The City Council voted unanimously Monday to authorize spending $86 million from Seattle’s emergency reserves to provide additional relief to residents and small businesses struggling to deal with the public health and economic crises caused by the coronavirus pandemic.
It also unanimously approved a resolution laying out a detailed plan for more than $200 million per year in expected proceeds from a new tax on big businesses, allocating the lion’s share to affordable housing projects.
The COVID-19 relief bill and the spending plan for the big-business tax are linked, because the spending plan calls for the first $86 million raised by the tax next year to be used to replenish the emergency reserves.
The council took the steps over objections lodged by Mayor Jenny Durkan, who described them as fiscally, legally and economically risky.
Council members, including sponsor Teresa Mosqueda, celebrated the actions as essential to help Seattle’s most vulnerable households survive the pandemic and to build a more resilient tax system for the city in the years ahead, with large companies paying a greater share for public services.
“It is our obligation to provide immediate relief right now,” Mosqueda said, arguing the emergency reserves were built up for a time like the present and making the case that pumping money into working households and small businesses will help Seattle’s economy recover better than cuts.
The Durkan administration asked the council Monday to resist sapping the emergency reserves for COVID-19 relief, at least until August, when more will be known about the city’s economic trajectory and about additional Congressional assistance. Seattle is dealing with a massive budget hole this year and can expect to encounter an equally large gap next year, due to the downturn and money already spent on COVID-19 relief, Senior Deputy Mayor Mike Fong and Budget Director Ben Noble wrote in an email.
“We may need to enter into another stay-home order this year, which could have further devastating impacts,” Fong and Noble wrote.
Monday’s votes wrapped up months of talks about how best to raise money from large corporations and years of advocacy on the issue. The council voted 7-2 to pass the tax earlier this month, along with a high-level spending plan.
Dubbed JumpStart Seattle by Mosqueda, the measure will apply a tax rate of 0.7% to 2.4% on compensation paid by large companies to employees who make at least $150,000 per year.
The tax will apply to businesses with annual payrolls of at least $7 million, with exemptions for supermarkets, government entities and some health care nonprofits. It targets businesses with many high-paying jobs, like Amazon; the top tax rate is for companies with at least $1 billion in annual payroll.
Monday’s COVID-19 relief bill appropriates $67 million from the city’s emergency fund and $19 million from the city’s revenue-stabilization fund (nicknamed the rainy day fund) this year for the following purposes:
- $32.6 million for rent assistance and homeless shelters
- $18.1 million for grocery vouchers for immigrants and refugees
- $14.5 million for small business assistance
- $13.5 million for grocery vouchers for others
- $3.6 million for child care assistance
- $2.3 million for affordable housing providers
- $1.1 million for mortgage counseling and foreclosure prevention
Durkan separately has proposed using $29 million in emergency funds to help plug the city’s 2020 budget hole. The council is is still reviewing the mayor’s budget rebalancing package but is likely to approve that strategy.
The emergency and rainy day funds today hold a combined $128 million. Taking $86 million for COVID-19 relief and $29 million for budget rebalancing will leave the former with $0 and the latter with $13 million.
Mosqueda described that amount Monday as responsible, considering the JumpStart tax will be used to replenish the funds.
“Now is not the time” to spend so much from the emergency and rainy day funds, “when there seems to be so much rain in our future,” Fong and Noble countered, also asserting a lawsuit could block the JumpStart tax before 2021 and leave the city without that source to replenish the emergency funds. The council vetted the tax with “the same attorneys the mayor relies on,” Mosqueda replied.
The debate may not be over. Mosqueda made a point to note Monday that the council “can only appropriate dollars — we cannot force the mayor to spend.”
The JumpStart tax is expected to raise at least $214 million annually and Monday’s resolution describes how the council intends to spend the money.
In 2021, the council’s priorities will be:
- $86 million to replenish the emergency reserves
- 75% to preserve city services, support low-income, immigrant and homeless residents
- 20% for COVID-19 relief
- 5% for administration
In 2022 and beyond, the council’s priorities will be:
- 62% for low-income housing, housing designed to combat displacement in neighborhoods like the Central District and affordable homeownership
- 15% for small business assistance and worker training
- 9% for Green New Deal programs
- 9% for community-led development projects
- 5% for administration
Mosqueda said the tax would over time address Seattle’s long-running homelessness crisis and combat gentrification, while Councilmember Kshama Sawant credited activists with pressuring the City Hall to pass a tax by collecting signatures for a potential “Tax Amazon” ballot measure.
The Washington State Public Disclosure Commission ruled Friday that the Tax Amazon campaign should have registered as a ballot-measure committee by Jan. 27, instead of on March 19. The commission issued a warning.
Councilmember Dan Strauss narrowly won support for an amendment Monday that will allow businesses with 25 or fewer full-time-equivalent jobs to qualify for COVID-19 assistance, up from 10 full-time equivalent jobs.
Durkan said last Friday she would allow the JumpStart tax to become law without her signature, objecting to the measure while acknowledging the council could override a veto. She said she worries the tax may encourage large companies to move workers away from Seattle, arguing the policy would work better at the county or state level.
Council President M. Lorena González pushed back against that reasoning in a letter and in remarks Monday. In a letter to Durkan, González wrote she would refuse to “be held hostage” by businesses threatening to leave the city.
“We are choosing bold action as opposed to kicking the can down the road in hopes that some other elected body will show up to rescue us,” she said.