On Sunday Night, Washington State Governor Jay Inslee announced the signing of a statewide emergency proclamation to “temporarily shut down restaurants, bars and entertainment and recreational facilities.” Governors in Illinois, Ohio, and California have announced similar closures. To many, this was hailed as a heroic act and to others it was seen as a massive over reaction. One thing is for certain, the longer the closures last, the more damage there will be to our local economy, thousands of jobs and hundreds of small businesses.
On Thursday, Seattle Mayor Jenny Durkan and the Seattle City Council unveiled the Emergency Fund for Businesses Affected by Covid 19. This fund will reward $10,000 to businesses that meets qualifications. This appeared to be the first attempt to alleviate the effects of people staying home and employers like Amazon and Microsoft having their employees work remotely. However, clearly this proposal was written by people who have never owned a business, who are more interested in virtue signaling than solving the economic impact.
Some of the qualifications are for the grants are:
The business owner must have a low or moderate income less that 80% of the city median- Before all the closures there were plenty of business owners who lived above that income line. Many are about to lose everything because of the closures. What about all the business owners that are about to have no income but did well last year?
"Five employees or less:" Most restaurants have more than five employees because of different shifts throughout the day. Other types of businesses that have a higher payroll with many more employees will no longer have any customers
"Located in neighborhoods for high risk of displacement:" Why is it not open to any business owner? Do our politicians really think this is an attempt at gentrification? Is it fair that anyone not “located in neighborhoods with a high risk of displacement” go out of business?
When $10,000, in many cases, is a weekly "burn rate" of a successful business especially in the restaurant industry once you factor in rent, payroll and utilities. This money will have very little impact.
This proposal is flawed not just because of the social justice component, but also because it relies on a bailout, which as we saw in 1929 crash, in the 2008 collapse and as recently as last week with a 1.5 trillion dollar infusion, doesn’t work.
Another proposal by the Mayor and council is to freeze evictions during the crisis. Marxist Councilmember Kshama Sawant, a longtime advocate of an eviction ban even before the Covid 19 crisis who is always quick to mention her economics degrees, is okay with “mom and pop” landlords who may default on mortgage payments when tenants don’t pay rent. Perhaps she is forgetting that mortgage defaults triggered the economic collapse of 2008. Rent assistance or vouchers from city funds could help negate this but were not proposed.
Another proposal would be to reduce expenses on business owners. For example, a moratorium on utility bills, which are city run and operated and a moratorium on city taxes. Yet how can the city afford the cost of this without bankrupting the city like this shutdown is about to do to businesses?
Using Seattle as an example for what could be done in other municipalities, I pulled up the Seattle city budget for 2020. The proposed budget was the largest in Seattle’s history, the city has record revenue and a lot of pet projects. By assuming an 11% reduction, and a 6 week shutdown like the local schools, in unused services and pet projects, the city could assist small businesses, their employees and do so much more.
An 11% reduction in Arts and Culture programs that are not taking place
Public Art- The city has a massive budget for public art. Sound transit even spent $500, 000 to move a sculpture 300 yards. It is a crisis. We can do without new projects for 1 year while people are in financial crisis- Total value $2,802,546.
11% of the after school programs that are not happening because school is closed $644,736.
Seattle’s controversial unallocated soda tax funds that every politician is fighting over is $28,347,000.
11% of library programs that are not happening because the libraries are closed $7,150,637.
P - Patch Gardening. These gardens are supposed to be taken care of by the neighborhoods so why are tax payers paying for it? People are going to need projects while out of work and school $3,874,956.
Seattle Center Community programs that are not happening during the closures at 11% of their budget - $286,744.
Festivals at Seattle Center that are not happening because of the ban on public gatherings at 11% $153,655.92.
McCaw Hall Programs that are not happening because of the ban on groups of 250 people or more at 11% $641,521.
The controversial Democracy Vouchers that use taxpayer money to fund political campaigns we can do without for this year $742,213.
The Seattle Channel. We have the Emergency Public Address system. We can do without interviews with council members that no one watches. There are plenty of communications, film and media students that are not in school that can have a great internship experience by recording and streaming government meetings $7,343,268.43.
Parks and rec programs that are not happening because of the event ban at 11% - $9,394,162.
Zoo and Aquarium programs that are not happening at 11% $783,853.
A total of $62,954,518— none of which is salary, or essential services like transportation.
How many businesses and jobs could be saved with that? How many tax breaks and utility payments—utility losses can also be offset by federal grants which utility providers already receive—could we give with all that. The city coffers are full.
I did not go line by line, or I am sure I would have found even more excess funding available. I did not suggest cutting pork projects like the new waterfront parks aka “the waterfront LID” or the overbudget, unnecessary street cars. Is the only reason we can’t do this politics and politicians who would rather keep hard earned money of tax payers than help the small business owners who paid those taxes who are in trouble because of an uninsurable “act of God” and decisions of politicians who did not consider the ramifications of those decisions?
Seattle politicians have spent tax payer money like it was going out of style and did not plan for an economic downturn. Politicians should realize that with so many businesses about to close, the gravy train is over unless they try to save them. This is just one possible solution that could help save the local economy. While the closures may be necessary to stop the spread of the Wuhan Coronavirus, the economic impact needs to be addressed simultaneously. Perhaps cities outside of Seattle will be inspired to review their municipal/state budgets and look to cut waste that can save small business and jobs as well as their future tax revenue. Or perhaps I am being naïve.