Tag: recession

Durkan Will Veto Council Budget Over Cuts to Police Department; Council President Hopes for Compromise

As I first reported on Twitter this morning, Mayor Jenny Durkan will announce this afternoon that she will veto the city council’s midyear budget rebalancing package, a move that could effectively remove one co-equal branch of government from the city’s budget process by reinstating Durkan’s original budget proposal with no input from the council. The council could overturn the veto, as they did the mayor’s recent veto of a COVID relief package that relies on future revenues from the JumpStart payroll tax. Or—as seems likely—the council try to work with Durkan to come up with a rebalancing package that the mayor will accept.

“The bills I am vetoing today were passed without the level of collaboration that I think we need, and more important, that the city expects of us,” Durkan said at a press conference this afternoon, “but I am optimistic that we can continue to work together to bridge the gaps. I continue to believe that we can [reach] common ground on the vision for SPD that has been laid out by Chief [Carmen] Best and I.”

The objections Durkan raised were familiar to anyone who has been following the debate over police defunding: The mayor said that the council is attempting to change things “overnight,” “without a plan,” and that her budget proposals already contain large cuts to the police department. The vast majority of those cuts, however, come from transferring some current SPD functions, such as the 911 dispatch center, into other parts of the budget—not from transforming the city’s approach to public safety or reducing the number of SPD officers, as protesters have been demanding since May.

City council president Lorena González said in an interview that she is “incredibly disappointed’ in the mayor’s decision to veto yet another council spending proposal. “It is obvious that there is a significant difference of opinion between the City Council and the mayor and the chief on what can and should be achieved in 2020 in order to respond to the calls from community to reduce the Seattle Police Department’s budget this year and begin the process of investing in community safety programs,” González says.

The rebalancing proposal was necessary to deal with a midyear budget shortfall of around $300 million, a number that keeps getting edited upward as new revenue projections come in.

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The council’s plan included more significant, but still relatively minor, cuts. The version they adopted cuts SPD’s budget by 7 percent by eliminating the encampment-removing Navigation Team, reducing the salaries of SPD command staff (including Best, whose 2020 pay was reduced by $6,000) and cutting 100 positions at SPD through a combination of layoffs and attrition. The council’s proposal also provided $3 million to start a participatory process to reallocate SPD to community-based public health and safety programs, plus $14 million to a combination of city and community programs, funded through an interfund loan that Durkan said was the main reason for her objection to that particular spending proposal.

“Look, it’s a loan that I’m not sure we can repay, and we know with the coming budget that we will have to do some interfund loans just to keep the city services that we have,” Durkan said.

Durkan mentioned the Navigation Team specifically at several points during her press conference, suggesting that the council wanted to cut the team “without a plan” to deal with dangerous encampments. “I’ve had open houses with a number of community and neighborhood groups in the last weeks, and the impact that some of these encampments are having are real— and they are also real for the people living in those encampments,” she said. “We have to have a way to bring people inside and address the public safety [issues], and the cuts did not allow us an opportunity to do that.” Since the pandemic began, the city has provided only about 100 new shelter spaces for the thousands of people living unsheltered in Seattle.

Under the city charter, the council must take a vote to overturn or sustain the veto within 30 days. Council president Lorena González says her hope is that, rather than simply overturning another mayoral veto, the council will be able to “come to some agreement  with the mayor around a rebalanced package, and that’s going to be a two-way street. We need her to make a good-faith effort to engage in order to meaningfully move this forward.”

Otherwise, González says, the council and mayor will likely stay stuck in “this constant back and forth” of vetoes and votes to overturn. “This mayor has made a historical number of vetoes. I’m not aware of any other mayor in the history of the city of Seattle who’s used veto power at this level, and I think that she is sending us a clear message that she will continue to do so,” González says.

It’s clear that there are still significant gaps between what the council wants and what the mayor will accept. In particular, it’s unclear what, exactly, the mayor would consider “on the table” when brokering a future “compromise” with the council. The Navigation Team, community spending, participatory budgeting research, command staff salaries, and SPD personnel cuts seem to be off the table.

But there is also now precedent for compromise between the mayor and the council. This afternoon, Durkan also announced an agreement on the COVID relief package that is much smaller than the council’s original proposal but that will, in the words of JumpStart sponsor Teresa Mosqueda, enable the city to “mov[e] forward jointly as we cannot wait another day” for relief to residents and small businesses impacted by the pandemic.

