Seattle’s transportation infrastructure and transit service lag years behind our city’s rapid growth. You can feel it any time you try to get across town during rush hour, by car or by bus.
Move Seattle, the $930 million property tax levy for transportation improvements that will appear on the November ballot, will help alleviate some of our transit woes, but there’s another progressive tax that Seattle should be taking advantage of—the Employee Hours Tax (EHT).
This flexible funding tool could generate $20 to $30 million per year, enough to make strides toward a true Bus Rapid Transit system in Seattle. The “head tax” is paid by employers based on number of employees, and requires businesses to contribute to the public transit system their workers depend on and help ease commerce-stifling congestion. With riders, consumers and car-owners already contributing through fares and taxes, an EHT will make our transit tax structure more equitable.
As our city councilmembers bemoan our state’s regressive tax system, why don’t they use one of the very few progressive options at their disposal? Every month we wait to pass a robust EHT, we lose millions of dollars in revenue that could be building the world-class transit system Seattle so desperately needs.
To understand why the city council hasn’t yet passed an EHT, we need to understand history.
Way back in 2006, when Move Seattle’s predecessor, Bridging the Gap, was approved by voters, the city council augmented it by passing a Commercial Parking Tax and an Employee Hours Tax. The revenue was slated for transportation maintenance and improvement projects, including road and bridge repair, sidewalks, transit infrastructure, and various projects in the city’s Bicycle and Pedestrian Master Plans. The EHT was set at a modest $25 per full-time employee per year, but only included employees who drove alone to work (it also exempted small businesses).
Over the nine-year lifespan of the $365 million property-tax levy Bridging the Gap, the EHT was expected to bring in an extra $50 million—not enough to buy a fancy new rail line or anything like that, but not chump change either.
Fast forward to 2009, one year into the Great Recession. Councilmembers Richard Conlin and Tim Burgess and Mayor Greg Nickels announced their intention to repeal the EHT. The Chamber of Commerce and the Downtown Seattle Association had complained that the tax was hurting Seattle’s business-friendly reputation. Sustainability advocates and groups like Cascade Bicycle Club, meanwhile, wondered why the city would let $5 million a year in bike, pedestrian, and transit improvements evaporate into thin air.
Perhaps unsurprisingly, transit advocates lost that battle. In November 2009, the EHT was repealed by the city council.
At the time, Burgess admitted that $25 per year per employee wasn’t enough to actually discourage hiring, making the repeal “somewhat symbolic.” For business, maybe, but the progressive revenue that Seattle has forfeited over the past five years is real money, and now our transportation infrastructure is $30 million worse for the lack of it.
More to the point, if the tax was so small as to be symbolic, why did the Downtown Seattle Association and the Chamber of Commerce lobby so hard to get rid of it? No doubt they saw it as a dangerous precedent, a wedge just begging for someone to come along with a hammer. Its mere existence implied that business should also contribute to the transportation system that allows the wheels of commerce to turn. The recession was the perfect pretext to cry poverty and strangle this baby in its cradle.
Big businesses know the value of our public transit system to their bottom line. They’ll even shell out money to convince voters to swallow more regressive taxes for transit: Amazon, for example, contributed $25,000 to the campaign for King County’s Proposition 1, which promised to plug Metro’s funding gap with a combination of sales tax and flat car tab fees. Businesses need public transit and they know it. But they don’t want to pay for it.
In April 2014 the county’s Prop 1 went down in flames, despite the best efforts of a broad coalition composed of the DSA, elected officials, labor unions, transit advocates, and social justice groups, as well as the Transit Riders Union. The ball was punted to Seattle to save its bus service.
Enter rookie Councilmember Kshama Sawant, who teamed up with Councilmember Nick Licata to shake things up. Rather than simply rerunning the county’s ballot measure in Seattle, where it had passed handily, they proposed dropping the regressive sales tax hike in favor of two progressive options: a Commercial Parking Tax increase and a new-and-improved version of the EHT—this time set at a very modest $18 per worker per year, or less than a penny per hour.
This proposal was voted down 2-6, and Seattle’s Proposition 1 marched onward to the November 2014 ballot in its original form—with unanimous support from the city council, by the way, just to jog the memory of all those now trying to brand Sawant with an inability to compromise.
Something else happened in fall 2014 that affected Seattle’s vote for Prop 1: In a surprising about-face, the King County Council canceled most of its planned bus service cuts, fuelling libertarian suspicions that all the talk of deficits had been crying wolf. In fact, the county managed this feat by betting on robust sales tax receipts and changing Metro’s reserve fund policy to shift more money into service. (So we’re all set up for another crisis when the economy tanks again. It won’t, you say? Ha!) But the gamble is paying off so far, leaving Seattle in our current happy position of purchasing new bus service from Metro.
So in spring 2015, with Metro adding service hours for the first time in ages and the Bridging the Gap levy about to expire, all eyes turned toward Move Seattle. The long-overdue transportation improvements it promised to fund inspired little controversy, but the $930 million price tag caused some consternation. There is debate about how regressive or progressive property taxes shake out to be, and uncertainty as to how voters will respond to the rapid volley of property tax measures coming their way: parks and preschool, transportation, and the Seattle Housing Levy that is likely to double in 2016. And so Licata and Sawant took the opportunity to propose a diversified funding approach, bumping the median property tax bill down from $275 to $175 and filling the hole with—you guessed it—Commercial Parking Tax and an EHT.
This second effort to revive the EHT also failed 2-7, but significantly, most councilmembers support it in principle. Even Burgess has said he could support the tax if it’s tied to congestion by requiring employers that bring commuters into high-traffic areas to pay more. Bruce Harrell has also expressed support, and Mike O’Brien has repeatedly stated that it’s not a question of if we use the EHT, only when and what for. The refrain during council discussions was that this tax shouldn’t be used to displace other revenue sources simply because our unmet transit needs run so deep. In the words of Transportation Committee Chair Tom Rasmussen, “We’re going to need all the funding options available to us for transit and transit service.”
I have some sympathy for this line. But when you hear it again and again, it begins to sound a lot like an excuse.
So let’s pass an Employee Hours Tax, and let’s make it good. If $25 per employee is so trivial as to be symbolic, by all means let’s make it at least $50. If it was modeled after the Licata-Sawant proposal (which exempted small businesses but included all employees), this would generate nearly $20 million per year. Or more—$80 would generate more than $30 million. And sure, let’s divide the city into congestion zones and make it a tiered charge. The EHT is a flexible tool. One could even tax different industries differently (Amazon, anyone?), if there were good policy reasons to do so.
We could accelerate the build-out of Bus Rapid Transit infrastructure throughout the city, add more bus service hours, strengthen Metro’s poor late-night service network, and stash some cash in reserve for the next economic downturn. Or we could follow San Francisco’s example and start a free bus pass program for low-income youth, seniors, and disabled riders. Possibilities abound.
If this year proves too short a timeframe to actually pass the EHT, at the very least the city council should include a Statement of Legislative Intent in the budget so that consideration is assured for next year. The city is already in the process of studying transportation impact fees on new development, and much of this analysis could be made relevant to an EHT.
Now is the time to act. And what better time than when our city council is about to undergo a major shakeup? Retiring councilmembers have nothing to lose. And for the candidates now in office, what better way to show they are not beholden to the big money lobby groups that may be bankrolling their campaigns than to pass a progressive tax?
Any incumbent running for re-election who doesn’t help pass it doesn’t deserve your vote.
Katie Wilson is the general secretary of the Transit Riders Union, an organization that fights to preserve, expand, and improve the public transportation in Seattle and beyond.