Here are the big budget issues the Council is debating

On By In budget

This morning the City Council hit an important milestone in its deliberations over next year’s budget: it completed discussion of all the issues that Council members and their staff had raised for discussion with the Mayor’s proposed budget. Here’s a summary of the more significant matters currently in play.

For context: the Mayor’s budget allocated all the available revenues, as is typical for a proposed budget. Unless the City Council wants to propose new revenue sources (and it largely isn’t doing that this year), then to pay for anything additional it needs to either go looking behind the proverbial seat cushions for spare change, or take funding away from something that the Mayor proposed. Council members and their staff do, in fact, look for “spare change” that was overlooked, and every year they find a few crumbs — not enough to fund major programs, but enough to pull a couple of pet projects off their wish lists and into the budget.

There are two big new revenue sources in the Mayor’s budget: the tax on Uber/Lyft rides, and the proceeds from the sale of the Mercer Megablock. The Uber/Lyft tax is expected to generate about $52 million through 2025; the Mercer Megablock will generate a one-time windfall of about $72 million after covering existing commitments (paying back the highways funds used to buy the property, covering interfund loans, paying fees and expenses associated with the sale). Again, the Mayor proposed uses for every cent of it, but the Council controls the purse strings and can rewrite the appropriations of those funds.

At this stage, Council members are free to generate lists of things they would like to fund without specifying where the money will come from to pay for them. And they have; there are dozens of such items in the list of “issues.” If the Council members can convince enough of their colleagues to support their issue as a top priority, Budget chair Sally Bagshaw might build it into her “initial balancing package”; if not, then the Council members will get one more shot in a few weeks, but will be required at that time to specify what other expense will get cut in return.

According to Bagshaw, there is already over $30 million of additional spending requests competing for limited resources. The vast majority won’t make the cut. But here are the issues that are top-of-mind for the Council and may get traction:

