Governing: Money For Nothing

Money For Nothing
Politicians like to joke that people want two things from government: fewer taxes and more services. In the coming years, the joke is going to be on the people as that old saw is reversed: Government will tax more and cut back on what it provides.

The Great Recession has battered tax revenues, leaving policymakers with declining revenues and rising expenses. They’re also stuck with bloated union contracts negotiated during more hopeful times, and they face a populace that still clamors for government help.

In our region, the situation is especially dire for King County, which is in worse shape than Seattle and the state because, by law, it has fewer revenue sources and less flexibility about how to raise and spend money. Even under the most optimistic scenarios, county government must shrink. Because most of what it provides now are deputies to patrol streets and attorneys to prosecute criminals, the reductions will have to come from public safety—the one area almost everybody agrees should be preserved.

What will it mean for King County residents, beginning as soon as next year? Everything from the shuttering of rural parks to the possibility that some car thefts and home burglaries would no longer be investigated.

Whose fault is it? There are plenty of villains. Start with the boom-bust nature of the economy. A downturn that continues to confound experts has extended the bust beyond most projections, creating huge deficits in recent years and for many years to come. This has exposed a public sector compensation system that is out of whack with economic reality, so blame the Democratic majorites that run Seattle, King County and the state. Union leaders unwilling to look beyond the next cushy contract for county employees also bear some responsibility. And, finally, look in the mirror. Local voters have approved tax-limiting measures while also insisting on more cops and roads and open spaces.

Regardless of where the blame lies, government officials are now basically sitting at the kitchen table like the head of a family who needs to seriously cut back on household spending. But instead of deciding whether to drop ballet lessons, cable TV or fancy dinners, local politicians have to consider laying off cops and prosecutors and eliminating funding to feed and house the needy and the homeless.

King County Executive Dow Constantine, playing the part of the distressed father staring at a stack of unpaid bills, says that, without more money, the cuts he’ll have to make would be “akin to an amputation.”
Creative options like spending down reserves and tapping other nonrenewable sources of money—the government equivalent of looking under the sofa cushions for loose change to help pay the phone bill—have been exhausted. At a meeting in May, the County Council failed to pass a measure that would have asked voters in August to approve a sales tax increase to help preserve law enforcement funding. Sheriff’s deputies and court representatives—as well as ordinary citizens—pleaded with council members to ask voters for more money.

 “I have neighbors who have been in their homes for 30, 40 and 50 years who are afraid to sit in their yards,” said Tara Jo Heinecke, who lives in North Highline, a high-crime area in an unincorporated part of King County just south of White Center. “Folks know if you call the police, they may not be there.”
But not enough council members were convinced. Wary of asking voters for more cash in this Great Recession, they first wanted to identify potential savings. Still, it’s likely that some tax plan will be put before voters in November, but the amount of any sales-tax hike being considered won’t make the county whole again.

King County’s operating budget—the fund that pays for day-to-day operations of government—is now roughly $630 million. Projections indicate the county’s general fund will be about $60 million in the red next year and $20 million short in 2012.

That red ink is spilling mostly onto the desk of King County Sheriff Sue Rahr, who has warned that 12 percent across-the-board cuts—which are expected without the appearance of more tax revenue—would force her to send layoff notices to 40 of her approximately 700 deputies sometime in September and cause scores of reported property crimes to be ignored. Bruce Heller, presiding judge of King County Superior Court, says criminal justice agencies took a 1 percent cut last year and an 11 percent reduction the year before. The county’s District Court, meanwhile, may have to eliminate caseworker supervision for many offenders.

 “It’s not exactly like we’re starting out from a situation where we had excess fat,” Heller told council members. “It is not enough to say you support public safety. Your responsibility is to provide the resources so that the system can function.”

 But there’s a significant number of people in King County who object to what they deem public safety scare tactics. They think local government is profligate and needs to adjust budgets accordingly.
 Both sides have a point.

