Northwest NEWS

September 20, 1999

Front Page

Northshore cities brace for I-695 fallout

by Marshall Haley, staff reporter

   NORTHSHORE--Woodinville's City Council discussed potential income and transportation impacts on the city if I-695 passes in November. The initiative would lower car licensing costs, but would require a special election for every local or state tax or budget increase, they concluded.

   Councilmember Bob Miller asked City Manager Pete Rose to contact all the City's contracted services to see how I-695 might affect their budgets, and resulting impacts on the potential for decreased service to contract cities, such as Woodinville (and Kenmore).

   Deputy Mayor Scott Hageman called I-695 an expensive vote prospect, considering each little tax and budget increase adjustment the City often needs to make every year. Mayor Don Brocha said most citizens, if not briefed on the facts of a measure, usually tend to vote conservatively, or "No." Rose said each vote requires at least a 3-4 week preparation period for the City to send out fact sheets for public education on each issue.

   Finance Director Jim Katica said each special election costs the City an average of $18,000. Katica said councilmanic bonds will not be subject to I-695 restrictions.

   "This measure was obviously not written by anyone who knows anything about state tax structure," said Brocha. "Let's put out a fact sheet to let people know our concerns. At least they'll know a little bit about what we do here."

   The Council agreed that the public does not realize that passing I-695 would force each citizen to make a multitude of complex decisions that they have elected public officials to make for them.

   In a study session last week, the Kenmore City Council voted to seriously consider raising the Kenmore utility tax as much as the law allows, in an effort to make up part of the 22-24 percent loss of annual revenue I-695 would cost them.

   "The passage of I-695 would severely impact Kenmore, due to the lack of tax revenue we realize, compared to most cities," said City Council candidate John Phelps. "We don't have any major stores to supply us with significant commercial tax revenue. We are a bedroom community, and our citizens spend most of their money in other towns."

   Kenmore also faces the same questions as Woodinville, regarding police and fire services contracted through King County.

   The "NO on I-695" committee ("NO") has asked the initiative's promoters to prove their claims that local governments throughout Washington have $3 billion in "surplus" funds.

   "Show us the money," said Bob Edwards, a Renton City Councilmember and former president of the Association of Washington Cities (AWC). "Spokane doesn't have enough dollars to fix potholes in its streets. King County cities are bearing the cost of growth. In Pierce County, a new jail is being delayed, even while prisoners are getting early release. And cities and counties have $3 billion squirreled away. I guess that I-695 promoters believe they can throw out any number and that nobody will challenge it."

   Edwards was responding to a claim I-695 promoters made in the Sept. 13 edition of the Seattle Post-Intelligencer.

   Stan Finkelstein, AWC executive director, said he believes I-695 promoters got that $3 billion figure from the average amount temporarily deposited in the State Treasurer's "local government investment pool." He said the state invests that money for an average of less than 50 days before it is used to pay local government bills.

   "That money is not available to replace Motor Vehicle Excise Tax (MVET) revenues that would be lost by I-695 passage," according to Mark Funk of "NO" headquarters. "That argument is like saying that money in a person's checking account earmarked for the mortgage can be spent on something else."

   The local government "surplus" includes money invested by several agencies not immediately affected by I-695, such as the state's community college system, said Funk. The state's "rainy day" emergency fund, established by I-601 in 1993, is to ensure that the state saves any revenue above spending limits in case of recessions.

   "I-695 promoters aren't acknowledging the good sense that voters showed when they approved the emergency fund," said "NO" campaign treasurer Mike Vaska. "It seems we've had it so good in Washington state for so long that I-695 promoters are forgetting what happens when our economy slows. Tax revenues fall drastically as people cut back on purchases.

   "To have a 'rainy day' account that the Legislature can access to reduce the impact of a recession on our public schools, universities, public safety, and social service programs is just not common sense."

   The state Republican Party is expected to reverse their May decision to not take an official stand on I-695 because it was too extreme and would threaten state transportation projects.

   But the conservative Washington Research Council has warned the public about "surplus" rhetoric.

   "With respect to the general fund surplus, there is none," stated a Council policy briefing. "Passage of Referendum 49 (last year's transportation initiative) handled the surplus and left a prudent balance. Under the most likely projections for 1999-2001 general fund spending, reserves will amount to about $525 million, about five percent of annual spending and just one-third of the lost MVET revenue."