Voters in Seattle, WA, approved a ballot initiative that will fund the Seattle Social Housing Developer with revenues from a new payroll tax. The special election, which took place Tuesday, February 11, first asked voters whether the city should use payroll tax revenues to fund social housing programs and then asked them to choose between two policy alternatives. Overall, 71% of voters expressed their support for using payroll tax revenues to fund the development and maintenance of social housing. Sixty percent of voters preferred Proposition 1A, a citizen-led initiative to fund mixed-income social housing with a new “excess compensation” tax and 40% of voters preferred Proposition 1B, an alternative proposed by the Seattle City Council to allocate some existing payroll tax revenues to social housing.
Initiative I-135 (I-135), a ballot initiative approved by Seattle voters in February 2023, established the Seattle Social Housing Developer, a new agency tasked with building, acquiring, and managing publicly owned affordable homes for low- and moderate-income tenants (see Memo, 3/6/23). The Seattle Social Housing Developer’s purpose is to create mixed-income housing for people earning between 0% and 120% of Area Median Income (AMI), in which tenants’ rents are capped at 30% of their income. I-135 also included strong provisions for resident voice, autonomy, and representation in the social housing developer’s governance structure.
Because I-135 did not provide a sustained funding mechanism for the social housing developer, advocates soon launched the campaign for another ballot initiative that would allocate resources to the new housing program. House Our Neighbors, the coalition that led the campaign for I-135, developed a proposal for a 5% “excess compensation” tax on employer payroll expenses. Businesses would pay the 5% payroll tax for each Seattle-based employee paid over $1 million annually (including salary, stock, and bonuses). House Our Neighbors estimates that the tax will raise about $53 million each year for the social housing developer. A successful signature-gathering campaign brought the proposal, known as I-137, to the Seattle City Council, which could have adopted the proposal directly or referred it to the ballot. Councilmembers voted to place I-137 on the ballot in a February 2025 special election, rather than adopt the proposal or place it on the November 2024 general election ballot.
Councilmembers also developed an alternative proposal (City Ordinance 127101) and placed it on the special election ballot. The Council-backed alternative would not have established a new payroll tax, but rather, would have allocated $10 million from the city’s existing payroll expense tax revenues to social housing programs in the next five city budgets. In total, this allocation would have amounted to 20% of the funding that the excess compensation tax is estimated to provide within the same period. Ordinance 127101 would have introduced new accountability mechanisms for the Seattle Social Housing Developer, including a requirement that the developer hire a chief executive officer and chief financial officer in order to be eligible for funds. The proposal would have also amended the social housing developer’s mixed-income model: under the proposal that voters approved in 2023, renters making up to 120% of AMI are eligible to live in social housing, with middle-income tenants’ rents cross-subsidizing the rents of the lowest-income tenants. Under the council’s proposal, all city funds would have been required to serve low-income renters at or below 80% of AMI.
NLIHC’s annual Gap report shows that the housing shortage in the Seattle metropolitan area is most concentrated among the lowest-income renters: there are only 26 affordable and available homes for every 100 extremely low-income renter households, compared to 99 affordable and available rental homes for every 100 median income renter households. While 76% of households making at or below 30% of AMI are severely cost-burdened, only 2% of households making between 81% and 100% of AMI are severely cost-burdened.
On the ballot, voters were confronted with two questions. First, Question 1 asked voters whether to use revenue from payroll taxes to fund the development and maintenance of social housing. Question 2 then asked voters to choose between Proposition 1A, the citizen-initiated excess compensation tax proposal, or Proposition 1B, the Council-backed alternative. Because voters approved Question 1 and Proposition 1A received the higher number of votes, the citizen-led initiative will be enacted.
NLIHC’s Our Homes, Our Votes campaign tracks, reports on, and analyzes housing and homelessness ballot measures. For an archive of Our Homes, Our Votes ballot measures summaries and analyses, visit: www.ourhomes-ourvotes.org/ballot-measures.