Proposed Local Tax Hikes Are Only “Steep” If Your Starting Point Is Our Post-Eyman/Post-Great-Recession Dystopia

It’s not that Seattle Times columnist Danny Westneat is wrong when he points out that our progressive city and county agenda of preserving Metro bus service, providing a stable funding source for city parks, and expanding high-quality preschool comes at a high cost. It certainly does. But if he’s going to describe the price tag as “steep,” then we need to have a little more context. For steepness is a measure of the relative elevation from Point A to Point B—and while Point B is not in dispute, the location of Point A is a bone of contention.

Yes, the county is asking voters for $130 million a year in car tab and sales tax revenue to stave off a 17 percent cut in Metro bus service. And yes, Mayor Ed Murray wants to go to the ballot with a $56 million a year parks district. And yes, the universal preschool measure the council is currently developing could ultimately cost Seattle taxpayers another $30 million to $70 million annually. Westneat isn’t exaggerating the numbers. That’s a lot of new taxes.

But “new” based on what? Our current diminished tax based? Or the city and county tax base we enjoyed before a series of tax-limiting statewide initiatives were passed against the will of Seattle and King County voters?

Take Metro, for example. Prior to the passage of Tim Eyman’s $30 car tab fee Initiative 695 in 1999, Metro relied on a relatively stable Motor Vehicle Excise Tax (MVET)—a tax on the value of your car—for about one-third of its operating revenue. King County voters rejected I-695, but it passed statewide, so the legislature granted Metro some additional sales tax authority to make up the difference. Unfortunately, sales tax revenue is much less stable than MVET, and when the economy collapsed in 2008, so did Metro’s funding. From 2009 through 2015 Metro will collect $1.2 billion less in sales tax revenue than previously projected.

That averages to $200 million a year in reduced tax revenue, far more than the $130 million a year Proposition 1 would raise.

Seattle tax revenues have been similarly slashed thanks to an Eyman initiative: I-747, which again, was rejected by Seattle and King County voters, but was approved statewide in 2001. I-747 limits growth in regular levy property tax revenues from existing construction to an absurd 1 percent a year—far below inflation. A 2012 report from the Seattle Parks Foundation concludes:

As a result of Initiative 747 alone, the City of Seattle’s property tax collections in 2010 are at least $60 million less than if the measure had not passed. The impact of the loss is compounded each year the limits remain in place, so annual losses increase by approximately $15 million per year, meaning that the estimated loss for 2011 will be at least $75 million. This estimate assumes the City Council would have limited the tax increase to the rate of inflation in the City’s labor costs (3.5 percent to 4.5 percent annually, which includes the cost of health care). If one assumes the City Council would have increased property tax to the statutory limit of 6 percent per year, the 2011 loss would be $126 million.

Taking into account compounding, and using Eyman’s own framing, I-747 will save Seattle taxpayers between $135 million and $186 million in 2015 alone, the first year any of the new taxes Westneat mentions would take effect. That’s far more than the combined annual cost of a parks district and universal preschool!

Such a bargain!

Yes, in both cases we’re talking about substantial tax hikes above what taxpayers are currently paying. But they amount to substantial tax cuts from what taxpayers would have been paying today had not I-695 and I-747 been forced on us by statewide voters. Indeed, the only reason we are going to voters with tax hikes to fund bus service and parks is that I-695 and I-747 left the county and the city without sufficient revenues to sustain these crucial services!

So are the costs high? Sure. It’s expensive to maintain the high-quality public infrastructure we want and need. But are these tax hikes “steep”…? Not if your starting point is the more rational local tax structure we enjoyed just a decade and a half ago, before that two-bit fraternity-watch salesman started fucking with our tax base for fun and profit.

Comments

  1. 1

    spews:

    “Sure. It’s expensive to maintain the high-quality public infrastructure we want and need.”

    Actually, what’s expensive is NOT maintaining the high-quality public infrastructure we want and need.

  2. 2

    dutch spews:

    I always get a kick out of your ability or desire to rewrite history to make it fit your agenda.
    I695 was passed by the people of WA state with a 56.1 to 43.9 percent margin. This was a clear win, even King County (and mostly Seattle), while against it, was just marginally against it compared to the usually pro tax results. No 285374 Yes 249621 or a 53 to 47 percent margin, not enough to overcome the rest of the state. Democracy sucks sometimes.
    Shortly after passage, the measure came under court challenge. In order to insure that $30 license tabs went into effect as the voters wished, the legislature passed, and the governor ( Dem Gary Locke) signed, a bill to enact Initiative 695’s main tax-cutting provision. Other provisions, such as the requirement that future fee and tax increases must be voter-approved, were later struck down in court.
    So it was Locke and the Dem Legislature who finalized and put it into law. Eymans initiative would have been struck down most likely.
    And if the state (and to the extend the county) wouldn’t have been so greedy at that time to based the value of the car on inflated estimates and not real value, who knows what the people would have decided.
    But the people decided and then the Gov listened.

