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The bill comes due for unsustainable spending

Post by Patrick O'Callahan on May 26, 2010 at 7:48 pm with 2 Comments »
May 26, 2010 6:07 pm

This editorial will appear in tomorrow’s print edition.

The Great Recession has brought a painful reckoning to local governments that seem almost hard-wired for constant spending increases. King County is a spectacular example.

Year after year, the county executive and County Council have routinely adopted budgets exceeding the rate of inflation. With the recession now crimping tax revenues, the bill has come due.

County officials say they’re staring at a $60 million shortfall next year and another shortfall on the same order the following year.

Executive Dow Constantine and Sheriff Sue Rahr are warning that major layoffs of deputies and other criminal justice personnel will be necessary if voters don’t approve a tax increase, which the Republicans on the County Council have so far refused to put on the ballot.

Shades of Pierce Transit, which has been saying it may cut more than half its bus service without new taxes.
This isn’t a suddenly blooming 2010 problem. Even more than Pierce Transit, King County has spent years enthusiastically digging itself into this pit.

The Seattle Post-Intelligencer has reported that the county government’s payroll costs have more than doubled the rate of inflation since 2004. Pay increases have been generous, as high as 5 percent a year. Two years ago, the deputies effectively got a 7 percent increase.

The rise in the county’s health care costs has been staggering: up nearly 60 percent since 2004. Unlike workers nearly everywhere in the known universe, county employees pay nothing toward the cost of their health care premiums.

As in Pierce County’s government, more than 10 percent of all employees make more than $100,000 a year.

Only fiscal conservatives – apparently a rare breed in King County – were worrying much about the out-of-control spending when enough taxes were rolling in to cover it. It took the recession to expose the cumulative impact of the county’s unsustainable budgets.

The public recognizes folly when it sees it. Given that most voters have been tightening their belts – often painfully – since the recession began, they won’t likely be enthusiastic about bailing out a government whose escalating payroll expenses are on autopilot.

That doesn’t mean modest tax increases are beyond reach. Consider the case of Tacoma’s Metro Parks, which asked voters for a levy lift last month – and got it, with a stunning 68 percent of the vote.

But Metro Parks didn’t simply declare an emergency, threaten to cut core services and demand new taxes. Before going to the ballot, administrators and employees alike took impressive steps to cut expenses, including payroll costs.

Lesson for local governments: In a climate of economic distress, when the taxpayers footing the bills are hurting, that’s what the public expects.

Leave a comment Comments → 2
  1. Unsustainable spending, or unimaginable tax cuts?

  2. A little bit of both NEAL. Tax cuts have hit all local governments, but counties particularly hard. Limiting property tax increases to below inflation affects them more because they have to serve areas that tend to not have other sources of tax revenue like sales and B&O. I-695 also eliminated the sales tax equalization that mitigated that imbalance.

    On the spending side there are a number of problems. Pierce County years ago decided to allow uncontrolled growth far from urban centers. We’re now finding out those areas are extremely expensive to serve. So it’s not surprising that the cost of government outpaced inflation during our highest growth period.

    But the benefit problem is kind of a tangled web of issues. It used to be that governments used their relative buying power for benefits to compete with private enterprise since it was cheaper than salary competition. The problem is that these benefits grew entrenched in contract negotiations at a time when health care costs skyrocketed. With each government comparing its benefits/salary to others, being the first to cut to bring them in line with cost increases is difficult.

    Part of me feels like we should consider regional contract negotiations with public employee unions. I hate saying that since there is great value in dealing locally with your employees. But I can’t picture another way of getting public salaries/benefits under control.

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