King County's running out of cuts
I have spent the bulk of my career opposing higher taxes and increased spending. In the Legislature I voted against Governor Mike Lowry'ês 1993 budget and tax increases. On the King County Council I voted against two budgets because they increased spending and raised property taxes — budgets written by my fellow Republicans while we were in the majority. During all of my 11 years in elected office I served on the budget writing committee, and every year I listened to Democratic governors and county executives talk about tight budgets, while revenues and spending went up and up.
As a fiscal conservative, therefore, I hope I can say this with some credibility: King County really does have a revenue problem. In fact, it is closer to a revenue crisis. (Disclosure moment: I am a public affairs consultant and one of my clients is the King County Corrections Guild, which has a big stake in the county's budget.)
Dino Rossi, who twice ran as a Republican candidate for governor, tells a great story about 'êOlympia cuts.'ê Imagine your son or daughter asks you for a $10 per week allowance. You say, no, but I will give you $5 per week. Your child then complains that their allowance has been cut 50 percent. That'ês an Olympia cut — a decrease in a requested increase.
But these aren'êt Olympia cuts they'êre dealing with in the county courthouse They're the real thing. The 2010 budget transmitted to the council by Executive Kurt Triplett last Monday anticipates less general fund revenue for King County in 2010 than in 2009, which comes on top of a reduction in revenue in 2009 compared to 2008. King County'ês revenues, and services, are shrinking.
King County will actually spend close to $5 billion next year, but the overwhelming majority of that revenue is legally dedicated to specific programs, such as transit, waste water, unincorporated roads, and solid waste. The crisis is in the general fund, which pays for criminal justice, parks, human services, and general government. King County'ês general fund spent $654 million in 2008. That fell to $641 million this year, and is anticipated to drop to $622 million next year. General fund spending is dropping 5 percent, while inflation and health care costs continue to rise. The county estimates that revenues will rise slightly in 2011 and be back up to $647 million in 2012 — significantly less than the 2008 level.
King County'ês two main sources of general fund revenue are the sales tax and the property tax. Sales tax revenues have been hammered by the recession, down 10 percent since 2008. Property tax revenues are derived from the general levy, plus revenue from new construction. Needless to say, there hasn'êt been much new construction lately. The property tax levy was once allowed to grow 6 percent per year, then was capped at a factor of inflation plus population by Referendum 47, and then reduced again to 1 percent per year by Initiative 747 in 2001. The result is the county'ês largest source of general fund revenue has gone from an annual growth rate of 6-8 percent during the 1990s, to less than 2 percednt now.
What do all these numbers mean to real people? In 2009 the county laid off prosecutors and police, and again delayed a decision on new jail capacity. Jail populations have fallen, while violent crime is up 22 percent in Seattle. For next year, Triplett is proposing modest cuts to criminal justice, but closing 39 county parks, eliminating the animal control program, and slashing county assistance to community-based human service agencies. Even with these cuts, to maintain a status quo county budget in 2011 will require $54 million in cuts in 2011, and another $88 million in cuts in 2012. Triplett warns that cuts of that magnitude would lead to 'êthe dismantling of criminal justices and public health services.'ê
Tim Eyman'ês latest initiative, I-1033, would make this situation even worse by capping overall county revenue growth at a factor of inflation plus population. Eyman has already placed a 1 percent lid on property tax revenue; the proposed 1033 cap would prevent sales tax revenue from growing with a recovering economy.
It'ês at this point where taxpayers, fed up with liberals crying wolf about threatened budget cuts, often tune out. Surely there is fat and waste in the county budget? What about the executive'ês staff, and the staff of the county council? What about those gold-plated health care benefits? Let'ês cut some mid-level bureaucrats!
Of course King County can be more efficient, and more savings can be found. The problem is the revenue gap is too enormous to solve by such trimming around the edges. You could eliminate the county executive and his entire staff, including the budget office and the planning office, and toss out the whole county council and their staffers, and still only save $26.5 million, roughly half of what you need in 2011. In fact, you could eliminate the entire area of general government — get rid of all the bureaucrats — and "only" save $100 million. Not enough to plug the hole in 2011 and 2012.
The great majority (76 percent) of the general fund goes to criminal justice — police, jails, courts, and prosecutors. This is King County'ês core function, and this is where the money is. After cutting parks and human services in 2010, there will be nowhere else to turn in 2011 and 2012 other than criminal justice. If something isn'êt done to fix this structural revenue problem it is hard to imagine how the county will be able to meet its public safety responsibilities.
The new County Executive will face a heavy burden, and Dow Constantine or Susan Hutchison will need help from Olympia. There are some additional steps the county can take. Continue to cut bureaucrats and staff, and keeping looking for efficiencies. There isn'êt enough there to fix the problem, but it will help with public opinion, and every dollar you can save is helpful.
More importantly, the county and the cities have got to accelerate the process of annexing the remaining unincorporated urban islands into cities. The county is not set up to provide intense levels of urban services, and loses roughly $16 million per year doing so. The cities are supposed to be urban local governments, while the county provides regional services (such as courts and elections), and services to the rural area.
The real solution, therefore, lies in Olympia. Our state'ês founders did not give counties the same taxing authority as cities (such as utility taxes) because they never imagined that counties would do more than govern rural areas. Combine that with the relatively new 1 percent cap on property taxes and you have a government that can'êt pay for its core services. This year the legislature gave the county the authority to ask voters for a temporary tax increase for public safety and public health, but a more permanent, structural fix is needed. Job one for the new executive is to meet with the governor, legislative leaders, and the Pierce and Snohomish county executives and hammer out a new funding model for large urban counties. Perhaps new leadership can succeed in finally getting Olympia'ês attention on this issue.
The biggest challenge will be convincing a rightfully cynical public that King County really does have a revenue problem rather than a spending problem. If only our leaders hadn'êt declared the sky was falling so often in the past.