Public safety and criminal justice:
  • LEAD. LEAD is a diversion program for low-level offenders, focused on small drug offenses, prostitution, and similar low-impact crimes. It employs case managers to connect individuals to services and programs and ensure that they et the help they need to avoid re-offending. The individuals are referred to LEAD by police officers as an alternative to arresting them, or by community members (such as neighborhood business owners) when they come across someone who they think could benefit from the program.  Over the past few years it has seen strong results. Originally focused in the downtown core, last year it was expanded to North Seattle, and this year it is expanding to South Seattle. But it has become overwhelmed by its success; it is now managing 700 clients with a “waiting list” of another 300. It is funded for 19 case managers, and while the program was designed with a the goal of 25-person caseloads, at the moment the case managers have over 40 clients each. At the current rate of referrals, they expect to be at 1400 clients by the end of 2020.  But they need substantially more case managers than they are currently budgeted for, and have a $4.7 million gap in the funding they need to get there. The Council members are unanimous in their support for LEAD and filling that funding gap; this is perhaps the top priority on their budget wish-list. However, they haven’t identified where the money will come from.
  • Pilot programs to address “high barrier” individuals. In the aftermath of the System Failure report on “prolific offenders,” Mayor Durkan created a task force to make recommendations on how to address the ongoing situation. Their final report indeed made several recommendations, and the Mayor’s budget incorporates four of them: a new enhanced shelter directed at this population, case conferencing,  a rapid re-entry connector, and high-barrier probation. But the Council is balking at the latter three and the $532,000 annual price tag, given that the Mayor’s office has provided them with few details on how the programs would work. Some Council members, including Gonzalez and Sawant, have particular reservations about the high-barrier probation program, as they believe that probation has been shown to cause more harm than good. The Council has several potential options: cut one or more of the programs, restrict the funds until the Mayor’s office can provide more details on the intended implementation of the programs, or just let it sail through unchanged. Don’t expect the latter option to win the day, despite a letter from over a hundred local business owners expressing their support for Durkan’s proposals.
  • SPD staff savings, reinvested. Because it has been missing its hiring and retention targets, SPD will enter 2020 needing $6.2 million less for compensation than originally projected. The Mayor’s budget proposes to reinvest that savings in three SPD-focused programs: a collection of new hiring and retention initiatives; expanding the Community Service Officer (CSO) program from 12 to 18 officers; and continuing on the “emphasis patrols” that SPD added last summer to address crime hotspots.  The CSO program, recently reintroduced after a long hiatus, has many fans on the Council and should stay in the budget (though they are frustrated that the “Seattle Process” has slowed down the rollout of the program until the end of this year). However, Council member Sawant has proposed cutting the hiring and retention programs, the emphasis patrols, and also the hiring incentive bonus program created earlier this year.  it’s unlikely that the Council will agree to cutting the hiring and retention programs or the hiring bonus; they are already feeling the heat for the perception among some quarters that they don’t support the police department. They may, however, attach a proviso to the new hiring and retention programs until they can see the implementation plan. The emphasis patrol funding is trickier, as the Council is sensitive to perceptions of over-policing or biased policing, and emphasis patrols, which are a common practice in police departments, are loosely connected to the “broken windows” theory of policing that has come under scrutiny and found to be lacking.
  • Probation. Last year the Council had a hard conversation about the probation system in Seattle Municipal Court when a number of community organizations pushed hard for the Council to gut it altogether and invest in restorative justice programs instead. Sawant put forth a proposal along those lines that was not adopted, though many Council members wanted to see the city develop a plan to move away from probation toward harm-reduction alternatives. This year’s budget discussion covers the spectrum: Sawant is once again pushing to cut $1.5 million of funding for probation, while the Mayor’s budget, as mentioned above, attempts to create a new, special “high barrier” probation system on top of the existing one. Look for more discussion, involving a range of stakeholders.
Homelessness:
  • The Navigation Team. As with probation, the options on the table for the Navigation Team are wide ranging, and the Council is divided. Sawant has proposed cutting the entire team and redirecting its budget toward homeless services. Juarez, on the other hand, has proposed adding two additional staff to the team to focus on the north part of the city, which continues to be a “services desert.” Herbold doesn’t appear to be motivated to either add to or cut the team, but wants to hold the Mayor’s feet to the fire by continuing the oversight regime she imposed this year: the Navigation Team’s budget is released in quarterly tranches after a report is submitted to the Council detailing the team’s activities and results. At the heart of the matter is the conflict that comes out of the team’s dual role: outreach to homeless people to offer services, and cleaning up unsanctioned encampments. With