Tag: JumpStart

City Council, housing, human services, Mayor Harrell

Council Digs In on Harrell’s “IOU” Budget
Source: City Council central staff budget presentation

By Erica C. Barnett

The city council started breaking down Mayor Bruce Harrell’s budget in earnest on Tuesday, zeroing in on the mayor’s high-level plans to balance the budget by using revenues the city previously allocated to other purposes, including the JumpStart payroll tax, to help resolve a $141 million budget gap that is expected to grow every year through at least 2026.

Overall, the mayor’s budget would add about $32 million in net ongoing new expenditures (total expenditures minus cuts) next year, and about $52 million in 2024. Over two years, those proposed new expenditures include $8.8 million to make the Seattle Community Safety Initiative, a youth gun violence prevention program run by the nonprofit Community Passageways, permanent;  $3 million for the Regional Peacekeepers Collective, another program run by Community Passageways; $1.2 million a year to keep the Public Defender Association’s Co-LEAD shelter program going; $11 million over two years for police hiring bonuses at SPD; and at least $13 million to expand the city’s Unified Care Team, which does outreach and encampment removals, and the Clean Cities Initiative, which clears trash and removes graffiti from buildings.

Every year, the mayor proposes a budget and the council amends and approves it. The process can be highly contentious, especially in lean years. Starting in 2021, the city has used the new JumpStart payroll tax—a payroll tax on the city’s largest employers—to fill revenue shortfalls caused by the COVID pandemic and the resulting economic downturn. Harrell’s budget would continue to use the JumpStart tax to fill the ongoing budget gap, using $86 million in JumpStart revenues to backfill the general fund in 2021, and $84 million in 2024.

Last year, anticipating that future mayors would continue trying to use JumpStart revenues for non-JumpStart purposes, the council passed a law codifying the existing, but never fully realized, JumpStart spending plan. The ordinance restricts JumpStart spending to four specific categories: Housing (primarily affordable rental housing for people making less than 30 percent of median income); local businesses and economic recovery; equitable development projects that increase opportunity and prevent displacement; and investments that support the city’s adopted Green New Deal priorities.

On Tuesday, Harrell and Mosqueda announced the beginning of a process that could lead to new progressive taxes or fees to pay for some of the programs his current budget relies on JumpStart to fund. The new Revenue Stabilization Work Group includes representatives from business, labor, and nonprofits, including the progressive Washington Budget and Policy Center and the Transit Riders Union.

The new law does allow the city to use the tax for other purposes in one circumstance: If general fund revenues fall below about $1.5 billion, the city can siphon off JumpStart funds equal to the gap between actual revenues and $1.5 billion. If general fund revenues were $1.4 billion, for example, the mayor and council could take up to $100 million from the JumpStart fund to address the shortfall.

Harrell’s budget would require the council to amend this newly adopted law so that the general fund “floor” would rise every year according to the rate of inflation (currently 7.6 percent), which would also increase the differential between revenue projections and the new floor. The change would set up JumpStart to permanently solve a structural budget gap that exists because general-fund revenues aren’t rising nearly as fast as inflation, including property taxes, which by law can only increase 1 percent a year.

As a memo from the council’s budget staff puts it, “the proposed policy change … could result in permanently backfilling revenue losses that are due to noninflationary factors in other funds. Put another way, the JumpStart Fund transfer would be permanently solving stability issues inherent with the existing [general fund] financing structure.”

The change would enable the city to rely on the JumpStart tax to provide a huge, permanent cushion for the overall budget by diverting more and more of the tax from its original purpose. Next year, for example, the general fund actually is close to $1.5 billion, the current floor, meaning that under current law, the city can’t use JumpStart revenues to pay for anything above that amount. If the council adopts Harrell’s proposal, the change would allow the mayor to remove $105 million from the JumpStart fund in 2023, $176 million in 2024, and $189 million in 2025.

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Council budget Teresa Mosqueda said she was disappointed that Harrell proposed permanently changing the law governing how the payroll tax can be used, since the council agreed in principle back in August that the city could use JumpStart revenues in excess of previous projections, as long as those funds went to prevent budget cuts and “austerity.” At the time, those excess revenues amounted to $84 million in 2023 and $71 million in 2024—not much less than the amounts Harrell has proposed allocating.

