Will you chip in to support our nonprofit newsroom with a donation today? Yes, I want to support My Edmonds News!
Editor:
Recently, the City’s Finance Director reported that sales tax revenues are falling short of overly optimistic budget projections. Whether that’s due to inflation or broader economic conditions is up for debate.
What isn’t up for debate is a basic rule of economics called the Laffer Effect. At a certain point, when government takes too much of a community’s disposable income through taxes, overall revenues don’t rise — they fall. Residents have less to spend, local commerce contracts, and the City’s own tax collections decline in tandem.
We’ve already seen a significant hit with the RFA levy passed earlier this year. If the proposed levy lift on the November ballot also passes, many Edmonds families will lose an additional $2,000 of disposable income. For some, that will mean cutting back sharply on local spending. For others, it could mean being forced to move out of Edmonds entirely.
A local economy can’t remain vibrant if households are stripped of that much buying power. The math is simple: less disposable income means less commerce — and ultimately, less revenue for the City itself.
So maybe the question isn’t if this levy is the tipping point. The real question is: Can Edmonds afford the consequences?
Lee Reeves
Edmonds
Mr. Reeves: I want to point out there is reason for skepticism of your point of view here. There are many criticisms about the Laffer curve, including that is is an oversimplification, it uses unrealistic assumptions, and is based in supply side economics so it shows political bias (a conservative/Republican bias). Also this site says: “While some historical examples, like Estonia’s flat tax, seem to support the curve, others, like Kansas’ tax experiment, show the opposite effect. Moreover, isolating the Laffer Curve’s impact from other policy changes and economic trends is challenging.” https://whye.org/are-there-criticisms-or-limitations-associated-with-the-laffer-curve
So I ask the question: Can Edmonds afford the consequences of a No vote that won’t fix the fiscal problem but will force drastic cuts to our wonderful City?
Hi Arlene,
I’m sitting at dinner in Downtown Edmonds with my family – sort of shaking my head.. you’ve made up your mind, clearly, but I’m always up for a good ol’ fashioned debate.
Skepticism is fair, but the Laffer Effect isn’t partisan—it’s behavioral economics. When taxes rise beyond what people and businesses can sustain, spending slows, and city revenues drop. It’s happening in Edmonds now: declining sales tax, fewer visitors, and local shops closing.
A “No” vote doesn’t harm the city—it pressures leadership to fix the spending problem instead of raising taxes that drain disposable income and weaken our economy.
At some point, higher taxes yield less revenue. That’s not ideology—it’s reality. Look around downtown – on highway 99..; the data is written on the empty storefronts.
I think any business owner with and Econ 101 and/or above experience would be familiar. Painting as this side vs that side misses the point. But you’d need to understand business and economics to see that.
@Lee – if you can afford dinner in downtown Edmonds, for your family and yourself, then you are living well it seems to me. And yet you oppose the levy. I’m shaking my head. As I understand it, you are also a business owner.And I believe you said you belong to the development commission. Still shaking my head.
@Pamela You’re right—I can afford dinner in downtown Edmonds. I’m a small business owner, we employ one person at a living wage with healthcare and flexibility. I’m not hiding anything, and to be clear: I’m not worried about my ability to pay… No, I’m not on the EDC, but I’ve shared small biz concerns about B&O.
Constructive next steps:
City should publish 5-year models for (1) $14.5M Levy, (2) B&O tax, (3) Paid parking, and (4) Combined impacts—broken out by micro/small/med businesses & sectors (retail, food, services, personal care).
If B&O moves forward, include phase-ins + thresholds to protect micro-biz. Pair with a real economic dev plan (retention, foot traffic, recruitment), and fix basics (ADA/parking enforcement).
Laffer was a Reaganomics guy. His Laffer curve was the excuse that led to Reagan’s tax cuts for the rich which caused a huge jump in the deficits, because supply-side economics doesn’t work. Bush Sr. had to raise taxes to fix the problem after Reagan. Supply-side economics didn’t work for Bush Jr. either… the deficits climbed. Supply side economics has created huge inequality as the rich get richer and the rest don’t.
If you believe in the Laffer curve as a way to argue against the Levy Lift, then you have to own up to the history of it. It is a conservative ploy used to argue against any tax increase, such as the levy lift. Unfortunately for Edmonds, we have to balance the budget, unlike Reagan and Bush Jr. and Trump, so we have to fix the problem. That means cutting services or raising taxes. That will be what the voters decide.
