Citizenry’s Power of the Purse Strings Is Raising Alarm Bells

The question of whether Washington state residents would vote to slash their vehicle registration fee, ranked the highest in the nation, seemed a no-brainer. Just ask any voter faced with the choice of paying either $732 a year or a flat 30 bucks.

Perhaps the only surprising thing, say government officials who outspent supporters, 10 to 1, in trying to defeat the tax cut, is that just 58% of the voters said yes.

The ramifications of the vote earlier this month are only now becoming clear--because Initiative 695 included not only the excise tax rollback but also a provision for voter control over future tax increases that is more stringent than any adopted in two decades of American tax revolt.

For the first time, citizens have the authority to approve all future state and local government fee hikes as well as tax increases.

Local officials statewide fear that could mean going to the ballot box every time a city wants to raise the price of library fines, school lunches or garbage collection.

For the state, which will dole out half of Washington’s $1-billion budget surplus this year to cities and counties savaged by the tax measure, it means legislators can forget about imposing a sales tax increase or an income tax to make up for the $743 million a year in lost revenue.

No other state has gone as far in handing day-to-day control of the purse strings over to the citizenry. Colorado voters in 1992 gave themselves the power to approve tax increases, and Missouri requires voter consent on hikes in taxes and fees, but only if they amount to $50 million or more. Half a dozen or more states, including California, have rolled back vehicle registration taxes.

But Washington could be the only state going hat-in-hand to the public when it wants to raise the price of admission at the county fair.

Local governments are preparing the first in what will likely be a barrage of lawsuits challenging the constitutionality of Initiative 695 and seeking guidance from the courts on how much, or how little, it applies to.

But increasingly, the talk in Washington is not of undoing but of making do.

Democratic Gov. Gary Locke has pledged to implement the initiative. And other elected leaders say what they are witnessing is not an old-fashioned, conservative tax rebellion but an increasing assertiveness by an informed electorate determined to play a stronger role in government.

“This is not about taking power away from the Legislature but a way to govern in the next century,” said Democratic state Rep. Frank Chopp of Seattle.

“With the new technology that’s emerging all across the world, but particularly in Washington state, there’s a very natural desire of folks to make sure that they’re included in the government,” Chopp said.

Mystery of Financing Said to Be Easing

“I think much of the mystery of government financing has been stripped away over the past 10 years, primarily because people are becoming savvy consumers,” added Pete Sepp of the National Taxpayers Union.

“Mutual funds are no longer solely the province of brokers; computers and the Internet are no longer the playthings of math majors. We’re all becoming more comfortable with investments, with values for our money, and the voters themselves appear to be more capable than elected officials have been giving them credit for in deciding what they can afford,” Sepp said.

Tim Eyman, the 33-year-old watch salesman who ran the Yes on 695 campaign out of his garage in Mukilteo, Wash., said the measure sold itself in a state with the nation’s sixth-highest overall tax burden.

“You never had to convince people that taxes were out of control. All they wanted to know was what do you have that’s better. Once the initiative was written and filed, I believe a monkey could have run this campaign and won,” Eyman said.

He downplayed predictions of dire cuts in government services and insisted that it’s the job of elected officials to make tough decisions on spending the money taxpayers give them. “Just the fact that the sun rose on Nov. 3 [the day after the election] exceeded the expectations that were set up by the opponents,” he said.

The measure will hit hardest in dozens of small, rural cities without substantial sales tax revenue, towns that depend on state excise taxes to fund the basics: police, fire and health services.

For example, the town of Bridgeport, in the apple-growing region of central Washington, will lose 47% of its general fund and stands to go broke in two years unless some relief is found.

First to go will be police services. Mayor Steve Jenkins said the community likely will cancel its contract with the county and will rely more on retirees on volunteer patrols. Bridgeport also has drafted a student to join the City Council in the hope of coming up with innovative ideas to run the city with no money.

“If it gets to the point where we have no funds left and we put it to a vote for disincorporation, what happens if they [the voters] choose not to?” Jenkins worries. “Where do we go? Because we’ll be bankrupt in two years.”

Major cuts in public transit and road-building projects--traditionally funded out of car tag revenues--are almost assured statewide. The Washington state ferry system, which stands to lose $52 million a year, immediately mothballed its expensive new passenger-only ferries and said it would adopt major service cutbacks on many tourist and commuter runs.

In the Seattle area--No. 3 in the nation in traffic congestion--the bus service likely will be rolled back by one-third to 1984 levels. King County officials also plan $10.5 million in public health cuts as part of an overall budget reduction that could total $127.7 million a year by 2001.

Across the state, there is plenty of finger-pointing to go around--much of it directed at Locke. While the governor campaigned vigorously against Initiative 695, he is being criticized for failing to provide a concrete alternative to the car-tag tax, which was 2.2% of the vehicle’s value. The average cost to a two-car family was nearly $300 a year.

Before this year, the tax in California had been 2%. Then-Gov. Pete Wilson’s administration rolled it back 25%, effective last January. To waylay any more voter restiveness this year, Gov. Gray Davis unilaterally rolled back the vehicle registration tax 10% more, effective Jan. 1, 2000. The new rate will be 1.3%. Now that Washington voters have spoken, Locke has emphasized the need to bail out local governments and maintain funding for public health and transit programs to the degree possible. But the state Republican Party, which backed Initiative 695, has pledged to fight Locke over any use of the surplus.

“Our state government has been growing much faster than the private economy in terms of the size of the budget, and last year we added 5,500 new state employees. When you combine that with the fact that the car tax is the highest in the nation in gross dollars, you have what they’re calling a Washington Tea Party,” said state GOP Chairman Dale Foreman.

Colorado Voters Still Back Most Tax Hikes

Colorado’s experience since 1992 shows that voters have granted the majority of tax increases sought by local government, and there is no reason to think Washington would be any different, Foreman said.

“Lawmakers will be less likely to bring little tax increases before the voters, but when they do, they will be very well prepared and they will have justification,” he said. “The sky’s not falling. You will continue to operate your government; it will just make politicians think twice before proposing tax increases.”

Many cities are rushing forward with tax and fee hikes now, hoping to beat the Jan. 1 deadline when the measure takes effect. Citizens are doing the same. Hundreds have stopped payment on checks for license tag renewals due in November and January, and many others are crossing out the amount due on their registration bills and sending in checks for $30.

The response from the state comes back quickly: Pay up or else.