Tag: city budget

Affordability, City Council, housing

“Day Tents” and “Active Rat’s Nests”: Council’s Housing Budget Interrogation Goes Off the Rails

By Erica C. Barnett

For months now, Seattle City Council members have been insinuating that the city’s Office of Housing, along with other departments, has been “sitting on” unused money year after year that could and should be spent on other purposes. Back in July, for instance, Councilmember Maritza Rivera suggested the council should borrow money from the voter-approved housing levy to pay for unrelated city services, given that this money was “not being used” at the moment.

The theory, which is based on a misunderstanding of how funding for housing projects works, is that the city should not be holding on to money it collects for planned housing projects for as long as it does. When it comes to the full budget, the city has an “initial underspend” that includes all the money that hasn’t been spent by the end of the year, currently 9.9 percent; however, that total consists primarily of funds already allocated to specific projects, so the “true” underspend—the amount that goes back into the general budget—is consistently around 2 percent a year.

In addition to that “underspend,” every year, tens or hundreds of millions of dollars in housing funds (and funding for other projects that span multiple years) is “carried forward” to the following budget year, because the projects that money will eventually fund have not received the funding from other sources they will need to actually get built. Because the city is typically the first funder for housing projects—other funders, including the county and state, contribute to full funding for projects later—there’s no way to spend this money until the rest of the funding is in.

However, because the funding is all allocated to specific projects, it isn’t available to use for other purposes; dipping into money that’s already dedicated to specific housing projects (or simply using housing levy funds for non-housing levy purposes, as Rivera previously suggested) would be fiscally irresponsible, to say the least.

Nonetheless, the council is still set on the idea that the Office of Housing—along with other city departments—is twiddling its thumbs instead of getting money out the door. On Thursday, Nelson’s governance committee held what amounted to an interrogation of OH and the city’s budget office about why they aren’t spending money faster. The specific purpose of the meeting was to review the two departments’ response to a council directive requiring them to report on why the city underspends its budget every year.

“I’ll just say that this is this is accountability, full stop,” Nelson said to set the tone. “This is all about our role in in making sure that the things that we allocate money to are actually benefiting from those decisions[.]”

In the first half of the meeting, city budget staffers explained why the city doesn’t always spend 100 percent of funds for multi-year or complex projects, such as executed contracts for human services, in exactly 365 days. In addition to projects that carry over from year to year, the city ends each year with an “underspend” of about 2 percent, which goes back into the general budget. “This is a feature, not a bug,” budget director Dan Eder said. “Those are committed dollars that that were always intended to be spent several years later.”

In its memo explaining why the budget works this way, the budget office noted that forcing departments to spend their budgets down to zero every year would lead to wasteful spending, illustrating the concept by linking to an episode of The Office.

Rivera pushed back on Eder, saying she felt “angsty” about her inability to get questions answered to her satisfaction. “Every time we ask a question, it’s really hard to get a response, and that doesn’t inspire confidence in the fiscal responsibility part of the city,” Rivera said. “So I’d love to have some fiscal systems put in place where every time we ask a question, we should be able to readily get to the answer.”

“Councilmember, I just want to assure you that we absolutely do have a system in place, and we can report out chapter and verse on every one of the grants from 2023 if that’s your interest, or 2025 if that’s your more updated focus,” Eder responded. “I’d love to get that,” Rivera said, but what she really wanted to know was “not just about grants,” but “information about vacancies, about just how much [housing] is being created and how vacancies are being filled. I just feel like every time we have this conversation, there isn’t a one stop shop to get all this information.”

That off-topic grievance—the meeting, again, was ostensibly why the city doesn’t spend money for housing and other priorities faster—set the tone for the rest of the discussion, in which the council grilled OH staff about issues that had essentially nothing to do with whether the department was sitting on money the city could be using elsewhere. Bob Kettle started off down this road, musing (as he has many times in the past) that the housing office should create an easily digestible “housing plan” for the whole city, the same way SDOT consolidated all of its modal plans for bikes, pedestrians, freight, and transit into a single, overarching “Seattle Transportation Plan.”

“You know, there’s [the JumpStart tax], there’s [Mandatory Housing Affordability], you mentioned the Housing Levy, but now we have the social housing levy, we have all these different funds,” Kettle said. “So as you know, there’s permanent supportive housing, there’s affordable housing, and it’s different bands and so forth. There’s social housing and the like. We need to have a comprehensive look.”

As Winkler-Chin gently reminded Kettle that social housing is a separate government entity, he cut her off, saying “I recognize that, I recognize that,” but “if they’re not in sync with what we’re doing, or what [the King County Regional Homelessness Authority] is doing on permanent supportive housing, that’s a problem, and the public should know it.” KCRHA does not directly fund the construction of permanent supportive housing; OH does.

