I’ve been writing each week to bring you news of the City Council’s budget deliberations. This week, the Budget Committee met to consider and vote on a “revised” balancing package based upon the potential amendments Councilmembers proposed on Tuesday, November 7 to my “initial” October 31 proposed balancing package.
These balancing packages were the subject of much debate in recent weeks and for good reason. They included a complicated and highly politicized discussion on an Employee Hours Tax, or EHT, with the expressed intent to address the factors contributing to homelessness, which has for the third consecutive year been at the heart of Council’s budget discussions.
To adequately address the factors contributing to homelessness in our City we need ongoing, and dedicated resources – not unsustainable cuts to other services, one time revenue, or other gimmicks. This tax proposal I proposed this week replaced the version proposed by Councilmember O’Brien. Mine was crafted at a rate of 6.5 cents per hour to apply only to the approximately 1,100 business with gross receipts exceeding $10 million a year. There are more than 70,000 business licenses in Seattle, and only about 22,000 business locations with gross receipts of over $100,000. In other words, this tax would have applied to only 1.6% of all businesses with a Seattle business license, or 5% of all the businesses in Seattle with gross receipts of over $100,000. For those small numbers of businesses, the EHT would have increased employment costs by one quarter of one percent. In exchange, we would have secured an ongoing, sustainable source of funding to support our efforts to house the people of this city.
Some questioned whether there was a nexus between the proposed tax (economic prosperity of successful businesses) and the proposed use of the tax (homeless services). As I’ve pointed to before, Mayor Burgess’ proposed budget recognizes the nexus and calls out that Seattle’s economic growth has actually contributed to homelessness. Page two of the 2018 Proposed Budget Executive Summary document reads:
“Despite the economic prosperity driving growth in the City’s revenues, and in part because of it, Seattle is facing a homelessness crisis of unprecedented proportions.”
Often, we talk about economic prosperity not lifting all boats, but the proposition we are faced with — and the reason the EHT was proposed — is because economic prosperity has not only failed to help everybody but this economic prosperity has hurt some people. I believe that the beneficiaries of that economic prosperity must do more to address the impacts of prosperity that has not been shared by all. Today the Seattle Times noted that US Census bureau data indicate inequality is increasing in Seattle—and now on a par with San Francisco.
In discussion among Councilmembers about the EHT, some argued that because it didn’t do enough it shouldn’t be approved now. As I explained in my blog post last week, the EHT was not first and foremost about the 2018 funding for $13 million in programs serving homeless people, but it was about how – with an on-going revenue stream that we could bond against – we can also begin to invest nearly $50 million more each year and create 2000 additional new units of affordable housing over four years for both low-wage working families and formerly homeless individuals. We need both to truly address homelessness. Last year’s budget supporting the $29 million housing bond allowed the Office of Housing to nearly double available funding this year to build housing for very low income people. An EHT would allow us to more than double what the Housing Levy funds each year, thus building off of Council’s successful budget vote for a Housing Bond last year (which each the Mayor, Budget Chair, and Budget Director opposed because we didn’t have a fund source to pay it off).
Office of Housing Director Steve Walker said: “The availability of $29 in bonding authority in 2017 provided the Office of Housing with critical resources to put to immediate use to create affordable homes in our community. The bonds allowed the Office of Housing make commitments to two large-scale transit-oriented affordable housing developments at the Roosevelt light rail station and Northgate transit center. At the same time, it freed up funds to be committed through OH’s annual competitive award, producing housing for people experiencing homelessness, low wage workers, and seniors throughout the City. In total, the $29 million in bonding authority supports the creation of 300 affordable apartments that otherwise would not have been created.”
Some folks expressed concern that there hadn’t been time for the business community and other stakeholders to be involved in a discussion about the proposed tax and any possible alternatives. I listened to those concerns and incorporated a Statement of Legislative intent calling for the Council and the Executive to work together to create an opportunity for exactly that kind of engagement. The EHT ordinance wouldn’t be collected until 2019. If a better alternative was identified was a result of the discussion that follows, then we could change course. But if no better alternative was found, then it will be of crucial importance that we have already begun to take the steps needed to impose the EHT – and of course to have authorized funding for these much-needed services.
Finally, I’ve heard some suggest that my October 31, initial proposed budget package was a “strategy,” that relied on “taking hostage,” funds for important programs. I’d like to respond to that idea. Here are some important dates:
- October 20: The Council was informed of the revenue options. Central Staff had identified about $4 million in revenue they’d recommended the Council focus on to fund their priorities.
- October 23-25: Councilmembers make about $30 million in new budget proposals.
- October 26: Council receives a 2017 revenue update, learning that that there was an addition $2 million in revenue, bringing to a total of $6 million to fund $30 million in Council priorities.
- October 31: The Council learned that my initial balancing package included EHT as a revenue source.
The story that I hope these dates demonstrate is twofold. First, the decision to include EHT as a revenue source was not a strategy, but it was a choice between three undesirable options.
- Option 1 – fund only the necessary actions to avoid reductions in services for homeless people.
