Tag: JumpStart tax

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, homelessness, housing, human services, Mayor Harrell, Police

Early Council Budget Concerns Include Plans to Raid JumpStart Tax, Cut Pay for Human Service Providers


Chart showing growing gap between city of Seattle revenues and planned expenditures through 2026By Erica C. Barnett

In a preview of the next several weeks of budget deliberations, the city council’s budget committee (which includes all nine council members) discussed their initial questions and concerns about Mayor Bruce Harrell’s proposed budget this week.

The budget would require the city council to overturn a 2019 law Harrell himself supported when he was on the council. That law requires the city to increase human service provider contracts by the rate of inflation, with the intent of providing raises to service providers that at least keep up with inflation; during the meeting when the council unanimously approved the law, Harrell said it was important to provide raises to human service providers “in both periods of economic growth and in periods of economic hardship,” and sponsored an amendment codifying this intent.

The contracts that would be impacted include all the homeless contracts the city funds but that are now administered by the King County Homelessness Authority. Harrell’s proposal would amend this law to cap mandatory pay increases at 4 percent a year, or about half the current rate of inflation, meaning that as long as inflation is higher than 4 percent, human services workers would see declines in real wages year after year. Harrell’s budget cites economic hardship as the reason he is proposing the cut.

Three years ago, Harrell took the exact opposite position. In 2019, as council chair, he proposed and passed an amendment emphasizing not only that the money needed to go directly to “underpaid” workers but that the city intended to provide full inflationary increases “in both periods of economic growth and in periods of economic hardship.”

Harrell’s proposed $10 million budget increase for the KCRHA would be earmarked mostly for shelters and tiny house villages, rather than the items the homelessness agency proposed funding in its request for $90 million in additional city and county funding; that unfilled request would have funded a 13 percent wage increase for homeless service providers.

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“In the entire spectrum of building this budget, this decision was particularly difficult,” city budget director Julie Dingley told the committee. “We know that human service provider workers do some of the most difficult and meaningful work in the city and that employers do not necessarily enjoy the funding needed, but unfortunately, during forty-year high inflation, the ongoing liability that the current law would require, does not match our ongoing general fund resources.”

Three years ago, Harrell took the exact opposite position. In 2019, as council chair, he proposed and passed an amendment emphasizing not only that the money needed to go directly to “underpaid” workers but that the city intended to provide full inflationary increases “in both periods of economic growth and in periods of economic hardship.”

Introducing his amendment at a full council meeting that year, Harrell said, “Some of us have been around where we’ve had real tough times, [during] a recession. While we’ve had to make tough cuts, the work [human services providers] do is so critically important that we recognize we have to preserve if not even enhance the funding” during economic downturns.

On Wednesday, Councilmember Lisa Herbold, echoing comments by budget chair Teresa Mosqueda, said she was “disappointed” that the mayor’s budget would permanently cap increases for human service providers regardless of the actual inflation rate. ”

“We heard from folks this morning, nonprofit leaders, who have already passed budgets that provide a modest but essential wage increase for staff on the strength of their trust that the city was going to to follow the law and fully fund the required increase,” Herbold said. “Our intent is to advance nonprofit worker wages, not force them further behind, which I feel that this proposal does.” 

Listen to this week’s Seattle Nice podcast, where Sandeep and Erica find rare common ground in condemning pay cuts for human service providers 

As of earlier this year, the KCRHA reported that the five largest homeless service providers had more than 300 vacancies for jobs that average between $20 and $25 an hour, or between $41,000 and $52,000 a year. Increasing all human services contracts (which include more than just homeless providers) by 7.6 percent, as existing law requires, would cost about $6.5 million. As a point of contrast, Harrell’s budget includes more than $4 million for police recruitment and retention strategies, an effort to increase the number of Seattle Police Department officers that includes hiring bonuses of up to $30,000, on top of an $83,000 starting salary that rapidly increases to six figures, plus overtime, according to SPD’s recruitment page.

Bar graph contrasting low human service provider wages with the Seattle median
Image via King County Regional Homelessness Authority

Harrell’s budget proposes a second change to law that takes the opposite approach to high inflation as his proposal to cap human service contract increases below inflationary levels. This change would allow the city to use the JumpStart payroll tax fund, which is earmarked for housing, Green New Deal programs, equitable development, and small businesses, to provide about $86 million toward filling the $140 million budget gap.

