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Recently, all the news about King County has concerned park closures, human-services cuts and a proposed countywide utility tax. The gap between King County expenses and revenues is projected to be over $30 million in 2003, not including a potential cut in state funding for counties.

Yet, in the past decade, King County increased both its tax revenues and general-fund spending by an average of 8 percent per year, for a total increase of $226 million.

How can the county be broke, given a decade of rapidly growing revenues? The ultimate source of the county's budget woes is found in its cost structures, particularly in salaries, wages and benefits. Over the past decade, salary, wage and benefits costs have grown 8 percent annually — twice the inflation rate.

Some of that spending growth involved hiring more county employees: deputy sheriffs, jail guards, County Council staff, parks personnel, etc. From 1991 to 2001, general-fund employment grew 25 percent. But overall general-fund spending expanded by 100 percent because costs per employee grew much faster than overall employment levels.

While the county pleads poverty, however, County Executive Ron Sims has continued to negotiate and sign new three-year collective-bargaining agreements that lock us into the same basic cost structures. Our projected expense growth per employee continues to be double the forecasted inflation rate.

The executive's approach to covering these costs is straightforward: Cut services while minimizing layoffs, and seek tax increases. This formula means that King County taxpayers will pay more and more while receiving less and less.

During the 1990s, with total tax revenues growing 8 percent a year, this trade-off wasn't necessary. Tax revenues and spending both grew at double the inflation rate. General-fund property-tax revenues grew by 103 percent. King County's sales-tax revenues increased by about 23 percent.

The sales-tax growth was possible because counties receive 15 percent of all sales taxes collected within their boundaries, and King County's cities have been blessed with extraordinary sales-tax-revenue growth since the late 1980s.

That revenue growth was also possible because in 1991, the state Legislature authorized counties to seek voter approval of a local-option 0.1-percent sales-tax increase to help fund criminal justice. King County taxpayers voted yes, and that 0.1 percent now generates over $11 million per year.

The tax-revenue growth of the 1990s simply wasn't sustainable. Voters statewide finally rebelled against governments that annually maxed out their property-tax revenues. Initiative 747 imposed a 1-percent limit but, with certain allowances I-747 left in place, King County continues to project annual property-tax-revenue growth of about 3 percent.

Last year, the amazing growth in sales-tax revenues finally ended with the inevitable economic downturn.

Now, the executive and County Council majority have asked the Legislature to authorize counties to impose, by council vote, a 2.5-percent countywide utility tax. A portion of the revenues would go to the cities, which already collect a 4-to-6-percent city utility tax.

The county's share of this new utility tax would yield around $75 million in the first year. Given its current cost structures, the county would be back in a deficit position by 2005. The county's fiscal crisis will continue so long as its costs grow two to three times faster than inflation.

Our employees argue that they deserve salary and wage increases that average more than 6 percent a year, even in a 3-percent inflation economy, because they have to keep up with their private-sector counterparts.

In a recent letter, the co-chair of the King County Labor Union Coalition asserted that in the 1990s, private-sector employees were "enjoying a booming economy and private-sector increases were running 6 percent, 7 percent and 8 percent per year, (while) King County cost-of-living increases were running at 90 percent of the cost-of-living figures, which were in the area between 2 percent and 4 percent."

Actually, the state's Employment Security Department reports that private-sector salary and wage growth in King County averaged less than 5 percent per year in the 1990s. That figure excludes software-industry salaries that were tremendously inflated by booming stock options.

Moreover, the unions' focus on cost-of-living allowances (COLAs) conveniently omits the other factors that produce annual salary and wage increases that average more than 6 percent. In particular, public employees are paid according to a negotiated salary and wage schedule that is broken down into steps. In addition to their COLAs, many county employees receive a "step increase" each year and some receive additional merit increases. Hence, the average 6.25-percent salary and wage increase per employee that our collective-bargaining agreements lock us into for three years at a time.

The state's figures for private-sector employees, on the other hand, include all sources of salary and wage income, whether the result of COLAs, seniority or merit increases. Given the state of our regional economy, does anyone seriously believe that private-sector employees in the next three years will receive annual salary and wage increases averaging over 6 percent?

A new utility tax is like a pay cut for taxpayers. It would be a Band-Aid that only temporarily stops the county's fiscal hemorrhaging. It cannot be justified when its principal purpose would be to support salary, wage and benefit increases that are two to three times the inflation rate and much higher than what the average taxpayer will receive.

http://seattletimes.nwsource.com/html/editorialsopinion/134420592_robbop15.html

Rob McKenna, R-Bellevue, chaired the Metropolitan King County Council budget committee over the past two years. He represents the council's 6th District.

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