Search Results for: inflation

Hey, is anyone surprised Sen. Michael Baumgartner (or an intern in his office) is writing press releases in support a bill to dock teacher’s pay during strikes? No, nobody? I’m going to make fun of it anyway.

OLYMPIA… On the same day that teachers in the Seattle School District are planning to walk off the job, the state Senate Commerce and Labor Committee will hold a hearing on a bill that would dock their pay.

On the same day that Michael Baumgartner is violating his oath by not supporting the paramount duty of the state — AKA, any day — he still managed to find time to complain about the people who actually educate children. Yes, he has helped make sure that teacher pay has been frozen for years. Not for nothing, but he’s literally using a special session where he’s supposed to find ways to fund education to try his hand at cutting teacher pay.

The work session and public hearing on Senate Bill 6116 is set for 1:30 p.m. Tuesday in Senate Hearing Room 4. Officials of the Washington Education Association and other education groups have been invited.

The bill, sponsored by state Sen. Tim Sheldon, D-Potlatch, would for the first time impose a financial penalty on teachers who choose to break the law by going on strike. The proposal is especially timely this year, said committee chair Michael Baumgartner, R-Spokane. Teachers affiliated with the WEA have voted to stage one-day walkouts in 55 school districts.

It’s like he isn’t aware that it’s the middle of a special session to fund education, and failing super hard. The most timely thing about this bill is a strike? Is he even trying? He’s aware that we can read, right?

“Let’s leave aside the political arguments for a moment,” Baumgartner said.

Seems unlikely, but let’s see what “leave aside the political arguments” looks like:

“The fact is that these strikes use our children as a political football. The teachers walk out and the parents have to stay home. The union is hoping parents will take out their anger on the Legislature. It’s a nasty game they play.”

So leaving aside the political argument is blaming someone else for your own shortcomings. Great. Again, if the legislature did their job, we wouldn’t be in this mess.

Teachers are protesting a Senate budget proposal that gives them their first cost-of-living increase since the Great Recession. The problem is the Democrats in the state House are offering them more. At the same time, both parties balk at paying for Initiative 1351, a class-size reduction measure backed by the teacher’s union that narrowly passed last year. The measure would require that 25,000 additional teachers and school employees be hired, costing $3.8 billion every two years when fully implemented.

Oh right. You’ve not passed teacher raises despite inflation still being a thing for the better part of a decade. Now you’ve decided that instead of fully making up that gap and paying for the other things you haven’t funded for a long time, not to mention what people just voted for, just dock teacher pay for a one day strike that will be made up at the end of the year anyway.

Sheldon noted that state law has always prohibited teacher strikes. In addition, most local schoolteachers’ unions have agreed to no-strike clauses in their contracts. Those rules are rarely enforced. When teachers walk off the job, strike days are generally made up at the end of the school year in the same manner as snow days, with full pay and benefits. Sheldon’s bill stipulates that no state money shall be used to compensate teachers when they go on strike. The intention is that teachers shall not be compensated when they make up strike days, he said.

In the previous paragraph he said he wouldn’t fund I-1351, despite it being state law. Throughout the entire press release, there’s no way to meet the Constitutional requirements spelled out in McCleary. Yet somehow, he’s super concerned with obeying the law? Also, is he saying strike days shouldn’t be made up, or just that the state shouldn’t pay for it? Either way, the bill is seeking to harm school districts to prove some sort of nebulous point. And have I mentioned how they’re failing their paramount duty?

“This is really a bipartisan concern,” Sheldon said. “I know of no other profession in which you get paid to go on strike. I’m glad we’re holding this hearing the same day the Seattle teachers are protesting the Legislature. Some of them may actually come down here and do it. That will give me a chance to ask why they think taxpayers should pay them to play hooky.”

Can whoever wrote this press release ask Tim Sheldon if he still gets paid by Mason County while he’s playing hooky in the legislature?

– If inflation, population growth, and economic growth weren’t a thing, that spending increase number might be meaningful.

– Bill Bryant, Who Backed Bringing Shell’s Arctic Drilling Fleet to Seattle, Announces Run for Governor

– Caring about affordable housing isn’t why John Okamoto is now on Seattle’s city council. As always, the public is the last to get the memo.

– You don’t necessarily have your family’s policies if you run for office, but if you can’t get away from George W. Bush, you’re in trouble.

– Reporting from the “My Actual Hell” newsdesk; Cuddle Club.

