Category: Economy

Gaming Out the Latest “Amazon Tax” At the Start of an Unprecedented Recession

Let’s start out by stating the obvious: Barring a miracle, the “Amazon Tax” proposed by Seattle council members Kshama Sawant and Tammy Morales will not become law in its current form. The bill, which the council will continue discussing into next month, would slap a 1.3 percent payroll tax on companies with more than $7 million in payroll expenses, raising more than $500 million a year from about 800 Seattle companies.

Sawant and Morales decided to designate the bill as an “emergency,” which makes it invulnerable to a future voter referendum; the tradeoff is that they need 7 votes for approval, plus the support of Mayor Jenny Durkan, since the city charter requires mayoral approval of all emergency legislation. In other words, even if Morales and Sawant got five other council members on board—unlikely, if comments at Wednesday’s budget committee from council members who are ordinarily sympathetic to tax-the-rich arguments are any indication—the mayor could simply let the proposal die without a formal veto. Durkan fought Sawant’s last effort to “tax Amazon,” a $275-per-employee tax on employees of companies with gross receipts of more than $20 million, and is implacably opposed to this one as well.

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Your $5, $10, and $20 monthly donations allow me to do this work as my full-time job. Every supporter who maintains or increases their contribution during this difficult time helps to ensure that I can keep covering the issues that matter to you, with empathy, relentlessness, and depth.

If you don’t wish to become a monthly contributor, you can always make a one-time donation via PayPal, Venmo (Erica-Barnett-7) or by mailing your contribution to P.O. Box 14328, Seattle, WA 98104. Thank you for reading, and supporting, The C Is for Crank.

There is also some question whether the proposal complies with an emergency order issued by Gov. Jay Inslee in March, and extended this week, barring public agencies from adopting or discussing legislation unless it’s “routine” or “necessary to respond to the COVID-19 outbreak and the current public health emergency.”

Despite all that, it’s still worth taking a look at the legislation, which dwarfs the “head tax” the council passed in 2018, then overturned, by a factor of more than ten. What would happen if, against all apparent odds, the bill were to pass in its current form?

In its first year, 2020, the legislation would fund cash payments of $2,000 over four months to 100,000 low-income Seattle residents to respond to the COVID crisis. (This is the part of the bill most obviously compliant with Inslee’s order). Because revenues from the tax wouldn’t be available until 2021, the bill would fund these checks by taking a short-term loan from six city funds that, according to a companion bill, have “sufficient cash” to contribute up to $50 million each. Those funds would be paid back in 2021, plus $5 million interest.

From then on, assuming all the assumptions that went into the proposal remain correct, the tax would pump more than $500 million a year into funding for “social housing” for people making between 0 and 100 percent of the Seattle median income, operational support for permanent supportive housing, and funding to implement the Green New Deal, which includes strategies like weatherization and converting buildings from gas to electric heat. The amount of funding from the tax would be less, of course, if the number of businesses spending more than $7 million annually on payroll declined because of the recession.

Even if the legislation is safe from any future referendum, it would still be subject to lawsuits, and there’s no guarantee that litigation over the tax would be resolved quickly, or in the city’s favor.

The $200 million “interfund loan” would come from six voter-approved levies and taxing districts, including the Move Seattle levy; the Families and Education Levy; the Seattle Parks District; and the Library Levy. Some of these funds do have “sufficient cash” to give up $50 million in the short term, but it’s worth taking a look at why that is, and how this might impact their ability to fund promised projects.

The Low Income Housing Fund, which receives money from the Housing Levy and payments from developers through the Mandatory Housing Affordability program, has more than $146 million on hand because property taxes have continued to flow in to fund future projects that are not yet off the ground. That money is in the city’s “bank,” but it’s already spoken for. Other funds, such as the Library Levy Fund, the Move Seattle Fund, and the Parks District Fund, have significantly less than $50 million lying around. The Parks District fund, in fact, is actually in the red; the 2020 budget makes up a $6 million shortfall with an interfund loan, to be repaid as more revenues come in. Some of these funds simply aren’t that big to begin with—the library levy, for example, is supposed to raise just over $200 million, total, over seven years,

None of that might matter if the $200 million could be repaid in just one year as proposed. But even if the legislation is safe from any future referendum, it would still be subject to lawsuits, and there’s no guarantee that litigation over the tax would be resolved quickly, or in the city’s favor. If funding from the tax didn’t come through quickly, or ever, it’s unclear how the $200 million would be repaid. If, say, the Library Levy found itself short $50 million, that could significantly impact the library’s ability to provide services promised to voters—especially as the recession eats into the city’s tax base.

