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Thursday, August 17, 2006

Seattle: Smug, Arrogant, Delusional?

The Seattle P-I Virtual Editorial Board highlighted an excellent comment to an editorial about the $1.6 billion tax package. A reader going by the handle "Face Reality" made the following insightful observations:

Seattle has no coherent "tax plan": Or finance, revenue, fiscal or spending plans for that matter. It hasn't for over 20 years. A succession of irresponsible Councils and Mayors (that we insist on re-electing) seeking short term gratification has seen to that.
...
Instead of a measured, predictable tax package for very specific, prioritized needs we get an endless, open ended "all at once" debacle and xmas tree wish list that still includes money for needless things like Paul Allen SLU beautification.

Reckless tax and fiscal policies make this city that much more unaffordable for all but those who can blithely pay for our "new urban" paradise while unwittingly contributing to the very sprawl they decry: When everyone else is driven to more affordable areas outside Seattle – along with many of the businesses that employ them.

There is a direct correlation between taxes, sprawl and affordability. So many people here are in denial about that reality - you can't simply tax, grow or densify your way to affordability and a quality city. The concepts are mutually exclusive if badly applied - as in Seattle.

Poorly applied and rapid ramp ups in taxes raise housing prices and mortgage qualifications, stagnant business growth and cause decline in real revenues as the increased taxes are eaten up by more service demands that density creates. If this continues, a city inevitably declines as demographics and businesses leave for cheaper pastures, ie, the 'burbs.

The real bill will come due in just a few years, when the inevitable economic downturn combined with higher taxes that narrow the base and discourage businesses will bring both an actual DECLINE in tax revenues across the board and a grinding halt in City business and population growth.

With the usual Hobson's choice of cutting services vs raising taxes even higher, setting up the potential for the classic revenue "death spiral".

An experience well documented in just about every other American city the last 30 years – including memory challenged Seattle, once again the caboose on the train of national experience.

Smugness, arrogance, delusional growth projections, pseudo - environmentalism and the attitude "its different this time" are no defense against the lessons of history.
You should really go read the entire comment.

This was cross-posted on both Seattle Bubble and Seattle Traffic.

(Face Reality, Seattle P-I (comments), 08.16.2006 )
Please read the rules before posting a comment.

25 comments:

Anonymous said...

Well said. Unless something drastically changes, Seattle will eventually be a desolate skeleton populated by perhaps a few rich people near water, encircled by the homeless, the addicted, and criminals.

Anonymous said...

I agree that the city of Seattle has a spastic two-year-old's ability to plan for the long term, but the comment about the "service demands" of density is complete bullshit.

Time and again, cities find that the "expense" of density is illusory -- you may spend more on public services in the absolute, but you spend far less money per capita. Put simply, suburbs are wasteful, innefficient communities for very spoiled people. They are not a sustainable way to live.

SourMash said...

What does this have to do with "news and discussion about the real estate / housing bubble, specifically as it pertains to the Seattle area"?

I mean, it's a tax policy question for residents of Seattle. More pointedly, for voting residents of Seattle, since it will have to go to a public vote.

jcricket said...

Seattle is neither smug, arrogant or delusional. It's peope like "Face Reality" that are the problem. They toss off words like "irresponsible" and "reckless" without any evidence or support, and generally blame big, bad "taxes" for problems.

If WA state had a tax revenue base that actually grew with the growth in population (i.e. an income tax), a significant portion of these one-time and long-term levies would not be needed. Combine the lack of that tax base with the fact that voters in WA, CA and CO just love initiatives that limit tax growth at some artificially low point that sounds good (like wholesale inflation, 1%, etc.). These limits create a situation where your tax base rarely keeps up with the cost of providing the underlying services, inevitably meaning you lose the ability to pay for the services you claim to want (roads, teachers, police) over time. Inevitably requiring short-term tax boosts (which the commentor calls bad long-term planning).

If people would stop believing the fairly tales told to them by the Tim Eyman, the BIAW and Grover Norquist, perhaps we could have a more sane tax policy.

Also, people do not leave cities, generally, because of taxes. Most of the "white flight" in the 60s and 70s was related to crime and a perception that suburban living was the "american dream" (whereas cities were too crowded and dirty).

I see little insight in the comment by "Face Reality" - just a lot of disconnected and poorly sourced rambling (hmm, sounds familiar).

The Tim said...

SourMash,

I feel that the entire argument being made by "Face Reality" is relevant to the topic of this blog. Specifically, the following bits, where he directly relates it to housing affordability:

When everyone else is driven to more affordable areas outside Seattle – along with many of the businesses that employ them.

There is a direct correlation between taxes, sprawl and affordability. So many people here are in denial about that reality - you can't simply tax, grow or densify your way to affordability and a quality city. The concepts are mutually exclusive if badly applied - as in Seattle.
...
Poorly applied and rapid ramp ups in taxes raise housing prices and mortgage qualifications...

jcricket said...