– I liked the last book by Randall Munroe’s last book, so here’s looking forward to Thing Explainer

In a guest op-ed in the Seattle Times, former Washington State Republican Party Chair Chris Vance argues that the state needs to lift the absurd 1 percent cap on growth in revenue from property taxes:

Counties spend 70 to 80 percent of their general-fund revenues on law enforcement, and the growth of those funds are not keeping up with the rate of inflation and population increases. Part of the problem is due to the fact that so little sales-tax revenue is generated in unincorporated areas.

But the bigger issue is the 1 percent cap on property tax revenue. King County receives 43 percent of its general-fund revenue from the property tax. The math is obvious: Capping that revenue growth at 1 percent a year makes it virtually impossible for the county to even keep up with inflation.

It’s not Vance’s arguments that are so significant here; as he says, “the math is obvious,” and always has been. What’s new here is that these words are coming out of the mouth of a Republican. If Republicans are beginning to admit that strangling local government isn’t the solution to all our problems, then perhaps there is hope yet.

The rest of Vance’s column, I’m not so sure of. But you can be sure of two things: 1) He just pissed off a lot of people in his own party by voicing this heresy outloud, and 2) he wouldn’t be writing this if there weren’t already other people in his own party voicing these thoughts privately.

The serious people keep using that word. But I do not think it means what they think it means.

Enter Sen. Mark Miloscia, R-Federal Way, a former Democrat, with what he calls a “grand compromise.”

Miloscia dropped a bill Tuesday, SB 6029, that would scrap local authority to raise the minimum wage — meaning it would nix Seattle’s $15 per hour minimum wage approved last year. Instead, Miloscia’s proposal would index the wage to both urban inflation and personal income growth.

So, um, how exactly is this a “compromise,” grand or otherwise? God I hate it when politicians speak to us like they think we’re morons.

Miloscia and his crowd have already lost the minimum wage debate. Seattle has passed a $15 minimum wage, and polls consistently show that voters overwhelmingly support Democratic efforts to raise the state minimum wage to $12 an hour. In fact, polls show that voters are willing to go much higher—and public support spikes again when we add in paid sick leave! So Miloscia’s proposal that we give all these gains away in exchange for just tweaking the index by which the state minimum wage is already annually adjusted, well, from our perspective, that sounds a lot more like a capitulation than a compromise.

But in the spirit of Miloscia’s creative interpretation of the word, I’d like to respond with a counter offer: How about, if the legislature refuses to raise the state minimum wage to $12  in 2015, we “compromise” by going to the ballot with a measure that raises it to $16 in 2016? Because what Miloscia, his fellow Republicans, and WA’s business establishment need to start wrapping their minds around is that $12 is the compromise. We could get much more than that at polls. So don’t say we didn’t warn you.

A stunning new poll conducted by Hart Research Associates finds that 63 percent of respondents support raising the federal minimum wage to $15 an hour over five years. A less ambitious proposal to raise the minimum wage to $12.50 an hour earns an even more overwhelming 75 percent support, including support from a majority of Republicans. The poll additional finds that 82 percent of respondents support indexing the minimum wage to inflation, while 71 percent of respondents favor eliminating the federal tip credit. The survey of 1002 adults was conducted January 5-7, and has a margin of error of +/- 3.1 percent.

The federal minimum wage currently stands at $7.25 an hour, and at just $2.13 an hour for tipped employees.

Why Democrats aren’t flocking to this issue, I just don’t know. It’s a political no-brainer.

State House Appropriations Committee chair Ross Hunter (D-48) is no idiot. He may not be as smart as he thinks is (hanging out in Olympia will do that to you, because his fellow electeds set such a low bar), but he’s no idiot. I’ve had numerous conversations with Hunter over the years, and there’s no question he’s smart. Often too conventional. Sometimes dead wrong. But smart.

But state Senate Ways & Means chair Andy Hill (R-45), well, I gotta wonder. Never met the guy. Never had so much as an email exchange. So it’s hard for me to judge his intelligence for myself. But what I can say is that if Hill is not an idiot, he sure thinks you are:

But Hill labels as false Hunter’s overall depiction of a budget shortfall in need of new tax revenue.

Hill says Hunter would like you to think it’s either raise taxes or make cuts. But, Hill says, “Remember, we’ve got $3 billion of new money.

Sigh. That old line again—that if the dollar figure of revenue goes up, there can’t possibly be a revenue shortfall, regardless of the rising costs of existing government services or the added costs of meeting new demands. I mean, let’s say your rent rose 7.9 percent last year (the actual average rent hike in Seattle last year), but your wages rose 2 percent. Hey: You’re revenue is up! So quit your whining!

Speaking of which:

“And Ross will say it’s all spent, but it’s all spent on optional things, like collective-bargaining agreements,” Hill added.

