Seattle City Council President Bruce Harrell has scheduled a special meeting Tuesday to consider repealing the so-called “head tax,” which passed unanimously in May.
If the Council approves Harrell’s legislation and repeals the controversial tax on Seattle’s top-grossing businesses, it will be a historic turnaround less than a month after all nine councilmembers approved the compromise tax, broked in late hours by Mayor Jenny Durkan. A vote is expected during Tuesday’s meeting. Seven councilmembers have indicated support for the repeal.
In an interview with KING 5, Harrell said they’ve been listening to constituents and “what people are saying is they’d like us to reset the button to look at — not only our investment strategy — but whether a tax on jobs makes sense.”
Harrell announced the unexpected about-face just days before an important deadline for a referendum campaign that would give voters the chance to overturn the head tax. The “No Tax on Jobs” campaign has until June 14 to submit a petition with at least 17,000 signatures to get a referendum on the November ballot. The campaign expects to exceed that goal.
Before the special meeting was announced, the referendum campaign notified the city of plans to submit the signatures Tuesday morning. John Murray, a spokesperson for the campaign, told GeekWire they will wait to see how the Council votes before submitting the signatures.
“The No Tax on Jobs Coalition appreciates that the Seattle City Council has heard the voices of the people loud and clear and are now reconsidering this ill-conceived tax,” Murray said in a statement.
Harrell told KING 5 that he didn’t consider the No Tax on Jobs effort when making his most recent decision to repeal the head tax, saying that the real focus was listening to the public. He declined to admit making a mistake with the initial vote, telling KING 5 that he’s looking forward to hitting the “reset button.”
After weeks of heated debate and outcry from many in the tech industry, most notably Amazon, the city passed the head tax on May 14. It levies a tax of 14 cents per employee, per hour worked, amounting to about $275 per full-time employee each year. The tax applies to businesses grossing more than $20 million in annual revenue and begins in January 2019. The head tax would generate about $47 million each year to fund affordable housing and homeless services in an effort to fight Seattle’s homelessness crisis. The Council approved the tax 9-0 less than a month ago.
Durkan, Harrell, and Councilmembers Sally Bagshaw, Lorena Gonzalez, Lisa Herbold, Rob Johnson, Debora Juarez, and Mike O’Brien co-signed the following statement, signaling enough support to pass the repeal.
“It is clear that the ordinance will lead to a prolonged, expensive political fight over the next five months that will do nothing to tackle our urgent housing and homelessness crisis. These challenges can only be addressed together as a city, and as importantly, as a state and a region. We heard you. This week, the City Council is moving forward with the consideration of legislation to repeal the current tax on large businesses to address the homelessness crisis.”
Seattle Metro Chamber of Commerce CEO Marilyn Strickland called the news the “breath of fresh air Seattle needs” in a statement provided to GeekWire.
Much of the head tax debate focused on Amazon, which would be among the hardest hit. The company stopped construction on one of many office towers it is developing in Seattle and said it was reconsidering occupying another, pending the city’s decision. Amazon has since resumed construction on the tower it paused but the company says the city’s “hostile” attitude toward business has it reconsidering growth in its hometown.
The Council’s abrupt 180 could look like capitulation to Amazon, a polarizing force in the city. As longtime Seattle journalist Knute Berger notes, “the repeal of the head tax will be seen by many as caving to Amazon. Are they running the city now?”
Amazon, Vulcan, and Starbucks donated $25,000 each to the “No Tax on Jobs Campaign.” In the wake of Monday’s announcement, Starbucks public affairs lead John Kelly said “repeal makes sense,” in a statement.
“The best path forward is to implement the reforms recommended two years ago by the city’s own homelessness expert,” he went on. “Starbucks remains a committed partner to government officials, business leaders, and family service providers.”
Starbucks plans to convene those stakeholders for a summit Tuesday, June 19 to discuss solutions to the homelessness crisis.
But not everyone is applauding the proposal to repeal the head tax.
In a statement, Councilmember Teresa Mosqueda said “a vote may go forward to repeal the tax” but that she “cannot back a repeal without a replacement strategy.” Meanwhile, Councilmember Kshama Sawant called it a “backroom betrayal” and said her office was not notified of the plan.
URGENT ACTION ALERT on Amazon Tax to build affordable housing: @SeattleCouncil will repeal the tax on big biz at noon tomorrow! This is a capitulation to bullying by Amazon other big biz. This backroom betrayal was planned over weekend w/o notifying movement (incl. my office).
— Kshama Sawant (@cmkshama) June 11, 2018
Sawant and Mosqueda are the only councilmembers who did not co-sign the statement put out by Durkan.
Watch the KING 5 interview, in which Harrell discusses efforts to encourage Seattle’s “innovative economy and job growth, below.”