City's Prognosis Under Eyman's 1033: Grim

By Erica C. Barnett October 12, 2009

[This was originally posted this morning.]

[caption id="attachment_15929" align="alignleft" width="550" caption="Scary Chart of the Day"]Scary Graph of the Day[/caption]

At a council briefing this morning, city budget staffers outlined the grim impact Tim Eyman's Initiative 1033 would have on city government.

The takeaway is in the graph to the left: Within the next 15 years or so, assuming 1033 goes into effect in 2010, property tax collections for the city's general fund would drop to zero.

Essentially, 1033 would cap each year's revenues at the previous year's level, adjusted for population growth and inflation. The "base" year for those revenues would be 2009, when inflation-adjusted revenues have been lower than any year since the 1960s. As council budget chair Jean Godden observed, "The base [year] we're talking about [includes] furloughs, layoffs, and the rainy day fund. So it's almost an artificial low."

And the way 1033 is written, the city can never catch up to inflation. If revenues come in lower than expected, the following year's growth limit is based on those actual (lower) revenues. If revenues come in higher than anticipated, the "extra" money would go into a fund to reduce property taxes the following year.

By 2015, the city's finance department estimates, the city would have about $150 million less in its general fund—a reduction of between 12 and 15 percent. By around 2025, the city estimates that the amount of property taxes it collects for the general fund (which is also funded by sales and business and occupation taxes) would drop to zero.

That's not a typo, although it sure looked like one to council member Richard McIver. "At what point do those lines come back together?" he asked, referring to the graph above.

"They don't," assistant finance department director Glen Lee said. "They get wider and wider."

Viewed another way, as council member Tim Burgess put it, "We would essentially be wiping out the [equivalent of the] police department."

Council member Sally Clark added, "The short-sighted assumption is that the [savings from lower property taxes] ends up in [taxpayers'] pockets. It says, 'hey make do with the resources that you have,' but it’s completely irrelevant and disconnected from the fact that people depend on these government services."

Initiative 1033 is on this November's general-election ballot; ballots will start arriving in the mail later this week.
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