Seattle ‘Employee Hours Tax’ at Center of Budget Debate

by Kelsey Hamlin/

Seattle City Council budget chair Lisa Herbold’s job is to take the mayor’s budget proposal and shape it for the city’s most important priorities. This week, her committee will put the final touches on Seattle’s budget “balancing” process.

A new employee hours tax — sometimes referred to as a head tax — stands at the center of the effort.

“If we pass the Employee Hours Tax…  starting in 2018 we can begin to invest nearly $50 million each year and create 2,000 additional units of affordable housing over four years,” Herbold writes in an update on the budget process, “for both low-wage working families and formerly homeless individuals. This would more than double what the Housing Levy funds each year.”

While many in Seattle’s business communities have voiced opposition to the HOMES tax, Council members Kshama Sawant, Mike O’Brien, Kirsten Harris-Talley and Herbold are planning a budget including its implementation.

Other proposed budget updates focus on the Seattle Department of Transportation (SDOT) and the Human Services Department. Herbold says she wants to remove the minimum general fund contribution of $40 million given to SDOT. The committee’s amendments allow four more authorized encampments and have three provisions on unauthorized encampment removals.

“I’m very leery of dipping into these funds, though it’s always tempting for elected officials,” Herbold said. “The account has successfully helped the city to maintain services during economic downturns … especially in this era where federal funding is so uncertain.”

The Full Council is scheduled to vote on the budget November 20th.

The HOMES proposal creates a permanent revenue source and simultaneously generates a new bond. This means the Council could use the HOMES money to bond against and replicate last year’s $29 million housing bond. $10 million of that bond was already issued and the remainder comes over the next year. The concern is Seattle has no ongoing revenue source to pay the current bond back. So the money has to otherwise come out of the general fund.

The HOMES tax could solve this problem.

The tax dedicates $13 million to both preserving and adding new housing and shelter services. It’s also said to provide funding for Law Enforcement Assisted Diversion.

O’Brien and Harris-Talley released a joint statement pointing out the disproportionate burden on communities of color during Seattle’s housing and homelessness crisis. The release lists a number of notable supporters, like Jessyn Farrell, Washington’s former representative in the 46th, Seattle Peoples Party and LGBTQ Allyship. There are 26 supporters in total.

“We need to reduce the number of new housing units that get diverted from the housing market into vacation rentals,” the release read, “and create a revenue stream to fund community-led anti-displacement investments through the Equitable Development Initiative (EDI) … We support the proposal to restrict the number of units for short term rentals to an individual’s primary residence plus one additional property”

The EDI would get $5 million a year from the HOMES tax.

The HOMES tax could hypothetically spend a few million on bonding and at least $11 million on emergency shelter. After four years, the money could shift from services over to housing. The breakdown of where the money goes will not be voted on this week, but rather over the next few months if the tax passes.

Meanwhile, a group of businesses headed by the Downtown Seattle Association has sent a letter opposing the proposed tax. The complete letter — and a roster of signees — is below:

Kelsey Hamlin studied Journalism and Law, Societies & Justice at the University of Washington. For three years, she has focused her work around social justice issues, legalities and policies.