minimum tax. We discuss the corporate minimum tax in more detail below. We also agree that the caption should refer to fees, as well as taxes, because taxes and fees are distinct. See Northwest Natural Gas Co. v. City of Gresham, 359 Or 309, , 374 P3d 829, 851 (2016) (noting that tax proceeds are expended for general public purposes; fee proceeds are used for regulation or benefit of the parties who pay the fee). The measure applies to any tax, fee, or other assessment, but none of the commenters suggest including assessment in the caption. It is unnecessary to include assessment, because an assessment imposes either a tax or a fee. See Wittemyer v. City of Portland, 361 Or 854, 858, 402 P3d 702, 705 (2017) (describing assessment of the city s art s tax); Northwest Natural, 359 Or at 348 (referring to assessment of a regulatory fee). As for the commenters objection to the omission of adopted, approved and inclusion of only enacted in the caption, all three words similarly refer to a legislative act that creates or

5 Page 3 amends a tax or a fee. See Webster s Third New Int l Dictionary 29, 106, 745 (unabridged ed 1993) ( adopt means to endorse and assume; approve means to vote into effect : pass formally < the legislature approved the bill>; enact means make into a law. ). Mr. Baessler suggests that the three-word phrase is required to explain that the measure would have the effect of invalidating any tax or fee that was adopted, approved or enacted in the sense of having been passed by the legislature before October 1, 2017, but which does not go into effect until on or after that date. We disagree. Such a tax or fee would have been made into a law by the legislative body before October 1, 2017, and, for that reason, the measure would not invalidate it. Accordingly, we conclude that adding adopted, approved to the caption would not better describe a major effect of the measure. However, we have added or amended to the caption. We make that change in response to comments on the yes result statement, which are discussed below. The commenters other objections do not warrant changes to the caption. First, we reject the suggestion to use retroactive rather than enacted after September 2017, because the latter phrase better describes the extent to which the measure would be retroactive. Use of retroactive could mislead the voters about the extent of the measure s retroactive effect, because the measure would not retroactively invalidate all taxes and fees on groceries that are described in the measure, regardless of when they were enacted or became effective. The measure only invalidates any such taxes or fees adopted, approved, or enacted on or after October 1, Accordingly, the phrase enacted after September 2017 accurately informs the voters of the extent of the measure s retroactive effect. We also believe that a reference to preemption of local government authority to tax groceries would not better inform voters of the major impact of the measure compared with use of Prohibits taxes/fees, and a reference to preemption of local government authority potentially would be misleading. Reference to preemption of local government authority to impose taxes and fees on groceries could be misleading because it would suggest a different effect on state government authority. The measure, however, has the same effect on both state and local government. The phrase Prohibits taxes/fees accurately describes that effect. Similarly, Mr. Baessler s suggestion to add exceptions so that voters understand that the measure does not affect income taxes would not better inform voters of a major effect of the measure. In particular, the caption describes the taxes and fees that are affected by the measure taxes and fees based on groceries transactions thus implying that income taxes are not affected. The measure does except some items from the tax on groceries, as that term is defined in the measure, even though the items may be included in a broader definition of groceries, such as alcoholic beverages. Those exceptions are noted in the summary. Finally, Ms. Ashby and Ms. Steenbergen point out that the measure applies to sales of food at restaurants. We agree that the measure applies to sales at restaurants, but that is included in the reference to groceries, as that term is defined in the measure. We do, however, provide that additional explanation in the summary. After consideration of all the comments concerning the draft caption, we certify the following caption:

