This post also appears in Rondezvous.
Seattle currently dedicates less of its economy to public spending than did in the famously austere recession-era of 2012, but you sure wouldn’t think so based on the histrionics from the Seattle Times Editorial Board, or all the talk from the conservatives on the Seattle City Council about waste and bloat and audits.
That’s because they appear to buy into the story told by downtown’s big business interests last year. According to a “study” paid for by the Downtown Seattle Association (DSA), Seattle budgets had actually grown faster than inflation and population. Like Newt Gingrich and Paul Ryan before them, and like Dave Reichert in his recent debate against Bob Ferguson, they claimed the problem with our public realm was waste, not a lack of resources.
Unfortunately, the DSA cobbled together a tale that looks like it was deliberately designed to mislead.
First, their “study” picked 2012 as its starting budget year. You may remember that in 2012 we were suffering a grindingly slow economic recovery and global austerity.
In fact, the Seattle budget had actually declined from four years prior (from $925,687,000 in 2008 to $919,738,000 in 2012!). Had they started four years earlier, they would have found a much, much smaller growth rate for the budget, and another 30,000 people to contend with in their population increase. So 2012 was the perfect year for starting this tall tale.
Second, their “study” focused on inflation and population growth as they relate to spending. Had the authors done what any first-year economics grad student would know to do, they would have looked at spending as it relates to the size of the economy. This measure is a far better indicator of whether we are living within our means.
Here’s another way to look at it. In your own household, if your annual spending increases by 25% but your income is flat, then you might have a spending problem. But if your income has doubled, then you are probably living frugally. The “study” crucially left out that kind of information–the income of the people and businesses of Seattle (our economy) went up faster than our spending.
Third, the inflation rates of services and construction (which is most of what cities do) almost always increase faster than general inflation anyway, because they are more labor intensive. Headline “inflation” is based on an average of a mixed bag of goods that includes things like computers, TVs, and potato chips, whereas the services that the government provides (health care, housing, infrastructure) almost always get more expensive faster than average inflation. This trend holds true in the private sector as well. (For you nerds, it’s called the Baumol Effect, or Cost Disease). And this is doubly true in a place like Seattle, where construction costs are soaring in part because the price of land has skyrocketed because everyone wants to live here. This is why professional economists talk about spending as a percentage of GDP.
Had downtown interests prioritized rigor over retrograde ideology, they would have instead told the world that Seattle’s budget is smaller as a share of the economy than it was even in the bleak year of 2012.
Back then, Seattle’s 285,000 households had a median income of $66,345. Today, our 365,000 households bring home a median of $120,608.
If the City’s budget had grown as fast as its economy, today’s city council would be spending $2.14 billion of discretionary money, but instead it is only spending $1.867 billion.
That’s a $273 million gap from the parsimonious period after the great recession. And using median wages likely understates the economic growth, so it’s probably an even bigger gap. To make matters worse, conservatives on the council and in the mayor’s office look set to cut an additional $260 million.
That means the council is aiming to put us more than half a billion dollars below matching the shoestring spending rate of 2012.
In other words, we will dedicate way less of our economy to the public realm–to stuff like parks and public safety, transportation and affordable housing–than during the most strained budgetary period of the 21st century.
Tell me again how this is moderate? How is it anything but Republican tax ideology?
Now, the city officials are fully within their rights to pursue right-wing ideology. And, contrary to some hysterical commentators, I’m not saying that decision makes them Republicans–they certainly may vote for some Democrats for other reasons while pursuing a Republican economic agenda.
But it is time for the media to stop pretending this economic policy is a moderate-Democratic or mainstream Democratic approach. Moderate leaders would likely never support a budget that cuts from something already way more austere than 2012. They would first work to make our tax system fairer and prevent cuts this year, and then they would aim at a multi-year plan to meet or exceed spending as a share of the economy compared to 2012.
To raise the $290 million needed to avoid cuts this year, real, moderate Democrats would turn to the findings of the workgroup that showed how to avoid cuts and make it so our tax code stops being one of the least-fair systems in the country. True, being moderates, they might aim to cover about a fourth of the gap with the big projected increase in revenue that the city’s JumpStart payroll tax will bring in next year (without cutting any funding for affordable housing, equitable development, the Green New Deal, or small businesses compared to their current levels). But they would raise the remaining $220 million or so through these tweaks to the tax code.
And they would start studying more of the options from the progressive revenue task force in more detail, so that within a year or two Seattle’s spending levels could be restored to those of the past. (Progressives would look to something more ambitious, of course.)
In other words, this Seattle budget battle does not pit moderate and progressive ideas against one another. This pits Republican taxing and spending ideology against a mainstream Democratic one, full stop.
“Back then, Seattle’s 285,000 households had a median income of $66,345. Today, our 365,000 households bring home a median of $120,608.”
so:
population:
UP by Eighty Thousand souls.
median income?
UP, too! by almost
Fifty Percent. whoa, baby.
hmmm.
I’ve gotta
wonder if
the neolibs
& cons were
Informed of this
seemingly-frivolous Factoid
or merely Forgot
to Include it in
their little far
right spend-
thrift agen-
dacies.
Slash it to the bone and keep cutting.
@2 — bingo.
we don’t Need
no Stinkin’ Scandinavia
the Happiest People on this* Planet.
*or
Any.
let us
Reinvest
in our Villionaires.
And, of course, when we get to the end of the rant, it’s all hand-waving at the details, and finger-wagging at the Council to Do Better:
“And they would start studying more of the options from the progressive revenue task force in more detail, so that within a year or two Seattle’s spending levels could be restored to those of the past.”
