25 Commonsense Ways to Implement Initiative 695
December 1999
On November 2nd the people of Washington enacted one of the largest tax cuts in state history. In a single step, Initiative 695 repeals the Motor Vehicle Excise Tax and replaces it with a flat $30.00 annual fee, regardless of the car’s year, value, make or model.
It also includes a major new limitation on the growth of government spending. Beginning January 1, 2000 all proposed increases in existing taxes, fees and "any monetary charge of government" must be submitted to the voters for approval.
Many elected leaders say their only choices are to "dip into reserves or raise taxes" before the law goes into effect. Some cities are already raising taxes and fees to beat the tax-limitation deadline. In many cases, however, elected officials are over-reacting. There are actually dozens of ways state and local governments can implement Initiative 695 without shutting down essential government services.
This Policy Brief presents twenty-five commonsense ways, some immediate and others long-range, that Initiative 695’s requirements can be met by eliminating government waste and inefficiency, without cutting into basic services. Examples include waiving prevailing wage rules for school construction, restraining the growth of the public workforce and allowing private companies to offer services traditionally supplied only by government.
The specific proposals given in this Policy Brief demonstrate that drastic cuts in vital government services are not necessary. Instead, there are clear, down-to-earth ways to implement Initiative 695 while still carrying out the basic mission of government.
Careful and intelligent implementation of Initiative 695 will help restore the public’s trust in their leaders. People will again feel they are part of important decision-making in their communities, and will gain greater control over deciding how their tax dollars are spent.
It is clear the citizens of Washington want their leaders in government to make good decisions with their money and to involve them in those decisions. Voter approval of Initiative 695 emphasized that point. When government doesn't listen, the message citizens send is often loud and clear. This has occurred not only in Washington, but in other states as well.
We must not shrink from our responsibility to listen. We must welcome it as an opportunity to reassess whether the way we do business aligns with the desires and expectations of Washington citizens.
I have proposed creating an Alliance for Accountability, which calls for taking a broad, fundamental and long-term look at state governance. This proposal is among 25 ideas described in this Policy Brief on how state and local governments can constructively and effectively carry out the decision of the voters. The Washington Institute’s Brief takes an important step in constructively prompting a public debate over how to implement Initiative 695.
Not all of these ideas will or should be carried out. But their presentation in this Policy Brief provides an excellent starting point for policy discussions. I hope many other ideas will come forward. In the process we must evaluate how public services at all levels are provided and what citizens want from government. Through an open exchange of ideas can we begin to restore citizens' trust in their government.
The people of Washington state are overtaxed. On November 2nd they demonstrated how strongly they feel about the heavy tax burden by enacting by a wide margin one of the largest tax cuts in state history.
In a single step, Initiative 695 repeals the state’s car tax (called MVET, for Motor Vehicle Excise Tax) and replaces it with a flat $30.00 annual fee. And to insure that government leaders do not simply raise other taxes to make up for the decline in car tax revenue, the authors of Initiative 695 included a major new limitation on the growth of government spending. Beginning January 1, 2000 all proposed increases in existing taxes, fees and "any monetary charge of government" must be submitted to the voters for approval.
Polls show that for many voters, the tax limitation provision presented an even greater incentive to support Initiative 695 than the car tax repeal. Its popularity indicates the deep distrust many citizens have come to feel for their own elected leaders and for politicians in general. Many voters stepped into the booth on election day, voted on Initiative 695, turned in their ballots and walked out, all without blackening the oval next to the name of a single political candidate.
The contentious public debate over Initiative 695 resulted in an unexpectedly high voter turnout for an off-year election. Some 1,767,000 ballots, representing an impressive 58% of eligible voters, were cast in the election. Initiative 695 sailed to easy passage with just over 56% of the vote, garnering majorities in 34 of Washington’s 39 counties. Even in populous King County, where opposition to Initiative 695 seemed strongest, the measure received 48% of the vote.
In the run-up to election day opponents warned darkly that passage of Initiative 695 would hamstring government administration and result in drastic cuts in basic services like transportation, schools, police protection, fire departments and emergency medical services; that is, all the things on which people rely the most to receive from their government.
The NO on I-695 campaign predicted twenty-six specific scenarios, all disastrous, that would descend on the state like the plagues of Egypt if Initiative 695 passed. These ranged from cutting child immunizations and daycare inspections to "jeopardizing safety in Washington schools." One dire forecast envisioned the exact opposite of Initiative 695’s primary goal. The measure, it was said, would "make tax increases common again," in part because one place politicians would seek increased revenue "would be from a state income tax."
In the days following the election many elected officials who had opposed the tax cut seemed prepared to follow through with the worst outcomes from Initiative 695.
Governor Locke announced he would dip into the state’s emergency reserve fund and spend half the $1 billion surplus. Transportation Secretary Sid Morrison put all planned road construction projects on hold. King County Executive Ron Sims announced plans to cut back sharply on bus service and other public transit.
Many elected leaders say their only choices are to "dip into reserves or raise taxes" before the law goes into effect. But is that really true? Some cities are already raising taxes and fees before the new limitation goes into effect at the end of the year. The mayor of one town, Bridgeport, is even threatening to close down the city, to disincorporate, rather than try to implement Initiative 695 belt-tightening requirements.
Is all this hand-wringing and imposing of pre-emptive tax increases necessary? In many cases elected leaders over-reacting to a tax cut imposed by the people. There are actually dozens of ways state and local officials can implement Initiative 695 without closing the fire department, the public health service or entire towns.
This study will briefly summarize the impact of Initiative 695 on the state and on local governments. It will then present twenty-five commonsense ways, some immediate and others long-range, that state and local governments can implement Initiative 695’s requirements by eliminating waste and inefficiency, without cutting into the most basic services.
Careful and intelligent implementation of Initiative 695 will help restore the people’s trust in government. People will again feel they are part of important decision-making in their communities, and will gain greater control over deciding how their tax dollars are spent.
When Initiative 695 takes effect it will reduce the annual Motor Vehicle Excise Tax from 2.2% of a car’s value, based on the manufacture’s suggested retail price, to a flat $30, regardless of the car’s year, value, make, or model. As a result, most Washington families will be able to keep hundreds of dollars more of their own money each year.
Initiative 695 applies to the state itself, including all its departments, boards and agencies, to Washington’s 227 municipalities and 39 counties, and to all the districts and other political subdivisions that make up the 1,720 taxing districts across the state.
Initiative 695 will reduce revenues the state receives from the car tax by $764 million a year. The $30 fee will continue to bring money into the treasury to pay for the cost of administering car tab renewals. The car tax on rental cars is unaffected, and will bring in $22.5 million in revenue over the current biennium.
King County will lose $118 million next year in car tax revenues as a result of the passage of Initiative 695. Seattle will lose $20.4 million, about 1% of its budget. Smaller cities, like Kent ($1.2 million) and Enumclaw ($107,500) will lose amounts that make up about 2% of their annual budgets. Cities that depend heavily on the sales tax equalization fund will be much harder hit. Some stand to lose as much as one-third of their annual budgets.
