Goldy

I’d been meaning to comment on Danny Westneat’s recent column suggesting real estate development impact fees as an alternative to the current round of proposed tax increases, and I want to start by thanking Danny for at least attempting to think creatively on the issue. Really. I’m a big fan of using one’s media presence in the service of public brainstorming.

That said, while I’ve got nothing against them in theory, I don’t think impact fees can or should be a big part of the solution here in Seattle.

For example, take Danny’s inspiration: being crowded onto a sweaty No. 8 bus. “By state law impact fees can’t be used directly for transit,” Danny writes. So then, um, what’s the point? Seattle’s transportation benefit district—the same authority Mayor Ed Murray has proposed using to raise vehicle license fees and sales tax in order to buy back Metro bus service cuts—also has the authority to levy impact fees on commercial (nonresidential) development. But that’s not going to add any service hours to Danny’s No. 8 bus.

I’m not saying we shouldn’t use this authority to help fund roads and stuff, just that it does nothing to solve our immediate crisis.

Second, the notion of charging residential impact fees (Danny says that Bellevue charges $2,600 per house and $1,300 per apartment unit) would run headlong into Seattle’s efforts to address our city’s growing affordable housing crisis, both by making new housing more expensive, and potentially more scarce. Furthermore, anything that holds back new construction ends up adversely impacting property tax revenue, as new construction is exempt from I-747’s absurd 1 percent cap on regular levy revenue growth, and thus the engine of revenue growth in general.

Third, the logic of impact fees just doesn’t hold in a dense urban center like Seattle the way it does in a sprawling suburb, where new developments on virgin residential land often require the construction of new roads, new sewers, new fire stations, new schools, and so forth. Most residential development here in Seattle consists of in-filling in areas where all of these basic services already exist, so it just doesn’t carry with it the same sort of additional public infrastructure costs as a new suburban subdivision.

But finally—and this is my biggest complaint with Danny’s solution—impact fees do nothing to address the heart of the problem: our refusal to tax the people who can best afford to pay higher taxes. You know, the wealthy!

Implicit in Danny’s column is the acknowledgment that Seattle’s public services and infrastructure are underfunded. He’s not arguing with the need to expand bus service, maintain our parks, or fund universal preschool. He just seems to think that the latest round of proposed taxes are too much for the average taxpayer to bear. That’s debatable, but if you presume that it’s true, simply shoving the burden onto the backs of newcomers isn’t much of a solution. Instead, we should be looking for ways to ask our under-taxed wealthy to pick up more of the cost of maintaining the city in which they prosper. Not just out of fairness, but out the very pragmatic logic that they are the people with the most extra money to spare.

I look forward to Danny joining me in attempting to brainstorm a solution to that vexing problem.

Seattle City Council members Nick Licata and Kshama Sawant announced today a plan that would avert scheduled bus service cuts within Seattle through increases in the commercial parking tax and the employer head tax. You know, just like I had suggested.

“I have asked our policy staff to research exactly how much revenue could be raised through these means, and to begin drafting legislation to introduce to the City Council,” said Licata in a prepared statement.

Unlike Mayor Ed Murray’s proposed vehicle license fee and sales tax package, or the competing property tax proposal, hikes in the commercial parking tax and the employer head tax could be passed councilmanically without having to be put to voters. The council could pass these tax increases now, in time to avert the first round of Metro cuts that are scheduled for September. The other packages couldn’t go to voters before November, well after the first round of cuts are implemented.

Also unlike the other proposed taxes and fees, the commercial parking tax and the employer head tax aren’t particularly regressive. So that’s a big plus in their favor.

While only Licata and Sawant have put their names on this proposal, a birdie tells me that at least one or two other council members have expressed interest. So there is a real shot at preventing in-city bus cuts entirely instead of just preventing them from getting any worse.

Last fall I walked into the McDonald’s on Madison Street in Seattle to order myself a metaphor. The point was to demonstrate how incredibly cheap fast food is by historical standards, and how little impact a $15 an hour minimum wage would really have on fast food prices.

