by Katie Wilson
It costs over half a billion dollars to keep the King County Metro bus system running for a full year. Where does all this money come from?
Bus fares make up a smaller portion of Metro’s budget than you might think – less than 25%. Revenue from advertising and other miscellaneous sources contributes another 15%. But the most important source of funding by far is sales tax, which accounts for over 60% of Metro’s operating budget. In King County a sales tax of 0.9% goes directly to Metro – that’s just about a penny on every dollar you spend. So you are paying for the bus not only when you pay your fare, but every time you buy a pair of shoes or a bar of soap.[ref]From King County’s web site: “King County residents currently pay a 9.5 percent sales tax. The state keeps 6.5 percent, 1.8 percent goes to Metro Transit and Sound Transit, 0.1 percent is set aside for mental health services and substance abuse treatment, and the remaining 1.1 percent is split between cities and the County.” More detailed information on Metro’s operating budget and capital funding can be found on their website.[/ref]
It makes sense that a social good, like public transit, should be funded through taxation. But what kind of taxation? Who is bearing the brunt of the cost? This makes a big difference. Sales tax is an example of a regressive tax, one that places a disproportionate burden on working and poor people. Let’s look at the matter more closely.
When you spend $100, 90 cents out of the sales tax you pay is channeled to Metro. The same thing goes for Bill Gates when he spends $100. But even though you pay the same percentage on the money you spend, that 90 cents and that $100 amount to very different portions of your respective incomes. $100 might be all the money you have this month, after rent and bills and food – whereas for Bill it’s a drop in the ocean. Furthermore, very wealthy people tend to use much of their income in ways that bypass the sales tax: investing it, buying expensive items outside of Washington State, and so on. So over all, you end up paying a much larger percentage of your income in sales tax than Bill Gates does. Sales tax hits the poorest the hardest: that’s what makes it a regressive tax.
Seattle has a reputation for being politically progressive. But it turns out that Washington State has the most regressive tax structure of any state in the nation. According to a 2009 study by the Institute for Taxation and Economic Policy in Washington, D.C., people earning less than $20,000 annually in Washington State pay 17.3 percent of their family income toward sales and excise taxes and property taxes; those making between $99,000 and $198,000 each year pay 7.6 percent; and those making more than $537,000 a year (the top 1% of earners) pay just 2.9 percent of their income in state and local taxes.[ref]The full report can be found here;. Unlike most states, Washington has no income tax – and we don’t have local income taxes either. Initiative 1098, which would have introduced a progressive state-wide income tax (affecting individuals who make over $200,000 per year) was voted down in a referendum in 2010.[/ref]
Now, it’s one thing to point out that this is unfair, and that the rich should contribute their fair share to sustain public services that benefit everyone. That’s true enough. But recent events have shown us something more: we, as bus riders, and as working and poor people who do not make hundreds of thousands let alone millions of dollars per year, simply cannot afford to keep paying more.
When the economic crisis hit in 2008, we all cut back our spending. Sales tax revenues plummeted: in 2009, Metro lost more than 15% of its sales tax base.[ref]See “History of Metro Funding” here[/ref] This, combined with rising gas prices, threw Metro into a budget crisis. Even after repeatedly increasing fares, laying off workers, and making other cuts in the name of “efficiency”, by spring 2011 Metro was looking at an annual shortfall of $60 million. Suddenly residents of King County were faced with the devastating prospect of 17% cuts to bus service, despite the fact that ridership kept rising. That’s what happens when vital public services are funded on the backs of poor and working people: funding dries up just when it is most needed.
The $20 car tab fee approved by the King County Council in August is expected to keep Metro afloat for the next two years, and for that we can be grateful. But it is also another regressive tax: it is a flat fee on all car-owners, rich and poor alike.[ref]A better solution would be a progressive vehicle tax, one that requires those who own more expensive cars to contribute more. In fact, up until 1999 about a third of Metro’s revenue came from just such a motor vehicle excise tax, set at 2.2 percent the value of the vehicle. This tax was repealed in 1999 by Tim Eyman’s Initiative 695 and replaced with a flat fee of $30, costing the state hundreds of millions of dollars per year. This was the beginning of Metro’s heavy reliance on sales tax.[/ref] This summer, working and poor people were presented with a difficult and divisive choice: either watch your bus service be dismantled, or pony up and pay for it out of your already empty wallets. Bus riders were pitted against car-owners, when in reality the vast majority of us are in the same boat.
But is this really the only choice? We can’t afford to keep paying more and more – but there are others who can. For us the Great Recession continues: jobs are scarce, wages are falling, prices are rising, and it doesn’t look like things are about to get better any time soon. But not everyone is struggling. Corporate profits recovered from the economic crisis just fine, and sales of luxury goods have shot up again.[ref]See, for instance this article and this article[/ref] A just and stable solution to Metro’s tribulations is not hard to find, in theory: tax corporations and the rich, and fund public transit.
The TRU is committed to finding progressive ways to fund Metro, and to fighting for them. We hope you will join us!
You conveniently neglect to mention that “bus fares”/ridership typically make up just 10% of revenues in most other large cities. We suggest that metro stop gouging customers in the long-standing tradition.
A giant step toward gaining more revenue would be to close down the “Free Ride” zone downtown. That might have been a great concept back in the 1970’s, but now all it does is bring crime and criminals onto the bus system unchecked while making local riders PAY for the tourists and the downtown businesses.
If you consider Sea Tac airport, at which most commercial businesses have to pay much higher rates which they pass along to the non-voting tourists, you’ll note things like huuuuuuuuuuge, gouging “tax” fees on rental car bills, which effectively pass costs onto tourists visiting the airport. (the same car rental at a downtown location brings with it nowhere near the giant tax charges)
Seattle’s downtown “free ride” zone lets tourists get to various downtown businesses for FREE… at the direct expense of metro’s regular, local riders!!!! Downtown businesses and the tourists who want to visit them should be paying these costs, not little old ladies who live in Laurelhurst!!!
Once we get rid of the downtown Seattle “free ride” area we can eliminate the mass (screw)-up that has been the ORCA Card. Imagine two twin brothers, of whatever minority race is on your mind right now… one living in Belltown, and the other living somewhere near to 100th and Greenwood… both users of an ORCA Card:
One of’em gets on the bus in Belltown, and travels out north to Northgate, he gets off the bus, swipes his ORCA card, and then has TWO HOURS to re-board his bus before he is charged another fare (and he’s home 35 minutes later)
The twin brother gets on the bus at 100th and Greenwood, swipes his ORCA card, then spends 35 minutes getting downtown, where he may have 45-ish minutes to shop before he has to be on a bus that gets him HOME by the 2-hour limit to avoid paying another overly-costly Metro fare.
Why should one brother get a full two hours to do his business while the other brother is afforded just 45 minutes (if he’s lucky) to do his business?? (and the answer simply CAN NOT BE that one is a member of the racial minority that was last on your mind)
You simply can not “save our metro” from itself. These morons need to be forcibly made to apply at least the first hint of logic to what they call a “system”.
Good work Katie, nice peace.