Seattle has enjoyed plenty of gravy from its economic boom, but what happens when the fireworks end? The sustainability of the city’s fast-growing budget should be an important campaign issue.
One of the most provocative eye-openers for local policy discussions arrived quietly late last month.
It came in a report from the historic and respectable Municipal League, whose roots go back to 1910 and took inspiration from the Progressive movement. The first such “good government” league was founded by Theodore Roosevelt.
In Seattle and King County, the Municipal League has advocated for government transparency, fought graft and supported environmental cleanup. Its biggest loss, now lamented every day in traffic, was voter rejection of the 1970 Forward Thrust ballot initiative — a subway system that would have been heavily funded by the federal government.
Now the organization focuses on the city’s general fund, which finances everything from utilities and street maintenance to public safety, human services and the arts.
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Instead of proposing additional programs and services, the League poses a little-asked question: How sustainable is the city’s spending?
According to the League’s July report, Seattle’s government spending has grown 250 percent over the past half century, adjusted for inflation. It’s not only that the city’s population has grown: “More has come to be expected of government today, especially services that were once provided by churches and charitable organizations, the private sector, or not provided at all.”
These expectations have been lavishly funded, thanks to Seattle’s economic boom and rising levels of sales and property taxes, business taxes and voter-approved special levies, as well as federal money.
The Municipal League argues that none can be taken for granted. Some reasons for concern:
Federal funding for cities is especially at risk from the Trump administration.
Voters may tire of endless requests for more levies (see last Tuesday’s defeat of King County Prop. 1).
The region’s robust and diverse economy is recession-resistant, but not recession-proof. This is particularly true if a downturn or even a “growth recession” — going from 60 miles an hour to 25 — hit Amazon and tech.
In such a “perfect storm” of revenue sources being hit, the report says, “our policymakers would face an extraordinary challenge in governance and priority-setting.”
That’s a mild way of putting it.
One of the big misconceptions out there is that Seattle’s growth doesn’t pay for itself. Quite the contrary has been true in recent years.
The city has especially had a windfall from the construction boom. For the second year in a row, it has more cranes on the skyline than anywhere in the United States. As I wrote last week, arguing that additional impact fees would be counterproductive, construction is responsible for filling city coffers with hundreds of millions of dollars annually.
Growth, including development, has allowed the city to increase its budget to $5.71 billion in 2017, up from $4.13 billion in 2010.
Instead of more taxes on development, city leaders should be mindful of the dependence on a revenue source that’s sure to slow down, not to mention the risks to other funding, especially federal.
As the report puts it, “How would we manage drastic revenue declines? How does Seattle balance its progressive values and the looming reality of limited resources? Are there limits to what government can do to solve social problems? Do we need new revenues? What innovative practices can be put in place to prepare for the possible shortfall and yet address the City’s needs?”
It quotes former city budget director Woody Wilkinson: “When there is no elasticity in the revenue base, the funding will run out. Then you are down to closing fire stations to keep senior citizen centers open.”
Seattle is not the next Detroit. Far from it, this is one of the most prosperous cities in America, at the commanding heights of the tech economy and in a region with a highly dynamic economy.
Yet these good times risk lulling us into complacency. It’s a complex issue and conventional lenses for addressing it have their limitations.
For example, the “conservative” vs. “liberal” dichotomy is of limited value in understanding the situation.
Some very progressive cities, such as New York City, Boston and San Francisco, enjoy vibrant economies and healthy increases in city revenue. San Francisco’s latest budget is more than $10 billion.
Meanwhile, the most conservative large city, according to the Pew Research Center, is Mesa, Arizona (population 485,000). Yet it has a relatively small economy on its own, faces a city budget crisis, and depends heavily on jobs elsewhere in the Phoenix metro area.
How about New York City’s famous budget crisis of the 1970s? One superficial comparison is tempting for Seattle critics: Gotham made itself into something close to a social-democratic city, including free tuition in the city’s university system.
But, not quite. New York’s “Drop Dead” mess had much more complex roots, including flight to the suburbs by the middle and upper classes, budget hanky-panky, overreaching by municipal unions and dying old industries in the city, as well as the overall economic troubles of the 1970s.
And don’t forget, New York righted itself and came back stronger than ever. It offers cautionary tales, but imperfect ones.
Instead, I’d say the Municipal League has the questions exactly right. And every candidate in the coming election should have thoughtful answers.