Why Is Spokane So Broke? Theory No. 3

by Kevin Taylor & r & We're Cutting Our Own Throats & r & THEORY: Anti-tax fever, which has been infecting us for more than a decade now, is bringing on civic bankrupcty. With no way to raise enough money to deliver the kinds of services the public wants, the city and its residents are put into a lose-lose situation. And nearly every time they get the chance (except, remarkably, when it comes to school levies), they vote to tighten the chokehold on local government even more.

Building on the tax-revolt drumbeat of I-695 and I-912, a new initiative requiring the City of Spokane to "privatize all revenue" appears to be a solid lock at the polls next month.

Conceding as much, Spokane's chief financial officer Gavin Cooley has already laid in several squares of cardboard and a magic marker so department heads - in order to comply with the new law - can be deployed at freeway off ramps for direct funding appeals to citizens.

"For years we've told them to just cut the fat," says an exasperated critic of local government who would only identify himself as Hal. "They just kept raising taxes and raising taxes. Now they have to get by on what we give them. I live in a cardboard box -- the mayor can, too."

Spokane Mayor Jim West certainly looked like a cardboard box might be his fate at a recent City Council meeting. Wearing one of his many drab suits, he hunched over the podium. Most of his hair has been burned away by chemotherapy treatments after a recurrence of cancer a few months back. What hair remains is carefully plastered across his dome.

West, who is also in a battle for his political life after being caught chatting up young men for sex, tried to put a positive spin on the city's budget crisis.

We will raise property and utility taxes, city workers will give back nearly a million dollars in benefits, the mayor promised to cut his own salary by $25,000 and we will all pull together to save a city recently named seventh-brainiest in America along with a slew of other obscure awards.

But these are short-term solutions.

The city's latest budget crisis is being called a "structural imbalance." What that means in plain English is the general fund (which is looking to be $6 million short for 2006) pays out a lot more every year than it rakes in.

This can't be good.

And part of the problem is West, observers say. Until the sex scandal is resolved, the mayor is a flawed leader and his problems take away focus that should go to finding long-term budget solutions. Every time he addresses the issue, such as at the recent council meeting, critics will see it as an attempt to merely put good spin on his accomplishments as the recall election nears.

But West is not to blame for the "structural imbalance" (where expenses grow at 4.5 percent per year to revenue's 2.5 percent). The gap has been Spokane's dirty little secret for decades.

Previous city councils had enough flexibility with funding sources to cover it. Lately, the gap has widened dramatically as a result of at least three events since 1999.

& lt;ul & & lt;li & Initiative 695, which replaced the state's motor vehicle excise tax with a flat $30 license fee, resulted in a $4 million to $5 million annual hit on the Spokane general fund. & lt;li & I-747, another arm of the statewide tax revolt, limiting increases in property taxes to 1 percent a year. Previous city councils could go as high as 6 percent in a pinch. & lt;li & The dot-com crash of 2000 burst rose-tinted bubbles for governments as well as private investors. Spending based on rosy budget projections of steady 2 percent or 3 percent annual growth simply vanished overnight. Sept. 11 didn't help, either. & lt;/ul &

Spokane has been dealing -- and not very well -- with the structural gap since it was first mentioned out loud during Mayor John Powers' tenure in 2002. The city has been in crisis mode the last three years, cutting services and firing people.

Every year, city leaders vow not to be in this spot again, and yet here we are.

West recently proposed a fragile three-legged fix. His budget patch involves two years of property tax increases, expected to raise $3.3 million, a 3 percent utility tax boost (at 17 percent, Spokane's is already the highest in the state) to raise another $2.85 million, and nearly a million dollars in benefit givebacks by city workers. City voters will decide whether to fund this plan on Nov. 8.

If one of these legs falls off, the whole deal keels over and next year's structural gap (and the year after that) could again be around $6 million.

Raising taxes anywhere in Eastern Washington is never an easy sell. It may be even tougher this fall, as people seem frustrated with the reduced city services in the wake of three budget-slashing years.

Even former Mayor Sheri Barnard says, "I was thinking of supporting the revenue bond issues -- but they will have to make a really good case for why I should support it."

Barnard says she and other residents she's spoken with share a frustration about why should people vote for higher taxes when the libraries are severely cut back or when the cops don't show up after your lawn mower is stolen.

"This is a very grumpy nation at the moment," says Keith Schneider, deputy director of the Michigan Land Use Institute, which studies urban health around the country.

The grumpiness comes from nervousness about the future, which in turn comes from a lack of clear vision or leadership. In such a climate, it's easy to pull back and just say no to raising your own taxes to help bail somebody else out. But that's exactly what has to happen, Schneider says.

Former Seattle Mayor Charles Royer agrees, saying voters don't always make a lot of sense: They want to have full services but don't want to pay for them.

"When this gas tax gets defeated [Initiative 912], as it most likely will, people are going to start to wonder why we have so much traffic congestion and why don't we expand our capacity as growth puts extraordinary pressure on the roads system," Royer predicts. "The answer is, well, we had a chance to do it, but we didn't because we were mad at the government. You kind of cut off your nose there."

Schneider says that's not the case everywhere, however, as some cities are voting to tax themselves when they see plans that make sense. These are cities like Denver; Salt Lake City; Grand Rapids, Mich. (roughly Spokane's size); and others, where residents have rallied behind efforts to support denser urban-core development and have voted to aggressively fund mass transit and to preserve open space and natural beauty.

Growth around Salt Lake City and its many surrounding towns once threatened to fill the valley with smog and strip malls, Schneider says. Today, thanks to aggressive planning, the average lot size in the area is shrinking from .37 acres to .29.

This is not just pie-eyed blabber about "new urbanism" and walking through your neighborhood "node" with a market basket.

"This is real money," Schneider says. "Just by shrinking the average lot size by .06 of an acre, Utah expects to save over 125 square miles of open space. Taxpayers expect to save $15.5 billion in infrastructure costs. This is the sort of thinking that's going on in parts of the country responding to the 21st century, not the 20th."

A more densely populated core also means more affordable housing and the critical mass needed for jobs, Schneider says. If development and investment continues to leak away from central cities like Spokane, so do jobs and any chance at prosperity.

That sort of land-use thinking has been rare around Spokane, says former Mayor Jack Geraghty, even though laws like the Growth Management Act were designed to stimulate density.

"It depends on who the leaders are -- if you've got people who are fundamentally not involved with the concept, then nothing's going to happen," Geraghty says. In the meantime, Spokane needs to fight for a denser downtown, where people live as well as work.

Schneider says any city that makes a move to prosperity must have citizen backing for public transit, which in turn needs high population density to be effective, which in turn can attract jobs and commerce back to the cities, which in turn preserves open space and the reason people liked to live here in the first place.

But it takes vision, urgency and money -- all of which seem to be in short supply locally. Some elected officials here don't see a downside to sprawl. Voters here almost never tax themselves for benefits that may bear fruit decades later.

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