Read more about the Laffer curve here (it is a gift link): https://www.nytimes.com/2019/06/25/opinion/the-dangerous-folly-of-lafferism.html?unlocked_article_code=1.sk8.emrM.1NRAoNeD147m&smid=url-share
The Laffer Effect isn’t about Reaganomics—it’s about what happens when taxation outpaces the local economy’s ability to sustain it. And that’s exactly where Edmonds is heading – as a small business owner, the writing is on the wall. Our sales tax revenue is already down year-over-year (the city has admitted this), even as costs for small businesses have jumped (this is happening + B&O tax is being proposed by the : commercial rent is up, the cost of labor is up, insurance up, and foot traffic down.
Those numbers aren’t political—they’re operational realities. When you pull another $2,000 per household out of the local economy through new levies, that money doesn’t just vanish—it’s money not spent in shops, cafés, salons, or at events. That means fewer sales, less hiring, and declining city revenue—the very thing the Laffer Curve warns about.
In Edmonds, we don’t print money or run deficits – we run on local commerce. Every policy that reduces disposable income directly hits the same small businesses that fund city services through sales and B&O taxes.
If the City wants long-term fiscal health, the path isn’t squeezing more from a shrinking base—it’s growing the base through business vitality and consumer confidence.
Lee, you’re trying to responsibly engage with a person who refuses to engage. Arlene should look no further than CA, IL, NY and other states who irresponsibly ramped up taxes and saw the predicted flight of people and money (tax revenue) from their states. Money is fungible; it goes where it is welcome. Irresponsible handling of tax dollars and reckless spending is what got Edmonds proper into the current situation. Merely raising more tax revenue is a short term ‘fix’ like for a junkie. It fails to address the underlying issues and systemic problems.
Pass this drastic increase in property tax and people will leave, will others come? Some commenters here already have moved out of Edmonds. Maybe, maybe not. Just like the exodus from California, it was predictable and therefor preventable.
Edmonds is a highly desirable place to live. People will come here. I came here from a low tax state because I did not like the result of low taxes. People will move both ways, in and out. In my view, Edmonds will be at risk if we don’t invest in the City. The parks and the streets will get run down. Edmonds won’t have the services to offer. Downtown won’t be kept up as well so it will be less appealing to visit and spend money at those downtown businesses. Edmonds is a really nice place, but it won’t stay that way if the City can’t fix the financial issue. And you mention California, which has higher taxes than Washington and yet it is the fourth largest economy in the world, behind the US, China, and Germany. It must be doing something right. https://www.gov.ca.gov/2025/04/23/california-is-now-the-4th-largest-economy-in-the-world/ In fact Blue States often out-compete Red states for economic output, and it is not because they cut taxes.
It seems to me that Arlene is engaging vigorously: engaging doesn’t mean accepting another persons argument.
I disagree with your statement Kurt about Arlene. I for one appreciate her viewpoint & do not see her as a “person who refuses to engage”.
I would suggest you read more about the Laffer Curve. Even the Laffer Center itself describes it as such: https://laffercenter.org/about/curve/ It says: “The Laffer Curve is one of the main theoretical constructs of supply-side economics, and is often used as a shorthand to sum up the entire pro-growth world view of supply-side economics.”
Now the Laffer Center thinks his curve is the best answer to the economic question about taxes, but that is the conservative viewpoint. It is not shared by everyone. It would be more honest of you to not pretend it is the only viewpoint that is relevant. You obviously believe in this conservative view. I do not. There are two different sides to this. It didn’t work in Kansas. They cut the taxes too much.
I believe the answer is giving more relief to those who have low income. I think that could be improved, but that is a state issue, not a city issue. The most regressive tax is the sales tax. That hurts low income folks more. An income tax with progressively steeper rates for the wealthier would be fairer, but that is not up to the City. All they have is sales tax and property tax and a B&O tax which you probably oppose. Otherwise, we have to cut. And the voters will decide that in November.
i have a question for Arlene. Arlene where in Kansas? It’s a big state when did you live in Kansas? When did you move to Edmonds? I’m curious being from MO originally. MO has HWY issues Interstates etc. many say from lack of tax revenue. WA has terrible roads and Interstates now too. Most of Kansas except along the border with MO is pretty flat and rural. It’s not known for its progressive politics that’s for sure neither is MO except a couple spots Kansas City Proper and Columbia. I have friends that live in Overland Park area and I have an artist friend who shows occasionally at an Art Gallery in Kansas too Sherry Leady I think its called.. So just curious about you as you are quite verbal here in Edmonds. I believe you now live in the Westgate area of Edmonds. How about some info about yourself and your views?
