KING%COUNTY%BUDGET%BACKGROUND!

The%Structural%Gap
King!County!calls!the!General!Fund!budget!challenge!a!structural!problem%to!indicate!that!the!challenge! is!a!long8term!problem!caused!by!the!structure!of!general!fund!revenues!and!expenditures.!General! fund!revenues!grow!at!a!slower!rate!than! expenditures.!!In!years!without!a!recession,! general!fund!revenues!grow!at!about!1!to!2%! annually,!while!expenditures!grow!at!5!to!6%.!In! years!with!a!recession,!the!structural!gap! is!magnified!by!a!decrease!in!revenue.%Over!the! previous!two!years,!in!2009!and!2010,!King! County!cut!a!total!of!$150!million!from!its! General!Fund.!!Spending!has!been!cut!by!more! than!$30!million!in!real!dollars,!and!service! reductions!have!totaled!$120!million.! Meanwhile,!revenue!in!the!General!Fund!has! declined!for!two!years!in!a!row.!!As!a!result,!the! County!becomes!unable!to!provide!the!same! level!of!services!as!in!the!previous!year,!requiring!continuous!cuts!in!the!level!of!important!services!to! residents.!!Simply!cutting!the!level!of!expenditures!or!finding!new!revenues!does!not!solve!the!structural! problem,!unless!these!actions!increase!the!long8term!growth!of!revenues!and!reduce!growth!in! expenditures.!!

Expenditures%
The!2011!King!County!adopted!budget!of!$5!billion!(which!includes!the!Metro!two8year!budget)!is!made! up!of!both!dedicated!and!discretionary!funds.!!By!law,!the!dedicated!funds!must!be!used!for!specific! purposes,!such!as!transit,!solid!waste!recycling!and!disposal,!sewage!treatment,!environmental! programs,!capital!improvements,!debt!service,!public!health,!human!services,!and!other!programs.! Dedicated!funds!made!up!most!of!the!budget!(87.6!percent)!in!2010.!! Discretionary!funds!can!be!used!for!mandated!or!non8 mandated!programs.!!Various!discretionary!revenues! made!up!the!other!12.4!percent!of!the!2011!budget,! tallying!$628!million!of!the!$5!billion!total!budget,!and! are!known!collectively!as!the!General!Fund.!!!About!77! percent!of!the!general!fund!is!used!for!public!safety!and! criminal!justice.!The!rest!goes!to!general!government! administration,!public!health,!and!other!purposes.! The!largest!area!of!expenditures,!at!41!%!is!Physical! Environment,!which!supports!services!related!to!building! and!land!use!permitting;!community!and!regional!parks;!!

various!recreational!programs;!solid!waste! disposal;!surface!water!management;!wastewater! treatment;!road!and!bridge!maintenance!and! improvement!in!the!unincorporated!area;! passenger!ferry!operations;!operations!of!an! international!airport;!and!transit!operations.!! The!General!Government!program!area!comprises! the!major!administrative!and!central!support! services!for!King!County!government.!This! includes!the!offices!of!elected!officials:!the!King! County!Council,!the!King!County!Executive,!the! Assessor,!and!the!Director!of!Elections;!!central!service!agencies!that!provide!a!service!to!other!county! agencies;!!direct!public!service!agencies!such!as!Records!and!Licensing!Services!and!Regional!Animal! Services!of!King!County;!and!!miscellaneous!agencies!and!central!reserves.!Approximately!75!percent!of! General!Government!agency!budgets!is!funded!by!internal!service!charges!and!flow!through!internal! service!funds!and!18!percent!of!the!total!General!Government!budget!is!located!in!the!General!Fund.!! Factors!that!exacerbate!the!structural!gap!on!the!expenditure!side!include:!

Unfunded!mandates:!!Washington!States!mandated!increase!in!service!responsibilities!have!rarely! come!with!additional!state!or!other!funding!to!assist!the!County!in!meeting!the!additional!expenses! of!the!service!requirements.! Urban!unincorporated!area!services:!!Although!state!law!requires!the!County!to!be!a!provider!of! regional!and!rural!services,!the!County!must!also!provide!services!to!several!unincorporated!yet! heavily!populated!urban!communities.! Cost!pressures:%!The!County!faces!many!of!the!same!kinds!of!cost!pressures!on!its!expenditures!that! businesses!do,!such!as!labor!costs,!but!has!far!less!flexibility!than!many!businesses!to!meet!these! challenges.!For!example,!union!contracts!set!employee!wages!and!benefits!for!80!percent!of!all! county!employees,!inflation!increases!the!costs!of!providing!County!services,!both!through! purchases!the!County!makes!and!through!rising!health!care!costs.!

