EVERY YEAR, the city signs off on a six-percent property-tax increase to generate dollars for the general fund. Last year, Council Member Peter Steinbrueck made a stink about the annual ritual, complaining that the city council wasn't meeting the stated prerequisite of the yearly tax hike: dedicating the money to a defined "substantial need." In turn, he voted against the $9 million windfall. He was the only council member to do so. Earlier this year, however, Mayor Paul Schell announced that he knew where the money should go: transportation.

Certainly, Schell's proposal seems to meet the Steinbrueck "substantial need" litmus test. According to Seatran, the city's transportation office, Seattle is short $16.5 million in road and bridge upkeep dollars. (The city has earmarked $29.6 million from the general fund to Seatran. Seatran's total 2000 budget is about $91.5 million--with the extra cash coming from the federal government, state taxes on gasoline, and some vehicle fees.)

But Steinbrueck isn't satisfied. The council member, who seems to be having a damn fine left-wing resurrection these days, thinks a substantial need exists elsewhere. While Schell wants to re-pave roads and fill potholes with the money, Steinbrueck wants to use the dough to build housing for the poor.

"It's time that we have a real discussion about what 'need' means and what needs exist, and I'm fully prepared to debate potholes versus people dying on the streets," says Steinbrueck.

Subtracting utilities and dedicated funds, the city has a general fund of about $550 million to play with this year, and $1.2 million of it is slated for the city's housing office. Along with the voter-approved $8.4 million that's dedicated to housing programs, the grand total for housing is slightly lower than last year's funding.

Citing the "1,000-people-are-on-the-streets-every-night-in-Seattle" statistic, Steinbrueck says the need to house poor people is more substantial than the need for road maintenance. He is therefore drafting a proposal to spend $15 million from the general fund on housing and support services for the homeless over the next two years. By way of comparison, the general fund has kicked in $2.4 million to housing over the previous two years. Steinbrueck justifies spending the money on housing because it comes from property taxes; his logic being that the haves should help out the have-nots.

Steinbrueck says he's got support from his liberal colleagues on the council, Nick Licata and Judy Nicastro, and from the public.

"We have an embarrassment of riches in this city," he says. "And I think people are beginning to see the acuteness of disparity, with incredible wealth that is showing itself in the form of stadiums, a concert hall, Experience Music Project, and on and on, while the numbers of homeless go up."

Schell evidently has a different Christmas list. Last spring, he floated the notion that transportation should be the sole target of the six-percent property-tax increase. And as Schell's press secretary Dick Lilly told The Stranger, Seattle has a responsibility to take care of its assets. The roads "are real things out there," he says. "We're not in a situation where spending money on housing is required by us to maintain the infrastructure."

Schell's communications director, Victoria Schoenburg, is more politic, saying Schell is concerned with transportation and housing. "It's a matter of finding the most appropriate way to fund his priorities," she says. In all likelihood, Schell will remain dedicated to funneling the property-tax dollars toward transportation costs, while looking elsewhere for housing funds.

While Schell and Steinbrueck tussle over this Sophie's choice of politics--housing versus transportation--homeless advocates worry that Steinbrueck, ironically, may be jeopardizing the cause. "Peter's so committed to doing this for housing, and I think that's great," says John Fox, director of the Seattle Displacement Coalition, a housing advocacy group. "But I hope he doesn't piss off the neighborhoods. We have often needed the alliance to the neighborhoods, and they have more clout than we do." In short, Fox's concern is that neighborhood demands--which tend to favor fixing up potholes more than setting up shelters--may come to resent housing activists stealing their dollars.

The council will vote on the tax in November or December.

allie@thestranger.com