The funding allocated to local governments, which made up about 24% of all car tax revenues, went to activities such as police and fire protection, sales tax equalization accounts, law enforcement, public health and distressed-county assistance. These are the areas where local governments will have to find savings or shift funds from other parts of their budgets to make up for the loss of car tax revenues received from the state.
Car tax revenues were allocated to specific transportation and local government uses as reflecting the legislature’s priorities. With the repeal of the car tax, the legislature must now re-examine its priorities and consider shifting funds from other uses to help pay for transportation projects and local government. Implementing Initiative 695 will top the agenda when the legislature meets in January. It is therefore appropriate to evaluate all General Fund expenditures for savings.
Governments at all levels will need to make changes, and some of these will have to be implemented immediately. But good planning and commonsense can lead to reforms that reduce expenses while maintaining the proper role of government in our free society.
This Policy Brief presents 25 specific ways this can be achieved at the city, county and state levels. They are not listed in priority order, but are presented in three sections. The first section lays out sources of immediate savings. The second proposes long-term structural changes in the way government does business. The third section looks at changes in the culture of government spending that will restore the people’s confidence in their elected leaders.
A. Sources of Immediate Savings and Replacement Funds
1. Devote Tobacco-Settlement to County Health Programs
Use $323 million in tobacco-settlement funds received in 1999 to replace lost county health funds.
Under the former distribution of car tax funds, county governments received 3.153%, or about $24 million, annually from car tax revenues for public health programs, such as child immunization and care for the elderly. These funds are now largely eliminated because of the passage of Initiative 695, placing at risk long-established health care programs that many people, especially the poor, have come to rely on to meet basic medical needs.
Fortunately, the state received $323 million in new health-related funds in 1999, and will receive comparable amounts in future years, from the settlement of the state’s law suit against American tobacco companies. In effect, these funds represent a 45-cent increase in the excise tax imposed on every pack of cigarettes. That is the price increase tobacco companies must pass on to consumers to fund tobacco-settlement payments to the states.
Washington’s share of the final $240 billion nationwide tobacco settlement is a steady year-by-year payout totaling $4 billion over 25 years, the largest legal settlement in state history. The legislature has control over how this money, and all future tobacco-settlement dollars, will be spent.
Two options have been advanced to deal with the tobacco-settlement funds. We propose a third. The first option is to use the tobacco-settlement funds for permanent tax reductions. Advocates of this solution point out that the tobacco-settlement funds are reimbursement for public health costs paid over the years by Washington taxpayers. The refund, they argue, should be passed on to the taxpayers.
The second option, one advanced by anti-tobacco advocates, is to spend the settlement funds on new government programs, especially for public health. But one reading of the strong support for Initiative 695 is that the voters have said, "enough of big government - downsize." Establishing new, open-ended programs runs contrary to that intent.
The first claim on the tobacco settlement funds should be the same county health programs which formerly benefited from the car tax earmark. The remainder of the tobacco-settlement funds should be allocated in the year 2000 as a one-time transition account to help cities and counties that are losing money from the sales tax equalization fund.
Opponents of the Initiative pointed out that "basic county health services are funded by license tab fees." With the passage of Initiative 695, they said, "funding for these programs will end on January 1, 2000."
With the major new source of revenue from the tobacco settlement, county health services do not have to "end" on January 1st. These funds should be used to replace money county health systems have lost due to the voters’ repeal of the car tax. After all, they would be devoted to the same purpose, paying for public health services, exactly the argument the state made to the court in winning the $4 billion settlement in the first place.
2. Tap Savings from Reduced Welfare Caseload
DSHS case loads have dropped 31% in three years, yet the agency employs 6% more people.
In 1996 President Clinton signed the Personal Responsibility and Work Opportunities Act, otherwise known as welfare reform. Nationwide, the results have been astonishing. Reductions in the number of people receiving welfare payments have already exceeded even the most optimistic estimates. For the first time, Washington state has put a five-year lifetime limit on welfare benefits and, through the newly-created WorkFirst program, imposed defined work requirements on all able-bodied adults receiving public assistance.
As a result, welfare caseloads dropped by more than 30,000, or 31%, between January 1997 and November 1998, falling from 96,000 to 66,600. The nearly one-third reduction in those receiving welfare payments netted the state at least $193 million in savings.
Yet while caseloads plummeted, the number of people working for DSHS increased year by year. In 1996, when welfare reform became law, the DSHS budget funded 16,666 full-time equivalent positions, resulting in personnel costs of more than $4.8 billion. By 1999 the agency’s payroll had grown to 17,668 full-time equivalent positions, while payroll costs ballooned to over $5.6 billion. Tens of thousands of people have left the welfare rolls, but the number of those paid to administer DSHS programs has grown by more than a thousand.
The Department of Social and Health Services accounts for 26% of all spending in the General Fund budget. It is good news that fewer people are dependent on government welfare payments. It is also good news that the state has realized major savings as a result. These savings should be allocated elsewhere in the budget where they are needed most. They can easily be diverted to make up part of the shortfall caused by reduced car tax revenues.
3. Suspend 1% for the Arts Program.
Temporarily suspending public arts spending would free up almost $1 million.
With the passage of Initiative 695, local government’s must assess new priorities for scarce tax dollars. One important task is to separate the essential services from the nice amenities and make sure that essential services are fully funded.
In 1973 King County initiated the 1% for the Arts program. Under the program 1% of the appropriated funds for all capital improvement projects which are publicly accessible and visible, and for which there is a need for mitigation, must be contributed to the County’s public art program. The state runs a similar program called Art in Public Places that is funded in the same way.
The amount King County spends each year on art projects has ramped up sharply in recent years. In 1997 the County spent $403,485 on the program. By the following year that amount had more than doubled to $913,890. With major new construction projects coming on line, the cost of publicly-funded art works can be expected to rise even higher in the years ahead.
Leadership in government means setting priorities. If loss of car tax revenue really threatens fire, police and emergency medical services, as Initiative 695 opponents contend, then local governments must decide if these public safety protections are more important than spending ever-increasing amounts of dwindling tax money on new art works. Suspending the 1% for the Arts program temporarily would free up almost $1 million a year in King County alone to help pay for essential government services.
Many local governments have programs similar to King County’s. Seattle has a 1%-for-arts program, which Mayor Paul Schell has proposed boosting to 1.5% and applying it to projects outside city limits, changes that would "nearly double the dollars going to the arts." Yet the program has its embarrassments. One city-funded sculpture, called Gyrojack, contributes to litter and general blight at a Belltown park, and may be removed soon at a cost of $20,000, not to mention the $10,000 it cost taxpayers to buy it in the first place.
