(This post is part of a series.)

A while back, the Seattle city government decided that it wanted to replace the Alaskan Way Viaduct—the seismically vulnerable aerial highway that cuts off the city’s downtown from its waterfront—with a tunnel. But what neither the city, nor anyone else, has decided is how to pay for the tunnel, which the state estimates could cost more than $4 billion.

So far, the city government’s strategy seems to be something like this: the city will cobble together a billion dollars—from city tax coffers, from the Port of Seattle, from potential tolls on the new tunnel, from a real-estate improvement tax, and from wherever else it can scrape together some cash. And then the city will convince someone else–the federal government, the state, King County, and/or neighboring counties—to pick up the tab for the remaining $3+ billion.

My question:  does anyone else think this is just wildly, wildly implausible?   I’d love some responses from someone, to help correct my thinking if I’m wrong.

  • First, some numbers. If Seattle residents had to fund the 2.1 mile Viaduct project by themselves, the per-person costs would be prohibitive: $4.1 billion amounts to about $7,000 for every man, woman, and child in the city, or $28,000 for a family of four. Seattle city residents are already ponying up quite a bit to pay for transportation projects—through gas taxes and the monorail levy, among other sources.  Adding such a big tax hit to city residents would probably be enough to whip even mild-mannered Seattleites into an anti-tax furor.

    So the city must be hoping to convince Seattleites that someone else will pick up most of the tab. If you can get a little money from enough other people, even a $4 billion project could become reasonably affordable.

    That’s the theory, I guess. But that’s just not how I think things will play out in the real world:  it seems to me that it’s very, very tough to extract lots of tax money from one place to give it to another place.

    Obviously, it can be done: this excellent report by the Tax Foundation showed that some U.S. states consistently subsidize other ones. New Jersey, for example, only got 62 cents in federal spending in 2003 for every dollar in federal taxes its residents paid out.  In general, the northeast, upper midwest, and west coast states subsidize the generally poorer and more rural states of the south and intermountain west. (Washington, by the way, gets only about 90 cents in spending for every dollar in US taxes it pays.) If Alaska and North Dakota can get on the federal gravy train, why not Seattle?

    But it’s pointless to argue about whether Seattle can somehow finagle its way onto the receiving end of federal largesse. Washington’s senior senator, Patty Murray, went so far as to declare Seattle’s hope of securing $1 billion in federal transportation funds for the Viaduct “very, very impossible.”  In today’s budget and political climate, don’t think for a moment that the feds are going to kick in more than a fraction of the project’s cost.

    The situation is much the same in state politics: it’s hard to see how Seattle is going to convince the rest of the state to give it a $3 billion handout. City officials can talk all they want about how the Viaduct is a state priority. But for people (& politicians) who rarely drive on the Viaduct, that kind of talk tends to fall on deaf ears. People are reluctant to subsidize projects they never see, and politicians never want to raise taxes if their constituents won’t get a share of the action.

    The result is that, even though transportation taxes are cycled through Olympia, for the most part they return to the regions that paid them. Like salmon, transportation taxes tend to return where they were spawned.

    Take a look, for example, at this table of county-level payouts from the “nickel fund”–the transportation fund created in 2003 through a 5-cent hike in the state gas tax—compared with population:

    County Share of
    Population
    Share of
    “Nickel Fund” outlays
    King 29% 33%
    Pierce 12% 16%
    Snohomish 10% 18%
    Spokane 7% 6%
    Clark 6% 6%
    Kitsap 4% 1%
    Yakima 4% 2%
    Thurston 4% 3%
    Whatcom 3% 4%
    Benton 3% 2%
    Skagit 2% 4%
    Cowlitz 2% 1%

    The payouts for a given county’s transportation projects are pretty proportional to the actual population of that county.  King County, for example, accounts for 29 percent of the population of the state, and 33 percent of the outlays from the nickel fund.  Overall, Puget Sound seems to get a little more from the nickel fund than it pays in—but not enough for a similar statewide financing scheme to net Seattle more than a few hundred million dollars towards the Viaduct.

    So if the city is searching for someone else to bail them out, they should probably forget about convincing some other part of the state to fund most of the cost.  Maybe they can squeeze out a little bit.  But nowhere near $3 billion.

    That still leaves a few possibilities for the city to turn to: the Puget Sound Regional Transportation Improvement District and King County (Seattle’s county) come to mind.  And the Seattle metro area is big enough to take some of the sting out of the cost of the Viaduct: spread out among all King County residents, for example, the Viaduct goes from $7,000 per capita to only $2,400.

    But the same issues that bedevil funding at the state level come into play here too.  There are lots of other transportation priorities in Puget Sound.  Politicians on the eastside of Lake Washington want to add more lanes to I-405; that’s slated to cost over $10 billion.  The 520 floating bridge across Lake Washington is, like the Viaduct, near the end of its life; replacing it would cost $2 to 3 billion. The concrete of I-5 is crumbling, and the state says it’s going to need major repairs soon—add another $2 billion or so.  The list of costly-but-high-priority transportation projects in greater Seattle goes on, and on, and on, (scroll down the link to see projects listed by county) running into the tens of billions of dollars. (And recall, the expenses I tallied are on top of the $3 billion
    or so that the region’
    s residents are paying for the monorail and light rail.)

    No doubt, there are many people in greater Puget Sound who would be willing to pay more taxes for new roads. And there are many who could be convinced that the Viaduct is one of the highest transportation priorities for the region. (I’m not one of them—I think that the city would probably be better off without the Viaduct—but that’s another story).

    Nevertheless, there probably aren’t that many people on the eastside of Lake Washington, or Tacoma, or Everett, who’d be willing to pay a significant chunk of change for a road they never drive on, when they believe they have more urgent priorities closer to home.

    That means that the only way to pay to replace the Viaduct would be in a package that would raise the taxes of everyone in the region enough to give them the feeling that they’re paying for their own local project. So a regional funding package to pay for the Viaduct is likely to include, in addition, projects for the folks east of Lake Washington, for the folks North and South of Seattle, and for the I-5 commuters. The money would be spread around the region—and certainly not all be funneled into a single megaproject in downtown Seattle.

    But now, we’re back to where we started:  essentially, a regional transportation package would still mean that Seattle residents are picking up most of the tab for the Viaduct, since taxes from people in other parts of the region would mostly pay for projects near them.

    So to me, the question of who else is going to pick up the tab for the Viaduct is pretty clear:  Nobody.   Nobody’s going to ride to the city’s rescue.  If the city of Seattle wants to rebuild the Viaduct, Seattle residents are going to have to pay for the bulk of it.

    And that means that city’s desire to find “someone else” to pay for the Viaduct really just boils down to this: they want “someone else”–a combination of the state, the county, and regional transportation district—to raise Seattle residents’ taxes by about $3 billion, more or less.  That way, city officials can claim credit for implementing their Tunnel vision, but pass off the blame for the cost.

    So, please—am I missing something here?  Is there some magic pot of money that I’m overlooking? Like Seattle, I guess I need a little help figuring all this out.  Comments welcome.