Amazon’s number: Inside the battle over Seattle’s head tax

As high-pressure negotiations over Seattle’s new head tax played out last weekend, one number loomed large on a white board in Mayor Jenny Durkan’s office: Amazon’s number.

Wrestling with Councilmember M. Lorena González over the size of the tax, the mayor insisted on a tax no larger than $250 per employee, per year because that was the most Amazon representatives had told her they would accept, González recalled.

The company had paused planning on an office tower over the prospect of a $500-per-employee tax, and Durkan was determined to get the project and its union construction jobs back on track.

“There was a white board,” González said, describing a three-hour meeting Saturday afternoon in Durkan’s office on the seventh floor of City Hall. “There was a council option and a mayor’s option, and the mayor’s option was consistently $250.”

Durkan told a similar story, though her office stressed she pushed Amazon up to that number from zero and spoke to many other businesses about the tax.

“I believed that common ground was not only possible but necessary for us as a city,” the mayor said.

However it was arrived at, the prominence of the figure illustrates the enormous weight the city’s largest employer carried in the weekend deliberations — even without a representative in the room.

González was pressing for more money to fund low-income housing and homeless programs. She and four colleagues had proposed a tax of $500 but had been blocked by the remainder of the council and the threat of a Durkan veto.

Big-business leaders were vehemently opposing what they called a “tax on jobs.”

“The mayor reiterated she was being strongly motivated by Amazon’s position. They would not agree to unpause the construction jobs at anything above $250,” said González, a lawyer by trade, like Durkan. “We were at an impasse … and it became clear to me and my colleagues we were going to have to come up with a different proposal.”

By Monday, all nine council members had thrown their support behind a tax of $275 per employee — agreeing to a compromise between social-justice activists and business leaders that pleased Durkan, only somewhat appeased Amazon and left González wondering whether she should have held out for more.

The tax, which Durkan signed into law Wednesday, will be imposed from 2019 through 2023 on companies that gross more than $20 million per year in Seattle and will raise an estimated $47 million annually.

“That’s natural when you’re negotiating like this,” González said. “But at the end of the day, I feel like we did a very good thing.”

Juggling numbers

Final talks began last Thursday, when Durkan first informed González and the other sponsors of the $500- per-head ordinance — Lisa Herbold, Mike O’Brien and Teresa Mosqueda — that an alternative proposal would be $250, González recalled.

“The mayor told us she had been told by folks over at Amazon that anything above $250 would not be a sufficient compromise,” González said.

That set the stage for the weekend wrangling and for the Monday deal. But what came before was just as important, according to Durkan.

“The resolution would not have been possible had there not been work over the last six weeks,” the mayor said.

Though the mayor in March and April mostly let council members drive the public discussion about the tax, she kept close tabs on the issue, she said, seeking out opinions from small-business owners, for example.

In Seattle, a new law needs five votes to pass and six to override a mayoral veto.

Eyeing a Friday committee vote, Durkan spoke with the four council members who had yet to commit — Bruce Harrell, Sally Bagshaw, Rob Johnson and Debora Juarez.

Councilmember Kshama Sawant was backing the sponsors. To force a compromise, the mayor needed to reach an understanding with the remaining four.

“Finding an alternative that those four council members could agree on took a lot of work,” Durkan said. “Without that work, there would have been no work over the weekend. Things would have fallen apart.”

Harrell, the council’s president, thought a $250 per-head tax made sense.

“I never negotiated a number with Amazon,” Harrell said. “That was not my goal … I let them know the numbers I had in mind. I believe the mayor may have had more direct negotiations.”

Once Durkan was aligned with Harrell, Bagshaw, Johnson and Juarez, she was able to block the $500 tax. The mayor made that clear last Thursday, said González, who had been hoping to win over one or more of those votes.

“She told us that earlier in the day she had spoken with our four other colleagues and had secured their support,” González said. “That was news to us.”

Friday morning’s 5-4 committee votes against the $250 tax and in favor of $500 showcased the stalemate: the larger tax had enough support to move forward but not enough to override a potential veto.

Working the phones

By Friday afternoon, the politicians were talking again, with Durkan inviting González to negotiate on behalf of her side, the council member said.

