Who Controls Washington's Wallet?

Some of the most important decisions the Washington Supreme Court has ever made had nothing to do with criminal law, free speech, or search and seizure. They involved money — taxes, spending, and who gets to decide how public funds are collected and used.

At first glance, these cases seem unrelated: a capital gains tax, thirty-dollar car tabs, school funding. But beneath the surface, they all raise the same constitutional question. Who controls Washington's wallet — the Legislature, the People, or the courts?

The Constitution Starts With the People

Washington's Constitution creates multiple sources of power. The Legislature possesses the power to tax and appropriate funds. The Governor administers government. The Judiciary interprets the Constitution. And uniquely, the People themselves possess the power to pass and reject laws through initiative and referendum.

That means major fiscal decisions can originate from multiple directions — sometimes from legislators, sometimes from voters, sometimes from constitutional rulings. The result is an ongoing constitutional conversation about who gets to make financial decisions for the State.

The Income Tax Case

When it comes to constitutional tax law, we have to start with the 93-year-old income tax case: Culliton v. Chase, 174 Wash. 363 (1933) — decided not three years removed from the start of the stock market crash of 1929. The People, in the most democratic way possible, came together by way of constitutional initiative and resolved to enact comprehensive tax reform. Two initiatives passed simultaneously: the first created a progressive income tax, and the second reduced the property tax. The measure wasn't intended to generate more or less tax revenue. Instead, it was designed to equitably shift the sources of tax revenue in response to what we now know as the Great Depression.

The Court concluded that income constituted 'property' under the Washington Constitution, and therefore could not be progressive and had to be capped at 1% annually. While the decision was correct, the outcome was devastating. The progressive income tax was invalidated, but the People's measure for property tax relief — which reduced government revenue — was enacted into law. That meant schools and government missed out on millions in very necessary tax revenue during the worst economic time in our nation's history. I don't believe the voters would have passed property tax relief if they had known the income tax would fail.

Whether one agrees with the decision or not, its significance is undeniable. That one case shaped Washington tax policy for generations. Supporters viewed the decision as faithful constitutional interpretation. Critics viewed it as a missed opportunity to do the right thing for the wrong reasons. But everyone agreed on one thing: the Court had enormous influence over fiscal policy.

In the last 14 years, though, we've seen a tremendous shift in the way the Supreme Court decides tax cases and the effect those decisions have on the State's wallet. Let's start in 2026 and work our way backwards. In 2026, the Legislature passed a state income tax. Last month, on May 4, 2026, our State Supreme Court, led by Chief Justice Debra Stephens, struck down the People's attempt to invalidate the income tax law because of the Legislature's 'necessity clause' — thus stripping the People of the power to reject laws passed by the Legislature.

The Capital Gains Tax

Nine decades after Culliton decided that income was property, the issue returned in a different form. In 2023, our Washington Supreme Court reviewed the constitutionality of the capital gains tax. In Quinn v. State, 199 Wn.2d 753 (2023), the Court was tasked with determining whether capital gains are considered 'property' under Amendment 14 of our State Constitution. If it's property, then it can't exceed 1% and can't be progressive. But if it's an excise tax, then the Legislature can tax that shirt to Shelton and back.

The Washington Supreme Court ultimately upheld the constitutionality of the capital gains tax. Writing for the 7–2 majority, Chief Justice Debra Stephens concluded that the capital gains tax was an 'excise' tax and not 'property' for constitutional purposes. Justice Gordon McCloud, in dissent, argued that capital gains are income, and income is property, and therefore the capital gains tax is a property tax. As a result of this case, Washington now has a capital gains tax. Once again, the Court found itself at the center of a major fiscal question — resulting in more taxes.

The Car Tabs Case

The next fiscal dispute takes us to 2020, where the fight came not from Olympia but from the voters. Washington voters approved Initiative 976, a measure designed to drastically reduce car tabs to just $30. The initiative passed — and then the litigation began.

The Supreme Court handed down a unanimous decision with one concurring opinion. Led by Justice Steven González and signed off by Chief Justice Debra Stephens, the Court invalidated the $30 car tab initiative under the 'single-subject rule.' Garfield County Transportation Authority v. State, 196 Wn.2d 378 (2020). While the measure arguably contained multiple subjects, the Court gave less scrutiny to the car tab law in particular, which is inconsistent with long-established case law. Equally troubling is that the decision does not address a very fundamental issue to the analysis. It's right there in the opening paragraph — but our Supreme Court did not even bother to go through the analysis. From my perspective, as a resident and taxpayer in Washington state, it was devastating to learn that not one of the nine justices considered what is, for all intents and purposes, a very obvious question of constitutional law.

