Seattle is scrambling to come up with a renewal for the Seattle Transportation Benefit District (STBD) which is set to expire at year’s end. Thanks to Initiative 976’s narrow victory statewide, funding options are limited. With the vehicle license fee (aka car tabs) that had been the STBD’s mainstay in jeopardy pending the Washington Supreme Court’s decision, the sales tax is the primary option remaining. The question is how big the City goes.
Mayor Jenny Durkan had proposed only renewing the existing 0.1% sales tax rather than raising new revenue to make up for lost car tab revenue. That means a shrinking of STBD bus service hours from 300,000 to 75,000 annually–a staggering 75% cut that would have turned much of the city’s 10-minute frequent transit network into a 15-minute network. It would mean longer waits for the bus, less ridership, and less progress on climate goals.
With King County shelving its countywide transportation benefit district idea in March and the Mayor waiting until July 7th to finally release her Seattle-only proposal, the Seattle City Council didn’t have much time to finetune the STBD. Since focus on JumpStart payroll tax and reining in overpaid and unaccountable police, it appears everyone was caught flatfooted. Sierra Club and a few other groups came out in favor of increasing the size of the proposal, but the city council was slow to respond. Finally, Councilmember Tammy Morales stepped in to offer an amendment that would add another 100,000 bus service hours by increasing the sales tax from 0.1% to 0.2%.
Some prefer transit cuts to sales tax hike
That idea had long been on the table and offered up as an option by staff, but some councilmembers were reticent in light of the pandemic and the recession. Councilmember Lisa Herbold professed being downright scared of the political implications of increasing the sales tax during a recession–apparently a huge cut to transit service seemed less scary.
“There are a lot of people who don’t use Metro, and those folks vote, and I’m really concerned if we end up doubling the size of the sales tax on this measure, we could end up regretting it,” Councilmember Lisa Herbold said.
Transportation Chair Alex Pedersen agreed with Herbold’s analysis and shared her fear that it would jeopardize passage of the measure. Councilmember Debora Juarez, meanwhile, objected to the last-minute nature of Morales’ amendment and said she hadn’t had time to weigh it or gather stakeholder input yet. Most councilmembers agreed that more time to digest the increase would be good.
As Councilmembers Herbold, Andrew Lewis, and Pedersen expressed their opposition and Debora Juarez, Teresa Mosqueda, Kshama Sawant, and Dan Strauss said they were planning to abstain, Morales withdrew her amendment. City Council President M. Lorena González was absent but may end up casting a decisive vote when the full council takes up STBD proposal on July 27th and Councilmember Morales reintroduces her amendment.
Another amendment shortening the STBD from six years to four years narrowly passed 5-3, but Councilmember Strauss said he’d like to switch his vote from yes to no, which would make it a tie, and González the likely tiebreaker. The justification for shortening the length was a desire to switch away from the sales tax to a more progressive funding source sooner rather than later. Some have also hoped that as a presidential election year 2024 would be a more favorable year for a countywide renewal. Pedersen countered that renewing in 2024 would risk a fiscal cliff situation and lessen leverage with Metro over service decisions.
Since the Move Seattle Levy is also expiring in 2024, it could either make it harder to pass both or open the possibility to combine them into one super measure. Or perhaps the Move Seattle property tax levy would remain separate and a King County measure funding both bus service and a light rail expansion could be created as Seattle Subway has begun advancing.
The success of recent transit measures in Seattle
The case that a 0.1% sales tax would pass but a 0.2% would not seems rather flimsy. If the long-rumored but rarely seen Seattle tax revolt is upon us, it’s likely going to buck either proposal. But it seems far more likely that either option option will pass easily given that Seattle overwhelmingly passed the last STBD measure in 2014, the Move Seattle levy in 2015, and Sound Transit 3 in 2016–and resoundingly rejected I-976 in 2019.
Some councilmembers have sought to defend the small size of the initial STBD proposal by saying it’s likely Seattle will be able to impose car tab fees again soon–and hinting they would vote to do so. It’s true the Washington Supreme Court may strike down I-976 for good and on the short horizon, opening up that option to the Seattle City Council. However, it wouldn’t be prudent to count on that outcome, and the city council is limited in how quickly they can ramp up car fees. Plus, while Sound Transit has a progressive Motor Vehicle Excise Tax authority that hits owners of expensive cars much harder, Seattle only has a flat vehicle license fee authority that is minimally more progressive than the sales tax.
Why the STBD sales tax is progressive
Councilmember Sawant railed against sales taxes in her comments, calling them regressive. That’s only half the story though. While the incidence of sales tax falls hardest on low-income folks, a sales tax can still create a very progressive outcome and reduce inequality if it’s spent in a progressive fashion. “Many policy analysts and advocates who want a more equal society overrate the importance of progressivity relative to sheer bigness of redistribution,” economist David Sligar wrote.
Investing in public transit fits the bill in multiple ways. Transit helps people lower their transportation costs by avoiding more costly car or ridehailing trips and speeding up the transit trips they do take while creating high-quality union jobs in the process. Furthermore, the STBD funds the ORCA Opportunity program which provides free fares for Seattle students and low-income residents.
We need only look at countries that have been highly effective at flattening wealth inequality to see our hyperfocus on tax incidence rather than the quantity of taxation and spending is misguided, as Sligar demonstrated in his analysis: “Social democratic leaders such as Denmark, Sweden and Norway have close to the least progressive taxation in the OECD. With universalist welfare systems, their spending isn’t particularly targeted at the poor either. What matters, however, is that they do a lot of it.”
Let’s think big!
Seattle has an incredible amount of wealth. We should not be struggling to maintain our transit system. Raising taxes will solve our immediate transit problem and will also contribute to the overall progressive aim of reducing wealth inequality via redistributive taxes. Rather than agonizing over the side effects of small taxes, we need to think big and tax big. Doing so will distribute wealth more equitably and it will allow us to solve our affordable housing and climate crises via a massive deep green building spree.
The recently-passed JumpStart Seattle payroll tax was a great start, but it’s just the start. There are still too many priorities that go unfunded and fortunes that go untaxed. Letting transit take a huge cut because we’re scared of a sales tax is wrong on multiple levels. It’d take us farther away from meeting our immediate transportation needs and climate goals, but it would also concede the larger intellectual battle about decreasing wealth inequality that we need to win–at least if we hope to get out of our death spiral of hyper-inequality, racism, and ecological destruction.
Contact your Seattle City Councilmembers to let them know you support Councilmember’s Tammy Morales’ amendment doubling the size of the STBD. Let’s save transit from the chopping block.
We hope you loved this article. If so, please consider subscribing or donating. The Urbanist is a 501(c)(4) nonprofit that depends on donations from readers like you.