They discussed how the tax money would be spent and González told the mayor her group was willing to settle for a tax of $350 per head. Its goal, she told Durkan, was to raise enough revenue to build a significant amount of additional low-income housing.

“She asked me, ‘What’s your bottom dollar?’ and I said, ‘I’m not prepared to answer that question,’ ” González said. “I told her we were being driven by our policy priorities.”

On Saturday, their conversations grew more intense, according to the council member. Because Durkan didn’t want to budge from the Amazon number, they talked about imposing a $250-per-head tax on a greater number of companies — those making at least $17 million per year, González said. That was a no-go.

“I indicated I had a strong preference for negotiating directly with her,” González said. “I wasn’t interested in being beholden to whatever math Amazon was putting out.”

Other leaders were hitting the phones. Bagshaw said hers stopped ringing about midnight Friday, resumed about 8 a.m. Saturday and continued through Sunday.

“My spouse and I were sitting at home drinking coffee, making calls,” she said. “This was the most divisive issue I’ve worked on in nine years as a council member.”

Harrell was also working the phones. The council president said he spoke with at least six colleagues over the weekend.

He also spoke with representatives from Amazon and the Seattle Metropolitan Chamber of Commerce, asking them about the council’s spending plan.

“They’re going to be paying the tax. I wanted them to be involved,” he said.

By Sunday evening, time was getting short.

Durkan wouldn’t budge from $250, but agreeing to that number, for the council majority, would have looked like a complete cave-in to Amazon and its superbillionaire CEO, Jeff Bezos.

“What kind of message would that send not just to the city, but to the nation?” said Katie Wilson, general secretary of the Transit Riders Union and an activist for the tax.

“Amazon puts its foot down and our council just rolls over? I think it was important to them to get to something other than what Amazon had demanded.”

So together, González and Mosqueda called Durkan and told her they would propose a $275-per-head tax Monday, betting it would be low enough for Amazon to unpause.

Asked by The Seattle Times whether she checked with Amazon on the new number, Durkan didn’t directly answer.

“I was talking to people throughout that time,” she said. “Things were still very fluid Sunday night.”

Not until Monday morning, when every council member other than Sawant put their names on the new proposal, did the mayor know the deal was done, she said.

A teaching moment?

How Monday’s action affects Seattle’s economy and how the money helps struggling people is more important than the weekend’s sausage making, González said.

Though the head tax whipped up a political hurricane, other City Hall deals have involved much more money, noted Nicole Grant, executive secretary of the Martin Luther King County Labor Council. Earlier this month, the council voted to allow a $1.6 billion Washington State Convention Center expansion move ahead.

But the head-tax brouhaha was about more than dollars and cents, Grant said, praising González and Herbold for pushing the tax and Durkan for driving a deal in her first major test as Seattle mayor.

In her campaign last year, Durkan vowed to bridge the city’s political divides, and when Grant met with her last Thursday, Durkan seemed confident, the labor leader said.

“I don’t know what stress would look like on Jenny Durkan. She seemed hopeful there would soon be a resolution with something in it for everyone,” Grant said.

That’s the result Durkan sees and the lesson she’d like Seattle to have learned.

“We had to find a way to address our homeless needs and housing needs and at the same time protect jobs,” she said. “I think the vote (Monday) shows we as a city have the ability to move past passionate debates” to make progress.

Not everyone is ready to move on, however.

Big-business leaders not placated by the last-minute reduction in the size of the tax are “doing their homework” on the city’s referendum process, said Jon Scholes, president of the Downtown Seattle Association.

“We haven’t foreclosed on any options,” Scholes said, pointing to a recent poll of registered voters by KIRO-TV in which 54 percent of respondents said they opposed the head tax.

Amazon, which did not immediately comment for this article, said after Monday’s vote it would resume planning on the tower but was “disappointed” by the city’s decision to tax jobs, “which forces us to question our growth here.”

On the other side, some activists greeted the council’s vote Monday by chanting, “We’ll be back for more!”

They say the new money will be nowhere near enough to solve homelessness and plan to keep up the pressure until corporate leaders help push for a state income tax.

Amazon isn’t the only business that will be taxed, but the debate has inflamed arguments over whether the dominant company’s growth has been good for Seattle.

“This issue around wealth and who has it and who doesn’t has come into sharp focus with this legislation,” González said.