I estimated that even if the entire cost of raising the minimum wage to $15 was passed on to consumers (and it wouldn’t be), menu prices would rise by only 20 percent, tops. Probably closer to 16 percent. Maybe as little as 10 percent.

And considering that, adjusted for inflation, the same 15 cents that bought you a McDonald’s hamburger back in 1948 buys you a $1.49 double cheeseburger today, it’s hard to argue that consumers can’t afford to pay a little bit more for their burgers.

Friday I walked into that exact same McDonald’s and paid $1.69 for the exact same double cheeseburger, a 13.5 percent price hike in less than six months. And yet for all the warnings from the industry that higher prices would drive away customers, it was business as usual at the Madison Street McDonald’s.

The fact is, restaurants and other businesses implement price hikes like these all the time, for various reasons, and nobody notices! In the worst case scenario for franchise owners under the proposed minimum wage ordinance, their labor costs would rise by no more than 18 percent a year over three years, before being indexed to inflation. But labor only accounts for a third of their costs. Pass all of that along to consumers (and again, they won’t), and you are looking at just a 6 percent annual price hike—less than half the rise in double cheeseburger prices just since December.

To put that in perspective—using the industry’s same minimum-wage-hikes-equals-higher-prices math in reverse—if all of the gains from a 13.5 percent price hike were passed on to employees in the form of higher wages, Madison Street McDonald’s workers would be making about $13.35 an hour today! Just from charging the equivalent of 20 cents more for a double cheeseburger! A price hike that customers apparently accepted with a shrug, if they noticed at all!

So let’s not pretend that fast food franchisees can’t afford to cover the cost of raising the minimum wage to $15 over three years, when they routinely pass on to consumers similar cost increases all the time.

Deuteronomy 28:53
And you shall eat the fruit of your womb, the flesh of your sons and daughters, whom the LORD your God has given you, in the siege and in the distress with which your enemies shall distress you.

Yummy. Discuss.

Really, Ed? It’s not even worth talking about?

Murray said Thursday he let the group know that the city council is not prepared to rework a Memorandum of Understanding between the city, county and Hansen to build a Sodo arena for a hockey team ahead of an NBA franchise.

“They wanted to explore the possibility of opening the MOU so a hockey team would go first,” Murray said. “My read right now is that opening up the MOU is not something the council is interested in at this time.”

Why? Why on earth would we be unwilling to even consider reopening the MOU in the interest of bringing an NHL team to Seattle? I presume, because Murray just wants to kill the whole McGinn-branded SODO arena deal. You know, because.

Sorry, sports fans. If he can’t stamp his name on it, he’s not interested.

Seattle Mayor Ed Murray released a 22-page proposal (pdf) today for implementing high-quality universal preschool in Seattle, starting with a four-year demonstration project that would serve 2,000 three- and four-year-olds in 100 classrooms by 2018. If approved by the city council, a $58 million property tax levy ($14.5 million a year) that would add about $43 a year to the average Seattle homeowner’s property tax bill would be put before voters on the November, 2014 ballot.

(FYI, while the document is boldly labeled “Mayor Murray’s Proposal,” it is largely the result of an effort led by city council member Tim Burgess long before Murray was sworn in as mayor. So credit where credit is due.)

I’ve only just skimmed the proposal, so you’ll have to wait for a more detailed analysis, but my initial response is that it is very thorough, very promising, and not quite as ambitious as I had hoped for.

During the demonstration period, enrollment would be open to all 4-year-olds, and all 3-year-olds from families earning less than 300 percent of the federal poverty level ($71,550 for a family of four). Tuition would be free for students below 200 percent of the federal poverty level ($47,700 for a family of four), and subsidized on a sliding scale based on income. Families up to 600 percent of poverty ($143,100) would pay no more than 40 percent of the project $10,700 per student costs.

