Legislature passes bills that may help King County’s budget crisis

Last fall, King County Executive Dow Constantine issued dire warnings about the county’s budget situation: Without help from the Legislature, it would be forced to shutter all or almost all of its 10 public health clinics.

The county’s general fund is fueled almost entirely by property taxes, and Olympia strictly limits how much counties can collect in those taxes. With inflation running hot the last several years, Constantine said, the county’s expenses were outpacing the money it was able to bring in.

County officials were a consistent presence in Olympia over the legislative session, lobbying and testifying for help. But Democratic legislators, amid pushback from Republicans, anti-tax activists and constituents, shot down the county’s preferred fix, which would have raised the cap on how much property taxes can rise each year.

Still, legislators passed two obscure bills, largely along party lines, that could help King County — and only King County — raise taxes to fill its budget gap.

“We have more options now, which is a really good thing, we can’t say with 100% certainty that we’re out of the woods,” said Metropolitan King County Councilmember Girmay Zahilay, chair of the council’s Budget Committee. “All we did was pass step one, which is state clearance, but we still have to clear things at the county level.”

The county estimates a $35 million funding gap for next year’s general fund budget. The general fund is about $750 million, but nearly three-quarters of that is for the state-mandated services of the criminal legal system — the sheriff’s department, courts and jails. The biggest chunk of the remaining general fund budget goes toward public health, which is why officials say the county’s health clinics are in danger.

The county’s general fund money comes almost entirely from property tax and sales tax, with the majority coming from property taxes.

Property taxes, by state law, can’t go up by more than 1% per year, plus the value of new construction. The 1% limit applies to what the county collects in total; an individual’s property taxes could go up by more than that, so long as the county’s total does not.

Constantine has, for years, been asking the Legislature to raise the 1% limit. The push to do so this year failed. Senate Democrats scrapped the bill, as it was on the brink of a vote, amid united Republican opposition and after two Democratic co-sponsors dropped their support.

“The County received no help with its General Fund financial crisis during the legislative session,” county Budget Director Dwight Dively wrote in an email. “Legislation to increase the 1% annual cap on property tax revenue would help. Even more useful would be to give counties new progressive revenue sources in addition to property and sales taxes.”

What the county got instead were two new options to raise property taxes on its own, although both would require difficult votes at the local level.

The 1% cap on property tax increases applies to every county, and many of them are in rough financial shape. Of the state’s 39 counties, 29 have budgetary situations flagged by the state auditor as either cautionary or concerning.

But King County’s finances were further limited. State law allows counties to create new levies, seeking voter approval to help fill general fund gaps.

But counties with more than 1.5 million people are barred from creating levies to replace general fund revenues. Only King County has more than 1.5 million people.

King County can run levies to provide new services — things like the Best Starts for Kids levy for early childhood education, or the levy to fund new mental health crisis centers — but it has been barred from using levies to fund services that it already provides.

House Bill 2044, passed mostly along party lines and signed by Gov. Jay Inslee this month, removes that barrier and allows King County to run a voter-approved levy to help fill its general fund.

“This bill gives King County voters a voice in what services they fund, which every other voter in jurisdictions outside King County currently enjoys,” Michael White, the county’s state relations director, said at a hearing this year.

The Legislature also gave King County an option to raise property taxes without a vote of the people. Under House Bill 2348, which Democrats passed with limited Republican support, the Metropolitan King County Council could raise taxes to help fund the operation, expansion and modernization of Harborview Medical Center, the county-owned hospital.

The legislation technically applies to all county-owned hospitals, but Harborview is the only county-owned hospital in the state.

Inslee has not yet signed the legislation.

Harborview, the only Level I trauma center in the Northwest, serves a significant homeless population and annually provides hundreds of millions of dollars in charity and undercompensated care. It currently receives no county money for operating expenses but is in the midst of a $1.74 billion renovation and expansion that is running significantly over budget.

The county could then, conceivably, transfer its public health clinics under the auspices of Harborview, using the new Harborview funding to essentially fill the gap in the general fund budget.

“But this would require significant restructuring of governance,” Dively wrote.

Zahilay said the County Council would follow Constantine’s lead on how to proceed, whether to ask voters to raise property taxes, whether to raise property taxes for Harborview, both or neither.

“They are weighing their options,” Zahilay said of Constantine’s office. “Putting out polls to see what would be most tolerable to the public, considering all the different factors and variables in the upcoming budget.”