The city had planned to give those workers a $90 a month allowance to offset a federal tax break available only to heterosexual couples under the Defense of Marriage Act.
KIRO-FM reports the benefit would cost Seattle taxpayers $162,000 a year.
The city attorney's office raised concerns the benefit would violate state law.
Seattle Mayor Mike McGinn canceled plans for a Wednesday news conference, but he says the city is still looking at options to address the tax inequality for same-sex couples.
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