This is how the Seattle City Council may spend emergency reserves and proceeds from business tax

Seattle is in a state of emergency. Three emergencies, to be exact.

The city has been operating under declared emergency over homelessness since 2015, the COVID-19 pandemic since March and the closure of the West Seattle Bridge since last week. (An emergency related to massive Black Lives Matter protests ran from May 30 to June 19).

To help address the crises, the City Council now is poised to tap Seattle’s emergency reserves and proceeds from a new tax on big businesses.

The council is scheduled to vote Monday on a bill that would authorize City Hall to spend $86 million in emergency reserves on COVID-19 relief this year and on a resolution laying out a detailed spending plan for the tax proceeds.

The council already has approved the “JumpStart Seattle” tax, which will target large companies with highly paid employees and which is expected to raise more than $200 million annually. That happened July 6, with the tax passing 7-2, and the council also approved a high-level spending plan, promising the proceeds would be used for affordable housing, community-led development, business assistance and Green New Deal investments.

“Seattle residents have made it clear — now is not the time for government austerity,” Councilmember Teresa Mosqueda said when the measure was approved, promising the payroll tax applied to annual salaries over $150,000 would “jump-start our recovery with a relief plan that centers workers, small businesses and our most vulnerable community members.”

On Friday, Mayor Jenny Durkan said she would allow the tax and the high-level spending plan to become law without her signature, criticizing the council’s “fast-track approach” and arguing other options would be better while acknowledging a mayoral veto would likely be overruled.

“Our shared goal should be to make sure our companies and their workers thrive in Seattle, pay taxes in Seattle and that resulting revenue increases equity and benefits the people of Seattle. Unfortunately, this bill … will likely have the opposite results,” Durkan wrote in a letter about her stance, suggesting the tax could drive jobs out of the city as the local economy seeks to recover from the pandemic.

The tax won’t take effect until next year. To provide COVID-19 relief this year, according to the council’s high-level plan, Seattle will use emergency reserves and then replenish those reserves in 2021 with proceeds from the tax.

Monday’s council bill would take $67 million from the city’s emergency fund and $19 million from the city’s revenue stabilization fund (nicknamed the rainy day fund) to provide COVID-19-related relief to households this year.

Here’s how that money would be spent:

• $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 has meanwhile proposed using $29 million from the emergency and rainy day funds to help plug a 2020 budget hole gouged by the pandemic. Council members are still reviewing Durkan’s budget rebalancing package but have expressed agreement with that aspect of the package.

The emergency and rainy day funds today hold $128 million. Taking $86 million from the emergency reserves for COVID-19 relief and $29 million for budget rebalancing would leave the funds with only $13 million.

Monday’s council resolution would establish a more detailed plan for the at least $214 million in expected proceeds from the JumpStart Seattle tax, starting in 2021.

Here’s how that money would be spent in 2021:

• $86 million to replenish the emergency reserves
• Remainder
  • 75% to preserve city services, support low-income, immigrant and homeless residents
  • 20% for COVID-19 relief
  • 5% for administration

Here’s how the money would be spent in 2022 and beyond:

• 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

Championed by Mosqueda, the tax was supported by community organizations, nonprofit housing providers, social justice organizations and labor unions. Some business groups have opposed the measure.