In 2023, the Washington legislature passeda billending the requirement that recipients of the state’sAged, Blind, and Disabled (ABD) cash assistance program pay back their benefits once they qualify for federal disability payments. ABD benefits go to some of the state’s poorest residents, and the new law attempted to remedy the payback requirement.
But a PubliCola reader recently let us know that the state Department of Social and Health Services (DSHS) is still requiring recipients to pay back ABD benefits. Sen. Claire Wilson (D-30, Auburn), chair of the senate Human Services committee, amended the bill near the end of the legislative session to change its effective date from October 2023 to October 2025.
ABD recipients are some of the most vulnerable people in the state. According to the latest data, nearly 30 percent of the 31,000 people currently receiving ABD are homeless, and 55 percent have a mental health-related disability.
According to Aaron Wasser, a spokesman for the Senate Democrats, Wilson and the Democratic caucus agreed to the change, in part, “to reduce fiscal impact to the budget without compromising the underlying policy.”
ABD is aimed at two groups: People who are temporarily disabled and those who need a “bridge” while they’re waiting to be approved for federal SSI disability payments—a process that takes, on average, seven months.
Sarah Payne, who lives in Everett and reached out to PubliCola, was helping a friend apply for ABD and noticed the payback requirement in a letter her friend received from DSHS, called an “interim assistance reimbursement authorization form.”
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“It’s just the most complicated Kafkaesque bureaucracy-worded letter you could possibly read,” Payne said. “I had to read it three times to get what it was saying.”
Payne’s friend, who declined to be interviewed because of privacy concerns, has heart disease. Payne says he has been waiting more than a year and a half to get federal benefits. Payne herself recently became disabled—she also has heart disease—but is rethinking applying for ABD because of the repayment requirement.
Brice Montgomery, interim director of the Community Services Division of DSHS, which manages ABD benefits, said his office welcomes the new legislation but the agency doesn’t have the funds toeliminate repayment requirements until October 2025. “We think that the law as written will be a help and is a commitment to reducing poverty in meaningful ways,” Montgomery said.
The reason DSHS historically required people to pay back their ABD benefits is that the federal government reimburses SSI recipients for the time they spent waiting to qualify for benefits. But people who receive these lump-sum payments often need the money to pay off debts or unpaid rent from when they were receiving ABD benefits, which are typically much lower than SSI.
The maximum monthly benefit for a single person in the ABD program is $450 per month, less than half of the maximum SSI benefit of $943 per individual (and a fraction of the $1,900 it costs to rent an average apartment in the Puget Sound region).
The ABD program has been historically underfunded, with benefits slashed to $197 per month in 2011. DSHS bumped up the benefit to its current level in 2022. “It was a very meager benefit for quite some time, and was remedied a bit,” Montgomery said, “but it’s still not as high as the typical SSI grant.”
Payne said she’s disappointed that the legislature kept the payback requirement in place for an additional two years. “It’s a small program, but it matters a lot to the people who are on it,” she said. “It feels like they’re picking at your carcass. That lump sum is what some people are counting on. After you wait so long, you’re in debt to a lot of people.”
The state estimated that eliminating the payback requirement will cost $51 million between 2025 and 2027 and $61 million between 2027 and 2029. “Pushing this out to the next biennium gave the state time to plan and budget for that fiscal impact and it also gives DSHS time to plan a successful implementation,” Wasser, from the state Democrats, said.
Payne said that requirement is placing a burden on people like her and her friend, whose finances are already precarious because of their disabilities.
“I just don’t understand this mindset of taking from the neediest,” she said.
Darrell Powell, the interim director of the King County Regional Homelessness Authority, abruptly fired the KCRHA’s interim Chief Financial Officer James Rouse last week, according to sources familiar with the decision. Rouse had the job for just six months; he replaced another interim CFO, Bill Reichert, who was also at the agency for less than six months. KCRHA confirmed that Rouse is no longer working for the agency but would not provide additional details, and PubliCola was unable to reach Rouse on Friday.
