Opinion

State needs to address tax issues to fix King County budget

How would cutting 100 sheriff’s deputies affect police response times? How would a reduction of 30 deputy prosecutors impact our ability to put criminal suspects on trial?

These are examples of the grim decisions facing King County citizens and lawmakers as we confront a $68 million budget deficit for 2009 and a possible $80 million shortfall in 2010. These cuts will hit hardest in unincorporated areas of King County, such as Vashon and Maury Islands, which rely on the Sheriff Department for police protection and on the general fund to pay for many basic services.

How did this problem come to be? The short answer is that the cost of maintaining the same core services from year to year increases faster than the resources available to pay for them.

While recent state initiatives have limited the growth of King County’s core revenues, costs have continued to grow. For example, Tim Eyman’s 2001 state Initiative 747 limited the increase in general fund property tax collections for municipalities such as King County to 1 percent annually. The prior limit had been 6 percent. (I-747 was invalidated by the State Supreme Court last year but immediately re-enacted by the Legislature.)

Eyman’s initiative did not limit staggering increases in the price of gasoline and diesel. It did not limit the annual double-digit increases in the cost of health insurance for county employees. It merely limited the ability to pay for these things.

A reasonable person might ask why reductions of $148 million over two years couldn’t be taken against a $5 billion total budget without harming essential services. The problem is that the cuts must all come from the county’s $662 million annual general fund, the money over which we theoretically have the broadest discretion.

The balance of the total budget is in dedicated funds collected under federal-, state- or voter-imposed legal limitations for such functions as transit, sewage treatment, the parks levy, mental health tax, Medic One levy and enhanced 911 service, to name just a few.

For example, under state law, King County’s sewage treatment function is considered a utility and our sewer rates must be set to reimburse the county for the cost of providing services, but we cannot charge a penny more. Nor can we transfer utility revenues or funds collected through ballot issues to pay for more police, prosecutors or jail guards.

The general fund is comprised of the money the county receives as its share of general property taxes and sales taxes. State law allows only cities — not counties — to levy utility taxes or business and occupation taxes. These “discretionary” general funds pay for general government services, including the county’s major state-mandated — and not at all discretionary — function: public safety. We run adult and juvenile jails, District and Superior Courts, the Sheriff’s Office, and the Prosecutor’s Office. We also fund public defense.

Combined, these law, safety and justice functions make up more than 70 percent of this year’s $662 million general fund budget. Had we not undertaken innovative measures a few years ago to divert people from lives of crime, criminal justice increases would have consumed the entire general fund. Still, making major cuts in the King County budget necessarily means cutting public safety expenditures.

King County is not alone. Most Washington counties are in a pinch. We all need help to finally solve the “structural gap” between costs and resources.

In the short term, I would propose two changes to state law that should be accomplished by the Legislature during its next session to help the state’s counties negotiate the general fund crisis.

First, cut strings on state-authorized funding. Large counties were authorized to levy a 1/10-cent sales tax to fund mental health and substance abuse treatment services (amazingly, it will raise more than $50 million annually in King County), but were prohibited from using the money to fund current mental health or substance abuse programs. Given that we will have to cut all areas of the budget to get it in balance, the Legislature should remove this and other similar restrictions to allow money to be used for the highest-priority programs.

Second, increase parity between county and city tax authority. Counties are not allowed to levy a utility tax — only cities can. But with more than 350,000 citizens in unincorporated King County, the county is the local government for what is effectively the state’s second largest city. This restriction doesn’t make sense and should be eliminated.

But these fixes are really just addressing the symptoms of some larger problems. The federal government must reform our health care system, to slow the shocking rate of cost increases. Both the state and federal governments must reverse the pattern of eliminating funding for essential services and creating unfunded mandates that must be covered at the local level.

Finally, and most importantly, the state’s tax system is a mess — inflexible, inadequate, bad for business and, worst of all, unfair. It needs a complete overhaul.

When I moved from the state House to the state Senate in 2000, I sat down with Sen. Lisa Brown, who is now the Senate majority leader, and crafted legislation creating what became the William H. Gates Commission on taxation. The commission responded with an excellent report outlining options for a revamped tax structure.

While I didn’t agree with every recommendation, that report — and the work of others including the tax committee of the Prosperity Partnership — provided a solid foundation for a new, fair, stable, adequate tax system better suited to modern economic conditions. Our overwhelmingly Democratic Legislature should use its unprecedented clout to tackle this enormous but solvable problem.

On the spending side, this can and should not be merely about sacrificing services. King County needs to constantly create new efficiencies and to push forward with the countywide performance measurement programs of which I have been a lead advocate.

Our comprehensive performance management system will identify where costs can be cut, reward employee innovation and allow budget decisions based on solid data about what works and what doesn’t. And finally, we must continue the process of annexing urban unincorporated areas into cities, which are better able to afford the costs of providing local services.

King County is no stranger to general fund cuts. In my first three years on the County Council, I served on the budget leadership team as we cut $137 million from the general fund budget. Those cuts were very tough. The next round will be both painful and, ultimately, counter-productive. It is time to get to the root of this recurring problem.

Dow Constantine represents Vashon and Maury islands on the Metropolitan King County Council.

His district also includes West Seattle, North Highline, Burien, Normandy Park, SoDo, the International District, Pioneer Square, West Beacon Hill, and portions of SeaTac, Tukwila and West Hill.

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