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August 2022

Seattle payroll tax will fund 1,700 affordable housing units from first year's receipts

August 2022

JumpStart Seattle, a payroll tax applied to high salaries, amassed more than $248 million in its first year. Those funds will be allocated to 17 groups serving low-income and homeless populations. Their combined projects will produce 1,700 affordable housing units.

Seattle City Council members passed the JumpStart proposal by a 7-2 vote in mid-2020 in response to the COVID crisis and to "focus on Seattle's long-term economic revitalization and resiliency by investing in affordable housing and essential city services."

The progressive tax is imposed on salaries of $150,000 or more at Seattle businesses with payrolls of $7 million or more. Most Seattle businesses do not meet those criteria and will not be subject to the tax.

Under variable rate provisions of the ordinance, the largest companies pay the most.

At a press conference last month to announce the initial recipients of funds, Councilmember Teresa Mosqueda said the 17 projects "are more than just units - they're investments into health, stability, opportunity and community, and they will have a positive impact on our community for generations to come." She credited a broad coalition of supporters for making the investments possible. Among them, she named businesses, labor unions, community-based organizations, affordable housing advocates, environmental groups, and immigrant rights activists.

In addition to affordable housing projects, JumpStart Seattle revenue will help fund environmental and economic development projects, including workforce training and childcare, with $48.1 million allocated for replenishing Seattle's reserves.

JumpStart creates an ongoing funding source for housing and is expected to net more than $277 million for 2022, according to forecasts from the city of Seattle's Office of Economic and Revenue Forecasts. The council's long-term spending plan dedicates nearly two-thirds of the revenue (62%) to housing, 15% to small businesses and economic resiliency, 9% to Seattle's Green New Deal investments, and 9% to the Equitable Development Initiative.

The tax is heavily reliant on just two sectors, according to GeekWire. That news site said Information and Professional & Business Services accounted for more than 82% of JumpStart tax receipts.

The Seattle Metropolitan Chamber of Commerce opposed the ordinance, but after losing two court cases, that organization issued a statement last month announcing it would not seek further appeals. In a statement, Chamber President and CEO Rachel Smith said, "We've decided the Chamber will not appeal this recent court decision. Ultimately, with two lower court rulings against us, it is unlikely that there will be a different outcome for this legal strategy at the Washington State Supreme Court - and no guarantee the court will even accept this case."