Sources familiar with the situation said Rouse and Powell had recently clashed over whether to pay the Low-Income Housing Institute $1 million from the tiny house village provider’s 2023 contract.
The money was still unpaid at the beginning of 2024 because of a contract stipulation that prevents KCRHA contractors from moving more than 10 percent of their budget for any project from one expense type to another—for example, from staff salaries to utilities. Because the details of large contracts tend to change over the course of a year (a site gets more expensive, or monthly utility costs go up), providers may end up paying for unanticipated expenses out of pocket and seeking reimbursement at the end of the year through an annual reconciliation process.
Because the KCRHA moved to a new system for filing reconciliation forms last year, LIHI asked KCRHA staff for assistance starting late last year, but reportedly never heard back; by the time LIHI asked the city of Seattle to intervene, the KCRHA had already sent the money back to the city, which provided the funding in the first place. Eventually, a high-level city staffer intervened and LIHI got paid in late April. It’s unclear whether Powell or Rouse decided not to just reimburse LIHI the $1 million in the first place, but Rouse was the one who paid for the decision.
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The city of Seattle has made no secret about its lack of confidence in the KCRHA, and often treats the homelessness authority as department of the city. In February, the city took back responsibility for homelessness outreach and prevention, which had been the KCRHA’s purview, saying the agency “did not have capacity to fulfill the outreach, coordination, and referral roles” that it took on in 2021.
The city also ordered the KCRHA to cut its budget for next year, and—unlike in the past—the agency quickly fell into line. In an April memo, the city “instructed” the agency to reduce its budget to reflect a 1 percent cut in city funding, and to “not propose any other funding increase unless it is offset by reductions or is revenue-backed.”
The resulting 2025 homelessness budget will cut as many as 300 shelter beds and eliminate rapid rehousing funds that are currently keeping 265 families from becoming homeless. The budget will likely require the closure of Benu Community Home, a low-barrier shelter serving Black men in the Central District that has been funded with federal COVID emergency dollars, as well as cuts to tiny house villages.
The new budget, at $230 million, is $39 million lighter than the “stabilization plan” KCRHA staff proposed in March, which would have preserved existing services and provided an across-the-board inflationary wage adjustment for homeless service providers.
In a letter to the implementation board, the Seattle/King County Coalition on Homelessness urged the board to, at a minimum, adopt the March version of the budget. “The KCRHA, as the organization charged with leading a regional homelessness response, should not simply maintain an insufficient system during an emergency,” the letter, which was also signed by representatives from the King County Alliance for Human Services and the Seattle Human Services Coalition, said.
Advocacy groups were conspicuously absent from the KCRHA implementation board meeting last week, where the board adopted a resolution endorsing the shelter-slashing budget, because the authority moved the meeting back one hour without sending out a public notice. Advocates expressed dismay at missing their last chance to comment before the board approved a resolution supporting the budget, which includes language asking the KCRHA’s funders (primarily the city and county) to “explore all potential scenarios to reconsider” the cuts.
The KCRHA does not send out email notices to let the public know when meetings are happening or when they’re rescheduled, which means that even people who attend the agency’s regularly scheduled meetings have no way of knowing about changes unless they check in regularly on the meeting agenda on the KCRHA’s website, which is buried in a fifth-level sub-page with no information on any previous page to indicate whether anything has changed.
PubliCola put the meeting on our calendar for the regular time of 2pm. By the time we logged on, the board had gone into executive session to interview candidates for the job of permanent KCRHA CEO, which has been filled by interim directors since the last permanent CEO, Marc Dones, left almost exactly one year ago.
One of those candidates, interim director Powell, reportedly made off-color comments about the LGBTQ+ community during a recent job interview for the permanent position.
Powell, a longtime friend of Seattle Mayor Bruce Harrell and the mayor’s pick for the interim role, was responding to a question about equity when he reportedly volunteered that he didn’t like the KCRHA’s gender-neutral restrooms and, in general, didn’t get the “LGBTQ stuff.” Former director Dones, who is nonbinary, emphasized gender inclusiveness at the authority, directing staff to introduce themselves with their pronouns and implementing the switch to gender-neutral restrooms.