“I think making these changes in perpetuity is very problematic to the sustainability of JumpStart and… concerning for this for the budget overall,” Mosqueda said. “To rely more and more on JumpStart creates greater instability for our overall budget going forward.”

Harrell’s proposal would also repurpose revenues from two other sources: The short-term rental tax on Airbnbs, which is earmarked for the Equitable Development Initiative (EDI); and state taxes on car services like Uber and Lyft, a fairly small revenue source that’s supposed to go to affordable housing.

District 2 (southeast Seattle) Councilmember Tammy Morales, who heads the committee that oversees EDI, said the program “is not just about affordable housing. It’s not just about senior housing. It really is about intentionally building space or the essential services that any healthy neighborhood needs and [providing] the opportunity to do it in a culturally appropriate way.” Although the Office of Housing funds housing projects, Morales continued, they often don’t pay for ground-floor services, like health clinics and day care centers, which is one reaseon the city started the Equitable Development Initiative in the first place.

“In asking departments to really tighten their belts, to look at where we can save money, we came up with the increase [for human service workers] of 4 percent, which would create anywhere between, I believe, $7 million to 12 million or so in savings, which allows us to do other things to help the same communities that they serve. And so we think that what we propose is consistent with the values that we set forth.”—Mayor Bruce Harrell

Harrell’s budget also includes an assumption that the city will spend $10 million less than what’s in the budget for the next two years, without identifying where those future savings will come from—a policy a council staffer referred to as an “IOU to come in under budget.” In 2022, the mayor achieved about $20 million in savings by placing “holds” on dozens of items the council added to its 2022 budget last year, including a new pre-filing diversion program for people over 25; money for a new health clinic for Asian Pacific Islander seniors; funding for the Mobile Crisis Team; and the expansion of an Office of Housing program that provides case management and housing stabilization to people who are homeless or at risk of homelessness.

Mosqueda also flagged her disapproval of Harrell’s proposal to limit mandatory increases in human service providers’ wages at 4 percent a year—about half what they would receive under legislation the council, then led by Harrell, passed unanimously in 2019. As we reported, Harrell even added an amendment to the 2019 bill clarifying that it was important to provide inflationary wage increases during times of economic hardship, not just prosperity.

When PubliCola asked Harrell about this apparent about-face, the mayor said he saw no contradiction between his position three years ago and his proposal to effectively overturn that legislation now.

“What I said in 2019 [was], we have to recognize that social workers and mental health counselors and those providing some of these essential services are underpaid… through good times and bad times,” Harrell said. “In asking departments to really tighten their belts, to look at where we can save money, we came up with the increase of 4 percent, which would create anywhere between, I believe, $7 million to 12 million or so in savings, which allows us to do other things to help the same communities that they serve. And so we think that what we propose is consistent with the values that we set forth.”

On Tuesday, Harrell and Mosqueda announced the beginning of a process that could lead to new progressive taxes or fees to pay for some of the programs his current budget relies on JumpStart to fund. The new Revenue Stabilization Work Group includes representatives from business, labor, and nonprofits, including the progressive Washington Budget and Policy Center and the Transit Riders Union.

Business, City Council, housing, Taxes

Amazon’s Housing Fund Sends a Political Message
Sea Cow, CC BY-SA 4.0, via Wikimedia Commons

By Katie Wilson

At a press conference last month, Mayor Bruce Harrell stood at a podium and thanked Amazon for funding affordable housing in Seattle. With him stood the director of Amazon’s Housing Equity Fund and representatives of three housing development organizations led by people of color that are receiving loans or grants from Amazon totaling about $23 million: Mount Baker Housing, El Centro de la Raza, and Gardner Global, a Black-owned developer working on a mixed-use apartment project at the former site of Mount Calvary Christian Center in the Central District.

This is Amazon’s most recent disbursement from the $2 billion Amazon pledged last January for affordable housing in three of its employment hubs. Three of the projects, including the Mount Baker Village preservation project, are affordable to people earning up to 60 percent of the Seattle area median income, currently about $54,000 for a single person; Gardner Global’s development in the Central District will include units for households up to 80% of area median income.

Amazon is by far Seattle’s—and now Washington state’s—largest employer. Over the past six years, Amazon’s relationship with the city and its politics has been fraught, with dramatic tussles over taxes, heavy-handed bids to sway local elections, and tech worker protests over the company’s role in the climate crisis. Given this history, it’s worth looking more closely at Amazon’s investment in affordable housing: its scale, what it means for the recipients and the company, and its political significance.

