Issaquah City Council has narrowly passed a council-voted ordinance to increase sales tax by one-tenth of 1%, the revenues intended for affordable housing projects and services. But unlike neighboring cities, Issaquah will repeal control of the sales tax to the county if one of it’s long term affordable housing projects is funded.
The council voted 4-3 on the sales tax with Council President Victoria Hunt, Deputy Council President Chris Reh and Councilmember Stacy Goodman voting no. At the Oct. 5 city council meeting, the council also added an amendment that the city will move revenue to the regional plan, if King County helps with the $2 million funding gap in its transit-oriented development project tenant improvements.
The sales tax increase is a result of House Bill 1590, which allowed counties to impose a one-tenth of 1 cent sales tax with at least 60% of revenues needing to go toward affordable housing or homelessness-related services.
Because King County Council did not vote for the sales tax increase by Sept. 30, a state-set deadline, the county lost exclusive rights to the tax increase and cities were able to use a council vote to collect the increase in sales tax for themselves. As a result, multiple cities fast-tracked votes to increase their sales tax and keep control of the revenues, before King County could vote to collect the revenues for itself. King County then voted for the sales tax increase for the rest of the county on Oct. 13, after several cities already voted.
Of the cities to enact their own sales tax increase, and therefore control 100% of the revenues for affordable housing generated within city limits, Issaquah’s share is estimated to be $1.7 million yearly. Other cities include Renton, Bellevue, Kent, Covington and Snoqualmie.
Councilmember Barbara de Michele was one of the members in support of controlling the sales tax that brought the ordinance to the table, as well as councilmembers Tola Marts and Zach Hall. De Michele and Councilmember Lindsey Walsh also did not support the amendment, wanting Issaquah to retain control of the tax dollars regardless of whether the county supports the Issaquah development project.
De Michele argued in support of enacting the sales tax without the amendment, saying the city needs more services for poor and marginalized Issaquah residents, than they have historically received from regional tax dollars, as the city is perceived as smaller and more affluent.
“It comes down to control. I would like to see us exert more control in where those tax dollars are going,” de Michele said.
King County Executive Dow Constantine’s proposed budget includes the regional sales tax increase as a funding source to purchase housing for the chronically homeless throughout the county. Now the county will have less money for that plan at the discretion of Bellevue and other cities who are controlling their shares of the tax.
The Issaquah Council Meeting included King County Director of the Department of Community and Human Services Leo Flor who spoke on behalf of the county’s plan and on the limits to the plan that results from multiple cities voting to control their portion of the sales tax.
“We’ve learned quite a bit from the COVID-19 emergency about what works and what doesn’t,” Flor said at the meeting of moving people out of homelessness. “I think the Executive is clearly focused on this, and we will move forward no matter what… and all of and we have every reason to believe that homelessness is going to get worse, not better. We have an economy and a pandemic that we know are a once-in-a-century events.”
The new tax takes effect at the beginning of 2021, both in Issaquah and county-wide.