When Worlds Collide: Homelessness, Taxes and the Port of Seattle

By Jordan Royer, Vice President, Pacific Merchant Shipping Association

It’s no secret that the City of Seattle is going through rapid change, brought about through booming homegrown businesses, population growth, homelessness and drug addiction, and a political culture that has gone from an understated, moderate, consensus-based endless meetings process to an in-your-face, confrontational extreme where you are either a Socialist, or you are a Right-Winger.

The Seattle City Council’s latest proposal to levy a “head tax” on the city’s largest employers has brought all of these dynamics to a “head.” The original proposal, to charge any business grossing $20 million or more approximately $500 per employee per year, was later watered down to $275 per head after the Mayor threatened a veto. The city estimates the latest proposal passed 9-0 by the council will bring in $47 million annually to help fund the City’s efforts to address homelessness. The tax would hit approximately 585 businesses in Seattle, including the two marine terminal operators at the Port of Seattle. The new tax takes effect January 1, 2019 and will sunset in 5 years.

Supporters of the tax have labeled it the Amazon Tax and have taken to trying to make Jeff Bezos the villain. Following the introduction of the ordinance, Amazon announced it was suspending construction work on two buildings until after the vote.

The debate over the head tax and homelessness has created anger on all sides. It has split the labor community with the Building Trades and ILWU firmly against, and the SEIU and government public sector unions supporting. Social service providers are squaring off against neighborhood activists who feel the Progressive city council is enabling crime and drug addiction in their communities because of a failure to enforce the law, as well as acknowledge the fact that mental health and drug addiction is driving the crisis as well as the reputation of Seattle as “Freeattle” where anything goes.

One of the most bewildering aspects of the head tax debate has been the silence from the Port of Seattle. Their tenants and their tenants’ employees, the longshore workers, were actively opposing the poorly thought-out legislation. They understood that it would further erode the port’s competitiveness and cost jobs. Apparently, potential loss of market share and customer complaints didn’t move the commission to act.

Seattle spends more to reduce homelessness per capita than any other city. In 2016, city voters passed a $290 million housing levy, double the previous 7-year levy. Last year, Seattle spent $54 million to deal with homelessness. This year, the tally will be close to $70 million. There are approximately 4,000 people living on the streets in Seattle. A recent outside study funded by the city found that revenues are not the problem but, rather, the lack of accountability for how the money is spent.

The head tax would impact the Port of Seattle’s two main marine terminal operators along with others in the maritime trade community, including BNSF, tug companies, shipyards, and seafood companies like Trident. Over 150 local companies have sent letters to the Mayor and City Council opposing the head tax. Former mayors, and other officials have expressed opposition to the tax. And still, the council pushed forward. A recent poll showed widespread opposition to the tax, across all demographics. Still, the Mayor and Council felt pressured to pass something, anything.

In 2013, Seattle voters approved a measure to turn the at-large city council into districts. Seven out of nine councilmembers now represent districts. Two are still at-large. In 2019, all seven of the districts are up for re-election for the first time. If the head tax and homelessness debate has exposed deep rifts in a changing city, the campaign for 2019 will prove to be the point at which the city either goes deeper into the Far Left, anti-business brand of politics or return to a more moderate, common sense approach which has fostered home-grown companies like Boeing, Starbucks, Microsoft, Amazon, Foss Maritime, and others. Either way, the head tax vote will be seen as the kick-off of the fight for Seattle’s soul.

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