Council briefed on impact of I-1033

Initiative 1033 is raising alarm among local government officials across the state. The state Office of Financial Management released a statement on I-1033 in August that said that if passed, it would result in a reduction of $8.7 billion to state, county and city general fund revenues through 2015.

Tacoma City Council was briefed on the impacts the passage of the initiative could have on city government during its Oct. 27 study session.

Bob Biles, the city’s finance director, gave a summary of I-1033, which is co-sponsored by Tim Eyman.

It aims to limit the growth of government to inflation, as measured by the implicit price deflator (IPD), plus population growth. Additional revenues a local government takes in over the limit the initiative would impose must be used to reduce property taxes in the following year.

It does allow for voter-approved increases, such as school levies.

Revenues in the city’s General Fund are estimated at $195.2 million for 2009. They were $206.2 million in 2007. According to the information Biles provided, it would be 2012 before the General Fund revenues returned to 2007 levels, factoring in the IPD and population growth, which in Tacoma has been .7 percent a year for the past five years.

Previous levies approved by voters, such as was done for the bonds that paid for the new police headquarters, would be subject to the revenue growth limit, as would tax revenue from properties coming off tax abatement. A number of condominium and apartment buildings in Tacoma have received a 10-year tax abatement.

Councilmember Mike Lonergan noted that levies for libraries and street repairs could face the brunt of the reductions I-1033 would impose.

City Manager Eric Anderson said there is much confusion and a lack of clarity regarding the initiative. “A lot of interpretation will be needed before we know what it means.”

Victoria Lincoln, legislative and policy advocate for Association of Washington Cities (AWC), was at the meeting as part of the organization’s effort to educate local government officials about the initiative. She noted AWC has not taken a stance on I-1033 because its legal status to take such stands is being challenged. A court decision on that will not happen until next year.

Should it pass, Lincoln said the city may have to make assumptions in planning budgets that may be inaccurate, as I-1033’s impact will not be fully realized until next fall. It would serve as a disincentive for cities to annex land, she added.

She was unable to provide answers to several questions, an indication of the ambiguity of the initiative. “We are learning as we go forward,” Lincoln said.

Current polls show voters evenly split on I-1033. Earlier polls showed it with above 50 percent approval. “I think people are taking a closer look at it,” Lincoln observed.

Mayor Bill Baarsma said approval was running two to one at one point. “The fact the gap is closing is an interesting observation,” he said. “People are considering the effect it will have on all levels of government.”

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