While funding art works with the public’s money might sometimes be desirable, public safety is essential. Local governments should suspend such programs, at least during the transition period while setting new spending priorities under the Initiative 695 law.
Once essential services have been funded, local officials should consider whether setting aside further money for taxpayer-funded art projects makes sense. Alternatively, public funding for the arts could be established on an "as needed" basis, and made subject to annual budget review, to insure the program does not crowd out funding for vital public services in any given year.
4. Eliminate Washington’s Presidential Primary
Get rid of the quarter-million-dollar delegates!
In 1992 Washington state began holding a presidential primary. The intention was to replace the traditional methods Republicans and Democrats had used to select delegates for their national nominating conventions. The third primary election to be held under this new system is scheduled for February 29, 2000. The two previous primaries, held in 1992 and 1994, drew only 14% and 24% in voter turnout respectively.
The Washington state primary has not fulfilled its stated purpose. The United States Constitution recognizes, and the courts have confirmed, the First Amendment right of political groups to select delegates based on their own rules and procedures. Only one of Washington’s political parties, the Republicans, uses the primary election to pick a small number of its convention delegates.
The Democratic party did not use the primary at all in 1992 or in 1996, nor will it in 2000. The state party had proposed choosing 19 of its 94 delegates and 13 alternates for the 2000 national convention in Los Angeles by using the results of statewide primary voting. But this plan was not approved by the national party, so all Democratic delegates in 2000 will by chosen according to the party’s internal rules.
Republicans will make use of the 2000 primary, but only to choose about one-third of the 37 Washington delegates going to the Philadelphia convention. To receive any primary delegates a Republican presidential candidate must receive at least 20% of the vote. Those receiving this level of support or above divide the delegate pool proportionally. For example, a candidate with 50% of the vote might get six delegates, while one with 30% of the vote gets four delegates, and one with 20% two delegates.
The remaining 25 delegates will be selected by the caucus and convention system. For the candidates, the difference between coming in first, second or third in Washington’s primary involves a shift of only two or three national delegates, out of hundreds in play nationwide. Washington Republicans, like Democrats, rely mostly on traditional caucuses and their own internal rules for the selection of their delegates.
The 1996 primary cost the taxpayers $3,279,505. Most election costs are incurred at the county level. King, the largest county, spent almost $1 million to run the election. Costs even for smaller counties, such as San Juan and Franklin, typically run around $36,000. The 2000 primary election will cost about the same amount, or about $275,000 per delegate chosen.
The two main political parties do not look to the primary system for allocating delegate support to their candidates, and the people of the state likewise derive little benefit from continuing it. If the presidential primary were eliminated it would not be missed, and Washington’s county governments would be ahead to the tune of $3.3 million, money that could be used to replace lost car tax revenues.
5. Eliminate Local Government "Walking Around" Money
The King County Council gives $1.3 million in uncommitted public money to its members each year.
The King County Council each year provides $100,000 under the Special Programs account to each of its 13 members, for a total of $1.3 million, to allocate within the budget however he or she pleases.
Examples of past Special Programs spending include grants to the Community Services Division, the Northwest Labor and Employment Law Office, and Forward Focus Community Programming. No doubt each project has its supporters and each confers some degree of public benefit. But the fact is that each of these projects was deemed too low in importance to justify a direct appropriation in the regular budgeting process.
In other words, they have all been judged by the Council to be a lower priority than anything else in the budget. Therefore these should be the first funds considered for reduction in the upcoming period of budget stringency. Other counties and cities around the state should examine their budgets for similar discretionary funds.
B. Long-Term Structural Changes that Will Save Money
6. Contracting Out Highway Maintenance
Washington could save $25 million a year by contracting out highway maintenance.
In the 1997-1999 biennium, the state spent almost $248.6 million on highway maintenance. This is approximately 9% of the Department of Transportation’s total budget of $2.2 billion. During the same period the state employed 1,427 full-time workers to maintain its network of 7,035 miles of roads highways and bridges. In an operation of this magnitude, one would reasonably expect there to be areas where the state could do its job more efficiently, uphold quality standards and gain major savings at the same time.
Other states have tapped the power of the free market to perform some of their highway maintenance work. States that have contracted out work on a competitive basis rate each of their programs an unqualified success. The experiences of these states hold important lessons for Washington lawmakers as they work to implement Initiative 695.
Massachusetts began contracting out some highway maintenance work in 1991, starting with roads in just one area, Essex County, as a pilot project. The state promptly saved $4.4 million in one year, while improving the quality of road service at the same time. Following up on this initial success, transportation managers extended the program to other counties, saving an additional $7.8 million in the process. Finally, in 1996 the Massachusetts Department of Transportation expanded it’s maintenance program across the rest of the state, with similar positive results.
Some years ago Virginia embarked on an innovative agreement with a private company to perform all maintenance functions on sections of three major interstate highways. As part of the deal, the company guaranteed it would meet or exceed the performance standards set by the state, or it would not be paid. Today, the program is on track and is expected to save Virginia taxpayers at least $22 million over the five-year life of the contract. Interestingly, no state employees were laid off as a result of the contract. Virginia transportation workers were instead shifted from their jobs on the interstate to maintaining and upgrading the state’s extensive system of rural roads and bridges, which had been sorely neglected.
These real-world cases demonstrate what could be achieved in Washington with an intelligent contracting out program. Unfortunately, our state has one of the strictest laws against the contracting out of government services of any state in the nation (see Spokane College case described below). Loosening or repealing this law would give state managers a powerful and flexible tool in seeking better ways to do business by providing high quality service while cutting operating costs.
The professionals that work in state agencies, who know best where the waste and inefficiency is, could then open government work to a competitive bidding process. An audit by the Department of Transportation in 1998 concluded that, "a new approach to maintenance contracting could result in real cost savings of 10% or more over current expenditures and at the same time improve service levels." Even if the work continued to be done by government employees, they would at least have to meet the efficiency standards of potential private competitors.
7. Eliminate Prevailing Wage Requirements in Highway Construction
Current law needlessly drives up government contraction costs.
The Washington state transportation account, which funds highway construction, will lose some $500 million per year as a result of the repeal of the car tax. As a first step, the transportation commissioner and the legislature should examine how to use more effectively the transportation funds that remain.
The current prevailing wage statute, called the "little Davis-Bacon" law because it is modeled on the federal Davis-Bacon act, interferes with the normal bidding process for highway construction contracts by imposing requirements that eliminate wage competition and artificially inflate costs. The law, first enacted in 1945 and codified under Chapter 39.12 of the Revised Code of Washington, provides that the hourly wage rate paid to laborers on any public works contract shall be "no less than the prevailing wage in the locality where the work is being performed."
The prevailing wage is defined as the wage paid to the majority of workers in the applicable trade, which in practice is interpreted as the going union rate. Unfortunately, the effect of this interpretation is to reverse the meaning of words. Normally, in our free economy the prevailing price of labor or of any commodity is set by open market forces, not by a government-administered process. By interfering in the market the government needlessly drives up its own costs.
