Less than a month after passing a head tax to fund housing and homelessness services, the Seattle City Council looks poised to repeal it Tuesday.
"It is clear that the ordinance will lead to a prolonged, expensive political fight over the next five months that will do nothing to tackle our urgent housing and homelessness crisis,” wrote seven city council members and Mayor Jenny Durkan in a statement.
The announcement caps off what has become one of the ugliest political debates in recent Seattle history, handing a victory to big businesses who opposed the head tax every step of the way.
If the council axes the head tax tomorrow—and it seems almost certain that they will—we’ll be feeling the ripple effects of the move for a long time. It’s hard to know exactly what this all means, but here are five takeaways that immediately come to mind:
DEEP POCKETS STILL RUN THE SHOW: When Mayor Jenny Durkan signed the head tax on May 16, opponents of the ordinance had already begun mobilizing to repeal it. Within a matter of days, businesses raised more than $350,000 to support a referendum campaign called No Tax on Jobs. The bulk of that cash—about $250,000—went to an Arizona-based political firm to gather the nearly 17,000 signatures they needed to put the head tax on the November ballot.
All that money paid off. It appears they got their signatures—not that they needed them. The businesses behind No Tax on Jobs will get what they want—a repeal of the head tax—and they won’t even have to count on voters to kill the ordinance for them. In their statement announcing the repeal ordinance, city council members predicted “a prolonged, expensive political fight” if the head tax were to move forward. Their fears are warranted.
Most of the financial support for No Tax on Jobs came from big businesses, including Amazon, Starbucks, Vulcan, several large grocery chains and real estate developers. For those companies, tens of thousands of dollars to put the head tax on the ballot amounts to a drop in the bucket. You can bet they would spend more to fund slick ads once fall election season rolled around. Supporters of the tax—namely homeless advocates and labor groups—just don’t have the same financial resources. “We know the campaign on the other side would raise however many million dollars they need,” said Council Member Mike O’Brien in a phone interview. “People are in front of grocery stores getting in shoving matches over signature gathering. Imagine how that plays out over the next six months.”
THE HEAD TAX IS A POLITICAL LOSER: Speaking of the election season, this upcoming November will be uneventful for city politics. But seven of nine city council members will face re-election in 2019. That just as many council members look poised to repeal an ordinance they passed unanimously a month ago suggests they did not anticipate how politically toxic that ordinance would become.
Three council members who sponsored the head tax—Lorena González, Lisa Herbold and Mike O’Brien—were among the lawmakers who signed onto a letter announcing the repeal vote tomorrow. All three seem to have conceded that they’ve lost the political battle on this issue. In a statement, González said she still believes the head tax is good policy to generate more housing funds, but claimed that “powerful and well-resourced interests have swayed public opinion to believe that more is not needed.” (Neither González nor Teresa Mosqueda, who oppose repealing the tax, will be up for reelection in 2019. The other seven council members will be.)
O’Brien said the council lost the battle last month when Amazon announced that it would halt downtown construction pending the head tax vote, putting 7,000 jobs in jeopardy. “That’s when public opinion turned against the tax,” he said. “People who weren’t paying attention said this was all of a sudden really threatening to them.”
O’Brien added that he is also worried about the effect the head tax could have on state legislative races in swing districts. If Republicans ran on an anti-head tax message, they could win control of the state legislature or pressure moderate Democrats to pledge to repeal or preempt the tax at the state level. “That is just real enough to me and just terrifying enough to me to do what I thought was unthinkable just a few weeks ago,” he said.
A CONSERVATIVE, ANTI-GOVERNMENT MESSAGE WON: For a debate in one of America’s most liberal cities, the messaging against the head tax took on a surprising tone: It sounded like it was coming from Republicans.
Opponents hammered on a message about perceived out-of-control government spending. No Tax on Jobs emphasized a message of “accountability.” Similar lines came from neighborhood groups and big name corporate executives.
“This City continues to spend without reforming and fail without accountability,” Starbucks executive John Kelly said after the tax passed. “The city does not have a revenue problem – it has a spending efficiency problem,” was the line from Amazon Vice President Drew Herdener.