That’s a bargain. So of course demand will far outstrip supply. Enrollment will be prioritized to children already in the program (the previous year’s three-year-olds), children with siblings concurrently in the program, and geographic proximity to the classroom. The plan calls for prioritizing the initial placement of classrooms in neighborhoods with the lowest levels of academic achievement. These enrollment and location priorities will tilt demonstration project access to Seattle’s neediest families.

The stated 15- to 20-year goal is to serve 80 percent of of all three- and four-year-olds from families under 300 percent of poverty by 2035. Which like I said, could be more ambitious. But considering the existing constraints on both classroom infrastructure and trained teachers, the demonstration program looks like a very good start.

Again, this is a very thorough proposal, so a more thorough analysis will have to wait. But with both $15 minimum wage and universal preschool proposals working their way through council, 2014 is shaping up to be a very exciting year.

In the comment threads at HA and elsewhere, some critics have shrugged off the looming Metro bus service cuts in suburban and exurban King County by asserting that most folks out there already have cars. Eliminate the less efficient feeder routes, they argue, and just focus on providing more park and ride spots. Which I suppose would be a welcome solution for Mercer Islanders accustomed to fighting for spots at its overcrowded park and ride.

But for the suburban poor, not so much.

The problem is, not everybody owns a car and not everybody who does own a car can really afford one. According to AAA’s annual Your Driving Costs report (pdf), released just this week, the average cost of car ownership is $8,876 a year.  By comparison, a full-time worker earning the Washington State minimum wage of $9.32 only takes home $19,385 in pre-tax income.

Of course, you can drive for less. But not as much less as you might imagine. AAA estimates average depreciation and finance charges at $3,510 and $847 respectively. So if you inherited a 15-year-old car from your grandmother, you can subtract that. But older cars generally have lower average fuel economy and higher annual maintenance costs (AAA estimates about 5 cents a mile for normal routine maintenance and wear and tear just over the first five years of the car, plus another penny a mile for tires), so you gotta figure those costs would be substantially higher on your typical beater. As for insurance, sure you can save bucks by declining collision and comprehensive on grannie’s clunker, but the poor generally have lower credit ratings and thus higher insurance rates, and the young (or their parents), well, they’re just generally screwed when it comes to auto insurance.

So when every penny is counted, I’d be surprised if there are many folks who can drive a car for much less than $4,000 a year. By comparison, a two-zone Metro bus pass costs $108 a month.

One of the side effects of Seattle’s booming economy and relatively strong real estate market is that we have been relentlessly driving our middle class families, let alone the working poor, out of the city and into cheaper suburban housing. It’s a tradeoff: longer commutes in exchange for lower rent. But for many households who rented an apartment or purchased a house based on proximity to a bus route that is no longer there, adding a car to their monthly budget just doesn’t pencil out.

Short term, there’s not much Seattle voters can do for suburban bus commuters. But we shouldn’t just shrug off their plight.

Goddamn liberal Seattle and its goddamn job-killing liberal policies!

April’s jobless rate of 6.1 percent was down from 6.3 percent a month earlier.

Joblessness in the Seattle metro area, which includes Bellevue and Everett, also declined two-tenths of a percentage point in April, to 5.0 percent.

As usual, Seattle accounted for most of the state’s job growth, with 7,100 of the 7,700 total coming from King and Snohomish counties alone.

No wonder the rest of the state hates us: our high taxes are stealing their jobs!

Seattle Times columnist Danny Westneat gets it half right when it comes to special levies:

If you’re feeling fatigue at all this, council members say: Blame Tim Eyman. The property-tax cap inspired by Eyman forces the city into paying for services “a la carte,” one special request at a time. They said constantly asking for more money creates a perception that taxes are high, but they remain about average for a big city.

“The reason we keep going back to this well is because of Tim Eyman,” Burgess said.

Except other local cities have figured out how to survive under Eyman’s boot heel without being in a perpetual state of need or crisis. Bellevue, for instance, has only one special levy, a parks tax that passed six years ago.