What options, specifically? How much revenue do you expect from each? Or did you run out of both because the very limited options for raising local revenue are either regressive as can be, wholly inadequate, or both?
This sorry excuse for a post is just that, an excuse for name-calling Seattle liberal Democrats as Republicans. It’s a cheap shot, dressed up with trashy accessories.
“To raise the $290 million needed to avoid cuts this year, real, moderate Democrats would turn to the findings of the workgroup that showed how to avoid cuts and make it so our tax code stops being one of the least-fair systems in the country.”
The link at “workgroup” above is broken. Ron was attempting to direct readers to https://www.cascadepbs.org/politics/2023/08/9-new-ways-seattle-could-raise-taxes-balance-its-budget
The suggestions in the link include a variety of non-starters that the Seattle City Council cannot actually implement, and some very dubious suggestions like a flat income tax (as an aside, I am seriously surprised Ron is apparently advocating for a regressive city-level income tax, that seems like one his dumber ideas):
“a flat 1% income tax” that “is not considered progressive”
congestion tolling, which is admittedly “administratively challenging to implement” and “must be used for transportation purposes”
an inheritance tax, noting that “No U.S. cities have a city-level inheritance tax, and the workgroup acknowledges that creating one in Seattle would be challenging, requiring state authorization, a vote of the people or possibly both.”
an estate tax, which would require state approval
higher real estate excise taxes, which would also require state approval
I don’t find historical multipliers on previous spending levels to be all that compelling – so many assumptions baked in. Show me what we need to do and convince me we’re doing it the best way. New revenue streams have a way of causing unintended consequences and can be volatile. Proceed cautiously.
@4 It may look like a post but it really is a preview of Ron’s campaign to run against Sara Nelson next year. Like his predecessor Shaun Scott he’ll keep himself relevant with TS contingent by throwing out an op-ed here and there so when he announces his run against the “corporate stooge” next spring he’ll have some name recognition. I’m sure the progressive think tank Hannah posted about yesterday is already lining up behind him ready to recapture the council chambers and take us back to the glory days!
@5: A flat 1% income tax could be made more progressive (or less regressive, depending on how you want to think about it) by giving people with less cash benefits – the City can do that for any households making less than 80% of area median income. (That’s how the Fresh Bucks program works, giving folks money from the Soda Tax to buy food). So in theory assuming it raised $600M (which I think was the estimate), $290M closes the gap and $310M gets distributed in some way to people making less than 80% of AMI.
@8 Neither Don nor the workgroup report he’s citing advocates for anything remotely like what you are describing. That aspect of the workgroup report is simply a flat local income tax, which Don characterized as a way to “avoid cuts and make it so our tax code stops being one of the least-fair systems in the country.”
Our Dear Hannah just posted her latest book report, “Mayor Harrell Sacrifices $200 Million Of Affordable Housing Rather Than Taxing The Rich”, at 2:16, but won’t allow comments.
If you can’t stand the heat dear, get out of the advocacy journalism. Maybe you can get a job with The Mercer Island Reporter?
@9: It’s in the workgroup’s final report: “This form of flat income tax would be more progressive if the City either imposed some form of rebate, rolled back/eliminated a regressive tax in conjunction with imposing the
new flat income tax, or included spending targeted to address the needs of lower income households.”
@2 No, the budget is a quarter of what it needs to be. Seattle needs a tax on vacant rental property that taxes vacant luxury condos and apartments so stiffly that it is cheaper to rent them at 1/4 their list price. Revenue from that to be spent on public housing and shelter beds to guarantee that no one is homeless.
A regressive tax — let alone a flat tax — is often better than nothing. One of the big misconceptions is that Scandinavian countries have highly progressive taxes. That simply isn’t the case. They tax the hell out of the middle class and then spend it on things that benefit everyone. It is like Social Security. Regressive as a mother fuck. But it largely eliminated poverty amongst the elderly, which was a major problem before. Of course it is ideal to tax people who are extremely wealthy but that is difficult to do at a city level. We can’t seem to do it at a national level (we merely tax income and estates but leave enough loopholes for people to get insanely wealthy).
@13
‘we merely tax
income and estates
but leave enough loopholes
for people to get insanely wealthy.’
slippery
they are
like Eels
steering
the Planet
like stoned
Octopusses pul-
ling the nearmost
lever seeing what it’ll Do
it’s Their
Playground
we’re just Here
to Populate the thing.
mind the
Tesla
@12
LOVE IT.
@12 And vacant commercial property as well. It should never be more advantageous to keep a storefront empty for years than it is to lower the rent and fill it.
@12, @16: What you’re advocating would lead to loss of buildings. Owners might find it more economical to tear down buildings than to pay the vacant-property taxes you’re advocating. Today’s luxury housing is tomorrow’s affordable housing; today’s new retail space is tomorrow’s small-business incubator space. If today’s buildings don’t survive long enough to become affordable housing or small-business starter spaces, the city of the future will be an expensive and grim place to live.
let the
Homeless
gaze in Wonder
at empty Skyscrapers
someday
ONE Day may-
be we’ll letchya in.
in the Mean time
mind the Fent-
anyl y’all.
Drug addicts from out-of-state won’t get free apts to trash. That is not the Sawant or Morales “progressive” policies of the past.
Good!
@17 Then we pass a law that lets the city declare eminent domain over vacant land at a fraction of it’s value if it is vacant because a sound building was demolished to make it vacant.