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Originally published October 19, 2009 at 12:18 AM | Page modified October 22, 2009 at 11:16 PM

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I-1033 could hit higher ed especially hard

Tim Eyman's Initiative 1033 would likely deepen the cuts throughout the state budget, including education.

Seattle Times staff reporter

How it would work

Initiative 1033 would limit tax-revenue increases for state, city and county governments to the rate of inflation and population growth. Any thing more than the limit would be used to reduce property taxes. Voter-approved taxes would be exempt.

State budget writers project the cap would limit revenue increases to about 3 percent annually over six years. But, as the economy improves, state tax collections are expected to increase about 5 percent each year on average. The difference between the two would be used to reduce property taxes.

The governor's budget office projects the measure would divert more than $8 billion from state, city and county general funds into property-tax relief from 2011 to 2015. That's roughly equivalent to state spending on public schools and higher education combined in the current fiscal year.

Once an initiative is approved by voters, it takes a two-thirds vote of the Legislature to amend the measure in the first two years. After that, lawmakers can change the measure with a simple majority vote.

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Polls long have shown education as a top concern among voters in this state, and opponents of Tim Eyman's Initiative 1033 are hitting that angle hard.

Critics argue the initiative would force deep cuts in spending on education and essentially lock them in place for years. Washington's K-12 public-school system receives about 72 percent of its funding from the state.

Eyman has dismissed the concerns as "absurd."

While the full impact of I-1033 isn't known, it almost certainly would make it more difficult for the state to crawl out of its existing budget hole. And short of lawmakers seeking, and receiving, voter-approved tax increases, the measure likely would increase the size of cuts throughout the state budget — including education.

State budget writers say the state's colleges and universities are more vulnerable to deep cuts than the K-12 education system when the Legislature drafts the next two-year budget in 2011.

That's because the state constitution mandates funding for K-12 "basic education" and the Legislature already made sharp spending cuts to the public system that fall outside that category.

For example, the Legislature this year slashed $600 million from Initiative 728 funding, approved by voters in 2000 to hire K-12 teachers and reduce class sizes.

In other words, lawmakers say there's not a lot left to cut out of the K-12 public-school budget without running afoul of the constitution. Unless voters approve a tax increase, the main effect of Eyman's initiative likely would be to essentially lock in place cuts to the K-12 system already made by lawmakers.

Higher education is a different matter. Although colleges and universities could face cuts even if I-1033 fails, the initiative likely would make the cuts deeper, lawmakers said.

"The first cut is going to be in higher education. There is no constitutional mandate to maintain our higher-education institutions," said Rep. Kathy Haigh, D-Shelton, chairwoman of the House Education Appropriations Committee. "If these institutions are going to remain viable, they're going to have to increase tuition to something more like private schools."

Mark Emmert, president of the University of Washington, is a bit more cautious but said that, at the least, students likely would see continuing tuition increases similar to the ones approved by the Legislature this year.

The current state budget allows universities to increase tuition 30 percent over two years.

"What we know for sure is it would impose ever-increasing budget cuts in higher education, and that in turn drives up tuition," Emmert said.

I-1033 would limit tax-revenue increases for state, city and county governments to the rate of inflation and population growth. Anything more than the limit would be used to reduce property taxes. Voter-approved tax increases are exempt.

Eyman disagrees that his initiative would necessarily result in tuition increases, or cuts to education. It's up to lawmakers to figure out how to spend state dollars, he said. They could cut spending elsewhere. Or ask voters to increase taxes.

"You guys [state lawmakers] keep saying your highest priority is education and higher education," Eyman said. "If it's your highest priority, it shouldn't have to be cut at all."

Legislators, however, say they expect a large shortfall when they put together the next two-year budget.

Not counting projected increases in tax collections as the economy improves, budget writers expect to be around $5 billion in the hole in 2011, in part because federal stimulus money will run out by then. And that figure doesn't include inflationary pressures such as increased health-care costs.

The state estimates it will have around an additional $3.3 billion in tax revenue during the next two-year budget cycle. Eyman's initiative, if approved by voters Nov. 3, is projected to allow the state to keep about $1.8 billion of that amount, and set aside $1.5 billion for property-tax cuts in the 2011-13 biennium.

Simply put, lawmakers say, Eyman's initiative would severely limit how much of the budget shortfall can be filled by increased revenue from a recovering economy.

The Legislature also is limited in where to cut. Programs that account for more than half the budget, including basic education, Medicaid, debt service and the state prison system, are largely off-limits for legal, political and practical reasons.

Higher education, and social-service programs not mandated by the federal government, often have been the target of deep cuts during recessions.

State Sen. Joe Zarelli, R-Ridgefield, who backs Eyman's initiative, said it's too early to know the impact the budget shortfall and I-1033 would have on state services.

The Legislature needs to reassess services being provided by the state and look at other ways to do the same things that could save the state money "before we can throw our hands up and say we need to make significant cuts or eliminate programs," said Zarelli, the ranking Republican on the Senate Ways and Means Committee.

Andrew Garber: 360-236-8266 or agarber@seattletimes.com

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