With reporting by Seattle City Council Insight
Taking a route closer to the middle ground on bridging Seattle’s coming COVID-19 crisis revenue gap, the Seattle City Council approved “progressive revenue bill” CB 119810 out of committee Wednesday, that will create a new tax on the city’s largest businesses that could generate more than $200 million a year for city services.
“Today we voted on a major structural change in how we finance public services,” South Seattle rep and co-sponsor Tammy Morales said about the passage. “Throughout this renewed budget conversation, I voiced my strong desire to see a sizable progressive revenue package that begins to address the enormity of the issues our city faces.”
The proposal will create a payroll expense tax on businesses located in Seattle with more than $7 million in gross payroll on “high income earning employees.”
The 7-2 approval sets up a final vote this coming Monday by the full council. Council member Alex Pedersen and Debora Juarez voted against the plan saying the preferred that voters decide on the tax.
Wednesday’s approval of budget chair Teresa Mosqueda’s plan for a tax on big businesses is hoped to help Seattle overcome its forecasted budget shortfalls due to COVID-19 and to fund affordable housing, equitable development, and economic support for small businesses. The session included debate on more than 20 proposed amendments to the proposal.
Supporters of District 3 representative Kshama Sawant’s more aggressive Tax Amazon proposal managed to also find victory Wednesday in the form of an approved amendment that increased the amount collected by millions. It added a new middle tier for companies with total Seattle-based salaries between $100 million and $1 billion, adjust the threshold for higher salaries from $500,000 down to $400,000, and increased the tax rates across the board for the higher salary tier. The amendment increases the expected 2021 revenues from $175 million to $214 million.
The council also voted out of committee the accompanying “Jump Start” spending bill, after stripping out most of the quantitative commitments in the bill. The final version lists a number of categories of spending, with an expectation that the City Council will make exact appropriations annually as part of the budget process. Mosqueda intends to write the first year’s spending plan into a resolution, which she will bring forward for a vote on July 15th.
Pedersen offered two amendments, both of which passed unanimously. The first added a requirement for new programs funded in the spending plan to be evaluated and reported back to the Council. The second placed restrictions on membership on the related Oversight Committee to prevent rampant conflicts of interest by limiting the number of members who work for organizations receiving funding from the tax revenues.
The final bill passed by an 8-0-1 vote, with Pedersen abstaining.
Despite council member Lisa Herbold’s pleading with the business community not to organize a referendum campaign against the bill, it may still be challenged in court, particularly over its “top tier” higher tax rates which seem to apply to just one company: Amazon.
In 2018, the city council passed and then rolled back a $275 per full-time employee tax on companies reporting $20 million or greater in annual “taxable gross receipts.” That tax would have generated only about $50 million annually.
The effort reshape the city’s budget for cuts forced by the COVID-19 crisis will continue next week with the final vote on the business tax and renewed debated on Seattle Police spending.
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