With 97 percent of precincts reporting early Wednesday, 69 percent of voters opposed the tax. The initiative served a jolt of controversy to an otherwise sleepy off-year primary election.
"You can't tax coffee. It just doesn't work," said coffee shop owner Jeff Babcock, celebrating the victory at a downtown espresso store.
The measure would have taxed espresso drinks a dime per cup, with the revenue going to fund preschool and day-care programs. The tax would have been levied on any drink with half an ounce or more of espresso.
Initiative sponsor John Burbank said people who spend $3 to $5 on coconut mochas or iced vanilla lattes could afford an extra dime for kids. "It's a disappointing vote," he said.
Neighbors Pam Masse and Sue Damon voted on opposite sides of the issue.
Damon, a stay-at-home mom, voted for it reluctantly: "I don't think that's the way you fund child care, but something has to be done."
Masse, a drapery installer, said a personal appeal from the owner of her local coffee shop swayed her vote against the measure. "I'm all for helping people, but not when it hurts the small businessperson," she said.
Proponents said the tax would raise at least $6.5 million a year, while a more conservative City Council estimate said the revenue would likely have topped out at $3.5 million annually.
Babcock staged a Boston Tea party-style protest earlier this month, throwing burlap coffee bags into Green Lake. The bags were filled with balloons, both to aid their recovery and because even the most ardent Seattle political protesters weren't about to waste perfectly good espresso beans.
The measure referred to the extra cost as a "luxury" tax, a term opponents disliked.
"It's not a luxury item as far as the culture here," Babcock said. "It's a cold, wet, damp environment. Coffee's big, and everyone loves their lattes."
A coalition of business owners, regular caffeine addicts, coffee roasters and espresso bar owners led by Seattle-based coffee behemoth Starbucks fought against the proposed tax.
Burbank said he hoped the campaign had at least raised awareness about early childhood education: "Now it's time for us to all sit down together and find a robust funding source. If we're serious about ensuring that kids have an equal start in life, we need it."
By Rebecca Cook