The law was originally justified by the desire to assure a reasonable wage on government projects during a period of weak unions. In contemporary America, these conditions no longer exist. By mandating a union wage scale today, a period of declining union membership and of greater labor choice in the marketplace, the government pays higher prices than it needs to by limiting efficient competition for public works projects.
Federally-funded highway construction will continue to be governed by the national Davis-Bacon law, but repeal of the state law would permit major savings on transportation projects built with state funds, and would allow the state to do more with less.
8. Eliminate Prevailing Wage in School Construction
Why build only five schools for the price of six?
School construction and funding are not immediately affected by the repeal of the car tax, but indirectly all General Fund accounts will be under pressure as legislators consider using General Fund moneys to replace some of the dedicated accounts that have lost car tax revenues.
Just as mandated prevailing wage laws increase the cost of highway construction, they also drive up the cost of school construction. Some estimates show that the prevailing wage rule can add up to 20% to the cost of building a new school. Does it make sense to build only five schools for the price of six? Allowing market forces to set wage rates would bring the state’s construction labor costs down to a more reasonable level, one that reflects the cost of putting up a comparable building in the private sector.
New schools are sorely needed for our growing population, as well as trained teachers, computers and other equipment to go in those schools. Ten states have already repealed their prevailing wage laws. Washington should join them. We can make more efficient use of tax dollars to advance important educational goals if we eliminate the inflated cost of prevailing wage statutes.
9. Local Governments Should Withdraw from Garbage Collection
The urban market can easily support two or three private companies, creating real choice and lower cost for homeowners.
Initiative 695 will induce government leaders at all levels to focus public resources on what they must do, as distinct from what they have traditionally done, so many existing local government services should be reviewed. Since Initiative 695 will prevent service fees from being raised without a vote of the people, it is especially appropriate to review those services that are provided for a user charge, such as garbage collection.
It is considered fair that those who produce more garbage should pay more than those who produce less. For that reason, garbage collection is usually funded through user fees rather than from general tax collections. If Initiative 695 prevents increasing those fees over time, then either service will decline or general tax revenues will be diverted to supplement the user fees.
One solution is for local government to get out of the garbage-collection business altogether. The usual justification for government providing garbage collection is that economies of scale -- a single truck stopping at every house -- makes a single provider more cost efficient and saves citizens money. Why this should be so is not clear. Even in a less-densely populated cities, many private companies make frequent deliveries along the same street. Today, HomeGrocer.com, Federal Express, UPS, even the local diaper service, all run regular delivery routes through neighborhoods in a competitive, cost-effective way, while providing excellent service to their customers. All anyone needs to get service from any of these private firms is a street address. Why should collecting garbage be any different?
One study shows that a city with a density of as little as eight households per acre provides enough business to support effective competition between at least two different collection firms. Larger, more compact cities could of course support even more competition.
To gain the benefits of free-market competition all a city has to do is pass a law that requires that each household and business to contract for refuse removal and bear the cost. Similar ordinances already exist which require homeowners to maintain the safety and general look of their properties, such as keeping the grass cut, trimming dangerous trees, caring for parking strips, and all the other things people must do to live peacefully together in an urban community. Taking responsibility for one’s own garbage collection would be no different from these other duties.
By dropping garbage collection, cities would gain several advantages. They would avoid the post-Initiative 695 squeeze on user fees because private providers would set their own fees without a public vote. Innovation and competition would directly benefit citizens by allowing better service at lower cost. City managers would be freed to focus their skills on the essential work of government, rather than on running a service that can be provided more effectively by the private sector.
10. Compete for Building and Ground Maintenance
As budgets at all levels are squeezed, more cost-effective ways of doing routine business should be adopted.
Government office buildings, with very few exceptions, are much like private office buildings. They require sweeping, window cleaning and trash removal on a regular basis. They also need normal daily maintenance such as light bulb replacement and maintenance of heating and cooling systems. All buildings need regular preventive maintenance (an area which often falls victim to short-term budget pressures) to keep them from falling apart. Their grounds require watering, mowing, raking, pruning and other general upkeep.
Long ago most owners of private office buildings learned that they could save money and shift their own management energies to more important projects if they simply contracted out building maintenance to other companies. Moreover, they found that private-sector specialists were usually more innovative and could provide better service at a lower cost. The magic of competition means that the most creative and efficient companies succeed, to everyone’s benefit.
There are more than enough qualified companies to insure healthy competition. A glance through the Yellow Pages shows that in Seattle alone over 220 companies are listed as landscape contractors. Statewide, there are some 5,000 firms that perform all kinds of landscaping and maintenance services, creating a thriving industry with about $30 million in annual sales.
Unfortunately, current law stemming from a 20-year-old court case imposes a strict ban on the contracting out of almost any government work. In 1978 Spokane Community College wanted to hire a private firm to do janitorial work in a newly-constructed administration building. The college was promptly sued by the local public employees union because they wanted to secure the new work for themselves.
The state Supreme Court agreed with the union and ruled that no government agency, including a school, can contract for services that had "regularly and historically been provided...by civil service employees." Shortly afterwards the legislature enshrined the court’s decision in law, providing that no work performed by state employees before April 23, 1979 could be contracted out to a private company.
With the budget scarcity resulting from loss of car tax revenues, spending more on maintenance than is required simply takes money away from providing essential services to the public. The Spokane Community College law should be repealed and state managers should once again be allowed to consider the option of contracting out.
11. Privatize Washington’s Liquor Stores
The government’s monopoly on hard-liquor sales should be eliminated.
A much talked about requirement of Initiative 695 is the provision that requires voter approval for the increase of any government tax, fee or "other monetary charge."
The person who buys a bottle of Scotch at a state liquor store pays a monetary charge and it follows that any plan to increase the price of Scotch must be submitted to the voters for approval. While the Initiative makes it hard for the state to raise over-the-counter prices on liquor, it still must pay the higher prices charged over time by liquor distillers. Eventually the Liquor Control Board, which handed more than $200 million over to the state’s General Fund last year, will start to see profits decline and ultimately the state will suffer a loss on liquor sales.
The 65-year-old agency has held a monopoly on Washington’s liquor business since hard-alcohol sales were legalized by the repeal of the 18th Amendment in 1933. Through its network of 314 state stores and more than 11,000 licenses to bars and restaurants, the Board regulates all liquor transactions in the state, including distribution, advertising, age-limit enforcement and public education programs. Its $133 million annual budget covers agency costs and pays the salaries, wages and benefits of about 1,000 state employees.
Subsidizing the drinking habits of Washington citizens out of general tax revenues is contrary to sound public policy. Yet that will be the result unless Washington voters regularly vote to increase the price list at liquor stores, something regular drinkers might be reluctant to do. Before Washington reaches that dilemma, the state should follow the path other states have taken: pull out of the retail liquor business.