Yeah, “optional things.” Like paying government workers. Which, you know, is every government’s biggest cost.

To be clear, what Hill is referring to is the collective bargaining agreement struck between Governor Inslee and the Washington Federation of State Employees. State workers haven’t received a cost of living increase since 2008, a period of time over which inflation has eaten away about 10 percent of their wages. The proposed contract would give state workers a 3 percent raise in 2015, followed by a 1.8 percent raise in 2016—a two-year period over which inflation is projected to rise about 1.8 percent a year. By the end of 2016, adjusted for inflation, state workers would still be earning about 9 percent less than they did back in 2008, even with this raise.

But Hill argues that it is an “optional thing” to ever increase state worker pay again!

Sure makes the job of balancing the budget without raising taxes easy if you can freeze one of your biggest cost drivers by never giving state workers another cost-of-living increase again. Ever.

I’ve other work to do so I can’t fisk all of Hill’s idiotic arguments. But it doesn’t bode well for budget negotiations when the Senate’s budget writer is so vehemently professing such budgetary nonsense.

State Senate Republicans are blaming Democrats for rising tuition at our state colleges and universities. Of course they are. And they’re right. Democrats are to blame. But more so the Republicans.

For while Republicans didn’t officially seize control of the Senate until Rodney Tom and Tom Sheldon betrayed their constituents in 2013, thanks to the disloyalty of “roadkill” Dems, Republicans more or less controlled the Senate budget-writing process for some time. In fact, back in 2011, former Republican Senator Joe Zarelli personally boasted to me that he wrote the Senate budget, not then Democratic Ways & Means chair Ed Murray.

But whatever. I’m less interested in apportioning the blame than I am in fixing the problem. And this sort of bullshit doesn’t help:

Bailey fingers a “lack of commitment by elected leaders” but also a lack of accountability on the part of universities as the causes of ballooning tuition that has “functioned like a tax on our middle-class families.”

“For years higher education funding has been used as a piggy bank to offset funding reductions in other areas of the budget,” she wrote. “As we work through the budget process and policy proposals, it is important to hold the line on higher education funding. We also expect higher education institutions to hold the line on tuition increases.”

Oy. How many times do I have to go through this? It’s not the cost of a college education that’s skyrocketing, it’s the price:

As you can see from the chart above, adjusted for inflation, the cost of educating a student has remained relatively flat over the past two decades. Tuition has been rising not in response to rising costs, but as a direct response to cuts in state funding.

No doubt there’s room for universities to try to be more accountable and efficient, but it’s not accountability that’s been the problem. It’s a lack of funding. And the only way for universities to hold the line on tuition increases is for legislators to hold the line on funding. (Or, I suppose, we could just offer a cheaper, lower quality college education. Is that what Senator Bailey is arguing for? I don’t think so.)

Yes, state lawmakers have used higher education as a piggy bank of sorts. But that’s not because Democrats hate higher education. It’s because there’s so little truly discretionary spending available to cut in the state budget. And Republicans have made it impossible to raise taxes.

That’s the problem. Collectively, our taxes are too low to sustain the government we want and need. In fact, as a percentage of income, our state and local taxes are now 20 percent lower than they were 20 years ago. If Republicans want to argue that we should be spending more money on higher ed, then they need to tell us which taxes they want to raise or which social service programs they want to cut. Because that’s the only other place to find the money.

So good on Senator Bailey for recognizing that tuition hikes function like a tax on middle-class families. We all agree. Now if only she and her fellow Republicans would permit a conversation replacing this virtual tax with a real tax on the wealthy households who can afford it.

So I’m wreaking havoc in the other Washington for a few days, but that doesn’t stop me from reading the Seattle Times editorial page. (Because I’m stoopid.) And for obvious reasons, I just couldn’t wait to click through to the following headline: “Washington’s tuition stability good for students, GET program.”

WASHIINGTON’S prepaid tuition plan rebounded into financial solvency on the wings of a rebounding stock market and a shift in legislative policy. That’s good news for the state: In 2013, the Guaranteed Education Tuition (GET) program was underfunded by $631 million. Absent the rebound, Washington would’ve been on the hook.

But the real winners in the rebound are Washington college students and their families, whether they had GET accounts or not. The prepaid plan’s deficit had been compounded by a ruinous state policy of huge tuition increases.

But if you were expecting the editors to eat a little well-deserved crow, think again. Absolutely zero mention of the editorial board’s prior advocacy to shut down GET at a taxpayer cost of $1.7 billion. Though in their defense, perhaps not even Seattle Times editors can bear to read the paper’s awful editorial pages.

One other comment, though:

The Legislature wisely reversed the gouge on college students and froze tuition increases for the past two years.

