Shammond Williams' big 3-pointer left Seattle coach Paul Westphal rolling on the bench.
The Sonics led 90-79 with 5:21 to play, but Utah made things interesting by cutting the margin to 95-94 on a 3-pointer by Jeff Hornacek with 2:13 remaining.
"I had an open shot at the time and I thought the shot clock was running down, so we needed to get a shot up," said Williams, who finished with 16 points. "I felt good about it. Hey, it hit all net."
Westphal, watching from the bench at the other end, fell back on his heels when the ball went in.
"I just couldn't believe Shammond took that shot," Westphal said. "Then when it went in I just rolled back and enjoyed it. I'm irrelevant here, so I might as well enjoy it."
The best shot the Jazz could manage in the closing seconds was an airball 3-point attempt by John Stockton.
Karl Malone had 26 points and 11 rebounds, and Bryon Russell scored 19 and gave the Jazz a chance by drawing an offensive foul by Payton with 2:26 remaining, setting up Hornacek's 3-pointer to cap a 10-0 run.
Stockton and Hornacek each scored 15, but Utah lost its fourth straight. It's the first time tha's happened since January 1997, but the Jazz went on to reach the NBA Finals that season.
It also was the first time Utah lost consecutive home games since the 1995-96 season, when Minnesota and San Antonio won at the Delta Center. Vancouver won here last week.
"The ideal situation is to listen to all the negative things that are going to come about, and quite frankly we deserve it," said Utah coach Jerry Sloan. "You just have to be strong and decide what you want to do."
Seattle seemed ready to wrap up the victory after Brent Barry hit a 3-pointer and Utah's Armen Gilliam was called for a flagrant foul on Payton, who hit one of two free throws for a 90-79 lead with 5:21 remaining.
Payton emerged from a timeout with a bandage covering his forehead, a sight that made Jazz fans chuckle. They weren't laughing a short time later when Payton hit a 3-pointer for a 95-84 lead with 3:46 to play.
"They kept hanging in there with us and they took advantage of the opportunities we gave them," Sloan said.
But that's when the Jazz made a 10-0 run. Russell hit a 3-pointer and drove for a three-point play, drawing a foul on Barry that hurt the Sonics even more when Barry received a technical foul for arguing the call.
On the other end, Russell drew the foul on Payton on the perimeter and Hornacek's 3-pointer pulled the Jazz within one point.
"We tried to play good defense, but they got some good looks," Stockton said.
Barry's 3-pointer with 10:04 remaining gave the Sonics an 80-73 lead. Stockton hit a jumper to cut the margin to 80-75, but the Sonics came out of timeout with a 6-2 run to regain control.
Williams had two layups and Payton drove for another basket as Seattle went ahead 86-77 with 6:35 to play.
The Jazz led by 10 points in the first quarter but Seattle rallied by outscoring Utah 30-18 in the second. The Jazz shot 38.6 percent (17-of-44) in the first half, helping the Sonics climb back.
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