Seattle voters will decide in November on changes hoped to boost small businesses while generating new revenue for the city.

In a special Monday meeting, the Seattle City Council approved the so-called “Seattle Shield Initiative” proposal that would exempt any business generating less than $2 million a year from the city’s B&O tax while raising the tax rate on the city’s most prosperous companies like Amazon and Starbucks. The proposal would eliminate or reduce the tax for around 90% of Seattle businesses while generating an estimated $81 million in new revenue.

Mayor Bruce Harrell signed the legislation following Monday’s vote putting the proposal on track to appear on the November ballot for the city’s voters.

The approval comes as the city’s economic forecasts are improving. City analysis is now predicting a $143 million revenue shortfall over the next two years, “with further financial risk stemming from Trump administration threats to federal funding and economic uncertainty.” Still, that is a sunnier forecast the recent predictions of $251 million budget shortfall that accompanied the proposal’s introduction in June.

CHS reported here as Harrell teamed up with Councilmember Alexis Mercedes Rinck to champion the proposal. Rinck leads the council’s Select Committee on Federal Administration and Policy Changes.

Publicola reports the new numbers are a product of accounting as city analysts have adopted “a more optimistic ‘baseline’ budget forecast this month, rather than the ‘pessimistic’ forecast the group adopted in April.”

CHS reported here on the belt tightening and cutbacks underway under the Harrell administration as Seattle prepared for the “pessimistic” revenue forecast. City Hall is preparing for planned 8% cuts to departments supported by the city’s General Fund and payroll tax on its largest employers. The Seattle Police Department and all “public safety related” departments are preparing for a 2% slash. The city’s spending on homelessness could also be similarly cut.

If approved by voters, the changes would raise the B&O tax threshold exemption from $100,000 to $2,000,000 in gross revenue and create a new B&O deduction up to $2,000,000. Around 76% of current B&O taxpayers, would no longer owe the tax, and approximately 90% of businesses would owe less than they do today, the mayor’s office said.

The council added exemptions for Fred Hutchinson Cancer Center and Seattle Children’s Hospital but rejected other proposed breaks.

City business advocates say they support the breaks for small companies but question the wisdom of piling additional costs on the city’s largest employers.

“The city’s proposal gives needed relief to small businesses, something that we – and voters – strongly support,” the Seattle Metro Chamber of Commerce said in a statement. “But we are disappointed that city leaders have also chosen to raise the B&O for many other hometown companies, making Seattle’s economic environment more volatile and uncertain.”

The boost in revenue would be used for “federal backfill for programs such as emergency housing vouchers and food assistance” and “mitigation of the impact of federal funding reductions by ensuring City investments in social and human services,” the council said in its announcement.

The mayor’s office said revenue generated by the changes would help the city protect “housing vouchers and shelter, food and nutrition access, services for survivors of gender-based violence, and more.”

“With current financial forecasts, this revenue would also allow the City to protect and maintain needed investments in affordable housing,” the Harrell administration said.

Rinck and Harrell will, of course, also be on the ballot in November — if they make it through Tuesday’s Primary Election.

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