A $300 million shortfall due to COVID-19. Three progressive revenue proposals and one initiative aiming for the ballot. A massive civil rights uprising calling for — at least — halving the police budget and reinvesting in community programs.
The Seattle City Council has a lot to work through over the next few weeks as it tries to realign the city’s budget after a rare confluence of events pushed funding inequity to the forefront.
Estimates of the impacts of the huge job losses and slow reopening of the state and local economies due to the coronavirus have been known for nearly two months.
At the end of April, Budget Director Ben Noble told the council the city could lose as much as 20 percent of sales taxes and a similar amount of business and occupation tax. While those two were among the biggest hits, almost no revenue source seemed unscathed, and the true costs were unknown.
City councilmembers have now come out with a trio of plans to raise and spend revenues from Seattle’s wealthiest businesses and people, varying by method of revenue generation and ambition. At the same time, several councilmembers have expressed interest in considering cuts to the Seattle Police Department (SPD) budget, the largest cost to the city’s general fund.
The first — sponsored by councilmembers Kshama Sawant and Tammy Morales early in 2020 — is the biggest, proposing a 1.3 percent payroll tax on companies that spend more than $7 million in compensation, which would raise over $500 million annually. The tax excludes certain businesses, like nonprofits and grocery stores.
Accompanying legislation would try to get future gains from the tax immediately to people in need. Other proceeds would go to a “green new deal” for creating union jobs and affordable housing, among other items.
A parallel effort through the initiative system has been furiously gathering signatures in an attempt to get on the November ballot.
The second, discussed in the June 17 budget meeting, is Councilmember Teresa Mosqueda’s “Jump Start Seattle,” which is also formulated as a payroll tax.
The proposal levies a tax percentage based on a business’ size and compensation rates. Businesses with payroll between $7 million and $1 billion would pay a .7 percent tax on total employee compensation from $150,000 to $499,999 and 1.4 percent on compensation over $500,000.
Bigger businesses would be charged more: 1.4 percent for the first range and 2.1 percent for the second.
That would bring in an estimated $174 million, excluding the higher pull from businesses that pay in excess of $1 billion in compensation.
The Jump Start Seattle spending plan falls into four primary buckets: housing security, support for immigrants and refugees, business support and food security.
Mosqueda, who chairs the budget committee, said a “call to action” was initiated in the council by Sawant and Morales, as well as constituents, for more services, small-business loans and affordable housing.
The councilmembers agree on the need for progressive revenue, ensuring that the revenue is progressive in both its assessment and spending plans, and that there is money immediately available to get out the door to struggling constituents, Mosqueda said.
“I’m hopeful that those three pillars that, I hope, unite us all on council and especially among the sponsors of the legislation continue to be lifted up, because I do think there is a lot of commonality in why a progressive revenue proposal is being put forward by folks here and the urgency to make sure something happens,” Mosqueda said.
The next day, Councilmember Andrew Lewis revealed a capital gains proposal to fund affordable housing, permanent supportive housing and homelessness services. This tax would be more narrowly tailored and bring in less money but is not intended to replace Mosqueda’s proposal, of which Lewis is a cosponsor. Instead, it would support Third Door Coalition — a group of businesses, nonprofits, academics and elected officials focusing on housing chronically homeless people.
“We need to tax wealthy individuals as well as corporations,” Lewis tweeted.
The tax would levy only stocks and bonds sold for profit, not retirement accounts, real estate sales or investment losses. An estimated 30 percent of Seattleites would pay the 1 percent capital gains tax, which would raise roughly $37 million per year, according to the press release.
Also at play is the SPD budget. According to the 2020 approved budget, the City Council appropriated more than $409 million for SPD, making it the most expensive department in the general fund. It’s also what Mosqueda calls a “black box”: She has requested a granular analysis of SPD spending, including how much has been spent on the police response to protests for George Floyd.
Floyd’s killing by former Minnesota Police Officer Derek Chauvin unleashed a movement across the country calling for defunding police, if not outright abolition. People occupying the space around the East Precinct in Capitol Hill are united in calling for a minimum 50 percent cut to the existing police department budget and the reallocation of those funds to serve Seattle’s Black communities.
At least three councilmembers have voiced outright support for the concept, including Sawant, Mosqueda and Morales, while others have expressed a desire to look at the budget but held back on an exact commitment, such as councilmembers Lisa Herbold and Alex Pedersen.
Taken together — and with the backdrop of ongoing protests and the continuing impact of COVID-19 — it will be a lot to bring together in a short time.
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.
Read more in the June 24-30, 2020 issue.