Regardless of one's position, the practical effect of the decision was clear: it saved the government billions in tax revenue. Imagine if you only had to pay $30 for car tabs — how much money would you save over two years? Think about the number of cars on the road, and think about how much the government would lose in tax revenue. It would have been a 90%-plus drop in tax revenue that would have crippled government programs like Sound Transit. The decision saved the government from a substantial loss of tax revenue. Another major fiscal decision approved by voters was nullified by our Supreme Court, which found itself, yet again, in the middle of a dispute involving public money — and siding with tax revenue.

McCleary

In 2023 they upheld the capital gains tax. In 2020 they struck down the $30 car tabs. Now let's go back to 2012 to witness another historic tax decision.

In 2012, the McCleary decision — authored by Chief Justice Debra Stephens — approached fiscal policy from an entirely different direction. The issue was not taxation. The issue was constitutional spending obligations. In a 7–2 opinion, Chief Justice Stephens authored a 78-page decision holding that the State had failed to satisfy its constitutional duty to make ample provision for public education. Many observers — including critics of the later proceedings — agree the Court possessed the authority to correctly identify a constitutional violation. The controversy arose from what happened next.

Rather than simply issuing its decision, the Court retained jurisdiction. It required progress reports, reviewed legislative responses, and repeatedly evaluated whether funding levels were sufficient. The Supreme Court essentially became the Legislature's probation officer. At one point, our Supreme Court held the Legislature in contempt and imposed sanctions of $100,000 per day until it came back and did better.

Meanwhile, the Legislature dramatically increased education funding. State K–12 funding grew from approximately $13.4 billion in the 2011–13 biennium to more than $22 billion by 2017–19, eventually exceeding $26 billion in the following biennium. In practical terms, education funding nearly doubled during the six-year McCleary era. Whether you are happy about the result of more funding is not the issue. The issue is the precedent the Court set by retaining jurisdiction over the Legislature. That's never been done before. Imagine all the other ways we could put the Legislature on probation and hold it in contempt when it fails to comply.

By retaining jurisdiction and repeatedly evaluating whether billions of dollars in new appropriations were sufficient, the judiciary became deeply involved in one of the largest budgetary questions facing our great State of Washington. The Court never enacted a tax. The Court never passed a budget. The Court never appropriated a dollar. And that raises the enduring constitutional question: when a court identifies a constitutional violation, where does judicial review end and legislating from the bench begin?

A Common Theme

Now let's bring it back forward. From 2012 to 2018, the Supreme Court retained jurisdiction over the Legislature for the first time in history, resulting in a near-doubling of the education budget from $13 billion to $26 billion. In 2020, the Supreme Court struck down the voter-approved car tabs on questionable constitutional grounds. And in 2023, the Supreme Court upheld the capital gains tax, calling it an excise tax rather than an income tax.

These cases involve different constitutional provisions, different legal theories, and different outcomes. But they all point toward the same fundamental question: who gets to make Washington's biggest financial decisions? The Legislature claims authority through its power to tax and appropriate. The people claim authority through initiatives and referendums. The courts claim authority through constitutional interpretation. Each institution possesses a legitimate constitutional role. The challenge arises when those roles collide.

The Separation-of-Powers Question

The most important debate is not whether taxes should be higher or lower. It is not whether education spending should increase or decrease. The most important debate concerns institutional power. What role should courts play when disputes involve billions of taxpayer dollars? Should courts defer to the Legislature? Should courts defer to voter-approved initiatives? Should courts aggressively enforce constitutional limitations regardless of fiscal consequences? There are no easy answers — because every answer involves competing constitutional values: democracy, judicial review, legislative authority, and direct popular sovereignty.

The Real Lesson

Most people think constitutional law is about free speech, or criminal procedure, or individual rights. But some of the most consequential constitutional decisions involve money — who collects it, who spends it, who controls it, and who gets the final word when government institutions disagree. That debate has shaped Washington for nearly a century, and there is no reason to believe it will end anytime soon. Because beneath every budget dispute lies a constitutional question.

Who controls Washington's wallet? The Legislature, the People, or the courts?