Category: Economy

City Council, Economy, Mayor Harrell, Taxes

Dire Revenue Forecast Spells Trouble for Capital Projects, Delays Council Budget Action
Graphs showing stark decline in the US housing market in 2023
The problem: A spike in interest rates has made mortgages unaffordable to many, reducing revenue from real estate sales that the city relies on to balance its budget.

By Erica C. Barnett

PubliCola management has been out of the office for the past couple of weeks (vacationing in a graffiti-covered post-apocalyptic European wasteland), which is why we haven’t been posting our usual detailed city budget updates. Luckily for us, city council budget chair Teresa Mosqueda decided to take an extra week before releasing her final budget balancing package, after the city’s Office of Economic and Revenue Forecast released a new revenue forecast last week that sent budget writers scrambling.

That new forecast predicts a sharp decline in revenues from a number of sources, including the sweetened beverage tax (SBT), the real estate excise tax (REET), and the retail, business, and sales taxes that make up the city’s general fund, which pays for everything from police salaries to homeless outreach workers.

For 2023, the new forecast predicts an additional general-fund shortfall of about $4.5 million. In addition, the new projections predict an additional sweetened-beverage tax shortfall of $1.6 million and an additional REET shortfall of $26.7 million. Over three years, those projections are $9.4 million, $4.5 million, and $64 million, respectively. Revenues from REET and the sugary beverage tax, unlike general-fund revenues, can only be spent on certain purposes, which limits the city’s ability to pull funding from either source to fill general-fund shortfalls (although elected officials have frequently tried); in addition, REET is largely tied up in mandatory debt payments on major bond-financed capital projects, making much of this funding source off-limits to annual budget writers.

Usually, when people refer to the city budget, they’re talking about the general fund, which represents the part of the city’s overall budget that the city council and mayor have the greatest ability to tweak. So let’s start there. On its own, the $4.5 million general-fund shortfall is not a hugely significant number in the context of a $1.6 billion budget. However, in late October, council members proposed budget amendments that would add $80 million in general-fund spending, which would have to be offset by still-unidentified cuts to Harrell’s budget proposal.

To vastly oversimplify, last week’s revenue forecast downgrade means that if the council wanted to fund all of their own priorities, they would need to reduce Harrell’s budget by $90 million. Obviously, many of these budget amendments won’t make it through—looking at you, new Seattle Fire Department program to promote “floatplane awareness”—but any additional spending requires an equivalent cut to Harrell’s budget plan.

And some of these amendments will be sacrosanct. For example, the council has shown virtually no enthusiasm for Harrell’s plan to cap annual increases on human service provider wages at a sub-inflationary 4 percent, effectively cutting these underpaid workers’ wages. (The exception is Councilmember Sara Nelson, a longtime business owner who wondered aloud why a subinflationary wage increase didn’t constitute a “raise.”) Increasing provider wages to the level currently required by law would cost about $7.1 million in 2023.

Other amendments would increase the city’s contribution to the King County Regional Homelessness Authority by $9.4 million annually to offset the loss of temporary federal funding that enabled shelters to reduce crowding during the (still-raging) pandemic; establish new tiny house villages; preserve the LEAD and Co-LEAD programs; and pay for new and existing crisis response programs. Proposals to expand human services will be harder to eliminate than, say, an amendment from Nelson that would spend $1 million on an unspecified new addiction treatment center—something King County, which has jurisdiction over public health and addiction programs, would ordinarily fund.

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Achieving a new budget balance will, as always, require some combination of spending restraint (passing only some proposed amendments) and cuts (bringing Harrell’s proposal, which includes tens of millions in new spending on priorities like removing encampments and graffiti abatement, down to size). Council members had already set their sights on Harrell’s proposal to dramatically expand the encampment-sweeping Unified Care Team and his plan to spend $1 million on a gunshot surveillance system like Shotspotter, which civil liberties advocates, including the ACLU, oppose.

Another option will be for council members to overturn a law they passed last year restricting the use of JumpStart payroll tax revenues, which are supposed to pay for affordable housing, equitable development, and Green New Deal programs, to backfill the city’s general fund. The new law says the city can only use JumpStart revenue for non-JumpStart purposes if the general fund falls below $1.5 billion. Harrell has proposed changing the law to pin the general fund baseline to inflation, allowing the city to use more of the earmarked money for non-JumpStart purposes.

