This past Monday, (May 19, 2014) Councilmember Kshama Sawant and I were joined by those representing the church community, transit riders, Democrats and Socialists, unions, students, and low-income residents to announce our proposal to address the looming cuts facing Metro bus service in Seattle. (Licata and Sawant Press Release)
Our intent was not to replace the Mayor’s proposed plan, but to amend it in a way that swaps its regressive sales tax increase for an employee head tax while also bumping up the commercial parking tax. The City Council has the authority to implement both without going through our Metropolitan Transit District. It can simply pass a head tax, as it has in the past.
Councilmember Sawant and I announce alternative Metro funding plan
The head tax, officially labeled the “hourly employee tax”(Council Bill 115667), was passed in August 2006 as an equitable means of generating revenue to ensure that those who regularly utilize the City’s transportation system are supporting that system. Councilmember Jan Drago sponsored the legislation and its proceeds had to be used “strictly for transportation purposes.”
We expect the amount of revenue generated from these two taxes will equal the amount that would have been collected by the increased sales tax. I have asked our policy staff to research how much revenue could be raised through various taxing models to provide an adequate amount. They will then begin drafting legislation for introduction to the City Council.
In particular the head tax could be easier to administer by eliminating the array of exemptions that were previously applied when it was enforce from 2006 to 2009. As a result, the rate could be significantly reduced. To provide the additional funds needed to avoid an increase in the sales tax, the commercial parking tax would be increased from 12.5% to 17.5%.
I thank the Mayor for proposing how to address the April 22nd failure of Proposition 1, which has forced King County Metro to implement the first of four planned rounds of bus service cuts. If all of these cuts happen, 16% of bus service, or 550,000 annual service hours, will disappear.
If approved by the City Council, the Mayor’s proposal will go to the ballot this November, but not in time to prevent the first round of cuts. Although those cuts would not be avoided with our proposal, either, our proposal would result in a more progressive tax by not increasing the regressive sales tax. According to the Institute on Taxation and Economic Policy’s (a progressive DC-based think tank) latest edition of “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States,” Washington state has the nation’s most regressive tax structure!
No new Metro Transit funding? Get used to even more crowded buses.
As the Stranger writer Goldy noted, Washington State over-relies on its sales tax. Our sales and excises taxes generate over 61 percent of state and local tax revenue, compared to a national average of only 34 percent. And since the lower your income the more of it you spend on taxable goods and services, the higher your effective tax rate.
During the past 25 years Metro has increased its reliance on regressive taxation five times by raising the sales tax and Vehicle Licensing Fees. In addition, fares have been raised four times over the past six years, with another increase proposed for 2015. Sales tax has proven to be an unstable revenue source: the dot-com crash in 2001 reduced sales tax revenue and forced Metro to scale back plans to increase service. In 2009, Metro lost more than 15% of its sales tax base due to the recession.
It is critical that we do more to reduce the number of single occupant vehicle commuters in our city. This is highlighted by findings recently published in the Third National Climate Assessment on the effects of climate change, which reports that right now our changing climate is endangering our lives and the lives of future generations.
This news compels me to spur Seattle to do more to reduce our carbon impacts on the environment. Funding Metro Transit to meet ridership demand, which has far outpaced demand for all other forms of transit, can significantly reduce vehicle pollution and its related carbon footprint.
I believe our approach can improve the Mayor’s proposal by not only saving our bus service and reducing harm to our urban environment, but by doing so without burdening those struggling to find Seattle an affordable city in which to live.
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