Um, so here’s the thing, Danny: We’re not Bellevue. Or Renton. Or Issaquah. Or Zillah for that matter. We’re Seattle. Which means we have different values and different needs than other cities. I don’t expect Snoqualmie, for example to feel it necessary to raise taxes to buy back in-city bus routes. But then, Snoqualmie’s not nearly as transit dependent as Seattle is. So if they don’t want to pay extra to preserve Metro, that’s up to them. But Seattle is different.

Do you think other cities are magically spending money more efficiently than Seattle? No, they’re just making the political decision to provide fewer public services. Should Seattle reject universal preschool simply because none of our neighboring cities pay for it?

The point to remember, and it’s one I’ve emphasized repeatedly, is that none of these special levies and transportation benefit districts would have been necessary without Eyman’s initiatives. The whole purpose of these initiatives was to force the funding of public services to a la carte public votes. And with the sole exception of universal preschool, all of the levies we’re being asked to approve are to preserve existing services, not create new ones.

Seattle is not a high tax city. Never has been. So rather than comparing ourselves to how other King County cities tax themselves (none of which compare to Seattle in any way), we should be focusing on what we need, what we want, and what we can afford.

During her successful campaign for Seattle City Council I pooh-poohed critics who denounced Socialist Alternative candidate Kshama Sawant as unelectable due to her party’s stance in favor of collectivizing the Fortune 500. She was running for city council, for chrissakes. It’s not like she was going to make collectivizing Boeing a councilmanic priority.

But the collectivization thing does rub a lot of people the wrong way, striking them as both un-American and impractical. And while I generally share that skepticism, that won’t stop me from making the following bold proposal: Collectivize Comcast.

Comcast is fast becoming a dangerously large corporation with the economic power, media might, and political influence to twist public policy contrary to the public good. While perhaps not quite yet a monopoly in the old Ma Bell sense of the word, its dominant position as a broadband provider threatens to saddle American businesses and consumers with slower speeds and higher prices than much of the rest of the world enjoys. Comcast’s push to end net neutrality could impose a toll on innovation, while its self-interest in sucking profits from the infrastructure it has rather than investing in the infrastructure we need must be viewed as nothing less than a tax on US economic competitiveness.

Besides, everybody hates Comcast. So let’s collectivize it.

And by “collectivize,” I don’t mean taking their assets by eminent domain or some extraordinary property grab. I mean collectivizing the American way: via a hostile takeover of a public company… but financed by US taxpayers rather than hedge fund managers or LBO conmen.

At about $50 a share, Comcast currently has a market capitalization of just under $130 billion. Offer $60 a share—a 20 percent premium—and a majority of shareholders would likely sell out in a heartbeat. And you don’t even need to buy all the shares. Just enough to control the board. For a federal government that’s created trillions of dollars in new money via “quantitative easing,” that sort of cash would be chump change.

And we don’t even want all of Comcast. Once taxpayers seize control of the company we can recoup some of the cost by selling off all the parts we don’t need: NBC/Universal, its professional sports teams and stadia management business, and other valuable properties. All we want is the broadband business—a public utility—as the basis for building a national, publicly-owned broadband network.

It’s not as outrageous a proposal as it may at first sound. The federal government bought controlling interest in GM, Chrysler, Fannie Mae, and Freddie Mac when they faced collapse, because our leaders determined it to be in the public interest. Well what could be more in the public interest in the 21st century than assuring open and equal access to an affordable, high speed Internet?

Besides, just talking about collectivizing Comcast has value in itself. Remember, everybody thought Sawant was crazy for campaigning on a $15 minimum wage, and a year later, Seattle is on the verge of passing one. Debating a public takeover of Comcast seriously, by whatever term of art we choose, would be an exercise in going on the political offensive. And if executives at Comcast and other telecom giants begin to feel some genuine pushback, perhaps they’ll think twice before pushing their anti-competitive agenda too far.

