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Rural counties fret over I-695
Rural counties fret over I-695
Small towns would have tougher time absorbing budget cuts
By Craig Welch - Staff writer
OLYMPIA -- They're plotting defensive strategies, shoring up financial weaknesses
and prepping the troops for possible casualties.
A month before voters decide on a state initiative to cut vehicle license tab
fees to $30, antsy government leaders across Eastern Washington gear up for
its possible passage as if readying for a budgetary invasion.
In Medical Lake, officials consider mapping out potential layoffs so no one's
caught by surprise -- and fret how that will affect morale if the initiative
fails and cuts prove unnecessary.
“Once you've identified someone's position as expendable, that's pretty hard
to take back,” City Manager Curt Kelling said.
In Othello, city leaders have already fortified their cash flow by bumping
up utility taxes, recognizing such a change may be difficult after Jan. 1. That's
because I-695 requires a public vote for any tax or fee increase.
The Spokane Regional Health District plans to raise fees this fall if I-695
passes.
In Cheney, leaders scrounge for backup money in case it's needed to match grants
for major road and sidewalk improvements.
In Stevens County, which recently drained its reserves building new mental
health and juvenile detention centers, budget writers agonize over another potential
$1 million cut.
“It's like the second coming of a nightmare,” said auditor Tim Gray. “I don't
know how to cut down more. I don't know how to operate with any less.”
The reason behind this flurry of activity: While saving the average taxpayer
$142 a year, I-695 would eliminate the state's motor vehicle excise tax and
replace it with a flat fee that generates $550 million less in revenue the first
year.
MVET revenue is widely distributed. Erasing it potentially affects not just
roadbuilding, but every city, county, health district or public transit system
in the
state.
Exactly how is tough to say.
Initiative opponents contend road projects will languish, small rural governments
will be so strapped they'll cut programs and law enforcement will be significantly
pared. The recently approved $2 billion North Spokane Freeway likely won't be
built, they contend. Neither will the $7 million repair to Othello's “Killer
Corner” at the intersection of highways 17 and 26.
“Basically we're talking about eliminating the fourth-most important source
of revenue in the state,” said Mark Funk, spokesman for No on I-695. “That will
be felt.”
Initiative sponsors contend the Legislature will simply use the state surplus
to plug all the holes the first year. After that, the tax cut will spur growth
and generate more tax revenue. If there are remaining shortfalls, they'll be
made up with program cuts or voter-approved tax increases.
“We're certain the Legislature will just use the surplus,” said initiative
sponsor Tim Eyman. “They won't do nothing, and they won't put a tax increase
on the ballot. It's an election year. The other options are political suicide.”
Regardless, passage of I-695 could profoundly change the way government operates
in Washington.
And fast.
The initiative's sweeping provisions would take effect Jan. 1. Yet the election
takes place at the same time -- in some cases on the very day -- governments
are adopting budgets for 2000.
“Government's like a snail,” said Kelling with Medical Lake. “Someone whacks
you, and you turn just a little. The system is not designed for a quick reaction
to change.”
In a state with no income tax, only the sales, property and business-and-occupation
taxes bring in more money than the MVET.
About 20 percent of MVET revenue goes to roads and highways, with another 10
percent set aside to pay off road bonds made possible by passage last year of
Referendum 49. Those bonds have not been sold, pending the outcome of I-695.
That money makes up nearly a third of the state transportation budget.
But MVET also finances ferries and gets sent around the state to local governments.
If I-695 passes and that money is not replaced, some would be hit harder than
others.
Spokane County would lose about $1.3 million from its general fund and a bit
more in transportation dollars. But Commissioner Kate McCaslin expects the county
to swallow the loss, either through efficiencies or by dipping into the county's
$14 million surplus.
“We don't even think it would affect us,” she said.
The city of Spokane, meanwhile, would lose about 4 percent of the city's budget,
and as much as $1 million in transportation projects.
“Locally, maybe we won't feel it for a year, but we will in a few,” said Sgt.
Chuck Reisenauer, vice president of the Police Guild.
Harder hit, however, would be poorer cities and counties. Governments in retail-poor
communities get an even greater portion of their money from MVET through sales-tax
equalization. Most of them are in Eastern Washington.
Medical Lake could lose 16 percent of its general fund budget. Stevens County,
about 9 percent.
That further stresses Carol Villers, acting administrator at Tri-County Health
District, the public health agency for Stevens, Ferry and Pend Oreille counties.
Not only do public health agencies receive MVET money -- in her case about
$100,000 a year -- but she fears I-695 would jeopardize the $800,000 she collects
from the three counties.
“They likely would want to reduce their contribution to us,” she said.
The Spokane Regional Health District is facing a 13 percent cut.
Eyman said he's sympathetic, but also claims if local communities desperately
need a program, they can take it to voters, who will approve it if it's worthy.
“Every prediction the other side makes just says in 100 different ways that
the government can't afford this initiative,” he said. “But the government will
adjust.”
That sentiment helps fuel support for a measure already so popular Eyman collected
more than a half-million signatures to get it on the ballot -- the second-most
in state history.
Consider: At the Spokane Transit Authority -- where state money that could
disappear with I-695's success currently covers 38 percent of the budget --
officials forecast a potential loss of up to 51 full-time jobs. And that's just
the first cut.
Five years later, a $38 million reserve would be down to $3 million, and STA
would still expect to cut another 20 percent of its staff.
“It would be devastating,” said Ken Davis, an official with the transit union
representing some 400 bus drivers and other STA workers.
Yet even as union leaders proclaim the initiative their greatest threat in
three decades, “a lot of our people are going to vote for it,” Davis said.
“They don't believe all this stuff,” he continued. “They figure the government
will work it out if it passes.”
Some of the consequences tossed out by anti-initiative forces are conjecture
at best, such as a recent statement from No on I-695 headlined “1,000 cops could
lose jobs if I-695 passes.”
The source, Mike Patrick of the Washington Council of Police and Sheriffs,
admits the claim assumes local governments or the Legislature wouldn't make
other cuts instead -- a remote possibility given the political reluctance to
slash crime-fighting dollars. Plus, some cops are paid for with federal grants
that must be repaid with penalties if positions disappear.
Still, Patrick regularly makes the claim on radio shows and debates -- without
apology.
“One thing I hate with a passion is scare tactics,” Patrick said. But “everything
we do in this campaign -- whether you're pro or con -- is based on assumptions.”
No on I-695 spokesman Funk put it this way: “Are you willing to take that risk?”
And, of course, Eyman's rosy forecasts if I-695 passes also require leaps of
faith. Funk calls them “Eyman-omics.”
Eyman assumes his tax cut could spur enough economic growth to all but replace
the $1.1 billion or more loss each biennium -- a point the state's economist
disputes. He also assumes that with an average savings of $142, drivers would
be more likely to buy new cars sooner. And he assumes the state could weather
a sudden economic downturn after using up its surplus.
“The state is on a current trajectory, and 695 sends it in another direction.
No question,” Eyman said. “The question is, which do you prefer?”
Craig Welch can be reached at (360) 664-2598 or by e-mail at craigw@olywa.net.