6 Page 4 Amends Constitution: Prohibits taxes/fees based on transactions for groceries (defined) enacted or amended after September 2017 B. The yes vote result statement We next consider the draft yes vote result statement. A ballot title must include [a] simple and understandable statement of not more than 25 words that describes the result if the state measure is approved. ORS (2)(b). The yes vote result statement should identify the most significant and immediate effects of the measure. Novick/Crew v. Myers, 337 Or 568, 574, 100 P3d 1064 (2004). The draft yes vote result statement provides: Result of Yes Vote: Yes vote amends Constitution; prohibits state/local taxes enacted after September 2017 on sale/distribution/purchase of, or on sellers/distributors of, groceries (defined). All of the commenters except the chief petitioners commented on and objected to the yes result statement. Ms. Ashby and Ms. Steenbergen, and Mr. Baessler, object to the yes results statement for the same reasons they object to the caption. (Ashby/Steenbergen Letter, 8); Baessler Letter 5). Secretary Richardson suggests deleting the phrase or on sellers/distributors of, because other taxes, including taxes on income, alcohol, and tobacco, may be levied on them. (Richardson Letter, 1). After consideration of the comments concerning the draft caption and the yes result statement, we agree that the draft yes result statement should be revised, in four ways. The first three changes are prompted by changes we have made to the caption. First, we add a reference to fees. Second, as we did in the caption, we delete sale/distribution/purchase and replace it with the phrase based on transactions. The third change is to indicate that the measure prohibits amendments to, as well as new, taxes and fees on groceries, because the phrase adopted, approved or enacted encompasses amendments by legislative bodies, at least when those amendments increase existing taxes. Although we have retained the reference to sellers/distributors, we agree with Secretary Richardson that the draft yes result statement permitted an inference that the measure would prohibit any new taxes, or amendment of existing taxes, on sellers and distributors of groceries. The measure would prohibit only taxes on groceries, and would not affect any other taxes on sellers and distributors of groceries. As a result of the other modifications to the yes result statement, the reference to sellers/distributors, in context, now refers only to taxes and fees based on transactions for groceries. For reasons discussed above, we do not make any other changes in response to the comments from Ms. Ashby/Ms. Steenbergen and Mr. Baessler. We certify the following yes result statement:

7 Page 5 Result of Yes Vote: Yes vote amends Constitution; prohibits state/local taxes/fees based on transactions for groceries (defined), including those on sellers/distributors, enacted/amended after September C. The no vote result statement A ballot title must include [a] simple and understandable statement of not more than 25 words that describes the result if the state measure is rejected. ORS (2)(b). The no vote result statement should address[] the substance of current law on the subject matter of the proposed measure and summarize [ ] the current law accurately. McCann v. Rosenblum, 354 Or 701, 707, 320 P3d 548 (2014) (quoting Novick/Crew, 337 Or at 577) (emphasis added in Novick/Crew). The draft no vote result statement provides: Result of No Vote: No vote retains current Constitution, state/local governments may adopt/amend taxes on transactions for, or sellers/distributors of, groceries (defined), including corporate minimum tax. All of the commenters commented on and objected to the no results statement. All of the commenters except Secretary Richardson address the reference to the corporate minimum tax. Secretary Richardson objects to the reference to sellers/distributors for the same reason he objects to the similar reference in the yes statement. (Richardson Letter 1). Mr. Baessler, in addition to addressing the reference to the corporate minimum tax, contends that the no statement gives the erroneous impression that grocery sales currently are subject to myriad taxes when, in his view, they are subject only to the state corporate minimum tax and are not subject to any sales or other tax, fee or assessment that would be barred by the initiative. (Baessler Letter, 5). We begin with the comments and objections to the reference in the no result statement to the state corporate minimum tax. The chief petitioners recommend deletion of the reference because, in their view, that reference goes beyond the subject matter of the measure and thus implies that a result of the change is a change to the corporate minimum tax. (Brake/Hannigan Letter, 2). They also object because there is no reference to the corporate minimum tax in the yes result statement, and ORS (2)(c) requires the no statement to use the same terms as the yes statement to the extent practical. (Brake/Hannigan Letter, 3). In contrast, Ashby/Steenbergen and Baessler contend that the no result statement must refer to the corporate minimum tax. (Ashby/Steenbergen Letter, 8; Baessler Letter, 5). Ashby/Steenbergen also point out that other taxes, specifically local taxes on prepared foods in Ashland and Yachats, also could not be amended if the measure passes. (Ashby/Steenbergen Letter, 6, 8). We agree with Ms. Ashby and Ms. Steenbergen, and with Mr. Baessler, that the no results statement should refer to the corporate minimum tax, and disagree with the chief petitioners that the reference to that tax is beyond the scope of the measure. The state corporate minimum tax imposes a tax on sales of the taxpayer. ORS Accordingly, taxpayers who sell groceries and who are subject to the corporate minimum tax would not be subject to any amendments to ORS enacted on or after October 1, For that reason, the corporate minimum tax is within the scope of the measure. Moreover, inclusion of a reference to

