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Initiative 1033: PubliCola Picks "No"

By PublicolaPicks October 19, 2009

Conservative militant Tim Eyman has a long history of putting regressive initiatives to statewide votes. His latest and most audacious effort, Initiative 1033, is essentially a statewide budget freeze. If passed, 1033 will be an unmitigated disaster for Washington.

The initiative would cap state and local taxes at the previous year’s tax levels, hampering cities' ability to raise additional revenues. The year Eyman has in mind for the starting pistol is 2009, the lowest point of the worst economic crisis since the Great Depression. In short, 1033 would lock state, county, and city governments into recession spending for the foreseeable future. This is a breathtakingly bad idea; a perfect storm of simplistic rhetoric, neolithic economics, and a myopic focus on small government.

Eyman assures critics that the cap will be tied to population growth plus inflation, so there's no need to worry about static restrictions. Well thank God for that! It’s a good thing the national inflation index, the standard Eyman proposes to index government spending to, is specifically tied not only to Washington State, but to the nuanced and individualized needs of every single county and city within Washington State. Oh, wait. It doesn’t work like that at all.

It gets worse. There are costs that rise faster than consumer inflation—little things like health care and law enforcement.  As the Center for Budget and Policy Priorities points out, education costs make up two percent of the average consumer’s budget. But K-12 and higher education costs account for 53 percent of Washington’s expenditures. A disparity of that magnitude can only be assuaged by massive cuts in public education. Hopefully Washington’s kids don’t value arts, music, sports or learning.

The best part is that any additional tax revenue over the cap won’t be wasted on education or health care. It will go to those who really need it: The rich. Any money that governments are able to raise over Eyman’s cap will go directly toward reducing property taxes (which happen to make up 25 percent of the budget for public education), eventually negating the only significant tax on wealth in Washington State. (Public institutions like libraries would still have to pay their property taxes.) It will grant some relief to average homeowners (renters, not so much), but the real beneficiaries will be wealthy property owners, who will save millions every year. For example, as the Seattle Times reports, the $1.7 million Bellevue developer Kemper Freeman pays in annual taxes on his Bellevue Square megamall would eventually go right back into his pocket. Freeman, by the way, has donated $25,000 to the 1033 campaign.

The state’s Office of Financial Management found that under 1033, by 2015, revenue to the state’s general fund would drop $8 billion, including $5.9 from education; counties would lose $694 million. Credit rating companies are leery of the initiative too, which means loans to Washington governments could wither away under 1033.

Seattle will not be exempt from the initiative’s injurious effects. As we reported last week, by 2025 no property taxes would be available for the city's general fund. When revenues come in lower than the cap, that will drive down the next year’s spending limit; but if revenues come in higher than the cap, the surplus will be shunted into property tax "relief." The upshot is that 27 percent of Seattle’s budget will be eliminated, causing untold reductions in essential services.

Or, as position 7 council member Tim Burgess memorably put it, “We would essentially be wiping out the [equivalent of the] police department.”

For a concrete example of the effects of Eyman’s proposal, consider the oft-cited Colorado example. Back in 1992, voters  enacted a 1033-like referendum in that state. The results were disastrous. State funding for higher education plummeted 31 percent in four years, and by 2005, when the referendum was put on hold, Colorado ranked 47th in the nation for state funds in support of higher education (in 1992, they were 34th). K-12 spending fell precipitously as well, dropping the state from 35th to 49th in the nation for education spending as a percentage of personal income. The number of children without health insurance doubled and full immunization requirements were abandoned because the government could no longer afford children’s vaccines against diphtheria, tetanus, and whooping cough.

Movement conservatives like Eyman love to decry big government’s nefarious influence over the lives of citizens (in fact, Eyman’s made a career out of it). But we don’t live in an Ayn Rand fantasy land. In the real world, as the Colorado example demonstrates, these uncompromising ideas do not work. They can only hurt Washington’s citizens and degrade our quality of life. The revenue 1033 would eliminate funds state schools, repairs our roads, keeps our libraries open, funds garbage pickup, pays firefighters and police, and keeps the state’s most vulnerable citizens from slipping through the cracks (which have only widened in the last year).

PubliCola picks "No" on Initiative 1033.

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