The table below uses the Department of Revenue Formula for estimating levied property taxes using the 106% limit of R-47. The formula assumes 8% growth per year in property valuation and the state wide average of 2.5% per year for new construction.

The table shows that I-747 could reduce property taxes by a factor of 7 by the year 2020. Yet government could collect 3.5% more per year from 2001 to 2020.

20 Year Predictions

Tax Limit factor Tax Revenue Tax increases ($100k valued in 2001)

------------------ ------------------- ------------------------------

101% (I-747) 92% (3.5%/yr) 24%

106% (R-47) 354% (8%/yr) 194% (8 times more than if I-747 is approved)

For each $100,000 (valued at 2001), the levied property tax could be 24% more in the year 2020 than was paid in 2001. Yet that same property could increase in value from $100,000 to $431,570 in 2020). If you sell this property in 2020 you could pay $7,682 in real estate excise tax.

Without I-747 State and local government could collect 354% more in taxes in the year 2020 than in 2001. Without I-747 your taxes could be 8 times more in 2020 than in 2001.

The bottom line is that I-747 will stop skyrocketing property taxes while providing adequate revenue to provide essential services. If more tax revenue is needed by government, they must obtain voter approval.

This example illustrates the effect of compounding interest. As L. Tom Perry has said: "Them that understand compound interest collect it and them that don't pay it!"

-- Monte Benham (rmonteb@aol.com), January 31, 2001

Answers

Monte: You write: "The table below...".

I must be missing something. I don't see a table.

In any case, I-747 will move us toward a fee-based society. In response to limited taxes, governmental entities will have no choice but to raise fees, or, as you suggest, "If more tax revenue is needed by government, they must obtain voter approval."

But, if the voters vote down the tax, then raising fees is the only alternative. This is not necessarily a bad thing, although it could create an undue burden for seniors and low-income families. However, I'm confident that any social injustice will be corrected by the voters.

I still think I'd feel a little better about I-747 if the limit were 2% instead of 1%.

-- Matthew M. Warren (mattinsky@msn.com), January 31, 2001.

Sorry for the formating problem. I hope this corrects it.

20 Year Predictions (using DOR Formula)

Tax Limit Factor_____Tax Revenue_____Tax increas ($100K valued 2001)

101% or I-747 _______92% (3.5%/Yr)___24%

106% or R-47 _______354% (8%/Yr) ___194% (8 times more than for I-747)

Under the R-47 law Our elected officials (except the state) could choose to raise taxes by 1% per year and still take new construction for a total of 3.5% per year. Rather many of them have taken the full 6% plus new construction. I-747 merely requires them to take up to 1% (plus new construction which for the state average is 2.5%). Anything more requires voter approval with I-747.

Those with the "Slave Mentality" say we can't do this or our masters will punish us by raising taxes or fees in other areas. My answer is "if they do we will (the voters) correct their excesses with more initiatives.

I recall Patrick Henery said: "Give me Liberty or give me Death!" We fought a revolution over a government out of control raising taxes on it's people.

Those with the "Slave Mentality" will not trust the voter to approve taxes they feel are just. It's just that simple. Are we the Slaves of the Government or are the voters in control. Is this a government of the people, by the people, and for the people.

-- Monte Benham (rmonteb@aol.com), January 31, 2001.

Correction to the above posting.

All taxing districts subject to "Regular Taxes" can take up to the maximum limit factor increases PLUS new construction and the value of state assessed property. So under I-747 the state also gets new construction included in it's automatic levy.

Ports and Public Utility Districts are not subject to the limitations of "Regular Property taxes" or the provisions of I-747. RCW 84.04.140 gives the defination of "Regular Property taxes".

-- Monte Benham (rmonteb@aol.com), January 31, 2001.

Monte,

You are using fuzzy math again.

1. Your prediction does not factor in inflation at all. When you calculate using constant value dollars adjusted for inflation, an increase of 101%/year is a steady and dramatic REDUCTION in property tax revenue, and a reduction in the level of service that revenue will buy.

2. You have included new construction, as if that added money is just a bonus for the local government. In fact new construction results in new people and new buildings and new roads and new service demands on local government; that all need to be provided for with new tax revenue and new service capability. If a community doubles in population and number of homes and businesses over 20 years, do you really think they will not see a similar increase in the need for police officers, and firefighters and road workers, etc.? New construction is excluded from the property tax limit calculation for a reason. It ought to be excluded because the new property needs to pay for the additional services it requires.

3. Your assumption that these limits will hold is just false. I think I-747 will result in annual lid lift elections that will fill the voter pamphlet with unnecessary propositions, and most of them will pass. This initiative will create an obvious and severe need for approval of the lid lifts just to maintian current service levels. In fact, it is more likely that lid lifts greater than what would occur under current law will be approved, because governments will want to ask for all that is legal so they will not need to go back to the voters quite as soon, and voters will know that the need is clear and the justification is the reasonable result of this stupid initiative.

