Council repeals Seattle's employee-hours tax

Amid chants from protesters inside city hall that “We are ready to fight, housing is a human right,” the Seattle City Council voted 7-2 to repeal the employee-hours tax, almost a month after its unanimous approval.

Council president Bruce Harrell called the June 12 special meeting one day prior, the announcement followed by a joint statement by Mayor Jenny Durkan and seven councilmembers, making it clear beforehand that the repeal would more than likely happen.

The head tax, passed on May 14, was already a compromise on the originally proposed $500 per full-time equivalent tax that a company claiming more than $20 million in gross receipts in Seattle would have had to pay, shrinking down to $275 per FTE.

This compromise was reached after Durkan made it clear she would not support a $500 head tax, and the council did not have enough votes to veto-proof the original legislation (5-4).

A No Tax on Jobs coalition began a signature-gathering campaign following passage of the new employee-hours tax, more commonly referred to as a head tax, after its passage.

Around 18,000 signatures were needed, but paid and volunteer gatherers had reportedly collected more than 45,000 prior to the council’s special meeting and a June 14 deadline to get a referendum on the November ballot.

Big businesses, which included Amazon, Starbucks, Vulcan and Kroger, contributed $350,000 to the No Tax on Jobs’ campaign.

Several councilmembers who supported the repeal said they still believed the EHT was the right move to generate new revenue for creating affordable housing and funding homeless services, but didn’t have confidence they could adequately change voters’ minds by November, especially when EHT opposition was being backed by funding from big businesses.

Councilmember Lisa Herbold, who led the Progressive Revenue Task Force with Councilmember Lorena González that in March proposed a $75 million head tax, blamed the Seattle Metropolitan Chamber of Commerce for convincing a “majority of Seattleites” that city government was not using the funding it already has efficiently. She said a regional solution to the housing and homelessness crisis will now undoubtedly rely on higher property and sales taxes.

The council and numerous community stakeholders spent nine months working on the EHT before its passage.

Herbold said the city does not have the time or resources to change minds at the polls, while the opposition has “unlimited resources.”

The 2018 Count Us In report, released on May 31, shows a 4-percent spike in people experiencing homelessness in King County — 469 more than counted last year — and 15 percent more living unsheltered than in 2017. People living in vehicles increased 46 percent, according to the report, and people living in transitional housing decreased 17 percent.

The total number of people living unsheltered in Seattle counted on Jan. 26 was 4,488, up from 3,841 in 2017.

Teresa Mosqueda and Kshama Sawant were the only councilmembers to vote against the repeal.

Mosqueda said she couldn’t support ending the head tax — which would have taken effect in January — without having replacement revenue sources in place.

The city has been under a homeless state of emergency for two years, she said, and any delay in new revenue will result in months of inaction. Those are months the city could be spending addressing the “housing first” strategy outlined in a consultant report released in 2016 by Barbara Poppe and Associates.

Mosqueda said 700 people have died on Seattle streets since 2012.

“I get that people are fed up,” she said before a crowd of EHT supporters and opponents. “I hear you, and I’m fed up of seeing people sleeping on the streets outside every day.”

Consulting firm McKinsey & Company earlier this year provided a homelessness report for the chamber of commerce, which Herbold said concluded King County needs to spend $410 million annually to house those experiencing homelessness and 17 years to catch up on the housing backlog. She then noted the city funded the creation of 944 “deeply affordable” housing units last year.

Councilmember Mike O’Brien said $93.4 million invested in affordable housing last year resulted in the leveraging of $2.81 of additional resources for every dollar, creating more than 1,400 units total.

“We know that that is not enough,” he said. “The crisis today demands more.”

He said the EHT made the most sense and was the most fair way of generating more revenue to address Seattle’s housing and homelessness problems, but he didn’t see the city having that revenue after November.

“I am going to repeal this, and I do not have a replacement for you,” O’Brien said. “Just because I do not have a replacement, doesn’t mean that I am going to stand by.”

The conclusion of O’Brien’s statement was followed by shouts of “shame” from EHT supporters in the audience, that same sentiment directed at many on the council over the course of the meeting.

González said the EHT was not a “perfect solution,” but it did not further burden homeowners and consumers. She agreed with Herbold, saying the city could not “outfund and outresource” the opposition campaign.

“It gives me no pleasure to have to repeal this law, because I think this law was well done,” González said.

Sawant said the meeting was not the appropriate moment for “councilmembers to be patting their own backs about the work that they did,” and spoke at length about a movement by renters, people experiencing homelessness, housing advocates and community members that started a year ago and came to the consensus that taxing big businesses and the rich was the solution.

"Jeff Bezos is our enemy. We have to fight big business,” Sawant said. “The question is, 'Will we have elected representatives who will fight with us or not?'"

EHT supporters chanted over the council as Harrell called for a vote on the repeal. Sawant held off on voting until the crowd had settled and she had conferred with them.

“What does our movement want me to do here?” she said.

A majority of councilmembers had left the chamber before the clerk had finished recapping the votes for the record.

Head tax supporters told the council during public comments that they felt betrayed by the move to repeal, and encouraged voting those councilmembers who approved it out of office.

Emerson Johnson’s microphone was cut just as she made the first such statement.

“The thing is nothing has changed,” she said about the council’s decision to repeal. “What the council is doing is what they have always done: Putting profits over people.”

Claudia Campanile, who co-owns The Essential Baking Company with her husband, Tom, said she’s an advocate for the homeless, but did not support the EHT.

“It’s become increasingly difficult to do business in this city,” she said, citing the business and occupation tax and Seattle’s $15 minimum wage.

Campanile identified as a member of Speak Out Seattle, which had a number of members take a turn at the podium, as did the Socialist Alternative for the pro-head tax side of the debate.

Tim Eyman, who has made a career out of opposing taxation in Washington, actually opposed the repeal because he wanted voters to do it with the November referendum.

“Why shouldn’t they be heard?” he said. “Why are their voices being muzzled?”