Last year, the council passed a law setting a clear limit on the use of JumpStart funds to backfill general fund shortfalls: If the general fund falls below $1.5 billion, the city can use JumpStart money for other purposes. Harrell’s budget would change that law to pin the general fund baseline to inflation, setting the floor for JumpStart transfers at a variable rate based on the current rate of inflation and allowing the city to use more of the earmarked money for non-JumpStart purposes whenever high inflation leads to economic hardship.

That money includes a presumption of $44 million in unspent JumpStart funds from this year, most of which would go toward a new revenue stabilization (“rainy day”) fund equal to 10 percent of JumpStart revenues every year; another $9 million would pay for administering the JumpStart tax itself through the general fund.

Mosqueda, the architect of the JumpStart tax, said she had questions about how the mayor is proposing to spend the repurposed tax and whether his plan aligns with the four priorities in the original JumpStart legislation.

“We have to continue, as a council, to make sure any of the higher-than-anticipated revenue that is being suggested to be used for investments into the general fund does still align with our city’s core progressive values” as well as “with the priorities this council has articulated in the past,” Mosqueda said.

“Part of the demand we all heard was, you have to tell us where you’re going to spend this [JumpStart] money. I totally agree that we need more revenue in the general fund so we can do the basic things that we need to do as a city, [but] these are commitments we have made to the people of Seattle.”—City Councilmember Tammy Morales

For example, Mosqueda questioned the mayor’s proposal to use $3 million a year in JumpStart funds to pay for 14 new positions at the city to support Sound Transit’s construction of light rail from West Seattle to Ballard, which Dingley said fits into the “Green New Deal” spending category because it involves shifting people from single-occupancy vehicles to trains.

When the council first considered the JumpStart tax, Councilmember Tammy Morales notes, “Part of the demand we all heard was, you have to tell us where you’re going to spend this money. … I totally agree that we need more revenue in the general fund so we can do the basic things that we need to do as a city … [but] these are commitments we have made to the people of Seattle” in the JumpStart spending plan itself and subsequent legislation codifying the spending categories the tax can be used for.

Chart outlining Mayor Harrell's proposed changes to the uses of the JumpStart payroll tax

Harrell’s budget proposal would also broaden the use of the JumpStart tax to allow it to fund housing for people making up to 60 percent of the area median income; currently, the tax primarily funds housing for very low-income people making up to 30 percent of AMI, a group that is not served at all by the market-rate housing market. The JumpStart tax can already pay for mixed-income housing that includes people making up to 60 percent of median, but the change would likely change the balance in favor of people making more money.

Harrell’s budget uses $20 million in unspent funds from 2022 and assumes an ongoing $10 million annual “underspend” in both 2023 and 2024; City Budget Office director Julie Dingley told council members Wednesday that she “would prefer not to have to use this kind of strategy,” but that “we feel comfortable at this point that there will be about this amount left at the end of the year” to balance the next year’s budget.

The budget also proposes using general fund dollars to continue and expand the Clean City Initiative and the new Unified Care Team, which together clean up trash, displace and relocate encampments and RVs, provide information about services and shelter beds to people being displaced by sweeps, and take residents’ complaints about encampments. The proposed budget would allocate more than $13 million to these programs, not counting the many individual line items related to graffiti cleanup, a particular pet peeve for Harrell. The budget would spend more than $800,000 on graffiti abatement, plus another $250,000 on Harrell’s One Seattle Day of Service, which includes graffiti abatement by volunteers.

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.

City Council, homelessness, human services, King County, Mayor Harrell, Mental Health

New Tax Would Fund Behavioral Crisis Centers; Things to Look for in Harrell’s Budget Proposal
King County Councilmember Girmay Zahilay speaks at a press conference on a county proposal to raise property taxes to fund walk-in crisis centers
King County Councilmember Girmay Zahilay

1. King County Executive Dow Constantine proposed a new property-tax levy to fund five behavioral health crisis centers across King County, along with higher wages for health care workers and the restoration of residential treatment beds that have been lost in recent years. The levy, assessed at 14.5 cents per $1,000 of assessed home value—about $121 for a median $694,000 house—could be on a countywide ballot in April 2023, if the King County Council approves it this year.

