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The Seattle City Council has approved the continuing use of its payroll tax toward its general fund despite opposition from residents and local organizations.
The approved legislation was originally proposed by Seattle Mayor Bruce Harrell. It allows the city's JumpStart Payroll Tax to continue to be spent on the general fund and sets no restrictions on how payroll tax revenues are divided among various categories.
The JumpStart Payroll Tax is paid by Seattle businesses with at least $8.5 million in local annual payroll. Companies such as Amazon, Meta and Google are expected to pay $520 million in the tax next year.
Prior to the city council’s approval, the payroll tax had a spending plan that allowed collected revenue to be distributed solely toward affordable housing, economic revitalization, "Green New Deal" initiatives, mental health and youth violence prevention, equitable development initiatives, and administration costs.
No tax revenue was to go to the general fund. But the tax is being used in the 2025-2026 budget to help the city address a $350 million general fund deficit over the next two years.
Seattle City Council’s approval of the bill also eliminates the JumpStart Oversight Committee. The $100,000 previously dedicated to the committee will now be allocated to conduct an assessment of program effectiveness and the economic impact of the tax.
JumpStart spending will now see revenues set for the general fund jump to $287 million in 2025 and $223 million in 2026. The allocation of over $233 million toward the general fund is expected to continue past 2026.
Despite the huge continual boost to the general fund, the city is expected to see a general fund deficit of $75 million after 2026.
The Center Square previously reported on members of a coalition of community groups, labor unions, and service providers calling on the city council to avoid making permanent changes to the payroll tax spending plan.
Many residents continued to speak in opposition of Council Bill 120912 during the public comment period of the Select Budget Committee meeting on Tuesday.
Multiple Seattle city council members proposed a combined total of seven amendments to the bill. However, only one amendment was approved. It retains a 2040 sunset on the JumpStart tax that would have otherwise been removed by the underlining bill.
The amendment was proposed by Councilmember Bob Kettle – a former Naval officer – who said removing the sunset clause is like “declaring mission accomplished on the flight deck of an aircraft carrier.”
Seattle City Councilmember Dan Strauss did not agree. According to Strauss, retaining the 2040 sunset will lead to a $500,000 million structural budget deficit for the city 16 years from now.
“We are in the middle of the storm [and] there are definitely more things coming our way in the next four years,” Strauss said at the Budget Committee meeting.
Council Bill 120912 passed by a 7-2 vote. It now goes before the full Seattle City Council along with the 2025-2026 budget package for a final approval on Thursday.