There are also other interests competing for that money. As city budget director Ben Noble noted in his grim revenue forecast presentation Wednesday, the city may have to dip into some of the dedicated levy funds to pay for basic services—using the parks levy to fund basic maintenance instead of new capital projects, for example. “If the base levels of funding for which the levies were intended to be additive are no longer feasible, the question is whether it would make sense to use the levy funds for operational purposes,” Noble told the council Wednesday. Continue reading “Gaming Out the Latest “Amazon Tax” At the Start of an Unprecedented Recession”

With Public Meetings Shut Down, Housing Developers Seek Temporary Relief from Seattle Process

The Standard towers in the University District, one of dozens of projects caught in limbo when COVID-19 led to the cancellation of all public meetings.

Nonprofit affordable housing providers and other developers were alarmed when a proposal from Mayor Jenny Durkan’s office that would make it possible for their projects to move forward during the COVID crisis was abruptly removed from this week’s city council agenda. The legislation would allow projects to go through the shorter “administrative” design review process, in which projects are reviewed and approved by trained city staff, instead of the usual “full” design review, which involves public meetings and sometimes-lengthy deliberations. Similarly, the city’s Historic Preservation Officer would be empowered to approve or deny changes to landmarked buildings for six months.

The changes would last for six months, or until the city has developed a system for design-review and landmarks board meetings to take place online. Without a process for projects to move forward, land-use attorney Jack McCullough says, a lot of planned developments could be “dead in the water.”

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During this unprecedented time of crisis, your support for truly independent journalism is more critical than ever before. The C Is for Crank is a one-person operation supported entirely by contributions from readers like you.

Your $5, $10, and $20 monthly donations allow me to do this work as my full-time job. Every supporter who maintains or increases their contribution during this difficult time helps to ensure that I can keep covering the issues that matter to you, with empathy, relentlessness, and depth.

If you don’t wish to become a monthly contributor, you can always make a one-time donation via PayPal, Venmo (Erica-Barnett-7) or by mailing your contribution to P.O. Box 14328, Seattle, WA 98104. Thank you for reading, and supporting, The C Is for Crank.

“If we have to tell everyone who’s in the pipeline or ready to get in, ‘We can’t tell you when you’ll ever be able to move forward,’ people will mothball their projects. They may not kill them, but they’re going to say, ‘If there’s not a path, why am I spending money money on this?”

The council was prepared to adopt the proposal on Monday, but after an executive session at which the city’s law department reportedly expressed concerns that it could open up the city to appeals to the state Growth Management Board, the legislation was yanked from the agenda. (City council president Lorena Gonzalez was unable for comment Thursday, and a city council spokeswoman did not return a call.) On Thursday, after both for-profit developers and low-income housing builders raised a ruckus, it’s back on next week’s agenda.

The city’s eight design review boards are supposed to ensure that their designs are high-quality, comply with regulations, and are appropriate for the neighborhoods where they’re being built. (This process, of course, can be quite contentious and subjective.) Twenty-nine projects, totaling 3,500 new housing units, were supposed to get hearings between March 11 and May 4, according to the city’s Department of Construction and Inspections, and another 30 were starting the community outreach process that precedes design review.  SDCI spokesman Bryan Stevens says many of these projects will provide affordable housing funds through the city’s Mandatory Housing Affordability Program or include affordable units through the Multifamily Tax Exemption program. The 30 projects that were just starting out include four affordable-housing buildings.

Chris Persons, the head of Capitol Hill Housing, says he has two projects in the development pipeline, including one that requires approval by the landmarks board. “It’s stuck, but it could be resolved by this legislation,” Persons says. Continue reading “With Public Meetings Shut Down, Housing Developers Seek Temporary Relief from Seattle Process”

Worker Benefits Expanded, Sweeps Suspended For Now, Navigation Team’s Future In Doubt

Ballard Business District, March 17, 2020

1. Governor Jay Inslee did not announce a statewide order to shelter in place on Wednesday afternoon, nor did he the bait when a reporter asked him whether he planned on doing so later this week. Instead, at a press conference in Olympia that was broadcast statewide, with reporters participating by teleconference, Inslee said he was issuing several new orders to ease the financial burdens the COVID-19 outbreak has placed on renters, small business owners, and workers statewide.

“My dad used to tell me, when you’re going through hell, keep going,” Inslee said, before announcing his latest statewide COVID financial relief package, which includes: 

• A statewide moratorium on evictions for residential tenants who are unable to pay their rent. Unlike a similar temporary eviction ban in Seattle, the statewide moratorium leaves some leeway for landlords to evict tenants for other reasons. “We just can’t have a big spike in homelessness … with this epidemic raging,” Inslee said. Inslee spokesman Mike Faulk said that the order left room for landlords to evict tenants who were engaged in criminal activity or creating environmental hazards, for example.

