Washington Voters Decide on Stock Market Investment for WA Cares

Washington voters are set to decide on a significant proposal regarding the management of taxpayer dollars. The first item on the ballot is Senate Joint Resolution 8201, which seeks to amend the state constitution to allow the investment of payroll taxes collected for the long-term care program, known as WA Cares, in the stock market. If passed, the Washington State Investment Board would gain the authority to manage the program’s assets similarly to how it handles pension and retirement funds.

The proposed amendment aims to enable investments that could generate higher returns for the WA Cares program, potentially increasing the funds available for beneficiaries. Heather Weiner, a spokesperson for the Approve 8201 campaign, emphasized the need for smart, long-term investing. She noted that Washington’s pension funds have averaged an annual return of 8.9% since 1992, significantly outperforming investments in government bonds. Weiner reassured the public that this proposal does not endorse high-risk trading: “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.”

Opposition to the measure comes from State Senator Bob Hasegawa, who argues that it compromises prudent fiscal management. He stated, “Our fiduciary responsibility is to the people. No one is going to know when the economy or stock market crashes.” Hasegawa advocates for retaining existing constitutional protections for taxpayer dollars.

The Washington Legislature voted earlier this year to place the constitutional amendment on the ballot, passing in the House by a vote of 86-9 and in the Senate by 42-7. If more than 50% of voters approve the measure on November 7, 2023, it will become law. The WA Cares program, established by legislation in 2019, is funded through a 0.58% tax on the paychecks of most Washington workers. Eligible individuals will be able to access a lifetime benefit of $36,500 starting in July 2026, with adjustments for inflation in future years.

A pilot program is set to launch in January 2024 in a select few counties. Since the payroll tax collections began in mid-2023, over $2.5 billion has been deposited into the Long Term Services and Supports Trust Account as of this past summer. Currently, the state constitution prohibits the investment of public money in private companies’ stocks, limiting state and local governments to fixed-income securities like government bonds and treasury bills, which typically offer lower returns. Should the amendment pass, the long-term service account would join pension and retirement funds in being exempt from this restriction, allowing the state investment board the option to invest in private equity and stock.

A similar measure failed in 2020, gaining approval in only three counties: King, Jefferson, and Whatcom. Weiner noted that the current proposal mandates that any earnings from investments must be allocated to the WA Cares Fund, protecting it from being diverted for other budgetary needs. Both Democratic Governor Bob Ferguson and Senate Minority Leader John Braun support the ballot measure, along with various organizations such as the Washington State Nurses Association and the AARP.

The Service Employees International Union 775 is leading the campaign, having raised and spent $2.5 million as of the last report. This amount is five times greater than what the union invested in the unsuccessful effort in 2020. Hasegawa pointed out that unlike the previous campaign, there is no organized opposition to this measure. He and three Republican lawmakers have submitted statements opposing the proposal for the voters’ pamphlet.

Official statements from both supporters and opponents, along with a comprehensive explanation of the measure prepared by the attorney general’s office, are available on the Washington Secretary of State’s website. As voters prepare to cast their ballots, the outcome of this proposal could significantly alter the future of long-term care funding in Washington.