Understanding the King County Budget

Citizens expect fiscal integrity and accountability in the use of their tax dollars, and the Metropolitan King County Council meets that demand by setting priorities, funding programs consistent with those priorities, and measuring results. The annual budget is the single most important document through which the Council sets policy for King County and oversees delivery of the services you need and expect.

This “big picture” look will help you understand how the King County budget works. The County Executive submitts his proposed budget in September. The County Council then holds a series of public hearings and panel meetings to scrutinize the proposal and develop its own. The Council traditionally adopts the final King County budget the Monday before Thanksgiving.

County revenues

King County has only two principal tax revenue sources to fund the many services it provides to residents: property tax and sales tax.

King County is the tax collector for all taxing districts within the county. Although the property tax check you write is payable to King County, the County receives only 17 cents for every dollar. The rest goes to other agencies, including 50 cents to schools, 38 cents to cities and towns, and 13 cents to other districts (see pie chart below).

Where your property tax dollar goes

King County residents currently pay a 9.5 percent sales tax. The state keeps 6.5 percent, 1.8 percent goes to Metro Transit and Sound Transit, 0.1 percent is set aside for mental health services and substance abuse treatment, and the remaining 1.1 percent is split between cities and the County. (See pie chart below.)

Where your sales tax dollar goes

 

 

Restricted and unrestricted funds

The county budget is composed of two types of funds: dedicated funds and the general fund. Dedicated funds are the largest portion, at 87% or more than four fifths of the total county budget. By law, dedicated funds can be utilized only for specific purposes, such as transit, sewage treatment, and voter-approved programs.

King County dedicated funds

At 13%, the  general fund is the smaller share of the county budget. This discretionary fund pays for critical day-to-day services that are not supported by dedicated revenues. Three quarters of the general fund (76%) goes to support state-mandated criminal justice and public safety services, with the remainder paying for other programs, such as parks and health and human services (see pie chart below).

King County general fund

Structural gap, or why is there a budget shortfall?

King County is now the 14th most populous county in the nation, with nearly 1.9 million residents, and is the second largest provider of public services in Washington State.

In addition to the services the county usually provides to residents, it has been left to counties to fill the gap as federal and state governments have made significant reductions to their support of vital human services and have left other critical needs unfunded.

Also, annexations and incorporations have reduced the County’s tax base, as previously unincorporated areas send their tax revenues to cities.

Counties have only two principal sources of tax revenue to support public services—property tax and sales tax—a structure that dates back to the farm-based economy of the 1850s. In contrast, the State of Washington receives revenue from 36 separate taxing sources, and cities like Seattle have 6 separate taxing sources.

By voter initiative subsequently passed into law by the Washington State Legislature, the amount of property taxes levied by counties can only grow 1 percent per year, plus the revenues from new construction. As a result, revenues counties receive grow at a much lower rate than the cost of maintaining the same level of service as before. This gap is referred to as the “structural gap.”

For example, under this cap on property taxes, county revenues grew by 2-3 percent a year till 2009, buoyed by the region’s construction boom. However, the rising cost of providing the same level of public services went up by 4 to 5 percent  a year.

For 2010, this structural gap is made worse by the global recession.  Property tax revenues are depressed by the severe slowdown in new construction, and sales tax revenues have declined dramatically as consumers have cut back on spending.

King County is not alone in this situation. Counties across the state face this structural gap between lowered revenue and the rising cost of maintaining public services. The projected deficit, or difference between revenue and costs, for King County is $60 million for 2011. Previous deficits were $56 million in 2010, and $93 million in 2009.

How can the budget gap be fixed?

In the short term, the County has to make difficult decisions to balance its budget. In the long term, this structural gap between revenues and expenses needs to be addressed by both the State Legislature and the County. The County has to use a dual approach—reduce expenditures and increase revenues—in order to provide the public services that county residents need and expect.