Selling Seattle to save its finances

We could be hit by a "perfect storm" of tax cuts and revenue limits. What's a city to do, then, to fund its needs? The private sector might have to be part of any solution.

Mayor Mike McGinn

Mayor Mike McGinn

Mark Funk, who represents the No on I-1098 effort, was in the Crosscut offices last week and thanked me for helping him out.

I'm actually in favor of I-1098, but he said an article I had written about exploring extending an income-style tax to Seattle is helping him make the slippery-slope argument the opponents of the tax reform initiative are using. 

My suggestion was that if I-1098 passed, Seattle could, and I think should, request authority from the state to impose its own progressive tax on high wage earners in order to make city tax system also less regressive. Boosting sales taxes and the B&O tax are some of the few levers the city has to deal with revenues. But the Seattle idea is being used by the ballot measure's opponents to sell their argument that I-1098 will inevitably lead to more taxes on everyone.

Not my idea, actually. My point is that Seattle ought to be able to work out of its own sense of social justice and economic necessity. Many cities have income or employment taxes as part of the mix. I-1098 gives some relief on state property and B&O taxes, but municipalities (and counties) ought also to have a wider range of tools to raise revenues and implement more progressive taxation. This includes lowering other taxes and fees in the cause of fairness.

Seattle, in fact, is facing a potential "perfect storm" of fiscal fiasco. If Tim Eyman's I-1053 passes and limits the legislature's ability to raise taxes, if the liquor privatization initiatives pass and reduce the state revenues and profits that are shared with counties and cities, if the taxes on candy, pop and bottled water are repealed, the city will be hit with significant revenue additional losses, and the state hampered in its ability to replace those lost revenues. This is very likely a winning combination in November.

And if I-1098 fails, there won't be any relief on the state B&O or property taxes, let alone a path to a more progressive system. On top of that, if the GOP gains control of either or both houses in Olympia (a possibility depending on the size and scope of a Republican tide), expect more cuts, reduced revenues, and continued reliance on a regressive tax system where the current slippery slope has allowed the biggest and most successful industries and businesses (Boeing, Microsoft) to get exemptions, loopholes, or legalized tax dodges while the little guy gets squeezed by a system accounted to be the most regressive state tax burden in the nation.

Friends of mine who have moved to Washington from elsewhere love the idea that there's no income tax, but once they're here awhile, they complain that they get nickeled and dimed to death on things like license fees. The city budget crisis is causing Mayor Mike McGinn to propose up to $4 per hour rates for downtown parking meters, for example. But given the kinds of cuts that have to be made, and the limitations on raising revenues, the choices are limited.

I recently asked McGinn about whether the city would have to be more aggressive in exploring other ways to generate revenues (aside from the laudable plan to go after people who, collectively, owe some $25 million in unpaid parking fines). What about public-private partnerships? Or instead of hitting non-profits like the Museum of History and Industry for loans, what about other investigating other revenue opportunities?

Can money be raised, for example, through more or new park concessions, advertising or naming opportunities? McGinn believes the city should look into all of those, and said that selling the naming rights to the new skateboard park at Seattle Center was underway. 

Looking for ways to rent out facilities at places like Magnuson Park is another opportunity. So is finding more private uses for public spaces. He cited the possibility of a Tavern-on-the-Green-type concept for Seattle parks, or even considering privately run parks, like New York's Bryant Park, which features restaurants, fashion shows, free events, and even seasonal shopping. Bryant Park has become what many consider the best park in Manhattan. While we're subsidizing the MOHAI in its move to South Lake Union, McGinn said the city also needs to find organizations "willing to pay us some money" to use city property. This, he noted, this had to be something the city should consider carefully. "I would encourage that we explore these things."

At root, McGinn is unapologetic that cities are largely about money, and that Seattle shouldn't be ashamed of that, and he criticized Seattle's knee-jerk reaction against anything that smacks of commercialization. Those costly, experimental downtown toilets? Other cities paid for them with advertising revenues, why not us? McGinn said he was not upset about a small number of high rises downtown being able to put up signs and corporate logos. "I am not offended that it says commerce happens here."

