Mercer Islanders Defeat Prop 1: A Victory for Sustainable Spending

In 2018, the City of Mercer Island faced a critical decision regarding its financial future. The City Council proposed a six-year levy, known as Proposition 1, to address projected budget deficits. Titled “Levy Lid Lift for Public Safety, Youth, Family & Senior Services, and Parks and Recreation,” the measure aimed to raise $21 million through an additional property tax of $0.25 per $1,000 of assessed value. However, Mercer Islanders for Sustainable Spending led a successful campaign to defeat the proposition, with 57% voting against it in the November 6, 2018, General Election, supported by an impressive 80% voter turnout.

The City’s push for Proposition 1 stemmed from a projected $29 million cumulative six-year deficit in its operating funds, comprising the General Fund and the Youth & Family Services (YFS) Fund. The proposed levy was designed to cover 72% of this shortfall, generating approximately $21 million. For a median-valued home assessed at $1.2 million, the levy would have increased annual property taxes by $315, totaling $1,890 over six years—a 26% increase over the 2018 city property tax.

The City argued that the levy was essential to maintain current service levels, including police patrol, investigations, school resource officers, mental health counselors, safety net services, park maintenance, and recreation programs. A 23-member citizen advisory group, after six months of study, recommended the levy by a 74% majority, supported by a third-party consultant’s verification of the City’s financial projections.

Contrary to the City’s dire predictions, the projected $29 million deficit never materialized. Instead, by the end of the six-year period, the City recorded a $17 million surplus in its General and YFS Funds. The combined year-end fund balance for these accounts doubled to $13.8 million. This remarkable turnaround was partly due to the COVID-19 period (2020–2023), during which expense growth slowed more than revenue growth.

The City projected a $1.86 million deficit in 2019, expected to grow to $7.42 million by 2024. State law, limiting property tax revenue increases to 1% annually since 2001, constrained the City’s budget, which relied on property taxes for 41% of its revenue. The City emphasized that without new revenue or service cuts, maintaining current levels of police, fire, school counseling, senior services, and park maintenance would be impossible. Proposition 1 would set the levy rate at $1.241 per $1,000 of assessed valuation in 2019, with a maximum 3% annual increase thereafter. For a median-valued home, this meant an additional $24 per month to preserve essential services.

Supporters, through www.IslandersYes.com, argued that regional inflation above 3% annually and the need for prudent reserves necessitated the levy. They highlighted the City’s efforts to manage expenses and improve efficiencies over the past decade, asserting that Proposition 1 was critical to avoiding service cuts while committing to further cost-reduction measures.

Mercer Islanders for Sustainable Spending countered that the City’s spending was out of control. Since 2011, city revenues from fees and other sources (60% of the budget) had grown 7% annually, while property taxes and new construction revenue (40% of the budget) increased 2.4% annually. City spending had risen 38%, with staffing up 12% (22 new employees) despite only 4% population growth. The opposition argued that the City had not pursued formal cost containment since 2005 and that critical services like police, fire, and school counseling were already protected. A 45% tax increase over six years, they contended, would disincentivize balanced budgeting.

The opposition urged voters to demand accountability and cost control, emphasizing that a “no” vote would push the City to balance its budget without new taxes. This message resonated, leading to the levy’s defeat.

The defeat of Proposition 1 in November 2018 was a testament to the power of informed voters prioritizing sustainable spending. Mercer Islanders for Sustainable Spending successfully highlighted the City’s overstated financial concerns and lack of cost control, proving that fiscal responsibility could maintain essential services without burdening taxpayers. The subsequent $17 million surplus validated their stance, showcasing the importance of community engagement in shaping a financially sound future for Mercer Island.