Sales tax shortfall brings calls for lid lifts

It seems obvious that our economy has slowed, since sales tax revenue distributed to the Kitsap County government so far this year is less than the amount received in the same period last year.

Since sales taxes pay a substantial part of the cost of county government, we taxpayers may as well start thinking about the impact of a decline.

This year’s county operating budget projected a small increase in sales tax revenue, but the revenue received in the first quarter is only 93 percent of last year’s first quarter total.

When the county plans on a small increase, but experiences a revenue decline of this magnitude, something has to give.

Fortunately, our county commissioners began this year with no plan to spend the reserve funds accumulated in past years. If they had planned on running a deficit, the situation would be worse than it is.

Unless the economy improves quickly, a deficit seems likely this year, which would leave less of a reserve for the future.

In the past 20 years, we have experienced economic recessions that were less severe and shorter in duration than had been typical in the previous decades.

Suppose this particular slowdown is a recession, and suppose it is more like the recessions of the earlier times, then consider how you want county government to respond.

The reserve fund cannot last forever, but raising taxes during a recession is a tough thing to accomplish.

Would a majority of voters actually approve a property tax “lid lift” to make up for the reduction in sales tax revenue? It seems improbable, unless county government can present an ironclad case for such an increase.

Considering the other taxing districts which will be asking for voter approval of levies in 2009, getting voters to approve a county tax hike seems even less likely.

The South Kitsap School District has no choice but to put an excess levy proposition on the ballot next year, since the current four-year levy expires at the end of 2009. Without voter approval of another levy to take its place, the school district would face a severe funding cut.

Similarly, the South Kitsap Fire and Rescue district must ask for renewal of the emergency medical services levy in 2009, since the current six-year levy expires next year.

The Kitsap Regional Library district may again ask for a lid lift, having failed to gain voter approval last year.

At some point, voters might feel they are being asked for too much by too many, so it will be important for each proposition to be fully justified.

For county government, the justification will probably have to be more than simple claims that revenue isn’t keeping up with expenditures.

It may not help to point out that most of the county’s expenditures are for mandatory and essential government functions, since the question would be whether so much needs to be spent on those functions. We know, for example, that law enforcement is essential, but this doesn’t tell us how much must be spent on it.

Sometimes, particular spending decisions have an effect on public opinion that outweighs their size relative to the total budget. They catch the public’s eye and become symbols of budget priorities whether or not they accurately represent our leaders’ priorities.

Take, for example, Gov. Christine Gregoire’s veto of additional state spending on the “Welcome Home Baby” program. It’s a small part of the total, but it can cause people to think that the state’s supplemental budget isn’t filled with excessive new spending.

Does anyone think that the governor would veto spending on public health nurses’ visits to newborn babies’ homes if there were other options?

We’re talking little babies and new mothers and nurses checking to see that all is well. Even though it would be a voluntary program available without regard to income, it sounds like a harsh budget decision.

What could the county do to match that? How about eliminating for a year or two the property tax levy for indigent veterans relief, and instead using that revenue for other essential functions?

Rather than looking for ways to increase spending on the county’s program now that the veterans relief fund has accumulated a substantial reserve, use that levy authority for other things as the law allows.

No one would be hurt, yet it would symbolize a recognition that spending cannot increase just to use up the surplus generated by soaring property values and an unchanging tax rate for this particular program.

It’s a small thing – only a penny per $1000 – but that’s $326,500 that could make up for part of the sales tax decline without asking for higher taxes.

If a lid lift is needed, it would be best to show that every rock has been turned over in the search for ways to keep it low – then few people could justly claim that you didn’t try.

Robert Meadows is a

Port Orchard resident.

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