He likes the salmon bakes that restaurateur Tom Douglas initiated at Victor Steinbrueck Park this year, and he wonders why we can't have advertising on bus shelters and benches like they do in other cities. Are we really maintaining some kind of purity by having ad-free shelters when the buses themselves are frequently wrapped so as to become rolling, 3D advertising bundles?

While these attitudes pre-date the fiscal crisis, the city's need to reconsider its rules and sensibilities going ahead is something of a necessity given that revenue options might be limited, the tolerance for new and higher taxes is lower, and the need to fund basic programs grows acute.


About the Author

Knute Berger is Mossback, Crosscut's chief Northwest native. He also writes the monthly Grey Matters column for Seattle magazine and is a weekly Friday guest on Weekday on KUOW-FM (94.9). His newest book is Pugetopolis: A Mossback Takes On Growth Addicts, Weather Wimps, and the Myth of Seattle Nice, published by Sasquatch Books. In 2011, he was named Writer-in-Residence at the Space Needle and is author of Space Needle, The Spirit of Seattle (2012), the official 50th anniversary history of the tower. You can e-mail him at mossback@crosscut.com.

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Comments:

Posted Wed, Oct 20, 8:24 a.m. Inappropriate

Let me help you, Knute.

In the 2009 legislative session, Senator Rosa Franklin (Democrat) introduced Senate Bill 5104 to the state legislature. Though not advanced, the bill was "retained in its present status". Meaning it is still alive. Here is a link to the bill:

http://apps.leg.wa.gov/documents/billdocs/2009-10/Pdf/Bills/Senate%20Bills/5104.pdf

In this, Senator Franklin documents the true goal of her party:

NEW SECTION. Sec. 301. TAX IMPOSED--RATES. (1) A tax is imposed
on all taxable income of resident individuals, estates, and trusts and
on all individuals, estates, and trusts deriving income from sources in
Washington for each taxable year based on the type of return filed and
the amount of income in accordance with this section.

(2) For every married individual who makes a single return jointly
with his or her spouse and for every surviving spouse, the tax is
determined in accordance with the following table:

If taxable income is: The tax is:
Not over $49,900 . . . . . 2.2% of taxable income
Over $49,900 but not over $120,650 . . $1,098 plus 3.5% of the excess over $49,900
Over $120,650 . . . . . . . $3,574 plus 6.0% of the excess over $120,650

(3) For every head of a household, the tax shall be determined in
accordance with the following table:

If taxable income is: The tax is:
Not over $37,425 . . . . 2.2% of taxable income
Over $37,425 but not over $90,488 . . . $823 plus 3.5% of the excess over $37,425
Over $90,488 . . . . . $2,681 plus 6.0% of the excess over $90,488

(4) For every individual, other than a surviving spouse or the head
of a household, who is not a married individual and for every married
individual who does not make a single return jointly with his or her
spouse and for every estate and trust, the tax is determined in
accordance with the following table:

If taxable income is: The tax is:
Not over $24,950 . . . . 2.2% of taxable income
Over $24,950 but not over $60,325 . . $549 plus 3.5% of the excess over $24,950
Over $60,325 . . . . . . $1,787 plus 6.0% of the excess over $60,325

(5) Taxable income of a taxpayer exempt from taxation by internal
revenue code section 501 is exempt from taxation by this title.

Is that more like what you have in mind? You should just say so. So should our state's Democratic "leaders".

BlueLight

Posted Wed, Oct 20, 8:31 a.m. Inappropriate

Nice article! I can't believe I am agreeing that we should let corporations put huge ads up all over town, with the City charging them fat license fees. But it is a progressive way of raising revenue.

spock

Posted Wed, Oct 20, 8:59 a.m. Inappropriate

Or do like Sydney, Australia. Sell advertising space on freeway over-crossings. Surely this is no different than selling "naming rights", is it?

Alternatively, ask the city mayor and council to make a thorough review of its current outrages salary scales. Can anyone justify 551 fire fighters, out of a force of 1106, (i.e., 50 %) earning over $100,00 per year? Since when should there be more chiefs than Indians?

Ditto at SPD where 717 out of 1856 (39 %) are in the same class, and also at City Light (504 of 1723) and SPU (237 of 1415).

