I-864: One more big hit

Fire protection, sheriff’s patrols, hospitals, and roads in Island County will each take a substantial hit if a Tim Eyman-sponsored initiative to reduce property taxes is approved by voters in November.

The initiative is still a big “if” — it is not yet on the ballot — but given the Mukilteo tax maverick’s success in past initiatives, county and city officials are looking ahead to a potential budget crisis.

Known as I-864, Eyman’s initiative would take a straight 25 percent off the top from most levy districts in the state. Island County levy districts would lose about $5.7 million in revenue, according to an analysis done by the Washington Department of Revenue. That would include $1.6 million from the county’s general fund, $1.5 million out of the county road fund, $1.3 million from fire districts and $170,000 from Whidbey General Hospital. Oak Harbor, Coupeville, and Langley would share an additional $824,000 reduction in revenue.

The impact of such cuts would hit home quickly, local officials say.

“I’ll be real blunt,” said Island County Sheriff Mike Hawley last week. “If this thing goes through, it would be the end of 24-hour-a-day policing in Island County.”

Fire District 3 would take a direct hit of about $425,000, according to Fire Chief Dan Stout. It’s already an all-volunteer force of 120 firefighters, led by a paid staff of three leaders and two clerks. The initiative means any hope of increasing paid staff and improving response times on emergency calls would be put on hold, he said.

The County’s Public Works Director, Bill Oakes, says he looks at it as a $10.6 million hit to the county’s 6-year road plan.

“Several projects (in that plan) just wouldn’t get done,” he said.

Eyman brushes off such concerns. He says there’s no shortage of “Chicken Littles” in government, each making claims that the initiative will impair vital government services. He believes it will actually improve such services.

“There can be no sacred cows when it comes to prioritizing spending,” Eyman said in an interview last week.

Eyman hopes the initiative will force decision-makers to not just cut the budget, but reform the whole budgeting process. There are more than 1,700 local taxing districts in Washington, he argues, and they have increased their take from around $1 billion in 1980 to about $6 billion in 2003.

“What we want is to bring about tax relief, give a boost to the economy, and get government to reform itself,” he said. “And government doesn’t reform itself when it’s fat and happy.”

Eyman points to the state as an example. The Legislature faced a $2 billion deficit last year and found a way to make the budget cuts it needed to make, he said.

“If reforming government is good for the state budget, it’s going to be good for the local budget as well,” he said.

Safety valves?

Eyman’s initiative has three important safety valves, he said. First, it does not affect education. School districts will not face the same budget constraints that general government will face.

Second, financial commitments, such as repayment of municipal bonds, are exempt until paid off.

Third, local voters can decide for themselves if the initiative goes too far. Voters can immunize any levy district from the 25-percent initiative by simply voting to do so. This would require a separate vote for each levy district.

Eyman points out that fire districts are very successful at taking levy requests to the voters and therefore, can insulate themselves from adverse impacts.

“I totally dispute what he says about (fire districts) being successful,” said Fire Chief Stout. He points out that South Whidbey voted down a levy request for the district four years ago and he’s been involved in two levy requests elsewhere that were recently voted down. It takes a supermajority of 60 percent for a levy increase, he said, and that is difficult to get.

Currently, the fire district puts about 25 percent of its budget away for upgrades and replacement of equipment. The initiative would force the department to quit budgeting for the future and to return to voters routinely for such funds, Stout said.

To insulate the sheriff’s department with a similar “lid lift” would be even more complicated. The sheriff’s budget is part of the county’s general fund. It would require a vote for the lid lift on the entire county to insulate that department from cuts.

The sheriff’s office currently represents about one-third of the county’s general fund, Hawley said. If the county was to lose $1.6 million in revenue from that fund, he said he’d expect his department to lose $400,000 to $500,000 or more. He said that would translate into a loss of up to eight officers from his squad of 30.

And if that’s being Chicken Little, Hawley said, then Eyman is welcome to step in and demonstrate how the county can be patrolled 24 hours a day with a significantly reduced force.

“I wouldn’t know what to do, to be honest,” Hawley said. “The math is not there.”

Contingency planning

The timing of the initiative is problematic for county budgeters. County budgets for 2005 are due in August, the election is in November, and, if approved, the 25-percent reduction will take place in January. That means August budgets might be outdated by the first of the year.

While counties throughout the state are making contingency plans, Island County is taking a wait-and-see attitude. Bill Byrd, chair of the Island County Board of Commissioners, said the board has not ordered contingency budgets, although department heads are thinking about it. If the initiative gets its required 200,000 signatures by the July 2 deadline, then they’ll take another look at contingencies, he said.

Byrd pointed out that while a $1.6 million reduction to the county budget would be significant, it amounts to an overall cut of about 10 percent. Forty-four percent of the county’s revenues come from property taxes, he said, and that’s the only portion affected by the initiative.

Still, cutting that amount would be difficult, he said. Departments such as the assessor, treasurer, and auditor’s offices each must fulfill state requirements and the county cannot cut back in those areas.

“There’s very few things we do that are not mandated,” Byrd said.

That leaves costly services such as police protection, criminal prosecution and planning and community development open to absorbing the the cuts.

County Assessor Tom Baenen agrees, saying his own department has no room to cut back and also fulfill its mandated duties. “We just administer state law,” said County Assessor Tom Baenen. “We set no policies. We do not control our own budgets.”

Levy rate low

Baenen points out that Island County consistently ranks at the bottom state wide in the levy amount set each year. Due to its increasing tax base, the county has been able to keep the levies to a rate under $10 for every $1,000 in property valuation. This year, the rate is $9.28. The statewide average for counties is $12.33, Baenen said.

Baenen, Byrd, and Eyman all agree on at least one thing when it comes to Eyman’s proposed initiative. Each of them believes the initiative will get its 200,000 signatures, make it on the ballot, and get approved by the voters.

“People think they’re being taxed too much,” Byrd said. “It’ll probably pass.”

The county is not planning to ask voters for a “lid lift” to insulate it from the effects of the initiative, Byrd said. The votes, he said, are just not there. That might change in a year or two, however, after county residents decide whether the reduction in property taxes is worth the corresponding reduction in services, he said.

Eyman is closed-mouth about the number of signatures gathered so far. But, he said the progress is on par with other initiatives he’s done. He accumulated $135,000 in donations by the end of March, which is also on par with past initiatives.

“We feel the citizens of this state will approve this initiative probably by the largest margin of any initiative we’ve ever done,” Eyman said.

“Clearly the initiative is trying to take this enormous problem with property taxes and try to put it on a more reasonable level, a more balanced level, and help the taxpayers in the process,” he said.

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