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.