Council advances 'Shield Seattle' B&O tax proposal after hours of public comment and amendments

The Seattle City Council’s Select Budget Committee voted unanimously to forward Council Bill 121028, the Shield Seattle B&O tax restructuring, to full council after a lengthy hearing that included more than 20 public commenters and debate over 17 amendments.

The measure would change the city’s B&O tax to raise roughly $90 million a year while reducing the tax burden for most small businesses by increasing the small-business exemption and adjusting rates. Sponsors and supporters said the revenues are intended primarily to backfill budget cuts to housing, homelessness prevention, food access and behavioral-health services caused by recent federal policy changes.

Why it matters: Supporters, including dozens of meal-program operators, homeless-service groups and housing advocates, told the committee that federal cuts are already producing higher local demand for services and that the proposed revenue is needed to avoid deep program reductions. Opponents and some business groups argued the proposal risks increasing costs for some businesses and urged guardrails and transparency provisions.

Committee chair Dan Strauss opened the meeting and noted the package was intended to shield core services “in a very challenging budget environment.” Council member Rink, sponsor of the underlying bill, said the measure aims “to reduce taxes on 90% of Seattle’s businesses and secure $90 million in net revenue to prevent cuts to critical city programs.”

Public testimony focused heavily on meal programs and human services. Maurice Walker of Chief Seattle Club and Jason Austin of the Meals Partnership Coalition described how their organizations provide thousands of meals daily, and said city support is critical. Hallie Willis, policy manager for the Seattle/King County Coalition on Homelessness, told the committee the $90 million is “a good and necessary step” while warning it would not fully close a projected $240–250 million shortfall.

Business groups urged modifications. Lily Hayward, representing the Seattle Metro Chamber of Commerce, told the committee the chamber supports small-business relief in the bill but warned that higher B&O levies on other firms could raise consumer prices and hurt downtown competitiveness.

Committee amendments: Committee members combined several technical amendments into a consent package for quick approval, and then considered a series of individual amendments. Notable changes adopted before the final passage included: - Annual reporting and transparency requirements for the use of net revenues (amendment 6), with the reporting date set to Sept. 1 to align with the budget cycle. - Inclusion of public health and substance-use-disorder treatment among eligible uses for the portion of funds the city expects to dedicate to backfilling federal cuts (amendments 13 and 16). - Several targeted tax credits were added for specific nonprofit institutions after debate: a credit to offset the increase for comprehensive cancer centers (amendment 8) and a separate credit for nonprofit pediatric hospitals (amendment 9). Sponsors said the credits were intended to avoid a near-term funding shock to research and patient-care institutions experiencing federal cuts. - Additional eligible uses were clarified to explicitly call out small-business support programs, food banks and meal providers, workforce development and arts and culture in different amendments (10, 11, 12, 14).

Several amendments provoked discussion about whether carving out exemptions for narrow industries or institutions would reduce the net revenue available to backfill federal cuts. Committee staff and the budget office warned the package must still meet the stated $90 million net revenue goal; sponsors said they would return to full council on Monday with rate adjustments if needed to offset credits that reduce collections.

Vote and next steps: After amendment votes, the Select Budget Committee voted to recommend passage of the amended bill to the full council at the August 4 meeting. The roll call on the final amended measure recorded the following votes: Council member Rivera — Aye; Council member Sacca — Aye; Council member Solomon — Aye; Council member Hollingsworth — Yes; Council member Juarez — Aye; Council President Nelson — Aye; Council member Rink — Yes; Chair Dan Strauss — Aye. The bill will appear on the full-council agenda with the adopted amendments for final action.

Context and finance: Sponsor materials and testimony characterized Shield Seattle as a progressive revenue package that would raise about $90 million annually. The package pairs an expanded small-business exemption (the first $2 million in taxable activity) with higher marginal rates for larger firms. Central staff and the Office of Economic and Revenue Forecasts (OERF) provided modeling used to set rates; they said the offices would provide updated analyses over the weekend for any new rate options under consideration before the full-council vote.

Outlook: Committee members repeatedly framed the vote as a choice to offer local protection for services the federal budget no longer fully supports. Several members said they would consider additional technical rate adjustments at full council to keep the package revenue-neutral relative to its targets if specific carve-outs decreased projected collections.