The result is, your predictions about how much property tax money this initiative will save is just smoke and mirrors. The only way it works is if everyone is content to go back to the level of services available in some third world village somewhere. That won't happen.

-- dbvz (dbvz@hotmail.com), January 31, 2001.

DB, I live in Eastern Washington, which is as close to the third world as you can get. We are getting along just fine with all these tax cuts. The cities services cannot go down , because there was never any here to begin with! I rumor I heard was maybe, just maybe, we might be getting electricity and indoor plumbing next year.

-- Rolex Hoffmann (rolex@innw.net), January 31, 2001.

dvbz:

There you go again dbvz!

Your doom and gloom predictions about the effects of loss of the MVET associated with I-695 were designed to scare those with the "slave mentality" If we have a tax cut our "masters will make things worse for us poor slaves".

The Washington Institute foundation just published the following artice showing that the sky didn't fall with the loss of the MVET and the sky won't fall with property tax releif.

Sorry for the formating problems. Call (206) 937-9691 or visit us on the web at www.wips.org to get a better copy of the article.

Monte Benham, cosponsor I-747

Initiative 695 One Year Later: The Sky Didn’t Fall by Paul Guppy and Brett Wilson

01-1

A little more than one year ago, the people of Washington overwhelmingly approved Tim Eyman’s Initiative 695, the “$30 License Tab Initiative.” At a stroke the voters repealed the Motor Vehicle Excise Tax (MVET) and replaced it with a flat $30 annual fee on private cars and trucks.

During the political campaign against Initiative 695, opponents made a number of specific predictions, all of them dire, of what would befall the state if the measure became law. Taken together these claims appeared so overblown that they amounted to a concerted effort to frighten people into voting against Initiative 695. Once their attempt had failed, opponents may be forgiven for hoping that their gloom-and-doom forecasts would be quickly forgotten.

A year later, however, we are in a position to coolly assess the actual outcome of Initiative 695. We see that the sky did not fall. The state and local governments have adjusted well to the revenue reduction and vital public services have not been disrupted. On the whole these programs have continued as before, and in many cases have been improved and expanded, since Initiative 695 passed. Nor has the measure seriously crimped public revenues, since overall spending by the state, counties and cities continues to rise.

The Washington Institute Policy Brief, “Initiative 695 One Year Later: The Sky Didn’t Fall,” examines opponents claims in detail and presents the actual outcome for each. We cannot list all our findings here, but the full Policy Brief can be found on our website at www.wips.org. All predictions in the study are direct quotes taken from “No on I-695” publications; they are paraphrased here.

Prediction: Funding would be lost for up to 1,000 police officers. Outcome: Most police departments have as many or more officers than a year ago. Also, the crime rate has dropped since Initiative 695 passed.

Prediction: The state Crime Lab would lose $2 million. Outcome: Funding for the Crime Lab has increased from $7.9 million to $8.4 million.

Prediction: More than 70,000 transportation jobs would be lost.

Outcome: The state has added 100 full-time transportation positions, while private sector transportation employment has increased by 3,000 jobs.

Prediction: Funding for traffic congestion and highway safety would be eliminated.

Outcome: In 2000 the state spent $139 million for highway safety and $349 million for traffic congestion relief. Also, traffic fatalities have dropped 8% since I-695 passed.

Prediction: Funding for basic county health services would end on January 1, 2000.

Outcome: County health services received an additional $11 million in 2000 and $22.1 million in 2001, to restore at least 90% of public health funds that previously came from MVET.

Prediction: Child immunization and flu shots will be cut.

Outcome: Nearly 2 million child immunizations were distributed in 2000, a rate consistent with previous years. Flu shots for the elderly are still widely available through public and private medical outlets.

Prediction: Restaurant and day care inspections will be cut. Outcome: State day care inspections increased from 341 to 375. The Washington Association of County Health Services reports that standards for restaurant inspections have been fully and consistently maintained.

Prediction: I-695 would jeopardize safety in Washington schools. Outcome: School safety has improved dramatically over the last ten years, especially in weapons brought to school and in gang-related incidents. School officials report the improving trend has not been disrupted by I-695.

Prediction: Spending on clean air programs would be cut by $17 million.

Outcome: By shifting budget priorities the legislature added $9.8 million to the air quality program to restore 90% of its previous funding. It was not cut by $17 million.

Prediction: I-695 would allow cars to be taxed as property. Outcome: Passage of Initiative 695 has not led to a property tax on cars.

Prediction: I-695 is a backdoor attack on the I-601 spending limits. Outcome: The spending limits remain in place, and have not been affected by passage of I-695.

