This week Seattle City Council members Kshama Sawant and Tammy Morales officially introduced their “Amazon Tax” legislation into the City Council’s legislative process, but not without a dust-up over who will shepherd it through committee deliberations.
The legislation is comprised of three bills:
- one that imposes a 1.3% tax on payroll for any Seattle company with a payroll greater than $7 million, excepting public agencies, nonprofits and grocery stores;
- one that details the spending plan for the revenues, consistent with what Sawant and Morales announced at their press conference last week;
- one that authorizes inter-fund loans to allow for $200 million to be spent this year in advance of the first revenues being collected.
Sawant “walked on” the bills as a last-minute addition to the weekly Introduction and Referral Calendar, having missed last week’s deadline to have her bills automatically included. She did this for two reasons:
- It gave her an opportunity to deliver a speech about the “Tax Amazon” movement during the Council meeting;
- It created an opportunity for her to propose which committee it should be referred to.
In the Council’s normal process, a bill being introduced is referred by the Council President to a committee for deliberations before it comes back to the full Council for a final vote. But Council President Lorena Gonzalez disagreed with Sawant over the committee assignment: Gonzalez wanted to send it to the Select Committee on Budget, while Sawant wanted it in her own committee, Sustainability and Renters Rights. Sawant has stated that she wanted it in her committee to ensure that “the movement” had a voice in the process, but that’s not what’s really at stake here. First, if Sawant chairs the committee then she gets to control the hearings, the agenda, the testimony, and the timeline for deliberations. Second, and perhaps more important, under the new Council rules this year, the only Council members who can vote in committee are the official members of that committee; in previous years any Council member can show up to any committee meeting and vote. Sawant’s committee has five members, of which she and Morales are two. That gives them a tremendous amount of power over potential amendments to the legislation and in shaping its final form. In contrast, the Budget committee, chaired by Mosqueda, has all nine Council members as committee members; Sawant and Morales will need to work much harder to sell their agenda to their seven colleagues in order to prevail.
Sawant’s pitch to get the bills in her committee failed miserably; even Morales, who correctly read the writing on the wall, didn’t support it. In the end, after a lot of speeches by Council members and accusations by Sawant that sending it through another committee would not result in a strong progressive revenue bill, all nine Council members voted to send it to the budget committee.
But what happens from here is very much unclear. Mosqueda committed to a robust process and discussion, but she didn’t specify a timeline for committee hearings. That may be because at the moment it’s uncertain whether the Council can even take it up. As I’ve written before, one of Governor Inslee’s emergency proclamations suspended some provisions of the Open Public Meetings Act and the Public Records Act, but also prohibited public agencies (including the City Council) from taking “action” on anything that isn’t either a response to the COVID-19 emergency or “necessary and routine.” A $500 million per year tax in perpetuity is hardly routine, and it’s an open question as to whether allocating the first $200 million in the first year makes it a “COVID-19 response.” If it does, then that’s a huge loophole: the Council could pass any bill just by throwing in some ancillary COVID relief. There are also questions to be answered about the legality of the inter-fund loans: several of the sources are voter-approved levy funds, and it’s unclear whether the terms that the voters approved allow the funds to be loaned. Also since it’s likely that the “Amazon tax” will be the subject of a referendum if passed, one can question the fiscal prudence of borrowing and spending $200 million in the next few months without knowing if the corresponding revenues to repay it will ever materialize.
And then there’s the timing in general: when the local economy is melting down, should the Council be passing new taxes on businesses? The city certainly will have an enormous revenue shortfall this year. But Sawant continues to conflate “big businesses” with “profitable businesses” and asserts that Seattle’s biggest 800 companies can afford to pay the tax. Amazon, the unwilling namesake of the tax bill, seems to be doing just fine, but some of the other local companies that would be subjected to it not so much: Expedia, Nordstrom, Weyerhauser, hotels, Tom Douglas and Ethan Stowell restaurants, Pagliacci Pizza… The Seattle Metropolitan Chamber of Commerce and other business advocacy groups are already sharpening their knives for the upcoming fight.
Nevertheless, Sawant is “all in.” She also made a big deal this morning of an online petition which she claimed to have over 5,400 community member signatures urging the Council to immediately pass her bills — though a close inspection of the petition shows it’s a typical low-quality Internet petition: lots of duplicates, and lots of people who aren’t from Seattle.
The “Amazon tax” proposal will be a big test: of Gonzalez’s leadership, of Sawant’s “movement,” of Mosqueda’s ability to shepherd controversial legislation, and of the ability of the Council as a whole to build consensus in unprecedented times.
This story originally appeared in Kevin Schofield’s invaluable Seattle City Council Insight website.
One can foresee some big potential problems. Will require large expense to gear up to collect the tax at a time when revenue is way below prediction. Massive intercity loans would impact AAA credit rating, making borrowing for things like sewer and electrical upkeep too expensive. Would have to halt capital projects, low-income housing and maybe bridge repair. Could put city finances in peril.