Two tax-limit initiatives will appear on the Nov. 2 election ballot. Initiative 601 would limit future tax increases according to growth in state population and inflation levels. Initiative 602 would roll back all taxes and fees enacted in the 1993 legislative session as well as limit future tax increases to a percentage of personal income. Since the tax rollback provisions of Initiative 602 would have an immediate impact on the University’s 1993-95 budget, its projected effects are outlined below in an article prepared by the UW Office of University Relations.
Q: What would Initiative 602 do?
A: Initiative 602 would establish a new state revenue limitation tied to growth in state personal income. It would also repeal all state tax and fee increases, including tuition, enacted during the 1993 legislative session. Initiative 602 also requires:
Q: How does Initiative 602 differ from similar tax-limit initiatives passed in Oregon and California?
A: Both Proposition 13 in California and Measure 5 in Oregon significantly reduced local property taxes. Initiative 602 does not apply to property tax, nor does it change the state sales tax. Therefore, the direct impact of the initiative on a broad spectrum of the population is significantly different. The major taxes and fees which would be eliminated by Initiative 602 are the following:
Q: What would be the impact of Initiative 602 on the state budget?
A: If passed, and if super majorities were not produced to mitigate the impact, Initiative 602 would require the state legislature to reduce biennial appropriations by $952 million from the $16.7 billion 1993-95 state budget. Since an estimated 47 percent of the state budget is constitutionally protected (basic education funding, debt service on state bonds and pension contributions), the budget reductions would come principally from five “unprotected” areas: higher education, social and health services, corrections, general government and the unprotected areas of K-12 education (e.g., block grants, complex needs, etc.).
With the state’s debt limit tied to state revenue levels, Initiative 602 could also result in a $200 million reduction in the $900 million state capital budget.
If Initiative 602 were to pass, presumably the governor would call the legislature into emergency special session to rewrite the state budget. No one can predict exactly how the legislature would cut state agencies to balance the budget. Some agencies could fare better or worse than others, but most observers agree that budget reductions would likely be enacted in all major areas of the state budget that are unprotected. This includes higher education.
Q: What would be the impact of Initiative 602 on higher education?
A: Higher education is more than 27 percent of the unprotected portion of the state budget. If it received its pro rata—or across the board—share of a $952 million reduction, higher education’s budget would be reduced by $260 million. Some of the potential areas for budget cuts include:
Q: What would be the impact of Initiative 602 on the University of Washington?
A: The University of Washington’s budget is 7.7 percent of the unprotected portion of the state budget. If it received its pro rata share of a $952 million reduction, the University’s budget would be reduced by $73 million. This would be on top of the $32.3 million reduction the University just absorbed in the budget as passed by the 1993 legislature, and a $21 million cut in the biennium just completed. If enacted, the cumulative reduction over two years could total $126 million. The additional $73 million budget reduction would more than erase the $50 million budget improvements provided to the University in the late 1980s, most of which went toward improvements in undergraduate education.
This type of budget reduction would eliminate more than 700 faculty and staff positions and reduce the size of the student body by 2,000 to 3,000 students. Additionally, the new enrollments in graduate, evening degree and branch campus programs would most likely be eliminated.
To meet reductions of this magnitude, it is likely that the University would enact “vertical” cuts by reducing, consolidating or eliminating some programs rather than administering across-the-board reductions.
Finally, the University’s pro-rata share of capital budget reductions would probably be about $40 million. Decisions on which projects would be eliminated would be made by the legislature, but vulnerable projects could include the old Physics Building renovation as an undergraduate center, the Business Administration Executive Education facility, the Henry Art Gallery expansion, the Harborview Research Building design funds, and Bothell and Tacoma branch campus construction dollars.