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Seattle ‘Employee Hours Tax’ at center of budget debate — UPDATE

Seattle City Council budget chair Lisa Herbold’s job is to take the mayor’s budget proposal and shape it for the city’s most important priorities. This week, her committee will put the final touches on Seattle’s budget “balancing” process.

A new employee hours tax — sometimes referred to as a head tax — stands at the center of the effort.

“If we pass the Employee Hours Tax…  starting in 2018 we can begin to invest nearly $50 million each year and create 2,000 additional units of affordable housing over four years,” Herbold writes in an update on the budget process, “for both low-wage working families and formerly homeless individuals. This would more than double what the Housing Levy funds each year.”

UPDATE 2:10 PM: During Tuesday’s budget committee meeting, Council members voted against the employee hours tax proposal in a 5-4 vote. Those who opposed were Harrell, Juarez, Johnson, Bagshaw and Gonzalez. However, Harrell, Johnson and Gonzalez expressed support for coming back to the HOMES tax early in 2018.

While many in Seattle’s business communities have voiced opposition to the HOMES tax, Council members Kshama Sawant, Mike O’Brien, Kirsten Harris-Talley and Herbold have been planning a budget including its implementation.

Other proposed budget updates focus on the Seattle Department of Transportation (SDOT) and the Human Services Department. Herbold says she wants to remove the minimum general fund contribution of $40 million given to SDOT. The committee’s amendments allow four more authorized encampments and have three provisions on unauthorized encampment removals.

“I’m very leery of dipping into these funds, though it’s always tempting for elected officials,” Herbold said. “The account has successfully helped the city to maintain services during economic downturns … especially in this era where federal funding is so uncertain.”

The Full Council is scheduled to vote on the budget November 20th.

The HOMES proposal creates a permanent revenue source and simultaneously generates a new bond. This means the Council could use the HOMES money to bond against and replicate last year’s $29 million housing bond. $10 million of that bond was already issued and the remainder comes over the next year. The concern is Seattle has no ongoing revenue source to pay the current bond back. So the money has to otherwise come out of the general fund.

The HOMES tax could solve this problem.

The tax dedicates $13 million to both preserving and adding new housing and shelter services. It’s also said to provide funding for Law Enforcement Assisted Diversion.

O’Brien and Harris-Talley released a joint statement pointing out the disproportionate burden on communities of color during Seattle’s housing and homelessness crisis. The release lists a number of notable supporters, like Jessyn Farrell, Washington’s former representative in the 46th, Seattle Peoples Party and LGBTQ Allyship. There are 26 supporters in total.

“We need to reduce the number of new housing units that get diverted from the housing market into vacation rentals,” the release read, “and create a revenue stream to fund community-led anti-displacement investments through the Equitable Development Initiative (EDI) … We support the proposal to restrict the number of units for short term rentals to an individual’s primary residence plus one additional property”

The EDI would get $5 million a year from the HOMES tax.

The HOMES tax could hypothetically spend a few million on bonding and at least $11 million on emergency shelter. After four years, the money could shift from services over to housing. The breakdown of where the money goes will not be voted on this week, but rather over the next few months if the tax passes.

Meanwhile, a group of businesses headed by the Downtown Seattle Association has sent a letter opposing the proposed tax. The complete letter — and a roster of signees — is below:

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13 thoughts on “Seattle ‘Employee Hours Tax’ at center of budget debate — UPDATE

  1. I’m not convinced that the “HOMES tax” is a good idea. The amount of taxpayer money spent on the homeless issue has already increased substantially in the last year or so, and in the recent election we approved even more funding…..that’s fine, but enough is enough. I do not trust City officials to spend additional money wisely, because that has not been the case in the past. I am optimistic that Jenny Durkan will be more able to get a handle on this problem, but even as Mayor she will only be one voice.

  2. I’d like to know why we have money to paint Pac Man on concrete parks but we need extra taxes. We should be helping the homeless before funding “nice to haves”. Maybe we could fund homeless services with the general fund and then put parklets and woonerfs up for a vote.

  3. One thing I found a little confusing about the article is that it’s about the proposed per-employee business tax, but it also mixes in quotes about a tax on homeowners who rent out their properties on a short-term basis. They’re really two different policies, each with their own pro- and con- arguments.

  4. WTF is wrong with this Clownsil? Who do they think will be left to pay for all these projects after they’ve chased every big employer out of Seattle and back to the Eastside again— if not out of state entirely? Did they not buy a clue with Amazon’s project to build a 2nd HQ? Are they so determined to kill the goose that laid the golden egg?

  5. WHY is every proposal made by Mike O’Brien, Kshama Sawant and Kirsten Harris-Talley COMPLETELY LACKING evidentiary support? So communities of color have been disproportionately “impacted?” And the Head Tax won’t adversely affect low margin businesses with more than $5 million in gross revenue? And there are “shovel ready” projects to build low income housing that just need a little public boost to get going?

    What’s the evidence???

    Why does it seem that Seattle is lapsing into “velvet authoritarianism,” with a city council that does whatever it pleases not only without regard to public opinion (and, sorry Kshama, your stage managed agit-prop events don’t count), but without a clear and verifiable evidentiary basis?

    Maybe because it is.

  6. I am most definitely a liberal but this city is off in the weeds. It’s like a leftist bizzaro world version of the White House (obviously with Sawant as bizzaro-Trump).

    A basic assumption is made if anything is to be be done then we must have a new tax for new revenue. Never a discussion about the billions we currently spend… let’s just take it from someone… raise a bit of revenue as well as dispense punishment on those who we deem responsible.

    The city’s overall budget (general fund, utilities, etc.) has increased by 38 percent over the last seven years (from $4 billion a year to $5.5 billion) this from

    There will never be enough money to spend or enough blame too spread for this current city council.

    Holy crap, I sound like some sort of ideologue troll, but I’m just some random liberal with common sense… just like the vast majority of people who live here.

  7. Although the article mentions that many in the Seattle business community are opposed to this, I’d suggest that there are many others apposed. It’s really easy to tax someone other than yourself. These city council members are precisely doing this. We already spend over 60 million dollars a year on homelessness in Seattle. Two studies last year said this was enough, IF we spent the money wisely. So when does “wisely” come into the picture?