Battle Over Budget Transparency Illustrates Deeper Rifts Between Seattle Mayor and Council

It’s probably another sign of the frayed relationship between most members of the Seattle City Council and Mayor Jenny Durkan that the big meta-budget dispute playing out in council chambers right now is how much the mayor and her budget office know about the details of midyear cuts the mayor is proposing and how much they’re telling the council, which has to approve a final package of midyear budget cuts based on more than a dozen pieces of legislation the mayor sent them earlier this month.

Yes, how much to cut the police department (and whether the mayor’s proposed “cuts,” for this year and next, are meaningful or merely cosmetic) remains the most pressing single budget issue. But the cuts the city has to make this year—and then replicat and expand in 2021—are largely in other departments that aren’t currently in the headlines, and the debate over the mayor’s proposals is also a debate about discretion and how much of the budget is actually on the table for the council to tinker with.

On Thursday morning, city council central staff director Kirsten Arestad said central staff will develop a new budget tool—essentially, a balancing worksheet—that will show exactly what is in the mayor’s midyear budget-cutting package, including “administrative cuts” the mayor has made that are not reflected in the legislation she sent to the council. The tool will also take a baseline forecast (the June revenue forecast, which added another $11.4 million deficit to the May forecast on which Durkan’s balancing packaged is based) and use it as the basis of the balancing package. The worksheet will also indicate more clearly the gap between revenues (including COVID-related federal funding) and expenditures (including unanticipated costs related to the pandemic), Arestad said.

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One reason all this extra work is necessary, according to Arestad, is because not all of the cuts Durkan made to the budget show up in the legislation she sent the council, which only includes cuts the council has to act on, making it “difficult to clearly see the full picture” of the budget and “almost impossible for individual council members to determine, as they’re making amendments, ‘Where can I take money, is this being double counted, how does this impact other fund balances, the levy exchanges, how we dip into the emergency funds, and so forth’.”

The budget office doesn’t see it this way. They say they have provided all the information the council has asked for—including not just specific line-item cuts but a list of cuts the mayor considered and rejected (scroll down)—and that the disagreement is actually more fundamental than a simple question of transparency. “We did not and were not intending to send down an entire new budget proposal,” budget director Ben Noble says, or relitigate the entire 2020 budget. But that, he argues, is exactly what the council is trying to do.

So why is this debate ultimately more illustrative than substantive? For one thing, a council that had a healthy relationship with the mayor could have communicated their confusion and need for more information behind the scenes, instead of having the director of Central Staff read a letter for the record; and a mayor who had a healthy relationship with the council could have figured out what information the council wanted and figure out a way to provide it, instead of sending down a dozen pieces of legislation that included gaps that were sure to frustrate a council primed to look for budget trickery.

The second reason this debate is largely symbolic is that the line items the council wants to add (and make up for by cutting from other parts of the budget) are—again, setting the police budget aside—relatively minor strictly from a spending perspective, and many of them will depend on departments (which answer to the mayor) agreeing to voluntarily start the hiring process this year for positions that have been frozen since March, at the risk of having to lay them off at the beginning of next year. Continue reading “Battle Over Budget Transparency Illustrates Deeper Rifts Between Seattle Mayor and Council”

Lawyers, Car Dealerships, Burger Joints, Newspapers, and Strip Clubs: Which Seattle Companies Got Federal Loans

COVID-19 Relief Series, Part 2: Paycheck Protection Program ...

 

The Small Business Administration has published a list of the companies that received Paycheck Protection Act loans of more than $150,000, including thousands of Seattle-based for-profit companies, nonprofits, and religious institutions. (The low-interest loans convert into grants if they are used primarily to retain staff who might otherwise be laid off). The local list, which I’ve compiled into a Google spreadsheet, includes a wide range of companies, from large law firms to newspapers to Catholic schools to nonprofits.

The Small Business Administration, which administered the loans, lists loans as ranges, so I have described each loan as being “up to” the higher end of the range. You can download the full spreadsheets of loans over and under $150,000 on the SBA website; note that the list of loans under $150,000 does not contain business names or detailed business categories.

