Sweetened-beverage tax revenue is no longer earmarked to assist homeless-service programs in the City of Seattle’s budget moving into 2020.

Seattle City Council voted 7-1 in favor of creating a dedicated fund for all sweetened-beverage tax revenue on Monday, July 23, so the council can better use the money for its intended purpose, which is primarily to create better access to healthy food for low-income communities and communities of color.

This action was taken after Mayor Jenny Durkan used sweetened-beverage tax revenue to supplant the general fund and balance her 2019-20 biennial budget. The council argues any additional revenue from the tax, beyond what is projected, should go toward funding existing or new programs that enhance food security for low-income residents and communities of color, as was the reason for creating the tax; not to free up general fund monies to be moved around to cover other expenses.

“My goal here is to commit to the original intent of the sweetened-beverage tax,” Councilmember Mike O’Brien said at the July 23 meeting. “Community members we know, low-income community members and communities of color, are disproportionately affected by this tax, and they are also disproportionately affected by the negative health outcomes of consuming sweetened beverages.”

O’Brien said these communities often don’t have access to affordable healthy food, if they have access at all.

He also said that marketing companies routinely target these communities.

“The original policy intent of this was not to raise revenue but rather to address the public health concerns,” O’Brien said. “And yes, there is a tax component of that that will raise some revenue, but it is critically important, it has been and continues to be, that those investments continue to go back to support access to healthy food and other investments like early education for folks in those communities.

Specifically, the vote gives the city defined guidelines for how the sweetened-beverage tax revenue can be spent.

Durkan denounced the council’s vote, stating in a news release that absence of the surplus sweetened-beverage tax revenue will create a funding gap for the upcoming budget, slashing support for a series of programs, including the Fresh Bucks program, food banks, children’s nutrition, the Child Care Assistance Program, the Parent Child Home Program and the Nurse Family Partnership.

“I am disappointed that despite the warnings of their own staff, City Council is creating a budget gap of more than $7 million,” Durkan said in the news release. “Because Council has refused to fund these vital programs or put forward a balanced plan, I will veto this bill.”

Council only needs a two-thirds vote to overturn a veto, so unless a good portion of the seven members of council that voted in favor of the dedicated fund change their minds, the veto has a good chance of being overturned.

O’Brien said previously that the 2020 budget will be addressed this fall, and the mayor has the option of continuing funding for those programs, just not by taking away revenue from the sweetened-beverage tax.

In a last-ditch effort, Councilmember Abel Pacheco, who placed the sole dissenting vote for the measure, proposed an amendment that would buy the mayor and the council more time to secure funding for both the healthy food and homeless services programs. The idea here is that the dedicated fund for sweetened-beverage tax revenue would not take effect until the 2021 budget.

This amendment failed, with only Pacheco and Councilmember Sally Bagshaw voting in support of it.

“I appreciate Councilmember Pacheco for putting forth his amendment, and Councilmember Bagshaw for supporting it, which would have protected these vital programs from cuts in 2020, and I’m disappointed that the council rejected it,” Durkan said in the news release. “I will not turn my back on the Seattle residents who count on these programs.”

Durkan went on to say that the council “wants to run up charges and have someone else pay the bill,” taking away from those in need.

However, O’Brien pledged that he will find a way to fund any existing human-service programs, regardless of the state of the 2020 budget the mayor presents to the council.

“I will tell you that my commitment, again this year for the 10th year in a row, will be that we are not cutting other human service programs, because those programs are a top priority for me,” he said.

Councilmember Lisa Herbold said she was in favor of the dedicated fund, and hopes that the mayor will present the council with a budget that prioritizes human services.

She said that she and the council are just doing their jobs in the most effective way they can, with the lives of people in mind, and that the mayor should do the same. 

“It is actually fiscally responsible for [council] to be making this commitment to the public for how we are intending to make our future budget decisions in just a couple months,” she said.

In support of his amendment, Pacheco said he was disheartened by all the council and city infighting, and he apologized to Seattle residents.

“I am saddened that this conversation has shifted to pitting programs against each other, when in reality this is a conversation of how we fund these crucial programs, not if we fund them,” Pacheco said.

The council also voted 7-1 on how short-term rental (STR) tax revenue will be used, which accounts for the rest of the $7 million deficit the Durkan cited. The short-term rental tax was originally intended to support at least $5 million for the Equitable Development Initiative (EDI), but was also tapped by Durkan to supplant general fund monies.

Last year, about a $1 million of the STR tax funds was diverted to support staff resources, being replaced by Community Development Block Grant money, which proved complicated for organizations to use, O’Brien said.

“And so it was a noble effort in really tight circumstances last year, but it’s not something that can be repeated, and it’s not clear that that money will be able to be used as intended,” he said.

In order of priority, the first $5 million of STR tax revenue will go to grants for EDI projects; $2.2 million will be used to pay off affordable-housing bond debt; $3.3 million will be used for permanent support of housing; $1.069 million will be used to support staffing and consultants for the EDI program; and any remaining funds would go toward additional EDI grants.