This morning, Council member Kshama Sawant unveiled her proposal for a new payroll tax in Seattle, independent of (and possibly on top of) one already proposed for King County.
She said that her proposed tax would raise $300 million annually, of which 75% would be used for affordable housing and social services, and 25% for converting existing homes from oil and gas heat to electric systems.
Sawant’s proposed tax would be imposed only on the companies in the top 3% of total Seattle-based payroll, at or above about $7 million annually. She estimates that would be about 825 local companies. Non-profits, public employers, and grocery stores would be exempted from the tax.
Of the $300 million that Sawant estimates the tax would raise in new annual revenues, 75%, or $225 million, would be directed to building new public affordable housing and providing supportive human services to accompany them. She expected this would fund the creation of 800 additional housing units each year.
The other 25%, $75 million, would be devoted to a program to convert existing homes in Seattle that currently use heating oil or natural gas to electricity-based heating systems. Sawant estimates that this could fund about 4,700 conversions per year.
Sawant touted her bill not only as a housing and Green New Deal bill, but also as a “public-sector, unionized, living wage jobs bill.”
The bill itself is not yet drafted. With the parameters now announced, she said that City Council staff will work on drafting it up, and that she hopes to introduce it before the end of February.
Sawant continued to rail against the threat of a local preemption clause in HB 2907, the bill being considered in the state legislature that would authorize King County to impose a payroll tax. A preemption clause, if added, would prevent Seattle from imposing its own payroll tax on top of King County’s. The City Council has come out strongly against preemption.
Sawant’s press release makes several other estimates of the impact of the tax without providing supporting details. SCC Insight has asked Sawant’s office for more information, which they have promised for tomorrow. Expect a follow-up post then with a more detailed analysis of Sawant’s proposal.
Mayor Jenny Durkan issued a statement today opposing Sawant’s plan as too large and not focused on regional solutions:
We need a new, progressive business tax to help our most vulnerable communities, which is why I worked on a plan in Olympia that has the broad support from labor, community advocates and even some in the business community who want to tax themselves to address our homelessness and housing crisis.
We know our homelessness and housing crisis is not confined to any city borders – it is a regional crisis that demands a regional solution. It’s one of the reasons our region came together to pursue a new regional authority to consolidate a fractured homelessness response.
I believe that big businesses can and should pay more to address our challenges, but this proposal that is six times bigger than the failed Council head tax proposal is not a plan that I can support.
Being progressive means actually making progress. While slogans are nice, a failed, divisive fight that is high on rhetoric but low on outcomes, or one that funds lawyers instead of housing, is not an actual solution.
Come next January, I want Seattle and our region to have resources to address this crisis, and I will continue to support a progressive solution to meet Seattle and our region’s vision for affordable housing and homelessness.
The Downtown Seattle Association, which has thrown its support behind HB 2907 with a preemption clause, issued its own statement this afternoon, also emphasizing the regional approach:
The table has been set for progressive revenue that would address our regional homelessness and housing affordability crisis. We remain firm in our belief that a coordinated countywide measure is the most effective approach. Since 2018, the city and county have taken important strides to create a new Regional Homelessness Authority that will centralize responsibility and accountability. A Seattle-only approach undermines that effort.
The Seattle Metropolitan Chamber of Commerce, to no one’s surprise, also opposed Sawant’s proposal and directly attacked Sawant:
Slogans are one thing; governing effectively is another. State legislators are having serious conversations with stakeholders about a regional approach to add funding for housing and homelessness. In contrast, Councilmember Sawant is spending her time printing posters and calling press conferences.
Assuming a Seattle payroll tax isn’t preempted by the state legislature and Sawant follows through and introduces her bill, it’s unclear how it will fare in the City Council. Some of her colleagues, such as Council member Herbold, have expressed a preference for allowing the voters to approve a new tax, rather than the Council. To that end, the Council could vote to put a proposal on the ballot either in August or September, rather than voting on it themselves. And if it chooses to do neither, then Sawant’s “Tax Amazon” campaign is gearing up to collect signatures to put a payroll tax directly on the November ballot, one which we can assume would closely mirror Sawant’s proposal — though earlier this week Sawant was charged with violating local and state law by using city funds to support the ballot initiative effort.
Here is the thing that worries me about this council and any of these large tax increases. It really seems like the focus is on the revenue side, just getting more money. But you really don’t hear anything on the expenditure side, as in, how are we going to spend the money. How are we going to ensure the money is spend effectively and efficiently. What are the plans to manage these funds with the correct oversight and accountability. The last transportation levy is a great example. The supporters promised to build all these great projects (which I support) if approved and once approved, the really hard work of figuring how to deliver these projects demonstrated that the supporters over promised. I wish our government would put as much effort in delivering effective and efficient services as they do in increasing revenues. My background is as a government auditor and I find that how you spend the money is as important, if not more so, as getting the money. Listen, I am not saying this is easy, in fact, it is very difficult. That is why I think the our elected officials really need to focus on this. And this is not only at the local level, but the national level. Has anyone talked about how you would implement Medicare for All? Basically, you would need to stand up another Social Security Administration to run it since currently Medicare is managed by a federal agency of 5000 people plus all the private insurance companies. Oh, and you would need to increase the IG office to protect against fraud, since Medicare is one of the most targeted programs. But that is another issue for a different story.