KCRHA would not confirm Powell’s comments. When PubliCola approached Powell directly at an event on Monday, he declined to speak with us.
A breakdown of the KCRHA’s budget, which could face additional cuts this year.
Erica C. Barnett
The future of the King County Regional Homelessness Authority came under scrutiny during a council meeting on Wednesday, just two days before a selection committee is scheduled to get its first look at a list of finalists to head up the embattled agency.
One name that may be on that list is that of KCRHA interim director Darrell Powell. Powell, the former chief financial officer for United Way of King County and Mayor Bruce Harrell’s pick for the interim role. Powell has reportedly applied for the permanent position, which has been vacant since the last CEO, Marc Dones, resigned last year. He replaced Helen Howell, who became interim CEO last May, in January.
The company that’s leading the search for a new CEO, Nonprofit Professionals Advisory Group (NPAG), has narrowed the list down to about a dozen candidates, whose names have not been made public, and will present the list to a search committee for further narrowing on Friday. The search process has been slow and opaque; NPAG only got around to posting a job description in January, eight months after Dones announced their resignation, and the search committee was reportedly uninspired by an early list of potential candidates.
If Powell—who did not respond to a request for an interview—became the permanent director, Harrell would have a long-term ally at the very top of an agency whose work he has frequently criticized and whose authority he recently reduced, by removing the KCRHA’s authority over encampment outreach and homelessness prevention and returning those contracts to the city’s Human Services Department.
The city council, including many of its six new members, appears to agree with Harrell about the need to claw back control over the KCRHA, which receives a little less than half its funding from the city. During a presentation by Powell and KCRHA staffer Jeff Simms on Wednesday, council members expressed support for Harrell’s decision to take over KCRHA’s outreach and prevention contracts and suggested the primary problem with the agency is that its governing structure is too confusing and unaccountable.
Specifically, council members said the KCRHA has too many boards—”three, plural?” Councilmember Rob Saka confirmed with Simms—and that one solution might be eliminating the implementation board, which is made up of unelected homelessness experts. “When you reference plural, rather than singular, I think therein lies the problem,” Saka said.
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Council President Sara Nelson also criticized the implementation board and suggested that as “non-elected people,” they had little incentive to spend city funding wisely.
“These are non-elected people, who are not accountable to their constituents for resources, that are making the budget, and then the governing committee is expected to basically essentially rubber stamp so that the providers—very important—can get paid,” Nelson said. “And so that really does need to be cleaned up. And that’ll be quite a process and that can only take place in the interlocal agreement,” which established the authority and created its governing structure.
Nelson wasn’t on the council at the time, but there was actually a huge debate over the two-board structure when the council was helping to craft the interlocal agreement; the original plan,proposed by city and county leaders, was to set up a public development authority governed by an 11-member board of homelessness experts, overseen by a separate “steering committee” made up of elected officials.
Through compromises over time, elected officials gradually secured some direct control over the authority, eventually landing on a structure in which co-equal governing and implementation boards, made up of elected officials and people with policy expertise and experience, respectively, make decisions about the KCRHA and adopt its budget. The implementation board is made up of 13 experts on various aspects of the homelessness system, including people with direct experience of homelessness. The third board, which oversees the local continuum of care, is required by federal law and serves as a subcommittee to the implementation board.
“We are looking at the this being up for renewal at the end of the year, and I think we all want it to work, but we have to be honest about where it didn’t work and how we’re going to make it work going forward. When we look at what’s happening on the street, we don’t see any improvement. We only see things getting worse.”—Seattle City Councilmember Cathy Moore
The original justification for leaving most decisions in the hands of experts, rather than elected officials, was that they would be less influenced by prevailing political winds—less inclined, for instance, to make major budget changes based on voter complaints about encampments or media reports suggesting the agency is in disarray. (Like this column by Danny Westneat questioning the wisdom of the regional approach, which two councilmembers cited during Wednesday’s meeting.)