I am referring to what is called the Kansas Experiment in 2012 under Sam Brownback. You can read about it here in Wikipedia. https://en.wikipedia.org/wiki/Kansas_experiment He said: n June 2012, Brownback stated on MSNBC show Morning Joe, “On taxes, you need to get your overall rates down, and you need to get your social manipulation out of it, in my estimation, to create growth. We’ll see how it works. We’ll have a real live experiment.” Wikipedia says: By early 2017, Kansas had “nine rounds of budget cuts over four years, three credit downgrades, missed state payments.” It crashed the state budget and had to be repealed in 2017 because they couldn’t fix it. They had to raise income taxes instead.
I read this since you went to the trouble of giving the link. Thank you. Thing is the Levy lift isn’t about cutting taxes like in KS it’s about raising taxes property taxes in our city only. Are you also for the B&O taxes for here in Edmonds. I am not for that one at all. Small business will suffer and all those grants and encouragement for people to start businesses will go down the drain. As I said I am thinking about the Levy Lift… I just hate it that things got so out of hand here and such a small percentage of our city benefited…but on the other hand I hate to see Edmonds fall..I like Edmonds I just want them to lets say kick that can up the hill and quit with the DT for awhile. That is all I have ever asked for really. I don’t have kids but I used to think sidewalks would be nice for them but now apparently sidewalks are way too expensive at least up here? Where the schools mainly are. Oh well huh ha. Not sure but I think 98026 has more owned properties than 98020. I have been staring at the screen to long ha. I love doing research it’s interesting to me and I am interested in all aspects and all citizens. Later.
Arlene,
I’m an Edmonds small business owner – and simply providing this perspective – as someone who has taken a few courses (UW grad), worked at a couple of companies here and there..and is very, very concerned about the impact of the levy to property owners, small business, renters… yesterday I went to the B&O roundtable at FAC (7:30am) to listen to our ED ‘experts’ drive B&O down our throat… with no real economic development plan (last updated in 2015)..the commission has no data, no models, nothing..every exercise by the city at this point is a short-term and shortsighted..it’s ‘how do we make it through the next couple of years?’… wrong train of thought.. Vote NO on Prop 1, Edmonds.
Yes you are a business owner in downtown Edmonds, I believe. Don’t you want the City to be an attractive draw for people to come visit? It takes money for that, for the parks, for those baskets, for a clean city with no litter, for police backup for people to feels safe here, and roads that are not in disrepair, plus those events that draw in people as well. That money is well spent for businesses as well as the residents. I believe in investing in the community where I live. I have always done this in all the places I lived, as a volunteer and a taxpayer. That is why I am a Yes vote. And I disagree with you about who is only thinking short-term. It is not the City. They are developing a plan to tackle the budget issues. It takes dollars. I feel it is many on the no side, including you, who are not looking to fix this long term. Cuts will only make it worse.
Sadly our city like it or not has too many parks to maintain and too much money is spent to irrigate and maintain all of them. 47 is a lot of parks compared to all other little cities that people have been using in comments. I looked. Now we can’t compare a city like Seattle first of all its King County and so is Shoreline as far as police go etc. Our comparison are really just Mukilteo and Everett as they too are on the waters edge. That will always increase prices. There is no comparison really with MountLake Terrace although they do have Ballinger park at least part of it? Lynnwood has no town square and to me there is no comparison they do have a much bigger retail tax base way beyond the Mall…Car lots, all sorts of those things we apparently didn’t want before people here realized we did need them and foolishly assumed we could go on like this. This is why I hope to see growth beyond the Bowl and into our hubs etc and on 99 where we can maybe encourage some businesses here like hotels nice ones and night life for our young people and housing for the workers in these places…So much to do Arlene. Lets get ideas from citizens here on what and how to attract.