One message the voters sent with Initiative 695 was that the government should not be running non-essential services and should restrict itself to the proper and necessary work of government. There is simply no need for the government to be selling for profit an ordinary commodity, and certainly none to continue a post-Prohibition system of state ownership of a large liquor-store chain. The state should step aside and allow the private sector to manage liquor sales.
12. Privatize Passenger Ferry Service
The state doesn’t need to shut down passenger ferry service; let the private sector do it.
In the wake of the passage of Initiative 695, the government-owned ferry system, which is the only one in business, stands to lose $52 million from its two-year operating budget of $316 million. Washington State Ferries has announced plans to tie up as many as 10 of its 28 ferries and cut back on all but the busiest commuter runs. The proposal also foresees taking the passenger ferries Chinook and Snohomish out of service, and canceling plans to add five new high-speed boats to the passenger-only system. Currently the system receives an overall rider subsidy of about 33% from taxpayers, while the passenger-only service receives an 85% yearly bail-out.
While Washington State Ferries intends to sharply reduce service to customers, it announced no plans to trim the system’s 1,400-member workforce. Instead of imposing severe reductions in service on riders and keeping the tax-funded administration and workforce the same size, Washington State Ferries should loosen its monopoly hold and allow private companies to provide passenger ferry service.
Private ferries could operate with the efficiency and responsiveness of a regular business. They could offer flexible, high-quality service that would not be subject to Initiative 695’s requirement that all price changes be submitted to a public vote.
At one time private ferry operators offered fast, affordable service out of dozens of ports around Puget Sound and the San Juan Islands. In June 1951 the state paid $5 million to buy out the remaining boats and port facilities of the Puget Sound Navigation Company, and it has run the system ever since. The enabling law included a provision which bans any other service from operating within ten miles of an existing state-run route.
But the same law allows Washington State Ferries to grant waivers to private operators for up to five years. After that time the quality of the private ferry service can be reviewed to determine whether it continues to serve the public interest. If so, the waiver can be extended or made permanent.
Private companies would certainly offer passenger-only service to daily commuters from all parts of Puget Sound to major workplace cities such as Tacoma, Seattle and Everett. Other companies would specialize in tourist traffic, creating more routes in the San Juans, offering better service in summer, and possible expanding service to Sydney and Victoria.
An idea like this is already in the works at the local level. King County Councilmember Jane Hague has proposed creating a new passenger ferry service across Lake Washington as a way to ease commuter traffic. The plan envisions two high-speed ferries running between Kirkland and the University of Washington, each carrying 50 people a trip, or up to a thousand riders per day. While an initial capital outlay would be made by the County, sufficient fare-box revenues could pay for operating costs. The fact that such an innovative proposal is being considered by one local government indicates the interest in the idea, and the benefits it would bring to consumers if it were imitated by the state.
The state should grant the waivers allowed by law to any private firms that are willing and able to provide passenger-ferry between convenient points on Puget Sound. The state system could then focus on the routes for large car ferries, while permitting greater choice and a variety of prices to consumers.
13. Contract Out Billing and Collection for City Utilities
Save up to 30% of current costs.
The City of Seattle will lose $20.4 million because of the repeal of the car tax. Other cities will likewise lose significant amounts.
City Light and City Water are public businesses that provide essential services to the residents of Seattle and other communities and send a bill regularly to every citizen. The repetitive tasks of meter reading, billing and processing payments involves nothing that is unique to the government sector. In fact, they parallel precisely the operations of private natural gas and electric power companies.
Indianapolis Mayor Stephen Goldsmith found his city was spending $3 million to collect $40 million in sewer bills. By opening up bill collection to competition, he drove the cost down by 30%, with improved services to customers. Over the first few years, the contracting out arrangement added $10.4 million in savings and revenues to the city’s coffers, beyond what it would have received under the old bill-collecting system.
At the same time, private contractors often find it beneficial to use 24-hour consumer service lines, to allow credit-card and automatic billing, and other convenient services which customers of privately-owned utilities like Puget Sound Energy have come to take for granted.
Seattle, Tacoma and indeed all cities that supply either water or power to their citizens should learn from the Indianapolis experience and contract out their billing and collection services.
14. Contract Out for Child Welfare Services
Contracting out could reduce by months or years the time many children now spend in foster care.
Many arguments against Initiative 695 centered on the loss of funding for human services that would result from the reduction in car tax revenues. But reports from other states show that creative approaches to delivering vital human services can reap significant savings and make limited tax resources go farther.
In Texas, contracting out of child welfare and placement services is expect to yield a total of $102.6 million in savings over fiscal years 1993 - 2003. Greater efficiency is being realized in such areas as improved case-worker retention, reduced clerical staff and better child support collections.
Kansas took an even bolder approach. In 1995 the state legislature recommended that the Department of Social and Rehabilitation Services take advantage of contracting out for all child welfare programs except child protective services. The state set specific standards for the performance of each contract in areas such as safety of the child, number of placements, maintaining family and community ties and placing a child with a brother or sister. Interestingly, the legislature did not mandate this innovative reform. It was the enthusiasm of the state agency itself that made it work.
An independent report on Kansas’ privatization efforts sums up the results: "Because of the improvements realized by privatization, children are spending less time in foster care and are being adopted at higher rates. Costs are being contained, and long-term savings can be anticipated..." The report concludes that use of "private, mission-driven agencies" has resulted in greater donations to the state system from private charities, thereby making the use of existing tax dollars even more effective.
By following the example of other states, Washington can create a streamlined child welfare system that would reduce by months or years the time many children now spend in foster care waiting to be reunited with their families, or to be adopted into a permanent home. More important than saving dollars are the improvements in care and protection for children. Competition breeds innovation and in the social services innovation can save lives.
15. Contract Out Public Health Services
Contracting out saved Piece County Health over $4.2 million, while almost doubling the number of people served.
In addition to funds that can be provided from the tobacco settle, resources can be freed up by tapping the competitive forces of the private market to provide public health services.
An example of what is possible is provided by the Tacoma-Pierce County Health Department. In the early 1990s the department was facing a severe budget shortfall while wrestling with questions about how to perform its basic mission. The department instituted a successful, three-fold solution: 1) phase out services that others can deliver better and cheaper; 2) play a minimal role in delivering services; 3) focus more on prevention than on treatment.
Once these new goals were in place, treatment programs were phased out and handed off to private-sector providers. The department closed six government-run clinics dealing with family planning, sexually transmitted diseases, tuberculosis, immunizations, refugee services and HIV testing and prevention, and signed contracts with six private-sector providers to manage these services.
As a result, patient access has been greatly improved, since treatment is now provided at 13 clinics around the county, rather than at just a few government ones. The contract clinics saw nearly twice as many patients - 31,901 compared to 16,386 - in their first full year of operations (1997) than had the public clinics before them. At the same time, using the private clinics saved the public health system $1.6 million.