Currently, there are no walk-in crisis centers anywhere in King County, and the wait for a residential treatment bed averaged 44 days as of July, according to the county. Since 2018, the county has lost more than 110 residential treatment beds and is down to 244 beds countywide. “A question that doesn’t get asked enough to the person who says ‘get people into treatment,'” King County Councilmember Girmay Zahilay said Monday, is “‘get people into treatment where?'”

In a county with 2.3 million residents, Zahilay said, we have one crisis care facility with 46 beds”—the Downtown Emergency Service Center’s Crisis Solutions Center in the Central District, which only accepts referrals from police and other first responders. “If you break a bone in King County, you can walk in and get urgent care. If you’re going through a mental health crisis or a substance use disorder crisis, you have zero urgent care options.”

The nine-year levy proposal would also create apprenticeship programs and other supports for people entering the behavioral health care field, and would “invest in equitable wages for the workforce at crisis care centers,” according to the announcement, plus mobile or co-located crisis services that would operate until the first crisis clinics were open.

“If you break a bone in King County, you can walk in and get urgent care. If you’re going through a mental health crisis or a substance use disorder crisis, you have zero urgent care options.”—King County Councilmember Girmay Zahilay

It’s unclear how many people would see higher wages under Constantine’s proposal, which his office released only in summary form. Pay for behavioral health care workers is so low that many employees qualify for the same services they sign clients up for, said Kristen Badin, a crisis counselor and representative of SEIU 1199NW.

The King County Regional Homelessness Authority has asked the city and county to provide an additional $15.4 million to permanently service providers’ baseline budgets by 13 percent in order to increase provider wages—part of an overall budget request that would add about $90 million to the regional agency’s budget, which is funded by the city of Seattle and King County through their annual budget process.

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That process kicks off for both the city and county tomorrow, when Harrell and Constantine announce their 2023 budget proposals. On Monday, Constantine said he considered the KCRHA’s budget request “aspirational,” and confirmed that he does not plan to provide all the money the authority’s CEO, Marc Dones, requested.

That budget request, Constantine said, “was essentially a statement of need, and that neither the county nor the city’s budget could support that full request.” Harrell added that “we weren’t able to meet all of the requests, but you’ll see [during Tuesday’s budget announcement] the support we have moving forward with RHA and the support we have the people on the ground doing this important work.”

2. In 2019, the City Council passed legislation requiring the Human Services Department to build a cost of living increase into all new or renegotiated contracts with service providers, based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). At the time, inflation, as represented by the increase in CPI, was modest—between two and three percent.

“I drew a line in the sand [on the use of the JumpStart tax to backfill the city budget], and I want to make sure that we’re sticking to that, not only because it’s what we passed in statute, but because the agreement to use the higher-than anticipated revenue was to prevent austerity.”—City Council budget chair Teresa Mosqueda.

Last year, the CPI-W increased 8.7 percent, meaning that compared to 2021, it cost 8.7 percent more to pay for the same goods and services. Any wage increase that’s lower than the CPI effectively constitutes a pay cut—something social service providers whose wages are funded by the city will likely be watching for tomorrow when Harrell rolls out his budget.

Council budget chair Teresa Mosqueda said she’ll also be watching for any effort by Harrell to transfer additional funds from the JumpStart payroll tax, which is earmarked for housing, small business support, Green New Deal programs, and equitable development. Earlier this year, Mosqueda proposed using excess payroll tax revenues to help close the budget gap; those extra revenues are projected at $71 million and $84 million in 2023 and 2024, respectively.

“I drew a line in the sand,” Mosqueda said Monday, “and I want to make sure that we’re sticking to that, not only because it’s what we passed in statute, but because the agreement to use the higher-than anticipated revenue was to prevent austerity. And part of preventing austerity is keeping our promises, [including] our promises to human service providers.”

Uncategorized

JumpStart Comes to the Rescue (Again), Sound Transit Updates on Escalator Outages
The forecast office went with the baseline scenario, but noted that the pessimistic scenario has become more likely than it was three months ago.

1. Next week, Seattle’s budget office will release its budget forecast for next year, which will tell city budget writers exactly how much of a shortfall the city faces in 2023. On Monday, the city’s Economic and Revenue Forecast Council, which includes city council members and representatives from the mayor’s office, got a look at the revenue side of that equation, which, like the cost of doing city business, is strongly influenced by the economy, inflation, and interest rates set by the Federal Reserve.