Prediction: I-695 will lead to a state income tax. Outcome: The state does not have a state income tax, and the governor and the legislature show no signs of passing one.

Prediction: I-695 will harm the economy.

Outcome: Washington’s economy is still strong. Unemployment is steady at 4.7%, well below what economists once considered “full employment.” Inflation is about 2%.

Initiative 695 has been a successful tax-cutting policy. In the first year the measure has enabled Washington citizens to keep over $750 million of their own money, thus helping them to build better lives for themselves and their families. It has also contributed to the overall economic well- being of the state by partially easing Washington’s high tax burden and allowing more money to remain in the private sector to foster savings, investment and job growth.

Policymakers and the public can learn important lessons from our experience with Initiative 695. The measure’s success indicates that by setting clear budget priorities, state and local leaders can responded effectively to the people’s strong desire to ease the growth of the tax burden while maintaining essential government services.

The Washington Institute foundation is an independent, non-profit, 501 (c)(3) research and education organization. Call us at (206) 937-9691 or visit us on the web at www.wips.org.

-- Monte Benham (rmonteb@aol.com), February 01, 2001.

Well done, Monte. Well done.

-- Matthew M. Warren (mattinsky@msn.com), February 01, 2001.

to dbvz: There is no problem. Governmental agencies will raise a variety of fees to make up the shortfall. Or, services previously provided by the government will be provided by the private sector.

I don't see the harm in either case. What are the advantages of higher taxes over high fees? What are the advantages of bloated government over private companies competing for your business?

-- Matthew M. Warren (mattinsky@msn.com), February 01, 2001.

Monte,

First, many of the dire predictions about 695 were concerning the other part of the proposal that was never implented, so the comparison between prediction and result is a bogus issue. The $30 license fee was not the critical part of 695, as far as I was concerned, and it did not have the widespread effects that voter approval of everything would have had if that had been implemented as proposed. Those provisdions were not implemented, because they were unconstitutional.

Second, I am not predicting doom and gloom over 747; but rather that it is unnecessary and will create a lot of bad consequences. It can be offset by local lid lift elections, and it will be for the most part for the most important funding concerns. That still will produce long term planning problems due to funding uncertainty, and hiring and retention problems due to salary uncertainty. It is a bad idea.

Third, Matt Warren is just wrong about local goverments offsetting the property tax cut with tax and fee increases elsewhere, so it will be no problem. Those options do not exist for many local governments; including fire districts, school districts, library districts, regional EMS funding, etc. that are entirely dependant on the property tax. If you can't be honest in your information, be quiet.

-- dbvz (dbvz@hotmail.com), February 05, 2001.

to dbvz: You write: "Third, Matt Warren is just wrong about local goverments offsetting the property tax cut with tax and fee increases elsewhere, so it will be no problem. Those options do not exist for many local governments; including fire districts, school districts, library districts, regional EMS funding, etc. that are entirely dependant on the property tax. If you can't be honest in your information, be quiet."

Odd, when my wife delivered in the ambulance, we received a bill in the mail. But, according to you, fees do not exist for "regional EMS funding".

You know, dbvz, "if you can't be honest in your information, be quiet".

-- Matthew M. Warren (mattinsky@msn.com), February 06, 2001.

Matt,

You leave a lot out of your comment about the ambulance ride. Was that a public agency ambulance, or was it a private company? Does your local levy for regional EMS services fund only the "emergency" part of the incident, and not the non-emergency part after the patient has been bandaged and stabalized? Do you even have a local levy for regional EMS services? If you got a bill, it sounds like either the transport was a private company, or the public agency was providing what is commonly a private service for an additional fee, as a convenience for the community. Often ambulance services are very distant, because the private company can not make any money except in the highly urban areas due to lack of volumn. If the regional EMS funding was intended to provide funding for the non- emergency part of the incident (the ambulance transport), then you would not have been sent a bill.

-- dbvz (dbvz@hotmail.com), February 06, 2001.

volume

-- dbvz (dbvz@hotmail.com), February 06, 2001.

to dbvz: You ask: "Was that a public agency ambulance, or was it a private company?"

Sure seemed public to me. The ambulance was the big boxy kind, and it had a big logo with something like "Gig Harbor Fire Department". In addition to the ambulance, the Fire Department also sent a fire truck. Why? I don't know. My understanding is that the people who worked the ambulance, also work the fires, too. In fact, we visited our "heros" at the fire station.

You also ask: "Does your local levy for regional EMS services fund only the "emergency" part of the incident, and not the non-emergency part after the patient has been bandaged and stabalized? Do you even have a local levy for regional EMS services?"