Piling on, Nelson said OH should be familiar by now with the “new council’s concern that it appears that we’re stockpiling housing funds during a housing crisis. … Clearly, if we have these questions, and they’re not going away, it is a call for perhaps a database that tracks every single award, what is happening with that award, and when it’s finished, how are we monitoring the performance of that award? What are the vacancy rates? What the impacts to neighborhoods, et cetera?” It’s hard to imagine how such a database would work (the “impact to neighborhoods” of affordable housing is completely subjective, for example, and vacancy rates fluctuate on a daily basis), or what kind of resources it would require.

Switching topics, Nelson mentioned recent media reports that some housing providers are selling off properties; couldn’t the city think about buying some of those? And then there was the recent audit about waste and potential fraud in King County’s Department of Community and Human Services grants; was OH sure there weren’t similar problems happening with the housing providers it funds?

Piling on, Kettle turned to people who hang around at Third and Pike and use drugs; between 15 and 40 percent of them, he said, actually have homes and use “day tents” to do their business before going home. He then complained about an unspecified public housing building “where there’s an active rat’s nest around it. … On the public safety side, if you have a problematic housing situation because there’s a rat’s nest or there’s other maintenance issues, that’s part of the dynamic that we see on the public safety side in terms of what’s happening on our streets.”

Rivera, riffing on Kettle’s comments, said, “And also, just as a city… we should know what other the other organizations, like the [social housing] PDA and the King County Housing Authority, are doing as part of this overall plan. … I understand that OH is focusing on the funding to build the projects, and you don’t necessarily have oversight of the projects, but I do think that we need to create an expectation with the projects… and the not for profits.”

OH policy and planning director Kelli Larsen assured Rivera that the city does monitor its investments after the fact, prompting Rivera to go on a riff about a recent Seattle Times article that found issues at several housing projects. When Larsen noted that the city didn’t fund those projects—King County did—Rivera quickly pivoted, saying, “we shouldn’t just focus on the units that we’re funding and then not look at the big picture, because what we’re doing will have an impact on the big picture, and vice versa. And then when those types of articles come out, and you just said those weren’t our projects, no one knows that, and we didn’t. I didn’t know that.”

Nelson summed up the discussion by expressing skepticism that “things are going pretty well,” criticizing the budget office for the high “initial underspend” number CBO director Eder explained in detail at the beginning of the meeting.”I see that the … net underspend for the general fund, average [s] 2.1 [percent] per year,” she said. “But then lower on the memo, it says actually … [that] the initial underspend, excluding the impact of carryforwards, average 9.9 percent. That gives me personal pause.” In other words: Don’t be surprised if the council raises these exact same questions again, no matter how many times the city’s budget professionals answer them.

After this story posted, Ryan Packer pointed out on Bluesky that Nelson sent out a campaign mailer focused on the meeting, claiming (falsely) that the city’s spending on housing is “routinely delayed for years” (instead of being spent the year it’s allocated) by “bureaucratic delays.” The meeting did not reveal any “bureaucratic delays”; instead, city staff explained repeatedly that housing cycles take more than a year, and that there would be major negative consequences if the city started backing out of its commitments (including contracts and the voter-approved housing levy) in order to use dedicated housing dollars to pay for other general fund priorities like transportation or police.

Note: The original version of this story misstated the percentage of public drug users Bob Kettle estimated have homes and use “day tents” that make them appear to be homeless. 

Arts, City Council

JumpStart Revenues Flatten and Council Questions Plan to Mandate Earplug Sales at Venues

1. As we reported on Bluesky Tuesday afternoon, the city of Seattle’s revenue update for the last quarter of 2024 shows that the JumpStart payroll tax fell about $47 million short of expectations last year, raising questions about the wisdom of discarding the original spending plan for the tax and using it to pay for basic city services.

Instead of bringing in $406 million last year, as the city’s budget forecast predicted, the payroll expense tax yielded $360 million—more than the $315 million the tax brought in for 2023, but more than 11 percent shy of what city budget planners expected. If this trend continues, it could be a major problem; last year, the mayor and city council added tens of millions of dollars in new spending, much of it ongoing, to the city’s budget, using $287 million in “extra” JumpStart revenues over two years to pay for the new spending and close a massive budget deficit.

Revenues from JumpStart are potentially quite volatile, because the entire tax base consists of fewer than 500 companies, with about 10 companies contributing around 70 percent of JumpStart revenues (and about 90 percent of the tax coming from just 100 companies). Changes at any of those companies, such as layoffs or relocations, can lead to dramatic shifts in the amount of revenue the tax produces.

Despite knowing this, the city has increasingly used these revenues to pay for basic, ongoing city services. Last year, the council gutted the original spending plan for JumpStart, making the original spending categories (housing construction and acquisition, economic revitalization, equitable development, and the Green New Deal) optional instead of mandatory. As we’ve reported, even with ever-increasing JumpStart transfers, Harrell’s 2025 budget already projected another deficit starting in 2027.

