Spokane leaders have ‘no appetite’ for Seattle-like ‘head tax’ to address homelessness

Don’t expect a levy on businesses in Spokane to pay for homeless services, like the “head tax” approved this week in Seattle.

Elected officials in Spokane said this week there was little appetite for such a move, citing previous investments in shelter services and the work of nonprofits to push affordable housing in the downtown core. Some criticized the move as standoffish with the business community, as evidenced by mega-retailer Amazon and coffee giant Starbucks condemning the unanimous vote of Seattle City Council on Monday to impose the tax.

“I’ve never been the type of person that wants to link a tax to a specific type of issue,” said Mayor David Condon, calling the move “counterproductive” to creating livable wage jobs that he said are needed to address homelessness.

Spokane has faced a growing number of people living on the streets in recent years, and both the mayor and Spokane City Council have poured money into keeping a shelter system open around the clock. City Council President Ben Stuckart, who has pushed workplace requirements on employers, including mandatory paid sick leave, said he didn’t agree with the way Seattle approved the tax without a vote of the people.

“I have plenty of liberal friends over in Seattle, and none of them supported the way the City Council went about supporting the head tax,” Stuckart said.

“I can’t believe it passed. That’s shocking,” he added.

Stuckart pointed to Spokane’s investments in homeless shelters, totaling $850,000 last year, and its work on revising zoning codes to promote infill development and the agreement between Condon and the council to use $2 million in real estate excise taxes over the next two years to promote affordable housing construction as evidence Spokane is working to address the issue without raising taxes on businesses.

“We’re not going to let ourselves get in that position,” Stuckart said.

The affordability of real estate in downtown Spokane, compared to other West Coast cities such as Seattle and Portland, also puts charitable organizations in a better position to address the problem here than in other big cities, said Grant Forsyth, chief economist with Avista Corp.

“We still live in a community where land values, prices and availability are such that nonprofits can make a big impact on this homelessness issue,” Forsyth said.

A majority of Stuckart’s colleagues on the City Council said they agreed that taxing businesses of a certain size wouldn’t make sense to address the problems facing the city’s homeless population. The Seattle tax calls for a $275 payment per employee for firms grossing more than $20 million annually.

“That wouldn’t work in Spokane,” said Councilman Breean Beggs, though he acknowledged the city might need to look at raising additional revenue to support housing in the future. But, he said, “it’s not going to be an employee head tax.”

Stuckart noted that state law provides for the creation of an affordable housing levy on property taxes.

“I would support a housing levy, under the current tax structure,” Stuckart said. “I wouldn’t support a head tax.”

Spokane does require, as part of annual business permitting, employers of a specific size to pay larger fees, with firms employing fewer than five people paying $10 a head and those with 11 employees or more paying $20 for their registration. But that money goes directly into Spokane’s general fund, not earmarked for a specific purpose, said Gavin Cooley, the city’s chief financial officer, and the amount raised is far less than the much higher business tax rates in Seattle.

Councilwomen Lori Kinnear and Karen Stratton also said that a head tax in Spokane wouldn’t be the right approach for the city.

“There’s no appetite for a (business and operation) tax in the city,” Kinnear said. “There’s no way I would support that. It’s off the table for me.”

Kinnear said the city’s current approach to sheltering and providing housing for those on the streets – depending on a single downtown shelter – “wasn’t working.” The city is soliciting proposals for a five-year sheltering plan that Kinnear hoped would include more options available throughout the city, an idea Stratton said she supported using existing funding and soliciting help from businesses and nonprofits, rather than taxing them to do so.

“I think it’s a matter of what our priorities are, where we’re spending our money,” Stratton said. “We’ve put a lot into homelessness and warming shelters. We need to continue to do that.”

The rumblings from firms such as Starbucks and Amazon have stoked optimism that some businesses may choose to pull up roots and locate elsewhere, including Spokane. The city already kicked in $450,000 to support marketing efforts intended to attract businesses and young professionals to Spokane, part of a larger initiative that is targeting businesses in Western Washington, Condon said.

“We’ve been identifying the companies that we would look at and targeting specific pay ranges, industry clusters, in this initiative,” Condon said. “Finance, accounting, tech jobs, all in that space.”

Forsyth said it would likely take some time to see what effect, if any, the new tax in Seattle would do to influence large firms’ behavior.

“In the short run we may not see impacts,” he said. “The businesses may need more time to think about what their proper response should be.”