I-1033: When all you have is a shovel, you can only dig a deeper hole.

September 30, 2009 | Aaron Keating

On the heels of a $65 million revenue gap in the King County budget comes news that state legislators may have to re-write the Washington State budget to cut spending by another $1 billion (that’s after $4 billion in cuts last year) because of declines in tax collections and a greater demand for services.

Tim Eyman’s latest ballot measure would make budgets like those forever the norm, if passed by voters this fall. Initiative 1033 would replace Washington’s tradition of local control with a rigid, one-size-fits-all “inflation plus population growth” budget revenue formula that doesn’t account for the different needs and priorities of our communities.

Over the next 5 years, Washington would lose $5.9 billion in revenue for education, health care and other services. Cities and counties would lost another $2.8 billion for public safety, road repair, parks and basic services. Instead of funding these vital public structures, I-1033 funnels money to property owners in proportion to the size of their property tax bill. (The more your property is worth, the larger the kickback.)

I-1033 is a bad idea for these three reasons (among others):

  • I-1033 offers little economic stimulus. It doesn’t lower taxes for small businesses, and it doesn’t change sales taxes. Property tax rebates will just go against next year’s tax bills, so likely won’t be spent to boost economic consumption or investment.
  • I-1033 will shackle long-term economic growth. By forever capping revenue for state, counties and cities at recession-era levels, long after the economy is back on track, Washington won’t be able to spend on K-12 and higher ed, new transportation networks, and other essentials for building a 21st century economy.
  • I-1033 hits people when they’re down. About 60% of the state budget is devoted to mandatory spending on items like basic education, federally mandated Medicaid, pensions and debt service. So future cuts will be made in the remaining 40 percent – like adult day health care and nursing homes, higher education, basic health, and parks and recreation. The same kind of scenario will play out in every city and county in the Washington if I-1033 passes.

Colorado tried Eyman’s idea – called TABOR (for Taxpayer Bill of Rights) – already. Things got so bad there, voters went back to the polls to suspend it:

Will Colorado’s lesson be learned in Washington? We’ll see.

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Posted in State Economy, Tax and Budget

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