To be clear, freezing tuition after four years of double-digit increases is good. But the legislature has not “reversed the gouge.” Lawmakers who paid an inflation-adjusted $2,500 a year for their own tuition a generation ago have still left today’s students paying around $13,000. It would take a couple decades of tuition freezes to truly reverse the gouge. And we all know that’s not likely to happen.

So if the editors truly care about Washington college students and their families, they would marshal their advocacy on behalf of raising the tax revenue necessary to both add capacity and restore some fiscal balance to our state college and university system.

Hey, remember how just a year and a half ago the oh so wise Seattle Times editorial board vociferously (and dishonestly) backed up Rodney Tom’s call to shut down GET (the state’s Guaranteed Education Tuition Plan), deriding it as “too generous,” while arguing that “lawmakers should be seriously concerned about a projected $631 million future shortfall” in the program?

“Closing GET to new enrollees would cause a $1.7 billion hit to the state treasury,” the editors wrote in January 2013, back when they were editorializing in favor of, you know, closing GET to new enrollees. And yet just 19 months later, according to today’s Seattle Times, GET is now funded at 106 percent of obligations:

The state’s prepaid college tuition is no longer underfunded, and has fully recovered from the recession.

That’s right: following the editors’ sage advice would have cost Washington taxpayers an unnecessary $1.7 billion, while eliminating our state’s only college savings option that allows middle-class families to securely plan for their children’s college education. Oops. Not that this wasn’t entirely predictable. As I explained in my contemporaneous fisking of this insane editorial:

Why the fuck would we want to lock in a $1.7 billion loss that we’d never have to pay if we’d just fund higher education at the level we all say we want to fund it? I mean, that’s just crazy. Inflation has averaged between 2 and 3 percent over the past few decades. Limit tuition increases to 7.5 percent a year and the GET program easily outgrows its shortfall.

As it turns out, the legislature ended up freezing tuition for two years. That and a booming stock market predictably led to GET’s full and speedy recovery.

Seriously… where do these clowns get off telling us how to run a government? Nobody should ever, ever, ever listen to their budgetary advice.

There’s a lot to ridicule in this Freedom Foundation blow-job from the Seattle Times editorial board, but for the sake of brevity, I think I’ll just focus on this single sentence:

These agreements are among the reasons for the disastrous run up in state spending during the bubble years of the 2000s.

Forget for a moment the editor’s ridiculous assertion that our public employee unions are somehow to blame for our state’s budget woes. Instead, I’m just going to rip into the underlying premise. For in fact, there was no run up in state spending during the 2000s, disastrous or otherwise. And unlike those lying liars at the Seattle Times, I’ll show you the data to prove it:

The chart above was copy and pasted directly from the pages of the Washington State Office of Financial Management (OFM), and while it does show a modest rise in spending from a low of $187.73 per $1,000 of income in 2000 to a mid-decade high of $205.75 in 2004, it only comes on the heels of a steep eight-year decline from a peak of $224.37 in 1993, followed by an immediate drop to $196.41 by 2006. Viewed through any reasonable time frame, this is nothing more than a blip.

But in fact, the “disastrous run up” the editors are really referring to is the 2007-09 biennial budget, in which Governor Christine Gregoire briefly restored voter-approved teacher COLAs, as well as COLAs for other state workers who hadn’t seen a raise in years. Squint closely and you can see it on the chart. That’s what the Seattle Times has been bitching about all these years.

Indeed, if there’s anything remarkable about the 2000s, it’s that state spending remained relatively flat compared to the more erratic oscillations of the previous two decades. State and local expenditures pretty much track the 50-state average (though slightly below) throughout the decade, fluctuating right along with the economy.

Seriously, take a look at that chart, and show me the “disastrous run up in state spending.” You can’t. Because it’s not there. And it’s not there for a very good reason.

The OFM chart above tracks Washington state and local taxes as a percentage of personal income, and not surprisingly, tells a similar story to state and local expenditures. Because, you know, one pays for the other.

In this case, taxes peaked at just below $125 per $1,000 of personal income in 1989, settled to about $119 over the next few years, before falling into an eight-year decline that bottomed out at $98.91 in 2002. Tax revenues did recover over the next few years to $109.43 in 2006, before falling off the cliff during the great recession. By 2011, the latest year for which OFM provides data, taxes had dropped to under $95 per $1,000 of personal income, the lowest effective average tax rate in the 31 years charted!

And again, throughout the 2000s, Washington’s state and local taxes largely track fluctuations in the 50-state average, if quite a bit below it. In 2011, Washington’s tax “burden” ranked 37th nationwide.

