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I-1033 puts government on a starvation diet
If the economy begins growing again in the second half of this year, the latest tax-limiting initiative from Tim Eyman would keep the state, city and county general funds from experiencing the usual revenue increase.
Initiative 1033 would limit annual revenue increases to an amount equal to inflation plus population growth — using anything above that figure to lower property taxes the following year.
The local property tax levies affected by I-1033 are those that go into the county and city “current expense” accounts, so much of the property tax burden would be unaffected.
Taxes paid to the Kitsap County Road Fund and Conservation Futures, South Kitsap School District, Kitsap Regional Library, the port districts of Bremerton, Manchester or Waterman, South Kitsap Fire and Rescue, and Public Utility District 1 would not be affected.
The state’s “school tax” levy would also be subject to a reduction, if the state’s general fund revenue increased enough after the economy recovers.
I-1033 could keep the state, county and city budgets on a “diet” for the near future that would continue the effect of the current recession on their revenues.
Whether the recovery is quick or slow, their general fund revenues would stay at essentially the same level as they are at the bottom of the recession after adjusting for inflation and population growth.
Of course, revenues could keep falling along with the economy, so we don’t yet know the level at which I-1033’s limit on increases would begin to be calculated.
If the voters approve I-1033 this November, we will see whether state and local governments can deal with no real growth in revenues — at least until the Legislature modifies the limit.
During this recession, budget cuts have generally been made with the intent of surviving until the economy recovers.
So what would happen if an economic recovery made no real difference in revenues?
Among other things, the unfunded liabilities for public employee pensions would have to be met with no actual gains in revenue.
Since the Legislature has once again cut government payments to those pension funds as one way to reduce expenditures during the recession, the situation is getting worse.
Without the limit on revenue increases that I-1033 would impose, we could hope that our representatives would finally act responsibly when the economy recovers and set aside the funds needed to keep our binding obligation to pay those pensions.
If they don’t, an ever greater share of our taxes will have to be used to pay retired public employees what was promised them as part of their compensation.
It isn’t an avoidable obligation short of bankruptcy.
All other spending that has been postponed until the end of the recession would eventually have to occur, unless we just do without whatever has been deferred.
The idea seems to be to force state, county and city leaders to find ways to avoid the usual spending increases when times are good by taking away the revenue increases that ordinarily occur in those good times.
If the principal cause of unsustainable spending increases is the presence of public funds waiting to be spent, I-1033 would certainly eliminate that cause.
Unfortunately, it isn’t obvious that spending restraint is the main objective of I-1033.
Instead, the purpose may seem to some people to be a reduction in some property taxes.
This would be a laudable goal if property tax increases were still the problem they were prior to Initiative 747’s passage in 2000.
But they aren’t. Since 2001, for example, the county’s current expense levy has increased by an average of less than 4 percent a year — and more than half of each year’s increase was paid by owners of new construction.
If voters want to keep state and local governments on a diet until spending restraint becomes customary rather than recession-driven, I-1033 is one way to do it.
But they need to focus on that spending restraint and how it could be done, not on I-1033’s claim that property taxes have “skyrocketed.”
Bob Meadows is a Port Orchard resident.