We also need to consolidate and streamline government agencies and services, maybe even merge some cities.
IN Washington state, we have argued back and forth about a state income tax virtually from the date of statehood. But the tax we should really focus on is the property tax and the services it funds, including schools and our criminal justice system.
Consider our jails in King, Pierce and Snohomish counties. They have hundreds of empty beds, while at the same time we lead the nation in property crime. County governments are choosing not to arrest, prosecute and incarcerate as many felons as they used to.
The best example is the unprecedented decision by King County to arbitrarily cap the jail population at 1,800 prisoners a day. In 2009, those jails held 2,400 inmates a day. Hundreds of individuals who are out on the street would have been in jail five years ago.
Counties spend 70 to 80 percent of their general-fund revenues on law enforcement, and the growth of those funds are not keeping up with the rate of inflation and population increases. Part of the problem is due to the fact that so little sales-tax revenue is generated in unincorporated areas.
But the bigger issue is the 1 percent cap on property tax revenue. King County receives 43 percent of its general-fund revenue from the property tax. The math is obvious: Capping that revenue growth at 1 percent a year makes it virtually impossible for the county to even keep up with inflation.
Now let’s look at education. Our system for funding education is inequitable, unstable and blatantly unconstitutional. Today, because state funding has not kept up with the real-world needs of our schools, many school districts rely on local levies — property taxes — to fund roughly one-third of their budgets. Due to variances in property values around the state, we now have an educational system of rich and poor school districts.
This is wrong, and clearly unconstitutional. In the McCleary v. State of Washington ruling, the state is under a court order to implement a system of full state funding of basic education without the use of local levies.
State lawmakers need to replace the 1 percent property-tax cap with a cap limiting revenue growth to a factor of inflation plus the rate of population growth. Yes, the voters approved the 1 percent cap, but they also approved the more realistic inflation plus the population cap when they overwhelmingly passed Referendum 47 in 1997. At some point, leaders have to tell voters the truth, and that is the 1 percent cap is preventing county governments from protecting public safety.
Now that the state Supreme Court has ruled again that levies can’t be used to fund basic education, lawmakers’ best option is to drastically lower local levy rates while concurrently raising the state’s share of the property tax and dedicating the money to education. This type of reform would not produce enough revenue to meet all of the state’s obligations in the McCleary ruling, but it would get the state much closer to full funding than it is today.
This change, however, would ripple through our complicated property-tax system and likely affect the funding of local governments and special-purpose taxing districts. This should spur the Legislature to do a long-overdue comprehensive review of how we provide and fund government services in the central Puget Sound.
King, Pierce and Snohomish counties are a coral reef of governments — dozens of cities and hundreds of special-purpose districts, large and small, all spending money and collecting property taxes. No one planned this system, it has simply evolved over the last hundred years.
Why do we have four different transit agencies with overlapping service areas? Why are there small sewer districts that operate outside the King County Metro system? Why do tiny cities like Pacific and Algona continue to exist, each with their own police departments? And why are there still unincorporated urban islands surrounded by incorporated cities?
We need state legislation to consolidate services and special purpose districts, give more regional authority to county governments, and maybe even merge some cities. Doing so would be a heavy political lift, but it would lead to better, more efficient government without raising taxes. In fact, it might free up more existing property and sales-tax authority to allow county and city governments to offer better services.
The debate over the income tax leads to stalemate. The real debate that needs to happen in Olympia right now is over our broken property-tax-driven system to fund schools and local government.