Courtesy of the City of Seattle

The Incoming Tax

Proposed Income Tax Would Pay for Mental and Public Health Shortfalls

The city council took steps toward offsetting the cuts to Medicaid that Congress is now considering.

Friday, the Seattle City Council’s Affordable Housing, Neighborhoods and Finance Committee amended a much-anticipated city tax on annual income above $250,000. The tax rate went from 2 percent to 2.25 percent. Also, some of the money is now earmarked for backfilling potential cuts to Medicaid, the federal health insurance program for very poor people.

Councilmember Rob Johnson sponsored a slew of amendments to the bill, including a requirement that the Department of Finance and Administration come up with a plan for enforcing the tax and a requirement that any future changes to how revenue from the tax is spent must do so by amending the ordinance itself (as opposed to allowing the executive branch discretion to change the spending).

Johnson also sponsored an amendment raising the tax rate slightly, to 2.25 percent, in order to raise another $15 million to pay for mental and public health services that could be cut by the federal government. Johnson told the committee he’s heard “very significant concerns about the proposed cuts to Medicaid” that Republicans in the federal Congress are currently trying to pass. (It is not yet clear whether they’ll succeed.)

“We have over 50,000 residents in the City of Seattle who’ve received increased coverage. They either didn’t have coverage or were underinsured before the expansion of Medicaid” under the Affordable Care Act, aka Obamacare, said Johnson. That’s roughly one in fourteen Seattleites. The city currently spends “between nine and ten million dollars a year” assisting the county with serving Medicaid patients, he said, and raising another $15 million “gives us an additional cushion by which we can continue to have coverage” for Medicaid patients at risk of seeing their insurance cut.

Sally Bagshaw sponsored an amendment (to another amendment sponsored by chair Tim Burgess) that specified the money can be used for backfilling federal cuts to “mental health and public health funding.” As drafted, the bill would allow income tax revenue to be spent in only five areas:

-Lowering the property tax and other regressive taxes

-Addressing the homelessness crisis

-Affordable housing, education and transit

-Green jobs and carbon reduction

-Administering and implementing the tax itself

The finance committee plans to vote on the amended bill Wednesday, July 5. In May, the Council passed a resolution promising that they would pass the tax by Monday, July 10. That’s still the plan, said Burgess on Friday.

Update: On Wednesday, July 5, the finance committee unanimously voted in favor of sending the income tax bill to full council for a vote on Monday, July 10.

This post has been edited.

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