Watch: Compromise in works as council takes up head tax

The Seattle City Council took up the controversial head tax on Monday, May 14, 2018. (Photo: KOMO News)

SEATTLE (AP) - After weeks of tense and raucous meetings, a divided Seattle City Council is voting Monday whether to tax the city's largest businesses to raise money to fight homelessness.

A compromise is in the works that might win the support of Mayor Jenny Durkan and other council members who opposed the tax that was voted out of committee on Friday.

The council took up the measure after a loud public hearing'

The debate over who should pay to solve a housing crisis exacerbated by Seattle's rapid economic growth comes amid skyrocketing rents and rising homelessness. The Seattle region had the third-highest number of homeless people in the U.S. and saw 169 homeless deaths in 2017.

Councilmembers who advanced a proposal out of committee on a 5-4 vote Friday want businesses with more than $20 million in gross revenues, such as Amazon and Starbucks, to pay roughly $500 a year per full-time worker.

The so-called "head tax," or tax on employee hours, would raise about $75 million a year to build affordable housing units and pay for homeless services.

But that proposal faces a potential veto from Durkan, who said Friday she doesn't support the current head tax proposal. She and four other councilmembers want a smaller tax that charges about $250 a year per full-time worker and raises $40 million a year.

She indicated through a spokeswoman on Monday that she has been working on a compromise.

"Mayor Durkan has been working around the clock with councilmembers, businesses and workers to forge a path forward that protects our economy and family-wage jobs while making meaningful investments in affordable housing and homelessness services. She is encouraged by the collaboration with councilmembers and looks forward to council's vote this afternoon," said Stephanie Formas, spokesperson for Mayor Durkan.

Councilmembers Sally Bagshaw and M. Lorena Gonzalez worked throughout the weekend on a compromise. It would amount to a tax of $275 per year per employee for businesses grossing more than $20 million a year.

The tax would raise $50 million a year and would expire in five years. The council would have impose it again after that.

The bill will need five votes to pass any measure and six votes to override a mayoral veto.

You can watch the City Council meeting here. It begins at 2 p.m.

Nearly 600 businesses would pay the head tax, but Amazon, the city's largest employer, would take the biggest hit. The company has more than 45,000 workers, and would pay more than $20 million a year under the tax. It would likely owe even more when the tax switches to a 0.7 percent tax on business payroll in 2021.

Supporters say businesses that have benefited from Seattle's prosperity and contributed to growing income inequality can and should pay.

We need "to make sure we have a livable city for everybody in our community and that there's a sense of shared prosperity and shared responsibility," Councilmember Mike O'Brien said Friday after the council meeting.

Businesses and others say the so-called head tax is misguided and potentially harmful. They question whether the city is effectively using the tens of millions of dollars it already spends on homelessness each year.

Amazon raised the stakes last month when it halted construction planning on a 17-story tower near its hometown headquarters as it awaits a tax vote. It is also rethinking filling office space in another leased building. The moves pauses about 7,000 new jobs.

Amazon's threat to pause its expansion in Seattle comes as 20 cities vie to lure the company's second headquarters and as it expands its workforce in Boston and Vancouver, British Columbia.

Proponents say people are dying on the streets, and while city-funded programs found homes for 3,400 people last year, the problem deepens.

Bruce Nourish, 34, software engineer, said he supports the head tax. "I think there's enormous demand (for housing) that's outstripped the need," he said.

Marilyn Strickland, president of the Seattle Metropolitan Chamber of Commerce said in a recent interview, said the city has seen record revenues from construction and growth.

"Seattle is not a tax poor city," she said, "If this is a priority, they need to make it one and use the resources they already have."

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