Now I know what some of you right-wing skeptics are thinking: lies, damn lies, and statistics, amirite? Goldy’s talking state and local expenditures and taxes as percentage of personal income in an effort to obscure some inconvenient truth.

Well, no. Taxes and spending as a percentage of personal income is a metric that inherently incorporates the impact of both economic and population growth, as well as inflation, thus presenting the most accurate picture of relative taxes and spending over time. And if you’re worried that OFM’s inclusion of local taxes muddies the picture, considering that the editors were only talking about state spending, well, you’re kinda right. When you break out just state taxes, the decline per $1,000 of income becomes even starker:

There’s your run up in state taxes for you—from a half-century low, up slightly mid-decade, and then off the cliff again. Disastrous! Just not in the way the Seattle Times implies.

And if you’re still not convinced that there hasn’t been some sort of secret hidden run-up in state spending that would prove the editors’ claim, just take a gander at this:

State workers are in fact the state’s largest expense, but do you see any sort of run up in state hiring during the 2000s? No you do not. In fact, the gap between population growth and state FTEs widened slightly throughout the first half of the decade before the state started madly shedding government workers during the Great Recession.

Go to the OFM website. Look at all of the charts. By any reasonable metric the “disastrous run up in state spending” that the Seattle Times has been pouting over for years, simply did not happen! The entire premise upon which the paper has built its relentless attack on public employee unions—that state spending is out of control—is entirely unsupported by the data. Indeed, what these charts actually show is a structural revenue deficit that has left state government unable to grow state services and investments commensurate with our needs.

McLeary, anybody?

And while none of these charts speak directly to the editors’ claim that public employee unions are bankrupting the state by extorting extravagant contracts through secret negotiations, given the context, where exactly are all these overpaid state workers? More than 45 percent of state general fund spending goes toward K-12 education, and yet the National Education Association reports that Washington state teachers—already paid well below the national average—actually saw their inflation-adjusted wages fall by 8.5 percent from 2002 through 2012. Are they really arguing that we should cut teacher pay even more?

And if it’s not the dastardly teachers union that is to blame, then who? Is it our state troopers who are overpaid? The men and women risking their lives fighting fires in Eastern Washington? The evil, evil members of perpetual Seattle Times boogeyman SEIU 775 NW, who now earn an extravagant starting wage of $11.06 an hour to wipe the poop off your grandma—a modest pay hike earned not through some secret back room deal, but through binding arbitration?

As I have said for years, there is a legitimate debate to be had over the proper size and scope of government, but the Seattle Times editorial board refuses to engage in it honestly. Instead, they obstruct debate through dog-whistle attacks on public employee unions and the relentless repetition of an out-of-control-state-spending meme that is entirely contradicted by the facts.

It is not state spending that is the problem, but state revenue. You could bust the public employee unions, convert their pensions to 401Ks, slash their health care benefits, and freeze their pay, and you still wouldn’t have enough money to fully fund McCleary. Even worse, in another ten years or so, we’d be right back to where we started. Because that is the nature of a structural revenue deficit. And no amount of lying or union-bashing can ever change that.

Socialists like Kshama Sawant like to argue that market capitalism isn’t working for the rest of us. But I’m beginning to wonder if it is actually working at all:

The American Trucking Associations has estimated that there was a shortage of 30,000 qualified drivers earlier this year, a number on track to rise to 200,000 over the next decade. Trucking companies are turning down business for want of workers.

Yet the idea that there is a huge shortage of truck drivers flies in the face of a jobless rate of more than 6 percent, not to mention Economics 101. The most basic of economic theories would suggest that when supply isn’t enough to meet demand, it’s because the price — in this case, truckers’ wages — is too low. Raise wages, and an ample supply of workers should follow.

But corporate America has become so parsimonious about paying workers outside the executive suite that meaningful wage increases may seem an unacceptable affront. In this environment, it may be easier to say “There is a shortage of skilled workers” than “We aren’t paying our workers enough,” even if, in economic terms, those come down to the same thing.

Adjusted for inflation, truckers are now earning 6 percent less, on average, than they did a decade ago. And yet trucking executives would rather leave business on the table than raise pay to attract more truckers. “It takes a peculiar form of logic to cut pay steadily and then be shocked that fewer people want to do the job,” observes the New York Times’ Neil Irwin.

So much for supply and demand.

And its not just the trucking industry. As the housing market recovers, the construction industry is facing a looming worker shortage, even against the backdrop of persistent six-plus percent unemployment. Here in Washington State, produce is left rotting in the fields for want of enough farmworkers at harvest time. Pay them and they will come, Econ 101 teaches. But in industry after industry, the masters of capital simply refuse.