OK - rising house prices generally push people who can't afford those houses farther out. This is inevitable unless you somehow have unlimited in-city land or no zoning regulations.

I suspect "Face Reality" is the same type of person who would resist or reject non-market-based approaches to fixing that problem (i.e. requiring set-asides for affordable housing, like we have in Seattle, and should probably have more of).

What do you suggest Seattle do? Artifically cap housing prices?

Anonymous said...

jcricket-

You have got to be kidding. Now, I am not a big Tim Eyman fan, but he has tapped the correct sentiment in that there are huge amounts of waste in government. For every program created, there is a new bureaucracy filled with people mostly concerned about increasing their pay and status, and for many, doing as little as possible..thus creating the need for more jobs. And many people in those jobs are incompetent. I've been there, I've seen it, and it is truly outrageous. There is virtually no accountability, and no incentive to get rid of slackers (many (or most?) in management).

Until there is a way to actually hold government accountable, I encourage all non-bleeding-hearts to vote down all taxes, fees, and levies, and pay as little tax as legally possible. I'm all for letting jcricket and his ilk bear the burden.

richard said...

As posted the other day, Seattle has around 6000 less people living in it than in 2000, and the number of housing units has increased by 15000 in the same time period.

This seems to indicate that people have been choosing to share space with fewer people than in the very recent past.

The Tim said...

If WA state had a tax revenue base that actually grew with the growth in population (i.e. an income tax), a significant portion of these one-time and long-term levies would not be needed.

So are you saying that under our state's current system (sales tax) as population grows, taxes collected do not grow proportionally? I guess I don't follow, because it seems to me that when a new person moves to the state, they're going to be spending—on average—about as much as the people that are already here. So am I misunderstanding what you're saying here, or do I have it all wrong?

These limits create a situation where your tax base rarely keeps up with the cost of providing the underlying services, inevitably meaning you lose the ability to pay for the services you claim to want (roads, teachers, police) over time.

Everything I've read says that state and local revenues have been up, up, up lately. It seems to me that the problem is that a very large amount of the money is spent on things that are not roads, teachers, police, etc., but rather feel-good projects that frankly the government should keep its nose out of.

That's just my opinion, of course, and I have just as many "facts" to back it up as Face Reality (or even you) has provided.

Anonymous said...

As posted the other day, Seattle has around 6000 less people living in it than in 2000, and the number of housing units has increased by 15000 in the same time period.

Well, you see an influx of single and DINKs and an outflow of parents w/ families because the schools suck...

richard said...

Well, you see an influx of single and DINKs and an outflow of parents w/ families because the schools suck...


I think this was more the case in the 80's during the bussing program. Some neighborhood schools have become very desirable (Wallingford).

I'd have to see some stats that the population decline was in the under 18 age group to believe this - but it could be the true.

richard said...

just posted, courtesy of craigslist.

Seattle Rollercoaster

Anonymous said...

Re. the roller coaster. I think most of Seattle/washington would be a little over the top, heading down. imo.

Mikhail said...

I wonder what will happen to cities if their revenues dry up in a severe real-estate downturn? Can municipalities just keep suck-it up and cut costs, or is there a certain level of liabilities that they simply can't eliminate (e.g. pension contributions, bond payments, etc)? Can towns actually go bankrupt altogether?

A better question is what happens to home-owners in towns that wind up bankrupt. Do they only suffer the degredation of services and infrastructure? Or can home-owners find themselves saddled with huge unexpected tax burdens?

I seem to recall hearing about some town in Colorado that went bankrupt in the mid '90s and all the home-owners were given $70,000 bills to cover the bond obligations of the town. Is such a thing really possible for cities in trouble?

synthetik said...

heh, love the coaster. Describes the situation exactly.

Anonymous said...

My thoughts about Government.. STARVE THEM TO DEATH.. Less money Government has the better. Without money Government needs to shink.

Personally I would LOVE NOTHING BETTERN Than a government that was 1/2 the size.

We probably be much wealthier society for it.

How much of a price of the house is Actally the House? How much is just Red tape.. Governmental Regulation fees??

My Grandfather told me about how as a builder he would go down to the local dinner pull out a napkin and scribble down the building materials needed for construction of a home on land that took approximatly 2 weeks of common joe wages to acquire.

My Grandfather built many homes in the Mukilteo area all overlooking the water and they are nearly all standing today 50 years later. Back then they cost a few thousand dollars those same houses now sell for hundreds of thousands to a million dollars.

His personal home is there today and never has had the roof been changed in over 50 years.

Anonymous said...

Anyone read the employment numbers?

