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Smaller cities prepare for hit if I-695 passes
Smaller cities prepare for hit if I-695 passes
by Jim Brunner
Seattle Times Snohomish County bureau
Brier Mayor Wayne Kaske is only half joking when he tells City Council members
they'll need to "bring a rag" to meetings if voters next month approve a statewide
initiative to slash car-tab fees.
The city won't be able to afford a janitor to clean City Hall if Initiative
695 is approved Nov. 2, he says. It would also close three parks, discontinue
the city newsletter and eliminate the mayor's salary under a 2000 budget proposed
by Kaske.
Like many cities across the state, Brier is crafting a doomsday budget in
case voters approve I-695, which would replace the unpopular car tax - 2.2 percent
of a vehicle's value - with a flat $30 fee and require voter approval for all
new tax and fee increases.
The reason is that cities like Brier and Mountlake Terrace in Snohomish County,
and small cities in King County, have few shopping centers and generate little
local sales-tax revenue.
They rely on the state for "sales-tax equalization" money, paid out of the
car-tab fees. If that money vanishes, tax-poor cities could be left with gaping
budget holes.
Initiative sponsor Tim Eyman dismisses the worst-case scenarios being painted
by local officials.
"I would say it's another example of the dishonest campaign our opponents
are waging of lies and scare tactics," said Eyman, a Mukilteo resident.
In the short term, Eyman says the state Legislature could make up for the
loss of car-tab money by spending its $1 billion budget surplus. In the long
run, he argues, I-695 would boost the state's economy and its tax collections
by giving consumers more money to spend.
But spending the state's surplus may not be so easy, state budget analysts
say. That's because Initiative 601, approved by voters in 1993, places strict
limits on the growth of spending in the general-fund budget, the state's primary
pool of money for everything from schools to prisons.
The car-tab money feeds a budget that is separate from the state's general
fund. If lawmakers try to use the general-fund surplus to make up for the loss
of car-tab money, total general-fund spending would surpass I-601 limits, triggering
a mandatory statewide public vote on whether to go ahead with the spending.
Alternatively, the Legislature could amend I-601, but that would require a
two-thirds vote in both houses.
The cloud of fiscal uncertainty has budget writers across the state planning
for a sudden plummet in revenue.
"It's literally impossible to tell anyone what cuts we'd make because it depends
on what the Legislature does," Mountlake Terrace Mayor Dave Gossett said. "But
it's simply dishonest for people to claim nothing will be cut."
For example, Brier anticipates a loss of $580,000 in state car-tax money next
year, rising to nearly $830,000 in 2001, according to a state budget-office
analysis.
To offset that, Kaske proposes to raise property taxes next year by 6 percent,
the maximum allowed under state law, if I-695 passes, and by just 2 percent
if it fails. But even with the extra taxes, the city's $2 million operating
budget next year would shrink by $200,000, to $1.8 million.
Kaske's budget, which awaits formal consideration by the City Council next
month, proposes a host of cuts to city expenses, large and small.
The Mountlake Terrace City Council is weighing a 6 percent property-tax increase
to offset part of the lost revenue. But a bevy of city services - and more than
20 employees - could be eliminated.
For example, closing one of the city's two fire stations and laying off several
firefighters would save more than $500,000 a year, officials said. Ending Brier's
funding of annual festivals such as a city Christmas tree lighting and an Easter-egg
hunt would save $43,000. And the city would save $50,000 by stopping an annual
"spring cleanup" that offers free pickups of household junk.
Edmonds stands to lose about $1.4 million a year if the initiative is approved,
city officials said.
No firm plans have been made, but Edmonds Mayor Barb Fahey said the City Council
will have to choose among such things as keeping its contract with the Sno-Isle
Library System, reducing baseball-field maintenance and cutting the hours at
the city pool.
"None of it will be pretty," Fahey said.
In Eyman's hometown of Mukilteo, city leaders are bracing for a reduction
of more than $1 million a year. That would amount to a 14 percent drop in the
city's $7 million operating budget, said Richard Leahy, city administrator.
Other Snohomish County cities, such as Everett and Lynnwood, boast thriving
business districts and don't need tax-equalization money. But even they stand
to lose dollars earmarked for police and fire departments, and for road improvements.
For Everett, which has a $90 million operating budget, I-695 would lop off
$1.5 million, mostly in car-tax funds earmarked for the fire and police departments,
according to the state budget office.
City officials are not sure what that will mean, though police and fire layoffs
are a possibility, said Doug Levy, governmental-affairs consultant to the city.
In all, I-695 could jeopardize 134 Snohomish County road and highway projects
worth $507 million, county officials say.
What I-695 would do: The annual state tax on motor vehicles would be replaced
by a flat $30 fee. The initiative also would attempt to fend off efforts to
shift the tax burden by requiring voter approval for any future fee or tax increases.
Voters will be asked to approve the measure Nov. 2.
