My Vote on the Employee Hours Tax

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Earlier today, I voted to repeal the proposed employee hours tax on Seattle’s top-grossing 3 percent of businesses. While the need hasn’t changed in the months since we started this conversation, it’s clear that we need to come together for the common good of our city.

My vote is not something I take lightly. I truly believe that the next 6 months of this fight would have been incredibly damaging to this City. From what I’ve heard over the last few weeks, it seems that the majority of Seattle residents would prefer to take a step back and “hit the reset button” on this issue.

A contentious ballot measure would have set the City up for a months-long battle that was not clear would be successful, and would have further paralyzed our ability to move forward with any kind of plan.

To be clear, the original proposal did have a plan. The City Council was ready to invest in solutions that have shown the most success in helping folks out of homelessness.

For example, we know that our affordable housing investments are making a difference, and are rigorously scrutinized as seen in the Office of Housing’s 2017 Annual Investments report, where they reported awarding $93.44 million in 2017 to build and preserve 1,450 affordable homes in neighborhoods across Seattle. We also have been implementing the “Pathways Home” recommendations of Barb Poppe, and in last year’s budget revamped our investments with an RFP that focused on extended-hour shelters and permanent supportive housing. Last year, King County saw a 35 percent increase in exits from homelessness over 2016, and the system permanently housed 8,100 households in 2017. The proposed spending plan would have built on those investments and expert recommendations, with the vast majority of funding recommended to go towards housing.

Many people ask: If we have these demonstrated successes, why is homelessness growing? A large factor is our lack of affordable housing. Over the past 7 years, average rents have increased in Seattle by 42 percent, fueled by unprecedented population growth in high wage earners (Rent Jungle, EOI). The lack of affordable housing means that a large rent increase, eviction, the loss of a job, or change in a family situation is more likely to put someone out on the street than in years past.

The 2018 Point in Time Count of Persons Experiencing Homelessness  demonstrates that the vast majority of homeless individuals come from the Seattle/King County area. Approximately 52 percent of survey respondents reported living in Seattle immediately prior to their loss of housing. An additional 31 percent of survey respondents reported living in broader King County, while 11 percent lived in another Washington county prior to their loss of housing.

Given these factors that contribute to our homelessness crisis, the recent McKinsey Report, produced for the Seattle Metropolitan Chamber of Commerce, concluded that we need to dramatically increase our investments as a region in affordable housing.

I believed a proposal asking the top-grossing 3 percent of businesses to pay 14 cents an hour for every employee was a sensible down payment on addressing the broader regional homelessness needs in an environment where Washington State does not allow for income or capital gains taxes. And that it was particularly appropriate given that businesses received a 40 percent federal tax cut after the Federal Tax Bill passed in December 2017, which lowered the corporate tax rate from 35 percent to 21 percent.

So I call upon the businesses and community leaders who led the charge against the employee hours tax to join in a productive conversation that will help address the concerns we all share.

In this conversation, I hope that they will recognize the efforts the City has made to support business growth, with hundreds of millions of dollars invested over the last few years in improvements to South Lake Union, significant investments in transit service to our job centers, and a city-wide rezoning effort, the need for which is fueled by the growth in the tech sector. Our investments also include a new Denny electricity substation, costing over $200 million, which will deliver highly reliable electricity service that high tech businesses need to operate in our City.

Similar to our partnerships with businesses on all these efforts, I believe large businesses can and should invest in affordable housing as an integral part of our City infrastructure that allows everyone to thrive. If the business community does not agree with investing in the Pathways Home strategy, I look forward to seeing their other ideas, which will perhaps be reflected in the Mayor’s proposed budget this Fall.

My door is always open to anyone who wants to engage in a solutions-oriented approach to this crisis. In the absence of the employee hours tax, I will start immediately working on ideas for alternative revenue streams to fund the necessary investments in housing and homeless services. I also expect the Mayor to play a leadership role in bringing the city together around a shared vision to reduce the crisis. In the meantime, I will continue to work on the policies and programs that I believe will help with the crisis. These policies and programs include: LEAD expansion to the North Precinct; establishing a Community Service Officer Program; ongoing work to support tenants’ rights, among other efforts.

As always, thank you for your continued engagement with my office.