The reform allowed the department to cut its administrative overhead from 28% to 16% of its total budget. Its workforce was reduced from 392 full-time positions to 283, while the number of management levels was collapsed from six to three. Employee salaries are now competitive with those in the open market. Employees raises are based on merit and there is now an explicit link between the department’s stated goals and its budget expenditures.
The administrative changes alone created first-year savings of over $2.6 million. The department even contacted out its routine building upkeep, saving $88,000 out of a maintenance budget of $404,000. Creative reforms like this can help all public health agencies adjust to the loss of car tax funding.
16. Contract Out Park Operations and Maintenance
20% annual savings are possible through contracting out.
This is one area of public policy in which we can learn from our neighbors to the north. Several Canadian provincial park systems have contracted out park operations as a way to improve efficiency. Ontario Parks reorganized itself on a "business model" basis in 1996. The department currently oversees 116 service contracts with private companies totaling $3.7 million. Contracts are used for such activities as janitorial, maintenance and safety enforcement services. The criteria for contracting out is simple. If savings are projected, the department will use a service contract. If hiring a private company is not feasible or cost-effective, as often is the case in the province’s hard-to-reach northern region, government employees do the work.
Alberta and British Columbia have instituted contracting out efforts that are more extensive. Alberta’s park system has responded to budget pressures by increasing the use of private operators in recreational parks and then focusing department resources on preservation-oriented parks. Private providers currently operate 92% of campsites in the system. The strategy has enable Alberta to add 34 new sites to its park system even while absorbing a $17 million reduction in the department’s budget. British Columbia Parks has seen similar success. Since 1992, British Columbia Parks has contracted out 100% of maintenance and operations. The department estimates that the move has resulted in 20% savings.
Contracting out park operations has worked in the United States too. In the early 1990s Alaska faced the possibility of closing some of its campgrounds due to lack of funding. The parks are small and isolated, attract few visitors and generate low revenues. Because of their distant location, the parks were costly to maintain. Rather than close them down, however, Alaska Parks decided to contract their support work out to private operators. The typical contract is short-term, just one to five years, and contractors may keep the camping fees and have their commercial use permit fee waived. Overall the experiment has been a success. Contracting out enabled Alaska Parks to keep parks open that otherwise would have been closed.
If granted the same decision-making flexibility as described in the examples above, Washington state park managers could realize significant savings by contracting out entire park operations or by using service contracts for routine maintenance, custodial work or security services. Contracting out park services would allow Washington’s park managers to do three things: lower costs, provide better service, and focus on core functions. The savings in the General Fund would allow resources to be shifted to programs formerly funded by the car tax.
17. Other Contracting Out Opportunities
Dozens of cities and counties across America have already benefited from contracting out public services to the private sector.
The examples cited are not the only areas of government work that offer rich opportunities to gain from contracting out. Dozens of other government services are eligible as well. Leaders in major cities such as Indianapolis, Chicago and Philadelphia, and metropolitan areas like Los Angeles County and Orange County have all tapped the private sector to provide better services at lower cost to taxpayers.
Simply contracting out traditional government work is not in itself an answer. It is opening up this work to competition, even if the work is still performed by government workers, that leads to savings and greater efficiency. As Indianapolis Mayor Stephen Goldsmith put it, "Competition, not privatization made the difference. Competition drives private firms -- and, as we soon discovered, public agencies -- to constantly seek ways to reduce costs and improve service." Savings of 25%, 30% and even 50% are common in these local programs.
Opponents of Initiative 695 said it would hit small cities and rural areas hardest because they depend on car tax revenues for a greater share of their annual public budgets. Similar challenges have faced small cities in other states. A few years ago, Pleasant Ridge, Michigan (population 2,700) contracted out all of its public works department services to a private company. From the start the company, CMS, Inc., guaranteed a minimum of 15% savings to the city. Since the arrangement started in 1996, the city has saved taxpayers 22% on public service costs while improving the quality of street cleaning, snow removal, landscaping, and other work needed to keep the city running.
Even Governor Locke recognizes the value to the taxpayer of contracting out, at least for new government work. In a recent directive to state agencies, colleges and universities he says, "Many of our state’s new services could be delivered faster, cheaper and more efficiently by contracting out." He then directs agency and school presidents to determine whether any new state services can be contracted out to private firms. Like Mayor Goldsmith, he provides that state employees be allowed to bid on such work too, since introducing competition, not just privatization, is the important policy change.
Savings from contracting out government services may not replace all of the funds once provided to cities and counties from car tax revenues, but the policy would go a long way toward making up the shortfall. More opportunities for contracting out are described in our 1997 Policy Brief by Senior Research Fellow Elaine Davis, and in the Washington Institute Foundation’s briefing binder on "Building a Competitive Environment in Local Government Services."
18. End Free Deluxe Bus Passes to County Employees
Saves over $1.4 million.
Metro transit has traditionally given free bus passes to its employees. In 1998, King County expanded this perk to all of its 13,000-plus employees. The pass is the best one Metro offers. It is good for a year and covers the two-zone, peak-trip fare on all buses; good enough to ride free on any route, anytime, to anywhere Metro goes, and they are made available to employees whether they ask for a pass or not. Private citizens pay $693 to get the same pass.
This particular job benefit cost county taxpayers a little over $1 million in 1998, and prompted Executive Ron Sims to request $1.4 million, a 33% jump, for bus passes in his employee-benefits budget request for 1999. At the same time Metro raised the price charged to fare-paying riders by 15%.
In the wake of Initiative 695, Executive Sims is talking about the need to increase fares again. For many Metro customers, especially those with low or fixed incomes, the cost of riding the bus is high enough already, without subsidizing the well-paid employees of local government. Any increase in fares should be shared equally by all public transit users, without granting a disproportionate benefit to some riders at the expense of others.
19. Privatize Boeing Field
Selling King County’s government-owned airport would bring immediate revenues and add to the long-term tax base of the county.
One message the people sent by voting for Initiative 695 is that they want to see government streamlined so it can focus on activities that are core government functions. In a free society, the government should only provide those services that the private sector can not or should not provide. Operating a major regional airport is not a core government function. As part of adjusting to the changes wrought by Initiative 695, King County should get out of the airport-management business.
King County International Airport, called Boeing Field, was opened in 1928 and named after famed aviation pioneer Bill Boeing, and it is where his company’s headquarters are located today. It is only four miles south of downtown Seattle and is one of the busiest general aviation airports in the country. The airport is home to 150 businesses, such as air cargo companies, flight schools, charter plane and helicopter services. It is used as a base by hundreds of private small-plane owners. As a thriving center of aviation commerce in a major metropolitan area, Boeing Field would prove an attractive lure for any willing private purchaser.