The city’s Office of Economic and Revenue Forecasts will release its new budget projections in two weeks, on April 10. That forecast should provide a better sense of how much trouble the city is in financially, and whether the council will need to make budget cuts this year to keep the budget balanced. The budget the city adopted last year assumes that JumpStart revenues will grow continually every year, bringing in $430 million this year, $452 million next year, and $469 million in 2027.

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2. Council member Dan Strauss’ colleagues expressed skepticism last week about his proposal to require all venues that host live music to provide earplugs to patrons for less than $1, with fines of up to $50 a week for those that fail to comply.

The proposal, which Strauss called “simply a good little bill,” would create a new business category called “loud music venues,” which would include all existing music venues as well as some other businesses that allow dancing, sell alcohol, or host live music.

Strauss introduced the legislation in his finance committee the morning after a marathon meeting on housing in the city’s stadium district at which Strauss accused his colleagues of voting to destroy Seattle’s maritime industries by allowing 990 apartments around First Ave. South. The plan passed 6-3 with Strauss, Bob Kettle, and Alexis Mercedes Rinck voting no.

Strauss said he decided to introduce the bill after talking to a “concerned audiologist” who spoke to Strauss about hearing loss during his office hours in Ballard. “This bill is about making sure that people have the opportunity to both enjoy Seattle’s vibrant music scene and protect their hearing health, no matter where they go,” he said.

But Kettle, along with Rob Saka, Sara Nelson, and Maritza Rivera, all questioned the wisdom and timeliness of Strauss’ “good little bill.”

Kettle noted that there are many other situations, such as street racing, where people may be exposed to loud noises involuntarily, as opposed to live music shows, where people know what to expect.

Rivera wondered why only two cities in the US—Minneapolis and San Francisco—have adopted similar laws, and “they did it 10 years ago. No one else has done it again.”

Saka—who reminisced about “screaming like a teenage girl” at a Justin Timberlake concert last year—suggested that instead of requiring venues to offer earplugs, the city could require signs notifying patrons about the risks caused by listening to loud music without hearing protection.

And Nelson said she was concerned about the impact the new regulations might have on venues that are still struggling. “What I hear from music venues is that they just got through pandemic, and they’re really focused on rebuilding their businesses.”

Strauss said he plans to formally introduce the legislation on April 16, and hopes to pass the proposal by the end of next month.

City Council, homelessness, Mayor Harrell, Mental Health, Police, Taxes

Council Increases Spending on SPD Marketing, Rejects Proposals to Release Youth Mental Health Funding and Block Expansion of Encampment Removal Team
Screenshot from one of SPD’s new recruitment ads, produced under a $2.6 million marketing contract that the city council just voted to expand.

By Erica C. Barnett

The Seattle City Council approved Mayor Bruce Harrell’s midyear budget adds virtually unchanged on Wednesday, despite several efforts by Councilmember Tammy Morales to amend the proposal.

Morales wanted to release all of the the approximately $20 million the city will collect in payroll taxes for youth mental health programs this year, instead of waiting until next year or later to spend all the money. Morales said her amendment would “maintain the commitment” the council made to students, who organized in response to a shooting at Ingraham High School in 2022, during last year’s budget.

The mayor’s office, which recently released its plan to spend $10 million of the money collected this year, has said that because the tax was only proposed, and approved, at the end of last year’s budget process, the city needs more time to come up with a plan to allocate all the funds in the future. Channeling this argument, Councilmember Bob Kettle called Morales’ comments “an injustice to the executive,” then went further, arguing that the proposal to fund student programs “came out of nowhere” and emerged “out of the blue” last year.

Council President Sara Nelson jumped on that one, saying she could tell Kettle exactly why there was suddenly an extra $20 million for youth mental health care: Because former councilmember Kshama Sawant wanted to raise taxes before exiting the stage, essentially creating a budget problem by providing too much money for students without a clear spending plan.

Obviously, it takes time to figure out how to spend a sudden windfall and, having done that, to get the money out the door. A larger concern, for those who want to see the full $20 million go to mental health services for young people in the future, is that once the funding is rolled back into the larger JumpStart fund this year (and used, as it inevitably will be, to help patch the city’s ongoing budget hole), it will be harder to claw back for its intended purpose in future years. Council members have already expressed skepticism about the entire $20 million, suggesting that perhaps the city should reconsider getting into “a whole new line of business” and let the funding lapse back into the larger, easy-to-pilfer JumpStart fund.

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The council also rejected a Morales proposal to redirect funding for 19 new members of the Unified Care Team, which removes encampments, toward the similarly named CARE Team, a group of social workers who are dispatched, along with police, to certain non-emergency 911 calls. Earlier this year, Harrell announced the city would take back funding it had been providing the King County Regional Homelessness Authority for outreach, reallocating it to the UCT.