Whether through collusion, or habit, or sheer ill will, a labor market that effectively suspends the rule of supply and demand isn’t really a market at all. And if there is no functional labor market, then capitalism really isn’t working for the rest of us. Really. In fact, it is fair to question whether market capitalism is working at all. For surely there must be more to the promise of capitalism than the mere accumulation of capital.

Minimum wage opponents like to argue that wage floors distort the natural efficiencies of the market. But you can’t distort something that doesn’t exist.

I certainly agree with the Seattle Times editorial board in lauding the work of Public Health – Seattle & King County director David Fleming, who is stepping down today after seven years on the job. Under Fleming’s leadership, Public Health has been one of the most proactive and effective agencies in the region.

But what I do take issue with is the editors’ envisioned role for Fleming’s successor.

There is much work to be done.

The department faces an estimated $15 million budget hole this fall caused by federal budget constraints. The next director will have to balance fewer resources with the demands of a fast-growing, diverse population.

Fleming’s successor should pick up where he left off by advocating for policies and funding in areas where data show the highest need and investment can have the highest impact:

That’s right: the editors want Fleming’s successor to “pick up where he left off,” but with “fewer resources,” despite the increased costs of serving our “fast-growing” population. It’s no secret that his department’s budget squeeze contributed to Fleming’s decision to step-down—the Seattle Times reported as much. And yet in the same breath in which they acknowledge the important work that Public Health does, the editors simply state as fact that the new director will have to serve a growing population with shrinking resources.

More sound public policy advice from the something-for-nothing crowd.

But it doesn’t have to be like this. Whatever the loss of federal funds, the city and county could backfill this money with local revenue—assuming I-747’s stupid fucking 101 percent limit wasn’t gradually drowning local government in a bathtub. About 45 percent of the county’s general fund revenue comes from the property tax, yet as I have previously explained, thanks to the 101 percent limit on growth in regular levy revenue, the property tax can’t even keep pace with inflation, let alone population-plus-inflation (not to mention economic growth, with is the most accurate measure of growth in demand for public services). To further complicate matters, another 14 percent of county general fund revenue comes from the sales tax, a tax base (the sale of goods) that has been steadily shrinking as a portion of the overall economy for more than 60 years.

What we have here should be familiar to anybody who is willing to honestly discuss Washington’s state and local tax system: a structural revenue deficit.

The editors’ advice—always—is that government must recognize this new fiscal reality and reduce the size and cost of its operations to match its reduced revenues. But it can’t work. For even if you believe that this new fiscal reality is more appropriate than the significantly higher relative revenue levels state and local governments enjoyed just a decade and a half ago, our ability to fund government services will continue to fall. That is the nature of a structural deficit.

If the Seattle Times really cared about maintaining public health, rather than simply urging the new director to magically do more with less (year after year in perpetuity!), the editors would take the lead in urging the repeal of the 101 percent limit, and replacing it with something more rational. The original purpose of the limit back when it was first imposed at 106 percent (or inflation, whichever was higher), was to prevent shocking annual increases in property taxes. But it was not meant to limit property taxes over the long run—that is the role of the statutory cap that limits the total amount of state and local regular levies to $10 per $1,000 of accessed value.

Tim Eyman’s arbitrary 101 percent limit is a perversion of this policy.

If Washington were a high-tax state this push for lower taxes might be understandable. But we’re not. As a percentage of personal income, Washington’s state and local taxes are now some of the lowest in the nation. And dropping. In this context, there is simply no rational argument for maintaining a 101 percent limit on local property tax revenue growth that is gradually starving local governments of the ability to meet their citizens’ most basic needs.

Everybody knows that Washington’s tax structure is immensely unfair. It is the most regressive in the nation. And by far. But it is also unsustainable. And we could really use some editorial leadership to help move us toward a solution before it is too late.

Contrary to the scare tactics being employed by opponents, Proposition 1 is not about “accountability” or “new stadiums” or “caged zoo animals” or “waterfront hotels.” In fact, the truth is, Prop 1 isn’t even really about parks. It’s about taxes. And to understand why it’s so important for Seattle to tap into the taxing authority available to a Metropolitan Park District (MPD), you need to understand the way property taxes work.

From a budget writer’s perspective, the property tax is the best tax ever, because if done correctly, it always brings in almost exactly the amount of money projected. That’s because, unlike the stupid, stupid sales tax, budget writers don’t actually set a rate and just hope the money comes in, they request a dollar value—for example, $47.9 million a year for the first six years in the case of the interlocal agreement that accompanies Prop 1—and then the county assessor adjusts the property tax rate annually based on current assessed value, and subject to statutory limits, in order to generate the requested revenue. If property values rise from year to year, the rate goes down; if property values fall as they did when the real estate bubble went pop, the rate goes up. But the MPD is almost guaranteed to generate that $47.9 million a year.