In a real organization where budgets are correctly derived, like City Parks (24 of 1022 or 2 % make over $100,000) and the Public library (10 out of 655 or likewise 2 %) the ratio of top earners to staff should be about two percent as in these two instances.

It is the incessant wage creep that is forcing the quest for ever more taxes and fees. It must be addressed and as you can see from the above it is the so-called "heroes" that need to be brought back in line, union be damned. It is time to get real and come down to earth. Maybe privatize them as another option.

Chris

seebee

Posted Wed, Oct 20, 9:10 a.m. Inappropriate

Well at least we should not sell the parking meter revenue like Chicago did. That was a major financial disaster.

http://www.rollingstone.com/politics/news/17390/222206?RS_show_page=0

GaryP

Posted Wed, Oct 20, 10:52 a.m. Inappropriate

Funny, I was just about to recommend privatizing on street parking! I believe it could be done in a more rational way than in Chicago. Of all the services to privatize, parking would be preferable to police and fire departments--can you imagine how privatized fire and police departments would compete for your business?

I do believe we should raise the parking rates to market level, at least. There is no case to be made for subsidizing on-street parking.

Also, the new waterfront is a prime opportunity for revenue. Instead of a fake brick colored wind-swept plaza, turn it into an extension of the Pike Street Market.. Make it a rabbit's warren of shops, cafes, bars and inns. Model it on the Thames river walk in London.

andy

Posted Wed, Oct 20, 11:19 a.m. Inappropriate


A better financing scheme is business excise. Businesses are better managed to handle forms and pass the tax on w/ discretion and use transit for advertizing and walk-in clientelle. The Sales Tax mechanism doesn't reflect the benefit of transit investment to businesses.

Seattle hills leave no choice but to build frequent (5-min) trolleybus fixed routes between Queen Anne, downtown, Capital and Furst Hills. Smaller coach, low-floor, hill-climb fleet of 20 or so. Rewire worst "cluttered" intersections on 1st, 3rd, downtown and these districts overrun with traffic. A Trolleybus reconfiguration is necessary and will be expensive - in the tens of millions to start.

The Mercer West thru-route to Elliott is a mistake. It's tied to the dbt, another terrible idea. Whose worse? Mcginn or McWsDOT honchos whose plans pollute neighborhoods and districts with dbt traffic management on the surface. Environmental impact is even worse than the surface/transit design, oh yes it is. Some inner-circle planners know it's essentially true. Mike is right to oppose the dbt. Go mike.

Wells

Posted Wed, Oct 20, 12:13 p.m. Inappropriate

Without a decent bypass for downtown the entire area becomes marginalized. Congestion will at least double and many of the vital, point of destination businesses will become too difficult to visit for people outside the neighborhood, even though Sound Transit will surely keep the night life edgy and exciting. The density may provide enough walk-in traffic to compensate for certain restaurants and shops but it will never be Paris. If anything the resentment for the core may grow due to the enormous amounts of money it extracts from the rest of the city.

jmrolls

Posted Wed, Oct 20, 12:32 p.m. Inappropriate

The bulk of government expense is in salary and benefits for those who work in government. This compensation is what needs to be attacked. We're paying high salaries and providing significant benefits to just about everyone who shows up to work in government creating a top-heavy bureaucracy. There are a few reasons for this:
1. The unions do a good job of sticking up for their members
2. The unions and their members contribute significantly to candidates who are indirectly beholden to them, and
3. Government workers typically have a monopoly on government services.

The above wouldn’t be bad if government were a high-performance operation, but instead it evidences all the usual pathologies of large bureaucracies. Since human nature is what it is, and bureaucracies have their own nature too, mechanisms need to be instituted to keep them in check. Here are three:

1. ADD SADBUTTRUE TO ALL UNION CONTRACTS. To address salary creep through COLAs built-in to union contracts, government needs a counterbalancing mechanism called the SADBUTTRUE (Salary Adjustment Due to Bureaucracy Underperforming or to Tanking of Tax Revenue Undermining the Economy).

This clause in union contracts would address two cases: 1) the chronically sclerotic underperforming bureaucracy, and 2) the recession or economic downturn that makes a given compensation regime unsustainable. If a Mayor or County Executive or Governor had the SADBUTTRUE clause in every union contract, then instead of agonizing for years over what to cut, then simple actions could be taken to address the truly pathological bureaucracy (say in KC or the City of Seattle), or to adjust compensation across the board quickly and effectively in the case of a recession.