Private airport operations have been successful in other cities. Indianapolis opened management of its airport to competitive bidding in the mid-1990s. The winning company is committed to reducing landing fees by at least 25% over the ten-year life of the contract. The White Plains/Westchester County airport in New York initiated a 30-year contract with a private company for basic management and operations. The arrangement has already turned operating losses of up to $250,000 a year into net income of about $3 million annually.
The sale of Boeing Field would bring the County two immediate benefits. At present it breaks about even financially. Selling the facility, however, would bring in additional revenue just when the County needs it most, as it weathers the transition to a budget that does not rely on car tax funding. In addition, transferring the airport to private hands would greatly and permanently broaden the County tax base. Adding 596 acres of valuable commercial land to the tax rolls would not only maximize property tax collections, it would bring some measure of relief in the weight borne by current taxpayers.
Even if Boeing Field is retain by the County for the present, the loss of car tax revenues many lead to a gradual degrading of upkeep and investment and the airport might one day operate at a loss. That eventuality can be forestalled by selling the airport to private interests and refocusing County effort and budget on core functions.
C. Changes in the Culture of Government Spending
20. Restrain the Overall Growth of Government Spending
State government has grown by 11% in the last two years.
One point that is often lost in discussions about funding for individual government programs is the sharp rise in recent years in the overall size and cost of Washington’s state government. Examining the total amount of money the state spends for all purposes in one biennium gives an accurate idea of the budget’s size. It also puts into clearer perspective just how much the state must adjust spending in order to accommodate the car tax decrease enacted by Initiative 695.
The total for the All-Funds budget for the 1997-1999 biennium was $40.7 billion. In the 1999-2001 biennium that figure has jumped to $45.2 billion, an 11% increase in only two years. Over the same period annual inflation in the general economy has been less than 3%. The growth in state spending from one two-year budget cycle to the next is well above that needed to simply meet the higher cost of doing business, and shows that state spending is expanding by at least twice the rate of inflation. This built-in rate of growth offer opportunities for complying with Initiative 695 without cutting below the amount the government spent in just the last biennium.
While much of the budget slated for the 1999-2001 biennium is entitlement spending over which the legislature has little control, the purpose here is show the total size of government spending compared to how much must be trimmed from future growth to comply with Initiative 695.
Government revenues grow with the natural expansion of the economy. Recent forecasts show the state will collect $215.2 million more in taxes in the 1999-01 biennium than was estimated as recently as September. Increasing revenues alleviates the atmosphere of budget crisis and allows more time for the legislature to adjust to the loss of car tax revenues. Many of the requirements of Initiative 695 can be satisfied by using this time to restrain the growth of future government costs, without cutting into spending on current programs.
21. Restrain the Growth of the Government Workforce.
The state plans to add more than 5,109 new hires to its payroll over the next two years.
The single most-expensive item in the state budget is the cost of salaries, expenses and benefits for government employees. Today, the state employs almost 57,000 people. This figure includes permanent, probationary, trial, service, emergency exempt, temporary, seasonal, intermittent and Washington Management Service workers. The figure does not include those working in K-12 schools (who are hired by local school districts) or those in state higher education or who serve on state boards or commissions.
The planned expansion of the workforce by 5,109 represents a significant increase in taxpayer-funded full-time positions. The average cost of one state employee is about $40,000 a year, with additional benefit costs of about 20%, or $8,000, above that. For every planned full-time equivalent position the state does not fill taxpayers would save about $48,000 a year in salary and benefit costs.
The total number of new hires the state wants to bring on over the next two years represents a permanent $245 million increase in the annual cost of running the government. The message to government from Initiative 695 is "downsize," not "upsize." Governor Locke has expressed interest in trimming back at least part of the increase, but even if implemented the result will still be an expansion of the workforce. The state should instead adopt a "no net increase" hiring policy until Initiative 695 has been fully implemented.
22. Restrain the Growth in the Number of County and City Employees
Local governments can achieve major savings by simply restraining their own growth.
A similar story is told by the state’s largest local government. Today King County’s workforce numbers about 13,228 full-time equivalent positions, making it one of the county’s top ten employers. The current budget calls for adding 632 full-time equivalent employees in 1999, an increase of 4.9% in just one year.
Like the state, the size of King County’s government has snowballed in recent years. A recent analysis of the ten largest agencies funded through the Current Expense Budget reveals that their budgets grew by 37% between 1994 and 1998, a pace many times the rate of inflation. Over the same period, these agencies’ overhead costs swelled by 103%, more than doubling the size of the largest parts of county government in just five years. The cost of simply keeping the doors open at these agencies rose at an annual rate of 20%, while yearly inflation over the same period was never more than 5%. Looking ahead, the current growth rate in overhead expenses will in just three-and-a-half years double the cost, from $37 million to $76 million, of operating these ten county agencies.
King County presents a striking example of how a local government can achieve major tax savings by simply restraining its own growth, without even considering a reduction in overall size and cost. Holding growth in overhead to 3.5% a year, still well over the rate of inflation, would have saved King County taxpayers some $5.8 million.
23. Fully Implement Referendum 47 Property Tax Limitation
Faithfully implementing the will of the voters will their restore trust in government.
Initiative 695 is the second time in as many years that the people of Washington have passed a major tax limitation law. In November 1997 Referendum 47 was approved by a margin of 64%. The strong "yes" vote reflected voters’ frustration over rapidly rising property taxes. Now state law under title 84 of the Revised Code of Washington, the measure seeks to limit the ability of local governments to raise property tax collections from one year to the next by more than the rate of inflation.
At the state level Referendum 47 demonstrates how successful real tax reform can be. By limiting the increase in its portion of the property tax, the state government saved taxpayers $63.6 million in 1998, another $68.7 million in 1999, and will save a further (estimated) $74.3 million in 2000. Unfortunately, implementation of Referendum 47 at the state level only tells part of the story.
In the two years Referendum 47 has been in place, less than half the counties and major cities in the state have fully implemented its provisions. In the first year, 1998, just 17 of the 39 counties and only five of the 12 largest cities limited tax collection increases to inflation. Most cited a "substantial need," provided for in the law, to raise taxes higher.
In 1999 even fewer counties and major cities limited the increase in property tax collections to inflation. Such a dismal performance by local leaders, after passage of major property tax limitation by a vote of almost tally to one, helped feed much of the anger that emerged in the vote for Initiative 695.
Meeting the challenge of Initiative 695 thus goes well beyond simply scouring the budget to make up for lost car tax revenues. The voter resentment it expresses signals the need to restore the confidence of the people in their elected officials. That is why government in Washington today is facing a crisis of trust.
The people themselves are the source of all the money the government spends. But until voters can again rely on the assurance of their elected leaders that tax dollars will be spent wisely, and that ordinary citizens will not be overtaxed, long-term budget questions cannot be solved. Faithful implementation of the Referendum 47 law at the local level would go a long way toward regaining the people’s trust in their government, and would obviate the need many feel to vote "no" on all tax increases.
24. Revitalize the State Productivity Board
This existing state board can be revitalized to root out and eliminate government waste at the deepest levels of the bureaucracy.