Despite an ongoing, metrics-obsessed effort to reform the way the city spends money on homeless services, the message pushed by those execs found a captive audience among Seattle voters. A poll from March, first reported by Crosscut, found that most Seattleites believe homelessness is a serious problem, but 83 percent were dissatisfied with how the council has addressed the problem. Only 29 percent believed the city needed more tax revenue to address homelessness.
Council members acknowledged the opposition messaging, too. Council member Herbold, who supported the tax but nevertheless indicated she will support repealing it, called it a “tired, old conservative trope that increased levels of human suffering we see in our city is caused by government inefficiency rather than by the Gilded Age level income inequality in Seattle and elsewhere.”
Even some opponents of the tax acknowledged the messaging had broadened beyond the tax. Monty Anderson, executive secretary of the Seattle Building and Construction Trades Council, said his group initially supported the referendum to repeal the tax but then scaled back its involvement with the campaign.
“We were more worried about the jobs,” Anderson said. “They were talking about some things that are a little too to the right for us, a little too ‘blow up the whole thing.’”
DON’T HOLD YOUR BREATH FOR “REGIONAL SOLUTIONS”: Alongside messages about efficiency and accountability, you may have heard that the entire region—not just Seattle—should be figuring out how to solve homelessness. In their statement, Mayor Jenny Durkan and seven council members said “the state and region must be full partners” and added that “Seattle taxpayers cannot continue to shoulder the majority of costs, and impacts.”
We’ve heard this before.
Former mayor Ed Murray’s administration, which declared the ongoing state of emergency on homelessness, repeatedly called for state and regional lawmakers to kick in more funding for the crisis. Durkan has made similar calls. As have city council members. There’s little to show for those efforts.
Last year, Murray dropped a plan for a city property tax levy to fund homeless services in order to pursue a regional effort instead. The city and county planned to team up on a sales tax for homeless services. A countywide tax never came to pass. (Sales taxes are regressive. Washington State has one of the nation's most regressive tax systems in the country, and Seattle is particularly "hard on the poor and easy on the rich," as Gene Balk reported this year.)
Then, in December, regional leaders created a new task force called "One Table" to "find solutions" to homelessness. In announcing the task force, King County Executive Dow Constantine said the county could seek a sales tax increase but did not commit to any new funding. In the end, the task force didn't come up with any new revenue sources either. The group made recommendations, including providing 5,000 units of affordable housing over three years, but did not detail how much those efforts would cost or how to pay for them.
WE STILL DON’T HAVE MONEY WE NEED—NOT EVEN CLOSE: The head tax represented a massive political undertaking, but not because of dollars and cents. The tax presented a challenge to the city’s most powerful corporate interests, but the $47.5 million a year it was going to rake in represented only a fraction of what’s needed to address the city’s housing and homelessness crisis. That’s because Seattle is facing a crisis that, by some accounts, will cost hundreds of millions in additional money to solve.
Exact numbers vary, but analyses of the region's housing challenges have said Seattle needs between 10,000 and 25,000 new housing units that are affordable to very low income people in order to address homelessness. In the heat of the head tax debate, a new analysis from the consulting firm McKinsey and Company said 22,000 households experiencing homelessness currently need affordable housing units, but there are only 8,000 units available at a given time. That leaves a gap of 14,000 units. In total, the firm's report estimated that the county needs $200 million more per year to address the crisis.
The head tax would have raised $45 million in new revenue in its first year. Exactly how the money would be spent would have been decided during budget negotiations this fall. However, a spending plan adopted by the council would have dedicated 66 percent of the revenue to building affordable housing. The result: Over five years, the head tax would pay for 591 of the 14,000 units that the region needs.
“There are thousands of people on the streets of Seattle every day and every night because we have spent years wishing and hoping that small adjustments and modest increases in investments can be the answer,” says Alison Eisinger, executive director of the Seattle/King County Coalition on Homelessness, which advocates for more funding for housing and homeless services. “Anyone paying attention to the facts can plainly see that...our investment simply hasn’t gone big enough.”