After a weekend of high-stakes negotiations between Seattle City Council members and Mayor Jenny Durkan, the council voted unanimously Monday to tax the city’s largest employers to help address homelessness.
Starting next year, the tax will be $275 per employee, per year on for-profit companies that gross at least $20 million per year in the city — down from a $500-per-head proposal that Durkan threatened to veto.
The city declared a homelessness state of emergency in late 2015. A point-in-time count last year tallied more than 11,600 homeless people in King County and one in 16 Seattle Public Schools students is homeless.
“We have community members who are dying,” Councilmember Teresa Mosqueda said before the 9-0 vote. “They are dying on our streets today because there is not enough shelter” and affordable housing.
The debate over who should pay to solve a housing crisis exacerbated by Seattle’s rapid economic growth comes after weeks of tense exchanges, raucous meetings and a threat by Amazon, the city’s largest employer, to stop construction planning on a 17-story building near its hometown headquarters.
Amazon, Starbucks and business groups sharply criticized the council’s decision after Monday’s vote. They called it a tax on jobs and questioned whether city officials were spending current resources effectively. One state Republican leader said he would seek legislation next year to make clear that a city tax on employees, wages or hours is illegal.
Seattle-based Starbucks had harsh words for its hometown leaders. It accused the city of spending without accountability while ignoring that hundreds of children sleep outside.
“If they cannot provide a warm meal and safe bed to a 5-year-old child, no one believes they will be able to make housing affordable or address opiate addiction,” Starbucks’ John Kelly said in a statement.
But worker and church groups and others cheered the tax as a step toward building badly needed affordable housing in an affluent city where the income gap continues to widen and lower-income workers are being priced out.
For Seattle’s liberal City Council, the discussion Monday centered not so much on whether there should be a head tax but how big it should be. Four bill sponsors initially pitched a tax of $500 per full-time employee a year but a compromise proposal emerged over weekend after they couldn’t muster the six votes needed to override a potential veto by Mayor Jenny Durkan.
Proponents of the tax say too many people are suffering on the streets, and while city-funded programs found homes for 3,400 people last year, the problem deepens. The Seattle region had the third-highest number of homeless people in the U.S. and saw 169 homeless deaths last year. The city spent $68 million on homelessness last year and plans to spend even more this year. The tax will provide additional revenue.
“This legislation will help us address our homelessness crisis without jeopardizing critical jobs,” Durkan said in a statement.
Other cities have implemented similar taxes, but critics say Seattle’s tax could threaten the booming local economy and drive away jobs.
Nearly 600 large employers — roughly 3 percent — would pay the tax starting in 2019. Amazon, the city’s largest employer with 45,000 workers, would take the biggest hit.
Amazon Vice President Drew Herdener said in a statement Monday that the company was disappointed.
While Amazon has resumed construction planning on the downtown building, he said “we remain apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here.”
He noted that city revenues have grown dramatically and that the city “does not have a revenue problem — it has a spending efficiency problem.”