Arlene — I love your civic spirit, truly. But the problem isn’t whether Edmonds should be beautiful or safe — we all agree on that. The problem is that City Hall keeps asking for more money while doing nothing to grow the economic base that funds those very things. You can’t keep taxing the same small group of residents and business owners and expect long-term stability.
Deborah is right — Edmonds is built out, overextended, and underdeveloped outside the Bowl. Real solutions come from economic development, not endless levies. Let’s invest in Route 99, mixed-use growth, and a stronger commercial footprint so we can actually fund our parks, police, and public spaces — sustainably. Accountability first, growth second, higher taxes last.
Hello readers who are inclined to vote Yes on the levy lid lift. Isn’t there anyone else besides Alene who will comment? Is everyone stuck on the emotional message of “Save Francis Anderson Center” (despite it already being saved in the City’s CIP/CFP long range capital program.)
This column from Lee is some critical thinking, not the sound bites of campaign messaging.
Don’t we have some Econ Majors who have an informed opinion?
Mr. Reeves is the one who brought up the Laffer Curve and that is unmistakenly a conservative construct to argue against taxes. He is suggesting the Levy Lift is a tipping point, but he doesn’t have the data to truly make that argument. Now he can make his argument that he feels that the Levy Lift is too extreme, and he has been making that argument for months, but he doesn’t have any data that proves his Laffer Curve as it applies to Edmonds. His is just an opinion, like mine is. I have always felt that supply-side economics doesn’t work. You don’t get more revenue by cutting taxes. I have pointed out that there are many examples of why higher taxes are not necessarily a detriment, because Blue States with higher taxes, like California, are really the economic engine of this country for the most part and using Laffer as Republicans did in Kansas didn’t work in that case. He has his opinion that the taxes are too high. I have a different opinion that we need to keep Edmonds in good shape to attract visitors and fix the budget issue through the Levy Lift. I believe we can do a better job of giving relief to the lower income taxpayers, to help with equity, but that is a State issue.
Arlene,
It’s campaign season! Hey, and happy Sunday.. (Go Hawks)
Unlike many others in our space, our business operates on a healthy margin, underscoring the strength and sustainability of our business model…but here is what is coming down the line that our business is tracking – the tipping point… if you want to come look at our Pro Forma, let me know..
City Levy Lift (Prop 1) – Adds $14.5M/year starting 2026.
Fire Authority (RFA) – Adds ~$1,000/year per property post-annexation.
Snohomish County property taxes – Increasing 4% through 2026.
Edmonds School District levy (2026) – Expected 2–3% increase.
Utility rate hikes – Water, sewer, and stormwater rates expected to rise above CPI.
Sound Transit – Considering +1% property tax on top of current rate.
For a small business leasing commercial space, these layered increases will push rents, utilities, and insurance significantly higher. A typical 2,000 sq. ft. café or boutique could see overhead rise $2,000–$4,000/year between 2026–2028 — before any increases in labor or supply costs. This means fewer hires. Delayed raises. Slower growth. Less local investment. Exactly the opposite of what Edmonds needs.
Hi Theresa, Why is it necessary to comment in this forum? I’m voting Yes but having conversations about it offline and in other online spaces. I will say that I don’t care about the Frances Anderson Center either way and it has not entered into my decisionmaking process.
Shucks. A little bummed Kim. You’ve pointed out many times Edmonds does not invest in your neighborhood and electeds in past have looked down on it. Why reward them?
Btw – I’m yes for $6M levy. If it fails, city will come back to voters.
Either way, Yes or No. I’d be happy to help advocate for 99 investment. I live above bowl, nothing needed. I spent a lot of time in 99 neighborhoods, commuting, shopping. I’d love to see upgrades.
Take care
Entirely removed from any Laffer curves…I suspect that the reason Edmonds sales tax receipts are lower than expected is simple: Highway 99 is losing businesses (witness all the empty commercial properties fronting on the Edmonds segment vs. both Shoreline and Lynnwood). And new construction on the Edmonds segment of Hwy 99 never really took off in the boom that has now ended. Both of these failures reduce the amount of sales tax coming in to the City by a lot. Maybe the City should publicize the sales tax totals coming in from Hwy 99 frontages over the last 10 years? I bet it would look pretty ugly.
