Everything Is Political … in South Seattle: Bills, Bills, Bills

What's Going On With the Budget?

There's a lot worth paying attention to in Olympia this week, what with the legislative session coming to a close. However, the biggest battle has been over the state budget. Ours is projected to be about $16 billion out of balance, and as a state we are required to find those funds.

Democratic state legislators want to close that gap with increased tax revenue, while newly elected Democratic Gov. Bob Ferguson would prefer austerity. Democratic legislators recently passed tax bills that would raise around $12 billion, while Ferguson has already proposed $4 billion in cuts. He also soundly rejected the idea of $12 billion in new taxes, issuing a statement on April 17 criticizing the tax bills.

"At a time of great economic uncertainty and assaults by the Trump administration on core state services for working families, raising $12 billion in taxes is unsustainable, too risky and fails to adequately prepare Washington state for the crisis that looms ahead," he wrote.

Ferguson's biggest bone to pick with his fellow Democrats was a proposed wealth tax, which would apply to individuals with assets over $50 million. In his statement, he praised legislators for abandoning the proposal. But while he made it clear he wasn't in favor of a wealth tax, he didn't give much guidance on what kinds of taxes he would be into. His only guidance for lawmakers looking to balance the budget was to use a mix of spending reductions and "progressive revenue." 

Progressive revenue, hmm. Like, say, a wealth tax?

Anyway, if Ferguson and his fellow Democrats can't figure it out this week, they're stuck in Olympia for a special session.

They're Still Just Bills

First, a caveat: Over 150 bills have been put in front of Ferguson this session, and plenty more are still in play. Some have been signed by Ferguson, some are awaiting last-minute moving and shaking in executive sessions, some are necessary to implement the budget, and some are dead. The following is intended to be a lightly curated overview, not a comprehensive legislative digest. Maybe we'll tackle that once the ink is dried on everything, but for now it's just the highlights.

They Hope and Pray That They Will

Okay, for starters, all of the Democrats' tax bills have passed both chambers, but will of course need Ferguson's signature. Given his recent statements, that's by no means guaranteed.

Senate Bill (SB) 5814 sounds like the most boring, but it's the most controversial. While "modifying the application and administration of certain excise taxes" doesn't exactly get the blood pumping, the modifications the bill proposes are actually quite sweeping. Namely, it would begin applying state sales tax to a whole array of services that were previously not taxed, bringing our tax code in line with the country's switch to a service economy. It would also require a one-time prepayment of tax for businesses grossing over $3 million a year and amend taxes on certain nicotine products.

Alongside SB 5814 are two more tax increases: SB 5813, which would bump up the existing capital gains tax, and SB 5794, which would eliminate some tax exemptions, including on operators of self-storage units.

Also awaiting a signature is SB 5786, which would raise liquor licensing fees by 50%. Backers of the bill argue it brings fee structures in line with inflation and helps raise desperately needed money to fill that budget hole. So far, the media portrayal of the bill has been that it will increase costs for consumers. To put that in perspective, the most expensive license type is for a sports arena at $2,500. Large bars are somewhere around $2,000, and a neighborhood restaurant selling only beer and wine pays a mere $400. Yes, costs are killing restaurants right now, but these are all one-time fees. If you're mad that most craft beer is in the vicinity of $11 right now, you should be, but you shouldn't be mad about the minimum wage or a little licensing fee increase. It's the housing crisis. It's always been the housing crisis.

Speaking of, House Bill (HB) 1217, which would cap rent increases, is looking likely to pass. As we reported last week, it was sufficiently watered down to satisfy the landlords who run our state Legislature, so surely it'll satisfy the anti-tax, corporate Dem in the governor's mansion. Some nifty new math from Real Change's Guy Oron shows just how watered down it actually is — the latest version of the bill would do effectively nothing to limit rent increases.

HB 1491, which has also passed both chambers, also has a lot to do with easing the housing crisis. It would mandate zoning that promotes what's called "transit-oriented development" (TOD), which basically means building more dense housing around light rail stations and other major transit hubs. Dense housing in places where people don't have to own cars is a really, really good thing. For cities, for the humans that live in them, and for the environment, among other things.

