Council hand-wringing over HB 2907 and the threat of preemption

While the state legislature is preparing to meet with stakeholders to hammer out the details of House Bill 2907, which would grant King County authorization to impose a payroll tax, Seattle officials continue to fret over whether the final bill will preempt the City of Seattle from imposing its own tax on top of the county’s.

Here’s my post from yesterday summarizing where things currently stand: nothing has been decided, and the bill’s primary sponsor, Rep. Nicome Macri, has worried some local officials by apparently stating that she has left the door open to preemption and is concerned about double-taxation of businesses. Council member Sawant is particularly up in arms about Macri’s statement, and today called into question her pregressive credentials for even entertaining the notion of including preemption in the bill.

Council member Mosqueda responded in an assertive though less accusatory manner, penning a letter for she and her Council colleagues to sign that signals the Council’s united opposition to a preemption clause. The letter was sent to Macri and her counterpart in the state Senate on the bill, Sen. Karen Keiser.

The letter urges the legislature not to preempt the City of Seattle from imposing its own progressive business tax:

We support regional solutions using progressive revenue sources to solve our crises and we desire a comprehensive solution that does not rely on staggered steps to solve these enormous problems—but we cannot currently support attempts that preempt us or strip us of our limited resources and make our city’s tax code even more regressive. The City’s taxation power is already extremely limited and, as it relates to this taxation tool, in many ways underutilized. To allow preemption in that context, sets up municipalities like Seattle to be on a slippery slope to further limiting our already narrow taxation powers. In the long-term, this would be a mistake. Instead, we support legislative efforts in the State Legislature to provide additional progressive taxation options to municipalities.

Sawant took a more forceful approach, to no one’s surprise. She attempted to “walk on” a last-minute resolution for the Council to officially adopt this afternoon that makes many of the same points in principle, but is written in Sawant-speak — including a free ad for Sawant’s “Tax Amazon” campaign:

WHEREAS, in January 2020, the Tax Amazon movement in Seattle organized hundreds of 23 people into a political fight for affordable social housing to be funded through a $300-24 $500 million per year progressive tax on Seattle’s largest businesses…

Rather than allow themselves to be backed into a corner and forced to vote on a resolution that they had no opportunity to review or amend, Sawant’s colleagues, led by President Pro-tem Mosqueda, chose an unusual move  to head it off.  They refused to allow her to introduce her resolution into the Council’s legislative process at the last minute — forcing it to wait to be introduced next week through the normal introduction process. That meant Sawant’s resolution could not be on the agenda this afternoon at all. Mosqueda justified this by noting that her letter covered all the substantive points that they wanted to communicate to the Legislature, though that provided no comfort to Sawant nor to the “red army” of  supported that she had invited to “pack city hall” for the vote on her resolution. For the second week in a row, the crowd turned ugly on Mosqueda as she tried to chair the meeting, but this time she handled the angry crowd deftly and shut down the dissent before it got out of control.

In truth, there is little that the City Council can do to affect the outcome beyond writing pleading letters and angry resolutions. It is a stakeholder at the table as Macri attempts to broker a deal, but it is only one stakeholder among many. And at the end of the day the nine City Council members don’t get to vote on HB 2907; that responsibility lies with the state Legislature. The city has no inherent authority to tax; it only has the authority that the state legislature explicitly grants it. So it can ask for (or demand, or urge) whatever it likes, but at the end of the day it will need to take what it can get.

The word on the street is that Macri will begin convening meetings with stakeholders later this week to hammer out the details of the final version of the bill.

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