“For the second year in a row, a citizen initiative looms over the city budgeting process.Initiative 722 – which would roll back last year’s increases in local taxes and fees, and cap future valuations on island real estate – shadows the task in uncertainty.It’s like I-695 – nobody knows how it will be interpreted, said Ralph Eells, finance director for the city. A worst-case scenario, he suggested, would result in city staff layoffs and cuts to both discretionary spending and essential services.I don’t mean to sound alarmist, Eells said, but we don’t have $1.5 million we can take off the top.Taking I-722 out of the equation, the administration does have a general idea of what revenues will look like next year.Because of new construction added to the tax roles, and the revaluation of existing residential properties – up as much as 18 percent this year – the proposed city tax rate will actually go down.That rate – which accounts for about 10 percent of the local property tax bill – is expected to drop to $1.65 per $1,000 assessed valuation in 2001, down from $1.73 this year. That’s not to say actual revenues would go down. Do the math, and it adds up to about $4.717 million in local property taxes flowing into city coffers next year, a 12-percent increase over 2000. Net result: The owner of a $300,000 home would spend about $495 for city services.It’s apparent that elimination of the state Motor Vehicle Excise Tax – codified by the Legislature, despite the fact that I-695 was found unconstitutional by an appellate court – continues to cost the city dearly. Eells said shared revenues from the state would have equaled $1.2 million next year; instead, the city will get about $286,000, with the city left to make up the difference through other means.Somewhat ahead of the rest of the budgeting process, the new property tax levy is up for adoption at Wednesday’s council meeting. At the same time, Mayor Dwight Sutton and city Administrator Lynn Nordby are set to begin weeding through department spending proposals.Department heads were asked to submit proposals that would maintain current programs, adjusted for employee COLAs mandated under the city’s collective bargaining agreement.Budget requests will be supplemented by the cost of any proposed programs or equipment, depending on what the city council decides are its priorities for next year. We’ll try to keep the programs we do have rolling, Sutton said.But looking down the road – faced with the prospect of a significant tax-rate rollback and property valuation cap – Eells predicted that court challenges by cities and counties will immediately follow if I-722 passes.The administration has already discussed that possibility, after the successful challenge of I-695 it undertook with the city of Bremerton. That ruling is being reviewed by the state Supreme Court.It’s a case of either you do that, or you start laying off cops, Eells said.The council has discussed the possibility of passing a resolution opposing I-722, but has not taken any action. “