Council votes to endorse increase in taxes

Comment by Pam Carter on February 7, 2013 at 7:45pm

Ellen, you've hit on something that is always a problem for Tukwila when it comes to tax distributions -- nighttime vs daytime population. However distribution based on population works for most cities so that is a formula that stands more chance of success in the legislature. I have no idea as to the chances of this proposal but cities are pretty limited in the amounts and types of taxes they can enact. Tukwila does have a couple of options it hasn't tried -- B&O tax which is very regressive and hated by the business community, a vehicle license tax (not sure if that would need to be okayed by voters), and an temporary increase in the property tax which would need voter approval. I wouldn't support a B&O tax and don't think the City would have a strong argument for a temporary tax increase. Cities across the state are asking the legislature for "more tools in the toolbox" so they can't meet their obligations. It's pretty rough for cities; as the economy is beginning to improve, the cities are still loosing funding. Yet, we the people don't want to see a decrease in services. I don't have any magic solutions -- wish I did!

Comment by Chuck Parrish on February 7, 2013 at 10:45pm

I was there to observe the discussion. Essentially, the city added its name to a letter endorsing legislation that would give cities the OPTION to add (up to) a particular percentage to auto tab renewals based on the assessed value of their vehicles at the time. This would be on every motor vehicle in a household. It was not a vote to enact a new tax. Robertson was pointing out the effect that it would have on an average citizen if such a tax were enacted by the council. The percentage under discussion at the time was about 1.5%. Dennis said that on his $15,000 used car that would be about $225. That is some real money. Ekberg came up with a similar calculation. Since this was a letter that only came to the council's attention that same evening, the only reason that the council voted to endorse the idea was that it would provide the option for such a tax. In fact, several council members suggested that they would want any such taxes to be utilized only for sidewalks and residential streets in Tukwila.

Pam is quite right that cities are looking for "tools in the toolbox." The city considered a B&O tax but opted instead for a "head tax" which has to do with a certain amount of money per employee. Note: Perhaps wrongly, I don't think of a B&O tax as a regressive tax simply because that is a term most commonly used in relation to a flat tax (like a sales tax) applied to all individuals with regressive impacts on those with less disposable income. Pam, I would like to hear more about the idea of regressive taxes with respect to the business community if you have time.

It is a tough situation for governing entities. Citizens of Washington are limiting the taxing ability of governments in such a manner that keeping up with normal inflation and cost of living agreements becomes almost impossible. If that model continues, either services and service levels will have to drop or additional pay-more-as-you-go paradigms will appear. Talk about regressivity.

My solution: eliminate the 2/3 majority requirement to increase taxes at the state level, implement a state income similar to over 40 states in the United States and drop the 1% cumulative max on property tax increases so that elected representatives have the authority to "flex" the tax rates as needed to provide the services expected by constituents.

Comment by Pam Carter on February 7, 2013 at 11:58pm

Chuck, I'd agree with most of your suggestions. The regressive part of the B&O is that it is applied to gross receipts rather than net. So business A and business B might have the same gross, but B's expenses are five times that of A but they still pay the same amount. Businesses are so opposed to the B&O that it has not been tweaked to make it more rational.

Comment by Chuck Parrish on February 8, 2013 at 12:06am

Makes sense.

Comment by Ellen Gengler on February 8, 2013 at 6:56am

I appreciate learning more about the discussion. I did understand that the city was voting for the ability to increase taxes. I believe there are other options besides increase in taxes. One thing that needs to be looked at is what the city is spending money on and if those expenditures truly reflect services the citizens want. And also, what can the city really afford? A careful look at our budget and expenditures is necessary. I've recently requested that the city post it's checkbook online (similar to Bell, California) so that citizens can see where $ are going to. We need more citizens to be informed and feel that they can help make a difference. We've got elections coming up in November, I'm curious to see if we'll have any contested positions.

Comment by Chuck Parrish on February 8, 2013 at 8:33am

I suspect that some philosophical differences may frame discussions of this nature. That said, I offer the following.
As an observer, especially since the recession, I can say that the administration and the council have been and are constantly looking at how costs can be reduced and whether or not programs are efficacious. Government never is 100% effective in this regard and so it is a good idea to be pay continuous attention. However, I support new taxes if the context is right. We know that federal individual income taxes lowered in 2001 and 2003 with the intention of sunsets will no longer be sunseted. That is off the table. The rates now are as low as they have been in four to five decades. We know about the limitations at the state level. So, IMHO, it would be challenging at best for one to make the case that taxes are too high. For the reasons that I have shared in this and the previous post, it makes sense to me that more time and attention should be given to how revenues can be increased and growth / development encouraged.

Comment by Ellen Gengler on February 8, 2013 at 9:08am

The more voices in the conversation equal more POV (points of view) and more ideas. IMO it's insane to expect different results without moving away from the status quo. There are always opportunities to increase efficiency and find alternative methods. Change is inevitable. It would be a shame to wait to do this until forced to.

Comment by Marie Parrish on February 8, 2013 at 10:29am

I was at the meeting on Monday night. The council voted to support more options for local (city and county) governments to raise revenue for transportation related items. Options for transportation related items, that's all - not telling the legislature to raise anyone's taxes. Most citizens have no idea how their vote on Mr. Eyman's infamous car tabs initiative and the subsequent legislative actions in Olympia have devastated local governments all over the state - especially small ones. Then Mr. Eyman piled on more restrictions on revenue raising with further initiatives (which people vote for because most people think lower taxes are always a good thing, never considering what those taxes buy them). These restrictions along with the economy of the last 5 plus years have squeezed some cities in the state to the point where they struggle to provide even basic police and fire services let alone think about maintaining infrastructure.

While this was only a vote to support options, this was not an easy vote for the council and discussion did center around impact on citizens. While the council is concerned about the impact of taxes, they realize the necessity for local governments to have avenues to raise revenue to provide needed services and things like roads, sidewalks, parks and human services that make a city a great place to live.

I agree more citizens do need to be involved and informed. I would love to see the council chambers packed every Monday. I hope many who can't attend will listen to the audio. However, I know everyone's busy with family and work.

Comment by Barbara Bader on February 8, 2013 at 11:31am

You have all raised valid points. To Chuck, this time I have to disagree with you on eliminating the 2/3 requirement to raise taxes. I think it would give Olympia a green light to raise taxes, and no incentive to look at alternatives. Implement state income tax, I don't know. That has been proposed and voted down many times and no one has ever given an example of how that would actually effect people. For Pam Carters statement, I agree that you can't have a different effect on different people. Having said that, take a look at Boeing, Amazon, Microsoft and other large companies and the effect they have on the economy. Yes, we are very fortunate to have these large employers but isn't it only fair that they pay what they should and not manipulate the tax code to their advantage. To Marie, I did not vote for any of Tim Eyman's tax initiatives, however, you may recall the reason people were so angry and voted with him was because a vechicle was taxed on the price of the car when new or the person bought it, not on the current value. That was not fair and the people recognized it as such. Also, what is going on with all the lease signes I see at South Center? Is it the recession, or is it something else.

Comment by Pam Carter on February 8, 2013 at 11:45am

Marie said it very well. A quick look at the City's property tax rate over the years show how it has dropped. In 1996 the tax rate was $3.21 per $1,000 assessed valuation. The current budget shows the rate has dropped to $2.95 -- that's a 26 cent drop. By my calculations, if the City property tax was at it's former rate, the City would have an additional $ 1 million dollars.

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