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Seattle City Council likely to repeal business tax for housing and homeless services

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The council appears to have enough votes to repeal the “head tax” after outcry

Seattle Municipal Archives, item No. 186192

The latest iteration of an employee hours tax to support housing and homeless services programs appears to be on the chopping block, with several members of the Seattle City Council—joined by Mayor Jenny Durkan—supporting a repeal proposed by City Council President Bruce Harrell. The City Council has scheduled a special hearing on the appeal, with a likely vote to follow, at noon on Tuesday.

The tax, proposed in late April, would originally have charged businesses making $20 million or more in revenue around $500 per full-time employee, with the $75 million raised going toward affordable housing and homeless services. The version that ultimately passed council and signed by the mayor was a watered-down, compromised version, at about $275 a head and raising between $40 and $50 million a year. A spending plan also passed by council would have devoted more than half of that money to building affordable housing.

Opposition to the tax was swift, with a business coalition organizing a referendum campaign to put the tax on the ballot, supported by the Seattle Metropolitan Chamber of Commerce. As both volunteers and paid gatherers collect signatures, an opposition group has been organizing to encourage people to not sign onto the referendum (and fact-check when necessary).

As their constituents become more heated, the majority city councilors have backed the repeal proposal, which the Chamber of Commerce called “a breath of fresh air” in a statement. “Repealing the tax on jobs gives our region the chance to address homelessness in a productive, focused, and unified way.”

A joint statement by seven out of nine city councilors, including most sponsors of the original bill to implement the tax, plus the mayor said that while Seattle “remains committed to building solutions that bring businesses, labor, philanthropy, neighborhoods and communities to the table,” that “Seattle taxpayers cannot continue to shoulder the majority of costs and impacts.”

Although Lorena González, who sits in the citywide Position 9, signed onto the joint statement, she also expressed reservation with the appeal—and shot down claims that the council didn’t work with the business community—in her own, separate statement.

“I continue to believe that the Employee Hours Tax was an appropriate policy choice to fund additional housing and human services for people experiencing homelessness,” said González. “I regret that it appears that powerful and well-resourced interests have swayed public opinion to believe that more is not needed.”

“Certain members of the business community... chose to double-down on polarizing the issue of homelessness and fostering divide amongst Seattle residents,” added González. “For civic and business leaders who are truly committed to concrete, progressive solutions to get our neighbors housed now, I welcome good-faith and urgent collaboration to identify revenue sources to accomplish our common goals.”

Two remain steadfast in supporting the tax. Teresa Mosqueda, who serves in the at-large position 8, said in a statement that she’s heard concerns—and shares them—but that she “cannot back a repeal without a replacement strategy to house and shelter our neighbors experiencing homelessness.”

“While a vote may go forward to repeal the tax, our homelessness and housing affordability crisis gets worse” said Mosqueda. “We have people who are dying on the doorsteps of prosperity, and our neighbors and friends worry about being able to afford to live in the City while we have a booming economy.”

Kshama Sawant, who represents district 3, called the repeal “capitulation to bullying by Amazon & other big [businesses].”

Still, with only two currently opposed—and seven signed on—the repeal seems all but set in stone.

The Employee Hours Tax was the latest of several proposals aimed at helping people sleeping outside and in shelters that has been dismantled after public outcry. An earlier version of the tax was sent back to the drawing board (that is, a committee) for revision after initially being proposed during the council’s city budgeting process. Other measures to provide leniency to people living in tents or cars while they waited for services—and the city waited for more affordable housing to come online—were also widely panned by the public and ultimately scrapped.

Meanwhile, King County’s latest point-in-time count of people experiencing homelessness found more than 6,000 people unsheltered, and almost 6,000 more in temporary shelters or transitional housing.

This article has been updated with a statement from Lorena González.