8 Page 6 the corporate minimum tax advances voters knowledge about the measure. See Nesbitt v. Myers, 335 Or 424, 432, 71 P3d 530 (2003) (describing that no statement should advance [ ] voter s understanding of the choice that a proposed measure represents ). In particular, it provides additional detail about the types of existing taxes that may be affected by the measure. We also agree with Ms. Ashby and Ms. Steenbergen, and thus disagree with Mr. Baessler, that the corporate minimum tax is not the only existing tax that, if amended on or after October 1, 2017, would be affected by the measure. As they point out, Ashland and Yachats have had taxes on groceries in particular, a tax on food sold at restaurants in effect since before October 1, The measure does not affect those taxes, but it would affect amendments to them. Although the effect of a no vote would be that state and local governments would retain their ability to create and amend existing taxes and fees on sales of groceries, we believe that the impact of the measure on the state corporate minimum tax is substantially greater than the impact on local taxes. That is because, based on the comments, we are aware of only two local governments that impose taxes that, if the measure passes, could not be amended. The state corporate minimum tax, in contrast, potentially applies to all corporations that sell, distribute, purchase, or receive groceries throughout the state. Accordingly, we retain the reference to the state corporate minimum tax in the no result statement. That reference is preceded by includes, which indicates that a no vote would have a similar effect, and that that effect would not be limited to continuing authority to amend the corporate minimum tax as it applies to sales of groceries. That is, the result of a no vote would be that governments would continue to be able to enact new, or amend all existing, taxes and fees on sales of groceries. The chief petitioners also urge that the terms in the no result statement should parallel the terms in the yes statement and, for that reason, the no statement should not refer to the corporate minimum tax. As explained above, we believe that a significant effect of the measure is that the corporate minimum tax could not be amended as it applies to sellers and distributors of groceries. We decline to make any additional changes to the no result statement. As with the yes result statement, we retained sellers/distributors, but other changes we have made to the no result statement clarify that it refers only to taxes and fees on groceries. And, as noted, we disagree with Mr. Baessler s contention that the no results statement suggests that sales of groceries currently are not subject to a sales tax or any other tax, fee or assessment barred by the initiative, other than the corporate minimum tax. (Baessler Letter, 5). In light of our response above, we certify the following no result statement: Result of No Vote: No vote retains state/local government authority to enact/amend taxes (includes corporate minimum tax), fees, on transactions for groceries (defined), including on sellers/distributors.

