More on Employee Hours Tax or Head Tax

Several people have contacted me about my sponsorship of repeal of the Employee Hours Tax (EHT), expressing fear that important pedestrian safety and other neighborhood transportation projects will be at risk.  (Read my earlier post.)

My study of this issue leads me to conclude that repeal of this tax will not negatively impact projects.  Consider these factors.

 

When this transportation tax cocktail was conceived in 2006 the total estimated revenue from the Commercial Parking Tax (CPT) and the Employee Hours Tax for the period 2007-2015 was $183.7 million.  In the Spring of 2008, this estimate was updated based on actual performance of the taxes up to $198.7 million.  This Spring, another updated estimate was produced, again based on the actual performance of the two taxes, and showed total revenues of $212.8 million.  The CPT is driving this increased revenue, not the EHT.

 

Based on the Spring 2009 estimate, and assuming repeal of the EHT effective January 1, these two tax sources will generate $191.2 million, about $7.5 million more than the original estimate.  So, by 2015 we should be able to complete an equal amount of work when compared to what was promised the voters.  Other steps that may also be taken, such as extending bond repayments from 15 to 20 years, could also free up some cash for projects around town.

 

Some suggest that the EHT was good public policy because it rewarded the use of alternative transportation by waiving the tax on those employees using public transportation, carpooling, or walking to work.  I am particularly sensitive to this argument because I agree with the underlying philosophy, but not this specific execution.  A rising commercial parking tax is a better way to discourage single occupancy vehicle use, in my view, and this tax will increase again on July 1.  My colleagues and I are very supportive of progressive transportation policy, including the Bicycle Master Plan, the upcoming Pedestrian Master Plan, and the Spokane-Alaskan Way-Mercer Corridor project that will have a huge impact by encouraging alternative modes of transportation.  No one should interpret repeal of the EHT as backing away from any of these policies. 

 

Finally, symbolism is very important.  Because of our very challenging economic conditions it is even more crucial that we take steps--however small or large--to make certain Seattle is known locally, regionally, and nationally as a metropolitan area very focused on economic recovery and job growth.