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UP #368 – Move Seattle Transportation Levy

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Move Seattle Transportation Levy

In early May, Mayor Murray proposed a “Move Seattle” transportation levy. The levy would be funded with $930 million in property taxes over nine years, with an annual cost of $275 for the owner of a $450,000 home. You can examine the details at the Move Seattle website; materials from the May 12 presentation to the City Council are here.

A public hearing is scheduled for June 2, and Council discussions are scheduled for May 29, June 9 and June 23. The deadline to place the measure on the November General Election ballot is August 4.

I believe the Mayor has made a strong case that there is much to do in Seattle on transportation, and his proposal would take a big step forward to address the maintenance backlog, improve safety, build sidewalks, improve bus infrastructure, and implement the pedestrian and bike master plans.

It’s clear we need to approve a significant transportation levy in 2015. We also need to pass a much-needed low-income housing levy in 2016; I see those two issues as being connected. In reviewing the proposal, I am particularly concerned that those on fixed and low incomes not being unduly burdened.

I believe we need to consider the size of the levy, and examine alternative funding sources, in an effort to reach the $930 million goal. We should also consider the risk that a large levy might be less likely to pass, and consider the potential consequences.

In that spirit, I’d like to take a step back and look at the bigger picture of Seattle levies during the last ten years, and where Seattle Move fits.

Seattle Voters and Property Tax Measures

Seattle voters have a well-established track record of generosity in funding property measures.

In the last ten years, Seattle voters have approved nine of ten City property tax measures for libraries, parks, low-income housing, families and education, early learning, the Downtown seawall, the Pike Place Market, and transportation (Bridging the Gap). In previous years, voters also approved levies for Fire facilities, the Opera House, and community centers.

The only “no” vote was for public financing of elections, which received 49.6%.

Seattle Move In The Context Of 2005-15 Property Tax Measures

The proposed Seattle Move levy proposal is significantly larger than previous property tax measures. The 2006 Bridging the Gap measure is the largest to date, at $365 million, or $424 million in 2015 dollars, as shown below:

Seattle Property Tax Measures 2005 - 2015

When viewed by the annual average cost, the Parks District measure in 2014 is the highest, at $48 million. In 2015 dollars, Bridging the Gap would average $47 million (see below):

Seattle Property Tax Measures 2005-15, average annual cost in 2015 dollars

Seattle Move would average $103 million annually.

Aside from public financing, Seattle voters have passed all nine proposed property tax measures in the last ten years. Of the nine, only two have received less than 59%: the Bridging the Gap (BTG) transportation levy in 2006 and the Metropolitan Parks District in 2014. Both attained 53.4% (see chart below). As noted above, they were the most expensive property tax measures, by a clear distance, which suggests Seattle voters may be price-sensitive for larger property tax measures.


Seattle property tax measures from 2005 to 2015

Seattle Since 2006

Is there a limit beyond which Seattle voters won’t go? Looking at other measurements since Seattle voters approved Bridging the Gap in 2006 can help provide a broader context about affordability.

From 2006 to 2015, the assessed value of property in Seattle has increased 59%, from $91 billion to $145 billion. Thus, the total amount of property tax that can be collected has increased by a comparable level, provided that voters agree.

How has income kept up?

There are no clear estimates for income beyond 2013, so an exact measurement isn’t possible.

According to census data, median household income in Seattle increased by 20% from 2006 to 2013. The last year or so has seen solid growth, though we don’t have estimates for 2014 and 2015. If we go back to 2005 for census data, a boom year, the data shows a 43% increase from 2005-13.

So it seems reasonable to estimate that, cumulatively, the 2006-15 increase is likely below the 59% increase in assessed values for property, or at least no higher (median family income increased a little more).

If used as a guide, a 59% increase in the $365 BTG levy would result in a $580 million levy. Perhaps that’s a suitable target, given affordability, and a risk of the levy not passing if a larger levy is proposed.