9 Page 7 D. The summary We next consider the draft summary. A ballot title must include [a] concise and impartial statement of not more than 125 words summarizing the state measure and its major effect. ORS (2)(d). The purpose of a ballot title s summary is to give voters enough information to understand what will happen if the initiative is adopted. McCann, 354 Or at 708. The draft summary provides: Summary: Amends Constitution. Currently, state/local governments may adopt taxes; corporations subject to state minimum tax based on Oregon sales. Measure prohibits state/local governments from adopting, approving or enacting, on or after October 1, 2017, any tax, fee, or other assessment on sale/distribution/purchase of, or on sellers/distributors for privilege of selling/distributing, groceries (defined), by individuals/entities regulated by designated federal food safety agencies, or operating as farm stand/farmers market/food bank. Measure prohibits sales tax, gross receipts tax, commercial activity tax, value-added tax, excise tax, privilege tax, and any other similar tax on sale of groceries. Groceries defined as any raw or processed food or beverage intended for human consumption. Alcoholic beverages, marijuana products, tobacco products exempted. Other provisions. All commenters except Secretary Richardson suggest changes to the summary, and all of their suggestions are based on their comments and objections to the other portions of the draft ballot title. The chief petitioners object to any reference to the corporate minimum tax. (Brake/Hannigan Letter, 3). Ms. Ashby and Ms. Steenbergen urge inclusion of a statement that the measure preempts local laws. (Ashby/Steenbergen Letter, 9). Mr. Baessler contends that the summary does not adequately or fully explain current law, does not fully explain the measure s retroactivity provision, and, like the caption and yes result statement, does not address all transactions impacted by the measure. (Baessler Letter, 6). Based on our responses to the comments on the caption and to the yes and no results statements, we make changes to the summary that are consistent with the changes to the other portions of the draft ballot title. In addition, for reasons noted in our response to the comments on the caption, we modify the phrase describing individuals/entities that are subject to taxes and fees that would be affected by the measure to include restaurants. However, we did not replace sale/distribution/purchase with based on transactions, and we added receipt to the phrase, because the longer phrase uses terms from the definition of sale or distribution in the measure. It thus advances the voters knowledge about the scope of the measure. Accordingly, we certify the following summary: Summary: Amends Constitution. Currently, state/local governments may enact/amend taxes/fees on grocery sales, including state corporate minimum tax, local taxes. Measure prohibits state/local governments from adopting, approving or enacting, on or after October 1, 2017, any tax, fee, or other assessment on sale/distribution/purchase/receipt of, or for privilege of selling/distributing, groceries, by individuals/entities regulated by designated

10 Page 8 food safety agencies, including restaurants, or operating as farm stand/farmers market/food bank. Measure prohibits sales tax, gross receipts tax, commercial activity tax, value-added tax, excise tax, privilege tax, and any other similar tax on sale of groceries. Groceries defined as any raw or processed food or beverage intended for human consumption. Alcoholic beverages, marijuana products, tobacco products exempted. Other provisions. E. Conclusion We certify the attached ballot title. Sincerely, /s/ Keith L. Kutler Keith L. Kutler Assistant Attorney General keith.kutler@doj.state.or.us Enclosure Ron Brake Syd Hannigan Dennis Richardson 155 B Avenue, Suite B Avenue, Suite Court St. NE, #136 Lake Oswego, OR Lake Oswego, OR Salem, OR Gregory Chaimov Margaret Olney Steven Berman 1300 SW Fifth Avenue 210 SW Morrison St. 209 SW Oak St., Suite 500 Portland, OR Suite 500 Portland, OR Portland, OR 97204

11 Certified by Attorney General on December 20, /s/ Keith Kutler Assistant Attorney General BALLOT TITLE Amends Constitution: Prohibits taxes/fees based on transactions for groceries (defined) enacted or amended after September 2017 Result of Yes Vote: Yes vote amends Constitution; prohibits state/local taxes/fees based on transactions for groceries (defined), including those on sellers/distributors, enacted/amended after September Result of No Vote: No vote retains state/local government authority to enact/amend taxes (includes corporate minimum tax), fees, on transactions for groceries (defined), including on sellers/distributors. Summary: Amends Constitution. Currently, state/local governments may enact/amend taxes/fees on grocery sales, including state corporate minimum tax, local taxes. Measure prohibits state/local governments from adopting, approving or enacting, on or after October 1, 2017, any tax, fee, or other assessment on sale/distribution/purchase/receipt of, or for privilege of selling/distributing, groceries, by individuals/entities regulated by designated food safety agencies, including restaurants, or operating as farm stand/farmers market/food bank. Measure prohibits sales tax, gross receipts tax, commercial activity tax, value-added tax, excise tax, privilege tax, and any other similar tax on sale of groceries. Groceries defined as any raw or processed food or beverage intended for human consumption. Alcoholic beverages, marijuana products, tobacco products exempted. Other provisions. 20 Dec :27 pm