Council advances spending plans for payroll tax

This morning, the City Council’s budget committee advanced two bills that form the spending plan for the recently-passed payroll tax.


The first is an ordinance that borrows $86 million from the city’s two reserve funds (the emergency fund and the “rainy day” fund) and allocates it to several COVID-19 relief programs for disbursement this year. There were three amendments made before it was unanimously moved out of committee:

1. a collection of technical and substantive changes that the bill’s sponsor, Council member Mosqueda, had collected from her colleagues since its introduction two weeks ago. It expands the eligibility for small business stabilization funds to nonprofits, and to businesses with up to ten full-time equivalent employees (up from the original five). It also expands eligibility for childcare providers, and restricts the city from using homeless shelter “de-intensification” funds on congregate shelters. It also increases the size of the financial assistance for immigrant and refugee worker households, and prioritizes those who face structural barriers to accessing other forms of COVID-19 support from the state or federal government (i.e. language barriers or risk of deportation).

2. earmarking $3.6 million of the funds set aside for shelter de-intensification specifically for creating 4-5 new “tiny home” villages — altogether 200-250 new units. This proposed amendment split the Council; while they all support more tiny home villages, they recognize that there have been difficulties in siting them, and that there is currently only one provider that operates the villages (LIHI). That raised concerns that the money might sit unused because either a site could not be found or LIHI could not scale up to operate more sites (or simply that the Mayor would not prioritize moving the effort forward). After a long discussion, the amendment was adopted by a 5-2-2 vote, with Pedersen and Mosqueda voting “no” and Gonzalez and Strauss abstaining.

3. additional language expressing the Council’s intent to offer further relief for small businesses by reducing their B&O tax bill.

Council member Strauss offered a fourth amendment that wasn’t adopted, which would borrow an additional $9 million from the city’s reserve funds to add to the small business stabilization fund. Concerns were raised that further draining the reserve funds (down to about $12 million) could create issues next year when the city’s budget shortfall is expected to be at least as bad as this year’s. The amendment failed by a 3-4-2 vote, with Strauss, Juarez and Mosqueda the only “yes” votes and Pedersen and Sawant abstaining. Strauss said that he would likely offer a similar amendment when the bill comes up for final approval next Monday, but at a lower amount.


The second bill is a resolution detailing the Council’s expectations for how payroll tax funds would be spent in 2021 and beyond.

The Council worked its way through eight amendments, adopting all of them. Several of them articulated the Council’s intents and expectations for how funds would be spent and who would be consulted along the way. Another group of the amendments changed the sizes of the allocations to the various categories of investments, often to prioritize individual Council members’ districts or legislative agendas. Council member Juarez added language that required equitable distribution of funds across Seattle’s low-income neighborhoods as she continues to fight to ensure that her District 5 isn’t overlooked. Gonzalez, Herbold and Morales requested the executive branch to develop a new rental assistance program to ensure that there isn’t an “avalanche” of evictions when the current eviction moratorium is lifted. Council member Sawant, after several days of loudly campaigning for $50 million to be set aside annually to build 1,000 new homes in the Central Area, had to settle for an additional $5 million per year in the pre-existing category for “housing and services,” though with an additional statement calling out “the Central area and other impacted communities” as a priority for the funding.

Tha amended resolution passed unanimously.

Both bills come up for final approval next Monday afternoon, July 20.

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