The KCRHA’s interlocal agreement expires at the end of this year, a date human services committee chair Cathy Moore called a “juncture” for the agency. “We are looking at the this being up for renewal at the end of the year, and I think we all want it to work, but we have to be honest about where it didn’t work and how we’re going to make it work going forward,” Moore said. “When we look at what’s happening on the street, we don’t see any improvement. We only see things getting worse.”
Simms pointed out that the agreement (and thus KCRHA) will continue automatically unless the city decides to unilaterally withdraw from the authority. If that happened, it would effectively end the agency and trigger the return of all homelessness contracts back to the government entities that oversaw them before 2020, including the city.
Before the KCRHA was created, homelessness contracts were under a division of the Human Services Department called Homelessness Strategy and Investments, which was subsequently (and messily) disbanded. HSD recently created a new homelessness division with its own director, suggesting a potential return to the old model.
It’s unclear how this would be an improvement (one reason for the whole “regional approach” concept in the first place was that it would consolidate city and county contracts under one authority) but a number of current elected officials seem to believe it might be—egged on, perhaps, by the mayor’s office, which has been bearish on the KCRHA since Harrell took office.
On Wednesday, several council members expressed the view that suburban cities need to “step up” and contribute financially to the regional authority so that Seattle can reduce its contribution; Saka, previously an attorney for Meta, likened Seattle’s initial heavy investment to a round of “seed funding” that would eventually lead to greater investments from other cities and a “draw down” in investments from Seattle.
This is a baked-in issue with the regional approach—why would a suburban city that disagrees with KCRHA’s progressive approach to homelessness give money to the authority when they could be spending it on encampment sweeps?—but suburban contributions were never going to make up a huge chunk of the KCRHA’s budget anyway, since their budgets are so much smaller than either Seattle or King County.
Although the council will soon be making major decisions about the KCRHA’s budget—which could face cuts this year to help close an estimated $230 million budget gap—it’s clear they still have a steep learning curve. (The meeting was one in a series of City 101-style briefings that have filled the council’s schedule since six new members took office in January).
After Simms told councilmembers that there is currently about one housing unit available for every 34 homeless people “nominated” for housing, for instance, Nelson suggested that “part of the problem is the demand, because people aren’t moving on from permanent supportive housing, perhaps because they don’t have the supports to be able to do so” from the agencies that provide their case management, she said. Permanent supportive housing, Simms pointed out, is a specialized housing type set aside for people with severe, usually lifelong, disabilities; “permanent” is a key part of the concept, and people aren’t expected to “move on.”
Other council members appeared unaware that people don’t generally flock to an encampment once they hear it’s being removed; that KCRHA gets people into housing, not just shelter; that the city’s Unified Care Team holds near-monopoly access to tiny house villages; and that the KCRHA doesn’t decide how to spend the city’s money, but administers a list of contracts that remains largely unchanged since the city was in charge of them.
Arrow goes up: Seattle touts metrics that advocates, service providers, and a two-year-old auditor’s report have said are deeply flawed.
By Erica C. Barnett
Seattle Deputy Mayor Tiffany Washington told reporters last week that the city has made impressive progress on removing encampments and referring their displaced residents into shelter, and that new, data-driven criteria for prioritizing encampments now prevents “the loudest voices” from dictating which encampments get removed.
Although incomplete identification data means that any numbers are likely an undercount, Washington said, “we’re happy to say that shelter referrals are up” 20 percent over last year, and shelter enrollments are also on the upswing. “I’m encouraged by the progress we’ve made over the last few years,” she said.
Harrell cited similar numbers in his State of the City speech on Tuesday, crediting a new “state-of-the-art system that informs a data driven, objective and equitable approach to resolving to resolving encampments” for the increase.
In reality, the main component of the city’s “state-of-the-art system” is a frequently updated database of encampments (which replaced an earlier spreadsheet-based system), combined with a prioritization matrix that helps inform which encampments the city removes. That matrix is essentially the same as the one Harrell’s office created back in January 2022, when he first took office.