 About 76 percent of the county’s general fund goes to labor costs. County workers recently received cost-of-living bumps that exceed the rate of inflation. (By agreement, those workers have been guaranteed at least a minimum 2 percent annual raise.) Since 2004, the national inflation rate has averaged 2.6 percent, but during that time the overall county payroll has increased by an average of 5 percent a year, according to data provided by the county. And the Sheriff’s Office, under a deal negotiated by former County Executive Ron Sims, has one of the county’s most generous arrangements. Deputies will get a 5 percent annual raise this year, next year and in 2012. Overall, about 1,200 of the county’s 13,500 workers make more than $100,000 a year, many because they work overtime.

 Like many employers, King County is also plagued by rising health care costs. Since 2004, the per-employee costs for health benefits have gone up 58 percent, reflecting an average increase of 9.6 percent a year, much higher than other employers have experienced. The county’s situation is exacerbated by the higher average age of county workers and the fact that more family members are on county workers’ plans compared with other employers. But county leaders have so far been reluctant to change a deal that infuriates many: Except for doctor-visit co-pays, the county pays the entire tab for monthly insurance premiums for its employees—and will continue doing so through 2012.

 But it’s not as if the county hasn’t been making painful cuts. Officials have pared $150 million in general fund spending over the past two years and have eliminated more than 300 positions. County leaders have tried to protect public safety programs—to the detriment of everything else. (Public safety spending takes $3 out of every $4 the county spends.)

The situation is so bad that even if the council asks voters in November for more tax money—and voters say yes, which is far from certain—the proposals being discussed wouldn’t solve the problem. At most, the possible sales-tax plan would bring in roughly $37 million next year. Even with the new tax revenue, millions in cuts would still be necessary. And some proposals being discussed would reduce previously approved levies—such as money for parks—to try to blunt the impact on taxpayers.

 Another way to look at it: Things are so bad, the county could eliminate all employee benefits and save only $57 million a year, meaning there would still be a deficit if there wasn’t new tax money coming in. If the county cut wages by 10 percent, that would save  $32 million annually—less than half the projected shortfall.

 Constantine and his deputy, Fred Jarrett, are talking with labor leaders to try to find savings. Both are loath to negotiate in public, but by all accounts they appear to be making progress. However, their lack of specificity in the run-up to the County Council votes on tax increases was maddening to some council members.

Meanwhile, organizations that help the needy, and that rely on some funding from the county, worry and wait. Kelsey Beck of Food Lifeline, a nonprofit that provides food and meals to the needy in western Washington, says her organization is struggling mightily after losing county assistance. Over the past several years, Food Lifeline received between $115,000 and $215,000 each year from the county. “Food Lifeline’s funding to help put food on the shelves of food banks, meal programs and shelters across the county has been reduced and reduced, and was finally eliminated for the 2010 budget,” Beck says. “At four meals for every dollar, that’s a lot of food that’s really needed while unemployment stays high.”

Beck has seen what the cuts are doing to other social services—things like child care resources to help keep parents working and senior centers that also offer meals, as well as mental health programs. “Thankfully, a few human services that have cross-over with criminal justice, like domestic violence and sexual assault services, were still funded this year [by the county]….But it definitely doesn’t cover the gamut of services that are needed for healthy communities.”

Chris Vance, a former state legislator, an eight-year member of the King County Council and one-time head of the state Republican Party, says King County government has essentially gone from prince to pauper. When he was on the council, Vance says, the county was experiencing about a 6 percent annual increase in property tax revenue. That’s now down to about 1 percent, thanks to voter-approved tax-limiting measures. And the county’s other main source of revenue—the sales tax—is depressed because of the economic recession. “Those two things together have hit the county budget even harder [than other governments]—much harder,” Vance says. “I never had to face this.”

Vance, now a public affairs consultant (who lobbies on behalf of King County Jail guards, trying to preserve their salaries and benefits), expects some tax measure will be put before voters in November to try to preserve public safety programs. But the county’s ability to do much of anything else is in question.
Says Vance: “We’re seeing almost the disintegration of county services.”

The county is tasked with providing police and other services to rural and unincorporated urban areas that tend to be less affluent—places with a low tax base that are expensive to care for. County leaders hope nearby cities will annex many of these areas, where nearly 200,000 people live. But cities face tight budgets, too, and they’re reluctant to take on more public service responsibilities. So, until the economy actually rebounds, it appears a lot of people in King County will have to learn to live with less.

Originally published in August 2010