The Washington State Productivity Board was created by the legislature in 1983. Its mission is to "promote increased efficiency and productivity in state government." The Board is co-chaired by the governor and the secretary of state, and its ten members include the state auditor plus representatives of state agencies, higher education, government unions and private businesses.
The Productivity Board runs two programs designed to involve state employees in helping the government run better at lower cost. These are the Employee Suggestion, or "Brainstorm," program, and the Teamwork Incentive Program. In its 17-year history the Board claims success in achieving $40 million in revenue and cost savings and in making "numerous improvements in public service and safety."
This work is a commendable as far as it goes. But given the amount of obvious waste and inefficiency in many government operations, the Board is clearly not living up to its fullest potential. One indicator of this is that most Washington citizens have never heard of it.
A re-energized Board would have the resources and the political clout, because of its high-ranking leadership, to focus with laser-like intensity on rooting out waste at the deepest levels of the state bureaucracy. Securing savings at many times the amount achieved so far is possible for the Board even in normal times. The urgent necessity of making up for lost car tax revenues, however, provides an added spur to making the State Productivity Board as effective as possible.
25. Alliance for Accountability
A proposed new "Grace Commission" offers a chance to thoroughly review all public spending while restoring trust in state and local government.
The clear signal for fundamental change sent by the voters in passing Initiative 695 has led to some creative proposals being put forward. In a letter to the governor barely a week after election day, State Auditor Brian Sonntag proposed the formation of an Alliance for Accountability. He envisions the group as a potent "governance summit on a scale that will lead to meaningful change." As further described by Mr. Sonntag:
"The Alliance should comprise a brain trust of Washington’s top leaders and best thinkers. Among the Alliance’s makeup: Citizens, business, labor, frontline state employees, local government leaders and employees, loaned executives, college and university students and faculty, legislators, state elected leaders, cabinet members, leadership organizations.
"The Alliance could address fundamental and far-reaching questions such as what services state government should provide, how they should be delivered, how we finance those services, and what the state will do to support local governments.
"The Alliance could develop processes to involve a great many citizens and engage them in discussions to address issues. These could include focus groups, town hall meetings and other public forums across Washington. I’m sure other ideas will surface."
Mr. Sonntag concludes by saying, "the opportunity is too great and the time is too critical to delay looking at how we govern. Through this Alliance, we would create a public forum of great magnitude to restore citizens’ trust in their government."
As proposed, the Alliance for Accountability is modeled on the Hoover Commission of the 1950s and the Peter Grace Commission of the 1980s. Both bodies were made up of dynamic leaders from government, business and other walks of life. Both identified hundreds of practical ways the federal government could cut costs and improve service, while re-awakening people’s confidence in elected officials.
Arkansas and Texas have also created performance review commissions to scrutinize every aspect of state government. If implemented in a thoughtful and meaningful way, this proposal for starting a similar review commission in Washington holds tremendous potential to change for the better the way our state government operates.
The passage of Initiative 695 presents state and local leaders with tough budget choices over the next year and beyond. Voters have sent a clear message that the taxes they pay are too high and that they deserve meaningful tax relief. Having achieved that, voters expect their elected leaders to implement the budget adjustments and policy changes necessary to make Initiative 695 work. That is what officials are elected for in the first place: to carry out the will of the people.
Voters will react against any efforts by their leaders to "teach people a lesson" by eliminating essential government services in the wake of overwhelming support for a tax cut. The 25 specific proposals given in this Policy Brief demonstrate that these kinds of drastic budget cuts are not necessary. Instead, there are clear, commonsense ways to implement Initiative 695 while still carrying out the basic mission of government.
Predictions made by Initiative 695 opponents of what would happen if the measure passed.
1. "Eliminate[e] all funding to reduce traffic congestion and improve highway safety."
2. "More than 70,000 transportation jobs would be lost."
3. "Passing I-695 would reduce county bus service 25% statewide."
4. "More than 3,000 government jurisdictions would be forced to have elections on every fee they change, costing taxpayers more than $25 million a year."
5. "If I-695 passes...transportation, prosecutors, police, fire and health programs, will be reduced by billions of dollars."
6. "The passage of I-695 would reduce funding for these vital programs [transportation, prosecutors, police, fire and public health services], about $1.7 billion in the next biennium alone."
7. "Over the next six years, passage of I-695 would result in the loss of $7 billion in transportation funding."
8. "A cut of this magnitude ($4.2 billion for roads) means that there would be no new construction projects to improve our highway system, until new revenue sources could be found."
9. "County bus service would lose at least $1.4 billion over the next six years."
10. "Special bus programs, including those for senior citizens and the disabled, also face reduction, if not elimination."
11. "The state ferry system would "face cuts in its operational budget and the elimination of $115 million intended for construction projects."
12. "The Washington Council of Police and Sheriffs has estimated that local governments will lose funding for as many as 1,000 police officers."
13. "The Washington state Crime Lab would lose an average of about $2 million per biennium too."
14. "With the passage of Initiative 695, funding for these programs [basic county health services] will end on January 1, 2000."
15. "Child immunization and flu shots for the elderly will be cut. So will restaurant and day care inspections."
16. "If I-695 is passed, the environment will be harmed in a couple of ways." "...there will be more cars on our freeways and more bumper-to-bumper congestion - that means more air pollution."
17. "I-695...contains loopholes that allow cars to be taxed as property, just like our homes."
18. "I-695 would rescind about $360 million in local government assistance, including funding for public health, police and fire departments."
19. "Police and courts would lose more than $81 million dollars [sic] if this initiative passes."
20. I-695 would, "jeopardize safety in Washington schools."
21. "Initiative 695 would cut spending on clean air programs by $17 million."
22. "I-695 would knock a $1.8 billion hole in the road fund, negating Referendum 49."
23. "I-695 is a backdoor attack on the spending limits of Initiative 601. This will end spending limitations and make tax increases common again."
24. "If I-695 passes...the reserve will be spent in three years."
25. "Money for important programs will have to come from somewhere, and an obvious place would be from a state income tax."
26. "I-695 will harm the state economy because big employers like Microsoft and Boeing will move some activities out of state where transportation costs are adequately funded."
Source: NO on I-695 Campaign, www.no-i-695.com, "The Official Site of the No on Initiative 695 Committee," November 1, 1999.
Fact sheets on:
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"Everything You Wanted to Know About I-695."
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"If It Sounds Too Good to be True, It Probably Is!"
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"What Would I-695 Do? More Than Meets the Eye..."
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"What I-695 Promoters Forget to Tell You: A ‘Dedicated Fund’ Means ‘Dedicated Cuts.’"
Click here to read more about the author Paul Guppy.
Sharon Atkinson served as the primary research assistant for this study as part of the Foundation's Internship Program. Intern Krista Colson also assisted with research. Their professional work and overall contributions are greatly appreciated.