If You Support Universal Preschool, Vote “Yes” on Prop 1

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.

Comments

  1. 1

    Kate Martin spews:

    I’m not at all tax averse, but I hate ineffective applications of taxpayer money. I’m voting NO on “Universal Preschool”. The best and least expensive way to improve school outcomes (and ultimately life outcomes) for every single child is to focus on the first 2000 days of a child’s life not preschool. And when i say focus, I don’t mean send the newborns to a “learning” institution, I mean coordinate with families and caregivers to assure that healthy brain development occurs from birth to 3. Preschool would be a next and much more expensive step after that. Preschool WILL NOT get it done and all evidence supports what I’m saying. Please don’t repeat the Tim Burgess meme that preschool will be a silver bullet for youth and families. How hard would it be to get our government to actually do real research and a cost-benefit comparative analysis before jumping into a pre-ordained solution? Damn near impossible it seems.

  2. 4

    Kate Martin spews:

    Poor policy and budget decisions – ones supported by I wish this would work rather than I know this will work – waste time and money and so they are the enemy of progress.

  3. 5

    michaelp spews:

    That’s real rich, Kate, coming from the person who wants to put a park on top of a crumbling structure. Talk about a waste of money and terrible policy.

  4. 6

    spews:

    @5 @4 I’m almost willing to forgive Kate for that, because it can never happen, so what’s the harm in clinging to such a harmless fantasy? (It’s not that a High Line like Viaduct Park isn’t a beautiful idea, Kate, it’s just that the Viaduct is one 6.0 quake away from tipping over onto the waterfront.)

    But trashing high quality early learning? The research in favor is overwhelming. Yes, we need to invest more in birth-to-three services—the preschool recommendations explicitly acknowledge this—but trashing one in favor of the other is not constructive.

    This is the thing we can do now. And I’m glad as hell you’re not in a position to get in the way.

  5. 9

    Kate Martin spews:

    Happy to debate effective strategies for early learning anytime, Goldy, but you’ve got to say something with substance not change the subject or repeat the same old meme that “quality preschool” is the solution. As they say at the UW Institute for Learning and Brain Science, it’s a preparation gap, not an achievement gap and those first 2000 days are where we need to aim.

  6. 10

    sally spews:

    Kate Martin: You say ” focus on the first 2000 days of a child’s life not preschool.” By my calculations, that means the first 5 years of a child’s life, and that’s when preschool happens.

  7. 11

    Kate Martin spews:

    Hi Sally. First is the key word. Sorry to not clarify that. Please check out the modules at the UW site I mentioned. They’re fantastic and exactly what we need to be doing and I’m sure you’d enjoy them. Brain science is making significant strides and we can stride right along with that if we choose to or stay tied up in our old ways. I’m sure we all want to move forward, though. Universal preschool is nothing compared to this stuff. Absolutely nothing. Check it out.

  8. 12

    Pat L spews:

    Gosh, I might spend $100 or $200 per year extra on those awful parks- Volunteer, Green Lake, Seward, Discovery, Ballard Locks, Smith. In the meantime I may be FORCED to cough up a few thousand for the viaduct tunnel disaster, which I would rarely, if ever use!

  9. 13

    Roger Rabbit spews:

    Shorter Seattle Times: Yes! Vote for universal preschool! No! Don’t vote for the evil union’s initiative, I-107!

    http://seattletimes.com/html/e.....30xml.html

    Roger Rabbit Commentary: Here’s the richest part of an ST editorial so thick you can cut it with a knife:

    “I-107 also blows up the carefully negotiated $15 minimum-wage deal by phasing in the higher wage years sooner for child-care workers represented by SEIU.”

    It appears ST editorial writers think the $15 wage ordinance imposes a CAP on child-care workers’ raises. My question is, where in hell did that notion come from? As far as I know, nothing in the $15 wage ordinance precludes unions (or anyone else) from negotiating with employers for earlier implementation of the $15 wage, or for higher wages, or for benefits.

  10. 14

    djw spews:

    Goldy, thanks for this. I feel like I have a much better understanding of our property tax rules after reading it.

  11. 15

    ymathome spews:

    Goldy, this was a terrific explanation of the limitations of our current taxing scheme. It can be very difficult to explain, but you did a fine job. Now, I wish the state legislature would realize their mistake, and go further to create a progressive tax structure instead of a regressive one! Oh, and I agree: Vote Yes on Prop 1!

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