The general fund is not the only budget area where the council will have to make some hard choices, nor is it the largest. Projected revenues from real estate taxes, which the city thought would continue to increase this year, have taken a nosedive thanks to rising mortgage rates and the resulting slowdown in housing purchases.

Because a large chunk of REET revenues pay for debt service, a fixed cost, or multi-year capital improvement projects such as road paving and maintenance, the city can only make limited changes to REET spending. Generally, that means cutting new or shorter-term capital projects. Some of these are improvements that mostly benefit city employees rehabbing the elevators at the Seattle Municipal Tower, for example—but others are the kind of visible, council district-level projects that voters tend to notice.

For example, Harrell’s proposed budget includes $2.5 million in new REET spending to promote “safety and accessibility” at City Hall Park; $10 million for a new Tribal Interpretive Center on the downtown waterfront; and $1 million to rehab at least one park restroom. Eliminating or delaying these programs, or any REET-funded capital project, will produce instant blowback from constituents, who will be voting next year in all seven district-based council races.

A spokesman for Harrell’s office said Monday that the mayor “recognizes that this is a challenging revenue forecast. … The mayor’s proposed budget makes critical investments in key priority areas including public safety, housing and homelessness, and the essential city services residents expect. Based on our collaboration throughout this process, we believe the Council will ensure these priorities remain adequately funded in the final budget.”

PubliCola has calls out to several council members, including Mosqueda, and will be posting additional budget updates later this week.

City Council, Economy, homelessness, human services, Mayor Harrell, Police

Harrell’s Budget Would Move Parking Enforcement Back to SPD, Add $10 Million to Homelessness Authority, and Use JumpStart to Backfill Budget
Mayor Bruce Harrell delivers his first budget speech.
Mayor Bruce Harrell delivers his first budget speech.

By Erica C. Barnett

Mayor Bruce Harrell’s first budget proposal would use JumpStart payroll tax revenues to shore up spending for non-JumpStart programs, move the city’s parking enforcement officers back into the Seattle Police Department from the Department of Transportation, and provide pay increases to homeless service providers well below the rate of inflation.

The proposal includes an add of just over $1 million to the current $6 million budgeted for projects designed to reduce traffic deaths and serious injuries in the Rainier Valley, plus “other transit-related projects that will be identified in the coming months,” according to the budget book.

In addition, the budget increases funding for the King County Regional Homelessness Authority by just over $10 million, or 13 percent—a fraction of the $90 million the KCRHA requested from the city and King County. The budget earmarks that funding for new shelter, such as tiny house villages. In its budget proposal, the KCRHA asked for funding for, among other things, a new high-acuity shelter for people with severe physical and behavioral health care needs, new spaces for unsheltered people to go during the day, and wage increases for homeless service providers.

King County Executive Dow Constantine’s budget proposal, also announced today, includes $89 million for the KCRHA over the next two years—a number that represents a reduction, on average, from the $49 million the county provided the authority as part of its startup budget this year. (Note: This number has been updated; because of a miscommunication with the county executive’s office, we originally reported that the additional money was for one year, not two.)

Harrell’s proposal to use $95 million in JumpStart tax revenues to balance his budget will likely come up against council opposition. The tax is earmarked for housing, Green New Deal programs, and equitable development, but was used during the pandemic to shore up the general-fund budget, with the understanding that the practice would be temporary.

It also adds $13.7 million across three departments—Human Services, the Seattle Department of Transportation, and Seattle Public Utilities—to maintain the Unified Care Team, which “addresses the impacts of unsheltered homelessness in the city,” and the Clean Cities Initiative, which provides trash pickup in parks and around encampments, along with graffiti cleanup and enforcement. That total includes $1 million to add six new “system navigators” to the Human Services Department’s HOPE Team, which does outreach at homeless encampments before they are swept.

The proposal includes a number of cuts a budget shortfall of around $140 million. The Human Services Department will lose about $50 million in funding from one-time federal COVID grants and general fund dollars from 2022 that funded shelters, violence prevention, and food assistance, among other programs, only some of which Harrell’s budget would continue to fully fund.

The Seattle Police Department budget eliminates 80 vacant positions, for a savings on paper of $11 million, and moves spending from another 120 vacant positions to other SPD programs, including hiring bonuses and other recruitment efforts, wellness programs, and equipment, including new Tasers and $1 million for an automated gunshot surveillance system in Rainier Beach.

