Contrary to the scare tactics being employed by opponents, Proposition 1 is not about “accountability” or “new stadiums” or “caged zoo animals” or “waterfront hotels.” In fact, the truth is, Prop 1 isn’t even really about parks. It’s about taxes. And to understand why it’s so important for Seattle to tap into the taxing authority available to a Metropolitan Park District (MPD), you need to understand the way property taxes work.
From a budget writer’s perspective, the property tax is the best tax ever, because if done correctly, it always brings in almost exactly the amount of money projected. That’s because, unlike the stupid, stupid sales tax, budget writers don’t actually set a rate and just hope the money comes in, they request a dollar value—for example, $47.9 million a year for the first six years in the case of the interlocal agreement that accompanies Prop 1—and then the county assessor adjusts the property tax rate annually based on current assessed value, and subject to statutory limits, in order to generate the requested revenue. If property values rise from year to year, the rate goes down; if property values fall as they did when the real estate bubble went pop, the rate goes up. But the MPD is almost guaranteed to generate that $47.9 million a year.
Over the long run, nominal property values will almost certainly rise. So while the voters guide projects an MPD tax rate of $0.33 per $1,000 of assessed value in year one, even a relatively modest 5 percent average annual rise in home values would leave the rate at less than $0.26 per $1,000 of assessed value by year six.
But unfortunately for city budget writers, as reliable as the property tax is, it is subject to two very important limitations. The first is known as the “statutory dollar rate limit”: the City of Seattle’s property tax authority is limited to $3.60 per $1,000 of assessed value. That is the maximum theoretical rate the city can levy without voter approval. But thanks to the second limit, known as I-747′s “101 percent limit” (or more accurately: “Tim Eyman’s Revenge”), the city’s actual regular levy authority falls far short of the statutory dollar rate limit.
Under the growth limit factor first enacted in the 1970s, and then punitively reduced to 101 percent under Eyman’s I-747 (and later reinstated by a cowardly legislature after the state supreme court tossed the initiative out), the dollar value of property taxes collected may not exceed 101 percent of the taxes collected in the highest of the three most recent years, plus an allowance for net increased property value in the district resulting from new construction.
I know—that’s very complicated. But suffice it to say that thanks to the 101 percent limit, revenues generated from Seattle’s regular levy generally don’t even keep pace with inflation, let alone rising property values. As a result, the actual maximum levy rate available to the city council has been steadily falling as I-747′s 101 percent limit has ratcheted down revenue growth.
Fortunately, state law does allow for 1 to 6-year “lid lifts,” enabling the city to raise revenues in excess of the 101 percent limit, but within the $3.60 statutory cap, subject to voter approval. That’s what the expiring Parks Levy is—a lid lift—as is the Library Levy, the Families and Education Levy, Bridging the Gap, and so on. When you add up Seattle’s regular levy together with its various lid lifts, Seattle is currently levying a combined rate of just under $2.91 per $1,000 of assessed value (although about $0.26 of this expires at the end of 2014 with the Parks and Pike Place Market levies).
Got it? Okay then, so why do we need the additional taxing authority of the MPD if we still have so much room available under the statutory cap? Why not just go to voters with another parks levy as the Seattle Times disingenuously contends? Because we don’t really have that much room.
First, remember how I said that a property tax almost always generates the revenue requested, if done correctly? Well, doing it correctly requires accounting for the possibility that property values might fall in the short term. Seattle property values fell about 12 percent during the real estate bust. Had Seattle been levying within 12 percent of its statutory cap it would have resulted in a budgetary disaster. So it would be imprudent to go beyond $3.20 per $1,000 of the $3.60 cap available.
Second, this limited cap space leaves little room to fund other pressing needs. For example, voters will be asked to approve a Preschool Levy in November, generating about $14 million a year in revenue. But it will eventually cost much more than that to fully implement the program. Likewise, our current Parks Levy was never enough to both operate parks and chip away at the growing deferred maintenance backlog. Even with the levy, we’ve been underfunding our parks for years. But to fully address parks via another lid lift would limit the city’s ability to adequately fund preschool and other pressing needs.
So if you really, really, support universal preschool, you should really, really support Prop 1.
That’s the primary attraction of an MPD: it comes with its own separate $0.75 per $1,000 of assessed value, meaning that we no longer need to pit parks against other crucial services like libraries, roads, and preschool in a competition for precious cap space. With the MPD, parks will finally have a reliable revenue stream sufficient to address its maintenance backlog over time. But the tax-averse amongst you can rest assured that for all the same reasons that the city can’t access its full $3.60 rate, the MPD could never access its full $0.75 either, even if the mayor and the council were the evil bastards MPD opponents make them out to be.
Finally, I want to address the opponents’ claim that “for a hundred years Seattle citizens have supported voter-approved levies that give each neighborhood a legacy voice” in blah, blah, blah. That’s bullshit. For a hundred years parks have been primarily funded through the city’s regular levy, which requires no direct voter approval. It wasn’t even until the 1970s, when a growth limit factor was first imposed, that a lid lift even became a thing. Indeed, the city’s first parks levy wasn’t passed until 2000, and the shift in funding to lid lifts didn’t take off until after 2001, when Eyman’s absurdly unsustainable 101 percent limit kicked in. Bond levies aside*, this voting on maintenance and operations levies for parks, libraries, roads, and whatnot is a relatively new phenomenon. And an incredibly stupid way to budget.
That said, the MPD won’t change how we fund these other services. While it would leave more room for other lid lifts to meet other pressing needs, these lid lifts would still have to go before voters.
Opponents present Prop 1 as some sort of sinister plot to privatize our parks and build stadiums for jillionaires. That’s crazy. Or incredibly dishonest. I’m not sure which is worse. But all it really is is a modest tax increase dedicated to parks, that provides an adequate and stable source of funding, while leaving voters the option to tax themselves to pay for other needs.
If you simply hate taxes (hello, Seattle Times) vote “No.” But if you support essential services like parks, libraries, preschool, and roads, vote “Yes” on Prop 1.
* There is also the option of rarely-used voter-approved “excess levies,” which get around the statutory cap entirely, but since they are limited to 1 year, they’re not really practical for dealing with anything but an emergency.