Guest Blogger - Remy Trupin
The Budget & Policy Center has lots of information on this issue in the form of a PowerPoint, one of our blog posts, or the paper we developed based on our powerpoint. They all can be found on our website or blog: http://www.budgetandpolicy.org/
This is our preliminary analysis of Initiative 1033, a ballot initiative filed by Tim Eyman for the November 2009 ballot. It is for educational purposes only and does not constitute an organizational position on the initiative.
The basics. Initiative 1033 limits the total growth in revenue each year for state, county, and city general funds. If total revenue (including taxes and fees) for a state or local government grows more quickly than the prescribed limit, property taxes would automatically be reduced. Revenue raised in binding public votes would be exempt.
The key problems with this approach are:
1. It limits the growth in revenue to inflation plus population growth. This limit does not account for the natural increase in the cost of government, which rises faster than inflation in general in part because the services provided by government (particularly health care) have higher-than-average inflation rates.
2. This measure would severely limit the ability of state and local government to make expanded long-term investments in education, transportation, health care, and economic security.
3. During periods of recession, revenue can fall sharply because of decreased economic activity (as we are currently experiencing). The measure would limit the ability of government to return to the previous revenue level because the base would be reset. Because this measure would be enacted during the worst fiscal crisis in memory, this provision would be particularly damaging.
4. Property taxes already have strict limitations on growth and levels. The result of these has been particularly hard on local governments, who have limited ability to raise other taxes.
5. Shifting from the property tax to other tax sources makes our tax system less stable because property taxes are one of the least volatile revenue sources we have.
Similar measures have been disastrous elsewhere. The “Tax-payer Bill of Rights” (TABOR) passed in Colorado in 1992 is a case-study of this type of poor fiscal policy. TABOR amended the state constitution to restrict revenue and expenditure growth to the sum of inflation plus population change and require voter approval to override the revenue or spending limits.
In Colorado, TABOR resulted in far reaching negative consequences including large increases in the number of children who are uninsured (ranking last in the nation in that measure), dropping higher education and K-12 funding so significantly that they now rank as the 49th and 48thlowest state investing in the respective areas. In 2005, voters in Colorado responded to the deterioration of their public structures by suspending the TABOR for 5 years.
What are your thoughts on this Initiative?
About our Guest Blogger:
Remy Trupin is the founding executive director of the Budget & Policy Center. He directs the activities of the Budget & Policy Center with a focus on strategic direction, external connections and state budget analysis. Remy has worked at the federal and state levels for foundations and funders, produced research and conducted direct lobbying.
The Washington State Budget & Policy Center provides credible, independent and accessible information and analyses of state fiscal issues including both revenue and spending policies, with particular attention to the impacts on low and moderate-income persons. Their products inform state fiscal and budget policy debates and contribute to sound decisions that improve the well-being of individuals, communities and the state as a whole.
I-1033 in good times is a freeze on government services and in bad economic times, usually when public help is greatly needed, it acts to permanently reduce government programs.
ReplyDeleteThe reason for this is that because the government's revenue(in I-1033 this includes cities, counties and the state) in good times can only increase to take into account inflation and population growth. At best it can only keep funding existing programs adjusted for inflation increased costs and added needs due to population growth. An added problem is that many government programs, like increased medicaid funding by the state as more people enter this program, can't keep pace because I-1033 doesn't take this into account. The state has the same number of people so no population increase is allowed for this change, just more are elderly because of the baby boom.
In bad times I-1033 results in further cuts to services over the long haul because each year's spending limit ratchets down based on the previous year's level. So even when the economy improves, spending the next year can not return to its level prior to a recession, it can only increase the amount of inflation and population growth.
I-1033 is intended to reduce government services and cut government help to citizens. It is not meant to "control" spending but to reduce government permanently as desired by libertarians and right wing tax cutters that can find no good in government.
This approach was tried in Colorado and was known as TABOR - the Taxpayers Bill of Rights. It resulted in drastic cuts in government services. Teacher pay for example was cut to be one of the lowest in the nation.
I-1033 is not needed. Washington State actually ranks 35th (with 1 being the highest) in terms of state and local tax burden according to the national conservative Tax Foundation. We also rank eigthth highest in terms of income per capita.
Eyman's I-1033 will remove local control of budgets and spending and will cut social services and other government programs that make our state a great place to live. Vote No on I-1033 this November 3rd and urge your friends and family to do so also.