For years, homeless service providers, advocates, and elected officials have asked the city to stop touting shelter referrals, since that number only refers to the number of people who were told that a specific bed was available, not how many actually slept in a shelter bed for even one night—much less accessed meaningful services or ended up in housing.
The deputy mayor said getting other parts of the region to allow new shelters or housing will be “a challenge. If you were them, and you saw what we were dealing with, would you want a shelter in your city?”
Enrollments—in which a person living in a swept encampment shows up at a shelter for at least one night—totaled 970, up from 746, across all encampment removals last year. While enrollments are a slightly better measure of success than referrals, staying in a shelter for a night or more—perhaps because it’s cold outside—is not a measure of success or progress toward housing.
Because the amount of available shelter space is a fraction of the thousands of people sleeping in tents, vehicles, and doorways every night, the fact that several hundred people a year are “accepting” the city’s shelter offers, and even “enrolling” in shelter, is less an impressive achievement than an indictment of the city’s perennial lack of shelter and housing. Asked about the possibility of siting more shelter and parking for people living in their vehicles, Washington said it was time for other communities besides Seattle to step up.
“I may get in trouble for this, but I think Seattle’s exasperated,” Washington said. “What happens when we go to site anything? The neighbors are like … ‘No, put it somewhere else.’ …Homelessness doesn’t just reside in Seattle, it’s a regional problem. And Seattle needs to not hold the majority of all shelters.” But, Washington added, getting other parts of the region to allow new shelters or housing will be “a challenge. If you were them, and you saw what we were dealing with, would you want a shelter in your city?”
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The Harrell administration has made a lot of adopting a “data-driven approach” to homelessness, suggesting that this distinguished them from the Durkan Administration. Last week, when I asked Washington when the city stopped using complaints as their primary basis for encampment removals, mayoral spokesman Jamie Housen jumped in and responded, “When Mayor Harrell took office”—that is, after Mayor Jenny Durkan left.
Washington, however, is a holdover from the Durkan administration, where she held several roles overseeing the city’s homelessness response including as the deputy mayor overseeing homelessness—her current role. As the head of the city’s homelessness division under Durkan, Washington vigorously defended the city’s strategy for prioritizing and removing encampments. In 2019, when the Durkan administration was forced to acknowledge they had no idea how many unsheltered people were actually ending up in housing, Washington said the exact number didn’t really matter, because “no matter how you look at it, it’s getting better.”
The city’s homelessness data still doesn’t include that information. Nor does the Harrell Administration’s “state-of-the-art” encampment dashboard appear to include most of the information a report from the City Auditor’s office said the city should provide about homelessness back in 2022, at the beginning of Harrell’s term.
That audit recommended the city create a “data dashboard” that would show whether and how the city’s encampment removal were performing based on a wide array of measures, including health and safety outcomes for people living unsheltered (like deaths from hypothermia, overdose deaths among unsheltered people, and the spread of infectious diseases) as well as other measures beyond shelter referral rates, such as outreach workers’ ability to maintain engagement with their clients after a sweep, access to mental health care and addiction treatment, and the availability of public restrooms with running water.
The city’s public-facing dashboard includes data points related to shelter referrals and public safety (such as shots fired and reported encampment fires), and a “snapshot” map, updated four times a year, showing encampments the city has removed.
During his State of the City speech, Mayor Harrell noted that “there have been bumps in the road” since the city and county created the KCRHA in 2020. “So this year, we will drive needed changes to improve oversight and accountability and foster stronger regional collaboration and solutions,” he said.
Harrell has frequently been critical of the King County Regional Homelessness Authority, and recently nominated a friend and ally, Darrell Powell, as its interim CEO. (Prior to accepting the new position, Powell was the chief financial officer for several nonprofits, including the local YMCA and an agency, the Scholar Fund, at the center of a dispute with King County over alleged fiscal mismanagement.) He also asked the agency to come up with potential cuts to help the city close its $220 million budget deficit this year.
Those moves, and the increasingly high priority of the encampment-removing Unified Care Team, has led to speculation that the mayor may move to shut the agency down. During his speech on Tuesday, Harrell noted that “there have been bumps in the road” since the city and county created the KCRHA in 2020. “So this year, we will drive needed changes to improve oversight and accountability and foster stronger regional collaboration and solutions,” he said.