If I can recall correctly 8,000 jobs inprovement in the last month.
7,000 jobs were Educational and State Government.
Awesome... ... 7 out of 8 jobs are requiring more tax payer money... nothing really created as far as im concerned. Better off if they probably never hired those 7000 people probably.

Anonymous said...

I was reading about Pierce County Job numbers, just to clarify.

my Grandfather built homes that he claimed was almost 0 governmental controls regulations and permits.

and that he Quite building homes because Governmental Red tape.

I personally think that Government is in many cases the problem NOT the solution.

Anonymous said...

I've lived here all my life, and trust me this city is smug and arrogant and delusional. The oregon coast and vancouver and portland kick this city's ass out the door.
Seattle has jobs (currently) and an improving nightlife, but otherwise, its (as mudhoney said) so overblown.

The natives and the immigrants belief in their own
blessed fortune in living here really makes me want
to hurl.

Anonymous said...

Sorry, but Vancouver is no paradise either. They are trying to copy the People's Republic of Portland. The last stats that I read in the paper were that Washington had a SURPLUS. We do NOT need a state income tax. I lived in North Carolina that had both a sales and state income tax and they were always begging for more money. Give more $$ to the liberal pols and they will create programs to spend it. Portland can't fund their schools but seems to find money to find the trolley and tram systems. It never ends.

Eleua said...

jcricket said,

Also, people do not leave cities, generally, because of taxes. Most of the "white flight" in the 60s and 70s was related to crime and a perception that suburban living was the "american dream" (whereas cities were too crowded and dirty).

While I agree that 'burbs are not self-sufficient, neither are cities. Cities are only possible due to cheap/subsidized transportation and large-scale farming.

As for "white flight"...

It was due to crime and all forms of urban blight. The 'burbs, while not immune, have just a sliver of the social pathology that their host cities have.

Also, while not directly related to this topic, people hate diversity. They talk a good game, but will pay through the nose to leave it 10 miles down the Interstate or a ferry ride away.

Anonymous said...

OK, since eleua touched on the diversity thing, I'd like to keep that rolling, as I usually don't butt into these topics, but oh well, here it goes. What is the deal with all the re-gentrification going on in the CD and South Seattle? White people would never touch some of these streets with a 10' pole, but yet now I see hot, white Californian soccer moms jogging in spandex down 23rd and Jackson. How did this happen? Don't get me wrong, many of the neighborhoods like Madrona, Leschi, Mt. Baker, etc. have always been relatively diverse (for Washington State, anyway) but much of the CD has been predominantly Black or Asian-American. Why over the course of the last decade, was it necessary to drive the real estate value up to surely unaffordable amounts, forcing many residents to pack up and move to Renton/Kent? How many of you out there live in "Columbia City"? How many of you drive straight through on Genessee or Orcas to your brand new townhome, never, ever daring to venture forth from those streets? And never, God forbid, would you actually walk around your 'hood? Is it "nicer" there now, with the new set of residents? I think it's funny, sometimes when I hear about how Beacon Hill used to be an exclusive, upper-class, all-white neighborhood. Legend says that Yuen Lui, a local photographer, was the first Asian-American to purchase a house on Beacon Hill. They actually used to prevent non-whites from living there. Sure enough, look what happened...the yellow peril took over. I think it's funny how some white people think Beacon Hill is a great place to live again.

Eleua said...

This gentrification happens here for the same reason it happens elsewhere. Once you can't afford any decent place, you take what you can get.

Why East Palo Alto, California sells for $1000/sf is truly a wonderment.

The problem is you are still buying a $500K, 500sf crack house in the worst neighborhood on the West Coast. It isn't Menlo Park, Atherton, Palo Alto, or Mountain View. It's EPA.

When the "tide goes out" (to borrow a phrase from another thread), we will find out just how much this idea stinks.

Perhaps I am wrong (perish the thought), but once someone wakes up and realizes they owe $500K for a crack house, they will just want to crawl under a rock and die.

It's one thing to buy a $500K meth lab, if you can sell it to another dim bulb for $550K. It's quite another when you are paying more for your house in the "vibrant" neighborhood, than your friends are paying for a nice place just three years down the road.

Being upside down in Bellevue, Mercer Isl., Issaquah, etc. is a hell of a lot more tolerable than being upside down in da 'hood.

America's new national motto will be: "W-T-F was I thinking?"

Eleua said...

Put another way...

"You can't fix stupid."



I got that from some comedian on Comedy Central.

Eleua said...

Remember, somebody bought PETS.com at the top, and thought it was a good deal.

JNPR once sold for $244, and someone thought there was another moron out there that would pay $300.

When it went sailing through $150, people thought it was the deal of the century.

It traded at $5, and it will again.

Just because someone does something stupid with their money or reputation, does not mean there is any value in that endeavor.