Two years after the Seattle City Council approved and then repealed a business tax to fund homelessness services, a new measure to fund coronavirus relief, services and housing projects sailed through the City Council with a veto-proof majority.
And this time, it was four times bigger.
The City Council approved JumpStart Seattle on July 6, a payroll tax on lucrative companies that offer generous salaries. It’s expected to raise more than $200 million each year, money that will initially be plowed into coronavirus relief for low-income Seattleites and later into affordable housing production and services to alleviate the city’s homelessness crisis.
“This is about caring for Seattleites now and into the future. Together we are making history,” said Councilmember Teresa Mosqueda, the architect of the legislation.
Although the payroll tax raises significantly more money than the failed 2018 effort, it is more narrowly tailored to hit businesses that can afford to pay it. JumpStart Seattle applies to businesses with $7 million or more in payroll, and only on salaries greater than $150,000.
That separates it from the 2018 measure, which applied an across-the-board fee based on the number of employees a business had — a policy proposal that brought together a coalition of opponents from grocery stores to tech giants. A well-funded opposition campaign launched as a result, causing councilmembers to backtrack a month after it passed, lest they risk a repeal at the ballot box.
JumpStart Seattle also appears to have fended off a separate effort spearheaded by councilmembers Kshama Sawant and Tammy Morales, who advanced a richer proposal that would have raised $500 million per year by taxing large businesses but exempting nonprofits and grocery stores.
That measure stalled at the council level, first over concerns that it did not meet the threshold for consideration under Gov. Jay Inslee’s proclamation that dictated what government business could and could not be conducted over virtual meetings during the coronavirus pandemic.
Undaunted, supporters launched a parallel process to get an initiative on the November ballot.
They gathered more than 30,000 signatures in a handful of weeks through a socially distanced process, mobilizing hundreds of volunteers armed with masks and gloves to drop off individual signature sheets at homes throughout the city. However, members decided to hold onto them rather than submit them to the state.
“Our fight is not over,” they wrote in a statement. “Now that a big business tax has been won, we can fight to expand it, to build far more affordable housing, to fight against all the budget cuts to social services.”
The signatures will be held in reserve in case businesses attempt to repeal the tax.
Unless other councilmembers backtrack, a repeal is the only viable option to be rid of the tax.
The 7-2 vote is a veto-proof majority, meaning that if Mayor Jenny Durkan — who was vocally opposed to Sawant and Morales’ bill — chooses to send it back to council, at least two council members will have to be convinced to change their vote.
The two who opposed the measure — councilmembers Debora Juarez and Alex Pedersen — did so for professedly different reasons.
Juarez told her colleagues that she believed additional revenue was needed, but that Seattleites could be trusted to vote to tax themselves, citing the success of voter-approved levies that support libraries, homelessness services and veterans, among others.
“I like what Portland did,” Juarez said, referencing a regional tax that 63 percent of voters approved in May 2020 to fund homelessness services that sunsets in 10 years.
“Seattle voters are smart, caring and generous,” Juarez said. “I trust their civic judgment and voice.”
That civic judgment and voice seemed cloudier for Pedersen, who complimented Mosqueda as a “masterful legislator” but opposed the measure, pointing out that businesses already pay business and occupation taxes, property taxes and license fees.
“I appreciate why many of my colleagues are going to vote yes today,” Pedersen said. “After much consideration and consultation with my constituents, my strong concerns remain.”
The legislation did not make it through the council unchanged. Councilmembers voted to add a 20-year sunset clause — it had none before — and exempted nonprofit health care organizations, despite the multi-million-dollar salaries paid to some of their executives.
The changes were frustrating, Morales said, but ultimately the tax was a step in the right direction.
“This is a more equitable way to finance public services, and we challenge elected officials at the state level to choose investment over austerity,” Morales said.
The broad contours of the spending plan were also approved, although the details remain to be decided.
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 July 15-21, 2020 issue.