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I-695 - Valley's small towns face big losses
I-695 -- Valley's Small Towns Face Big Losses
11:15:15 AM Monday, October 18, 1999
Published in the Herald-Republic
By TOM ROEDER
YAKIMA HERALD-REPUBLIC
Small governments stand to lose big money if license tab taxes are erased by
Initiative 695.
Money from the tabs is spread like fertilizer in Yakima County. It subsidizes
impoverished governments and pays for roads and police.
Many Yakima Valley towns have come to rely on the tab money. For Mabton, Wapato
and Harrah, the state money makes up more than 10 percent of their operating
budgets.
"It just cleans their clocks," Yakima County Commissioner Jim Lewis said.
Tab Generates Funds
Local governments get about 25 percent of the $750 million the state brings
in each year with the license tab tax. The other 75 percent pays for local buses
and mass transit, ferries and highway construction.
I-695 sponsor Tim Eyman said the threatened cut is healthy for local government.
"Maybe we will wind up with a system in place for local communities to pay
for programs that are important to them," he said.
Mabton gets $160,000 every year in license tab money, almost 20 percent of
its $900,000 operating budget. That's $96 for each of the 1,650 people in the
50-square block city.
Much of the money comes as sales tax equalization, a subsidy Mabton gets from
the state to make up for a lack of sales tax income.
"It's just five miles for people to drive to Grandview or Sunnyside," she said.
Mabton has a grocery store, a hamburger stand, a gas station, a tavern and
a barber shop that doubles as a liquor store. But there isn't a Wal-Mart or
a mall to drive sales tax revenues, city administrator Ildia Jackson said.
Mabton to Feel Squeeze
But if I-695 passes, the city's subsidy will dry up.
I-695 already has brought changes to Mabton. After one of the city's three
full-time police offers took another job a few months ago, the position was
left vacant to save money in anticipation of budget cuts.
"We aren't looking at paving for a while either," Jackson said.
If the initiative passes, more changes will be on the way. City Councilman
David Conradt said plans to balance the city's budget include cutting hours
for five employees who make up half of the city's workers.
"I'm hoping they can get some unemployment benefits," he said. "I'm not comfortable
with it. These are jobs."
Conradt said many Mabton residents didn't realize license tab money paid for
local government.
"People think it's a tax to pay for roads," he said.
That is one of the things that makes people angry with the license tab tax,
County Auditor Doug Cochran said. They don't understand where it goes.
Mabton's license tab money is a small share of the millions brought in countywide.
County Budget Cuts Coming
The Yakima County Commission is looking for a way to hack $2.4 million from
its budget if I-695 passes, Lewis said.
"We haven't heard a peep from the Legislature about a plan for if 695 passes,"
he said. "While we don't want to tell people a tale of gloom and doom, we are
looking at cuts."
Indirectly, the tax money is funneled to other agencies, including the Yakima
Valley Regional Library, which is expected to lose user fees paid by cities
if the cuts come down.
"About half of our budget is in jeopardy if the towns and cities can't pay,"
Library Director Anne Haley said.
The library gets half of its budget from property taxes assessed in rural Yakima
County. The rest of the money comes from fees paid by cities.
Mabton kicks in more than $6,000 every year for library services.
The city of Yakima already has told Haley to expect cuts as high as $115,000
if I-695 passes. The city in 1999 paid $1.15 million of the library's annual
$3.9 million budget.
Eyman said the library should ask local voters for the money they need to operate
rather than relying on money to filter down from the state.
The Yakima native, who now lives in Mukilteo, a small town south of Everett,
said the tax cut will help small governments re-examine their needs and find
efficiencies.
"Aren't we taxed enough?" he said.
License tabs for a 1995 Mercury sedan worth $10,000 on the state tax rolls
brings in $220 in taxes. Another $23 is assessed as a licensing fee. Eyman's
initiative would drop that cost to a flat $30, regardless of a car's value.
According to state budget numbers, the average car owner would save $142 per
year.
Tab a Money-Maker
The unchanging nature of the license tab tax has made it an attractive pool
of money for state lawmakers.
They have attached a Christmas tree of spending bills to the tax, partly because
the value of cars has increased for years, and car owners haven't stopped paying
annually, said Rep. Barbara Lisk, a Zillah Republican who hasn't taken a stand
on I-695.
"A lot of stuff got tied to it because it was dedicated and stable," Lisk said.
But the stability has been threatened by a growing disdain for the tax that
critics say is unfair because it taxes cars based on the sticker price rather
than what people actually pay, Cochran said.
"People are unhappy with it," he said.
Lisk said she and others have promoted cutting the license tab tax.
"You could tell that it could be grounds for a taxpayer's revolt," she said.
Referendum 49, which funneled license tab money into an account to pay for
massive highway projects, brought some tax relief in 1998 by cutting $30 off
the price of tabs.
Eyman said the referendum did too little to address the tax.
But no more changes were in the offing. State lawmakers didn't think Eyman
would gather enough signatures for the November ballot and nothing more was
done about the tax, Lisk said.
But his initiative attracted 514,000 signatures, three times what is needed
to earn a place on the statewide ballot.
No Definitive Plans
Legislators have no clear-cut plans for helping local governments if I-695
passes. Eyman said the state can cough up some of its $1 billion savings account
as a stopgap measure.
Sen. Harold Hochstatter, a Moses Lake Republican, wants to use the extra $130
million the state has been raking in every three months over spending limits
set by Initiative 601. That initiative curbs budget increases and requires lawmakers
to keep a 5 percent budget reserve.
"But we want government to economize," he said.
Hochstatter said he wants to make county and city officials around the state
take pay cuts as a condition of getting state cash.
"Some of those people are making $100,000 a year," he said.
Lisk said lawmakers are making budget plans based on the passage of I-695.
"I will do everything I can to make sure those cuts aren't devastating," she
said.
But lawmakers' promises haven't eased the uncertainty in Mabton.
"We have to be ready for the cuts," Jackson said.
