Category: Utilities

City Council, human services, Taxes, Utilities

No Local Capital-Gains Tax This Year; Water Tax Repeal Also On Hold

By Erica C. Barnett

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’t filling up my inbox complaining to me about the water tax. They’re complaining primarily about crime and homelessness and other issues that Seattle is facing and wondering why aren’t we doing more about these issues.” — 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.

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“People aren’t filling up my inbox complaining to me about the water tax,” Nelson said. “They’re complaining primarily about crime and homelessness and other issues that Seattle is facing and wondering why aren’t we doing more about these issues.” 

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.

labor, Police, Transportation, Utilities

Parking Officers Lose Labor Complaint But Will Return to SPD; Utility Managers’ Union Files Complaint Over Wages

1. On Monday, the state Public Employee Relations Commission rejected an unfair labor practice (ULP) complaint by the Seattle Parking Enforcement Officers Guild (SPEOG) over changes that took place when the parking officers moved from the Seattle Police Department to the Seattle Department of Transportation in 2021, ruling that the issues the union raised in its complaint were not mandatory subjects of bargaining.

As PubliCola previously reported, the parking officers argued that they needed access to a database called the Criminal Justice Information System (CJIS). The officers can scan a vehicle’s license plate and determine whether it’s on a “hot sheet”—a list of license plates that have law enforcement information attached to them, including stolen vehicles and those whose owners are in a criminal database—and report back to SPD, which can then investigate Without CJIS access, however, they can’t know exactly what issue is associated with a particular vehicle.

In its decision, PERC said the parking enforcement officers could still find out whether a vehicle was stolen or associated with a crime or outstanding warrant; the only information they no longer have access to is detailed information about the issue with a particular vehicle. “SDOT does not require or expect PEOs to issue a citation or remain in the area after dispatch informs them that SPD has an interest in or is responding to a vehicle,” the commission wrote.

The move reverses a change the council made in 2021, at the urging of then-mayor Jenny Durkan, to shift parking enforcement out of SPD in order to “reduce” spending on police; this on-paper reduction, which advocates for more police funding have characterized as “defunding the police” ever since the city made it, was little more than a budgetary sleight of hand

PERC has not yet ruled on a counter-claim that the city filed against the parking officers’ union in July.

Parking enforcement officers who wanted to move back to SPD got their wish on Monday, when the city council voted to return the officers to SPD and use the budget savings to pay for a number of items that would have otherwise been cut. The council decided to move the officers back to SPD in a 6-3 vote as part of the overall 2023-2024 city budget, which we’ll cover in more detail in a separate post.

The move reverses a change the council made in 2021, at the urging of then-mayor Jenny Durkan, to shift parking enforcement out of SPD in order to “reduce” spending on police; this on-paper reduction, which advocates for more police funding have characterized as “defunding the police” ever since the city made it, was little more than a budgetary sleight of hand by Durkan and the council. Nonetheless, because taking on nearly 100 new staff added significantly to SDOT’s overhead, removing the parking enforcement officers freed up millions to spend on other purposes.

Harrell has said he plans to establish a “third department” to oversee public safety, which could be the parking enforcement officers’ ultimate destination if they don’t stay at SPD; last year, the council wanted to move the officers to the newly created Community Safety and Communications Center, which took 911 call response off SPD’s hands, but Durkan and SDOT lobbied hard to put them at SDOT.

2. In other city labor news, the union representing strategic advisors and managers at Seattle Public Utilities has filed an unfair labor practice complaint against the city for, according to the union, withholding wage increases it should have provided and imposing a new return-to-office policy in the middle of contract negotiations. The group of 175 SPU managers and strategic advisors was just certified for representation (by the Washington State Council of County and City Employees, Council 2, AFSCME) last year; this is the group’s first contract negotiation.

The primary issue at play in negotiations between the union and the city is the way SPU allocates raises to this group of about 175 workers. Bill Keenan, the organizing director for Council 2, said SPU has “an archaic process” for deciding how much its managers and strategic advisors make, which results in persistent pay disparities between people doing the exact same work.

The result of SPU’s wage increase process, according to the union, is that women in these positions earn $1.20 less per hour than men, and people of color earn 99 cents an hour less than their white counterparts. One 26-year veteran of the department, a woman of color, makes $10 less per hour than a man who has been at SPU for five years, the union’s organizing director said.

Typically, a new city employee starts at the bottom of the “pay band” for their position and proceeds through a series of “steps,” or pay increases, over a set period of time. If the city hires someone as a Strategic Advisor 1, for example, they’re supposed to start at the bottom of the pay range for that position and receive pay bumps according to a set schedule.

At SPU, Keenan said, there’s no such process for managers and strategic advisors; instead, their pay is set by the person who hires them, and “once you get placed on the pay scale where they decide you should be placed, they have another broken process where [future raises] are again up to an individual. … It’s totally subjective.” The result, Keenan said, is that women in these positions earn, on average, $1.20 less per hour than men, and people of color earn 99 cents an hour less than their white counterparts. One 26-year veteran of the department, a woman of color, makes $10 less per hour than a man who has been at SPU for five years, Keenan said.

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The city has said the salaries and pay increases the union is seeking would cost as much as $40 million, a number the ULP calls “greatly exaggerated.”

The unfair labor practice complaint doesn’t deal directly with the labor issues Keenan that are at play in the negotiations; instead it accuses SPU of halting the existing annual wage increase process for most of the union’s members and imposing a return-to-office policy that the union had no role in negotiating. “Until we reach a contract, they have to retain the status quo on wages and conditions of employment unless we agree to bargain otherwise,” Keenan said.

Currently, the union and city are in mediation over the underlying contract. A survey of all SPU employees found that a majority of workers enjoyed working with their immediate teams and felt valued, but felt that higher-level management doesn’t care about SPU workers or understand what they do. In an email to employees, SPU general manager Andrew Lee—a Harrell appointee who just started in June—called the results “very humbling” and expressed his “strong commitment to improvement.

SPU’s call center employees—a group of about 85 workers who are among the city’s lowest-paid employees— fought Harrell’s return-to-office mandate earlier this year and won. 

Keenan said he expects the union and city will return to mediation after the holidays.