The Seattle Street Repair Tax:
Funding Basic Services with Special Levies
2006-16
The Mayor and the Seattle City Council have sent to voters the largest property tax levy in city history, $365 million over nine years, to start paying for repair of public streets and other services. The levy, along with two other new taxes, will fund half of projected street maintenance needs by 2015.
The two other taxes are: 1) a permanent $25-a-year head tax on workers “for the act or privilege of engaging in business activities within the City,” whether or not the company they work for is located in Seattle, and; 2) a permanent, phased-in 10% tax on commercial parking, making Seattle, especially downtown, a less attractive place to live, work or shop. The City is applying the head tax to its own 10,700 workers, adding $267,500 a year to payroll costs.
The taxes on workers and parking have already been enacted by the City Council and signed by the Mayor. The property tax levy requires voter approval and is phase one of a larger, $1.6 billion plan. The Mayor promises to “come back to the voters in 9 years to finish the job.”
The levy proposal raises two important questions which are analyzed in a recent Washington Policy Center report: How did Seattle get in this predicament in the first place, and how does the street tax fit with what Seattle residents are already paying for public services?
City officials say lower car tabs and reduced state funding explain why the streets are in bad shape - as the Mayor puts it, “we’re in a bit of a fix” on street repair. But total revenues to the city have been growing. Taxes in Seattle are higher than ever before, and the City’s general fund, adjusted for inflation, has more than doubled since 1980. Over the years, the increased revenue was used for other programs, while basic road upkeep was neglected.
Special levies are often viewed in isolation, but the cumulative effect on working families is enormous. To get an accurate picture, the street repair levy must be viewed in light of how past, present and future taxes add up. Seattle residents are paying to support 16 county and municipal bonds and special levies, totaling roughly $1.4 billion. The following two tables show how levy and bond measures stack up, on top of the regular property tax.
Seattle and King County Bonds and Special Levies
| Bond or Levy | Total Cost | Payable for: | Passed | Expires |
| Farm and Open Space | $50 million | 30 years | 1979 | 2009 |
| Health Care Capital | $10 million | 20 years | 1987 | 2007 |
| Youth Detention Center | $14.2 million | 20 years | 1988 | 2008 |
| Public Green Space | $118 million | 20 years | 1989 | 2009 |
| Harborview Refit | $193 million | 20 years | 2000 | 2020 |
| County Parks | .05/$1000* | 4 years | 2003 | 2007 |
| fingerprint System | .05/$1000* | 6 years | 2006 | 2012 |
(*Levy rate is five cents per $1,000 of assessed value.)
Seattle Bonds and Special Levies
Bond or Levy |
Total Cost |
Payable for: |
Passed |
Expires |
Public Housing |
$48 million |
25 years |
1981 |
2006 |
Library |
$196 million |
30 years |
1998 |
2028 |
Seattle Center |
$72 million |
8 years |
2000 |
2008 |
Parks for All |
$198 million |
8 years |
2001 |
2009 |
Low Income Housing |
$60 million |
7 years |
2003 |
2009 |
Low Income Housing |
$26 million |
7 years |
2003 |
2009 |
Fire Stations |
$3.6 million |
20 years |
2003 |
2022 |
Fire Facilities |
$167 million |
9 years |
2004 |
2012 |
Familes and Education |
$117 million |
7 years |
2005 |
2011 |
The property tax on an average Seattle home valued at $400,000 is $3,848 in 2006. The proposed street repair levy would add $155 to that total in the first year.
Most people agree that elected officials should not ask voters to pay extra for basic services. For elected officials, though, the temptation to do so is tremendous. If voters are told they will lose the service if they do not vote for a levy, people feel they must renew the levy again and again. Funding basic services with special levies makes voters feel they must either agree to pay higher taxes or do without a vital service. Yet each new tax lowers the take-home pay of Seattle residents.
The practice creates a pattern: low priority services are funded through the regular budget, while high priority services are left unfunded. Public officials then call for more money through special levies. When voters say yes, it encourages officials to shift more core functions to special levy funding, thus freeing up the regular budget for spending on other programs.
The tendency toward funding core government through special levies highlights the need for budget discipline. It is in the nature of government to expand. Government has no competitors and cannot be put out of business, so it operates without the natural constraints that bring financial discipline to private organizations. Instead, policymakers are constantly pressured to channel money to various public programs and special interests.
That is why it is so important to keep government focused on its core functions. A clear focus on core functions enables policymakers to resist calls for higher levels of spending, which can cause government to become over extended. Using regular tax revenue to pay for basic services allows elected leaders to improve the quality of the services they provide, and enhances the public’s confidence in government’s ability to act effectively and positively.
Most people see maintaining public streets and bridges as a core function of government. Voters will determine whether the $365 million special property tax levy called for under the street repair proposal is needed to provide this basic service. Passage of the measure would continue the trend of enacting special levies to pay for routine public work. Should the measure fail, elected leaders would likely be induced to re-examine priorities within the existing budget to determine whether street and bridge repairs can be addressed at current taxation levels.