Seattle’s head tax is dead, but political debate may reverberate

Seattle’s head tax didn’t last long, but the thud from City Hall when the tax on large employers was put to the sword this month may reverberate. Business lobbyists who helped slay the measure want to carry momentum into next year’s elections, when seven City Council seats will be up for grabs.

The tax passed in May was supposed to raise $47 million per year for low-income housing and homeless services. Strategists say its fate was sealed as voter concern over homelessness bled into broader frustration with the council, encouraged by a business-funded referendum campaign to repeal the tax.

“We’re already looking ahead to 2019 as an opportunity,” said Markham McIntyre, executive director of the Civic Alliance for a Sound Economy, the Seattle Metropolitan Chamber of Commerce’s political arm. “We’ll absolutely try to build on this.”

As the Chamber seeks to translate its legislative win into a more attentive council, residents who collected signatures for the referendum campaign may try to make inroads at City Hall with their complaints about neighborhood safety and homeless tent camps.

But the housing advocates and social-justice activists who championed the tax say Amazon and the measure’s other opponents, having worked to rob the city of revenue, must now own the homelessness problem.

They say voters could turn on the companies and their wealthy executives unless the crisis eases, and the odds of that are diminished by the lack of shelter and cheap housing that the tax sought to address.

“The loudest voices against the tax now have to come up with a solution,” said Joe Mizrahi, political director at supermarket-workers union UFCW Local 21.

Surprise decision

The council’s decision to nix the annual tax of $275 per employee on June 12 came as a shock not only to many voters but to boosters of the measure, as well.

Pressure for the repeal came from a “No Tax on Jobs” campaign that raised nearly $400,000 and collected about 45,000 signatures to put a referendum on the November ballot. Transit Riders Union General Secretary Katie Wilson says she and other activists, believing the tax on corporate titans would be popular with voters, weren’t prepared.

“We expected business opposition, but I don’t think we anticipated the degree,” said Wilson, who helped put the head tax together. “In retrospect, we were very naive.”

Several labor unions, including SEIU 1199NW, which represents workers at homeless shelters, would have contributed money and people power to try to save the tax at the ballot.

But before they could strategize, their “Bring Seattle Home” campaign commissioned a poll that yielded bad news. The results showed a majority of voters opposed to the tax and unlikely to budge, according to a half-dozen people briefed on the poll.

The results also showed dismal job-performance ratings for the council. SEIU 1199NW declined to share the Bring Seattle Home poll results.

The weekend before the repeal, the council members who had sponsored the tax – Lisa Herbold, M. Lorena Gonzalez, Mike O’Brien and Teresa Mosqueda – conferred with their allies. Taking on a business-backed campaign that had substantial resources would be a waste of time and money, most concluded.

The council voted 7-2, with socialist Councilmember Kshama Sawant joining Mosqueda in standing behind the tax.

“I don’t have a problem fighting a losing battle in order to build something for next time,” Herbold said in an interview last week. “But I didn’t see what would be built.”

She worried the head-tax drama would hurt Democrats running for state office, and Gonzalez feared it would jeopardize a city education levy on the November ballot.

A lawsuit has alleged public-meetings violations related to the swift repeal.

Public opinion

In April, a poll by labor unions had shown majority support for a head tax. By June, the equation seemed to have changed.

What happened? Amazon brought more attention to the debate by threatening to abandon a tower project, and local institutions like Dick’s and Uwajimaya spoke out.

Though a number of small-business owners and artists backed the measure, the Chamber slammed it as a “jobs tax” and launched an anonymous website called “City Council: Make It Better.”

The group tapped authentic frustration among voters, McIntyre says. Increased spending by Seattle in recent years has moved many people off the streets, but tents have continued to pop up.

A poll by the Chamber in March showed latent dissatisfaction with the council on homelessness.

Though a recent independent analysis attributed the problem to a shortage of affordable housing, many voters “don’t think the City Council is delivering results,” McIntyre says.

The Chamber will count on that sentiment in next year’s elections for the council’s seven district seats. The business group likely will target the seats held by Herbold, O’Brien and Sawant.

Herbold and O’Brien were sponsors of the tax who flip-flopped this month, and O’Brien has been shouted at in Ballard over homeless issues. Gonzalez and Mosqueda hold citywide seats with terms that don’t expire until 2021.

“Smart candidates will identify district-specific examples of the council not delivering,” McIntyre said.

David Rolf has a different take on the head-tax saga. The SEIU 775 executive director says business leaders duped Seattle when they warned that the head-tax hike – about 13 cents per hour for 600 companies – would harm the economy.

Amazon easily could have paid, but it wanted to scare cities across the country before selecting a second headquarters, he says. Eyeing 2019, the Chamber channeled public anxiety over homelessness into anger at the council, says Rolf.

“This wasn’t about a tax, at the end of the day. This was about power,” he said. “You have downtown businesses planning in plain sight to remove a government.”

The companies, Rolf says, targeted conservative voters, residents who miss old Seattle and people upset over street camping, among others. “They figured out how to knit those groups together,” he said.

The labor leader, whose union represents home-health aides, doubts the same game plan will work next year.

In 2015, Herbold and Sawant defeated Chamber-backed candidates, and O’Brien won handily. The three may be more vulnerable now, but business leaders are taking a risk by siding with “NIMBY homeowners,” Rolf says. The Chamber has had more success in the past teaming up with unions like SEIU 775, he says.

A key issue for voters

In any case, voters are paying attention. Even before the head tax passed, 87 percent of respondents to a KIRO-TV poll said they had heard about the issue.

Troy Faraone, a North Seattle homeowner, says he objected to the tax for his own reasons – not because the Chamber told him to. Faraone says City Hall can do better.

“Make your dollars count. Make them stretch,” he said.

Andrew Coak, case manager at a homeless shelter, says the dollars already are stretched. The SEIU 1199NW member says the tax would have alleviated suffering.

“Despite what the polling may have said, I would have liked the opportunity to convince voters,” Coak said. “My clients are where my heart and my mind go.”

Besides the head tax, what Seattle leaders do next also could determine what happens in 2019. Though she believes the city is making progress, Gonzalez says she wants to improve communication with voters and repair ties with business leaders.

“We have to figure out a way to work together,” she said.

The council’s options on homelessness are limited, however, because working people have no interest in another regressive property- or sales-tax hike, according to UFCW Local 21’s Mizrahi.

“We live in a city with some of the richest people in the world,” he said, “and we have people dying on the streets.”

Editor’s note: While The Seattle Times Company would have been affected by the head tax, and the editorial board has commented on it, the Times’ news coverage is separate from those functions and remains independent.