After a dramatic, year-long quest to fill the $417 million budget shortfall projected for the 2025-2026 biennium, the Seattle City Council threw up their hands in the final budget committee meeting Thursday, leaving the critical decision between taxing the rich and austerity budgeting to the more conservative council that will takeover in January.
This Seattle Process Got Hands
Last year, the Mayor and progressive revenue champ Council Member Teresa Mosqueda convened a group of representatives from business, labor, housing, etc., to recommend new taxes on wealth to pay for services the City would otherwise have to cut.
The workgroup faced months of delays, thanks to big business’ tax aversion and general whininess, but eventually it produced a list of nine potential taxes to explore. Of the nine, Mosqueda directed central staff to write draft legislation for three ideas: An increase to the “JumpStart” payroll tax, a local capital gains tax, and a tax on the difference between a CEO’s pay and its employees.
But the council failed to balance the general fund with any of these proposals. Sure, the council passed Council Member Kshama Sawant’s budget amendment to barely increase JumpStart, but that increase will raise $20 million for mental health counselors in public schools. While funding school counselors the state should be paying for is a just cause, that money will not cover the looming budget shortfall.
As for the CEO pay ratio tax, Mosqueda said she initially thought the City could set it up right away by attaching the fee to JumpStart, but upon further inspection the City found that tying the new tax to the existing one would only generate an estimated $7 million. So, Mosqueda would rather give the City more time to design that tax to generate revenue to its fullest potential. It’s not like they already set aside a year to work on it or anything!
As for the capital gains tax, the council deferred to conservative Council Member Alex Pedersen, of all people. Earlier this year, Pedersen proposed a 2% expansion of the state capital gains tax—which imposes a 7% tax on the sale of stocks, bonds, and some other assets above $250,000—to offset the regressive water tax he sought to repeal. In other words, it would not bring in any new money to balance the budget. One council member, Council Member Lisa Herbold, had her head screwed on straight and proposed an amendment to Pedersen’s bill that would increase his tax by 1%, raising $18 million for the general fund.
Smash or Pass: Alex Pedersen’s Capital Gains Proposal?
In a meeting Thursday, the council briefly discussed Pedersen’s proposal but decided not to vote on it. Pedersen, at the advice of Rep. Nicole Macri (D-Seattle), said the council should wait to see how the statewide initiative to repeal the capital gains tax plays out this month.
Earlier this year, Redmond hedge fund CEO and Republican donor Brian Heywood launched signature drives for a slew of conservative ballot initiatives under the banner “Let’s Go Washington,” including I-2109, which would repeal the state’s capital gains tax. With the signature deadline just weeks away, Macri told The Stranger that if Seattle, Washington Republicans’ favorite boogeyman and a town clearly full of proto-Sawants, decided to pass a capital gains tax, it may bring more supporters to Heywood’s initiative, potentially jeopardizing the tax.
Macri also worried that Pedersen’s proposal did not have a “constituency” to defend it from the challenges it would inevitably face. The state worked long and hard to build a line of defense around capital gains, Macri said. A statewide survey, paid for by SEIU 775 and Washington Conservation Action, found that 40% of respondents support repealing the state capital gains tax and 46% do not. The opposition to the repeal initiative and thus support of capital gains increases to 56% when respondents learn that the tax funds education. Replacing a water tax, while regressive and worth replacing, may not pull on the heart strings quite the same way, Macri said.
Sure, but why is Pedersen’s revenue-neutral capital gains tax, which has always seemed like a ploy to keep the council from using such a tax to draw additional funding, the standard we’re using here? Why not use a proposal developed by Mosqueda’s revenue workgroup, which the council specifically designed to create progressive tax options with enough support to avoid big messy repeal fights?
Well, basically because Seattle’s progressive electeds wake up every day in a pool of sweat due to war flashbacks from when big business launched a relentless campaign against the head tax in 2017. Progressives fear the corporate overlords so greatly that they bend over backwards to accommodate them with revenue task forces that end up going nowhere, and now, in this case they’re passing the buck to a council that big business put in office to oppose taxes on the rich.
“These things always take longer than we want,” Macri said in a phone interview. “But I share your concern that we might have missed our window.”
