King County's
budget is its spending plan -- its blueprint --
for providing vital services to our 1.7 million
residents. The law makes it very clear that county
budgets must balance. None of us can spend more
than we have. King County is no different.
In October, I sent a budget to the County Council
that addressed those vital services. It was balanced,
fiscally responsible and tied county property
tax-supported spending to the rate of inflation
(2.6 percent this year.) This budget was lower
than the council's financial plan. Under my administration,
I have lowered property tax rates each year. In
fact, I continue to be willing to adopt a new
budget with an even lower property tax rate of
2 percent.
But the County Council adopted a budget earlier
this month that was $54 million out of balance.
I was required by law to veto it, which I did
earlier this week. I did so because the council
had not only spent more than they had, they made
mistakes in how they calculated the regular property
tax levy and emergency medical services property
tax levy. This would have resulted in cuts to
Medic One, parks, human services, public health
and put our public safety in jeopardy. In addition,
the council-approved budget was based on erroneous
assumptions about the number of unfilled positions
in county government. As a result, 87 positions
providing critical county services are eliminated
from the county's budget. These and other items
in their budget need to be addressed.
The decision to veto this badly out-of-balance
budget was not a decision I made alone. I heard
from other elected officials in King County, fire
district officials, various cities, the King County
Bar Association and the Trial Attorneys. Many
diverse constituencies and residents requested
I veto this budget. The Prosecuting Attorney,
District and Superior Court judges, the Sheriff
and the County Assessor requested I veto the council
budget.
The cities of Bellevue, Seattle and the City
of Renton requested a veto because, as Renton
Mayor Jesse Tanner wrote, ``the budget seems to
create more problems than it attempts to solve.''
I have had teachers contact me regarding the ``quality
programs the parks department offers to supplement
existing programs and provides hands-on experiential
learning opportunities.''
The King County Agriculture Commission opposed
this budget, and I had citizens ask me to ``please
veto the portion of the budget relating to the
Conservation Futures Fund, so that these appropriations
will be done in a fair and orderly manner.
Childcare providers and advocates urged a veto
because of cuts to Public Health Child Care. And
from our employees, I heard, ``It appears that
some of the council are indifferent to the safety
of staff members.''
Although some have tried to make this a debate
about Initiative 722, it is not now, nor has it
ever been, a factor in this budget. Even though
the court has enjoined that measure, 722 has always
been totally irrelevant to this budget discussion.
Nov. 8, the day after the election, I notified
the council that the most prudent course of action
was to continue as if the courts would deal with
this measure. We had also issued a plan to implement
it if the court directed us to do so. The court
has enjoined this measure, as most cities and
counties statewide had assumed it would.
Now, it is time to have the council return and
build with all Council members and the executive
a collaborative, bipartisan budget that is fiscally
responsible, balanced and that meets the needs
of our citizens.
Since I have been King County executive, balanced
budgets have been created with the council through
a cooperative, bipartisan effort that took into
account different philosophies and goals. Last
year, Council members Jane Hague and Greg Nickels
were able to successfully address Initiative 695's
potentially devastating impact and work with the
executive branch and all their Council colleagues
to develop a spending plan that received the support
of 11 Council members.
As budget chair in 1997, Councilman Chris Vance
received the unanimous support of all 12 of his
colleagues and the County executive for the council's
budget. King County does not have a history of
dissension between the County executive and the
County Council on matters as serious as our fiscal
integrity. I look to Council Chair Pete von Reichbauer
and others in his caucus for leadership.
We will now begin the process of fixing the budget
and doing it in an open, collaborative and bipartisan
manner. During my term as King County executive,
my staff and I have demonstrated that we are capable
of doing the work necessary to collaborate across
party lines, make tough decisions and work with
colleagues to build a consensus budget. And that
will continue.
To complete a final budget as expediently as
possible, I directed my staff and departments
to carefully review this budget. A detailed analysis
resulting from this review is available on our
Web page and provides additional reasons for my
veto. here are some items, however, that will
be nonnegotiable.