However, as brought to my attention by former Seattle City Council policy analyst Toby Thaler, there is one catch: This bill carves out an exemption that allows Seattle to continue its "pay the poors away" policy, where developers can pay in-lieu fees to an affordable housing fund instead of including affordable housing in their projects. The in-lieu fee is a whole big debate of its own, but I see it as leading to less affordable housing in desirable areas and more displacement.

Lastly, some good news on the booze. HB 1515 would bring our liquor laws more in line with New Orleans' approach, which is to say the sane, European standard of drinking in public being allowed as long as you're not out of control. We're still a state with blue laws, so we're not proposing to let people wander around all of downtown with a go-cup just yet, but the law would basically allow big cooperative beer gardens where patrons of multiple bars and restaurants could mingle in one outdoor space. It's more or less designed around all the off-site events associated with the upcoming World Cup, but whatever — it's progress.

He Signed You, Bill, Now You're a Law

HB 1858 is another seemingly boring but actually very important bill. Rep. Shaun Scott's bill, which the governor signed on April 21, would close a loophole in the collection of document recording fees. Certain documents that must be recorded by county auditors carry fees, and this bill would nix exemptions for assignments or substitutions of previously recorded deeds of trust. I'm not exactly an expert on real estate law, but more or less it means that whenever lenders transfer loans, even if document recording fees were already paid on the original deed of trust, they gotta pay again — $183 to affordable housing and homelessness funding and $100 to the state's Covenant Homeownership program, which helps families affected by redlining buy homes. As Scott himself put it, "Taxing the rich works and we should do more of it."

Besides that, there were, as usual, a lot of bills making minor tweaks to existing policy — clarifying definitions, closing loopholes, and such. Some of the non-tweak bills that caught my eye were HB 1141, which provides a framework for agricultural workers in the cannabis industry to organize; HB 1321, which would require either the governor or the president's authorization for any out-of-state military force to operate in our state; HB 1075, which eases restrictions on private development of affordable housing that is financed via a public housing authority; and HB 1201, a bill requiring municipalities to identify accommodations allowing pets in their emergency management plans. That last one is definitely important, as a lot of emergency shelters for homeless people don't allow pets or don't have a clear policy on them.

A Bit of City Council Housekeeping

While the Seattle City Council did nothing much besides confirm appointments and pay bills this week, they did tackle a few interesting topics. The Land Use Committee discussed bills that would broaden the number and type of Accessory Dwelling Units (ADU) and Detached Accessory Dwelling Units (DADU) that would be allowed. Easing restrictions on these types of units would not only have at least a "modest" impact on housing production, it would also bring us into alignment with two new state housing laws (HB 1110 and HB 1337) by a deadline of June 2025. Backyard cottages certainly won't save us from the affordability apocalypse we're hurtling toward, but, hey, anything helps.

Also in the "build, baby, build" category, the council passed an ordinance (CB 120948) allowing already approved building projects to apply for extensions to their building permits despite those permits having outlived updates to building codes. Mayor Bruce Harrell's office has identified 15 projects, most of them downtown, that have been stalled due to various financial woes. Allowing them to keep their current permits a bit longer would avoid costly redesigns and potentially push them across the finish line. Or at least the starting line.

"These projects represent approximately $13.4 million of sales tax revenue to the City and an estimated maximum of $75 million in mandatory housing affordability (MHA) fees; they could also produce additional but undetermined incentive zone payments as well as real estate excise tax and business and occupation tax revenue," wrote council policy staff in the bill's summary and fiscal note.

This bill is clearly a bailout of sorts for developers and, as noted above, MHA "in-lieu" fees are far from perfect. However, at the risk of sounding like a broken record, anything helps.

Lastly, the council voted to renew the city's Democracy Voucher program, which would cost $45 million over 10 years. Final approval of the program's extension rests with us voters, and we'll get our say in the August election.