Last week, Washington said that the city wasn’t considering such a move, and wouldn’t unless “they fail, which we really hope they do not.” If that happens, she said, “we would have to have a discussion with all of the partners at the table and determine whether we revamp it, change it, restructure it, or completely pull out and everybody goes back to their corners.”
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The Burien City Council capped off 2023 by holding an executive session last Monday to discuss “litigation or legal risks” associated with a new church-based encampment in the city, whose nighttime outdoor sleeping ban went into effect December 1. After the city swept a longstanding encampment where many of Burien’s unsheltered residents had been living, a number of people moved into a structured encampment at Oasis Home Church that has been operating since November 1.
Burien City Manager Adolfo Bailon, along with City Attorney Garmon Newsom II, has insisted that the encampment can’t operate without a temporary use permit would limit encampment operations to no more than 60 days in any calendar year.
“Oasis Home Church remains in violation of the city’s zoning codes,” which do not allow encampments, Bailon said at last week’s council meeting. “Oasis Home Church continues to refuse to acknowledge the rights afforded to the city of Burien to protect public health and safety. … The city is not aware of how, if at all, public safety is being addressed at Oasis Home Church. We do not know of any protections in place to protect the people in the encampment and at the community at large.”
In a letter dated November 30—the day before Burien’s sweeping encampment ban went into effect—Burien assistant city attorney Ndiabou Diagana explained why the city believes it can restrict a church from hosting a homeless encampment, which is explicitly allowed under state law. Acknowledging that the state law supercedes city codes, Diagana argued that the city still has the right to require a temporary use permit because the law only prohibits cities from enforcing laws that pose a “substantial burden” on their free exercise of religion (emphasis in letter.)
One irony of the city’s decision to challenge the encampment so publicly is that many council members who voted for the sleeping ban have repeatedly said that religious and private charities, not the government, should bear the burden of helping homeless people in the city.
“Asking for a temporary use permit to know how, where, how long, and in what fashion the encampment will be run is reasonable, within Burien’s Washington State Constitution Article XI, Section 11 authority to protect health and safety, and not a substantial burden,” Diagana wrote. “Even Washington’s Religious Freedom provision prohibits practices inconsistent with peace and safety. The temporary use permit is a tool that municipalities use to ensure peace and safety.”
The thing supposedly threatening “peace and safety,” in this case, is an encampment intended to provide some sanctuary and safety for people who are homeless in a city that has effectively banned homelessness, which is precisely the type of situation that led to the law allowing churches to host encampments in the first place. One irony of the city’s decision to challenge the encampment so publicly is that many council members who voted for the sleeping ban have repeatedly said that religious and private charities, not the government, should bear the burden of helping homeless people in the city.
Oasis Home Church’s lead pastor, Mark Miller, did not respond to a request for an interview.
In its letter, the city also argued that the two-month limitation shouldn’t be a problem for the church, since the encampment’s supporters have already said it would be temporary. But this is being cute: If the church agreed to a 60-day limitation, it would have to shut the shelter down on December 30, just one month after Burien’s encampment ban went into effect.
The city declined to respond to a list of questions from PubliCola; a spokeswoman said the city could not comment on legal matters. It’s unclear if the city plans to sue the church or the Burien Community Support Coalition, a nonprofit started by Councilmember Cydney Moore. Moore, who lost her reelection bid, was excluded from the executive session because, according to City Attorney Newsom, she would be a “party” to any future legal action.
Before joining most of the council in closed session, Newsom accused Moore of misrepresenting her connection to the encampment, charging that she “denied entry to a member of the press who was attempting to enter this site.” The “member of the press” Newsom was referring to was Jonathan Choe, a self-appointed provocateur and staffer for the right-wing Discovery Institute who takes iPhone videos of himself confronting homeless people and activists and posts them on X. Choe’s video of his encounter with Moore shows him attempting to enter the fenced encampment and Moore asking him to leave.
