To sustain core services through the current economic and public-health hurricane, cities must cut spending.
They are no different than households and businesses forced to spend less to get through the downturn.
Yet, instead of preparing and confronting this painful reality, some Seattle City Council members are instead exploiting fear and uncertainty during the crisis, to make another run at a punitive jobs tax. This must end.
Councilmembers Kshama Sawant and Tammy Morales propose a payroll tax penalizing 800 businesses employing some 300,000 people. Piggybacking on labor’s crusade against Jeff Bezos, it’s dubbed an “Amazon tax” even though Amazon is just 0.125% of the number of companies affected.
It’s a new twist on Seattle’s failed head tax. That was canceled in 2018, after union interests seeking the tax gave up in the face of widespread community opposition.
Shouldn’t business pay its share? Yes, it already does in Seattle. The city has unusually high business taxes, and business generates a majority of its revenue.
People need help. But it’s cruel for Sawant and Morales to promise “relief,” since their plan would dole out a few checks, then give most proceeds to developers who are already generously subsidized.
Any significant and lasting relief must come from the federal government. States and cities are providing some assistance, supplemented by philanthropy, but they cannot afford to maintain essential services and provide relief households need. Some cities are already cutting employees and services; the National League of Cities estimates up to 1 million municipal workers face layoffs or furloughs.
Mayors and city councils should be engaging with the public not only on how to maintain services but where to cut, knowing budgets will decline. Those are best practices suggested by Washington’s Municipal Research and Services Center.
Seattle’s council is ceding leadership by instead devising schemes to spend more. It’s depriving residents of meaningful conversations about what to preserve and which niceties must be curtailed.
Worse, it’s probably illegal. Under Gov. Jay Inslee’s emergency order, cities can only undertake “necessary and routine” or COVID-19 related matters, since the shutdown restricts open meetings.
Sawant and Morales — with assent from council President Lorena Gonzalez and Teresa Mosqueda, budget chair — are spinning the tax as virus response. Yet it was floated before the emergency, and Seattle wouldn’t get new tax revenue until 2022.
To sustain this charade, these council members would raid levy dollars residents gave for parks, libraries, affordable housing and preschool. This interfund borrowing makes big assumptions about Seattle’s ability to refill those accounts and fulfill levy promises.
The budget shell game would enable the city to give up to 100,000 households monthly $500 checks for four months. That would use 7% of payroll tax proceeds over five years, so 93% isn’t virus-related.
Around 75% of proceeds would be spent developing and purchasing apartment buildings, not necessarily for the poor since median-income units are eligible. More housing is needed, but apartment builders already get billions of city, state and federal subsidies. Since 2017, $1.5 billion worth of subsidized projects began in Seattle alone.
What Seattle needs is jobs. One in five Washington workers are jobless, Boeing is cutting deeply, and even Amazon is constrained by heavy spending on worker safety and pandemic operating costs.
The payroll tax would take $2.9 billion from employers over five years, reducing dollars available for hiring during the recovery. That encourages firms to hire less or move jobs elsewhere. The largest can hire in other states and cities that don’t take them for granted.
Mayor Jenny Durkan is right to oppose this shortsighted tax. She must hold firm, even if variations are offered in attempts to put lipstick on this pig.
Penalizing job creators makes it harder to address Seattle’s biggest challenges: Mass unemployment, housing affordability and poverty-induced homelessness.
Private-sector jobs are the only sustainable solution. Reducing jobs hurts people more than they’re helped by a few checks and more apartment subsidies. Fewer jobs and less economic activity also reduce municipal budgets, which is now obvious to everyone outside the council bubble.
Inslee and legislative leaders should weigh in to prevent this attack on Washington’s recovery.
Seattle drives much of Washington’s economy. If Seattle impedes job growth with a payroll tax, it jeopardizes the state’s recovery and overall success combating the pandemic.
Washington’s elected leaders have mostly risen to the virus challenge, making hard choices to save lives and prepare for recovery. They prioritized the well-being of all constituents over demands of a few special-interests.
Don’t let ideologues on the Seattle City Council squander that progress.