Initiative 695 - Potential Local Impacts

Renton City Council Minutes August 23, 1999

Victoria Runkle, Finance & Information Services Administrator, reported on the potential impacts of Initiative 695, which will be before Washington state voters this November. The initiative would reduce all vehicle registration costs to $30 per vehicle. It would also require that any governmental fee and tax increases effective January 1, 2000, be approved by voters.

The initiative is already having some effect, just by being placed on the ballot. For example, last year’s approval of Referendum 49 required the state to allocate 75% of motor vehicle excise tax (MVET) revenues to transportation purposes. As a result of I-695 garnering enough signatures to be put on the ballot, however, the state has refused to issue bonds for major projects pending the outcome of the election.

If I-695 is approved, Renton will lose up to $625,000 in state-shared revenue from the MVET. Some of these funds ($75,000) would have gone toward special public safety programs addressing the problems of domestic violence and at-risk youth. The remainder would have helped offset Renton’s public safety (police and fire) costs.

Continuing, Ms. Runkle said because 3.1% of the MVET revenue total is currently allocated to cover county health costs, a drastic reduction in the amount collected would probably mean that cities would once again have to pay for these costs directly. Renton’s estimated annual expense would be $620,000, on top of the lowered MVET revenues.

Finally, passage of the initiative would significantly impact state, regional and local transportation projects. The State’s 1999-2001 budget forecasts that, in those three years, WSDOT would spend $480 million on transportation projects, transit agencies would receive $455 million, the ferry system $201 million, and HOV improvements would total $35 million. If these figures are reduced to the level foreseen by I-695, Renton would experience significant reductions in bus service at all times of the day. The City would also receive far fewer transportation grants than it currently enjoys. As far as specific projects, improvements to the I-405/44th St. interchange would not be made, nor would the SR-167/I-405 junction be rEconfigured.

Additionally, the Municipal Research Services Center, a statewide agency which provides a clearinghouse of information for all cities and counties, is fully funded by the MVET and stands to be severely affected by I-695.

Ms. Runkle added that another potential impact is that the City’s borrowing costs would increase. Also, election costs would run $25,000 to $45,000 per year. And although preparing an annual budget is already a lengthy and time-consuming process, the cost to do so would substantially increase since the City would have to prepare two budgets - one assuming no fee or tax increases and the other assuming normal increases, should the voters deign to approve them. Referring to language in the initiative which repeals the prohibition against taxing vehicles as personal property, Ms. Runkle assumed that, if the initiative is approved, the County Assessor would likely begin to assess and tax vehicles in addition to homes and other real estate.

Concluding, Ms. Runkle said the Administration has asked departments to start preparing possible reductions in programs and services in case the initiative passes.

Responding to Mayor Tanner regarding potential impacts to the Downtown Transit Center, Transportation Systems Director Sandra Meyer said although the hub’s construction would not be affected by I-695, the City would expect that transit service levels would likely decrease if the initiative is approved. Ms. Meyer noted that the transit center was designed and will be built, then, to accommodate a level of service that may not materialize due to I-695. Councilmember Keolker-Wheeler noted that the City is required, as all municipalities are, to fully fund water and sewer services. She wondered how this would be accomplished if the costs of doing so rose, but voters rejected rate increases. Ms. Runkle said one option would be to use general governmental funds for this purpose, which would be a sharp departure from the City’s currentpractice which is to fully fund the water and sewer budgets from rates.

Councilman Corman added that the City currently requires that the cost of numerous development services be fully borne by the applicants. If expenses rose but fee increases were not approved, the City would be prohibited from recouping these costs from developers, and a subsidy would thus be created for such services. He pointed out that the MVET is deductible on everyone’s federal income tax return, while other taxes and charges are not.

Councilman Schlitzer reported that the first poll taken on this issue showed that 78% of the population was in favor of the initiative. The latest poll, however, indicated an approval percentage lower than 60%.

Couniclmember Keolker-Wheeler suggested that Council host a debate on this issue, after which it could take a formal position via resolution.