Support The C Is for Crank
During this unprecedented time of crisis, your support for truly independent journalism is more critical than ever before. The C Is for Crank is a one-person operation supported entirely by contributions from readers like you. Your $5, $10, and $20 monthly donations allow me to do this work as my full-time job. Every supporter who maintains or increases their contribution during this difficult time helps to ensure that I can keep covering the issues that matter to you, with empathy, relentlessness, and depth. If you don’t wish to become a monthly contributor, you can always make a one-time donation via PayPal, Venmo (Erica-Barnett-7) or by mailing your contribution to P.O. Box 14328, Seattle, WA 98104. Thank you for reading, and supporting, The C Is for Crank.

• A waiver of the usual one-week waiting period before people can receive unemployment benefits, retroactive to March 8, when Inslee expanded eligibility for unemployment to part-time workers. Inslee said today that he is waiting for the White House and Congress to declare a federal disaster in Washington State, making more employees, as well as some independent contractors, eligible for unemployment.

Employment Security Department commissioner Suzi LeVine said unemployment claims were up 150% last week, and claims for shared work arrangements (where people go to part time but also get unemployment) have spiked 500%. “There has been a tsunami of demand,” LeVine said.

• Small grants to small businesses that have been impacted by the epidemic, plus tax relief for businesses that are unable to pay their taxes on time, retroactive to February 29. This will include interest waivers and the suspension of tax liens and forced collections by seizing bank accounts.

• The extension of Emergency Family Assistance (cash assistance) eligibility to families without children.

“Because of our living situation, we’re probably a little bit less susceptible [to COVID-19] than a lot of the general public.” — Steve, who lived in a trailer that was towed away by the Navigation Team last week

2. Yesterday, after declining to respond to questions from reporters about whether the Navigation Team planned to continue removing encampments and disposing of homeless people’s belongings during the pandemic, the city’s Human Services Department put up a blog post announcing the suspension of most sweeps, except in an “extreme circumstance that presents a significant barrier to accessibility of city streets and sidewalks, and is an extraordinary public safety hazard.”

HSD spokesman Will Lemke said examples of an extreme circumstance would include any encampment that is “blocking the entire sidewalk, prohibits access to a facility, or is a public safety danger to occupants and/or greater community.”

A spokeswoman for the mayor says that both the Navigation Team and other city staffers authorized and trained to remove encampments on their own, such as community police officers and some parks employees, will abide by the moratorium. The blog post included a detailed itemization of the number of hygiene kits the city has distributed, the number of sites the team has visited, and the number of flyers about COVID they have handed out. But when it came to the number of encampments that have been removed since the beginning of March, when several people in the Seattle area had already died from the virus, the blog post said simply that they were “limited.”

Asked for a more specific number, the mayor’s office responded that the city removed just 15 encampments that were deemed “obstructions,” total, between March 1 and March 17.

3. I found out about one of those 15 removals on March 11, when Bailey Boyd, a North Seattle resident, took photos of its what was left after the Navigation Team towed away a trailer that was parked on the street near her home and posted them on Twitter. Boyd said and her roommate watched as the team tossed all of the items inside the trailer onto the street, where many of them remained until the couple who had been living there moved to a different location.

Source: Alliance for a HealthY Washington

“I went and got coffee in the morning, and when I came back, there was a squad car and another car there and the Navigation Team was going through all their stuff and throwing it on the ground,” Boyd said. “Then they brought a tow truck in and towed the trailer, and they just left all of their stuff on the side of the road.”

One of the two people who had been living in the trailer, whose first name is Steve, said the Navigation Team told him they could call a shelter for him and his girlfriend, who is disabled and uses a cane, and see if they had space. Steve says he told them not to bother. “I’m not going to a shelter. I’m with my girlfriend and I’m not going to split up from her,” he said. He also wants to avoid close contact with potentially infected people—something he doesn’t have to deal with living in a trailer. “Because of our living situation, we’re probably a little bit less susceptible than a lot of the general public,” he said.

Another issue, for Steve and his girlfriend, is that they don’t want to lose all their personal items—something Steve said has happened to him repeatedly after the Navigation Team has made him move. According to the city, the Navigation Team places all personal items removed from encampments in storage for a minimum of 70 days. However, according to the “site journals” posted on the city’s encampment abatement page, which has not been updated since the end of January, the last time the Navigation Team stored any property at all was last October.

4. This year’s city budget will need to be cut dramatically to deal with the economic impact of the COVID epidemic. Last week, the head of the city budget office, Ben Noble, estimated that the budget could take a $100 million hit. One place council members may look for savings is the Navigation Team, which has been expanded every year since Mayor Jenny Durkan took office in 2017. The team, at 38 members, now costs the city $8.4 million a year.

District 2 council member Tammy Morales, who vowed during her campaign to “stop the sweeps,” told me this week that the council had already started looking at the team’s budget before the current crisis hit. “Even before this emergency, our office was working to stop the sweeps,” Morales said. Expect the council to take a critical lens to the program once the dust settles and it’s clear how much the city has to cut.