Lower ‘head tax’ passed by Seattle City Council

Seattle City Council today unanimously passed an employee hours tax affecting businesses making $20 million or more in gross adjusted income, or about 3 percent of Seattle’s businesses—although it’s a smaller version of the tax than the one that wound through Council over the past few weeks.

The bill that emerged from committee had resisted most amendments, but was threatened by a mayoral veto with a narrow vote margin of five to four. So the version that passed City Council was a smaller tax plan than originally proposed—closer in scope to a plan proposed by Mayor Jenny Durkan last week, but with priorities closer to the original intent—with a rate of about $275 a head instead of $500. That plan, instead of continuing indefinitely, expires in 2023, although a new ordinance could renew the tax.

Unlike the previous Durkan compromise, which would have shifted spending priority to services, this plan devotes 61 to 69 percent of its revenue to housing inventory and associated wraparound services, depending on the year.

With a smaller tax comes a smaller amount of revenue, though: between 40 and $50 million a year, compared to the $75 million originally proposed. A recent report by firm McKinsey, in partnership with the Seattle Metropolitan Chamber of Commerce (which opposed the tax), found the region needs to spend around $400 million to solve the homelessness crisis—with about 80 percent of that money going toward affordable housing.

“I want to be clear that the bill before us, unamended, is the best way forward,” said Mike O’Brien, who first introduced a head tax for housing and homeless services last year, explaining his “yes” vote on the amendment. “Despite a lot of conversations over the past week, including a lot this weekend, we could not find a path to get the number of votes we needed to put this in place.”

“There’s a lot more work that needs to happen,” he continued.

“While I’m pleased, I’m also disappointed,” said Lorena González, one of the sponsors of this bill in its original form, in discussion of the amendment.

The crowd was packed with citizens both in strong support and opposition to the bill. As City Council prepared to pass the amendment for the lower tax, the crowd began chanting in favor (“75! 75!”)

“We’ve worked hard,” said Debra Juarez, who opposed the original bill, speaking of the revised version. “And if you can’t see that, I’m sorry.”

According to the most recent spending plan provided to Curbed Seattle—although some adjustments were made in amendments and the plan itself is nonbinding—over the next five years, the tax will fund constructing 591 apartments for those making both 0 to 30 percent and and between 30 to 60 percent area median income (AMI)—30 percent is $25,950 a year for a family of three. It would also fund wraparound services for 302 housing units for more vulnerable populations.

“Immediate” needs funded by the tax include around 250 shelter beds, two temporary encampments with room for 54, 153 safe parking spots, and 289 “immediate housing” units (“rental, operating, master leasing and/or capital subsidies”). In addition, it would fund mobile hygiene and health services, including showers, laundry, toilets, and medical care, plus garbage pickup.

Staffing would also be fortified, with additional behavioral health and housing navigation outreach employees and money to help address turnaround for existing service providers, which tend to have extremely low rates of pay.

“We kept pushing the ball forward,” said Teresa Mosqueda discussing the bill—and for her, the fight’s not over. “Even after today we will keep fighting for progressive revenue.”

This article has been updated to clarify that the spending plan is nonbinding.

• Business tax for housing and homeless services advances out of City Council committee [CS]
• Revised business tax for housing and homeless services heads to City Council [CS]
• Progressive Tax on Business [SCC]