- Option 2 – using funds that the Council analytical staff recommended against using, fund all $13 million of Councilmember’s top priorities in existing and new services for homelessness prevention, public health services for people who are homeless, and shelter, housing, and employment help for people who are homeless, including youth and domestic violence and sexual assault survivors.
- Option 3 – develop new revenue with the EHT and fund all $13 million of Councilmember’s top priorities in existing and new services for homelessness prevention, public health programs for people who are homeless, and shelter, housing, and employment help for people who are homeless, including youth and domestic violence and sexual assault survivors.
None of these three alternatives were optimum; I chose the option that did the most to serve the greatest needs, in a way that was fiscally responsible.
Secondly, Councilmembers who planned to not support the EHT had time, when they knew my package included EHT as a revenue source on October 31, to pursue some other revenue options to fund their top priorities.
And, I’m pleased to say, Councilmembers did so. Though I was disappointed on Tuesday that the Council voted down the legislation down that would have allowed us to provide dedicated, on-going funding for known priority areas including emergency services, permanent supportive, and transitional housing, nevertheless, on Wednesday, I proposed a third balancing package. It funded approximately $10 million of $13 million priority homelessness and housing services and programming, for about 14 of the 17 projects that were in the original EHT spending plan. Also, included in Wednesday’s balancing package were another nearly $8 million of funded priorities in categories ranging from parks, economic development, criminal justice diversion, tenants’ rights, domestic violence/sexual assault, funding for participatory budgeting, library hot spots, transportation. On Wednesday, we voted on 161 items in all!
Yet, Wednesday’s balancing package included using some revenue that the Council’s analytical staff had recommended against and that I had not included my earlier two proposed balanced budgets. Some Councilmembers, in proposing to fund their priority adds in my final balancing package relied heavily on making reductions to Mayor’s Office funds. Other proposals relied on using year end “fund balances” in Department of Parks and Recreation, the Office of Housing, and the Department of Early Education and Learning. In some cases, this creates problems for departments who have reimbursable expenses and are reliant on grants. The use of too much fund balance can put those departments in a negative cash position, triggering the need for interfund loans and possibly posing ongoing cash flow challenges. Other proposals relied on using bond authority (debt) to buy new $1.9 million in new parking pay stations, instead of cash. Debt without a revenue source to pay the bills creates a future unfunded liability. Still another Councilmember proposed taking out a larger loan on a future sale of a property that had no definite sale date to fund more homelessness programs. I opposed that last effort and appreciate that majority of my colleagues agreed that it would be irresponsible to game against a prospective sale.
Despite the EHT narrowly not passing 5-4, I am pleased to have had the discussion about it. In doing so, a majority of Councilmembers sent a clear signal supporting future passage of the EHT. The Council will continue to advance the EHT in a resolution that Councilmembers Gonzalez and O’Brien will be bringing forth Monday for a vote.
The final budget actions to implement a balanced budget will occur at our last scheduled Budget Committee Meeting on Monday, November 20, at 10:00 a.m. On that same day at 2:00 p.m., the Full Council will consider for adoption the Budget Committee’s Recommendations for Final Action.
Seattle Parks and Recreation is looking for your input on new play equipment and improving the accessibility of the South Play area in Lincoln Park. You can take the online survey here. Additionally, Parks and Recreation is hosting two public meetings about the project and to gather input from the Community.
- Meeting 1:
Wednesday, November 29, 2017
6:00 – 7:30 p.m.
The Kenney (7125 Fauntleroy Way SW)
- Meeting 2:
Wednesday, January 24, 2018
6:00 – 7:30 p.m.
The Kenney (7125 Fauntleroy Way SW)
As many of you know, the Seattle Department of Transportation (SDOT) announced in August that they would be abandoning the much-needed plans to pave the walkway on 25th Ave SW between Trenton and Cloverdale. SDOT argued that a developer might be building on the east side of 25th Ave SW in the future, and, if that happened, the developer would be required to construct similar improvements at their own expense. SDOT acknowledged that this development might not occur for several years, but still their position was that “the high likelihood of its occurring means that investing public funds at this location would not be prudent.”
I am happy to report that decision has been reversed and SDOT once again plans to pave the walkway and install lighting for safety. The change in course from SDOT is a result of the strong community advocacy of the South Delridge Community Group as well as the Westwood, Roxhill, Arbor Heights Community Coalition.
The removal of the walkway caught myself and community members who had sought funding for the project off guard. This project is important to hundreds of students at Sealth High and Denny Middle Schools as well daily walkers, people going to and from the Westwood Village, and bus riders from the transportation hubs of 25th and Barton. The project had been highly rated and funded through the Neighborhood Street Fund. Several of you submitted questions and asked for the rationale behind the decision. While waiting for an adequate response from SDOT I received the welcome news that they were reversing course and would be pursuing the original plan which received public input back in March.
The walkway on 26th Ave SW will also be improved, as has been the case throughout design. Seattle Department of transportation will be finalizing the design soon and expect construction to start in mid-2018. You can continue to follow developments on the project website here. Additionally, if you have comments you would like to send you can do so here.