Whatever strategy or Comprehensive Planning Edmonds has done for the last 10+ years for Hwy 99 has obviously failed and the City should explain whether that failure caused or contributed to the budget shortfall. Instead, our Mayor tries to put more of the ever increasing budget on the backs of property tax paying residents.
Money that should have been spent on the Hwy 99 area and (elsewhere not “the Bowl”) was wasted on totally rebuilding Civic Field Park including building a giant drain field, not originally planned, to create solid ground where nature wants to form a pond. I suspect that might be where the just missing 3M from the Nelson Admin. went. Similarly, money has been wasted on paying your city attorney to fight for the “Missing Link” in “the Bowl” against your own citizens living at Ebb Tide Condo and funding the shipping away of poop waste that was supposedly going to get cooked and sold to offset the costs of the new state of the art waste treatment plant. And you plan to just give these people who couldn’t run a lemonade stand if someone gave them the lemons all the money they want to waste on stuff like this? If you vote yes you deserve what you will get.
The Laffer Curve is not relevant to the levy lift debate. The Laffer Curve does not explain property tax elasticity. Laffer’s model is based on a model of income tax elasticity. To apply the Laffer curve to explain property tax elasticity would not yield a meaningful analysis.
The lead article that has utilized the Laffer Curve to claim tax revenue starts to go down in a society with excessive taxes. The argument is that it begins to impact spending and therefore GDP. However, a look at per capita GDP by state demonstrates that the states with the highest per capita GDP are blue states with higher tax rates. The highest is New York at over $116,000. Second is Massachusetts at over $110,000. Third is Washington state at over $108,000, Fourth is California at over $104,000 and fifth is Connecticut at over $100,000. All blue states with significant tax bases that provide substantial services to their residents.
In contrast I recently lived in North Carolina. Taxes are low, the minimum wage is still the Federal minimum wage and labor unions are outlawed by “right to work laws”. Medical care for low income individuals is nonexistent. Since there is no longer bussing schools are segregated by neighborhoods. While all schools receive the same funding, the PTA in wealthy neighborhoods can provide over $100,000 in extra funding while a poverty school is likely to generate $5,000.
Yes taxation must be reasonable but to focus on taxation as the cause for an economic downturn is not supported by evidence. We are lucky to live in a State where the economy is great.
In other sections I have commented on the need to change the zoning and building regulations on Route 99 to promote significant multi-use development. Ideas include, increased height limitations, the promotion of housing and retail mixed use properties. Producing low to moderate income housing so workers can live where they work without having to drive an hour. This would increase property taxes since the taxable base will increase beyond single family homes. It will also generate more sales tax. Large grocery stores do not produce sales tax since food is tax exempt.
Mark — appreciate your thoughtful response. Agree with you on broad national trends – my current assessment: GDP and tax rates can coexist productively when paired with strong economies, innovation, and business ecosystems. That’s where we (Edmonds) differs — we’re a small, built-out city with limited commercial inventory, no meaningful industry base, and rising operational costs outpacing inflation.
That’s why the conversation should, IMO, shift from taxation to economic development. Edmonds needs to grow its taxable base — not just raise rates on the same residents and small businesses. Highway 99, Highway 104, and our downtown core are underperforming economic zones. With smart zoning reform, targeted mixed-use incentives, and a real business recruitment strategy, we can expand revenue sustainably without overburdening taxpayers.
It’s not about being anti-tax — it’s about being pro-growth. We need a city hall focused on building opportunity, not just collecting more from the same shrinking pie.
Lee, it would help if Edmonds just got back to the basics of only what is needed to provide vital city services such as police, fire, sanitation, water, roads and building permit enforcement. Great Parks and playgrounds are nice things to have but not vital. A Center for the Arts is a nice thing to have, but not vital. An uninterrupted Salish Sea walkway would be a nice thing to have, but at the cost of thousands if not millions? A city social worker is a nice thing to have, but not vital to city government. Fighting climate change is a nice idea but is there really all that much the city can do about it and should the city be spending money it doesn’t have on doing it? Purchase of the Unocal property and day lighting Deer Creek would be a nice thing to do, but can the city afford to do it, especially if doing it might incur huge pollution mitigation charges after Chevron is let off the hook by the state? Rosen’s Prop 1 is just giving people who really don’t know what they are doing more money to waste.