Laws against trespassing, along with basic ethical standards, generally prevent members of the press (and general public) from non-consensually entering privately operated shelters, sanctioned encampments, transitional housing for domestic violence victims, and other places where homeless and formerly homeless people live.
The Seattle City Council won’t take action on a proposed local capital gains tax or a related proposal to repeal the city’s water utility tax until after an effort to repeal the state capital gains tax, which pays for public schools, has run its course. The news of the delay, which will put both tax proposals in the hands of a mostly new council next year, came during a meeting of the council’s budget committee on Thursday.
Opponents of the state tax, which has brought in far more than expected in its first year, have filed an initiative to repeal it, part of a suite of anti-tax proposals backed by Redmond hedge fund CEO and Republican donor Brian Heywood. The campaign will have to gather more than 300,000 valid signatures to get the measure on the ballot.
Councilmember Alex Pedersen proposed repealing the water tax, currently 15.4 percent, and offsetting the lost revenues—around $40 million a year—with a 2 percent tax on capital gains, effectively replacing a regressive tax with a progressive one. The two proposals came as a package, with the capital gains tax proposal explicitly calling the tax “a more progressive method of taxation to replace revenues from regressive taxes no longer collected by The City of Seattle including, but not limited to, the tax on water.”
“People aren’tfillingupmyinboxcomplainingtomeaboutthewatertax. They’recomplainingprimarilyaboutcrimeandhomelessnessandotherissuesthatSeattleisfacingandwonderingwhyaren’twedoingmoreabouttheseissues.” — City Councilmember Sara Nelson
An analysis by city council staff estimated that the capital gains tax could raise around $38 million a year, based on Seattle’s share of state capital gains tax revenues from the state capital gains tax. However, the staff report cautions, that estimate doesn’t take into account “tax avoidance” by wealthy people who can move their assets around, and is based on “an extremely concentrated tax base,” which could make it an unreliable revenue source from year to year. Just 163 people are responsible for 85 percent of state capital gains tax revenues originating in Seattle.
Councilmember Lisa Herbold proposed amending Pedersen’s proposal to increase the capital gains tax to 3 percent, which would offset the water tax and provide a modest cushion against next year’s estimated $218 million budget deficit.
After the meeting, council budget chair Teresa Mosqueda said the council decided to put off the decision on capital gains “to protect the viability of that [revenue] source,” noting that a new, local capital gains tax might increase support for the campaign to repeal the statewide tax.
Councilmember Sara Nelson said during the meeting that she showed up “prepared to vote against this today. And I just wanted to make sure that I got this on the record if it does come back” in the future, she added.
“People aren’tfillingupmyinboxcomplainingtomeaboutthewatertax,” Nelson said. “They’recomplainingprimarilyaboutcrimeandhomelessnessandotherissuesthatSeattleisfacingandwonderingwhyaren’twedoingmoreabouttheseissues.”
If the council’s goal was “really to help low -income people,” Nelson continued, the city should be “working harder to enroll them into our utility discount program,” which provides a 50 percent discount to eligible residents. Unlike the proposed utility tax repeal, however, the utility discount program requires a lengthy application process, and is only open to very low-income residents: For single people, the cutoff is a little over $41,000 a year, and a two-person household has to make less than $54,000 to qualify.
Pedersen said his intent in proposing both tax proposals was to make the city’s overall tax system less regressive. “As a centrist who cares about business in the city and worked really hard on public safety issues here in the city, I support a capital gains tax,” he said. “I think it’s fair, and we should do it…. And I think we could also repeal the water tax. We could do both.”
Whether the council will do either is now up to the incoming council, which will no longer include Pedersen, Herbold, or Mosqueda. Nelson, who actively campaigned for several of the council’s new centrist majority, reportedly wants to be council president, a role that would give her authority over how (and whether) legislation moves through the committee process.
The budget committee did pass two proposals imposing new transparency requirements on the budget process on Tuesday, along with an ordinance requiring human services providers that receive funding for worker wage increases to spend that money only on worker pay, not for other purposes.
