King County’s budget crisis: Where do we go from here?

This year, I was honored to be selected by my colleagues as the chair of the council’s Budget Committee. This means that not only will I manage budget issues that arise throughout the course of this year, but I will also lead the council in our annual deliberation and passage of the 2011 budget.

With this privilege comes great responsibility. King County is facing a budget crisis of incomparable magnitude, primarily due to the worldwide economic recession. I have the challenging task of balancing a budget that will severely cut critical functions of government, or work with my colleagues to ask voters if they are willing to support a tax increase for criminal justice, health, and human services programs.

In this column, I will provide information about King County, which services are most at risk for cuts, why the budget crisis is happening, and options for balancing upcoming budgets.

What are services provided by King County?

King County government provides both regional and local services.

REGIONAL SERVICES include: public health functions like restaurant inspections, disease control, and water sanitation; criminal justice services such as the courts, jails, and sheriff’s office; Metro bus service; management and tabulation of elections; animal care and control functions; emergency management and emergency planning services; human services; acquisition and maintenance of regional trails, parks and open space; and wastewater management.

LOCAL SERVICES for unincorporated areas (those areas not included in city limits) throughout the county include: roads; zoning and land use; and police services.

Which of those services are at risk of being cut?

Many of the programs and services provided by King County have a dedicated funding source, like a federal grant, a usage fee, or a tax levy, to support them. However, some of the most critical services, such as public health, human services and criminal justice, rely solely on general, undesignated funds, which are more and more sparse.

In the last two years, we have cut over $150 million from our $630 million general fund ($93 in 2009 and $56 for 2010). In the next two years, it is projected that we will need to cut another $60 million in 2011 and $90 million in 2012. Our sheriff, judges, and prosecutor, whose budgets make up 76 percent of the general fund, have all indicated that if they make additional cuts, they may not have the funding to comply with state and federal mandates. This reality is deeply concerning. The impacts of fewer sheriff deputies, diminished ability to fight the spread of disease, overcrowded jails, and less assistance for children and families in need will be felt by all of us, countywide.

The general fund is not the only pot of money experiencing financial constraints. Metro transit, or bus service, relies heavily on sales tax, whose collections have dropped 20 percent in the last two years. The King County Council staved off significant cuts to bus service this year and next, by raising bus fares, using reserves, and finding efficiencies. However, bus service in the next biennium (2012-2013) will need to be cut, given that sales tax collections will not reach status quo for at least five years.

What happened to cause this budget crisis?

As you know, the banking, automotive, insurance, and mortgage failures have caused far-reaching and long-term economic impacts. Nearly 10 percent of King County residents are without a full-time job; 1 in 6 families do not have the resources to put food on the table three times a day; almost 15 percent of children in Washington State are now living in poverty. While families here face difficult choices about their financial future, so too does local government. More than 150 county employees have been laid off in the last two years alone. The county has had to discontinue entire lines of business, including running an animal shelter and using general funds to support human services.

But this recent economic recession is not the only reason King County faces budget shortfalls. King County takes in revenues via two sources – property taxes and sales taxes. Because there are only two sources, it limits the county’s ability to manage the effects of a downturn in either property or sales tax. Similar to owning a business, if you had only two clients and one significantly reduced the size of their order, it would have a drastic effect on your revenues for that month.

King County first began to experience a downturn in revenues when Initiative 747 passed in 2001, limiting the county’s property tax collection rate to 1 percent per year. The inflation rate varies between 2 percent and 4 percent each year, with next year predicted to be even higher than 5 percent. With that revenue stream restricted to 1 percent, the county cannot afford the many increases due to inflation, creating a “structural gap” in income versus expenses. Gas for sheriff deputy cars and metro buses, health care costs, cost of living increases, and many other expenses are increasing at far higher percentage rates than the revenues King County has to support them.

In addition, the downturn in the economy resulted in reduced interest earnings on county investments, totaling millions of dollar in lost interest.

What is King County doing to alleviate this problem?

Over the last two years, every department has had to take cuts. While our criminal justice agencies have sustained modest cuts, many of our general government functions (elections, assessor, council, executive) were cut by more than 10 percent in the 2010 budget.

We also are closely examining our operations to determine if we can achieve further efficiencies and become as lean and highly functional as possible.

Over the course of the next year, the King County Council and Executive will work together to develop a sustainable long-term strategy to relieve the pressure the current structural gap has placed on our budget. This may include asking voters whether or not they would be willing to approve a ballot measure to increase funding for the sheriff, courts, human services (like domestic violence, homeless services, youth violence prevention, etc.) and public health programs (like swine flu prevention and education, coordination of health clinics, and drinking water testing).

Although we face difficult budget decisions in the coming years, I believe we will create solutions that maintain core government services, while continuing to sustain our high quality of life in King County.