In an unprecedented act of cowardice, city councilmembers repeal the new city head tax

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Mayor Durkan and Bruce Harrell lead repeal of the head tax

This repeal translates directly into more homelessness in our city and a denial of necessary housing and services for hundreds on the verge of becoming homeless

The news hit suddenly with an announcement by Seattle City Council president, Bruce Harrell, that seven of the nine councilmembers would vote the following afternoon to repeal the office head tax.  It translates directly into a loss of tens of millions needed to address our housing and homeless crisis.  A measure that for the first time would have marginally moved our tax system in a progressive direction by calling on big business to truly share some of the costs was dropped less than a month after it was approved by a unanimous 9-0 vote.  In our 40 years of City Hall watching, we can cite numerous instances of capitulation to pressure from big business but never so suddenly and completely.

Such a colossal and unprecedented flip-flop originated with the Mayor and likely Councilmembers Harrell, Gonzalez, Rob Johnson, Debora Juarez and Sally Bagshaw.  Only Gonzalez among CM’s is not up for re-election next year for their district council seats.  Flip-flopping like this only adds to a growing disaffection with these councilmembers among their district constituents who already see them, especially Harrell and Johnson, as too beholding to their key downtown, developer, and big business backers who contribute tens of thousands to get them elected.

But the two councilmembers who stand to lose the most politically given their vote backing repeal, are CM’s Herbold and O’Brien because they risk greatly alienating their progressive base and core supporters.  Their action will never garner them support from big business nor get the the Times endorsement.  And no matter what they may have been offered in return behind the scenes, it likely won’t offset the disaffection felt by many of their backers – that instead of joining Sawant and Mosqueda and leading, they caved to pressure.

Here’s our story posted last week before news of repeal and circulating now in Pacific Publishing Newspapers explaining why we so strongly back the head tax and why its removal represents such an extraordinary set-back

Big business finally (would have) shared the costs of growth and addressing homelessness with the head tax

  • reprinted from issues this month in Pacific Publishing Newspapers

What’s the perfect recipe for creating even more homelessness in our city? What co-incidence of forces coming into play could screw things up to an even greater degree, forcing still more human beings onto our streets, sidewalks, and alleyways?

Let’s start by eliminating millions of dollars in funding for low-income housing and homeless programs. That’s what city voters would do if they repeal the recently adopted employee head tax that would generate another $48 million dollars per year over five years. Two-thirds of the total would be used to create about 600 permanent low-cost units; the rest would fund more homeless shelters and survival services.

A study recently commissioned by the Metropolitan Chamber of Commerce indicates at least another $410 million is needed to make a dent in homelessness, in the form of added shelter and services and moving another 14,000 homeless households into affordable housing. (In reality, the cost of building permanent affordable housing for 14,000 households at the going rate of $250,000 per unit exceeds $5 billion. And simply handing the homeless rent vouchers, as the authors recommend, to help them cover market rents for a few months only guarantees most will wind up back on the streets when vouchers expire.)

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CM Johnson: another of the flip-floppers up for re-election in 2019

Nevertheless the Chamber’s study makes clear that substantially more funding is needed. While the authors avoid saying it, obviously the head tax moves us in that direction. More surprisingly, here’s big business’ chief lobbyist dismissing the naive notion that by simply reorganizing the way we deliver homeless programs, enough added resources will miraculously be freed up to solve the problem. The study explicitly estimates that, at best, improvements in program delivery would assist another 2000 households.

Seattle’s tax structure now ranks number one as most unfair among cities in Washington, a state ranked most unfair in the nation. Unlike every other taxing source now used to address our homeless crisis, the head tax is progressive, paid only by the top 3 percent of the city’s big businesses. The $11 million Amazon will pay annually amounts to a whopping .002 percent of their $5 billion plus annual revenue.

Let’s face it, the chicken-little sky-is-falling BS expressed by our city’s corporate elite isn’t so much about this relatively small hit on their pocketbook but what they see as a trend. Even Councilmembers and Mayor Durkan backed heavily by big business in the last election supported the measure once the size of the tax was reduced. And unlike the recently approved city income tax on hold due to a stiff court challenge, the head tax is not legally vulnerable. Three cities in the region have had one for years. So did Seattle fifteen years ago, but city leaders at that time caved to pressure and withdrew it.

Now Amazon and other big Seattle employers pay only a fraction of the enormous cost of the public infrastructure demanded by their expansion into this city. Over the last decade, in South Lake Union (SLU) where Amazon and Vulcan and the other big companies have located much of their real estate and development activity, over one billion in our tax dollars was spent on capital improvements to accommodate their growth. Most of that cost is passed directly onto the average Seattle taxpayer. And those companies soon will receive over a half billion more in the form of an electrical substation we’ll pay for in higher utility rates.

Easily a third of the city’s budget each year goes to downtown and SLU combined. That’s a cost that exceeds the tax revenues generated by growth we’re seeing there. It’s a key reason why the city refuses to break down geographically where most of our tax dollars are directed. Better to keep this reality concealed.

County Executive Dow Constantine doesn’t like our new head tax, calling the debate a distraction, yet he’s offered no alternative revenue source to fill the low-income housing gap. If voters repeal the head tax, it virtually guarantees the perpetuation of our regressive tax system that ensures working people will continue to pay a disproportionate share of their income for programs to house the homeless, and much more than their share for the infrastructure demanded by developers and companies benefiting from our record levels of growth. That’s the same growth driving up housing prices and forcing more low-income folks onto our streets.

There is a fraction of the city’s homeowner class, not a majority but we fear a significant minority, grousing about the number of homeless they see in their communities, who’ve joined with the corporate elite to oppose the head tax. We saw some of them recently crowding into a Ballard town hall, using the head tax debate to berate councilmembers trying to address our crisis.

Ironically, if their referendum makes the ballot and voters repeal the head tax, these same disgruntled homeowners better brace themselves for more homeless in their communities. And by letting big business off the hook, like it or not, they’ll be paying more in taxes to address both the costs of growth and our homeless crisis.

 

About John V. Fox

Director, Seattle Displacement Coalition
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