Holding Out for a Hero
In the Thursday council meeting, Mosqueda said that she hopes the next council picks up the capital gains tax next year if I-2109 fails, but no clear champion for progressive revenue has emerged among the incoming council.
Among the 2024-2028 crowd, Council Member Tammy Morales appears to be the only tried and true proponent of taxing the rich. On the other side of the spectrum, incoming council members Rob Saka, Maritza Rivera, and Bob Kettle routinely show their aversion to progressive taxation, so they will likely create an anti-tax caucus with Council Member Sara Nelson. That leaves Joy Hollingsworth, Cathy Moore, Dan Strauss, and an unknown appointee somewhere in the middle.
More specifically, the new council does not have a majority in favor of a local capital gains tax. In the meeting on Thursday, Nelson said she would have voted no on Pedersen’s proposal, but focused her arguments against repealing the water tax. She thought the City should instead work to help more people enroll in the low-income discount program.
According to pre-election interviews with Real Change, only Morales and Moore said “yes” when asked if they support such a tax. Saka, Hollingsworth, Rivera, and Strauss said “maybe.” Kettle did not appear in the video.
For tax supporters beating their heads against a wall at the predicament the council put the City in, take that frustration and use it to keep yelling at our elected officials.
“Once the new council starts looking at these budget reports and constituents start knocking on their doors asking them not to cut $200,000 worth of social services in 2025, I think they might start to get pretty serious about revenue pretty quickly,” Macri said.
“ … conservative Council Member Alex Pedersen …”
“(c)onserative?” Are you f’ing serious?
@1 she means “more conservative than me”
How about just cutting the budget? We all get so little for the taxes we pay no one will notice. It’s not like the streets that aren’t getting fixed now will be any different after a budget cut.
Maybe a round of tax cuts will force the city to focus on essential services, rather than casting vanity votes about Gaza.
@2 I think she means “more conservative than Kshama Sawant.”
I love the fact the Stranger characterizes an additional $20 million of JumpStart funding as “barely increasing” funding. This is the same publication that recently complained devoting a mere $1 million of the $375 million SPD budget to gunfire detection technology was outrageous.
Interesting.
Think I won’t pay my property taxes then.
Consequences.
Or they could just expire the unfunded police spots that have no police
What exactly did Hannah expect the council to do here? Mosqueda herself said the CEO tax won’t move the needle and then you have one of the most progressive members of the state legislature asking the city to hold off lest the imperil the entirely of the capital gains tax at the state level. I think Marcri probably knows what she is talking about there. The jump start tax can be raised at any time. They should wait and see what actual revenues come in (how many times have we found out the city/state is making more than they anticipated), analyze current programs to see if cuts can be made and then raise new revenue if needed. That’s called fiduciary responsibility something sorely lacking at all levels of government in this state.
There is a report that a mere 163 people in Seattle would pay 85% of the Capital Gains tax. If this is factual would the tax be an unreliable source of revenue? How many people need to move to Florida before there is no substantial revenue stream?
What sort of idiot would move to Floriduh?
@9, An exodus of dollars could make Seattle more affordable pretty quickly even if no taxes are collected. Seattle is an expensive place to live on account of all the high income earners and company stock money.
@11: The Stranger constantly confuses “the rich” with “persons earning high incomes.” An exodus borne of a capital gains tax on actual rich persons won’t lower rents, because persons with taxable portfolios likely already own their residences. It’s the high-income types who are more likely to cause rental increases, and they have yet to accrue sufficient capital to earn taxable income upon it.
Cut the budget already! Perhaps you can start by getting rid of 9 legislative aids – one for each council member. That could save over $1 million. Drop unnecessary trainings. And unnecessary functions. The budget increased too much during our growth period. Now we need to focus our tax dollars on needs not wants.
This taxing the rich idiocy is counterproductive and underscores the limitations the progressive world view, which desires to punish success and reward mediocrity, such as these self-serving pencil-pushers on the Seattle City Council, who refuse to go on a fiscal diet and propose a temperate budget that does not require fleecing the business sector in order to fund the co-dependent policy fantasies of socialist nitwits like Sawant and Mosqueda.