I took a look at the list of Seattle companies and put together a highly unscientific, non-comprehensive guide to highlights, lowlights, and oddities.

• As the New York Times and others have pointed out, large law firms, lobbyists, and car dealerships were among the biggest “small-business” loan recipients nationwide, and Seattle was no exception. Law firms receiving big payouts in Seattle include Foster Garvey (formerly Foster Pepper), which received as much as $10 million; Schroeter, Goldmark, & Bender (up to $2 million) and Stokes Lawrence (up to $2 million). Local mega-consulting form Strategies 360 received up to $5 million. And Bill Pierre Ford (up to $2 million), Carter Motors, and Freeway Motors (up to $5 million each) were just three of the 20 Seattle car dealerships that received federal loans, a number that does not include the much higher number of dealerships just outside city limits.

The owners of the McDonald’s at Third and Pine, a corner that has seen many shootings over the years (most recently in February, when a mass shooting killed one and injured seven), also received a loan of up to $5 million.

• Several local media companies received PPP loans, including the Seattle Times (which reported earlier this month that it had received nearly $10 million), the Stranger (which has not disclosed its loan of up to $2 million, and continues to solicit small donations from readers, saying they’ve lost more than 90 percent of their revenue), the Daily Journal of Commerce (which received up to $1 million) and Sagacity Media, which owns Seattle Met Magazine and received up to $2 million. Cascade Public Media, the umbrella nonprofit for KTCS 9 and Crosscut, also received up to $2 million.

• For reasons that are unclear, Red Mill Burgers, which is owned by two white siblings, listed itself as a Black-owned business, according to the SBA. (The racial designation is optional, and does not confer any particular advantage.) Red Mill was in the news several years ago after owner John Shepherd got in trouble for making sexist and transphobic comments and sharing transphobic cartoons. Specifically, he “stepped down” from his “role” at the company—without actually relinquishing control—after calling female city council members “bitches” for voting against a sports arena and posting transphobic memes on Facebook. Shepherd remains an active commenter on the anti-homeless Safe Seattle Facebook page. Red Mill received between $100,000 and $350,000.

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• Restaurants, which (along with hotels) were hard-hit by stay-at-home orders, ranked high among recipients of large and mid-range loans. Some notable beneficiaries include Duke’s Chowder House (up to $5 million); the Daily Dozen Doughnuts stand in Pike Place Market (up to $5 million); Matador, with branches in West Seattle and Ballard (up to $5 million); Salty’s, a seafood restaurant on Alki Beach (up to $5 million); two franchise branches of Din Tai Fung, the Taiwanese restaurant chain (up to $2 million); Renee Erickson, who owns nearly a dozen local sea creature-themed restaurants (up to $5 million); and the ultra-spendy Queen Anne destination restaurant Canlis (up to $2 million); and Dick’s Drive-Ins (up to $5 million).

Various business entities associated with restaurateur Tom Douglas, who shuttered all of his restaurants and laid off hundreds of employees in early March, will collectively receive loans of up to $4.35 million. The restaurants include some that are still open, such as the Palace Kitchen, Dahlia Lounge, and Serious Pie, as well as two that Douglas has closed permanently, Brave Horse Tavern and Cuoco. According to the SBA database, Douglas’ claimed that the federal loan of up to $1 million would allow Terry Avenue Restaurants, the corporate name for the two shuttered restaurants, to retain 92 jobs.

The owners of the McDonald’s at Third and Pine, a corner that has seen many shootings over the years (most recently in February, when a mass shooting killed one and injured seven), also received a loan of up to $5 million.

Rounding out the list of local burger chains, Kidd Valley and Burgermaster each received loans of up to $1 million.

Five corporations associated with Deja Vu strip clubs, not all of them incorporated in Washington State, showed up on the list and received a total of up to$5,350,000.

Some of the restaurateurs who will benefit from federal largesse have been in the news previously for stiffing workers or expressing anti-tax or anti-government views. Douglas, who just announced he will permanently close two of his restaurants near the Amazon campus, was among the most vocal restaurant-industry opponents of the “head tax” last year, and had to pay out a $2.4 million settlement for underpaying his employees last year. Dick’s Drive-Ins also came out against the tax, and its executive vice president, speaking on behalf of the company, suggested that charitable giving by individuals should replace government support for homeless services.