The big picture: In 2022, the city would face a shortfall of nearly $18 million if not for late payments from the JumpStart payroll tax, assessed on very large local companies with highly paid workers. Those payments should have come in last year but didn’t for a variety of reasons, including the fact that some firms apparently didn’t know they had to pay the tax but “fessed up,” in the words of Office of Economic and Revenue Forecasts director Ben Noble, and paid this year.

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Because JumpStart revenues were still going to the general fund in 2021 to address the impacts of the pandemic, the money went into the general fund this year. Next year, though, that won’t be the case—and the office expects other city funding sources, such as taxes, grants, and court fines, to be lower than they predicted back in April.

Overall, the forecast office predicts the city will bring in about $1.5 billion in general-fund revenues next year—down $217 million from the current forecast for 2022.

The decline in revenues can’t all be chalked up to parking ticket refunds. Other factors include lower than anticipated revenues from business and occupation taxes, FEMA reimbursement for COVID expenditures, and a decline in use for some utilities, including telephone service (on the decline for years) and water (Seattle had a rainy spring). The city also expects payroll taxes to decline in the future, as tech companies’ stock value decreases and jobs shift away from Seattle to the Eastside

2. In a presentation to the Seattle Pedestrian Advisory Board about Sound Transit’s frequent escalator and elevator outages on Wednesday Sound Transit’s vertical conveyance deputy director, John Carini, argued that user error, rather than anything Sound Transit could control, is to blame for the majority of escalator failure. Carini also talked at length about what the light-rail agency is doing to keep riders informed about why outages are happening, and noted that the agency relies mostly on the public, rather than internal systems, to let it know when its equipment is down.

After showing a slide depicting a new sign that read, “This unit is out of service due to vandalism,” Carini said, “what a lot of people don’t understand is, mechanical failures account for about 38 percent of our total outages”; the rest fall into categories like “misuse” (32 percent) and “environmental” (15 percent), which includes debris people drop that gets caught in the equipment.

Overall, Carini said, Sound Transit is actually exceeding its targets for elevators and escalators in service—if you exclude the downtown light rail tunnel, which Sound Transit took over in January 2021. That’s a huge “if”—as anyone who has taken light rail to or from downtown is well aware, the escalators in every downtown tunnel station are often out of service; currently, according to Sound Transit’s performance tracker, one in three tunnel escalators is down.

The presentation did come with some good news for frustrated light rail riders: Sound Transit is currently setting up a schedule for replacing the downtown elevators and escalators, although with the exception of the International District station, where construction is supposed to start in 2024 the schedules are “TBD.”

In the meantime, Sound Transit will keep working to repair the broken-down equipment, and finally upgrading its elevators and escalators with equipment to ping the agency when they break down, rather than relying on security guards and the general public to let them know things aren’t working. That upgrade, too, is in a “pilot” stage; it will be 2024 or later before Sound Transit stops relying on what Carini called “the human factor” to keep them up to date on equipment failures.

 

Affordability, Density, housing, Maybe Metropolis, Taxes, zoning

Maybe Metropolis: The Solution Is More Density, Not Just More Taxes
Image of three developments allowed in some former single-family areas, from least to most dense: residential small lot, low-rise 1, and low-rise 2.
MHA’s modest upzones on a sliver of Seattle’s single-family land include (l-r) residential small lot, low-rise 1, and low-rise 2. Images via City of Seattle.

By Josh Feit

The JumpStart tax, city council member Teresa Mosqueda’s payroll tax on big employers like Amazon, is posting standout numbers. This year, JumpStart will fund $97 million in affordable housing investments, including nearly $80 million for 1,769 units of affordable rental housing. Last year, the $71.4 million it provided toward affordable housing amounted to almost half the $153 million total raised by all the city’s affordable housing funding streams.

The Jump Start tax teases out the nexus between surging tech job growth and housing prices by capturing nouveau corporate Seattle’s impact on the market. That is: As the hyper growth of tech companies like Amazon inflate local housing prices, the city is taxing them to help fund affordable housing. It’s a good look, and it seems like a logical offset for the influx of high-earning tech employees. And, let’s be honest: It also feels good.