the current lack of available shelter options, the Navigation Team’s emphasis has been on cleaning “obstruction” and hazardous encampments that are exempt from the requirement to provide 72-hour notice and meaningful offers of shelter (though sometimes they do anyway). That feeds suspicions that the Navigation Team is purposely focusing on obstruction cleanups in order to avoid the notice and shelter requirements; there is no proof that’s true, but the circumstances do look somewhat fishy and it leads to accusations (particularly by Sawant) that the Navigation Team is simply “sweeping” homeless people, pushing them from one place to another. However, the other eight Council members, while worried that the definition of “obstruction” might be too loose, understand the need to have a team cleaning up obstruction and hazardous camps as humanely as possible, and seem to be looking for a middle ground the provides better oversight and transparency while keeping the team in place. Minimally, expect a continuation of last year’s proviso requiring quarterly reports; and don’t be surprised if the Council tightens up some of the cleanup rules as well and redefines “obstruction.”
  • Tiny home villages. The permits for two of the city’s existing “tiny home” villages, Georgetown and Northlake, will expire in March; each has been in place for at least two years. The Mayor’s budget includes $1.3 million to relocate those two camps and their residents, including setup at the new site (or expansion of other existing villages) and cleanup of the existing site. Some of the Council members expressed surprise that the dollar figure is that high. Sawant, for her part, has offered a three-step response: a proposal to leave the two camps in place (arguing that the expiring permits are a policy decision that the Council can change); a bill to expand the number of allowed tiny-home villages to 40 (that is currently in SEPA-appeal purgatory); and a proposal to allocate $10 million to open up 20 new tiny-home villages. Council member Mosqueda has a separate proposal to allocate $900,000 to open one new tiny-home village. One of the reasons that tiny-home villages are getting so much attention this year is that they have risen to the top of the performance rankings of the city’s various shelter options, this year outperforming enhanced shelters (including the Navigation Center) for exits to permanent housing. The Council naturally wants to place its bet on the winning horse. Of course, they don’t have the money to do anything very ambitious. Expect a lot of talk, but in the end, probably not a lot of action.
  • Startup funding for the regional governance structure. Council member Bagshaw recently admitted that since Mayor Durkan and King County Executive Constantine announced their negotiated plan to establish a regional governance structure for the homelessness response, the effort has bogged down in the City Council and the King County Council. Both have held hearings, and both question several aspects of the plan. Bagshaw now says that the terms are being re-negotiated between the city and county, along with representatives of smaller towns and cities in the county. The reality is that the stated goal to launch the new organization on January 1, 2020, is now unrealistic. That means that on top of concerns the Council may have about the $2 million the city is being asked to invest in startup costs, the 2020 budget amount may be pro-rated to some extent depending upon the actual launch date.
  • Mobile pit stops. Since the City Auditor reported earlier this year that the city only has six public restrooms available overnight, the Council has been trying to push for more restroom and hygiene facilities to be made available to the city’ homeless population. Doing so is a win all-around: it provides a crucial service to homeless individuals, and it reduces the amount of human waste in public places around the city. The latest solution is one borrowed from San Francisco: “Mobile pit stops,” trailers with restrooms that can be towed to various points around the city as necessary. Council member Herbold has proposed $2 million to launch mobile pit stops in Seatle; Sawant made a similar proposal with a  $1.5 million price tag. Herbold and Bagshaw also proposed $244,000 to expand access to showers at community centers.
  • Shelters and services for specific communities. Council member Pacheco proposed $382,000 for an overnight-only safe parking lot. Council member Sawant proposed $1.2 million for a replacement youth shelter for Peace for the Streets by Kids from the Streets, which recently lost its lease on its existing site. Council members Juarez and Gonzalez each made proposals to offer homeless services to Native American and Alaskan Native populations; Juarez’s is for $1.2 million, and Gonzalez’s is for $375,000.
Transportation:
  • The Center City Connector Streetcar. The Mayor’s budget uses proceeds from the tax on Uber and Lyft rides to fill the funding gap on the CCC Streetcar. But Herbold continues to be critical of the project, and has proposed redirecting those funds toward other transit uses, such as the Sound Transit light rail extensions to West Seattle and Ballard.
  • Earmarks for bike and pedestrian improvements. The Mayor’s budget only partially funds a number of projects that the Council asked her to prioritize. The Council will be looking to fully fund those projects, as well as to earmark funds for particular ones. A high priority for several Council members is to complete a safe protected bike route from South Seattle to downtown (one doesn’t exist now). Beyond that, several of the district-based Council members have proposed set-asides for specific bike and sidewalk projects in their district.
