KING COUNTY EXECUTIVE Ron Sims conveyed some grim, crocodile-tear-stained news as he announced his proposed 1999 budget earlier this month: The county's economic realities forced

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Boohoo economics

Why is Ron Sims presenting a spending increase as a tragic spending decrease?

KING COUNTY EXECUTIVE Ron Sims conveyed some grim, crocodile-tear-stained news as he announced his proposed 1999 budget earlier this month: The county's economic realities forced him to cut human-service funding to the tune of $1.9 million. It was a decision, he stressed, that he wouldn't have made unless it was absolutely necessary. Although he went on to say that a just-discovered revenue bounty of $600,000 might restore some of that funding, he appeared broken up over the cuts. He called the programs they affected "vital," and said that cutting them was "one of the toughest decisions I have ever been faced with as an elected official." So great was the psychological toll, he said, that it affected his personal life. "My wife and I are at the highest stress point in our marriage."

Government declarations of financial crisis have become so routine that most of us don't think twice about them. But consider: Why are painful cuts necessary at one of the most prosperous times this state and county has ever seen?

Often, the answer is that they're not necessary—they're choices. Elected officials make cuts in one area so they can spend money in another, the combination often leading to an overall increase, rather than decrease, in spending. Take Sims' proposed $2.7 billion budget, cuts and all: It represents an increase of 5.6 percent over last year's, partially because of additional spending on criminal justice.

Such growth is not necessarily a bad thing in boom times; a credible argument can be made that even more of the astounding wealth generated in recent years should go for the public good. But if you're a politician wanting to blend in with the current fiscally conservative climate, it pays to talk about financial pressures and belt-tightening.

Hence, the county executive's or the governor's annual ritual request to agency heads to identify (typically) 5 percent to 7 percent in potential reductions is always couched in portentous language these days. (The governor's chief economist, for example, in a June memo to state agency heads asking for this so-called "reduction exercise," warned of a possible recession due to the Asian crisis, Boeing lay-offs, and other factors.)

One of the more perverse elements of this exercise is that officials get the most political mileage out of cutting services believed to be critical. "They're trying to make the point of how essential it is to get more money," says University of Washington economist Neil Bruce. Thus the neediest are first in line to be denied money, in even the most flush of times, so that political leaders can appear to be highly responsible and fiscally sound of mind enough not to let their immeasurable compassion get out of control. County Council member Rob McKenna, a Republican who is far from a bleeding-heart liberal, hints at as much when he says of Sims' budget: "He wants people to think that he's cutting human services and increasing criminal justice spending—that's the main message of his budget to all those people in the suburbs who thinks he's a tax-and-spend liberal." A rumored candidate for higher office, Sims may be doing political penance for his strong commitment to human services in the past.

The appearance of sacrifice is also useful for Sims because he wants to convince the council and public that he needs to raise property-tax revenues by more than the recently passed Referendum 47's meager rate, which is tied to a national and consistently low inflation index named, for some odd reason, the Implicit Price Deflater (see sidebar, p. 16).

Sims' staff, of course, balks at any suggestion that he has exaggerated the county's financial straits. "We're not having good times," insists county budget office director Pat Steel. "We're seeing a slowdown and it's already reflected in sales tax revenues." Those revenues grew by only 2.6 percent in the second quarter of 1998, though projected growth was 7 percent. Sims, unveiling his proposed budget, further warned of dire prospects for next year because of the possible recession and the impact of incorporation, which dramatically reduces the amount of sales tax revenues going to the county.

McKenna, who wants to minimize property taxes, isn't buying the scenario. "Every year that I've been involved in the budget—even before, when I was preparing to run [for council]—there have been complaints that the county doesn't have enough money, that the tax base is shrinking," he says. "There is always concern that the economic picture is not as good for next year as this year. But if you look at county revenues over the last 10 or 15 years, you see that revenues have gone up more than the rate of inflation every single year."

NEXT YEAR IS EXPECTED to be no exception. While sales tax revenues are projected to hover again around 2 percent, overall revenues will grow by 3.7 percent if the council approves Sims' proposed collection rate for property taxes. Inflation around the Puget Sound area has been running at approximately 3 percent, according to the Consumer Price Index (much more widely used than the Implicit Price Deflater, which shows an inflation rate of less than 1 percent).

Nonetheless, Sims and his staff maintain that such revenue growth, lower than in previous years, is inadequate in light of increasing demands on the county—particularly in the realm of criminal justice. Sims' 1999 budget allocates a $25 million increase in spending for criminal justice.

At least some of that money, however, reflects new initiatives rather than an uncontrollable growth in the basic system. Among new items are a $1.4 million court for mentally ill defendants and the creation of a sophisticated $1.2 million database that could track offender patterns and crime rates in specific areas. Both are undoubtedly worthy ideas that would provide long-term savings, as Sims' staff argues, but it is worth noting that the money being spent on them is more than the money being cut for human services (whose proponents argue that spending there translates into long-term savings in criminal justice and welfare).

Even within human services, Sims has made trade-offs. While he announced a $1.9 million cut to nonprofits who contract with the county—Boys & Girls Club of King County, the Fremont Public Association, and Washington Literacy, for example—his budget would increase health and human services spending overall by more than $25.7 million. Much of that money comes from revenue dedicated by law to specific purposes and cannot be used for the nonprofits. But within the current expense fund, which is a portion of the total budget the county can use in any way it sees fit, health and human service funding is decreasing much less than Sims' budget speech would indicate—by $179,000, rather than $1.9 million.

Moreover, it's often hard to get a feel for how much money is being spent in any given category. For instance, Sims says he would cut parks spending by $1.3 million, yet outlay an additional $4.4 million on "livable communities" projects—including parks, open spaces and trails. According to Sims' budget office, the cuts are from one fund that goes for maintenance chores, while the new spending is from another that goes for land purchases (but also large maintenance projects, like replacing windows at a parks facility in White Center). The big picture—that more, rather than less, money is being spent—tends to get lost in such bureaucratic distinctions.

That's not to say that particular cuts do not wound. Rob Parker, president and CEO of the Boys and Girls Club of King County, says the county's withdrawal of $86,000 in annual support may jeopardize three staff positions—two athletic directors and one education director—at clubs in some of the county's poorest neighborhoods. Other cuts may imperil legal aid to the poor in civil cases and assistance in chores for the elderly.

While many of those affected express outrage, Parker doesn't blame Sims. "It really feels like [the county's] reached a point where they have no more money to spend," he says. Well, maybe so—unless Sims sacrifices, say, the new law enforcement database. In which case he'd undoubtedly be telling cops that the money simply isn't there.

 
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