There was a Seattle City Council Budget Committee meeting today. All nine council members were present. The council heard two things: how deeply COVID-19 fucked the city's 2020 budget and the first of three bills regarding a payroll tax on roughly 800 of Seattle's biggest businesses.
First, there could be as much as a $300 million tax revenue hole in the Seattle city budget. That's because around 60 percent of the budget comes from sales and B&O taxes and those things—especially sales tax, which has dropped by around 20 percent so far—"are heavily influenced by economic conditions," as Councilmember Tammy Morales said today.
"This is not the Great Recession," Ben Noble with the Office of the Budget said, explaining the budget projections he was presenting to council. "We’re forecasting into a situation we’ve never seen before."
Part of that forecasting requires anticipating how the economy could get back on track during a time when it's unclear how or when the city will reopen. Noble said that their financial modeling anticipated "a loosening of current social distancing standards" by the beginning of the third quarter. Or, July.
While there are reserves to tap into like Seattle's Rainy Day Fund (which has $60.8 million) or the Emergency Fund ($66.9 million), "there will be some set of spending reduction that will need to occur," Noble said. “There is a lot that we had hoped to do that we will not be able to do."
Leaving it on that grim note, the council then heard Morales' and Councilmember Kshama Sawant's legislation: a corporate payroll tax (otherwise known as the Amazon Tax). It would put a 1.3% tax on businesses with payrolls over $7 million in order to raise $500 million.
The money from the tax will immediately go to helping Seattleites in the wake of COVID-19. In the years after that, it will create affordable housing and invest in making buildings compliant with a Green New Deal (no fossil fuels). By 2025, the tax is anticipated to mobilize $1.9 billion on around 5,600 affordable units.
"We will be in the thick of it for quite some time," Morales said, citing Noble's July prediction for relaxing social distancing measures. "That's exactly why we have to do something to provide support."
Only the spending plan, the first of three bills, was presented in the committee today. All the expected naysayers, like Councilmember Alex Pedersen, seem to be staying mum until next week when the majority of the bill will be discussed. Pedersen, so far, is the only council member who has spoken out against the tax. He wrote this op-ed, published in the Seattle Times this week. Sawant classified the op-ed as one of "four hit pieces published in the Seattle Times" against the tax.
Pedersen wrote the op-ed with Matthew Gardner, an economist at Windermere who is also on Gov. Jay Inslee’s Council of Economic Advisers. Mike Faulk, the governor's communications director, told The Stranger that "Gardner is speaking for himself here and not for the Governor’s Office... We are singularly focused on COVID-19 right now."
The bulk of today's discussion on the spending plan was around how the city would select 100,000 low-income households to distribute $2,000 in aid to across a four-month period ($500 checks once a month for four months). Currently, low-income families would be selected based on whether they are enrolled in city assistance programs. Other vulnerable populations such as people who have lost jobs during the pandemic, seniors, immigrants and refugees, homeless people, people experiencing domestic violence, and more are expected to be eligible.
If this thing, a package of three bills, gets off the ground then the plan is to split $200 million among 100,000 at-need households starting in June.
Except, the earliest this could be voted on is May 13.
Council President Lorena Gonzalez asked how soon the money would get to the families. Analysts in the council's central staff replied that it was "dependent on how quickly we can work with the executive on ways to distribute that cash." The executive, or, Mayor Jenny Durkan, has not announced her support for the corporate payroll tax.
"So that work has not yet been done," Gonzalez noted.
Gonzalez seemed wary about the lack of specifics in the spending plan.
"I'm open to talking to council members on specific things they’d like to see funded and am all for being very specific for how this money goes to households," Sawant said.
Those conversations, and many more, will start up again next Wednesday.