Revenue focus of city's priorities in 2003 Legislature

With a projected shortfall of at least $19 million in the 2003-2004 city budget, the focus of Tacoma’s efforts in Olympia next year will be revenue, with an eye toward protecting municipal services and vital infrastructure, as well as the enhancement of economic development.

That was the gist of a presentation at yesterday’s City Council study session by Government Relations Officer Randy Lewis on Tacoma’s priorities for the 2003 Washington State Legislature.

The City Council sets priorities annually and adopts them formally as resolutions.

Changes in state law often impact local government’s ability to provide core services, Lewis noted.

He provided City Council members with a February 2002 report by the Washington State Department of Revenue detailing a study of the state’s tax structure and how that effects local revenues.

According to the report, sales tax reductions since the 1970s have reduced local revenues by about $600 million.

The report also states that city, county and transportation losses due to Initiative 695, the repeal of the Motor Vehicle Excise Tax (MVET), cost $779 million in the 1999-01 biennium.

City and county losses attributed to Initiative 747, the limit on property taxes, for the year 2002 total over $36 million, the report stated.

Tacoma’s $334 million general fund, the money that pays for basic city services, took a $12 million hit due to the impacts of initiatives 695 and 747.

“The need is real in counties and cities,” Lewis said. “We get leverage on the Legislature when working together.”

Toward that goal, Tacoma is working with the county and other cities and their respective associations to support a package of local option taxes to replace at least some of the money lost to those two initiatives.

Lewis described it as a “menu” approach in which cities and counties can choose one or more tax options to place before voters to meet local needs.

For example, the Tri-Association – made up of the Association of Washington Cities, Washington Association of County Officials and Washington State Association of Counties – has presented proposals for additional sales, utility and property taxes, all subject to voter approval.

Tacoma and Pierce County have come up with similar revenue package options, where additional authority would be granted by the Legislature, including increases in sales and utility taxes that would have to be approved countywide by voters, as well as an increase in property taxes, subject to the 1 percent growth lid of Initiative 747 and citywide voter approval.

“This is a local proposal,” Lewis said of the county and city’s draft. “We don’t think it hurts to have local options in front of the Legislature.”

Stressing the importance of working with other cities and counties, Lewis said although the draft originally started out including just Pierce County and Tacoma, ideas and proposals are being circulated between cities.

“We’re still working on this,” he said. “We would like it to be available when the Legislature convenes in January.”

Multi-year excess levies, removing the 60 percent super-majority requirement for local government and school bonds and levies, and opposition to legislation restricting or limiting existing revenue, as well as opposition to unfunded mandates are high on the city’s list when the Legislature meets.

The city will also look to support street user fees for the maintenance and enhancement of arterials and streets.

Tacoma is also looking to establish a tax increment financing mechanism to enhance economic development.

With the state facing its own budget crisis in the form of a $2.5 billion shortfall, cuts in the state budget will have ripple effects on cities and communities throughout the state, including Tacoma.

“I don’t think it’s going to be a happy session,” Mayor Bill Baarsma noted near the end of the study session.