Yeah, yesterday’s poll finding 73 percent support in Seattle for a $15 minimum wage is a union-sponsored survey producing a union-friendly result. So take that with a grain of salt. It is also a survey that was structured and released so as to support the minimum wage compromise that Mayor Ed Murray hammered out between labor and business leaders, and is now under consideration by the city council. Again, context.

But EMC Research is a reputable polling firm, and 550 likely voters is a decent sample size, so it would be silly simply to dismiss these results as biased. On the core question—do you support setting Seattle’s minimum wage at $15 an hour?—voter preference is unambiguous:

I’m not saying that millions of dollars of TV ads portraying small business owners warning they’ll close up shop or move out of town won’t nudge the needle. But that’s an awfully heavy needle to nudge. So defeating $15 at the polls would be a dubious proposition.

Even more dubious? Persuading city council members—all of whom are up for reelection in 2015—that there won’t be a price to pay for undermining this very popular proposal. Richard Conlin was ousted by a socialist after casting the lone vote against paid sick leave. I’m not sure there’s anybody on the council who relishes the thought of being branded as the anti-$15 minimum wage candidate.

That said, if there’s anything that I’ve heard from the council that unsettles me it’s the chatter about exploring whether to make the tip and/or benefit deduction permanent. There is a certain logic to a tip credit that I imagine might be compelling to the Bagshaw, Burgess, Clark, Rasmussen camp. Meanwhile, Harrell is particularly being pressured by minority and immigrant business owners to soften the deal on their behalf.

But a permanent tip credit would virtually guarantee a competing $15 Now initiative with at least partial labor support, so with only 23 percent of respondents voicing support for a permanent tip credit or benefit deduction, council members who value their jobs should think long and hard before undermining Murray’s grand bargain.

No, there’s nothing definitive about this poll, and yes it was commissioned by pro-minimum wage groups. But if the business community had polling that refuted the core premise that support for a $15 minimum wage remains very strong, they would have released their polling numbers too.

Council members who value their jobs should be very wary of ignoring these results.

A new poll conducted by EMC Research on behalf of labor organizations finds 74 percent of Seattle voters support a $15 minimum wage, up from 68 percent support in January (PDF). Also, voters find socialist Seattle City Council member Kshama Sawant more credible than the Seattle Chamber of Commerce, the Seattle Times, and the Washington Restaurant Association.

More thorough analysis in the morning, but for the moment I’m busy drinking this:

As expected, Mayor Ed Murray announced today a Seattle-only tax package that would buy back 90 percent of bus service reductions financially strapped King County Metro has proposed for in-city routes. The $60 vehicle license fee and tenth of a cent sales tax increase would raise approximately $45 million a year—$42 million to restore and preserve Seattle bus routes, and $3 million towards a “Regional Partnership Fund” intended to attract matching funds from surrounding cities to spend toward preserving intercity commuter routes.

This is of course the same tax package rejected by county voters in Proposition 1 last, relying on the same “transportation benefit district” authority the state grants cities and counties. (I’ve dubbed it Proposition 1.1.) The only real differences between the two measures are that Prop 1 would have spent 40 percent of revenue on roads, whereas Prop 1.1 is dedicated entirely toward transit—and of course that Prop 1.1 will be voted on only in Seattle, where voters overwhelmingly favored Prop 1 by a better than two to one margin.

Murray was prodded into pushing forth his own proposal by a competing initiative to buy back Seattle bus service via a $30 million a year property tax increase. “We are thrilled that Seattle voters will have a chance to vote to preserve their bus service this fall,” initiative sponsor Ben Schiendelman of Friends of Transit replied via email. “With several progressive revenue sources available, we hope the council will take a serious look at all funding options before putting transit on the ballot.”

Schiendelman says that his organization has suspended signature gathering. Mission accomplished.

As for me, I’m agnostic as to the revenue source, as none of the options are great. “It is not ideal,” admitted Seattle City Council member Tom Rasmussen at this morning’s press conference. “We sought a motor vehicle excise tax from the state. They failed us.”

They certainly did.

