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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Absolutely gorgeous. Perfectly written, extensive, and of course, I agree.
Keep ‘em coming.
Great take-down of a terrible idea.
Smart, funny, and thoughtful. Nice work, publicola.
Oh come on, as soon as you saw the name “Tim Eyman” on the initiative, you opted no. Your other reasoned arguments are just frosting on your not very nuanced cake.
Good analysis. Eyman deals in lies and misrepresentations unfortunately so to trust anything he says as true you have to be pretty gullible. That’s what he’s hoping voters are.
Case in point:
The conservative Tax Foundation ranks Washington State’s local and state tax burden in the BOTTOM THIRD OF ALL STATES. They rank Washington State as 35th (with 1 being the highest) in terms of state and local tax burden.
You can check the results yourself here:
http://www.taxfoundation.org/files/sr163.pdf
Of course if you are trying to claim that Washington State’s taxes are obscene and unsustainable and out of control as Eyman incessantly does, 35th lowest is not a number he wants to use. That’s why he adds in your Federal income tax and says in the Voter’s Pamphlet that we are the eighth highest taxed state in the county.
Of course he neglects to add two other facts. We are also the eighth highest state in terms of income per capita according to the Tax Foundation and the fact that I-1033 is not a Federal initiative and can do nothing to change Federal taxes.
I-1033 only affects state and local taxes. It does nothing to change sales taxes or other fees paid. We have the highest sales taxes in the country. The Tax Foundation says on property taxes we rank 25th. And we have no income tax unlike 43 other states.
Eyman deals in hyperbole and stretching the truth. Tim repeats his misleading comments over and over hoping that repeating something that’s not true over and over will somehow convince people it is true. He’s been doing this for year’s and most in the media have been letting him get away with it.
No one likes to pay taxes or see their tax dollars wasted. But that’s really not what’s at issue here. Taxes are the price we pay to keep our communities livable. And I-1033 goes to the extreme in trying to reduce taxes for only one part of our tax system. He is only proposing reducing property taxes. And that will our tax system even more regressive putting more of a burden on lower income taxpayers.
Washington State’s taxes rank in the bottom third regarding state and local tax burden per capita. Let’s not make things worse by further reducing public services and slowing down recovering from the recession while making our tax system more unfair. Vote No on I-1033.
How much more evidence will it take for you guys to realize that gunverment is not the institution of peace and love and increased living standards for folks? Seriously, the money that the state (at any level) has comes straight out of family and individuals savings and earnings and goes to things like militaristic police brutality and all kinds of corruption. Gunverment is force at it’s core. Please stop advocating for such disgusting violence.
5. Again, Zemke, there are good arguments to make against 1033… but you can’t cite state tax rates without also citing the cost of living in those states, which that report you cited fails to do. Seattle, for example, has one of the nation’s highest costs of living to help make WA the 35th cheapest, i.e. the 16th most expensive, state in the union.
Citing tax rates in a vacuum doesn’t strengthen this side of the argument.
To expand on that, the cost of living includes housing costs. So while WA has tax rates slightly below average, that’s a percentage of a higher cost and value of housing: For example, 1.5% tax on a $350,000 home ($5.200) is going to cost a taxpayer more than 1.2% of a $200,000 home ($4,000).
And before you make the “$1,200 a year is paltry” argument, keep in mind that’s on top of all your other expenses: Mortgage, utilities, food and assorted sustenance, transportation, parking if needed, etc… which are already biting into people’s budgets as salaries flatten… assuming you manage to keep your job as hundreds of thousands of jobs go by the wayside. People are already stretched to their limits. Not everyone has $70K in income that’s assuredly not going anywhere, 2.3 kids and a cheap mortgage on a nice home in the city.
That’s a lot of text for a measure I’m still voting against, but it’s not like the pro-1033 voters have no leg whatsoever to stand on, nor that all of their arguments are illogical or invalid.
Gomez has a point. That is why 1033 is so seductive and why it has such a strong chance of passing. People latch on to the lower taxes message without reading the fine print. In the long run, hell, in the short run, 1033′s adverse effects will take a far heavier toll on middle-class, working-class, and low-income people then property taxes do. Consider that the weight of the tax burden will probably be shifted to the sales tax under 1033–the tax that costs impoverished people the most.
(WA state is already more reliant on the sales tax than any other state in the union.)
The other component not mentioned here is the issue of regressivity of Washington State’s taxes. Unfortunately I-1033 would make it even more regressive because it doesn’t cut sales taxes which are the highest in the country, which everyone pays and which made up 54% of state tax revenue last year.
State property taxes were only about 12%, quite a bit lower.
Regressivity means that lower income taxpayers are paying a higher proportion of their income in taxes than higher income folks. So while I say the over all state and local tax burden ranks us 35th, that doesn’t mean the tax burden isn’t there and hurting many people.
It’s just that I-1033 is going to make it worse for those people because I-1033 doesn’t cut sales taxes; it only reduces property taxes for residential and commercial property owners.
Renters, who make up 35% of the households in the state, will still pay the same sales taxes and fees as before but will see no tax rebate.
Instead their tax dollars will go to help wealthy property owners pay their taxes for vacation homes and million dollar mansions and investment properties as well as paying taxes for corporations, shopping malls and real estate developers.