Sound Stories. Sound Voices.
Play Live Radio
Next Up:
0:00
0:00
0:00 0:00
Available On Air Stations
You are on the KUOW archive site. Click here to go to our current site.
00000181-fa79-da89-a38d-fb7f2c120000Seattle is in the midst of a struggle with affordable housing and a rising homelessness crisis. The City Council is considering a proposal to have large businesses help pick up the tab on these issues with an employee tax, more commonly known as the head tax.The tax would force big employers to pay the city of Seattle for each employee and every hour worked. It's expected to raise $75 million.

What the Seattle City Council learned just two weeks before the head tax vote

Downtown Seattle accounts for more than half the city's construction investments, according to DSA.
KUOW Photo File/Megan Farmer
The boom is slowing in Seattle, which could impact how much money will be spent on people who live unhoused in the city. Downtown Seattle accounts for more than half the city's construction investments.

The bloom is off the boom.

That’s the message Ben Noble, director of the city’s budget office, gave Seattle City Council’s finance committee on April 30, two weeks before the full council passed the head tax. 

The growth that allowed the city to spend, Noble said, is starting to slow. “What you see is continued growth in employment but at lower rates of growth,” Noble told the committee.

Read: Inside Seattle's approach to tent encampments

 
Job growth instigated the construction boom in the city. Less hiring means there will now be less building. 

“You’ll note for 2019 and 2020 we show that declining, so we are actually anticipating a slow downturn in construction activity,” Noble said at the budget meeting.

That's a problem for the city, because it has been raking in tax revenue because of construction. That means tax revenues will start to decline, even as Seattle increases spending to combat some of the consequences of growth. For several years now, Seattle has overspent its budget. But surprise windfalls from growth, like sales tax revenues from construction, covered the gap. 

Read: Seattle could have even fewer shelter beds with head tax plan, Seattle mayor says

That's over now. If current trends continue, Noble told the committee, Seattle will operate in the red in 2019, to the tune of $28.5 million.

Councilmember Sally Bagshaw asked Noble what city spending was blowing the budget. 

Homelessness, Noble said, adding, “The demand for those services, far from declining, is continuing to increase."  

Noble told the Council that the city doesn’t have room in the budget for long-term spending on homelessness. It would be wrong, he said, to think the boom is going to surprise the city with more tax money like it used to.

Read: Eat. Pray. Truck. How a Northwest tribe brings salmon home

Underlining this point: As the need for money to curb homelessness increases, money from the boom declines.

What does that mean for the head tax — that $275-per-employee charge to big businesses? Well, the $47 million the tax is expected to raise annually could plug the shortfall. That would decrease how much head tax money would go to new spending on homelessness.

To be clear, that’s not set in stone.

Shortly after Noble's budget presentation, Mayor Jenny Durkan asked city departments to submit a budget with cuts between 2 and 5 percent. 

Durkan won’t agree to the City Council's plan to spend the head tax money, signaling there are problems with that plan. 

To recap: The city of Seattle overspent its budget on homelessness before the City Council voted on the head tax. Unless something changes, most of the money raised by the head tax will cover previous spending commitments — not new spending. 

Read: Seattle could have even fewer shelter beds with head tax plan, Seattle mayor says

Read: Eat. Pray. Truck. How a Northwest tribe brings salmon home