Annexation funding from the state is on Governor Gregoire's chopping block. Kirkland's budget relies on the promises of state funding to pay for annexation over the next ten years. The Kirkland City Council voted to approve the annexation despite one inconvenient truth that they all knew: the state promise of money could disappear in the blink of an eye. Our elected officials budgeted for millions of dollars from the state. If that promised money doesn't come, Kirkland's budget is in serious trouble.
If this bait and switch takes place, Kirkland will be in trouble. Those elected officials whom we trusted should have known better. They will deny all culpability. They will blame others and act like victims of the state budgetary process.
But they knew this could happen. They had no back up plan. And we all will pay the price.
[box type="note" style="rounded" border="full"]Kirkland acted in good faith when it took on the financial risks associated with annexation and increasing its population by nearly seventy percent. If the state cuts the promised ten-year .02 percent sales tax credit, the devastation to Kirkland's budget will be severe. We urge our elected officials to oppose the Governor's attempt to balance her budget on the backs of Kirkland's citizens.[/box]
Governor Christine Gregoire has delivered a classic bait and switch to the people of Kirkland: In a press conference on Monday, the Governor laid out a series of state budget cut proposals, one of which breaks a promise made to the 80,000+ people of Kirkland by eliminating or decimating the state's promised sales tax credit for cities which annexed large populations (10,000 or more). You may recall, high costs associated with annexation is what prevented Kirkland from proceeding with such plans for the better part of a decade. The only way the City of Kirkland could afford to annex Finn Hill, North Juanita and Kingsgate (Evergreen Hill) was with the promise of millions of dollars in aid from the state as part of a ten-year 0.2 percent sales tax credit. The loss of the sales tax credit funds would cripple Kirkland's annexation budgeting which in turn would result in cuts to other areas of the budget.
Such a move is tantamount to a bait and switch by our elected officials who lauded the financial models used to plan annexation. The promised support and funding is on the chopping block. Now that the annexation is completed and King County is off the hook for providing services to the 33,000 residents of north Kirkland, we see that the elected officials' promises were not worth a dime. They knew that Olympia could eliminate the sales tax credit just as quickly as it was created. They did not plan for such a contingency.
It seems ironic that now, a mere five months since annexation was enacted, the money upon which the annexation was planned is being pulled out from under us. After almost a decade of unsuccessful attempts to persuade cities like Kirkland to annex their respective annexation areas, our elected officials passed a state sales tax credit which promised approximately $40 million over the next ten years. This money was at the core of every annexation financial model created by the City of Kirkland. It literally was described as the final piece of the puzzle that could make annexation feasible.
Every citizen of Kirkland should weigh heavily their support of any elected official who does not do all they can to thwart the Governor's plan. Every elected official knew there was a very real risk that the state might break its promise of annexation funding. Some of them just didn't want to deal with that inconvenient truth.
If the funding for annexation gets cut, Kirkland will be impacted considerably. It will be the mother of all broken promises. And our elected officials -- state, county and local -- will be to blame.
The Governor will release her 2012 supplemental budget proposal later this month. She has tentatively chosen to cut $13.5 million of the $17.8 million annexation sales tax credit.
From the Governor's Budget Reduction Alternatives, p. 31:
Eliminate the annexation sales tax credit (effective Feb. 1, 2012) $17.8 million
Terminates a tax credit that benefits seven cities in King, Pierce or Snohomish counties. Under the credit, cities that annexed an area with a population of at least 10,000 are allowed to retain 0.2 percent of the state’s sales tax generated in the city to fund the cost of extending city services to the annexed area.
Alternative: Eliminate (May 1, 2012) $13.5 million*
Alternative: Reduce by 50 percent (July 1, 2012) $7.9 million
* Governor Gregoire has tentatively chosen to include the item in her 2012 supplemental budget proposal in November.