On May 14, the Seattle City Council passed a tax on 3 percent of the businesses in the city to fund affordable housing and services for people experiencing homelessness.
It was a controversial move. Tensions on the second floor ran high as council members and staff scrambled to put together a proposal they could pass that would make it past Mayor Jenny Durkan. She signaled just days before the vote that she would not support a previous, more expensive iteration that looked probable to pass the council by a vote of 5–4, one short of a veto-proof majority.
Now, that effort is under fire, despite its limited reach and the desperate need.
Business interests have banded together to launch a referendum to repeal the tax, which supporters say kills companies’ incentives to create jobs in the area. Amazon certainly tried to make that point, threatening to permanently halt construction on the Block 18 office tower and canceling 8,000 jobs associated with the complex.
Ironically, Block 18 is the current Days Inn, a building that houses a homeless shelter for women and families.
Amazon, Kroger, Albertsons and Vulcan have each pledged $25,000 to repeal the tax. Their donations made up a sizeable percentage of the roughly $350,000 promised to the campaign to claw back the tax expected to raise $47 million each year. According to reports, Amazon would be on the hook for approximately 20 percent of that total, an amount that founder Jeff Bezos alone amasses in a matter of hours.
It’s unclear if these businesses coordinated their contributions as none of them have yet responded to requests for comment. According to Wayne Barnett, executive director of the Seattle Ethics and Elections Commission, there is no upper limit on such contributions, meaning that the $25,000 figure is legally arbitrary.
Opponents of the tax suggest that the money is unnecessary to solving homelessness, or at least that the measure should be shelved until the city can prove that the millions already spent on alleviating the human suffering on Seattle’s streets is spent in an effective way.
Proponents say that current spending is saving thousands from homelessness, and the growing problem of unsheltered homelessness has more to do with the increasing number of people becoming homeless due to an inability to pay rent, eviction history, incarceration and more.
The fate of the employee head tax is the newest pitched battle around Seattle’s response to homelessness, and one that voters will likely be forced to decide come election season in 2018.
There is at least one facet of the tax that no one contests — the visible poverty and homelessness in Seattle has gotten more severe. Where people seem to disagree is the cause and the solution.
Data has long shown that one of the largest drivers of homelessness is a lack of affordable housing. That sounds intuitive, but those who oppose the tax to build more affordable housing and help people get into a situation where they can maintain that housing seem conflicted.
At last count, 5,485 people slept outside in Seattle. The total number of people experiencing homelessness is the third highest in the nation, far outpacing Seattle’s population relative to other major metropolises. When asked who to blame, advocates point to businesses like Amazon whose rapid growth and high-paid employees have helped make housing more scarce and more expensive.
Information released by McKinsey & Company in the last hours of the debate around the head tax backs up this theory.
According to McKinsey, the major driver of homelessness is a lack of affordable and available units — as rent for a studio apartment in King County jumped 12.3 percent per year between 2014 and 2017, the proportion of units affordable to people making half of the area median income (approximately $35,100 for a single person, $50,150 for a family of four) halved between 2011 and 2017.
In the same report, McKinsey recommended that the region spend $400 million per year to solve homelessness.
That conclusion sparked controversy and pushback. Roger Valdez, director of Seattle for Growth, wrote an article calling into question the report and its use by councilmembers in the last days of the tax debate before the full version was released to the public.
Valdez wrote a column for Forbes that stated that the McKinsey report was a fabrication, or at least an overstatement.
“That’s right,” the original column read in bold. “There never was a report.”
The article has now been updated to say that there was never a publicly available report, just a private Powerpoint circulated in City Hall to a handful of supportive councilmembers. Valdez believes that this is a distinction without a difference.
“It’s not if it was a ring-bound document, a Powerpoint or whatever,” Valdez said in an interview. “It was how it was used.”
Valdez’s argument has been shared by groups such as Speak Out Seattle and Safe Seattle, organizations composed of self-described concerned citizens who profess how much they care about people experiencing homelessness while attacking efforts to house them.
Now opponents are out to gather signatures in an attempt to get the repeal of the tax on the ballot.
There are good-faith arguments that the tax on employees is ideal public policy. In fact, outside observer’s such as Vox’s Matthew Yglesias have chimed in to say that it isn’t. But no one who opposes the tax — be it business owners or consumers — have offered an alternative in a state where local income taxes and graduated taxes are prohibited.
In fact, the Seattle Chamber of Commerce rejected the opportunity to come to the table to discuss the tax, saying that the outcome had already been decided. Instead, they and other tax opponents say that they believe that there are inefficiencies in the homeless services system that, if fixed, can do as much or more than the tax itself. That’s despite the fact that the body of homeless services contracts done by the city went out for competitive bidding less than a year ago.
This leaves proponents of the tax and future spending bill worried. The tax itself is not sufficient, representing a third of the amount that service providers rallied for. Killing the measure, in their eyes, is like saying that the Titanic could have been saved by shuffling its deck chairs.
This article has been updated.
Ashley Archibald is a Staff Reporter covering local government, policy and equity. Have a story idea? She can be can reached at ashleya (at) realchangenews (dot) org. Follow Ashley on Twitter @AshleyA_RC
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