"I-695 tossed, city budget hazy"
July 3, 2008 · Updated 1:03 PM
"The state Supreme Courts decision striking down Initiative 695, the cost-cutting measure approved by voters last year, may have little immediate effect on Oak Harbors critical budget problems.But the high courts 8-1 ruling announced Thursday could have consequences for this years Initiative 722, the so-called son of 695.Mayor Patty Cohen said that the city administration currently has no plans to raise taxes or fees this year, even though the courts ruling would free the city to do so. Instead, she said the city will probably do some major budget cutting this fall to balance the citys bare-bones 2001 budget.Then next spring, she said, the city may hold a special election for a tax increase package that would bring back some of the programs that were cut.The community can decide what level of service they want, she said, and what they are willing to pay for.The city has to cut at least $150,000 from the budget because a one-year-old tax on city utilities expires at the end of the year.The City Council, however, does not have to go along with the mayors plan and could raise taxes on their own accord.Oak Harbor budget problems originate, in part, from I-695. It was one of the cities hardest hit by the initiative, which eliminated the value-based motor vehicle excise tax and required a vote of the people to raise taxes. Oak Harbor lost $800,000 a year in sales tax equalization funding, which came from the car tax.The Supreme Court ruled that I-695 violated the state Constitution in four ways: It had more than one subject; the initiatives title was misleading; it created an illegal referendum procedure; and it amended an existing law without publishing the law and the proposed change.The ruling offers some comfort for those worried about I-722, which voters will decide Nov. 7. Oak Harbor Interim City Superintendent Doug Merriman said it seems likely that I-722 is unconstitutional, since it also has more than one subject.The initiative would limit property tax increases to 2 percent a year, limit increases to property value to 2 percent a year, and require government to roll back and give back any tax increases passed between July 2, 1999, to Dec. 31, 1999.If passed, that would mean a net loss of over $1 million from Oak Harbors $8 million budget. Merriman said city officials decided to wait until after the election to decided whether to cut the $1 million from the budget.In the meantime, Cohen said shes asked both the city department heads and the council members to work on prioritizing city services and programs by deciding what the core services are. She said there will definitely be some painful cuts ahead.I dont know if the community truly understands the critical nature of the city finances, she said. This is a very serious time for the city. Its not a good place to be. "