The primary acoustic gunshot detection system in use in the US is Shotspotter, a system that involves installing discreet surveillance microphones all over neighborhoods with high levels of gun violence. The system has a checkered history. A study of its use in Chicago concluded that it rarely resulted in the detection of actual gun violence, and could lead to preemptive police stops and searches in communities of color; last year, that city was forced to withdraw evidence based on ShotSpotter data from a murder case because the information was deemed unreliable.

A representative from Shotspotter disputes this, calling the system “highly accurate” based on an independent analysis by the firm Edgeworth Analytics.” That report, however, only determined whether the system—aided and sometimes recategorized in real time by ShotSpotter employees—accurately identified a sound as a gunshot. The Shotspotter spokesman added that the system “provides unique, reliable, and valuable evidence and expert witness testimony that has been successfully admitted in 200 court cases, in 20 states, and has survived scrutiny in dozens of [expert witness] challenges.

According to the ACLU, acoustic gunfire detection systems often send police into communities of color based on false alarms, increasing the likelihood of conflicts between cops keyed up for a dangerous confrontation and innocent people in those communities.

The Shotspotter spokesman said there is no data “supporting the claim that ShotSpotter puts police on high alert or creates dangerous situations,” and added that it simply gives police more information and better “situational awareness.”

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Tim Burgess, the mayor’s chief public safety advisor, pushed unsuccessfully to set up ShotSpotter technology in the Rainier Valley back in 2014, when he was on the city council.

Although Harrell’s office has said they plan to stand up a new “third” public safety department starting in 2024, the budget does not include any specific line items for work to develop this department next year.

Transferring the parking enforcement officers from SDOT back into SPD will save an estimated $5 million in administrative costs that the city was paying SDOT as part of the transfer. It also reverses a shift in funding that advocates against “defunding” the police department have used to claim that Seattle made cuts to SPD in response to the 2020 protests against police violence.

“This may not be the PEOs’ final home,” Harrell said during his budget speech on Tuesday, leaving open the possibility that the parking enforcement officers could move to the future new public safety department.

Parking enforcement officers have complained that the move to SDOT deprived them of access to a real-time criminal database that allowed them to look up the criminal history of a vehicle’s owner before stopping to issue a ticket. The move, according to Harrell’s budget, will “eliminate the basis for PEOs’ unfair labor practice (ULP) complaints” while also restoring the city’s Office of Police Accountability’s authority to investigate misconduct complaints against parking officers.

“This may not be the PEOs’ final home,” Harrell said during his budget speech on Tuesday, leaving open the possibility that the officers could move to the future new public safety department.

Harrell’s proposal to use $95 million in JumpStart tax revenues to balance his budget will likely come up against council opposition. The tax is earmarked for housing, Green New Deal programs, and equitable development, but was used during the pandemic to shore up the general-fund budget, with the understanding that the practice would be temporary.

In 2021, the city adopted an ordinance creating a special fund for JumpStart revenues and establishing formal restrictions on the use of the tax to backfill the city’s general fund. Currently, the city can’t raid the JumpStart fund for non-general fund purposes unless general fund revenues fall below about $1.5 billion; this year, general fund revenues are about $100 million over that threshold. Harrell’s budget includes legislation, which would have to be approved by the City Council, that would lift the floor by the rate of inflation, making it easier to use JumpStart revenues for any purpose.

In a statement, City Council budget chair Teresa Mosqueda alluded to the kind of changes the council might consider to Harrell’s budget proposal.

“Without investments in working families and core city services, the inequities we saw prior to COVID-19 will only continue to deepen,” Mosqueda said. “With a rocky economic forecast locally and nationally, inflation rates continuing to rise, and no new federal COVID-related funding, I will be focused on strong fiscal stewardship while maintaining investments in the people and services for our City.”

The budget proposes a sub-inflationary wage increase of 4 percent for homeless service providers. Lowering wage increases for human service providers below the currently mandated rate of inflation will require a change in city law.

