City Hall

Head Tax Fails to Move Forward, for Now

Council members will have to address a $13 million budget shortfall without the tax and reconvene Wednesday morning.

By Hayat Norimine November 14, 2017

Housing for all coalition sweeps head tax budget committee hearing oeddd3

Housing for All Coalition members pack council chambers to demand the employee hours tax and no more sweeps at a public hearing in November 2017.

After weeks of discussions on the controversial employee hours tax, Tuesday's budget votes confirmed Seattle council members' minds on the proposal had been made up early.

Council members in a narrow 5-4 vote struck down moving forward with the tax in the proposed 2018 budget after budget chair Lisa Herbold took a risk in including the tax in the budget package—and instead of making the budget entirely neutral, made noncontroversial, popular programs like the Law Enforcement Assisted Diversion expansion dependent on new tax revenue.

"I don't want to let the perfect be the enemy of the good," Herbold said in her opening statement on the package. "I do not believe that there is a better alternative today."

But even Herbold's proposal to raise the threshold of businesses being affected by the tax, add a "stakeholder process," and push it as a revenue stream that would allow the city to use its bonding capacity ultimately didn't move opposing council members.

Herbold and sponsors Mike O'Brien, Kirsten Harris-Talley, and Kshama Sawant supported it with the rest voting no. 

"I'm not in the back room smoking cigars and cutting a deal. A head tax is the shape of things to come, there's no doubt about it," said council member Debora Juarez, who signaled her opposition to the tax when it was first included in the budget package. She promised on Tuesday she would work with O'Brien to bring a tax to a vote within 30 days, by December. "I plan to do it and I plan to do it right. ...I would've been the first one to sit down with Council member O'Brien, and the vote would've been 9-0." 

Council members postponed their second budget meeting (which was scheduled for the afternoon) until Wednesday morning after the tax failed, forcing them to head back to the drawing board on a package that relied on additional revenue. The budget is now $13 million short, and that could mean significant cuts. A plan B by Bruce Harrell to fund homeless services with $10 million from the city reserves—known as the Rainy Day Fund, used as a cushion in the event of a budget shortfall—also failed 5-4 (Herbold, O'Brien, Harris-Talley, Sawant, and Gonzalez voting against it).  

Juarez criticized council members for pushing through the proposal without community or committee meetings and said it had been a lost opportunity to approve a tax "with the right type of transparency and discussion." Rob Johnson opposed it wanting more time and, he said, to make sure it was an appropriate investment compared to the city's other ongoing strategies for affordable housing.

Sally Bagshaw said the crisis needed a regional response and was hopeful the city would get more state dollars now that Democrats have a majority in the state Senate. Gonzalez said she wanted more input from service providers rather than a "mishmash of strategies."

"Frankly I think part of the reason we're in this hot water is that we have deferred far too long to the mayor's office," added Gonzalez, who was the only council member to vote no on both the tax and Harrell's plan. "By the time the decision points get to us, it's too late and we have no way of correcting course." 

But what all council members agreed on is supporting an employee hours tax, just not this one. And O'Brien said he would work with Juarez, who promised to bring a tax to a vote within 30 days. The pledges still left Sawant attacking council members for what she said was voting in the interests of their business sponsors: "That is where the rubber hits the road, which is corporate politics." Both Gonzalez and Sawant said they were crafting resolutions that would commit to considering an employee hours tax in the future. 

For Harris-Talley, who's an interim council member until November 28, that means she ultimately won't be with the council when it faces another vote on the head tax. The Peoples Party favorite for the council seat promised to join community members and go "full throttle" to hold council members accountable to their promises. 

Herbold's version of the tax would have affected businesses making above $10 million in gross revenues with about a $125 fee per full-time employee a year, generated somewhere between $20 million and $25 million a year for the city, and taken effect by January 2019. 

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