In a letter sent earlier this month to Seattle Mayor Bruce Harrell and his executive leadership team, three organizations invested in the vitality of the city’s urban core laid out recommendations for how to revive downtown Seattle.
Among those recommendations was a call to suspend — for the next three years — the city’s business and occupation tax for new businesses and the JumpStart tax for all businesses, with the intention of increasing competitiveness and attracting new companies.
The March 8 letter (in full below) was signed by Jon Scholes, president & CEO of the Downtown Seattle Association; Rachel Smith, president and CEO of the Seattle Metropolitan Chamber of Commerce; and Mary Eversole, executive director of the Washington state chapter of the National Association of Industrial and Office Properties.
“Removing barriers and costs is how we will create more jobs, economic opportunity and strengthen Seattle’s tax base,” Scholes said in a statement to GeekWire. “Put simply, the city should ‘do no harm’ as we work to revitalize downtown.”
The letter also asks the city to not enact any new taxes or fees on “fragile downtown businesses or properties.”
The plea from business leaders comes as Seattle and other U.S. cities struggle with the pandemic-driven rise of hybrid work and ongoing safety concerns.
Some cities are putting incentives and tax breaks in place to revive downtowns impacted by the pandemic and economic turmoil. San Francisco Mayor London Breed announced such plans in her “State of the City” address in February.
Scholes said “Seattle must do the same.”
“Downtown generates nearly half of the city’s tax revenues and attracting new investment in downtown will be critical to stabilizing the city’s tax base,” Scholes said in his statement to GeekWire. “The ability to fund basic services and priorities across the city will only become more challenging if downtown’s revitalization is impaired.”
Seattle’s JumpStart tax, originally passed in 2020 amid pushback from some business leaders, targets payrolls at the city’s largest companies and was designed to pay for affordable housing and homeless services, equitable economic development projects, and Green New Deal investments to help the city meet its environmental goals.
The tax applies to salaries over $174,000 annually at companies with yearly payroll expenses of $8.1 million or higher, which includes tech industry giants such as Amazon.
The main goal of the tax has been to address Seattle’s housing and homelessness crisis, though the revenue also helped the city recover from economic distress during the pandemic. When the tax brought in more revenue than expected in its first year, the Seattle City Council approved a plan to use the extra money to plug shortfalls in its General Fund for the next two years.
The City said last fall that it expects the payroll tax to raise $290 million in 2023 and $311 million in 2024.
City Council Budget Chair Teresa Mosqueda, who helped craft the tax, said Seattle has been able to “preserve and deepen much-needed investments in childcare, housing stability, and climate resilience” thanks to JumpStart.
She said the B&O tax makes up 21% of the total General Fund revenue and is expected to bring in $335 million in 2023 — more than the total Seattle Fire Department budget.
Update: Mosqueda’s numbers, from the City Budget Office, are in reference to what the B&O tax makes up in total. The Budget Office gathered that data based off of the statement from DSA’s Scholes, which was sent to the City and GeekWire. The statement began: “In light of continuing layoff notices, the city should immediately suspend the B&O tax and the JumpStart payroll tax as a means to attract new jobs and small businesses to downtown.” The statement did not make the distinction between all B&O taxes and just B&O taxes on new businesses, as the letter did.
Cutting both the B&O and JumpStart tax would result in close to 3,000 job losses, Mosqueda said.
“We all want a strong local economy and I have been working closely with the City Budget Office, Mayor Harrell and his executive team, and others, to build a sustainable budget for our City, one that invests in anti-austerity measures and ensures everyone — businesses, residents, and our workforce — is stronger,” she said in an emailed statement to GeekWire.
Harrell spoke at the DSA’s annual “State of Downtown” event last week and talked about efforts to rekindle downtown Seattle. In his “State of the City” address last month, Harrell said the word “downtown” more than 30 times and dedicated a quarter of his annual speech to revitalizing the city’s core.
His office is expected to release a “Downtown Activation Plan” next month.
“As we continue our work to revitalize downtown, hire more police officers, and deliver effective public safety, we will need to calibrate existing revenue sources with the cost of funding those efforts — and the overall price of other essential City services residents rely on, needed affordable housing investments, and projected budget deficits in the coming years,” Harrell said in a statement to GeekWire this week. “We need transparency and dialogue to set priorities for both revenue and spending to weather these changes and best support all Seattle communities.”
Revenue from JumpStart could be impacted by the ongoing layoffs across tech. Amazon has already cut more than 2,000 jobs in the Seattle region and this week announced an additional round of layoffs.
In their letter, Scholes, Smith and Eversole stressed public safety improvements as a top priority. They also ask the city to require its employees to return to the office at least three days per week by May 1, and to work with the 15 largest private employers downtown to join the city in return to office commitments.
Fewer than half of downtown Seattle workers have returned to the office, one of the slowest rates of return in the U.S. Meanwhile, office vacancies rose to 14% in downtown Seattle last year, nearing a highpoint not seen since the financial crisis of 2009.
Both Harrell and Scholes applauded Amazon’s recent change in policy, which will bring corporate and tech employees into the office at least three days a week.
Speaking at the GeekWire Summit in October, Harrell expressed concern about the impact of remote work on the city’s ability to generate tax revenue.
Read the complete letter to City leaders:
Downtown Action Plan by Kurt Schlosser on Scribd