Although the mayor’s office is requesting an inflationary increase in the floor to use JumpStart spending for non-JumpStart purposes, the budget proposes a sub-inflationary increase of just 4 percent for homeless service providers—a total of just over $600,000 next year. Currently, the city is required by law to increase wages for all human service providers by the rate of inflation, which, this year, is around 8.7 percent. Wage increases that are lower than the rate of inflation constitute an effective pay cut. Lowering wage increases for human service providers will require a change in the law; Harrell’s budget proposes a new law setting a 4 percent ceiling on wage increases for the nonprofit human services providers that receive funding from the city.

On Monday, Harrell, along with King County Executive Dow Constantine, touted a proposal that would increase behavioral health provider wages by 13 percent. Harrell’s budget also includes recruitment bonuses for child care workers, another field that, like human and behavioral health services, has a very high rate of turnover because of low wages, tough working conditions, and a lack of real pay increases relative to inflation.

The budget now goes to the city council, whose budget committee—made up of all nine council members—will take it up starting this week. The council adopts the city’s budget annually in late November, just before Thanksgiving.

This is a developing story.

Business, Economy, Maybe Metropolis, Transit

One Thing We Learned During the Pandemic: Transit’s Not Dead
SounderBruce, CC BY-SA 4.0 , via Wikimedia Commons

by Josh Feit

There’s a stat in the latest report from Commute Seattle that offers a glimmer of hope for transit advocates. In a report that otherwise shows a stark drop in transit commutes between 2019 and 2021, coupled with a dramatic rise in telecommuting—arguably a double whammy of bad news for future transit investments—there is one finding that points toward a potential transit renaissance.

The survey showed that a key bloc of downtown workers, employees at small businesses (between 1 and 49 employees), represent the greatest untapped market for transit.

According to the City’s Office of Economic Development, small business—places with 50 employees or less—make up 95 percent of Seattle’s companies. Given small businesses’ big footprint, it’s time for the city to make policy that not only serves this important workforce, but also serves Seattle’s goal to be a sustainable, green city.

In its report, Commute Seattle, the local nonprofit that facilitates alternatives to solo car commuting, describes the encouraging news this way: “Unmet demand for employer-paid transit is higher among employees at smaller worksites than their counterparts in larger ones.” In other words, despite all the doom and gloom soothsaying about transit, the untapped demand is actually there.

At a time when some urbanists are anxious about a post-pandemic world that sidelines train and bus commuting, the news that employees at small businesses would like to ride transit, but aren’t, is particularly welcome because small businesses employ an outsized percentage of the downtown workforce. The most recent info on downtown employment comes from a November 2020 report from the Office of Economic Development, which, in addition to the 95 percent number noted above, also found that businesses with fewer than 50 employees make up provide nearly 200,000 jobs, about a third of all jobs in the city.

The numbers about transit demand tell the story: At downtown Seattle’s smallest businesses, those with between one and nine employees, more than 40 percent of employees said that transit passes are “not available” from their employer, but “they would use them” if they were. For companies with 10 to 49 employees, the number was 25 percent. Based on Commute Seattle’s outreach work, the people who work at small businesses citywide are overwhelmingly hospitality, restaurant, health care, and in-home health care workers, they say.

Just 23 percent of employees at the smallest companies and 32 percent of workers at larger small businesses report that subsidized transit programs are actually available and that they use them. This means that interest in transit at these small businesses totals 64 percent and 56 percent, respectively, as the chart above indicates.

At downtown Seattle’s smallest businesses, those with between one and nine employees, 40 percent of employees said that transit passes are “not available” from their employer, but “they would use ‘them'” if they were.

By the way, at the city’s largest companies, 100 or more employees, transit benefit usage is high, at 60 percent. This high use is easy to explain: State law requires large employers to make a “good faith effort” to use commute trip reduction plans to meet state environmental and traffic congestion goals. What jumps out about this number is that it’s about equal to the pro-transit number among employees at Seattle’s smallest businesses. This raises a question: Why is public policy only about getting white-collar workers to the job, but not employees at smaller businesses, including working-class people?

It’s worth pointing out that the high demand for transit benefits from workers at smaller businesses is coming from people who’ve yet to experience the practical benefits of transit—no gas bills, for one—at their current jobs. Just imagine how those numbers would climb if these employers offered to subsidize their ORCA cards and word spread among coworkers about the benefits. As Commute Seattle’s communication manager Madeline Feig puts it: “The best way to get people to know if transit will work for them is to get transit passes in their hands—it makes the decision easy. It is difficult for folks to know whether they would use that type of benefit if they have never had it.” In short, total interest in riding transit may be much higher than what Commute Seattle’s report suggests.