• A large number religious institutions (which are not taxed) received significant loans, among them the Corporation of the Catholic Archbishop of Seattle (up to $5 million), the Diocese of Olympia (up to $1 million), St. Anne’s Church on Queen Anne (up to $1 million), and about three dozen other churches or religious organizations. Private schools, many of them run by religious denominations, also received dozens of loans; Holy Names Academy (up to $2 million), St. Joseph School (up to  $2 million), and O’Dea High School, for example, received loans, as did private schools like Morningside Academy (up to $350,000) and charter schools like Summit Public Schools and Villa Academy (up to $2 million each).

The libertarian, anti-government Washington Policy Center—which rails against expansion of government programs to help vulnerable people and advocates for “free-market solutions” over government “handouts”—accepted a federal handout of up to $1 million.

• Local nonprofits that help people experiencing homelessness and food or housing insecurity also received loans to continue doing their work at a time when direct assistance has been especially critical. On the long list are Food Lifeline (up to $2 million), Solid Ground (up to $5 million), the Chief Seattle Club (up to $350,000), the Lighthouse for the Blind (up to $10 million), Asian Counseling and Referral Service (up to $5 million) and El Centro de la Raza (up to $2 million).

• Five corporations associated with Deja Vu strip clubs, not all of them incorporated in Washington State, showed up on the list and received a total of up to $5,350,000. According to the SBA, the five Seattle-based entities employ nearly 400 people.

One, Bijou-Century LLC, is registered in Nevada and owns a strip club in San Francisco that has been the source of several high-profile legal disputes, including a lawsuit against the software company Oracle over an unpaid five-figure tab. Another, S A W Entertainment Ltd., is associated with the Hustler and Condor strip clubs (both Deja Vu-affiliated) in San Francisco. The listed location for both entities is at 1510 1st Ave., the location of Fantasy Unlimited/Deja Vu Showgirls, but neither company is registered in Washington. And two more Deja Vu affiliates—BT California, which runs the Penthouse Club in San Francisco, and Deja Vu San Francisco LLC—are both listed at an address on Eastlake Ave. E. that is not the site of any strip club.

Only Seattle Amusement Co., also located at 1510 First Ave., is an actual Washington State corporation—it’s owned, along with the rest of the building that houses the Showbox nightclub, by local strip club magnate Roger Forbes, who started the Deja Vu company with Larry Flynt in 1985. The byzantine accounting (and the sleuthing required to find out where all these “Seattle” LLCs are registered) speaks to the difficulty of tracking where all the loans are going, even with the benefit of spreadsheets and the Internet. For what it’s worth,

Finally, the libertarian, anti-government Washington Policy Center—which rails against expansion of government programs to help vulnerable people and advocates for “free-market solutions” over government “handouts”—accepted a federal handout of up to $1 million.

Durkan’s Proposed $20 Million Cut to Police Is Just $4 Million More Than Initially Planned

The overall budget picture, via City Budget Office.

After weeks of soaring, budget-speech-style rhetoric about “reimagining the police” and “working with community,” Mayor Jenny Durkan’s proposed midyear police budget cut of $20 million, or just 5 percent of the department’s $400 million budget, was underwhelming. Moreover, according to sources familiar with Durkan’s initial budget balancing package, the proposed cut is only one percentage point (or $4 million) higher than the one Mayor Durkan proposed internally three weeks ago, before protests against police violence upended the city’s business-as-usual approach to public safety. That $4 million can be accounted for by Durkan’s proposal to delay the construction of a second North Precinct for the department.

Despite demands from activists against police violence to start cutting SPD right away, the 5 percent cut will not even reduce the size of the police force. As a presentation on the budget cuts makes clear, SPD is on track to hire and train enough new officers to make up for the expected rate of attrition through the end of the year. The presentation emphasizes that SPD is taking the biggest budget hit, in dollars, of any department; it does not point out the fact that this is because SPD is by far the largest department in the city.

SPD spent an extra $6.3 million this year policing protests over a period of 12 days, including the ones that led to the Capitol Hill Organized Protest zone near the East Precinct. That $6.3 million paid for 72,619 hours of overtime.

None of the changes proposed for SPD’s budget in 2020 represent a realignment of priorities; rather, they nibble around the edges by cutting things like new IT investments and cars.