Note that by having the SADBUTTRUE option available, unions and sets of workers would be forced to justify their compensation based on performance rather than because of monopoly power or corrupting donations to candidates.

2. MAKE OUTSOURCING A STANDARD OPTION. Another way in which government should be economizing is in tuning it's work force so that it has a mix of out-sourced functions and directly funded functions, so that competition based on performance is used to decided who performs certain functions. For example, it's my understanding that a certain Eastside city outsources 40% of its work, thus saving that City tens of millions of dollars that would otherwise go to overpaid City workers who would have incentive to preserve their beyond-market high-salaried jobs.

3. USE MORE VOLUNTEERS AND MINIMUM WAGE WORKERS. Two other large bodies of labor available to cities are minimum-wage workers and volunteers. Taking advantage of these sources of labor should be a requirement of government. Why have a 1000 member fire department if you could have a 500 member one supplemented by 1000 volunteers and minimum-wage help? Same for many environmental actions where legions of environmentalists are willing to work for free (or presumably little compensation) to plant trees and improve salmon habitat. Why pay a person $100K to do what several others will do for free? The movement to professionalize most all areas of government is not a bad one, but it is a costly one. Professionals should be in charge, but we should be dividing labor so that professionals are provided for proper professional services and lesser paid non-professionals can perform appropriate supporting labor.

The point here is that we assume that everyone in government should have a five-star full-benefits pension and family-wage job (i.e.,wages that support 3 or 4 people instead of one). It doesn't have to be and shouldn't be the case. Government can to some extent be the employer of last resort for the unemployed and for those making a minimum wage. In this way it can address unemployment directly.

If you adjust the performance of government in these ways then it makes sense for voters to actually vote FOR an initiative, because they'll get value for their money. Nowadays, a voter (say me) holds his nose and votes yes for a particular initiative because he believes that FIRE or SCHOOLS or WATER or LIBRARIES or HOSPITALS or SEWER are activities that should be performed by government for the public. But that voter also believes that many of the institutions performing those functions are wasteful or are gouging the public with many public employees paid high salaries, who frankly don't come close to earning them. This fuels the Tea Party view of the world which essentially writes off government and taxes as lazy people who want something for nothing. Every public employee and everyone working under government contract should have motivation to work hard, work smart, and provide value to his employer and to his ultimate customers. When that doesn’t happen systemically, then voters vote systemically against funding that system, which is why I suspect that all the tax inititiavies are going to fail. In a high-performance government they’d all pass. Sadly, in the current state of the Union and the current state of States, high performance ain’t happening, while non-performance, low performance or pathological performance too often occurs.

Stuka

Posted Wed, Oct 20, 4:29 p.m. Inappropriate

I am stunned that Berger, who has previously expressed concerns about the corruption of our environment, is now prepared to encourage further degradation of our urban space by proliferation of City fostered advertising. Don't we have enough of the abuses of commercialization in our everydat lives? Perhaps we can look forward to having all City building wrapped in ads, having all City vehicles blanked with commercial messages, advertising messages on public emplyee uniforms, allow businesses to buy time for messages at all City official meetings, billboards in City parks, and much more that creative people can come up with. Who knows, perhaps some day we can collect enough revenue that way to forego all taxes. But who would want to live in such a place?

By the way, having buses wrapped in ads was found objectionable by many people and for a few years Metro stopped that ugliness. But now it's creeping back and merits renewed protests.

busterg

Posted Wed, Oct 20, 5:48 p.m. Inappropriate

McGinn could start by charging a fee to the hemp people for the use of Myrtle Edwards and Elliot Bay Park (after several inquiries I have concluded that there is NO rental charge for a venture that essentially denies the use of the Park to normal users for eight or nine days). I agree with Stuka; if you compare the City and State budgets for the late 1990s and add proportionately for inflation and population increase you will find that the spending side of the budget has increased dramatically. It is not simply a case of diminishing revenue (which has occurred only in the past three years).