Passage of the levy is critical: the current BTG levy accounts for ¼ of the SDOT budget.

If voters decide the levy is too large and it doesn’t pass, it may not be realistic to bring back a smaller levy in 2016. The housing levy and perhaps light rail will on the ballot next year, in addition to a School District capital levy. Further, there is no precedent for Seattle voters passing two large Seattle property tax measures in the same year. While voters approved two measures in 2008, 2012, and 2014, they were of more modest size.

This makes me wonder if badly-needed new transportation funding should all come from a property tax, or whether we should consider a more diversified funding package, to mitigate the risk.

Potential Diversified Funding Option

We may be able to meet, or at least approach, the Mayor’s goal of $930 million over ten year through a diversified funding package.

When Seattle voters approved the nine year $365 million BTG levy in 2006, the Council approved two other funding sources projected to raise $180 million: a commercial parking tax (CPT), and an employee hours tax (similar to how Portland funds transportation). Though the employee hours tax was later repealed, at election time the result was a roughly 2-1 ratio of property tax to these other sources. It proved a winning combination in getting public support for passing the BTG levy in 2006.

I suggest we consider a similar approach.

Based on current collections, a 5% CPT would produce $157 million over 9 years, assuming a 3% annual increase.

Based on a 2014 estimate, an $18 employee head tax would produce $69 million, assuming a 3% annual increase. This would amount to about a penny per employee hour in additional costs to businesses and it could produce a total of $226 million.

Combined with a $600 million levy, this would leave us roughly $100 million short of the Mayor’s $930 million figure.

In addition, the Council is considering a transportation impact fee, and has begun a process that could result in a Council vote in 2016. Impact fees, however, face limitations: they can be used only for future impacts reasonably related to a development, and are generally limited to improvements such as street widening, installation of bike lanes, new and coordinated traffic signals, and improvement to crosswalks.

While we can’t be sure yet how much a transportation impact fee could produce—no estimate will be available until next year—a strong commitment to a high level of service on city streets in the City’s Comprehensive Plan would result in a stronger fee, and a greater likelihood of reaching a total transportation funding package of $930 million.

I believe this diversified approach is worth considering.

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Comment from Thomas DeMaria
Time May 28, 2015 at 8:12 am

Hi Nick,

Much like Jean Godden, Burgess, and a couple of others: you are nostalgic for a Seattle that was still, well, a small city that seemed a bit more manageable under current ideology that leads the council. I for one, think it will be refreshing to see new blood on the council that is ready to lead a “city”, not a “kumbaya” circle. There is a younger generation that recognizes how out-dated and out of touch with what the top priorities of the citizens of this city (that is at it’s largest in population in its history). This leads me to believe, based on your blog, you are overwhelmed and not sure what the top 2-3 priorities are for moving this city forward. Many voters would claim you are “progressive”. However, when compared to global cities around the world, there is nothing “progressive” about weak decision making on transportation, the #1 priority for many voters this year, and in the near future. If you are unable, or too weak to put together a robust transportation package, please step aside and let strong leaders prevail. Fortunately, you’ve come to your senses and realized this step.

Comment from Adam Hyde
Time May 30, 2015 at 7:42 am

If the 2008 crash taught us one thing, its that you can’t rely on house prices remaining relatively stable, never mind rising over a period of 10 years. Although progressive spending is incredibly important, it needs to be fully funded. If it isn’t, you’re exposed to more risk.

Comment from Paul K
Time June 8, 2015 at 11:28 am

The one question/concern I have about levy’s is how are we spending the funds we have in the budget? Is the city budget too small,or allocated incorrectly? I feel we’re the people that get paid every two weeks and then run out to get a payday loan to cover them until the next paycheck. I can see a levy for a special need, I see transportation as a basic necessity that a city should be providing and budgeting for.

Comment from Naved
Time July 9, 2015 at 3:21 pm

In my view $930 funding should not be any issue.

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