Well, my property tax bill has an entry for EMS services. As to funding of the "emergency" part vs. the "non-emergency", I'll have to research that. Perhaps, because my wife actually delivered in the ambulance, the "emergency" was now ended, and the "non-emergency" began. Sounds pretty hokie to me. Your arguments seem to be getting weaker and more desperate all the time.

You also write: "If the regional EMS funding was intended to provide funding for the non-emergency part of the incident (the ambulance transport), then you would not have been sent a bill."

Again, I'll have to research the distinction between an emergency and a non-emergency. It sounds very silly to me. If there wasn't an emergency, then I would NOT have dialed 911. If the EMS portion of my property tax bill does not cover emergencies, then EMS must not be a critical need, and the community won't be too worse off if funding is phased out. You must mean that the EMS portion of the property tax only pays for the emergency part, not the non-emergency part.

The bill was around $500. If the baby had been delivered in our home, then the bill would've been higher, since 2 people would've been transported. But, since our son (Sir Speedy) was delivered enroute, the gods smiled on us, and we were only charged for a single passenger.

We recently had our son's birth certificate changed. We wanted it to say, "Mile Marker 10 on Hwy 16, Gig Harbor". But, all they do is say "Gig Harbor, enroute".

You're not really convincing me to vote against I-747. I think the best argument would be that 1% is just too low. 2% is a hellova lot more reasonable than 1%.

-- Matthew M. Warren (mattinsky@msn.com), February 07, 2001.

Matt wrote, "You're not really convincing me to vote against I-747. I think the best argument would be that 1% is just too low. 2% is a hellova lot more reasonable than 1%."

That I can agree with. My position is, if 1% is the wrong number, vote no.

As for emergency and non-emergency transports, I know a little about this. I operated a fee for service anbulance about 15 years ago. The common way the EMS systems in the state are structured is that EMERGENCY medical services end when the patient is no longer in danger and getting worse. After that, it is a question of what is the best way to get the patient to the hospital if that is where they need to go. If they can go in a private vehicle, or taxi, it is cheaper than an ambulance. If they need an ambulance, either private company of public agency, it is usually at extra charge since it is not part of the emergency service, and if it is a public agency the transport staff may be additional staff funded by the fees collected for transports. Some public agencies transport for free to limited local destinations, because they can deliver the patient faster than waiting for a private ambulance to arrive. The issue is that the staff that are transporting are not available for the next EMERGENCY, which is the real reason the EMS system exists.

-- dbvz (dbvz@hotmail.com), February 07, 2001.

to dbvz: You write: "That I can agree with. My position is, if 1% is the wrong number, vote no."

I'll tell you what, dbvz, I'll agree to vote against I-747 with the 1%, if you agree to vote for I-747 if they change it to 2%.

Is that a deal?

-- Matthew M. Warren (mattinsky@msn.com), February 08, 2001.

3%? That is more like normal inflation. If we can get it to 3% I think we would have a deal.

-- dbvz (dbvz@hotmail.com), February 09, 2001.

3%? At that rate you will have a doubling of the cost of government AFTER inflation only every 23 years. Vastly better than the last 23 years, but still unreasonable. (at 1.06%, it would be 380% of current in 23 years) If you continue with inflation adjusted increases in the real cost of government it must ultimately decrease the real income of everyone paying taxes, beginning first with those on fixed incomes.

-- (mark842@hotmail.com), February 09, 2001.

Run that past me again. What I have seen in the past several years is an average inflation rate of about 3%. If the levy limit was set at 103% of the prior year it would simply match historic inflation, and not be a tax increase at all in constant value dollars for existing tax payers.

It looks like you are including the effects of new construction again, in your projections. As I have commented on before, new construction is properly excluded from this calculation because new construction adds new service needs that should not rest on the existing tax payers or cause a reduction on the service available to everyone. New construction, such as new housing and new business property, should provide new revenue from the new property owners that added the new service requirements on the community.

So, what about our deal?

-- dbvz (dbvz@hotmail.com), February 10, 2001.

Oops,

I see the deal discusson was with Matthew Warren, and the last exchange was with Mark842. Sorry.

Back to the ambulance issue, my point was that local governments that are authorized only the property tax as their source of revenue for the basic services will be unable to keep up with inflation if 747 is approved. Fee for service ambulance transports are not part of the basic services funded by property taxes. That is a non-emergency service, and if it is provided it is often a fee service so that the staff involved do not reduce the resources available for the next emergency. All of that is a side discussion that does not really have an effect on the original point. I-747 should be defeated, as it is currently proposed with a 1% inflation limit.

-- dbvz (dbvz@hotmail.com), February 10, 2001.

to dbvz: Let's just split the difference and go with 2.5%. Deal?

-- Matthew M. Warren (mattinsky@msn.com), February 11, 2001.