1. The Partnership between Seattle Businesses and City Government in Providing City Services
The Greater Seattle Chamber of Commerce,
The North Seattle Industrial Association and
The Washington Research Council

2. Business Is an Important Partner in Providing City Services
As either taxpayer or tax collector, business supplies much of the funding for the city’s services
Without a healthy business community the city will not be able to provide the services its citizens demand

3. The City Relies Primarily on Four Taxes: Property, Retail Sales, B&O, and Utility
For 1990 property tax 28.5%, sales tax 27.7%, B&O 22.9 % utility taxes 17.9%, other taxes 3.6%
Source: City of Seattle, Year 2003

4. The Share from Property Taxes Increased while the Share from Sales Taxes Decreased

5. Businesses Pay 54 Percent of These Taxes
In contrast, businesses pay 46 percent of state and local taxes statewide.
Source: Washington Research Council

6. But If You Want to Talk Revenue Due to Business Activity, the Total Is 70 Percent
In contrast, businesses pay 46 percent of state and local taxes statewide.
Source: Washington Research Council

7. Since the Recession Began in 2001, Tax Revenue Growth Has Slowed
Source: City of Seattle

8. The End of The Recession Will Not Mark the End of the Difficulties
Future economic growth will not be as strong as the region has experienced in the past, so revenue will not grow as fast as it has in past expansions
Property and B&O taxes are constrained by recent legislation
The trend growth in the city’s costs of providing basic services is greater than the expected growth in revenue

9. For Three Years General Fund Taxes Have Grown by Less than Inflation
Source: City of Seattle; U.S. Dept. of Labor

10. General Sub-Fund Property Taxes (EMS Levy Excluded)
Source: City of Seattle; U.S. Dept. of Labor

11. Retail Sales Taxes Actually Fell for Three Straight Years
Source: City of Seattle; U.S. Dept. of Labor

12. B&O Growth Has Been Anemic for Three Years
Source: City of Seattle; U.S. Dept. of Labor

13. Utility Taxes Grew Strongly in 1999, 2000 and 2001
Source: City of Seattle; U.S. Dept. of Labor

14. Revenues from the Utility Taxes on Telephones and City Light Have Been Particularly Volatile
Source: City of Seattle

15. The City’s Councilmanic Debt Has Risen Significantly Over the Past Ten Years
Some would call this “Councilmaniac” debt.
Source: City of Seattle

16. Growth in the Metropolitan Seattle Region Is Slowing as It Converges to the National Rate
Source: U.S. Department of Labor; Conway- Pedersen Economics

17. Less Favorable Growth Rates Are Projected for Four Key Drivers of City Tax Revenue
Source: U.S. Dept. of Commerce; U. S. Dept. of Labor; Puget Sound Regional Council; Conway-Pedersen Economics

18. Initiative 747, an Eyman initiative
Revenue Growth also Will Be Constrained by Initiative 747 and House Bill 2030
Initiative 747, an Eyman initiative
“An act relating to limiting property tax increases”
Passed November 2001
Limits regular property tax revenue increases to 1 percent per year
City gets a further increment of revenue based on new construction
Limit can be exceeded with voter approval

19. House Bill 2030
“An act relating to changing requirements regarding state and local tax to provide for municipal business and occupation tax uniformity and fairness”
Enacted in 2003
Requires all cities to use the same definitions and classifications in their B&O taxes
Establishes rules under which a business’s revenues will be apportioned among cities and allows each city to tax only those revenues apportioned to it
Fully effective in 2008

20. Revenue is Projected to Grow by 3.1 Percent per Year on Average
Source: Washington Research Council, based on Conway-Pedersen and PSRC economic forecasts

21. Neither Fire nor Police Department staffing grew from 2000 to 2004
Police and Fire Departments Show Underlying Trends in City Service Costs
Neither Fire nor Police Department staffing grew from 2000 to 2004
Yet spending for the two departments grew by 21.3 percent over the period, on average 4.9 percent per year
We take this 4.9 percent to be the underlying growth rate in the cost of providing current city services

22. By 2013, the Cost of Current City Services Will Be $161 Million Greater than Projected Revenues
Source: Washington Research Council

23. An Optimistic Scenario: If Spending Grows 3
An Optimistic Scenario: If Spending Grows 3.5 Percent Per Year, the 2003 Gap is $41 Million

24. But If Revenue Grows at the Rate of Inflation and Spending at 4
But If Revenue Grows at the Rate of Inflation and Spending at 4.9 Percent the Gap Is $208 Million
Source: Washington Research Council

25. There Are Four Ways to Bridge the Gap
Cut city services
Hike taxes and fees
Improve productivity or restrain employee compensation
Encourage increased economic activity