Revenues:%Sales%and%Property%Taxes The!county!collects!two!main!types!of!taxes:!sales!and!property!tax.!Out!of!the!9.5!per8!cent!sales!tax! levied!within!most!parts!of!King!County,!the!countys!share!is!1.0!percent!in!unincorporated!areas!and! 0.15!percent!within!the!cities.!The!County!also!collects!0.9!percent!for!Metro!transit,!0.1!percent!for! mental!health!and!substance!abuse!treatment,!and!0.1!percent!for!criminal!justice!(shared!with!cities!by! formula).!The!remainder!goes!to!the!State!of!Washington!(6.5! percent),!Sound!Transit!(0.9!percent)!and!cities!(0.85!percent! within!their!boundaries).!!! Property!tax!rates!vary!across!the!county!depending!on! specific!rates!charged!by!various!jurisdictions.!On!average,! 17.5!percent!of!property!taxes!collected!by!King!County!go!to!

the!county.!The!rest!goes!to!the!state;!school!districts;!cities!and!other!taxing!districts!such!as!libraries,! fire!districts!and!hospital!districts.!! The!revenue!for!dedicated!funds!comes!primarily!from!fees,!user!charges,!dedicated!taxes,!voter! approved!special!levies,!and!similar!sources.! Factors%that%have%led%to%or%exacerbated%the%revenueFside%of%the%structural%gap%include:%

Heavy!reliance!on!property!tax:!!Counties!must!rely!almost!solely!on!property!and!sales!taxes,!while! cities,!for!example,!can!collect!business!and!utility!taxes.!!Less!diversification!in!the!tax!base!means! that!counties!are!affected!more!severely!when!property!tax!or!sales!tax!collections!slow!or!drop.! Property!taxes!make!up!nearly!one8half!of!the!Countys!general!fund!revenues.!!! Property8tax!limiting!regulation:!!Initiatives!such!as!I8747!capped!increases!in!the!property!tax!to!one! percent!and!was!subsequently!passed!into!law!by!the!State!Legislature.!This!has!limited!the!growth! of!the!property!tax!and!other!revenues!to!under!the!rate!of!inflation.!!! A!shrinking!tax!base!due!to!annexations!and!incorporations:%!Often,!businesses!and!densely! populated!residential!areas!are!annexed!into!cities.!Consequently,!their!tax!revenues!go!to!cities,! leaving!the!County!with!a!lower!level!of!revenue!and!a!slower8growing!base!of!sales!tax.! Economic!downturn:%!Both!property!tax!and!sales!tax!collections!are!particularly!hard!hit!in!times!of! slow!economic!growth.!Property!tax!revenues!are!depressed!by!the!slowdown!in!new!construction,! and!sales!tax!revenues!decline!dramatically!as!consumers!cut!back!on!spending.!%

Focus%on%Metro%Transit%operations!
Metro!Transit!operates!a!fleet!of!about!1,300!vehicles!!including!standard!and!articulated!coaches,! electric!trolleys,!dual!powered!buses,!and!hybrid!diesel8electric!buses!!and!in!2010!served!an!annual! bus!ridership!of!over!100!million!people!within!a!2,100!square!mile!area.!!Metro!Transit!serves!riders! who!are!disabled!with!accessible!fixed!route!service!as!well!as!with!paratransit!van!service!and!a!taxi! script!program.!!Metro!Transit!operates!the!largest!publicly!owned!vanpool!program!in!the!country!with! more!than!600!vans!used!by!over!5,000! people!who!use!these!vans!every!day.!!! The!regional!Ridematch!system!helps! commuters!form!and!sustain!new! carpools!and!vanpools!in!seven! counties!by!matching!names!in!a! computer!database.!!Metro!Transit! operates!the!1.38mile!electric!bus! tunnel!underneath!downtown!Seattle.! Metro!Transit!operations!are!funded!by! the!Public!Transportation!Fund,!which! is!comprised!of!three!sub8funds:! operating,!capital,!and!fleet! replacement.!There!are!several!revenue!sources!for!the!Public!Transportation!Fund,!but!the!main! revenue!source!is!the!sales!tax.!

METRO%TRANSIT%9FPOINT%PLAN% The!specific!actions!taken!for!the!201082011!biennium!include:! 1. Deferred%bus%service%expansion! Suspended!remaining!Transit!Now!improvements!except!Rapid!Ride!and!already8approved! partnerships.! 2. Made%capital%program%cuts! Reprioritized!the!capital!program!and!reduced!the!number!of!new!buses!to!be!purchased!to! replace!the!current,!aging!fleet!or!to!support!deferred!expansion.! 3. Made%nonFserviceFrelated%cuts! Reduced!costs!not!associated!directly!with!bus!service!by!more!than!10!percent,!including!the! elimination!of!more!than!70!staff!positions!(on!top!of!30!staff!positions!cut!in!2009).! 4. Increased%revenue%through%a%property%tax%swap! As!a!result!of!a!tax!swap,!6.5!cents!per!$1,000!of!property!value!is!now!allocated!for!transit.!It!is! split!into!one!cent!for!additional!bus!service!on!the!SR8520!corridor,!and!5.5!cents!for!other! transit!(including!creation!of!the!new!RapidRide!F!Line).! 5. Reduced%operating%reserves! Metro!has!reduced!by!half!the!funds!it!holds!to!address!emergency!situations.! 6. Increased%fares%in%2011! Metro!also!increased!fares!in!2008,!2009!and!2010,!for!a!total!increase!of!$1!in!adult!cash!fares.! 7. Reduced%fleet%replacement%reserves% Consistent!with!the!performance!audit!done!in!2009,!Metro!pulled!$100!million!from!its!fleet! replacement!fund!to!support!bus!service!during!the!next!four!years.! 8. Achieving%efficiencies%identified%in%a%2009%performance%audit! Metro!is!using!scheduling!efficiencies!to!eliminate!125,000!hours!of!service!during!201082011.! 9. Suspending%bus%service! Metro!has!a!target!to!cut!bus!service!by!75,000!hours!in!201082011.!More!cuts!will!be!required! through!2015!to!reach!a!sustainable!level.! !
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