Mayor Nickels, Council President Conlin, and I announced today that we will seek repeal of the City's Employee Hours Tax, the so-called Head Tax. You can read the news release here: Download EHT Repeal Release 6-23-09
This tax on job creation was adopted by the Council in 2006 and first collected in 2007. It was adopted during good economic times, but has been complicated to understand and difficult to collect. During my campaign for the Council in 2007 I promised to work for repeal of this tax.
We worked closely with the Mayor over the past several months to identify obstacles to economic growth and we agree that repeal of this tax will encourage job growth. The tax has generated less revenue than anticipated, but more importantly it has negative consequences because it taxes the creation of new jobs. Repeal of this tax will signal that Seattle wants a strong local economy and will take proactive steps to create a job-growth environment where our small and large businesses can flourish.
There are other steps we can take as well.
Since I started this job in January, 2008, I have been dismayed at how little information Council members have about the specific details of the City's budget. The first budget I voted to adopt in the fall of 2008 for 2009 presented me with a series of add-on or deletion choices. My decisions, by and large, were all about the margins, exceptions to the existing core operating budget. It was quite a change from my experience in the private sector and our top-to-bottom or zero-based budgeting approach, so I started talking about a different approach.
I'm very pleased to report that Councilmember Jean Godden, the Council's budget and finance chair, has selected two City departments for more in-depth review as part of this year's budget process: Parks and Recreation and the Department of Human Services. These two departments will undergo a much more thorough budget and program evaluation. The idea is to rotate other departments through this process on a going forward basis; each City department could expect such a review every three to five years. This is a huge step in the right direction and will bring more accountability, transparency, and hopefully more effectiveness in City services.
Finally, there is one more step I would like to encourage my colleagues to take this fall when we act on the 2010 budget. Each year for as long as City Hall staffers can remember, the Council has adopted an increase in the City's portion of the property tax, limited by state law to no more than 1%. I believe we should fore go this increase for 2010 as a further signal that we recognize the significant impact of the current economic recession on our city.
The property tax brings in about $200 million each year, so forgoing the 1% increase will "cost" us approximately $2 million, not a lot with an annual operating budget approaching one billion dollars. It's a small step, but with repeal of the Employee Hours Tax, a new rigor in our budgeting process, and other efficiencies and reductions we face it's an important step.