Updated Nov 3, 2009 - 1:11 pm
I-1033 would slap cap on gov't growth
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Associated Press Writer
Anti-tax activist Tim Eyman awaited the voters' verdict Tuesday on his Initiative 1033, which would limit government revenue, cut property taxes and require voters to approve any tax hikes.
A wide coalition of opponents, including elected officials, labor unions and big business, is hoping it will fail. They say the government is already struggling with recession-fueled drop-offs in tax revenue.
Initiative 1033 borrows from earlier smaller-government measures enacted here and in other states.
Its central feature is a cap on revenue. If enacted, I-1033 would allow the main checking accounts of city, county and state governments to grow only fast enough to match price inflation and population growth.
Any revenue collected above the cap would automatically flow into a separate account, which would replace property tax revenue in the following year.
Governments could collect revenue above the limit only by getting voter approval for new taxes.
Some sources of income would be exempt from the cap, including the state's constitutionally protected Rainy Day Fund and some federal money to the state.
An estimate from the state Office of Financial Management says I-1033 could divert nearly $6 billion away from the state general fund over six years. Cities would lose about $2 billion during that stretch, and counties would lose close to $700 million.
Eyman says I-1033 establishes needed restrictions to keep government spending growth at reasonable levels as the state pulls out of recession. Without such safeguards, he argues, politicians are too apt to match spikes in revenue with unsustainable increases in spending.
Opponents, however, argue that this is exactly the wrong time to put government on a strict diet. Services are being cut at all levels because of big drops in revenue tied to the slow economy, and the opposition says Eyman's measure would lock in a "permanent recession."
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