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The data about the intense demand at small worksites overlaps with another reality that became clear during the pandemic: Ridership data for transit agencies nationally, including Sound Transit and Metro, showed that that people in working-class communities and communities with high BIPOC populations continued to ride, or returned more quickly to transit, during the COVID-19 crisis.

I’m tying these two blocs of commuters together—those who work at small businesses and low-income and essential workers—because it reveals a strategy that could bring public transportation back to the forefront of our city vision, even as hybrid work models in the corporate world seem poised to undermine it. The strategy: Investing in public policy that brings transit to those who want it most.

“One of the most immediate actions we can take to address transportation inequities,” says Commute Seattle’s longtime program manager Nick Abel, “is offering transit opportunities to essential employees.”

Of course, subsidizing transit—or providing free transit— for 200,000 workers costs money. The good news is: Big employers are already paying. Sound Transit, for example, received about half its fare revenues from employer business accounts—more than $48 million of the $97 million the agency received in farebox revenue in 2019.

Given that status quo, given the environmental and city planning pluses of getting more people on transit, and given the unmet demand, it would make sense to replace this private cost with a broader, progressive business tax (smaller businesses pay less) to cover both the current cost at big companies and the cost to bring in new riders from small businesses.

Josh@publicola.com

Editor’s note: Columnist Josh Feit is an employee of Sound Transit, the regional transit agency. His views do not represent the agency’s.

Courts, criminal justice, Economy, homelessness, legislature, Morning Fizz

City Attorney Will Speed Up Case Filings, 21 Homeless Men Died in January Cold, Democrats Propose Sales Tax Holiday

1. Seattle City Attorney Ann Davison announced Monday that her office will begin deciding whether to file charges in misdemeanor cases within five business days of receiving a referral from law enforcement. In a statement, Davison said the move is necessary to prevent her office’s current 5,000-case backlog from growing.

“The best way to interrupt crime happening on the streets today is by quickly and efficiently moving on the cases referred to us by the Seattle Police Department,” Davison said. The strategy began as a recommendation from Brian Moran, who previously worked for three state attorneys general and as the US Attorney for Western Washington. Moran joined the City Attorney’s Office last month, in part to advise Davison on how to manage the backlog of criminal cases.

Speedier filing decisions could create some logistical challenge further downstream in Seattle’s criminal legal system. The COVID-19 pandemic has limited the Seattle Municipal Court’s capacity to hold hearings, and each misdemeanor case may require multiple hearings. The court has the capacity to hold two trials a week, and in recent months, it has averaged only one trial per week.

Meanwhile, King County jails are facing a staffing shortage, exacerbated by a recent outbreak of COVID-19 among staff and inmates, that has prompted the union representing King County’s corrections officers to raise the alarm about unsafe and inhumane living and working conditions for inmates and staff. While misdemeanor defendants make up a small portion of those incarcerated in King County jails, an uptick in the number of misdemeanor charges filed by the City Attorney’s Office could also increase the number of people held in jail while awaiting a hearing on their misdemeanor charges.

2. Last week, records released by the Seattle Medical Examiner’s Office revealed that 21 men experiencing homelessness died outside or in public in January 2022, the largest number since the previous high of 30 in December 2020.

Women In Black distributed a list of the people who died unsheltered during January last week.

Of the 21, four died of confirmed hypothermia, and another died from carbon monoxide poisoning in his car, a cause of death that indicates he was trying to stay warm. All five of these deaths occurred the week after Seattle and King County closed their severe weather shelters closed their severe weather shelters on the morning of January 3. During the week after the winter shelters closed, overnight lows in Seattle ranged from 32 to 38 degrees.

Twelve of the 21 men died of confirmed overdoses, according to the medical examiner.

3. To ease the burden Washington’s regressive sales tax puts on low-income and working-class people, House Democrats proposed a bill that would create a “sales tax holiday” during Labor Day weekend this year.

If passed, shoppers would be exempt from paying sales taxes when they purchase school supplies, clothes, over-the-counter drugs, computers and similar electronics, and other qualified products under $1000 during the three-day holiday.