First, the budget must be balanced and it must
not imperil any critical county service. The Council
Budget Chair's decision not to use the state Department
of Revenue's recommended methodology in the property
tax levy for the Current Expense (CX) general
fund and Emergency Medical Services (EMS), resulted
in a $5.7 million general fund budget shortfall
and a $1.1 million emergency medical services
revenue shortfall. As a result, revenues were
less than expenditures in the budget. This major
policy decision regarding calculation methodology
was never before the council for debate or decision.
The impact of the council's decision to calculate
a lower property tax means that the county and
cities and fire districts in your community will
have to cut critical public services in order
to reduce spending levels to match the lower revenue
levels approved by the council. This error in
calculation must be corrected and the lost revenue
from excluding tax collection on 2000 new construction
must be restored to ensure both our general fund
and Medic One budgets are in balance as required
by law.
Further, I will not allow the county's budget
to be balanced at the expense of our employees.
They work hard to provide critical services to
the people of this county, and I will not jeopardize
our standing as a premier employer, attracting
and retaining the best employee talent in the
region. The council budget ``cuts'' 87 vacancies
that do not exist. The report the council used
to identify vacancies is one not intended to represent
up to date county vacancy information. This must
be rectified.
It is, however, unlikely that I will implement
a reinstatement of the overnight booking at the
Regional Justice Center. While public safety is
a critical priority, it is being addressed with
the solution we arrived at last year when Initiative
695 made us look at reductions in services. Offenders
are being booked at the Kent jail and since that
resolution is working, we will spend the funds
that might have gone back into this shift on other
more pressing public safety needs.
But now it is time to work together. There are
several other items that need to be addressed,
and they will be the subjects of an open, honest
give-and-take as we determine the county's blueprint
for next year and beyond. I have invited all King
County Council members to join me in a renewed
effort to meet King County's challenges by developing
a balanced budget. The budget needs to pay for
and provide services to King County residents.
We need to resolve the outstanding issues outlined
above and adopt a balanced spending plan that
best serves County residents.
How to Balance a Budget:
1.) An Enforceable Legislative Balanced-Budget
Requirement
Don't wait for a balanced-budget amendment. Act
now. The most urgent reform for this Congress
to undertake is passage of a balanced-budget law
that enforces the deficit targets established
in the House budget resolution.
What I have in mind is a new Gramm-Rudman-Hollings
formula that establishes iron-clad enforceable
deficit targets. One of the great myths in Washington
is that Gramm-Rudman was repealed because it wasn't
working. The pro-spending constituencies in Congress
repealed gramm-Rudman precisely because it was
working too well.
Gramm-Rudman was enacted in 1985, when Congress
was under intense public pressure to immediately
reform the budget and reduce the $200 billion
budget deficit. The controversial law required
Congress to balance the budget by 1991 by meeting
a series of annual deficit reduction targets.
If Congress missed those targets, the law would
trigger automatic spending cuts--a process called
"sequestration"--to reduce the deficit
to the mandated level.
Critics charge that the act was a dismal failure
because Congress continually veered off the balanced-budget
track. It is true that Congress routinely missed
the deficit targets. Actual deficits under Gramm-Rudman
were, on average, about $30 billion per year above
maximum deficit targets.
Still, Gramm-Rudman had a positive effect on
the federal budget. The best way to measure its
impact is to compare the actual deficits recorded
during the five years the act was in effect with
what the deficit was projected to be by the Congressional
Budget Office without Gramm-Rudman. The 1989 deficit
was about $100 billion lower than had been expected
in 1985 without Gramm-Rudman. The deficit fell
from 6 to 3 percent of GDP under Gramm-Rudman.
The most dramatic effect of Gramm-Rudman was
to curb government expenditures. Government spending
in the five years before the act grew at a rate
of 8.7 percent, but it slowed to only 3.2 percent
in the five years Gramm-Rudman was in effect.
Even entitlement spending was curtailed under
Gramm-Rudman to a 5 percent growth rate, because
Congress realized that if it allowed programs
like Medicare and Medicaid to rise uncontrollably,
that would eat up the rest of the budget and cause
painful automatic cuts in discretionary spending.