SPD’s midyear budget adjustment also does not include any changes to the Navigation Team, the group of police officers and Human Services Department employees who do outreach and remove encampments around the city. Currently, the SPD budget includes $2.4 million for the Navigation Team, which pays for one lieutenant, two sergeants, and nine officers. School resource officers—police who provide security at schools, a role that is also extremely controversial—have been repurposed to go out with the Navigation Team while schools are closed due to the COVID-19 pandemic.

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During this unprecedented time of crisis, your support for truly independent journalism is more critical than ever before. The C Is for Crank is a one-person operation supported entirely by contributions from readers like you.

Your $5, $10, and $20 monthly donations allow me to do this work as my full-time job. Every supporter who maintains or increases their contribution during this difficult time helps to ensure that I can keep covering the issues that matter to you, with empathy, relentlessness, and depth.

If you don’t wish to become a monthly contributor, you can always make a one-time donation via PayPal, Venmo (Erica-Barnett-7) or by mailing your contribution to P.O. Box 14328, Seattle, WA 98104. Thank you for reading, and supporting, The C Is for Crank.

The mayor’s budget announcement included a commitment from SPD to come up with proposals to cut its own budget by 30, 40, and 50 percent for 2021, and a commitment from the city to “engage community to provide substantive input on what 2021 SPD budget choices should be made.”

It’s standard for the city to ask departments to come up with potential cuts themselves, but the case of SPD is different because protesters are clamoring for its budget to be cut in half (to begin with) and for the entire concept of public safety to be reimagined in a way that does not center police. The Human Services Department, for example, came up with 2020 cuts that include not filling vacancies and reducing or eliminating travel and trainings—but, unlike the ongoing outcry over police funding, no one is clamoring for fewer human or social services, so the process of asking HSD to propose its own cuts is less politically fraught.

The police department spent an extra $6.3 million this year policing protests over a period of 12 days, including the ones that led to the Capitol Hill Organized Protest zone near the East Precinct. That $6.3 million paid for 72,619 hours of overtime.

The mayor’s proposed 2020 budget balancing package would also draw on funds from several voter-approved levies to pay for normal city operations. For example, $10 million will be shifted this year from the Move Seattle Levy, which was supposed to fund new transportation capital projects, toward the day-to-day operations of the Seattle Department of Transportation. The library levy, which was supposed to fund increased services, will now pay for basic operations—keeping the lights on at branches that might otherwise see reduced hours or closures.

The council will be discussing the mayor’s proposed budget cuts this afternoon. Most members of the council support passing a progressive tax to reduce the impact of next year’s budget shortfall. A payroll tax on large employers with high-paid workers, proposed by council budget committee chair Teresa Mosqueda, has five co-sponsors (a majority), but council member Kshama Sawant has threatened to put her own competing employee hours tax on a citywide ballot if Mosqueda’s proposal goes through in its current form. Durkan has not endorsed Mosqueda’s package and has never supported any tax proposal at the city level.

Budget director Ben Noble said yesterday that the budget cuts the city expects to make in 2021 (again, in the absence of any progressive revenue package) will amount to about 10 percent of the city’s overall budget—an “unprecedented” amount that even dwarfs the cuts the city made under former mayor Mike McGinn during the Great Recession.

Gaming Out the Latest “Amazon Tax” At the Start of an Unprecedented Recession

Let’s start out by stating the obvious: Barring a miracle, the “Amazon Tax” proposed by Seattle council members Kshama Sawant and Tammy Morales will not become law in its current form. The bill, which the council will continue discussing into next month, would slap a 1.3 percent payroll tax on companies with more than $7 million in payroll expenses, raising more than $500 million a year from about 800 Seattle companies.

Sawant and Morales decided to designate the bill as an “emergency,” which makes it invulnerable to a future voter referendum; the tradeoff is that they need 7 votes for approval, plus the support of Mayor Jenny Durkan, since the city charter requires mayoral approval of all emergency legislation. In other words, even if Morales and Sawant got five other council members on board—unlikely, if comments at Wednesday’s budget committee from council members who are ordinarily sympathetic to tax-the-rich arguments are any indication—the mayor could simply let the proposal die without a formal veto. Durkan fought Sawant’s last effort to “tax Amazon,” a $275-per-employee tax on employees of companies with gross receipts of more than $20 million, and is implacably opposed to this one as well.