Over the long run, nominal property values will almost certainly rise. So while the voters guide projects an MPD tax rate of $0.33 per $1,000 of assessed value in year one, even a relatively modest 5 percent average annual rise in home values would leave the rate at less than $0.26 per $1,000 of assessed value by year six.

But unfortunately for city budget writers, as reliable as the property tax is, it is subject to two very important limitations. The first is known as the “statutory dollar rate limit”: the City of Seattle’s property tax authority is limited to $3.60 per $1,000 of assessed value. That is the maximum theoretical rate the city can levy without voter approval. But thanks to the second limit, known as I-747’s “101 percent limit” (or more accurately: “Tim Eyman’s Revenge”), the city’s actual regular levy authority falls far short of the statutory dollar rate limit.

Under the growth limit factor first enacted in the 1970s, and then punitively reduced to 101 percent under Eyman’s I-747 (and later reinstated by a cowardly legislature after the state supreme court tossed the initiative out), the dollar value of property taxes collected may not exceed 101 percent of the taxes collected in the highest of the three most recent years, plus an allowance for net increased property value in the district resulting from new construction.

I know—that’s very complicated. But suffice it to say that thanks to the 101 percent limit, revenues generated from Seattle’s regular levy generally don’t even keep pace with inflation, let alone rising property values. As a result, the actual maximum levy rate available to the city council has been steadily falling as I-747’s 101 percent limit has ratcheted down revenue growth.

Fortunately, state law does allow for 1 to 6-year “lid lifts,” enabling the city to raise revenues in excess of the 101 percent limit, but within the $3.60 statutory cap, subject to voter approval. That’s what the expiring Parks Levy is—a lid lift—as is the Library Levy, the Families and Education Levy, Bridging the Gap, and so on. When you add up Seattle’s regular levy together with its various lid lifts, Seattle is currently levying a combined rate of just under $2.91 per $1,000 of assessed value (although about $0.26 of this expires at the end of 2014 with the Parks and Pike Place Market levies).

Got it? Okay then, so why do we need the additional taxing authority of the MPD if we still have so much room available under the statutory cap? Why not just go to voters with another parks levy as the Seattle Times disingenuously contends? Because we don’t really have that much room.

First, remember how I said that a property tax almost always generates the revenue requested, if done correctly? Well, doing it correctly requires accounting for the possibility that property values might fall in the short term. Seattle property values fell about 12 percent during the real estate bust. Had Seattle been levying within 12 percent of its statutory cap it would have resulted in a budgetary disaster. So it would be imprudent to go beyond $3.20 per $1,000 of the $3.60 cap available.

Second, this limited cap space leaves little room to fund other pressing needs. For example, voters will be asked to approve a Preschool Levy in November, generating about $14 million a year in revenue. But it will eventually cost much more than that to fully implement the program. Likewise, our current Parks Levy was never enough to both operate parks and chip away at the growing deferred maintenance backlog. Even with the levy, we’ve been underfunding our parks for years. But to fully address parks via another lid lift would limit the city’s ability to adequately fund preschool and other pressing needs.

So if you really, really, support universal preschool, you should really, really support Prop 1.

That’s the primary attraction of an MPD: it comes with its own separate $0.75 per $1,000 of assessed value, meaning that we no longer need to pit parks against other crucial services like libraries, roads, and preschool in a competition for precious cap space. With the MPD, parks will finally have a reliable revenue stream sufficient to address its maintenance backlog over time. But the tax-averse amongst you can rest assured that for all the same reasons that the city can’t access its full $3.60 rate, the MPD could never access its full $0.75 either, even if the mayor and the council were the evil bastards MPD opponents make them out to be.

Finally, I want to address the opponents’ claim that “for a hundred years Seattle citizens have supported voter-approved levies that give each neighborhood a legacy voice” in blah, blah, blah. That’s bullshit. For a hundred years parks have been primarily funded through the city’s regular levy, which requires no direct voter approval. It wasn’t even until the 1970s, when a growth limit factor was first imposed, that a lid lift even became a thing. Indeed, the city’s first parks levy wasn’t passed until 2000, and the shift in funding to lid lifts didn’t take off until after 2001, when Eyman’s absurdly unsustainable 101 percent limit kicked in. Bond levies aside*, this voting on maintenance and operations levies for parks, libraries, roads, and whatnot is a relatively new phenomenon. And an incredibly stupid way to budget.