  3. 3

    michaelp spews:

    Thank you, Goldy, for this piece. It is a tragedy that folks forget that we in Seattle did not want to engage in Eyman budgets. We hold our elected officials accountable at the ballot box, and oversee departments with significant levels of citizen oversight in Seattle and King County.

    With the Parks District, we have an opportunity to declare that the Eyman budgeting method – putting civil servants’ jobs up for a vote every six years – is not how we want to fund basic services in Seattle. Instead, we can state clearly that we, as a city, believe in core values that include fully funding programs that make sure families can afford to send their kids to little league; that seniors can have equal access to lifelong recreation programs; and that people with disabilities may have opportunities to be more active in our communities.

    At the same time, we are going to have an opportunity to re-invest in the fantastic parks facilities we have, ensuring that future generations are not stuck with a ballooning bill as a result of “deferred maintenance”. Our legacy can be the preservation of the Olmstead legacy, with adequate funding to smartly grow parks with the rest of Seattle.

  4. 4

    OMG spews:

    Really? We can’t use steep to describe the change in taxes from today to when the increase comes through? We have to go back 15 years? Funny, my budget and spending is based on what I earn now and what I pay now. Isn’t yours?

    This regressive tax hike is very steep. People are hurting now, struggling to pay rent and buy food. What they might have paid in 1999 in taxes is totally fucking irrelevant to that.

    “Hey, I know the tax hike means you can’t pay rent, but come on, it isn’t a steep hike – you had to pay more taxes back when Clinton was the President! You should be happy living on the street!”

    What a fucking stupid way to look at the word “steep”. Your hatred for the Times is making you into a moron.

    VOTE NO ON REGRESSIVE TAX HIKES!

  5. 5

    spews:

    @2 Both initiatives failed in King County, and failed by a substantially wider margin in Seattle. That is a fact.

    But even if they hadn’t, the whole point behind Eyman’s measures—allegedly—was to give voters the final say on local tax hikes. Well voters are being given the final say on local tax hikes.

  6. 6

    ChefJoe spews:

    Woohoo, I can’t wait for the opportunity to vote for more local tax increases while the state continues to make King County to get the second lowest % return on our state tax money. It’s a deeply religious experience, giving until your pockets are empty. We should all be so blessed.

  7. 8

    ChefJoe spews:

    Maybe while we’re adding $60 to our car tab fees (to replace that $20 fee that was supposed to stave off 17% cuts… funny how 3x the fee is protecting the same % cuts as two years ago) for metro transit we can add some extra sprinkles of additional $5 tab and $12 title fees to build another ferry for what’ll be a not-King-County route.

  8. 9

    spews:

    @8 Are you stupid, or just intentionally spreading misinformation? The $20 fee was temporary—just two years—which combined with the remainder of Metro’s reserve funds was intended to stave off cuts until the legislator granted MVET authority. Which it never did. Promise broken.

    So since the $20 fee is expiring, the $60 fee is actually just $40 above what we’re already paying ($20 for those who qualify for the low income rebate).

    As for your idiot comments @6 and @7, I’m not really sure how to respond, as it doesn’t really make sense. Local taxes are spent locally.

  9. 10

    ChefJoe spews:

    I said it replaced the old fee great old wise one.

    Yes, and the $20 temporary fee was paid, $25 mil a year, and 17% cuts avoided, right ?

    http://seattletimes.com/html/l.....bs13m.html

    So, now it’s $60 fees to raise $80 mil for transit or it’ll be the same 17% cuts ? Ok, guess we have no choice.

    But when our state taxes aren’t coming home to help projects in King County then we keep being forced to vote for local tax increases to fund what we need. Olympia’s motto of Starve Seattle is the point.

  10. 11

    spews:

    @10 Olympia can starve Seattle all it wants. But since we get to keep and spend 100 percent of local taxes, but only 60 cents on the dollar of everything we send to Olympia, we’re better off being left to own devices in the long run. Eventually, maybe the rest of the state will figure out that every time they vote against a tax increase they are voting against us subsidizing them.

  11. 12

    ChefJoe spews:

    The little bit of logic in @11 is flawed by the fact that now you have greater local tax burden on top of whatever the state burden is (which is already weighted against us). Oh, and most of the taxes are regressively structured.