WE CAN DO BETTER
On Tuesday, December 4, the Redmond City Council passed a budget for 2013
through 2014. The administration says the budget “is reduced to take into
account the continued lack of service demand in development review [and other
items]” is a 4% increase over the current budget. The budget includes a 1%
property tax increase even though we will have a $10 million surplus at the end
of 2012 (the 1% increase is worth about $450,000 over the next two years). As
the two dissenting votes on the budget, we want the residents of Redmond to know
that the city can do better.
BUDGETTING BY PRIORITIES
In 2008, we adopted a process called Budgeting by Priorities, a technique
designed to fund the highest priority services first, with
input from the public. It was proposed by the authors of the book “The Price of
Government” as a method to counter unsustainable growth in government taxes and
fees. Essentially we establish a revenue prediction, and go through the various
services in priority order until we run out of money. This is not a stand-alone
process, however. Central to the premise of the book is that there is an
acceptable price for each level of government that citizens are willing to
support. Get above that level and taxpayers react negatively by rejecting tax
levies, supporting restrictions on raising taxes (58% of Redmond voters
supported I-1185), and even electing candidates who promise to be more fiscally
responsible.
HOW DOES REDMOND STACK UP?
On the one hand, the price of government as a percentage of the total income
base in Redmond is going down. One the other hand, the reason is because we
have increased the population density in Redmond so that the total income base
has gone up faster than the cost of government services. This is true for all
eastside cities. Redmond even has a policy of encouraging this by creating high
density development in downtown and Overlake. This is why high income density
communities such as Clyde Hill, Hunts Point, Medina and Yarrow Point have costs
of government half of Redmond levels.
On the third hand (economists always need at least three hands), how do we
compare to similar cities in our area? As a group, the cities of Redmond,
Bellevue, Kirkland and Issaquah spend about 4.7% of residents’ total income for
all services including water, sewer and storm water utilities. For Redmond, the
cost of these services is 6% higher at 4.98%. Woodinville and Sammamish don’t
provide the same utility services, but we can compare the cost of basic
government services for these cities as well. For the six largest eastside
cities, the population weighted price of basic municipal government is 2.83%.
For Redmond, it is 14.5% higher at 3.27%.
Mayor Marchione has said that it is an improper use of the Price of
Government tool to compare relative costs of neighboring cities. That is like
saying that it is improper to compare new car prices in Bellevue with car prices
at Kirkland dealers, or wrong to compare grocery prices at QFC in Redmond to
those at QFC in Sammamish. All six neighboring cities share the same labor
pool, cost of living, topography and service expectations. All six cities
provide high levels of basic municipal services and enjoy similarly high
satisfaction ratings by residents. Probably the most directly comparable city
to Redmond is Kirkland, yet our cost of municipal government including utilities
is 31% higher than Kirkland and the price of basic government excluding
utilities is 16% higher in Redmond. All cost data come from the Washington
State Auditor for the same categories of costs, while population and income data
are from the U.S. Census Bureau for 2011.
RHETORIC VS DATA
Two arguments were raised to support raising property taxes to the legal
maximum. First, it costs something to maintain any new capital project we
build. We all understand this. Whether it is a house or a car or a lawn mower,
anything we buy will generate ongoing maintenance costs. When we look at the
data provided by the administration, it is amazing how
little it will cost to maintain our
proposed projects. The Mayor’s projected ongoing costs related to the proposed
new capital projects is 0.65% per year. For every $100 we spend on capital, it
will cost us 65 cents a year in ongoing costs. Anyone who has ever owned an
Audi or a Fiat can tell you what a bargain that is. This argument also
overlooks that the purpose of these capital projects is to encourage and
accommodate new development, which in turn generates new taxes at an even higher
rate than the current tax base. We won’t be paying those new ongoing costs from
the current tax base, but from a significantly larger one.
The second argument for raising taxes is concern about possible shortfalls in
future years. This argument has been used every budget for the last three
budget cycles, and yet each biennium our surpluses have increased. If we had
not taken any property tax increases in the last six years, our current budget
surplus would be “only” $8.5 million, or over 5% of the current basic budget.
These rhetorical arguments are contradicted by any data analysis of possible
effects.
WE CAN DO MUCH BETTER
Proponents of higher taxes argue that the increase isn’t really very much.
We ask, are they even necessary? As a government, we should not be taking any
more money from our residents than we need in order to operate our services
honestly and efficiently. We know any money that’s collected will be spent
because Governments don’t do profit sharing or pay dividends. In addition to
being more diligent about our cost of government, we need to have a higher
threshold for raising taxes than simple anxiety or rhetoric. Raising taxes
should be the last option, not the first.
David Carson
Hank Myers
Executive Constantine on Dec. 6 issued the first marriage license in King County to a same-sex couple – the first in the nation to be issued under a state law enacted directly by voters. “Tonight you are making history,” he said at a special midnight ceremony.
At the permit counter of the new Snoqualmie offices for the renamed King County Department of Permitting and Environmental Review.
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