Local governments are keeping a close eye on a citizens’ initiative that recently garnered enough signatures to qualify for November’s ballot.

Co-sponsored by Mukilteo political activist Tim Eyman, “Lower Property Taxes Initiative 1033” would cap government revenue growth to the rate of inflation plus population growth. Any taxes collected above the revenue cap would need to be used to lower property taxes the following year.

Sponsors of the initiative submitted 315,444 signatures in support of the proposal to Olympia by the July 2 deadline, roughly 74,000 more signatures than required to qualify for the ballot.

Kelso Finance Director Brian Butterfield told the City Council this month that if I-1033 passes, “it’s going to be brutal to all governments in Washington.”

This year’s dismal revenues would be the baseline for the revenue growth cap. Right now, inflation is less than 1 percent. Under the initiative, next year, governments couldn’t collect any tax revenues beyond the inflation rate without obtaining voter approval.

“This is the worst year that the state and most counties have seen for decades,” Butterfield said. “This would just hog-tie all state and local government.”

Kelso Mayor David Futcher said although he’s sure the initiative is well intentioned, he’s wary it would hurt the city and deal a huge blow to school districts.

“We’d be stuck at this year’s level of spending, and it’s a bad year,” he said Wednesday. “You’d like to be able to provide better services to your citizens, and what we’re ending up with, if it passed, is being able to provide the level of service that we provide this year.”

The initiative’s timing would be unfortunate for Kelso because by late next year, the city hopes to see development of a large retail center along Interstate 5 with at least two big-box stores, Futcher said. The city has long viewed the proposed development, to be built just south of Exit 36/State Route 432, as the key to expanding the city’s meager tax base.

If the initiative passed, the city would have to take all its new revenue from the new shopping center and give it to the citizens in the form of reduced property taxes, Futcher said.

“At the same time, we’re going to have to start servicing this new development,” he said. “We’d have exactly zero additional revenue to do that with. … It sure takes the fun out of economic development.”

Longview Finance Director Kurt Sacha said the city hasn’t begun discussing the potential impacts of I-1033. But he predicts it would present “a real challenge” and would further reduce the city’s ability to provide services.

Wednesday, Eyman explained that the whole point of the initiative is to force government to limit itself to a predictable rate of growth it can sustain through bad times, instead of expanding during a boom and cutting during a bust.

“We think it’s totally reasonable that they get an automatic increase every single year that’s based on the growth of the economy,” he said. “The question is, should the government be allowed to grow faster than the taxpayers can afford?”

If the automatic increase under I-1033 weren’t enough, the initiative contains a “safety valve” that allows governments to dip into reserves or ask voters for additional revenue, Eyman said. This would hold governments accountable for how they spend taxpayers’ money and instill some fiscal discipline, he said.

“The idea that the government is entitled to everything that the taxpayer has in his wallet is not our world view,” he said.

Related articles:

Property tax initiative will be on ballot  (July 15)

Property tax initiative moves to Washington ballot  (July 2)