Sizing up the competeing Head Tax proposals

by Geov Parish, Op-Ed Columnist

In Brief

Durkan’s plan:

* Is timed to kill the existing proposal, and delay any solution.

* Is even more grossly inadequate to the scale of the problem.

* Abandons any serious effort to build additional badly needed permanently affordable housing.

* Puts more money into homelessness programs that only help a small segment of the homeless population.

* Rewards Amazon’s extortion, and gives companies like Amazon effective veto power over what our city does on any issue.

DETAILS

Both plans raise money based on the number of employee hours worked in Seattle each year by the top three percent of the city’s companies, based on gross revenues of at least $20 million. Durkan’s plan would charge about $250 per full-time employee per year; the existing plan charges about $500. Annual revenue would be under $40 million rather than $75 million.

Durkan’s plan eliminates the proposed 2021 shift to an equivalent, more traditional payroll tax. Instead, the head tax would continue, but then end after 2023.

Durkan’s plan also shifts spending. The previous plan dedicated about $50 million to building permanent affordable housing; $20 million to homeless services; and the rest to administration. Under Durkan’s plan, homeless service funding from the tax would increase from $20 million to about $28 million, but the affordable housing component would be reduced by four-fifths, from $50 million a year to only $8 million.

ANALYSIS

1. A report released yesterday estimated that King County needed to add 14,000 new affordable homes just to address 2017’s homelessness – let alone any future increases. The previous plan was an inadequate but important step in starting to address this shortfall. On this point, Durkan’s head tax plan moves from being inadequate to being nearly irrelevant. It would build about 24 housing units a year, or about 120 over the course of its entire five-year existence.
2. Durkan has already said that she wants to see head tax revenues for services funneled into the city’s existing “Pathways Home” programs, particularly its Navigation Teams and a private rental market voucher program. The Navigation Teams are meant to connect homeless individuals with a case manager and support programs that, if completed successfully, essentially allow the person to apply to get on waiting lists or for vouchers. Since most waiting lists are frozen or years long, this usually would mean the vouchers, in which people are given three- to nine-month rent support and then left to fend for themselves and counted as “permanently housed.”

Under Durkan, the city this year tried to defund most of the city’s existing emergency shelter network, on the grounds that they did not require guests to become part of this program. The city council blocked this attempt, which would have literally left thousands of people with nowhere to go while they wait for affordable housing that does not, as yet, exist.

The Navigation Team approach is far more comprehensive per person, but also far more expensive per person. Given the lack of overall additional revenues, this necessarily means helping far fewer homeless people.

At best, the city’s approach is to focus service on those individuals whose homelessness issues are personal and can be “fixed” or managed – substance abuse, mental health, etc. – while deemphasizing structural economic reasons (e.g., rent in Seattle is hella expensive). It presumes that people can easily afford a $2000/month private rental unit once their vouchers expire, since the personal problems which led them to become homeless will have been resolved. And some homeless individuals do fit that description. But most don’t – the issues are economic, or a complex mix, or not easily resolved in a few months.

That’s at best. At worst, Durkan is doubling down on an approach that amounts to corporate welfare to landlords, while abandoning most homeless people to fend for themselves.

3. Durkan’s plan would raise only a quarter of the revenue originally recommended by last winter’s Progressive Revenue Task Force, the most representative public body so far to consider the issue – and the task force acknowledged that its $150 million per year recommendation was inadequate to the scale of the problem. Durkan’s $38 million a year and 24 new homes a year isn’t a bad joke – but it’s close.
4. Durkan’s plan extends for five years one of the major problems with the existing proposal: its reliance on gross revenues, making no distinction between industries with large profit margins and those with notoriously thin ones.
5. Due to past decisions, the city doesn’t have any obvious constituencies other than its wealthier businesses from which it can raise significant additional revenue. But the scale of Durkan’s proposal appears to be a response not to the need or to any long-term plan, but to appease Amazon and other big business opponents of the original proposal. There are reports this evening that Amazon has said it would lift its freeze on two major downtown developments if Durkan’s plan passes.
6. Unlike the existing plan, which was developed over eight months and countless meetings and public hearings, Durkan’s plan was developed secretly behind closed doors “working with people across the city” who she has not yet named.

WHAT HAPPENS NEXT

Durkan’s plan is supported by the four pro-business city council members who have opposed the existing head tax plan, including CM Sally Bagshaw, who chairs the committee considering the existing proposal. That proposal is co-sponsored by four council members and supported by a fifth, Kshama Sawant.

Friday morning, May 11, Bagshaw’s committee meets at 9:30 AM for what was expected to be a final committee vote on the existing plan. A full council vote on that plan is scheduled for the next business day, Monday, May 14.

The existing plan has the five votes to pass but is opposed by the committee chair and does not have the six votes needed to override what would now be a certain veto by Durkan.

At a minimum, the timing of the release of Durkan’s plan is designed to maximally delay any final decision. Bagshaw is likely to call to postpone any vote pending new hearings and studies on the competing proposal – even though it clearly does not have the votes to pass council. Neither side has a clear path to its proposal becoming law now. Serious lobbying will start to either find a middle ground or (more likely) try to peel off at least one of the sponsors of the existing plan, with the explanation that “it’s the best that we can do.”

Durkan’s announcement delays badly needed additional revenues of any sort for a crisis that is now in its third year as a formally declared city emergency, and that is now literally killing people in our city each week. And the fact that Durkan’s plan is based not on need but on appeasing our city’s largest employers sets a terrible precedent. If her last-minute proposal ends up carrying the day, the City of Seattle is giving companies like Amazon effective veto power over city laws and policies. Is that the city, and government, we want?

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Primany image by Kevin Schofield