Rep. Dave Paul (D-10, Whidbey Island) sponsored the bill. He told the House Finance Committee at a public hearing that back-to-school shopping “makes September a very lean month” for “working and needy families” and a sales-tax holiday is a way to reduce the negative financial impacts. Continue reading “City Attorney Will Speed Up Case Filings, 21 Homeless Men Died in January Cold, Democrats Propose Sales Tax Holiday” →

Economy, Elections, Guest Contributor, Politics

Rachel Smith: The Chamber’s Recovery Agenda (And Why We Aren’t Endorsing Candidates This Year)
Seattle Metro Chamber President & CEO Rachel Smith. Photo by Alabastro Photography

By Rachel Smith

Global pandemic. Racial reckoning. Economic recession. Capital insurrection. Massive joblessness. Vaccine shortage. Unprecedented times.

This is the backdrop of the moment when I optimistically started in my new role as President and CEO of the Seattle Metropolitan Chamber of Commerce. And yes, I say optimism; optimism that comes from our region’s demonstrated ability to rebound and reimagine itself, as well as optimism about how the Chamber can play a central role in the work ahead. Today, we’re starting to see more signs of hope – and I’m even more excited to help lead one of our region’s civic voices as we begin to slowly emerge from these incredibly challenging times.

In 2021, the Chamber will not make candidate endorsements, nor will we engage in candidate spending through the Chamber PAC. Instead, we will focus on elevating – and pushing for – serious civic dialogue on the most pressing issues in our region.

First and foremost on my to-do list is driving a robust and inclusive regional economic recovery, and that starts with helping struggling small businesses secure federal PPP loans – including pro bono CPA services and connection to lenders; handing out PPE, helping business with Public Health guidance, standing up partnerships to distribute vaccines, and advocating for continued state and federal relief for employers.

Equity and inclusion are also core pillars of that recovery agenda, and we need to focus our economic tools and resources to create a change in outcomes. The Chamber will work to build wealth in historically excluded communities by investing in the retention and expansion of BIPOC-owned businesses, as well as providing all of our members with resources and guidance on becoming more anti-racist institutions.

Emerging from this pandemic in a position of strength also requires partnership with public officials and leaders throughout our region. I believe strongly that we accomplish the biggest things and make the most transformative change for the most people when we work in coalition – government, business, labor, and community. This moment does not call for small-ball victories; it calls for working together in common purpose to ensure that employers survive, people stay employed, the region is prosperous, and everyone has access to that prosperity.

That is the way I intend to lead at the Chamber—working in partnership to accomplish big things. And as with any new leader, you’ll see some changes. One of the first is a new approach to local and regional elections this year. In 2021, the Chamber will not make candidate endorsements, nor will we engage in candidate spending through the Chamber PAC. Instead, we will focus on elevating – and pushing for – serious civic dialogue on the most pressing issues in our region.

These issues include:

  • Specific economic recovery actions to ensure that large employers are able to bring employees back to safe and welcoming business districts, including downtown Seattle, and that small businesses can keep their doors open and attract the volume of customers they need.
  • Working toward racial justice to address longstanding and ongoing inequities
  • Utilizing strategies to address affordability issues so that people of all income levels can afford to live in our region.
  • Making real and sustained progress on homelessness, to bring people inside and provide access to services they need.
  • Implementing police reform and building trust in communities of color, in tandem with a robust plan to keep people and businesses safe.
  • Maintaining our aging infrastructure and a long-range vision for the future of transit and mobility.
  • Delivering on local government basics: light and power, garbage and recycling, potholes and sidewalks, parks and neighborhoods, employees and administration.

Why this switch from endorsements? We believe everyone who gains the trust of the voters and is elected to office has the responsibility to lay out their approach and commit to specific actions to solve our greatest challenges.

Especially in a time of economic crisis, helping all employers and their employees recover and thrive isn’t just a “business” issue.

Especially in a time of economic crisis, helping all employers and their employees recover and thrive isn’t just a “business” issue. Every candidate elected should have a plan to keep and grow jobs – not just candidates looking for the Chamber’s endorsement. Every candidate needs to share their plan for how they will address homelessness – plans measured not just in taxes raised and dollars spent, but in outcomes achieved and how many fewer people are spending their nights outside. Every candidate needs to talk about how they plan to deliver on the things we count on local government to provide – like dependable city services, community safety, and reliable transportation options.