To begin with the obvious, $23 million is not a great sacrifice for Amazon, especially considering that $15 million comes in the form of low-interest loans that will be repaid.

JumpStart brought in an impressive $248 million last year. If Amazon’s tax bill really is on the order of $124 million, then these grants amount to about one-fifteenth of that.

It’s instructive to compare the $8 million Amazon will spend on two of the projects in grants to what the company may be forking over to the city this year thanks to JumpStart Seattle, a payroll-based tax paid by the city’s largest employers that passed in 2020.

Neither Amazon nor the city will disclose that number. But back-of-the-napkin math suggests that the company could easily be responsible for over half the total revenue from the tax, given the size of its Seattle workforce and the graduated structure of the tax, whose rate rises based on company size and worker compensation. JumpStart brought in an impressive $248 million last year. If Amazon’s tax bill really is on the order of $124 million, then these grants amount to about one-fifteenth of that.

According to Seattle Councilmember Teresa Mosqueda, “$97 million from JumpStart went to the Office of Housing to be disbursed in the 2022 calendar year” to support affordable housing projects and services. Given that another large chunk of the first year’s revenue went to plug pandemic-related budget holes, she said, “we should be able to do even more next year.”

Those city funds are already enabling property acquisition and affordable housing development at least 16 sites around the city. I wish those projects and the progressive tax revenue supporting them got as many press conferences and as much media fanfare as Amazon’s housing fund has inspired.

All this is not to say that Amazon’s voluntary grants and loans are unimportant to their recipients. Cobbling together funds to build and operate affordable housing is extremely challenging. Estela Ortega, executive director of El Centro de la Raza, which received $3.5 million for an 87-unit project in Columbia City for families earning between 30 and 60 percent of area median income, says the grant is helping to close a gap caused by rapidly rising costs.

“We had a $54 million budget at the first of the year, then our contractor did a new estimate and it went up to $58 million,” Ortega said. “Amazon’s money is critical. If we had to raise another few million, we would not be breaking ground on January of 2023, which is our plan.”

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This also illustrates that Amazon’s contributions, though they may be crucial, are one small part of the funding for these projects: That $3.5 million almost covers the sales tax costs for El Centro Columbia City. The project is also receiving $5 million from the state Housing Trust Fund and over $11 million from the city of Seattle, among other sources. (Interestingly, Seattle’s contribution includes over $7 million from JumpStart. If my speculative math is correct, that means Amazon may be paying as much into the project through taxes as through the grant.)

You can’t really blame Amazon’s public relations team for titling its press release—“Amazon to fund construction of 568 affordable homes in Seattle”—to the company’s best advantage, subtly implying that Amazon might be footing the entire bill. It’s less forgivable for the Seattle Times to begin its coverage the same way—“Amazon committed Thursday to providing $23 million to create and preserve nearly 600 affordable homes in Seattle”—and then make no mention at all in the rest of the piece of other funding sources or the total costs involved. The average member of the public, no expert on housing development and finance, could easily walk away with the impression that Amazon is singlehandedly gifting us 600 affordable homes.

None of this might matter, and might be considered nitpicking, if there was no larger political meaning to Amazon’s actions. But the tenor of the June press conference, with Amazon in the role of good corporate citizen, contrasted sharply enough with the fights of recent years to make one wonder. When Amazon’s housing fund and an initial round of recipients were first announced in 2021, the absence of projects in Seattle was conspicuous. Instead, $185.5 million (mostly in loans) went to projects in Bellevue, every pundit’s favorite foil to Seattle when it comes to Amazon-politics. So what does it mean that Amazon is suddenly playing so nice with its hometown? Continue reading “Amazon’s Housing Fund Sends a Political Message” →

City Council, Elections, Equity, homelessness, housing, human services, Mayor Durkan, Morning Fizz, Politics

Evening Fizz: Another Call for Durkan’s Resignation, More Questions About Homelessness Reorganization
Two city commissions have called on Mayor Jenny Durkan to resign, and at least one more is considering it.

