October 11, 1999
BOTHELL--State Rep. Dave Schmidt (R-44th Dist.) agrees that the Motor Vehicle Excise Tax (MVET) is "out of control," but said eliminating the MVET under I-695 does not solve the problem. He says it would strip transportation and public safety budgets of essential funds, especially in smaller jurisdictions, and it would require citizens to vote on every little tax increase on the state, county, and local levels, which would "hamstring" governmental processes.
Speaking at a combined meeting held by the Northshore and Woodinville chambers of commerce, Schmidt said he has not yet heard I-695 proponents give a credible answer to one main question: where is the "surplus" they speak of that will fill the budget void created by I-695?
"The state Republican Party endorsed I-695. I am a Republican, but I believe people have to vote for people who will change the MVET, not cripple government with this simplistic, inefficient initiative. Every year since I've been in the House, Republicans have proposed changes in the MVET, but every time, the Democrats have shot it down or the governor has vetoed it.
"Under 695, out of the $30 tab fee, $27.50 will go for the license fee and only $2.50 for the excise tax. That excise tax would be far less than most states in the country. Proponents are ignoring the fact that states with a low license fee excise tax, like Oregon and Montana, get that money from a state income tax, which we don't have."
The obvious conclusion to draw from that comparison, Schmidt suggested: the state would have to institute a state income tax to replace the missing revenue.
"MVET money is all earmarked: 47 percent goes to transportation, 24 percent to local governments for public safety and public health, and 29 percent goes to fund local transit budgets. The smallest jurisdictions get hit hardest by 695: Garfield County gets 40 percent of its annual revenue from MVET, compared to a little over 30 percent for both King and Snohomish [Counties]."
Schmidt said I-695 sponsor Tim Eyman has a very loose concept of the state tax structure and budget, and thus gives the public an unclear picture of monies Eyman claims the state can use to replace the MVET. The I-601 restrictions that created it limit what the state can do with the state's $1.5 billion emergency fund that Eyman calls "surplus," said Scmidt.
If the state had a real emergency, like an earthquake, that fund would disappear overnight. Otherwise, the fund represents less than three years of the $550 million annually lost from the MVET if I-695 passed.
Schmidt reached the same conclusion the Woodinville City Council did on Sept. 27. I-695 would require every jurisdiction to spend so much time and money on public hearings processes and special elections for every minor budget change, every level of government would grind almost to a halt.
"I've been told I know more about elections than any legislator in 20 years," said Schmidt. "As a former county auditor, I know elections are expensive. Every election requires a period of public hearings. For example, even a mid-year, five-cent increase on school milk prices would have to appear on a special ballot, because it involves public money."
Jim Katica, City of Woodinville finance director, said special elections cost between $12-18,000, including the process of mailing voter education materials and holding public hearings.
A handful of Chamber of Commerce members protested loudly about the absence of pro-I-695 speakers. The meeting's moderator reminded the audience that the speakers were asked to address potential I-695 impacts on local governments.
At the Oct. 4 Woodinville City Council meeting, which included a public hearing on I-695, City Manager Pete Rose said his office had sent a registered letter invitation to Eyman, asking him to join King County's Pat Steele at the hearing. A receipt showed the letter was received, but Eyman did not respond. At that meeting, the Woodinville City Council unanimously voiced disapproval of I-695.
"Under I-695, money allocations will be as clogged with competition as 175th St. is at noon," joked Rose. "The most critical Woodinville issue is the ability to move goods and services. We would lose $250,000 (in missing MVET revenue) the first year and $220,000 a year after that. Out of that, about $45,000 goes for criminal justice expenses, the rest goes for transportation."
"Talk radio does very well on 522," said Rose, citing clogged traffic on SR-522 as a big part of Woodinville's transportation problem. If I-695 forces a halt to SR-522 construction, a project okayed by last year's I-49, the state's most clogged highway will not likely experience relief in the near future, he said.
"Loss of road project money will mean bus transportation will be even more important, but bus schedules will be cut, too," said Rose. He said he didn't know what Eyman meant by "surplus" in a July 29th Seattle Times interview.
"We don't have any surplus monies in Woodinville," said Rose. "A carry-over reserve fund is not 'surplus.' If cities save money for Capital Improvement Plan projects, as part of prudent fiscal management, we can't call that surplus."
Kenmore City Manager Steve Anderson said annual MVET revenue of $1.5 million represents 25 percent of the City of Kenmore's income.
"We are a contract city," said Anderson. "Loss of MVET revenue to King County would have a direct impact on our public works and police services. I-695 would mean we would only be able to maintain the 'rural' level of service that we've had from King County. We approved a $594,000 utility tax increase to make up the difference if I-695 passes. It's either that or generate three times our present sales tax revenues."
The Kenmore City Council stipulated that the tax increase would be repealed if I-695 does not pass.
The City of Kenmore will hold "Vision Night," a public hearing on I-695 at Inglemoor High School on Wednesday, Oct. 13, at 7 p.m.
"We would lose $330,000 under I-695, with $50,000 of that in criminal justice cuts," said Bothell City Manager Manny Ocampo. "Metro would lose 30 percent of their transportation budget, which translates to a cut of one million hours of service. They said the deepest cuts would be to their suburban, weekend, and special services. The Beardslee project would get severely cut, which would make UW and Cascadia access for 10,000 FTE's (full-time equivalent students) very difficult."
"Approving I-695 would be like taking a meat axe to the arteries of government," said Dave Hutchison, Lake Forest Park City Manager. "Taking away $1.2 million from our general fund would mean losing 28 percent of our revenues."