That said, the MPD won’t change how we fund these other services. While it would leave more room for other lid lifts to meet other pressing needs, these lid lifts would still have to go before voters.

Opponents present Prop 1 as some sort of sinister plot to privatize our parks and build stadiums for jillionaires. That’s crazy. Or incredibly dishonest. I’m not sure which is worse. But all it really is is a modest tax increase dedicated to parks, that provides an adequate and stable source of funding, while leaving voters the option to tax themselves to pay for other needs.

If you simply hate taxes (hello, Seattle Times) vote “No.” But if you support essential services like parks, libraries, preschool, and roads, vote “Yes” on Prop 1.

 

---

* There is also the option of rarely-used voter-approved “excess levies,” which get around the statutory cap entirely, but since they are limited to 1 year, they’re not really practical for dealing with anything but an emergency.

Seattle Times editorial columnist Thanh Tan raises the issue of “good governance” in regards to Proposition 1:

The Seattle Times opposes Prop 1, and published an editorial Wednesday arguing it is not the only option to save parks. The League of Women Voters of Seattle-King County urge a ‘no’ vote because its members take issue with Prop. 1′s proposed governance model, which replaces the current parks levy with a new taxing district overseen by the Seattle City Council.

The Municipal League of King County recently came out with a ‘yes’ recommendation, though it noted that “as a matter of good governance, parks operations should be funded through the City’s General Fund. The Municipal League believes a YES vote is the best practical measure available for addressing parks funding shortfalls, but is concerned that approving this measure will result in a continued practice of reducing allocations for essential city services from the General Fund.”

And I agree 100 percent! As a matter of good governance, parks operations should be funded through municipal general funds. As should libraries. And basic road maintenance. And affordable housing. And universal preschool. And veteran and human services. And the new juvenile detention center. And so forth.

The problem is, thanks to I-747’s arbitrary and absurd 1 percent annual cap on revenue growth from existing construction, our general fund revenues simply can’t grow commensurate with our needs. As a 2012 report from the Seattle Parks Foundation clearly explains:

Initiative 747 reduced the allowable annual increase in the property tax from 6 percent to 1 percent per year, well below the rate of inflation. Another ballot measure, Initiative 776, restricts counties from collecting vehicle license fees. It should be noted that the voters of Seattle voted against both measures by substantial margins, but they passed statewide and therefore apply in Seattle. 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.

That’s not pro-Park District propaganda. That’s math. And that’s the reason why the city has been forced to increasingly rely on levy “lid lifts” to fund basic services like libraries and parks—not as a matter of good governance but as a matter of last resort.

So the “good governance” argument is bullshit, not because it’s wrong, but because we simply no longer have that option. Tim Eyman (and the feckless cowards in Olympia who reinstated I-747 after the courts tossed it out) have deliberately taken that option away.

The fact is, like the state (if to a lesser extent), Seattle has a structural revenue deficit. The cost of maintaining government services at a constant level largely tracks economic growth, yet our tax system does not. Regular property tax levy growth is bizarrely capped at 1 percent. Year after year, sales tax revenue shrinks as a portion of the overall economy as the sale of goods becomes an ever smaller piece of the economic pie. Yet there are statutory limits on the extent to which we can use special levies to make up the shortfall. A municipal park district would get around that, by allowing the council to pass through to the parks department otherwise untapped taxing authority.

So again, arguing that good governance would dictate that parks be funded through the general fund is like arguing that good environmental stewardship would dictate that we save the carrier pigeon from extinction. Absolutely true. But too damn late.

We need a Metropolitan Park District because that is the taxing authority we have. Vote “Yes” on Prop 1.

The glaring irony in the minimum wage debate is that it’s not inflation or rising labor costs that threaten corporate profits, but rather, stagnant consumer demand:

McDonald’s Corp. said its profit slipped in the second quarter as sales in the U.S. continued to flag.

The world’s biggest hamburger chain has been struggling to boost sales in its flagship market amid intensifying competition, changing eating habits and the persistent financial struggles of its lower-income customers.

In the U.S., sales at established locations fell 1.5 percent for the period fewer customers came into its restaurants. The company, based in Oak Brook, Illinois, hasn’t managed to raise the figure since October.

Real median wages declined 11 percent between 2002 and 2012, leaving low and middle income consumers with little discretionary income. Not even enough to spend on luxuries like McDonald’s.

It is lagging consumer demand that is holding back the US economy, and lagging demand is a direct result of lagging wages. Perhaps that’s why the 13 states that raised their minimum wage on January 1, are the 13 states with the fastest job growth since?