And the Chamber can play a role in informing and educating the business community and the public about the issues, the candidates, and their plans. Continue reading “Rachel Smith: The Chamber’s Recovery Agenda (And Why We Aren’t Endorsing Candidates This Year)” →

Economy, Elections, labor, legislature, Morning Fizz, Police

Fizz: Revenue Rebounds, SPD Negotiations Delayed, and Sawant Slams Lazy Recall Campaign Mail
Stock photo models against Sawant!

1. Washington state’s latest revenue forecast shows tax revenue increasing $3.3 billion through 2023, a major jump from the Washington State Economic Revenue and Forecast Council’s most recent (November) projection. The new projection is an improvement on what had already been an upward trend after a grim forecast last June predicted $8.8 billion in lost revenue through 2023, and brings the state much closer to its pre-pandemic $52.3 billion projection.

Wednesday’s report shows that the state’s revenue recovery is being driven by speedy vaccine distribution, the two federal stimulus packages that passed in December and March, which gave qualifying Washington state residents $600 and $1,400 checks–the $4.25 billion expected to go to the state was not factored into the forecast–, and near-record high taxable activity from real estate transaction and higher than predicted retail sales.

Andy Nicholas, senior fellow at the progressive Washington State Budget and Policy Center, says it’s no surprise sales taxes and real estate excise taxes are keeping the economy afloat. “Our whole tax code is propped up by lower- and middle-income working people in Washington state,” he said. “The gains that we’re seeing are gains from a tax code that disproportionately put responsibility for funding public services that we all benefit [from] on those with low- or moderate incomes and asks very little from those at the top.”

Nicholas says the state is currently stuck in a position where it can only hope to keep funding for public services at the same amount they were before the pandemic—which he says was not enough.

Several bills in the house and senate, like the capital gains tax (SB 5096) and the wealth tax (HB 1406), hope to fix the state’s tax code and get wealthy residents to pay more. Democratic budget proposals for the next biennium, likely coming next week, may indicate what taxes they expect to pass this session.

The Office of Financial Management said in a press release on Wednesday, “The increase in projected revenues would leave the state with a net surplus of nearly $3 billion — including reserves — at the end of current biennium.” The recently passed American Rescue Plan Act of 2021 will infuse an additional $12 billion into the state and may help maintain programs, but ultimately the money is only a one-time infusion and needs to be spent by 2024. Washington state has received roughly $20 billion in federal aid since the start of the pandemic.

“This is moment where we need to be making big and bold investments in communities,” Nicholas said. While the federal aid will help, “[The government} needs to be thinking about how we are going to set ourselves up for long-term adequate level funding and that has to be done with new, equitable sources of revenue.”

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2. If Seattle City Attorney Pete Holmes’ prediction is correct, the city’s labor negotiation team won’t sit down to negotiate with the Seattle Police Officers’ Guild (SPOG) until after new mayor takes office in 2022.

In a presentation to the Community Police Commission on Wednesday, Holmes hypothesized that contract negotiations with the city’s largest police union “probably” won’t begin “until sometime next year,” and that the negotiators may not have finalized the “parameters” for bargaining—the ground rules for the process—by the time the next mayor is inaugurated in January. He also suggested the next mayor could begin the search for a permanent police chief at roughly the same time; current Interim Seattle Police Chief Adrian Diaz stepped into the role when former Chief Carmen Best retired on short notice in September 2020, and Mayor Jenny Durkan has declined to begin the search for a permanent during her term.

Contract negotiations with city employee unions can be a lengthy process—the last round of bargaining with SPOG ended in 2018 after more than a year of negotiations. At that time, SPOG members had been working under an expired contract since 2014. The 2018 contract expired at the beginning of this year, so SPOG members will once again work under an expired agreement for the foreseeable future.

Delayed negotiations would also mean that the numerous controversial features of the 2018 SPOG contract will remain in effect for at least the coming year. Before the Seattle City Council approved the contract in November 2018—responding in part to pressure from Durkan to approve raises for union members—police accountability advocates, including the CPC, condemned the agreement for undercutting years’ worth of advocacy and a landmark 2017 ordinance that strengthened police oversight and discipline. Continue reading “Fizz: Revenue Rebounds, SPD Negotiations Delayed, and Sawant Slams Lazy Recall Campaign Mail” →