Seattle City Council Members Promise New Business Tax for Homelessness by March

throwback sign seen at a recent Seattle City Council budget hearing. HG

The Seattle City Council intends to pass a business head tax or another progressive revenue source by March, according to a resolution the council approved unanimously today.

Last week, a narrow majority of the council rejected a proposal to impose a per-hour, per-employee tax on the highest grossing 5 percent of businesses in Seattle. That tax would have raised about $25 million a year to fund emergency shelter, affordable housing, and an expansion of the drug crime diversion program LEAD. Under public pressure, some council members who voted against that proposal said they may support a similar tax in the future if the city undertook a longer process and consulted business interests.

Today's resolution sets out a timeline for a task force to discuss a head tax and other potential revenue sources. The task force would also decide how money raised from a new tax should be spent on homelessness services and affordable housing.

The council, "with input from the mayor," will name members of the task force by December 11. That group will report to a council committee in January and February and make recommendations by February 26. Council Members Mike O'Brien (who sponsored the head tax) and Lorena González (who voted against the head tax) crafted the resolution.

The task force will consider various revenue sources, not just the head tax. The resolution initially said the council planned "to take final legislative action imposing an EHT [employee hours tax] by March 26, 2018 or early enough to ensure that EHT revenues can be imposed as of January 1, 2019."

The council engaged in a lengthy debate today over adding five words to that line. Council Member Sally Bagshaw proposed an amendment to the resolution to say the council will consider a head tax "and/or other progressive taxes." (Bagshaw voted against the head tax last week.) Council Member Kshama Sawant slammed Bagshaw and other council members over that change. “In the abstract, every politician agrees that we should have progressive taxation," Sawant said. "What is actually going to be voted on is the question.” The amendment passed 5-4.

Even so, González assured her colleagues that she supports a head tax. "My sole focus over the next several months will be to craft a clear, cogent policy around an employee hours tax," González said, "and I say that knowing the people who I am proposing to be taxed are not pleased with the fact that's the direction I want to head."

In making their case over recent weeks, head tax-supporters cited the nature of a new tax: Unlike one-time budget fights, taxing big business would provide a stable source of new money each year for housing and homelessness. (Stable until the next recession, at least.) Supporters also made a link between increased wealth in the city and worsening homelessness and housing affordability. The resolution directs the task force to identify revenue sources that will not "regressively burden low- and middle-income people (such as a sales tax), but instead require those benefiting from Seattle’s economic growth to contribute to addressing Seattle’s affordable housing and homelessness crises." The resolution directs the task force to prioritize people who've been homeless the longest or who have the greatest barriers to housing when deciding how the new money should be spent.

The Seattle Metropolitan Chamber of Commerce, which opposed the tax, issued a statement today saying the city should "move beyond tactics like the council’s recent attempt to pass a jobs tax." Chamber CEO Maud Daudon said the city and county should focus on data and "measurable outcomes" in determining which homelessness programs to fund. The city should give highest priority to serving families with children and should "embrace the 'housing first' philosophy," Daudon said. The city is already pursuing most of those ideas, following a consultant's recommendation to focus on housing while also re-bidding its contracts with service providers for the first time in a decade. But service providers and advocates say the problem continues to get worse as shelters are unable to meet people's needs and housing costs push more people into homelessness.

The resolution says the task force will be made up of "members such as subject matter experts on housing, health care, and homelessness; service providers; civic leaders; labor representatives; individuals who have experienced or are currently experiencing homelessness; business organizations; economic equity experts; community organizations; community coalitions; community leaders; and small and large business owners."

The task force's meetings will be public, according to O'Brien.