Although we vociferously opposed the City Council's proposal to repeal the commuter tax (aka head tax), we did not prevail, and the Council voted 8-1 to repeal the tax. Below is Richard Conlin's response to our most recent lobbying email about the topic.

Thank you for your message about the repeal of Seattle’s Employee Hours Tax (‘Head Tax’).  The Council approved this repeal by a vote of 8 to 1 on Monday, November 23, Councilmember McIver voting no.  The tax was repealed for four reasons:

1.      While it was originally designed to complement the parking tax in raising funds for major transportation projects under the Bridging the Gap program, the parking tax is generating more income than had been anticipated, and the planned Bridging the Gap investments are fully funded using the parking tax alone.

2.      Seattle is the only jurisdiction in Washington that requires businesses to calculate three different taxes (gross receipts, square footage, and employee hours).  The first two generate more than 95% of the business tax revenue.

3.      During the Council’s deliberations on economic recovery, repeal of this tax was singled out by the business community as a high priority.  They consider having a tax on employees the wrong signal to send when we are hoping to put people back to work.

4.      Numerous organizations also noted that the paperwork is painful for very modest results, especially for organizations that have many part-time employees and many employees who use alternative modes of transportation.  The President of Antioch University Seattle, for example,  wrote in support of repeal, noting that it took about two weeks of employee time to survey staff and calculate the tax exemptions – for a tax payment of $866.

The repeal of the head tax will not have any impact on planned pedestrian and bicycle improvements.  These funds are not dedicated to bicycle and pedestrian improvements, and in fact this tax was intended primarily to support larger projects, although a small portion has been used for ped/bike projects.  While it could be used for more such projects in the future, there is no guarantee of that, and it was neither in the design or the arguments for the tax.

No pedestrian or bicycle improvements that are planned for the period 2009 to 2014 will be affected by the repeal of the tax, and I would not support it if it would put those projects in jeopardy.
Projects which could be funded from the head tax are fully funded by the parking tax revenue, which is bringing in more revenue than projected, and more than enough to make up for the loss of the head tax revenue.

I sponsored the amendment that exempted employees who used other than SOV's.  It was cosmetic -- to provide a defensible rationalization rather than any expectation that it would impact modes of travel.  This was not part of the original legislation, and there is no evidence that it has any impact -- it is not a large enough amount to make it worthwhile for the employer to subsidize alternative modes, and does not go directly to the employee to encourage them to use alternative modes.

There are numerous options for funding future ped/bike improvements, and this is a small and not ideal possible source of funds.  Something more directly connected to transportation would be much better.  Councilmembers are looking for the appropriate funding mechanism, and we will work with the new administration to design one that will provide the appropriate funding.

Council President Richard Conlin

Seattle City Hall

600 Fourth Avenue, Floor 2

PO Box 34025

Seattle, WA 98124-4025

(206) 684-8805

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Mike McGinn, in response to the City Council's proposed ordinance formally adopting the tunnel and committing Seattle financial resources to the project, issued the following statement:

SEATTLE -- Mayoral candidate Mike McGinn today urged the Seattle City Council to change cost overrun provisions before committing to the tunnel mega-project.

This morning, the City Council started expedited consideration of a memorandum of agreement  to try and lock in the deep-bore tunnel plan before November's general election.

"State law puts Seattle property owners on the hook for 100% of tunnel cost overruns," said McGinn. "These overruns could easily run into the hundreds of millions or billions of dollars."

"The cost overrun law makes the tunnel the biggest financial risk the City has ever taken," said McGinn. "If there are major overruns, Seattle taxpayers could be financially drained for years, if not decades."

"Seattle is the only city in Washington state that has ever been held responsible for cost overruns on a state highway project," said McGinn. "It's ridiculous for the state to say that Seattle taxpayers should have to pay all of the cost overruns even though Seattle has virtually no say over the project.  It's even worse that the City Council is going along with it."

"The State has made it clear that they will pay no more than $2.8 billion," said McGinn. "Seattle and King County taxpayers are already on the hook for an additional $1.4 billion and that could rise dramatically if there are cost overruns."

"At the same time we're dealing with massive service cuts caused by large city, county and state deficits, we're rushing to build the most expensive viaduct alternative put forward," said McGinn.  "We can barely afford a Saturn and we're trying to buy a Cadillac...without even knowing what it will actually cost."

"And for those who promise there will be no cost overruns or delays, I'd suggest they check out Brightwater," said McGinn. "That tunneling project is already six months and a billion dollars over budget, with broken-down tunneling machines submerged in water deep underground."