However, as much as I agree with the logic of an Amazon tax, and as much as it’s bringing in, I think there’s a more germane and effective way to raise affordable housing dollars. Luckily, it’s already part of our affordable housing strategy—sort of.

I’m talking about 2019’s Mandatory Housing Affordability program, a fee on new development in designated parts of the city, which brought in an impressive $50 million in 2021 itself.

Given that Jump Start outpaced MHA by $20 million, why am I focusing on  MHA as the smarter policy? For starters, MHA, which came with a series of targeted upzones that allow more housing in more places, actually attempts to undo the root cause of our housing crisis: prohibitive zoning laws that discriminate against multi-family housing in the vast majority of the city. These historical zoning laws cordon off nearly 75 percent of the city from multifamily housing, pinching supply and thus fueling steep housing prices.

While conventional wisdom holds that upzones and new development inflate housing costs, a 2021 UCLA report found that the latest studies show the opposite: Five out of six studies looking at the impact of market-rate housing determined that new market-rate density “makes nearby housing more affordable across the income distribution of rental units.”

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Conversely, those who warn that upzones lead to gentrification, have a hard time explaining why gentrification is alreday happening in Seattle today, under our status-quo zoning that prohibits the very density urbanists are calling for. More logically, the prohibition on new development in so much of the city is spiking prices for the limited housing that is available.

Seattle gained 130,000 people between 2010 and 2020 (13,000 a year) and another 8,400 during the first year of the pandemic, many of them tech transplants. These newcomers didn’t cause the housing shortage, though—they merely brought it into sharper relief. The MHA strategy, which encourages housing development, is actually in the position to do something about it.

MHA, which came with a series of targeted up-zones, actually attempts to undo the root cause of our housing crisis: prohibitive zoning laws that discriminate against multi-family housing in the vast majority of the city.

And MHA might be worth more money than JumpStart. The MHA data point that interests me most is $13.4 million, a subset of MHA dollars raised. This figure represents the amount of money MHA raised specifically from developments built on land where it was previously prohibited: multifamily housing built on land that was upzoned in Seattle’s previously exclusive single-family zones.

Passed in 2019, MHA didn’t merely tack a fee onto new development; it also upzoned tracts along the edges of 27 single-family zones, allowing small-scale density in some previously single-family-only neighborhoods by expanding low-rise and neighborhood commercial zones and creating a new “residential small lot” zoning designation. These modest upzones, which the city adopted on just 6 percent of single-family land, allow new housing that fits in seamlessly with single-family houses.

Interestingly, this modest bit of geography— 6% of the single-family zones, or  4% of the city’s total developable land—accounted for nearly 20 percent of all MHA dollars. This outsized production could represent an upward trend. Last year, the same modestly upzoned fraction of single-family areas brought in 12 percent of the money raised from MHA overall, $8.3 million out of MHA’s $68.3 million.

This disproportionate performance indicates that pent-up demand for development on formerly cordoned-off land could be a spigot of affordable housing cash. Consider: There’s a lot more developable land where that 6 percent came from, and the city could increase the potential density of those areas more dramatically than it has to allow multifamily and commercial development, for example. If the city council and Mayor Bruce Harrell had the courage to stand up to Seattle’s NIMBY class by extending the upzones further into exclusive single-family areas and by opting for denser upzones, Seattle would generate far more cash for affordable housing.

Sure, $80 million from the JumpStart tax  is helping a lot. But the truth is, we need far more money for housing. According to the Office of Housing, MHA helped fund 990 units in 2021. But, according to the Regional Affordable Housing Task Force , we need 12,000 a year. Unfortunately, JumpStart’s impressive figures could dampen any move to expand the more on-point MHA approach, which raises money for affordable housing (and could raise a lot more) while actually addressing the crux of the housing problem by freeing up land for development.

In this way, JumpStart could unwittingly play to the interests of single-family homeowners (and their ever-appreciating property values) by shifting the focus away from the central role these homeowners play in the housing crisis, holding them harmless and avoiding bold policy solutions by taking their communities off the table.

According to the MHA numbers, the 4 percent of Seattle that we timidly opened up to more housing construction is trying to tell us something: The table is bigger than we think.

Josh@PubliCola.com