Council's Compromise with Mayor Durkan on Head Tax Cuts Original Rate Nearly in Half

Lorena González announces a compromise. Seattle Channel

Seattle city council members will propose a smaller head tax plan this afternoon, reflecting a compromise with Mayor Jenny Durkan in the first major policy debate of her administration.

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The new proposal would tax large for-profit businesses $275 per full time employee and is projected to raise $50 million per year to fund housing and homelessness services, according to council member Lorena González. Only businesses grossing more than $20 million annually will be affected. The city would evaluate the tax in 2023 and council members would have the option of renewing it or let it die.

Four council members last month proposed a tax on the same businesses of $500 per full time employee, which officials said would raise $75 million per year. On Thursday, the night before council members were set to talk about the tax in a committee meeting, Durkan announced that she supported cutting that tax in half to $250.

Council members voted 5 to 4 on Friday to pass the larger tax out of committee, with the understanding that they would be negotiating through the weekend for a plan that could get Durkan's signature.

Now, it seems Durkan and Amazon's efforts to shrink the tax could pay off. Stephanie Formas, a spokesperson for Durkan, said the mayor "is encouraged by the collaboration with council members and looks forward to council's vote this afternoon."

Lorena González, one of the four-cosponsors of the new proposal, told reporters after the briefing, "We feel like we’ve made a lot of good faith efforts to find a taxation rate that will bring our colleagues and the mayor along, and we hope this is enough to get the support of all our colleagues."

What will need to be fine-tuned between now and this afternoon is how the new money will be spent. Under the original proposal, council members wanted to spend about 75 percent of the new funds to build new affordable affordable housing and 20 percent to pay for emergency shelter and other homelessness services, with the remaining chunk of money going towards start-up and administrative costs. A modified spending plan proposed last week would instead divide the revenue at about 60 percent for housing and 40 percent on shelter services.

González said the adjusted spending plan for the $275 head tax will align more closely with the 60-40 split.

Today's compromise follows weeks of crescendo of raucous debate that has pitted the Seattle Metropolitan Chamber of Commerce opposing the tax against homelessness service providers who support it. Unions are split, with ironworkers and carpenters against the plan due to the potential impact on their jobs, and organizations representing nurses, educators and grocery store workers supporting the heax tax.

The episode reached a crescendo on May 2, when the Seattle Times reported that Amazon halted construction of a downtown office tower and considered sub-leasing, rather than occupying another building, pending the outcome of the city council vote. The halt put 7,000 jobs on the line.

When Durkan proposed her smaller tax, the Times quoted Monty Anderson, executive secretary of the Seattle Building Trades Union, saying that if Durkan's plan passed, the planned Amazon construction would start again.

Anderson told The Stranger today that the new proposal will likely have the same effect.

""Will Amazon unpause Block 18 if $275 passes?" Anderson said, referring to the downtown lot where the company halted construction. "I think they will.”

A spokesperson for Amazon would not confirm whether it is satisfied with the new rate.

The full council will take up the head tax at 2 p.m.

This post has been updated to include comment from Mayor Durkan and Monty Anderson.