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Instead of cutting the cities' revenue share, should we trim some special districts?

A profusion of special purpose districts collect state money and taxes for everything from mosquito control to 'television reception improvement'. Cities and counties might do their jobs better, for less.

State Rep. Reuven Carlyle

State Rep. Reuven Carlyle

Lay off the cities, governor, and lay into the special districts.

Lay off the cities, governor, and lay into the special districts. Washington State Department of Transportation

Three weeks ago, 115 mayors from around the state sent Governor Gregoire a letter urging her to reconsider the cuts she's proposed in the revenues that the state shares with local governments. It was one more reminder of the nervous tone of the Nov. 28 special legislative session. And, as much as any Occupy Wall Street chant, it was a wake-up call: This crisis is an ideal opportunity to examine, fearlessly and honestly, the basic relationship between state and local government.

We can all sympathize with the mayors’ plea; they are naturally troubled by a proposed reduction in the revenue sharing arrangment between the state and local governments. While I appreciate the unity and public outreach the mayors have shown, I am concerned about how widely we have already distributed taxing powers that their letter doesn't consider and how we seem to have lost an overall sense of strategic thinking about special taxing districts.

The real question is, will the effort that this letter represents lead to an open consideration of bold, systematic solutions, or retreat into a reflexive insistence that revenue sharing is sacred and untouchable? I sincerely hope we’ll see the former. The way money currently flows from Olympia to counties, cities, and hundreds of special purpose taxing districts cries out for systemwide reexamination.

Does our current system of revenue sharing work? How has our state changed in the 70 years since many of its local taxing districts were created? How should revenue sharing change to adapt to today’s financial climate? How much local taxing authority do current and future service needs require? Which level of government — state, county, city, or special district — is best suited to perform each service in question?  Are the special purpose districts we have collectively created taking the right share of resources away from the direct city and county authority?

Over the years we have established a wide range of these special purpose districts, many with independent taxing authority that is rarely reviewed or reconsidered.  On the right is a partial list, together with the years when they were first authorized. The question at hand is not whether each district works or does not work. Many of them have great value and purpose, and I have no quarrel with any in particular. But the proliferation of districts makes silo thinking and haphazard, fragmented taxation inevitable. And this is inherently inefficient. I don't think we could track the flow of money to the various districts very efficiently if we tried. 

We are a state radically addicted to decentralization at nearly every level — starting at the top, with nine statewide elected officials. But at some point — perhaps now — we have to ask, has our state’s long attachment to decentralized taxing authority actually brought us better service at a lower price? Can we organize these districts in a way that breaks down the silos and lets counties and cities more effectively control their taxpayers’ resources while providing taxpayers with greater accountability and transparency? Perhaps we should sunset special purpose districts the way we sunset tax exemptions, in order to allow a robust reconsideration of their value.

At a time when state government is struggling, we have few options but to provide cities and counties greater local taxing authority to fund their local priorities.  Part of doing that effectively is to reconsider the local taxing authority we’ve already provided.

Why shouldn’t the cities and counties have more say over how these resources are allocated? Why shouldn’t their leaders — the elected officials closest to the citizens — have greater authority over, and accountability for, the many taxing districts that overlay their territories?

There is a great deal of serious public policy work being conducted in Olympia — and major questions are being asked — about how state government can reexamine its core constitutional task of granting taxing authority, without this seeming to be merely a short-term cost-cutting strategy. The letter from the 115 mayors is an important contribution to the ongoing dialogue over the deep, rich, and long relationship between state government and the cities. But it is far from the full story.

Reuven Carlyle, a Democratic representative from Seattle's 36th Legislative District, is chair of the House Finance Committee.


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Comments:

Posted Tue, Nov 22, 1:35 p.m. Inappropriate

HELL YES this huge problem for our state needs examination and follow-through to correct the excesses!

The delegation by the state legislature of taxing authority to municipal corporations -- especially since 1957 when old-Metro supposedly provided a "good" paradigm -- has been haphazard and grossly excessive. Moreover, the justices have acted dishonestly on a number of occasions to exacerbate the problems; they've created a moral hazard that encourages the public finance interest group and the public employee unions to lobby hard for additional improvident taxing authority delegations.

There is far too much CORRECT about this piece by Reuven Carlyle for me to go on here. Everyone should read it twice.

crossrip

Posted Tue, Nov 22, 1:54 p.m. Inappropriate

And meanwhile, there are calls to add more districts and take more services (parks, libraries) out of cities' general budgets.

Nothing has changed in 3 1/2 years.

http://crosscut.com/2008/04/24/king-county/13493/Defragging-King-County/

Posted Tue, Nov 22, 2:28 p.m. Inappropriate

I'm hoping for a City Library District 2012 in Seattle to generate and isolate revenue from the city general fund and operate the facilities with.

Mr Baker

Posted Tue, Nov 22, 2:44 p.m. Inappropriate

Btw, the short answer is no, we need the silos.