1. On Wednesday, the Seattle LGBTQ Commission—one of five volunteer city commissions that deal with the rights of marginalized groups—voted narrowly to demand Mayor Jenny Durkan’s resignation, joining the Human Rights Commission, which made a similar demand earlier this month.

In a letter outlining the reasons for their decision, the commission said the mayor had failed to take meaningful action on police violence and accountability; had continued to remove encampments without providing unsheltered people with adequate places to go; and had “repeatedly undermined the budget proposals supported by Black communities,” by, among other things, using JumpStart payroll tax revenues that were already allocated to COVID relief and housing for vulnerable communities to pay for a new $100 million “equitable investment” fund to be spent based on recommendations from a mayor-appointed task force.

The letter notes that deputy mayor Shefali Ranganathan was dispatched to speak to the commission to make the case for Durkan, as she did earlier this week at the Women’s Commission when it considered a similar move. According to the letter, Ranganathan told the commission that the mayor does not have direct authority over police actions (such as the use of tear gas against protesters) and that she supports a regional payroll tax, just not the local payroll tax the council already passed. (She made similar arguments at the Women’s Commission meeting Monday night).

“Mayor Durkan’s role is to serve as the executive for Seattle and not as a lobbyist in Olympia,” the letter says. “Ultimately, Mayor Durkan’s opposition to the Jumpstart legislation disempowered the process taken to get there, which included months of work from Black communities, Indigenous communities, other communities of color, labor, and many more to find a way to fund affordable housing.”

The mayor appoints nine members of the Human Rights, LGBTQ, and Women’s Commissions. All three commissions have numerous vacancies and expired seats, but there is currently no major imbalance between council-appointed and mayor-appointed board members on any of the three commissions.

Durkan is up for reelection next year.

2. As we’ve reported, the city council, mayor, and homeless advocates have been working toward a tentative agreement on a new approach to unsheltered homelessness—one that could include dismantling the Navigation Team and creating a new process where unsheltered people move quickly through hotel-based shelters and into new permanent supportive housing or market-rate units through rapid rehousing, a kind of short-term rental subsidy.

The mayor’s budget allocates nearly $16 million to lease 300 hotel rooms for 10 months, which works out to about $5,300 per room, per month, and about $9 million for rapid rehousing dollars to serve up to 230 households (which works out to an average per-household cost of about $3,300 a month).

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“I’m guardedly optimistic,”  Alison Eisinger, the head of the Seattle/King County Coalition on Homelessness, told PubliCola. “I have some hope that there are folks [at the city] who recognize that requiring people to move, without addressing the state of homelessness, was never effective before COVID and is completely deficient now.” 

One element of the plan that has gotten little attention so far is that it would be extremely short-term. Funding for the hotel would run out after about 10 months—right around the 2021 election, if the city started leasing the hotel rooms at the beginning of next year. The extra funding for rapid rehousing would also come from temporary COVID relief dollars that expire next year. The upshot is that if the city wanted to rent the 300 hotel rooms and continue the rapid rehousing expansion after the one-time runs out, they would have to find a new source of funding for both. Continue reading “Evening Fizz: Another Call for Durkan’s Resignation, More Questions About Homelessness Reorganization” →

City Council, City Hall, Equity, homelessness, human services, Mayor Durkan, Uncategorized

Mayor Announces Membership of New Equitable Communities Task Force, Faces Criticism from Social Justice Activists

by Paul Kiefer

Today, a little more than four months since Seattle Mayor Jenny Durkan first said she would invest $100 million in services for BIPOC communities, and more than two weeks after she announced she was creating a task force to recommend how to spend the money, she announced the initial members of the task force.

The 28 members of the group, the Equitable Communities Initiative Task Force, are drawn from an array of BIPOC-led nonprofits and civic organizations around Seattle, including well know civil rights leaders such as Estela Ortega, the Director of El Centro De La Raza, and Dr. Sheila Edwards Lange, President of Seattle Central College. They will be tasked with “develop[ing] recommendations for a historic $100 million new investment in Black, Indigenous, and people of color communities to address the deep disparities caused by systemic racism and institutionalized oppression,” Durkan said in the announcement, ostensibly building on existing city investments

At present, the mayor’s proposed budget would take that $100 million from the revenues of the new Jumpstart payroll tax the City Council passed earlier this year. The council originally intended to use the Jumpstart tax revenue for COVID-19 relief for Seattle residents for the next two years, and later to fund affordable housing, projects outlined in the Equitable Development Initiative, Green New Deal investments, and support for small businesses; many of those budgetary priorities were the result of years of lobbying and activism by local BIPOC organizations.

