Tag: progressive revenue

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.

Equity, Guest Contributor, legislature, Opinion, Transit, Transportation

Guest Post: The Gas Tax is Regressive and Racist. Let’s End It.
Photo by Alexander Grishin via Pixabay.

By Anna Zivarts and Paulo Nunes-Ueno

Maybe we shouldn’t raise the gas tax. In fact, maybe it’s time to get rid of the gas tax altogether.

That might seem like a strange statement coming from advocates like us, who are firmly aligned with the pro-transit, pro-climate justice, pro-investments-in-equity corner of the political landscape. But as we look at the proposed transportation packages in the legislature this session, we are starting to believe that only a truly transformational approach to funding transportation will allow us to address the harm caused by our current system.

What’s wrong with the gas tax? Well, first of all, it’s regressive. You pay the same amount no matter what you can afford, and if you’re wealthy, you’re likely to own a more fuel-efficient vehicle. In fact, these days, you’re likely to own an electric vehicle and pay no gas tax at all. On top of that, as cities become more expensive, you’re more likely to have a long commute if you’re poor.

And the gas tax is receding: Over the last 20 years, gas consumption has not kept pace with population growth. Sooner or
later, this isn’t going to be a reliable revenue stream.

The gas tax is also restricted to funding highways, thanks to the 18th Amendment to the Washington State Constitution, which was enacted eight decades ago in 1944. Every other type of transportation infrastructure, from light rail lines to local bus service, must come from “unrestricted” sources such as car tabs and other vehicle fees—sources of revenue that, thanks to Tim Eyman, have been under constant threat for a generation.

The gas tax restrictions are redlining on wheels, funneling investments away from BIPOC neighborhoods because of the restrictions in where revenue can be spent

Currently, less than 4 percent of our transportation spending goes toward non-highway projects. In fact, in the last three state transportation packages, these non-highway investments have received a decreasing percentage of the total funding.

Which leads us to why the gas tax is racist. You’ve heard of redlining rules that kept banks from giving mortgages in Black or brown neighborhoods. The gas tax restrictions are redlining on wheels, funneling investments away from BIPOC neighborhoods because of the restrictions in where revenue can be spent. Instead of investing in reliable transit service that would benefit BIPOC communities where people are more likely to be transit-reliant, highway expansion funded by the gas tax directly contributes to increased pollution and negative health outcomes in these same communities.

Over the previous year, Front and Centered and Disability Rights Washington have been conducting listening sessions and interviews with our community members across Washington state, resulting in a report and transportation storymap. We’ve heard so many stories from our communities about how our current transportation system is failing us.

For example, Amanda, from Cowlitz County, shared, “I feel like as a senior in high school I should be able to walk to school on a sidewalk. I have to walk on the road with just a guardrail. It’s scary. I don’t want to get hit by a car on my way to school. This is the reality for other people of color.”

We know that what we are suggesting is a departure from the current transportation consensus, but as we’ve seen throughout the last year, sometimes we need to start thinking about how we can fully dismantle systems that perpetuate inequities.

Currently, the Washington State Department of Transportation (WSDOT) estimates they have less than half of what they need to keep the current highway system in good repair because our elected leaders would rather use gas tax revenue to build new highways and overpasses. With so much unfunded mitigation and basic preservation need, it is inexcusable to expand the system further.

The cost of preserving our highway system must include the costs of mitigating the harm it creates. But even though it’s possible to spend gas tax revenue for this purpose, the legislature has yet to invest the $3.1 billion estimated needed to build fish culverts, so salmon can get past highways. They have not even begun to talk about funding the $5.7 billion that WSDOT estimates is needed to repair the gaps and barriers created in the pedestrian network by the state highways that cut through our communities. For decades, our legislators have underfunded the preservation work needed to keep our highway and bridges from crumbling. And, given the health impacts of dirty air caused by highways and roads, WSDOT should pair road maintenance with air quality monitoring. Continue reading “Guest Post: The Gas Tax is Regressive and Racist. Let’s End It.” →