City Council passes payroll tax

This afternoon, the City Council passed by a 7-2 vote the much-touted “Jump Start Seattle” payroll tax proposal — with a couple of last-minute amendments.

The tax bill was adopted largely unchanged from the form in which it was voted out of committee last Wednesday, but two amendments narrowly passed:

• A 20-year sunset on the tax. The original 10-year sunset, intended to keep pressure on for a regional progressive tax solution and at the urging of the business community, was stripped out of the bill last week; Council member Sawant argued strongly against any sunset provision at all, though some of her colleagues voted to remove it because ten years would be too short to adequately support the creation of new permanent supportive housing. But Council member Lewis proposed the reintroduction of a twenty-year sunset today, and garnered the support of Council members Juarez, Pedersen, Strauss, and Mosqueda — just enough to adopt it over the furious objections of Council member Sawant.
• A 3-year exemption for nonprofit healthcare organizations for their compensation between $150,000 and $400,000.  Introduced as a compromise by Mosqueda today after she and Pedersen had competing amendments last week to do nearly the same thing, it came at the urging of some of the local healthcare nonprofits who are suffering financially due to the COVID-19 crisis. Some Council members today objected to any exemption for nonprofit healthcare organizations since some of them still have highly-paid executives; others objected to singling out healthcare nonprofits while not providing the same exemption to all other nonprofits (though certainly few pay seven-figure salaries to their executives). In the end the same five Council members, Mosqueda, Lewis, Juarez, Pedersen and Strauss, voted in favor of the amendment and it squeaked through.

The final vote on the bill was 7-2, with Juarez and Pedersen voting “no” again as they did last week in committee. The bill now goes to Mayor Durkan for her signature; she has previously expressed opposition to the larger payroll tax proposed by Sawant and Morales and has generally spoken negatively about new taxes right now, but has not taken a formal position on Mosqueda’s proposal that passed today.  However, the Mayor’s views are irrelevant, since the bill passed today with enough votes to override a Mayoral veto.

The Council also approved a spending plan ordinance to accompany the payroll tax, after hollowing it out last week to simply list high-level categories. Mosqueda is expected to introduce a resolution next week that will spell out more specific spending plans for 2021.  Adopting a sepnding plan year-by-year maximizes the Council’s flexibility in addressing needs — especially short-term responses to COVID-19 and the ensuing city budget crisis — but it also paints a picture of the Council as a caricature of “tax and spend” liberals: pass a tax first, then decide later how to spend the money.

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