  • Commercial parking tax shortfall.  The actual commercial parking tax revenues this year are below projections, continuing a multi-year trend. The Mayor’s budget moves some funds over to cover the shortfall in spending on committed transportation projects, but no one in city government can explain exactly why the commercial parking tax revenue continues to miss expectations — and that makes it difficult to revise the projections.
  • Initiative 976. Right now, one of City Hall’s greatest fears is that I-976 will pass; if it does, it will blow a hole in the city’s transportation budget. It might turn out to be the final death blow for the Center City Streetcar, as it will make Herbold’s proposal to redirect the funds to other transportation projects an easy and quick fix (at least in the short term, and at least to part of the shortfall). If I-976 passes, then next month’s budget negotiations suddenly become a panicked rewriting effort. Let’s hope that doesn’t come to pass.
Affordable housing:
  • How to invest.  Between the Mercer Megablock windfall, REET II dollars, and the “local option” sales tax proceeds, the city has a fair amount of new money to spend on affordable housing next year, but it has some hard choices on exactly how to spend it. The Mayor has proposed spending a chunk of the Mercer Megablock proceeds strategically on land acquisition for future siting of affordable housing projects, as that has become an impediment for a number of third-party organizations to fundraise for projects; the city can buy the property and make it available at no or low cost. On the other hand, Council member Mosqueda is pushing for simply funding more shovel-ready projects now, as the Office of Housing has more ready to go than they currently have funding to support. There are no wrong answers here, and it will be interesting to see where the Council lands.
  • On the topic of REET II: since the recent change in state law that allows for REET II proceeds to be spent on affordable housing expires in 2024, Council member Mosqueda has proposed making hay while the sun shines and directing $3 million per year more REET II proceeds toward affordable housing for the next few years. However, that will mean taking $3 million away from other infrastructure projects. Also, REET is notoriously volatile, as it depends on the volume of real estate transactions; it’s easy to redirect some in one year, but it’s dicey to plan on it for future years. That means you could use it for direct investment in projects, but not for debt service on bonds that the city issues.
  •  ADU loan program. The Mayor also proposed using $6 million of Mercer Megablock proceeds to establish a loan program for low-income homeowners to build an ADU. However, Council members expressed skepticism as to whether that was an equitable use of the funds, and even if it was, whether $6 million was too much to commit to a new, untested program. Look for the Council, led by Gonzalez, to “rightsize” the effort and redirect some of the money elsewhere.
Other random budget items that attracted attention:
  • P patches. The Mayor’s budget devotes $5.5 million of Sweetened Beverage Tax funds to preserving the city’s “P patch” gardens. The SBT Community Advisory Board has recommended that the City Council reject this use of SBT funds.
  • Fire Station 31. The budget has $43 million in capital funds to replace Fire Station 31. That station has had an unusually high number of incidents of firefighters contracting cancer, with no explanation. The city plans to raze the old station and build a new one.
  • $1.17 million for an additional firefighter recruit class. SFD currently has more than its usual amount of openings, and has a high number of firefighters reaching retirement age. Having an extra class of recruits net year will give them an opportunity to catch up in their hiring. SFD doesn’t suffer form the same kind of hiring and retention issues that SPD has seen.
  • The childcare center in City Hall is a no-go – or maybe not. Last year Council member Mosqueda requested that the city investigate opening up a childcare center in City Hall. The report from that investigation is in, and it looks financially infeasible to place one in either City Hall or Seattle Municipal Tower; it will be expensive to build out and to relocate the existing occupants of the space, and the annual cost for the childcare center’s customers will be prohibitively expensive — at the top end or higher of the cost for childcare in other centers downtown. The Mayor’s budget proposes instead making a greater investment in programs to make childcare affordable for low-income families. Mosqueda is undeterred, however, and has proposed $4.36 million to build out a 4-classroom, 58-child, childcare center (the study concluded that a center with less than 6 classrooms was unworkable). However, Council member Bagshaw has proposed a small consolation prize: that “quiet rooms” be set aside in each building for parents who bring their small children to work as encouraged under the recently passed “Infants at Work” resolution.
  • The TNC tax.  The Mayor’s proposal for the tax on Uber and Lyft rides is a flat tax per ride. The Council members are interested to explore other variations, such as varying the tax by length or duration of trip, or by geographic location so as to discourage trips at peak times or in the most congested areas. However, Uber and Lyft continue to  resist making the data available to cities that would be required to model those kinds of tax structures, so it’s unclear whether the city can even estimate how other models might affect revenues.

In case you’re interested in reading more, here are the Council staff’s memos on the different areas of the budget:

Now that the initial round of issue discussions are complete, this week Council members must submit their “Form B” budget change requests. Those will be discussed in Budget Committee hearings Tuesday through Friday next week, after which Bagshaw will assemble and deliver her initial “balancing package” budget on November 6th.

 

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