How the Seattle City Councils plans to patch a budget hole with JumpStart revenue

Seattle will use money originally earmarked for affordable housing to plug a $250-million hole in the city’s budget.

The money comes from the JumpStart Tax, a tax on big companies with highly-paid employees.

Tuesday's vote on a budget package at the Seattle City Council included a showdown on the future of JumpStart Tax revenue.

On one side, Councilmember Cathy Moore wanted to force the mayor to spend at least some of the money on affordable housing.

"It's a choice between putting some guardrails on the executive or not," Moore said. "I have tried to find the middle ground, in terms of those guardrails. Where I come down on mandating guardrails is with affordable housing."

On the other hand, Councilmember Bob Kettle wanted the government to spend less money, and that can mean painful cuts.

"We need budget reform," Kettle said. "And I'd like to thank [Budget Committee] Chair [Dan] Strauss for the efforts that have been ongoing this year, but we need more. We need to complete the mission of budget reform."

In the end, Kettle's arguments won the day: By providing maximum flexibility on how the JumpStart tax is used, there's less need to find new sources of revenue.

RELATED: How city leaders want to patch Seattle's $250 million budget deficit

Strauss warned that a path of continually raiding the JumpStart Tax would prove unsustainable.

"We’re not out of the woods," he said. "We're so far in the woods, it's a thicket that some folks are having trouble seeing the trees."

Council Bill 120912 adjusting how JumpStart taxes are spent has one more vote Thursday before it heads to the mayor’s desk for a signature as part of the budget package. However, Thursday's vote is considered a technicality, as the budget committee already includes all nine council members.

Seattle capital gains tax proposal by a surprisingly narrow margin

The Seattle City Council also voted against imposing its own, smaller version of the state’s Capital Gains tax in the same meeting Tuesday. The bill proposed by Moore called for a 2% tax on investment-sale profits above $262,000 annually. If approved, the tax would be mostly collected on large sales of stocks and bonds.

The vote on Moore’s bill was surprisingly close, with four council members voting against it and four voting for it, in part because Councilmember Tanya Woo recused herself.

"For full disclosure, my husband is a stock trader," Woo said. "I just spoke to legal counsel, but I want to abstain, so that I can talk to ethics first before I make my vote."

RELATED: Seattle could get its own baby capital gains tax

Voting for the bill were Councilmembers Moore and Strauss as well as Tammy Morales and Joy Hollingsworth.

Voting against were Councilmembers Kettle as well as Council President Sara Nelson, Maritza Rivera, and Rob Saka.

With the vote tied at four to four, the proposal will go to the council Thursday with a "do not pass" recommendation. Technically, a councilmember could still change their mind between now and then.

Saka said he could shift his vote to "yes" next year, especially if the bill can help fund infrastructure projects.

That means the bill has a stronger chance of passing next year.