(The Center Square) – Service providers in Seattle are calling on the city council to reject permanent changes to its payroll tax spending plan that is currently up for consideration.
Seattle’s JumpStart Payroll tax is paid by Seattle businesses with at least $8.5 million in local annual payroll. The rate the businesses pay ranges between 0.7% and 2.4% on salaries and wages paid to Seattle employees who make at least $150,000 per year. Companies such as Amazon, Meta and Google are subject to the tax.
Companies are expected to pay $520 million in the tax next year.
The proposed 2025-2025 budget utilizes $287 million in payroll expense tax revenues to support the general fund as the city addresses a $250 million budget deficit.
On Tuesday, members of a coalition of community groups, labor unions, and service providers spoke inside Seattle City Hall to call on the city council to avoid making permanent changes to the payroll tax spending plan.
The payroll tax spending plan allowed collected revenue to be distributed towards affordable housing, economic revitalization, Green New Deal initiatives, mental health and youth violence prevention, equitable development initiatives, and administration costs. No tax revenue is to go to the general fund.
However, the tax is being used in Seattle Mayor Bruce Harrell’s proposed 2025-2026 budget to help the city address the deficit over the next two years.
Harrell is proposing legislation that would allow the payroll tax to be spent on the general fund and set no restrictions on how payroll tax revenues are divided among various categories.
The mayor also wants to eliminate the JumpStart Oversight Committee and instead allocate $100,000 to conduct an assessment of program effectiveness and the economic impact of the tax.
Harrell’s proposed JumpStart spending would see revenues set for the general fund jump to $287 million in 2025 and $223 million in 2026.
A presentation from the Seattle Office of Economic and Revenue Forecasts Director Ben Noble last month assumes that the 2026 allocation of $233 million will continue in 2027 and beyond.
However, this would still leave the city with a general fund deficit of $75 million or more going forward.
All the while, payroll tax revenue for affordable housing, economic revitalization, Green New Deal initiatives, and mental health and youth violence prevention would see a slight decrease in funding from the tax next year.
The coalition of community groups, labor unions, and service providers state in their letter to the city council that they understand the current budget proposal relies on a significant transfer from the JumpStart fund to the general fund in order to balance the budget.
However, the coalition strongly urges the city council to avoid making permanent policy decisions about JumpStart spending and nullify the long-term spending plan that was created in 2020.
350 Seattle Executive Director Shemona Moreno said that the spending categories for the payroll tax were created for a reason.
“These are the priorities that Seattleites need to truly have healthy neighborhoods,” Moreno said in a press conference inside Seattle City Hall. “Knowing that the need for these investments has only grown since 2020, we were disturbed that Mayor Harrell proposed legislation to permanently remove the city’s commitment to Jumpstart revenue in these areas.”
Moreno added that without the investments, the city would be unable to address the underlying issues the revenue is used to address.
