Who Wins, Who Loses?

Pro I-695:
It's our seniors, working families and struggling college kids that got over 514,000 signatures for I-695 who will mostly benefit from lower fees. Additionally, MVET taxes new cars more than old cars and provides an incentive for people to keep their 10-15 year old cars that create most of the pollution. Newer cars are less polluting, more fuel-efficient, and have better safety features such as seat belts and air bags. Washington new car purchasers also pay high sales taxes.

Con:
I-695 benefits the wealthy, significantly reduces revenue from many existing public programs and also creates a legacy of unpredictable governmental chaos. Voter approval would give the owner of a 1998 Jaguar a windfall of $1,430, or near ten times the annual MVET savings of the 1998 Chevrolet Metro owner, who would save $150. With I-695 both car owners would pay the same flat $30-per-year Vehicle License Fee. Even worse, we would have to have a vote an all levels of government in Washington for every conceivable fee increase.

Personal Property Tax on Vehicles

Pro I-695:
I-695 would not make vehicles subject to a personal property tax. The initiative requires voter approval for any "tax increases", and a personal property tax would clearly be a new tax. A majority of the taxpayers/voters would have to agree to vote for the new tax. Even the Washington Association of Counties (an opponent of I-695) admits it will never happen.

Con:
Passage of I-695 could re-impose the personal property tax. It appears to repeal the law that exempts vehicles from personal property taxes. According to the state's Office of Financial Management, the average personal property tax rate per vehicle would be 1.5%. Each county would administer the program and the funds would go to state and local general funds.

Money for Transportation Projects and Services

Pro I-695:
Most states fund their entire transportation system with their gas tax and our gas tax is one of the highest in the nation. The problem with transportation is not a lack of funds.

Con:
State Transportation Department"s (WSDOT) 20-year budget of $26.6 billion has a projected $11.7 billion deficit. The four-county Puget Sound Regional Council (PSRC) is forecasting a $15 billion regional shortfall to maintain and improve our transportation system. Washington state¹s gas tax is 23 cents per gallon. Our state rates 19th among the 50 states, with some combined local and state gas taxes at 37 cents per gallon. I-695 will doom planned highway fixes. We would lose over $4.2 billion over the next 6 years for state highway related improvements to reduce traffic and gridlock. These include freight mobility, state ferry improvements, as well as inter city rail and local and regional transit systems. In the Puget Sound region it is estimated that the annual cost of congestion, due to time lost in traffic and accidents, is about $1.4 billion.

Using the State Surplus to Replace the MVET

Pro I-695:
Thanks to Initiative 601 our state has a huge surplus. This state can replace the MVET shortfall with this surplus.

Con:
The state¹s 601 "reserve" funds should not be used except for emergencies. They are our "rainy day" funds. We should never use state general revenues to replace dedicated auto user taxes. Auto-related taxes do not begin to pay the real costs to drive anywhere, anytime in our state. The costs of building, maintaining, policing and operating state and local highways is already highly subsidized from constrained state and local government funds. I-695 would reduce even more the funds for building and operating the highway and transit systems.

I-695 Puts a Hold on the 1999-01 Adopted State Biennial Budget Projects and Programs

Pro I-695:
Every program should have to justify its funding and make its own case for continued funding. I-695 results in a performance audit for each of these programs, something that we have waited for for a long time.

Con:
Referendum 49 highway projects were evaluated and approved by the 1999 Legislature and have been put on hold because of the threat of I-695. The 1999-01 MVET funds have already been appropriated, but no Referendum 49 guaranteed highway bonds can be issued in 1999. The future source of MVET revenue for bond repayment is in doubt, because of I-695. I-695, if passed, will cast a shadow over state and local public bond ratings, and will increase the costs of all future state and local public bond issues.

Referendum 49 - Balancing Tax Cuts with Public Needs

Pro I-695:
Referendum 49 provided an embarrassing small tax cut of $30 per car. Voters were insulted by such a pitiful tax cut, but it was better than nothing, so they voted for it. Referendum 49 addressed the problem of outrageously expensive license tabs and I-695 solves it.

Con:
I-695 goes too far and reverses the Referendum 49 vote. It guts the use of 1998 state voter-approved Referendum 49 funds for critical transportation improvements, and guts the funding of local governments' public safety and health programs, equalization payments to low tax base cities, and regional and local transit services.

I-695 and I-601 Limit Excessive Taxation

Pro I-695:
I-695 is pro-taxpayer, pro-economic growth and pro-fiscal accountability. If politicians had one ounce of compassion for the average taxpayer I-695 would not be necessary. Politicians will never limit excessive taxation. I-695 is our only chance. I-695 strengthens and extends the protections in Initiative 601. It limits excessive taxation at all levels of government, ensuring the taxpayer is protected.

Con:
I-601 has already reduced state programs by $4 billion. The purported "state surplus" (the reserve under I-601) would vanish in less than a year. No future reserve would be available in years to come for a possible economic rainy day. I-695 abolishes the MVET funds already anticipated for funding many public programs. There would be no reserve after the first year. State Referendum 47 already restricts the annual local property tax increases to 6% or less. There would be no way to fund existing programs de-funded by I-695, except through submitting regular, multiple ballot funding questions to the people at all levels of government.

Use of Public Versus Private Money

Pro I-695:
Unless new taxes are approved by voters under I-695, Washington citizens will have $5-6 billion over the next six years to spend privately to boost the state¹s economy, rather than for spending by government bureaucracies.

Con:
Washington's economy is overheated and the growth in population and the number of jobs in Washington state is breaking records. Unemployment is at a record-breaking low. Spending public funds does boost the economy and also provides needed public services and projects built by private contractors.

Citizen Initiative Legislation Versus Elected Representative Government

Pro I-695:
We need to have the people who are paying the taxes have the right to say "no" to the government's raising of our taxes. Washington is the sixth highest taxed state in the union. Taxpayers want lower and fairer taxes and more responsive government. Programs will have to justify their funding and politicians will have to prioritize in the future. Only the most essential tax increases will be placed on the ballot. Colorado has had the same limits and election requirements as I-695 on any new taxes and fees. It is the 39th highest in state taxes; Washington is the 6th.

Con:
Washington ranks 11th among all states, according to U.S. Chamber of Commerce, in state and local revenues per capita. But let's not argue numbers. Voters can say "no" to their elected state representatives, the governor and local officials, and throw them out of office. They are elected to represent and be accountable to the people. They propose and revise laws and referendums to respond to changing public needs and conditions.

The initiative process does not include the public hearings and fact-finding, the review and deliberative debate and the legislative/executive checks and balances that we rely upon to resolve public issues.

Recommendation:
On the basis of the above report, the Ballot Issues Committee is recmmendingto the Board that the Municipal League of King County oppose Washington State Initiative 695.