The core issue with leftism is that it springs forth from the moldy hallways of academia, where realism fears to tread, and produces scrambled egg heads like Hannah Krieg, who in her youthful adherence to Marxists principles, fails to realize that she is writing the death certificate for Seattle, as more and more constituents vacate this liberal enclave for greener pastures with less hairy socialists running around trying to fix every human shortcoming with other people’s money and diddling the livestock.
Danny Westneat has an excellent column in the Seattle Times today, “Escape Liberal Hell”, detailing the mass exodus of conservatives and people who think, feel, care and took a university level economics class, which explains the veracity of the capitalist profit venture system, to safer havens like Idaho and Montana, where the buffalo roam, and citizens don’t have to cover the malfeasance of others at the behest of the nanny state, as envisioned by hairy, tattooed philosophy majors who studied at the University of Washington under the tutelage of insular, hairy bureaucrats with turtlenecks and jackets with patches on their elbows.
Yes, conservatives are fleeing the Rhodie State for the Big Sky and Gem State in tremendous numbers, which will ultimately raise taxes even further to cover the lost margin from fleeing Republicans, much like Israelis running from the incursion of Hamas and Hezbollah, two of the Democrats most favored satellite tribal parties.
“Will the Last Person Leaving Seattle to escape the onslaught of nascent Marxists and their idiotic, counterproductive fiscal policies, please Turn Out the Lights?”
@10 Catalina Vel-DuRay: Jeff Bezos, for one. And good riddance.
I’d love it if all RepubliKKKans, like Bezos, Ron DeSatan, Matt Gaetz, and the Orange Turd, took full occupancy in the neofascist-confused State of Floridumb. Then, after evicting existing citizens (particularly those who aren’t registered rabid MAGAt), their gluttonous, self-induced global warming sinks the state into the Atlantic ocean and Gulf of Mexico. Mal-a-Tardo (thanks, kristofarian!) is reduced to an undersea Satanic cave, the GOP officially goes extinct from boiling in acidic sea water and / or being eaten by atomic sharks or gators, and…VOILA!—–the Deeply Divided States are reunited as a functioning nation, and democracy is thus restored. Maybe expelled former Floridians would be so grateful they avoided going under they’d switch political affiliations from blood red to at least independent if not entirely blue.
Suddenly I am reminded of the 1972 Deep Purple song, Smoke on the Water.
Agreed: Republicans are horrible people.
@14 pollysexual: This is sad. I remember the year 1969, during the Boeing layoffs. Show of hands: who can recall the billboard on Aurora Avenue North with the similar message: “Will the last person leaving Seattle turn off the lights?”
@14: “Yes, conservatives are fleeing the Rhodie State for the Big Sky and Gem State in tremendous numbers”
Yes. And no. What is fleeing is the declared home of their investments. The individuals, not so much. They may have established residences in Boise. But their yachts remain tied up in the Elliot Bay marina. Their private aircraft still parked at Boeing Field or Renton. And they still enjoy the amenities of a great Blue State city like Seattle. From a home owned by their real estate LLC, which they lease back as needed.
They are far smarter than the Washington State Department of Revenue. And make the Seattle City Finance department look like positive simpletons.
@6, SPD should should have their pay cut to match what school teachers make, as they contribute more to the safety of the public that SPD does, given they can’t even purge morally unqualified officers who have been members of domestic terrorist groups like the Proud Boys, Patriot Prayer, or the Oath Keepers. Were I called to jury duty in a criminal trial, I would have to assume any testimony from a member of SPD was intentionally false, unless the defendant was white, and on trial for a crime motivated by right-wing ideology.
Bingo, Our Dear Holmes. I bet Mr Bezos will not give up his compound in Medina. He’s just choosing to identify as a Floridian for some rich person reason, or thinking he’s “owning the libs”.
@10
The sort of idiot that doesn’t like to tip toe around addicts and human feces.
ASaxman5537, it’s wouldn’t be a slog post without someone mentioning poop and addicts. But I doubt that Bezos had to encounter much of that on his commute between Medina and wherever it is he “works”
But I’ll just quietly murmur that Florida has the third largest homeless population, after California and New York, so it’s rather a out of the frying pan, into the fire proposition, don’t you think?
@14, mmm just as many are fleeing, many are arriving. Washington state is not dying by any stretch of the imagination.
@25 actually, our state population is growing, especially Seattle
@27: Yes. I can count tents under I-5 too.