The Seattle City Council has suspended its consideration of a proposed payroll tax.
In a May 7 press release, city council president M. Lorena González (D) noted that a proclamation by Washington state Gov. Jay Inslee (D) limits the topics that public bodies such as the city council can take action on during the pandemic to those that are “necessary and routine matters” or “matters necessary to respond to the COVID-19 outbreak.” The payroll tax proposal is outside that range of issues, according to Gonzalez.
“In recent weeks, some of my City Council colleagues have begun to express concerns related to the City Council's ongoing attempts to comply . . . with Proclamation 20-28 as it relates to the Council's consideration of the corporate payroll tax legislation," González said in the release. After talking with the city attorney's office and reviewing the legislation, “I have become increasingly concerned that the substance of these bills and the facts established in its legislative findings do not meet the high standard necessary to support a conclusion that the package as a whole is either ‘routine and necessary’ or sufficiently related to COVID-19 and the current public health crisis, as required by Proclamation 20-28,” she added.
In a memo to her fellow council members, González explained her position on the legislation and asked “Budget Chair [Teresa] Mosqueda [D] to strongly consider cancelling the Select Budget Committee meeting scheduled for Wednesday, May 13, 2020, and to refrain from convening public meetings on these proposed bills” — the payroll tax package — “through at least May 31, 2020.”
Mosqueda said in the press statement that she agreed to follow González’s request, arguing that the move helps to “ensure transparency, accountability and participation from the public, and to protect the health and safety of city employees and attendees.”
The decision drew criticism from council member Kshama Sawant (Socialist Alternative), one of the backers of the legislation. In a May 7 tweet, Sawant said, "This move by the Democratic establishment to cancel Tax Amazon committees through May is nothing but a naked attempt to break the momentum of our movement, which they and their wealthy benefactors are clearly nervous about.” She said supporters of the tax will need to refocus on their grassroots efforts.
Sawant and fellow council member Tammy Morales (D) introduced the legislation early April after building a grassroots base of support in the city for the proposal. It would impose a 1.3 percent tax on the Seattle payroll expenses of businesses with $7 million or more in annual Seattle payroll costs, while exempting grocers, nonprofits, and government entities, among others. The tax proposal is aimed at Amazon, as well as the largest 2 percent of businesses in Seattle, and is projected to apply to roughly 800 businesses and generate $500 million annually to fund housing programs and a Seattle "Green New Deal."
The legislation was modified before its introduction to also dedicate funding to address the COVID-19 pandemic, including providing financial aid to lower-income households economically impacted by the outbreak. As proposed, the tax would have gone into effect June 1.
However, the legislation’s prospects are unclear. González said she believes “that the City Council should at an appropriate time deliberate on potential mechanisms to raise progressive revenue to address the emerging economic crisis brought on by the COVID-19 pandemic and our projected $200-300 million budget deficit.”
Proponents are also seeking to qualify a ballot initiative to allow a public vote on the tax.
“I look forward to reinitiating these deliberations when we are no longer restricted from doing so and when the public can fully and safely participate,” González said.
Jason Mercier with the conservative Washington Policy Center praised the decision in a May 7 blog post, arguing that “the Seattle City Council has taken a strong stand for fully complying with the restrictions outlined by the Governor’s proclamation temporarily waiving provisions of the OPMA [Open Public Meetings Act].”
Businesses in the city have voiced opposition to the tax, condemning it as a potential threat to the region’s economy. A letter circulated by the Downtown Seattle Association in April condemned it as poorly timed, and called it “the largest single tax increase in Seattle’s history and 10 times larger than 2018’s failed head tax proposal.”
The letter also argued that the tax would have a ripple effect and threaten small businesses. Proponents, however — including Sawant and Morales — have argued that the tax would fall on large businesses that could absorb the cost, while addressing inequity in the city to which large employers such as Amazon have contributed.