As the City discusses how to bring in more progressive revenue to fill its ever-growing budget hole, Seattle’s biggest business players proposed a way to protect their profits: suspend the JumpStart payroll tax for three years and, for new businesses, suspend the city’s Business and Occupation tax (B&O).
In a letter to the Mayor and his executive leadership, the Downtown Seattle Association, the Seattle Metropolitan Chamber of Commerce, and the Commercial Real Estate Development Association called on the City to “do no harm” by promoting a “robust economic recovery downtown,” which they predict will continue a downward spiral over the next couple of years.
The letter framed business interest as that of the public. If the City doesn’t pause JumpStart—allowing big business time to recover, or reactivate, or revitalize, or whatever—Seattle will face a cliff in funding in the coming years since downtown brings in almost half of the City’s tax revenue.
There’s one small (read: glaring) flaw to their proposal—if the City cuts JumpStart and B&O to prevent the budget gap business is apparently so concerned about, Seattle would lose out on hundreds of millions of dollars in progressive revenue creating, you guessed it, a budget gap.
JumpStart Is Good, Actually
JumpStart raised an impressive $231 million in 2021, the first year big businesses started paying the tax. Council Member Teresa Mosqueda, who championed the tax, said JumpStart enabled Seattle to “preserve and deepen much-needed investments in childcare, housing stability, and climate resilience,” while other cities across the country struggled with layoffs and cuts to city services.
The City projects JumpStart will raise $290 million in 2023 and $311 million in 2024. That would all be lost under the proposed holiday.
Additionally, B&O taxes account for 21% of the total general fund revenue. The City forecasted B&O will bring in $335 million in 2023. As Mosqueda said in an email to The Stranger, the City could pay for the entire annual Police Budget with that money.
Mosqueda does not think now is the time to raise less and spend less money. After all, local governments that increased government spending during the 2008 Great Recession saw “swifter economic recoveries and lower unemployment,” she said.
Business Doin’ Business
Even with Mosqueda defending the taxes, the suggestion could point to trouble for the future of progressive revenue.
The chamber’s CEO and weird letter signatory Rachel Smith currently sits on the Progressive Revenue Stabilization Work Group. The Mayor’s Office and Mosqueda designed the work group, which convened in October, to find new progressive revenue streams to make up for a huge budget shortfall and avoid a future of total austerity.
When the task force initially started the discussion, Mosqueda and others expressed relief to have business on board. The cooperation felt like a good omen after the sector refused a seat on the 2018 progressive revenue task force and eventually hammered in the nail on the head tax’s coffin. The letter could be a hit to that initial optimism.
Katie Wilson, General Secretary of the Transit Riders Union and work group member, called the proposal “bad policy.” It's so obviously bad that Wilson chalks it up to a “disappointing political move,” to stake out an extreme bargaining position for when the task force releases its recommendations and the real decision-making starts later this spring. By starting out so anti-tax, business interest can try to force a “compromise” that would funnel JumpStart revenue into the general fund to make up for the shortfall instead of raising new progressive revenue, Wilson speculated. Again, while that’s good for profits, Wilson said that proposal also sucks because it would cut funding to JumpStart’s intended targets, including affordable housing, Green New Deal investments, and small business development.
Wilson may not be far off. In an email to The Stranger, Smith said she’s focused on “how we use the City’s current revenues” and “budgeting practices.” Sounds a lot like putting JumpStart into the general fund and looking for inefficiencies to avoid more taxes.
The letter also asked the City not to establish transportation impact fees or building emissions performance standards, ideas the council is currently toying with. As a powerful lobby, business and real estate interests will likely influence those conversations.
Separating the Business Candidates from the Less Business Candidates
Business interest planted its flag in the far edge of the sandbox, which will give clueless business candidates running for City Council a better idea of what policies they should promote. In interviews with The Stranger, many candidates got super fucking weird about anything related to taxes. District 1 candidates Rob Saka and Preston Anderson, District 3 candidates Alex Hudson and Joy Hollingsworth, and District 2 candidate Tanya Woo avoided signaling support for any new progressive taxes or increases to JumpStart. Saka and Hudson specifically deferred to the promised recommendations of the work group.
I asked all the candidates who gave wishy-washy answers about progressive taxation if they support granting businesses a three-year holiday on JumpStart.
D3's Hudson said bussiness' proposal does not make sense for a “viable, equitable, or prosperous city,” that desperately needs to invest in “transformative solutions,” particularly in affordable housing, which JumpStart is supposed to fund.
“We need to stay the course on JumpStart, which was settled years ago. I think this is a non-starter that if adopted would result in worse outcomes for everyday Seattleites,” Hudson said in a text.
After initial publication, D3's Hollingsworth told The Stranger that pausing JumpStart "would actually hurt our city's recovery, and make the fluctuations of the current economy even worse for our community."
D1's Anderson said the current tax structure is "imperfect," but should JumpStart should be protected and funneled to its intended areas. In a change of tone from an earlier interview with The Stranger, Anderson said he wants to work with the state to adopt more progressive taxes.
Saka and Woo did not respond to request for comment.
This story has been updated since its original publication.