kieth

Posted Wed, Oct 20, 11:44 p.m. Inappropriate

The other day I read that, "60% of the (Washington) state budget is untouchable because it relates to salaries and benefits for public employees that are governed by union contracts."(http://online.wsj.com/article/SB10001424052702304410504575560301019870596.html?KEYWORDS=I+1098)

It seems unfair to hold state or local politicians accountable for excess government spending when so much of it is beyond their control. This is a massive problem as it distances the voter from their government. Finding a way to reduce this percentage of untouchable funds should be a primary objective of any voter. I don't know exactly how to this can be done or whether a SADBUTTRUE, as Stuka suggested, could work practically, but I do know that voting for more tax increases protects the status quo and that the status quo means inefficient, excessively costly government. Despite the catch 22 politicians face, I believe the pressure must be kept on them to make real reforms to the government spending structure.

As for ads, it wouldn't bother me at all to see more advertising in areas like Downtown, Capitol Hill or Aurora as they are already pretty saturated with ads and media. However, I agree with busterg's sentiment and think that it would be good to leave ads out of parks and residential streets and neighborhoods. I also agree with Andy's idea to sell (or rent) more public land for private enterprises, as buildings with ground retail are good for neighborhoods and, in this case, quite good for city coffers.

Posted Thu, Oct 21, 9:10 a.m. Inappropriate

Or, in other words, nobody has a clue about what to do here, so everyone brings the same song we've heard them sing before. Special mention to Wells and jmrolls for their on-message renditions of 'Go Mike' and 'Save the viaduct'- god forbid we might read something new first thing in the morning.

*Fortunately*, a rise in the cost of fuel well, before another decade has passed, bring a lot of people into town, and cause a lot of people to rethink some basic assumptions.

It might even make some people take a second look at all this "privatization" and "PPP" and notice how most of it has been a big belly-flop and left governments at all levels worse off financially and in terms of services. But that would probably be asking too much.

Posted Thu, Oct 21, 11:21 a.m. Inappropriate

Thanks for the shout-out –serial_catowner. I tried to save the Twin Teepees on Aurora too…but was unsuccessful.

Technology will solve much of the fuel issues in the next decade. Its cost and availability are more a condition of corporate influence and Wall Street speculation than anything else. Do you actually believe that if we all pack ourselves into the “urban village” downtown that the petro-giants will go out of business? There are also a number of alternate fuel solutions, some of which have been around for a long time. We have enough domestic natural gas to power vehicles for generations.

I believe that the intentional creation of gridlock and congestion for the sake of forcing change on people is incredibly irresponsible. The manner in which the current AWV solution was advanced has been equally irresponsible.

Restore the viaduct. There’s still time to do the right thing.

jmrolls

Posted Thu, Oct 21, 12:17 p.m. Inappropriate

New: Business Excise Tax to consider as fitting replacement for sales tax to fund transit.
Newish: Trolleybus Reconfiguration of short lines and small fleet that offers 5-minute no-wait service downtown and inner-city.
Newish: Surface/Transit option incurs "Less" environmental impact than DBT and Mercer West. God forbid the day readers think first and make accurate assumptions afterward.
Cheers for an AWV-free waterfront!

Grace Crunican asked me for help at the Rail-Volution conference where I volunteered as greeter. I restrained myself from telling her how much I oppose the deep bore tunnel project as she asked me for "preferential treatment" regarding goody bag contents. Anyway, I "bent the rules" to fill her wish for three more lapel pins swiped from stacks of extra goody bags; way below where I'd draw the line for unethical behavior.
Grace Crunican: pin swiper! :^)

Wells

Posted Thu, Oct 21, 1:57 p.m. Inappropriate

Since we have james corner field operations designing the waterfront, perhaps we can keep a portion of the AWV and turn it into a High Line style park! That way everyone is happy.

andy

Posted Fri, Oct 22, 8:57 a.m. Inappropriate

That sucker is going down, andy, and no stinking pipedream for an elevated walkway made of its crusty remains is staying up. Maybe save a few pillors installed as a testament to a the era of DOT error.

Wells

Posted Fri, Oct 22, 2:51 p.m. Inappropriate

Maybe we can sell the pieces of the AWV like they did the Berlin wall and Seattle can make some money that way. McGinn can come out and re-enact Reagan's "Tear Down This Wall" speech.

andy

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