Sen. Phil Gramm (R-Tex.) and House Majority Leader
Dick Armey have introduced legislation to restore
many of the features of Gramm-Rudman. The most
vital reform is a series of deficit reduction
targets that, if missed, would trigger automatic
across-the-board spending cuts--a sequester. I
would urge that any new sequester process include
all federal outlays except interest payments and
Social Security benefits. That would impose a
much-needed dose of discipline on the budget process.
2.) A Supermajority Requirement to Raise Taxes
Americans have been hit with 12 tax hikes in the
past 20 years; each one has succeeded in further
expanding the size of government rather than reducing
the debt. Requiring a three-fifths or two-thirds
majority in both the House and the Senate to pass
a tax increase would allow Congress to pass tax
hikes in cases of national emergency but would
make it very difficult for Uncle Sam to continue
the annual ritual of peacetime tax hikes. Several
states, including Arizona, California, and Oklahoma,
have enacted such measures; they have stopped
tax increases dead in their tracks. As one Arizona
taxpayer advocate of the supermajority requirement
recently told me, "Now the legislature doesn't
even bother to propose new taxes."
3.) National Referendum on All Tax Increases
Another populist budget reform that is sweeping
the states is the requirement that any tax increase
be ratified by a popular vote of the people in
the next election. That gives the taxpayers veto
power over the state legislature's efforts to
raise taxes. Congress, too, should be forced to
take its case to the people when it wants to take
more dollars out of our paychecks. It is a virtual
certainty that George Bush and Bill Clinton's
wildly unpopular record tax increases would have
been blocked if such a rule had been in effect.
4.) Dynamic Scoring of Tax Law Changes
The 1986 capital gains tax rate increase has raised
roughly $100 billion less revenue than the Joint
Tax Committee estimated when the law was passed.
Capital gains realizations are less than half
the level expected, as shown in Figure 2. Why
such gigantic forecasting errors? Congress still
uses static analysis to score tax rate changes--that
is, it assumes little change in behavior in response
to tax changes and thus almost no overall economic
impact of new tax laws. The assumptions have been
shown time and again to be wrong. We know the
procedures are wrong, but we still use them.
The capital gains tax cut promised in the "Contract
with America" will almost certainly raise
revenues for the government--and it might raise
substantial new revenues. The rich will actually
pay more taxes with the rate cut. But the Joint
Tax Committee refuses to score those dynamic effects.
Scholars at the Cato Institute have long endorsed
a zero capital gains tax. But the static revenue
estimators say that will reduce revenues by $150
billion over five years. Dynamic estimates indicate
that a zero capital gains tax would so energize
our economy that total tax revenues might actually
increase. But as long as we are slaves to static
scoring, faulty computer models will torpedo pro-growth
tax initiatives.
5.) An End to Baseline Budgeting
A 4.5 percent increase in spending on the School
Lunch Program is a budget increase, not a budget
"cut." Baseline budgeting is a fraud.
Lee Iacocca once stated that if business used
baseline budgeting the way Congress does, "they'd
throw us in jail."
It's time to end the false and misleading advertising
in the budget. Congress should be required to
use this year's actual spending total as the baseline
for the next year's budget. If Congress spends
more next year than it did in the current year,
it is increasing the budget; if it spends less,
it is cutting it.
6.) A Statute of Limitation on All Spending Programs
It has been said that the closest thing to immortality
on this earth is a government program. Congress
doesn't know how to end programs--even years and
years after their missions have been accomplished.
A five-year sunset provision should apply to every
spending program in the budget--both entitlements
and discretionary programs. That would require
the true "reinvention" of programs by
forcing the reexamination of every program, including
entitlements, every five years.
7.) Debt Buy-Down Provision
This is Rep. Bob Walker's idea that would allow
taxpayers to dedicate up to 10 percent of their
income tax payments to retirement of the national
debt. Politicians earmark spending all the time.
Taxpayers should have the same right.
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