While the death of the Seattle job tax following a City Council vote in June could be attributed to several causes – including its impact on the small business community – councilmembers pointed to its likely defeat via a ballot initiative as their reason for rescinding it.
However, industry members behind the initiative campaign say the swift, strong backlash stemmed not only from the tax’s far-reaching impact, but also over frustration with city’s direction regarding its overall business climate and spending priorities.
“A lot of people were really mad,” Jordon Royer said, who was a member of the steering committee for the repeal initiative. “It wasn’t about the head tax. They wanted a vehicle to express their frustration to the city council over a whole number of things. We’re spending more and more money on these difficult issues…and nothing’s getting accomplished.”
The son of former Seattle mayor Charles Royer, Jordan Royer is also the vice president for the Seattle branch of the Pacific Merchant Shipping Association (PMSA). The association is an independent nonprofit that focuses on policies impacting international trade.
Heavily backing the repeal initiative was Seattle’s maritime industry, which contributes $38 billion to the state economy and faced losing jobs and business to Canada as a result of the tax. Combined with other ports in the region, they provide the most direct shipping link between major markets in Asia and the East Coast.
Altogether, foreign exports account for a quarter of Washington’s economic output.
“These are high revenue, low margin businesses,” Royer said. “They’re building ships. They’re dealing in large pieces of equipment. A lot of them were going to get caught in this.”
In a May 7 letter to Seattle Mayor Jenny Durkan and the City Council, PMSA Vice President Mike Moore warned that the tax would have a “chilling effect” on the maritime industry.
“It is no secret that the Seattle City Council and past mayors have sent strong negative signals to the trade community that has created uncertainty around costs and regulations,” the letter states further.
However, Royer said that despite the tax’s unpopularity, following its unanimous passage there was still debate among the business community about whether to run an initiative. Opponents ultimately chose to go ahead and see what kind of backing they could muster in 24 hours.
“What we got back was overwhelming support for running a referendum,” he said. “We had over 2,000 volunteers step forward in over a week and a half. I’ve worked lots of campaign. I’ve never worked on a campaign that was this easy.”
By the time of the ordinance’s repeal, the campaign had gathered 45,000 signatures, more than twice the 17,000 signatures required.
Royer said those who signed viewed the initiative as more than a mere tax repeal.
“They don’t feel like they’re being listened to,” Royer said. “The city council mainly listens to a small band of activists that don’t represent the voters at large. (There was a) lot of pent-up frustration. This head tax repeal referendum offered everybody an opportunity to express that.”
That lack of dialogue between the business community and the city may explain the city’s surprise reaction to the backlash, as well as to the types of businesses and workers affected. While touted as an “Amazon” tax, as written it would have affected hundreds of businesses and employees that included not only local groceries but longshore workers as well.
“When they passed the head tax, they didn’t realize who was going to be caught up in it,” Royer said.
In a May 3 joint letter to Durkan and the City Council, the presidents of International Longshore and Warehouse Union (ILWU) 19 and 52 wrote that the “current economic environment continues to stifle or minimize cargo growth in Seattle,” citing the Harbor Maintenance Tax along with the possibility of a carbon tax via I-1631. “We urge consideration of these issues in any ordinance that would levy a tax or fee on maritime trade and trade related business, or otherwise impact waterfront jobs in Seattle.”
“They got pretty worked up about it,” Royer said. “There was going to be a lot of incentive to divert cargo up to Canada for all that discretionary cargo on its way to Chicago. It doesn’t need to come through Seattle.
“The moral of the story here is the first time that anybody can remember…a consequential piece of legislation is unanimously adopted and then repealed almost unanimously in a month,” he added. “For us, it was a home run.”