October 25, 2013 Print
    

Prop 1 Enforcement Looks to Be Pricey

When it comes to raising the minimum wage, somebody always pays. In the case of Proposition 1 in SeaTac, add taxpayers and city government to the list of workers and businesses the initiative would harm.

The law's administrative cost to the City of SeaTac has been a contentious point. Opponents of the initiative have noted that the increased costs of enforcing the law would likely cause the City to cut services or raise taxes.

Initiative advocates have contended that enforcing Prop 1 will not cost the City a dime and may actually save money.

Nicole Keenan, a policy analyst for Puget Sound Sage, recently stated that “Proposition 1 specifically exempts the City of SeaTac from having to pay for the day-to-day expenditure of enforcing Proposition 1.”

Keenan continues, “The way that you enforce Proposition 1 is through private suits through the county and state court system.”

While it is true that Prop 1 gives any person claiming a violation of the law the ability to sue an employer, the initiative does place specific burdens for enforcement on the City. For instance, section 7.45.100.B states: “The City shall adopt auditing procedures sufficient to monitor and ensure compliance by Hospitality and Transportation Employers with the requirements of this Chapter.”

An analysis recently completed by Cardno, an international consulting firm, estimated that enforcing Prop 1 would cost the City of SeaTac between $2.4 and $3.4 million over the first five years.

The study also noted that:

  • Enforcement costs would be highest in the first few years, settling down to about half-a-million-dollars-per-year by 2018.
  • “There is no funding mechanism to reimburse for City costs for implementation for the ordinance. Therefore, costs will need to be fully absorbed by the City via some revenue stream tax increase if at all possible, or commensurate cuts to other services provided by the City.”
  • “No other living wage ordinance is as complex as that proposed for SeaTac.”

Prop 1 advocates have argued that higher wages for workers would reduce the need for social services and save the City money on human services. As we have previously explained, this is unlikely because higher minimum wages do nothing to reduce poverty.

In terms of its overall budget, Prop 1’s cost to the City would not be exceptional. The City has a general fund budget of about $63.9 million. By comparison, the City allocated about $1.1 million for its entire human services program in the 2013-14 budget.

Still, Prop 1 will not only cost the City of SeaTac more to enforce, but it would likely reduce City tax revenue, as well. The Washington Research Council explained in a report earlier this year:

As services and payrolls are reduced, tax revenues can be expected to decline. Parking, sales and hotel/motel taxes will be negatively impacted. In addition, property tax revenues will be affected as Prop. 1 encourages developers to look outside SeaTac for new King County investment.

Thus, in addition to harming employment, discouraging economic development, and raising prices, Prop 1 will also drain City revenues while increasing costs.

Author

Maxford Nelsen

Labor Policy Analyst

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