Seattle uses tax on biggest businesses to fund program to curb homelessness. How Nashville is funding a $5.2bn transit upgrade

By , 16 Oct 2017 Smart City Dive
  • Two Seattle councilmembers have proposed a business tax that could generate up to $24 million a year to fund the H.O.M.E.S (Housing, Outreach, and Mass-Entry Shelter) program, developed to alleviate the city’s homelessness crisis, according to GeekWire and others.
  • The tax would be imposed upon the city’s highest-grossing businesses, which are those with at least $5 million in annual gross receipts. That applies to about 10% — or 2,200 — of the city’s businesses.
  • The measure would go into effect in early 2018 and would cost each business about $100 each year per full-time employee. Lawmakers will begin discussing the business tax proposal this week.
Although the U.S. Department of Housing and Urban Development (HUD) notes a 15% decline in homelessness in America over the past decade, Seattle is one of the areas trending in the opposite direction. It has experienced a 19% increase in homelessness since 2010 and has the third largest homeless population in the country behind New York and Los Angeles, according to HUD. In fact, the steady increase prompted Seattle’s mayor and county executive to both declare states of emergency for homelessness in 2015. Seattle also has a major problem with housing affordability, which some blame on Amazon and other large companies that fueled the city’s economic boom.

Seattle is one of the growing number of cities looking to tackle the homelessness problem with new approaches instead of solely relying on a one-size-fits-all traditional shelter program. Many cities are choosing to take a more holistic approach by addressing underlying problems that lead to long-term homelessness, such as joblessness or inadequate mental health care. But cities across the country lack sufficient funding for programs to curb homelessness. Seattle’s proposal to use a business tax to fund its program is a different approach, and it comes just after the interim mayor’s proposal to increase spending on responses to homelessness by almost 40% compared with four years ago.

The money collected through the business tax would be used in a variety of manners to combat homelessness, including emergency shelters, rental vouchers, safe lots for homeless vehicle campers and tiny house villages. Although the program would better focus attention on traditionally underserved portions of the community, it also could worsen the bad bloodbetween the business community and the city government. Some local politicians want businesses to take responsibility for displacing low-income residents, rapidly driving up the cost of living and causing housing prices to skyrocket. That attitude is souring businesses’ view of the city’s policymakers, and some claim it’s pushing out the very players that stimulated Seattle’s economy, as evidenced by Amazon’s desire to build its HQ2 in a different city. Both mayoral candidates for the Nov. 7 election have hinted that they support the tax proposal, whereas the business community has been outspoken against it.

Nashville, TN unveils massive $5.2B transit plan

 Oct. 19, 2017

  • Nashville Mayor Megan Barry on Tuesday proposed a $5.2 billion transportation plan, which includes a light rail system. The plan also includes a huge tunnel below downtown and a complete revamp of the city’s bus system. This is the largest transportation project in the city’s history, both in cost and in scope.
  • Residents will vote on a referendum in May which, if approved, would increase taxes to pay for the project.
  • The plan would be funded with a one-half percent sales tax increase that would increase to 1% in 2023, in addition to increases in the business tax, hotel/motel tax and rental car tax.
The mayor’s much-anticipated transit plan is intended to improve residents’ quality of life with easier and quicker mobility, plus a reduction in traffic. The overall plan puts a particular emphasis on better serving Nashville’s elderly, disabled, youth and disadvantaged citizens.

The light rail system ultimately will have five lines, including one with airport access. Several of the lines would travel into downtown via the proposed $900 million tunnel. New electric buses also would use the tunnel. In addition to the big-ticket items such as light rail and the tunnel, the project would create transit centers throughout the city, which are basically hubs that would ease residents’ access to transportation options. Plus, the bus system improvements include adding electric buses, adding additional routes and having buses run more frequently.

Tennessee already has one of the highest sales tax rates in the country, and when the 1% sales tax takes effect in 2023, Nashville’s sales tax will rise to 10.25%. That’s currently Chicago’s sales tax rate, which is the highest in the country. However, Tennessee does not have an income tax, only a 6% tax on interest and dividends, although that tax is slated to end in 2022.

If voters approve the May referendum and the plan moves forward, bus service improvements could go into effect in 2019, with rapid bus service arriving to four of the city’s busiest corridors in 2023. The first light rail lines are scheduled to open by 2026 and the entire light rail system is expected to be completed by 2032.

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