Murray and others repeatedly stressed that this was just a temporary solution until the legislature grants Metro a viable regional funding option. But I’m not so sure. Given the thrashing Prop 1 took by county voters, I don’t know that a more progressive MVET would have passed either. And I’m not hopeful that we’ll get MVET authority out of Olympia until the Democrats retake control of the state senate, an iffy prospect this November. “This is really up to voters,” offered state Senator Jamie Pedersen (D-Seattle). Good luck with that.

But the good news is that there appears to be strong support within Seattle from both the electorate and our elected leaders to tax ourselves to maintain crucial bus service. So while the suburbs may suffer, Seattle will attempt to at least take care of its own.

TANGENTIAL ASIDE: What is up with Seattle Times headline writers today? “County, city take variety of routes on bus rescue“…? No, they’ve taken the exact same route: cities buying back bus service hours. Not as bad as the Obamacare headline, but do the headline writers bother reading their own paper?

Oh no! “Insurers propose up to 26% increase in health-plan rates,” the headline on the front page of the Seattle Times website warns. Goddamn Obamacare ruining everything! Except, read the actual article and…

The proposed rate changes range from a decrease of 6.8 percent — from Molina Healthcare of Washington — to an increase of 26 percent from Time Insurance, a national company with relatively few Washington policyholders.

Most rate-change requests, particularly from larger insurers, were in the middle ground, with most asking for increases from about 2 to about 11 percent.

To anyone who has had individual insurance, premium increases are not surprising: Records show that, on average, insurers have proposed rate increases for individual plans from about 9 percent to more than 18 percent every year from 2007 to 2013.

So that one 26 percent rate hike proposal was an outlier—almost double the next highest request—that affects few Washingtonians, while the average rate hike request is actually lower than that during the previous six years! Yay for Obamacare! But you wouldn’t know that from the incredibly biased and misleading heading.

I mean, they could’ve written their headline to read “Insurers propose up to 6.8% cut in health-plan rates,” and been just as accurate. But they didn’t.

This is actually a really important election year story. Republicans have been looking to the rate hike requests as an election year opportunity to spin Obamacare into a disaster for consumers. But if the rate hike requests are actually coming in lower than in previous years, then that is at least preliminary evidence that the exchanges are pulling in enough healthy Americans to balance the costs.

So thanks, Seattle Times editors, for attempting to spin relatively good news on one of the first post-Obamacare rate hike requests into an anti-Obamacare national headline.

UPDATE: So how do other headline writers interpret the news? “A Washington State Health Insurer Plans to Cut Rates in 2015,” declares the Wall Street Journal, taking the opposite (and arguably sexier) spin. Pretty embarrassing for the Seattle Times.

UPDATE, UPDATE: As Richard points out in the comment thread, the editors updated the article at 10:35 am, changing the headline to the far more neutral: “Most state health insurers seek rate boost: Proposals compared.” Score another victory for Seattle Times Voluntary Ombudsman David Goldstein!

By all accounts Mayor Ed Murray is expected to ask the city council to send to the ballot a measure to buy back in-city Metro bus service cuts via a $60 car tab fee and tenth of a cent hike in the sales tax. Sound familiar? That’s the exact same tax that was rejected by King County voters last month in the form of Proposition 1, because it’s the exact same taxing authority also granted to the city via a transportation benefit district.

Call it Proposition 1.1.

I suppose this funding option is as good as any other, especially considering that Prop 1 passed here in Seattle. Even better, it’s Ed’s idea rather than Ben’s, so that means Prop 1.1 will enjoy Ed’s enthusiastic support. Which is fine. I don’t really care who gets the credit for things as long as good things get done. And buying back Metro bus service cuts is a good thing.

That said, I just can’t help but feeling a little wistful over the fact that just couple years ago Seattle voters rejected a similar car tab measure targeted toward expanding transit service—precious taxing authority we’ll now be using merely to preserve transit service. That’s not much of a step forward. Also, it is of course a shame that suburban and exurban Metro riders will be totally dicked over by these cuts.  But what are we to do? Suffer in sympathy?