As PubliCola reported last month, city budget director Ben Noble told reporters in September that “budget priorities for the city have changed, arguably, since that [JumpStart] plan was developed,” justifying the mayor’s affront to the council’s legislation.

Because the task force is expected to divert city dollars from JumpStart projects championed by racial and climate justice activists — and not from the Seattle Police Department — the Equitable Communities Initiative has raised alarms among some activist and nonprofit leaders in the past month.

Continue reading “Mayor Announces Membership of New Equitable Communities Task Force, Faces Criticism from Social Justice Activists” →

City Council, Economy, Featured, Mayor Durkan

Council Narrowly Overrides Mayor’s Veto of COVID-19 Relief Bill
District 7 council member Andrew Lewis voted to uphold Mayor Durkan’s veto

By Erica C. Barnett

The Seattle City Council voted to override Mayor Jenny Durkan’s veto of legislation to provide $86 million in immediate economic relief to renters, small businesses, people experiencing homelessness, and other people impacted by the COVID-19 pandemic and the resulting economic downturn, then voted to swap the original bill for a scaled-back version that will spend $57 million instead.

The legislation Durkan vetoed and the replacement ordinance would authorize the use of two city reserve funds to pay for COVID relief, and replenish those funds using proceeds from the JumpStart payroll tax, which kicks in next year. “We are just using a portion of the dollars that we’re collecting, with a certainty that we will be able to replenish the dollars,” council member Teresa Mosqueda, who sponsored the original legislation, said.

Durkan’s office said the mayor was still “evaluating” the legislation and had not decided yet whether she would veto this bill as well.

The council decided to reduce the size of the relief package, which will be funded by drawing down two city reserve funds, in recognition of a City Budget Office forecast released Monday that increased the size of this year’s projected shortfall by $26 million. Only Kshama Sawant voted against the new relief package, calling it an “austerity” bill that amounted to a huge “budget cut.”

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The veto override needed six votes to pass. One potential “no” vote, Debora Juarez, is excused from council all this week; she also missed Monday’s vote to adopt a midyear budget that included cuts to the Seattle Police Department. Andrew Lewis and Alex Pedersen both voted to sustain the mayor’s veto.

Pedersen said he was motivated, in part, by the concern that the city would be forced to lay off workers next year if the council spends too much money now. Lewis said he believed that the only way to “make a deal” with Durkan would be to uphold her veto and spend the next week and a half working “collaboratively” to come up with a proposal the mayor would be willing to support.

“The mayor, from her position, has made clear that she is not going to spend this money,” Lewis said. “She is going to continue to push back until there is a broader accommodation.” The “broader accommodation” Lewis referred to was apparently contingent on the council either letting the mayor’s veto stand without a vote and passing new legislation (which would mean no further discussion of the veto or the original bill) or upholding the mayor’s veto, as several council members made clear in their comments.

Council president Lorena González, for example, said she had spent hours on the phone with the mayor and her staff over the past week trying to come up with a compromise that Durkan would accept, but that Durkan was hung up on making sure that her veto stood. “Unfortunately, we were not able to come up with an agreement because… there was an insistence on the sustainment of the veto before we could agree to a number,” González said. The money, in other words, wasn’t the main issue—the veto was.

In a statement, Durkan said that in “the spirit of the collaboration, I proposed creating a new bill and an agreed spending and priorities plan to ensure the City could actually implement tens of millions of additional assistance in 2020 and 2021, while continuing to have resources to address our growing budget gap and any emergencies. Council chose to reject that proposal and take a different path.”]

Even if she doesn’t veto the legislation, Durkan is under no obligation to actually spend the money the council has allocated. (We covered this fact, and the history of council-mayor budget cooperation, in a recent post about the council’s efforts to eliminate the Navigation Team.)

The legislation recognizes this fact, in a roundabout way, in a new paragraph acknowledging that “direct relief to the community may take time and could result in not expending the full $57 million in 2020. If the full amount is  not expended in 2020, the Council is committed to working with the Executive to continue funding these critical COVID-19 relief programs in 2021 and to address newly identified 2020 revenue shortfalls.”