Do I have to explain how SB 6889 (2010) came about? state raiding the Convention Center fund to the tune of $54 million dollars, hoteliers taking the state to court, ring any bells? Not yet? Hoteliers agreeing to a $12 million dollar "fee" for the express pleasure of chewing off one of its lucky rabbits feet in order to create a silo?
I double dog dare you to dismantle that PFD, and any others remotely like it. You think the state is spending a lot of time in court now, well, gosh, do you think will happen?

Mr Baker

Posted Tue, Nov 22, 3:31 p.m. Inappropriate

As "Mr. Baker's" posts suggest, local self-interested entities will fight to preserve the taxing powers they were delegated. That dynamic unduly ties the state legislature's hands, and prevents it from allocating revenues wisely as both revenue streams and and public needs evolve.

Does "Mr. Baker" care one jot about the public's overall government services needs or tax burdens? No way. Does he have any perspective on fiscal or spending imperatives statewide, countywide, citywide, etc.? No way. He cares solely about his silo (apparently a PFD running a convention center).

He points to litigation: "We'll sue the state! The courts will eat our stuff up with a spoon!" This is a direct allusion to the problem I alluded to in my post above -- the justices have acted dishonestly and compounded the problems inherent in the state legislature's seemingly-wanton delegations of taxing power and bonding power to local municipal corporations.

"Mr. Baker" and his ilk are the kinds of bad actors that thrive in the civic environment that has been allowed to develop because of the irresponsible delegations of powers down to new taxing districts the state legislature has been making over the past several decades.

Reuven Carlyle's thesis here is timely (it's overdue). Start ranking these municipal corporations. What services to how many people does a municipal corporation provide? What are the tax costs to the public of each? A cost/benefit analysis of that type is needed, and could indicate elimination of some of them is overdue and warranted.

crossrip

Posted Tue, Nov 22, 3:59 p.m. Inappropriate

When the money goes away (either from the feds to the state or the state to the locals) does the regulation go with it? Seriously, Reuven? A discussion of state/local fiscal issues and no mention of regulatory costs?

It's Monday Night.

C'mon Man!

BlueLight

Posted Tue, Nov 22, 7:46 p.m. Inappropriate

Crossrip, you are missing the point (surprise!).
My "ilk" don't want ham handed "solutions" propelling the state, county, and city into a fungible money grab fantasy, only to end up in court trying to explain the state has been claiming to create these programs, with funding approved by voters, or by express instruction of law, only to have the money taken as soon as the ink is dry, and why not let every municipality join in the fun.
If you think the voters are distrustful now, yikes, try the giant pot of money game everywhere.

Many of these "silos" were created with a narrow tax or fee for a prescribed use that exists because there is a nexus. Destroy that silo, that nexus, and you will be eliminating whatever revenue is involved and whatever it is spent on.

You might as well propose spending gas tax money on teacher pay, same kind of thing, same trip to the courthouse.

What does this magical solution look like with the associated revenue gone? Do you really think Seattle will just tax hotels 5%, spend the money on bike sharrows, and the hoteliers will sit on their hands?
These silos were constructed by narrow groups to solve problem without some buffoon from some other municipality micromanaging some other municipalities solutions to their problems.

Mr Baker

Posted Tue, Nov 22, 7:47 p.m. Inappropriate

Oh, one more thing, screw you, crossrip. You don't know me.

Mr Baker

Posted Wed, Nov 23, 9:25 a.m. Inappropriate

When the Democrats we elect as the majority party in the Legislature do not have the courage to pass a budget that balances cuts to critical services and education with revenue-generating sources, the Legislature has the moral responsibility to provide more flexible revenue-generating programs to the county and local level.

If we cut these things at the state level and turn that money over to the localities, will that hurt or help? That's the question Rep. Carlyle is asking. I imagine some of these can be done better at the local level -- specifically those where there doesn't need to be cross-jurisdictional communication or coordination.

That said, the idea of eliminating some of the local taxing options is a BAD idea. We need more flexibility down here as long as our elected State-level leaders continue to not do their jobs.

David Miller

ddmiller

Posted Wed, Nov 23, 9:46 a.m. Inappropriate

You should be able to get rid of this one:

City transportation authority — monorail (2002)

A simple first step.

Do you think that all of these special purpose taxing districts might be a reaction to our initiative and referendum laws? In other words we carve out special purpose districts and the associated taxation authority to "gerrymander" a jurisdiction that can get something done and marshal the necessary resources. So long as we govern at the ballot box, as opposed to the legislative assembly, we will have special purpose districts; they are the relief valve called 'local option', 'local control', and 'local whatever'.

hoffphil

Posted Wed, Nov 23, 12:52 p.m. Inappropriate

Rep. Carlyle,

Please tell us more about "the way we sunset tax exemptions."

afreeman

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