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During this unprecedented time of crisis, your support for truly independent journalism is more critical than ever before. The C Is for Crank is a one-person operation supported entirely by contributions from readers like you.

Your $5, $10, and $20 monthly donations allow me to do this work as my full-time job. Every supporter who maintains or increases their contribution during this difficult time helps to ensure that I can keep covering the issues that matter to you, with empathy, relentlessness, and depth.

If you don’t wish to become a monthly contributor, you can always make a one-time donation via PayPal, Venmo (Erica-Barnett-7) or by mailing your contribution to P.O. Box 14328, Seattle, WA 98104. Thank you for reading, and supporting, The C Is for Crank.

There is also some question whether the proposal complies with an emergency order issued by Gov. Jay Inslee in March, and extended this week, barring public agencies from adopting or discussing legislation unless it’s “routine” or “necessary to respond to the COVID-19 outbreak and the current public health emergency.”

Despite all that, it’s still worth taking a look at the legislation, which dwarfs the “head tax” the council passed in 2018, then overturned, by a factor of more than ten. What would happen if, against all apparent odds, the bill were to pass in its current form?

In its first year, 2020, the legislation would fund cash payments of $2,000 over four months to 100,000 low-income Seattle residents to respond to the COVID crisis. (This is the part of the bill most obviously compliant with Inslee’s order). Because revenues from the tax wouldn’t be available until 2021, the bill would fund these checks by taking a short-term loan from six city funds that, according to a companion bill, have “sufficient cash” to contribute up to $50 million each. Those funds would be paid back in 2021, plus $5 million interest.

From then on, assuming all the assumptions that went into the proposal remain correct, the tax would pump more than $500 million a year into funding for “social housing” for people making between 0 and 100 percent of the Seattle median income, operational support for permanent supportive housing, and funding to implement the Green New Deal, which includes strategies like weatherization and converting buildings from gas to electric heat. The amount of funding from the tax would be less, of course, if the number of businesses spending more than $7 million annually on payroll declined because of the recession.

Even if the legislation is safe from any future referendum, it would still be subject to lawsuits, and there’s no guarantee that litigation over the tax would be resolved quickly, or in the city’s favor.

The $200 million “interfund loan” would come from six voter-approved levies and taxing districts, including the Move Seattle levy; the Families and Education Levy; the Seattle Parks District; and the Library Levy. Some of these funds do have “sufficient cash” to give up $50 million in the short term, but it’s worth taking a look at why that is, and how this might impact their ability to fund promised projects.

The Low Income Housing Fund, which receives money from the Housing Levy and payments from developers through the Mandatory Housing Affordability program, has more than $146 million on hand because property taxes have continued to flow in to fund future projects that are not yet off the ground. That money is in the city’s “bank,” but it’s already spoken for. Other funds, such as the Library Levy Fund, the Move Seattle Fund, and the Parks District Fund, have significantly less than $50 million lying around. The Parks District fund, in fact, is actually in the red; the 2020 budget makes up a $6 million shortfall with an interfund loan, to be repaid as more revenues come in. Some of these funds simply aren’t that big to begin with—the library levy, for example, is supposed to raise just over $200 million, total, over seven years,

None of that might matter if the $200 million could be repaid in just one year as proposed. But even if the legislation is safe from any future referendum, it would still be subject to lawsuits, and there’s no guarantee that litigation over the tax would be resolved quickly, or in the city’s favor. If funding from the tax didn’t come through quickly, or ever, it’s unclear how the $200 million would be repaid. If, say, the Library Levy found itself short $50 million, that could significantly impact the library’s ability to provide services promised to voters—especially as the recession eats into the city’s tax base.

There are also other interests competing for that money. As city budget director Ben Noble noted in his grim revenue forecast presentation Wednesday, the city may have to dip into some of the dedicated levy funds to pay for basic services—using the parks levy to fund basic maintenance instead of new capital projects, for example. “If the base levels of funding for which the levies were intended to be additive are no longer feasible, the question is whether it would make sense to use the levy funds for operational purposes,” Noble told the council Wednesday. Continue reading “Gaming Out the Latest “Amazon Tax” At the Start of an Unprecedented Recession”