Why businesses worry about Seattle's policies

Businesses fear that when it comes to their economic challenges, Mayor Mike McGinn and the city council don't get it.

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Seattle lost jobs while King County gained them during the past decade.

Businesses fear that when it comes to their economic challenges, Mayor Mike McGinn and the city council don't get it.

On Aug. 9, representatives from local businesses arranged a meeting with Mayor Mike McGinn. While they focused much of their message on retaining freight mobility by not restricting any more road lanes, they were equally concerned on the impact the recession has had on small and medium businesses.

They emphasized that the city needed to be aware that business generates the tax revenue the city so desperately needs.  They believe McGinn’s transportation decisions are slowing the movement of commerce. They hoped to deliver a message that city policy should consider the transportation needs of commerce equally with the needs of the commuter going to and from a work place.

Later in the month (on Aug. 24), the mayor held a press conference to announce Seattle’s response to the recession and job loss. There was no mention of his earlier (and only) chat with small businesses. The mayor rolled out a economic scheme called “The Seattle Jobs Plan” that had been in the works for months, but little of the mayor's plan addressed the issues that concern business the most, especially the need to keep down the costs for the businesses we already have.

The mayor’s “Jobs Plan” outlined the steps the city would take to stimulate job creation and enhance Seattle’s economic sustainability. The city would offer a wide range of stimulus programs, largely financial incentives and programs that range from post secondary education, rebuilding the infrastructure, enhancing the “Green Factor” neighborhood beautification along with McGinn’s favorite program called Walk, Bike, Ride. And, oh yes, more fiber. Not for you diet, but broadband.

While the McGinn plan dreamed up by the city's Office of Economic Development outlines some very useful and long-range services like www.growseattle.com, which connects businesses and services to financing for entrepreneurs, there is little mention of issues businesses think important.  Absent in developing the mayor's plan was the participation and advice from the majority of the city’s many mainstream businesses, chambers of commerce, and business associations. They believe they have been disenfranchised.

The Puget Sound Business Journal, the Greater Seattle Chamber of Commerce, and members of several small business associations have been vocal about the city’s apparent failure to understand what it takes to run a business and keep it healthy.  They might ask if the city’s example of management and living within a budget qualifies it to design successful business plans when few if any officials have actual experience in running a for-profit business.

Businesses generate tax revenue the city badly needs. Retailers and restauranteurs worry about the mayor's proposed budget, which would create revenue by making parking significantly more expensive. Restaurateurs speculate that dining out in the evening and shopping will not be done on bicycles or buses. A good many perceive the parking tax more as an anti-auto tactic than a source of city revenue. Retail businesses and restaurants argue the parking rate increase would penalize the very customers the retail and restaurant business need to make a profit and, thus, create more sales tax revenue.

Seattle still has some manufacturing and service industries. They all use power and utilities. These same industries complain that significant increases in utility rates for water, sewer, garbage, and electricity, plus restrictions on road use will slow commerce. At some point, lower sales and profits may well cause some to move out of Seattle, further reducing tax revenue to the city.

The Washington Research Council concludes many businesses and jobs have already moved out.  The council's researchers note that in eight years Seattle alone lost 7,900 private sector jobs. They also state that,  “Location is a choice, and increasingly businesses are choosing suburban locations over Seattle.”

They say, “This presents a long-run fiscal challenge for Seattle city government, which gets 54 percent of its general tax revenue from taxes paid by businesses. The research is clear: taxes matter to businesses when they choose where to locate within a metropolitan area.”

The council also reports,  “Seattle’s business taxes are already significantly higher than those in the suburban jurisdictions. In 2007, the city collected $485 in business taxes and fees per private sector employee, which was nearly twice the amount collected in Bellevue and more than five times the amount in Redmond. The tax gap could become even larger if the $25 per head annual tax that the city began collecting from businesses in 2008 is reinstated. To reverse the trend in jobs, Seattle must become more competitive within the region.”

Not mentioned by the Washington Research Council is the level of regulations and permit fees the city imposes. The number of permits or licenses to operate is staggering: permits for signs, permits for air compressors, sidewalk permits, the list is amazing. While fees and licenses are intended to pay for inspection, they were never intended to be revenue generators.

While private-sector jobs were leaving, the city under the Nickels administration increased its workforce to approximately 11,200 employees.

There is a general feeling surrounding a number of small- and medium-sized business that the current administration and the Seattle City Council simply don’t understand the role businesses play in the overall economy. It’s fairly clear that over the last few decades, few mayors or elected city council members have come directly from successful private, for-profit industries. Likewise, few department directors have extensive private sector experience.

One can easily understand this conclusion by noting the city’s choice for a new director of economic development. According to his resume, supplied by the city, there is no mention of his ever having owned or managed any for profit business. The same person is now in charge of the mayor's new jobs program. Wouldn’t it have made good sense to hire someone with extensive business experience to guide Seattle’s jobs program?

Seattle is losing jobs in manufacturing, warehousing and distribution, industrial supply, and shipping. Smaller traditional business that supply family-wage jobs believe Seattle’s mayor should want to know why. Individually, representatives for smaller business, suggest the city isn’t aware that its policies, regulations, and attitude discourage those industries and the people who work there. City planners, the mayor, and council appear more focused on commuter transportation planning, high tech, bio-tech, research, and the software industry. Encouraging the “brain” industries to find a home in Seattle is highly desirable, but so is insuring existing manufacturing, shipping, service, and supply jobs are retained.

Private business, unlike government, must be competitive. In the private world, time is money, and doing more quicker with fewer employees (productivity) is the name of the game. It’s the difference between staying in business and failing. If Seattle fails to provide an environment where commerce has the mobility and tax levels that are in line with other regional jurisdictions, more businesses will search for jurisdictions where their profitability can be sustained.

When a FedEx truck ships from an operational center in Fife to make deliveries in Everett, Marysville, or Bellingham, they must travel through Seattle’s geographic bottleneck. They perceive McGinn’s transportation theories choking their passage and thus cutting their profits. To them, time is money. They think McGinn’s theories on road diets, downtown streets in place of the viaduct, or perhaps commerce by bicycle would slow the regional economy.

At some point in time, McGinn and the city of Seattle will need to come to the realization that Seattle retail and manufacturing businesses are in the fight of their lives, competing with internet sales, cheap imports, and competitors like Walmart. Fighting for survival with their own city is simply not necessary. Seattle is now only one part of the global  economy and no longer the center of the known universe. Maybe the Hippocratic oath should be applied to government: “Do no harm!”


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