The 19 new UCT members would include 14 people with the title “counselor,” who would “support outreach-led encampment resolutions, provide referrals to shelter during encampment removals and provide support to individuals to move out of immediate hazard/obstruction locations,” according to a budget memo.

Finally, the council approved adding $800,000 to an existing $2.6 million police marketing contract, with a new provision from Councilmember Cathy Moore stipulating that half the money has to be aimed at recruiting women. Moore’s amendment replaced a proposal from Morales that would have not allowed SPD to spend the same $400,000 until it reported to the council on how it is currently spending the marketing dollars to recruit women and a status update on its goal of a 30-percent female recruit class by 2030.

Public safety committee chair Kettle objected to Morales’ amendment, saying that while he is “110 percent behind” efforts to recruit more women to SPD, I don’t think [the amendment is] needed in the sense that everything I see regarding recruitment, everything I see, is already including women in those recruitment efforts.

In fact, Kettle added, “I haven’t seen anything but women in [SPD’s] recruitment efforts.”

As PubliCola reported earlier this week, the marketing firm SPD hired on a no-bid “piggyback” contract, Copacino Fujikado, produced three video ads that exclusively feature male, apparently white, officers rescuing people from dangerous situations, including one in which a male officer saves a crying woman bound with rope from a man who is holding her and another woman hostage.

City Council, homelessness, labor, Mayor Harrell

Seattle Workers Hold “Practice Pickets” Over Wages; New Wrinkles in Burien Encampment Plans
City workers rally for higher wages and better working conditions in September.

1. On Thursday, city of Seattle employees will participate in rolling “practice pickets” that will serve as a kind of dress rehearsal for a potential strike if Mayor Bruce Harrell’s office does not agree to cost of living and wage adjustments that represent real wage increases. The pickets, organized by the Coalition of City Unions, will take place at a city facility in the International District starting at 6, in the area around City Hall at 11:30, and in South Lake Union at 3:30.

Negotiations between Harrell’s office and unions representing thousands of city workers started off on a bad foot last spring, when Harrell proposed a 1 percent “cost of living adjustment” that was about 7 percent below the rate of inflation. (Any pay increase below the rate of inflation represents a real wage cut because it costs more to buy the same goods and services, such as groceries and rent.) Since then, union sources say, the mayor’s office has barely budged, even as Harrell has proposed significant new spending on new programs like Shotspotter and agreed to cost of living increases for nonprofit homeless service providers.

Last week, City Councilmember Kshama Sawant proposed an amendment to the 2024 budget that would increase the JumpStart payroll tax to raise $40 million to fund city worker wage increases. “I don’t believe that there’s any excuse for asking essential city workers to accept a wage cut, with or without this budget amendment,” Sawant said. “However, making these funds available will make it crystal clear that the city has the funds to offer a wage increase that, at the very least, is not a wage cut in real terms.”

Councilmembers Lisa Herbold and Teresa Mosqueda signed on to the amendment, although both made a point of saying that city employees provide core services that the city should prioritize with or without additional funding from JumpStart.

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2. UPDATE: On Thursday afternoon, a spokesperson for the city of Burien confirmed that the city has signed a contract with Discover Burien, a local business association, that will subcontract with a group run by a Kirkland mortgage broker to respond to and remove encampments in the city. This post has been updated accordingly.

The city of Burien has signed a two-month, $40,000 contract for encampment removal services with the local business association Discover Burien, which will subcontract The More We Love—a controversial nonprofit run by Kirkland mortgage broker and longtime Union Gospel Mission volunteer Kristine Moreland—to respond to and remove encampments. Discover Burien is headed up by Debra George, the operator of an animal shelter called Burien CARES.

The city did not respond to questions about why they are not contracting directly with The More We Love, as originally proposed. However, the issue of insurance has come up repeatedly in public meetings about the proposal, and The More We Love may not have the minimum $2 million commercial insurance policy required to contract with the city.

Burien CARES is the same animal shelter that rented a city-owned lot—at the bargain-basement price of $185 a month—where unsheltered people were living. The company promptly swept the encampment, and the area is now a dog park.

Last month, shortly after Burien passed a new law banning its unsheltered residents from sleeping in the city overnight, Councilmember Sarah Moore asked for a public briefing on the potential contract, which City Manager Adolfo Bailon has the authority to sign without any public process. Currently, there is no such briefing on the council’s calendar. Bailon has the authority to sign contracts under $50,000 without council approval.

Burien CARES founder and director Debra George, meanwhile, was recently sued by three of Burien CARES’ employees, who alleged that they were routinely required to work more than 40 hours a week, without pay, in order to perform their duties and that one of the three employees was improperly classified as an overtime-exempt manager.

As we’ve reported, Moreland was sanctioned in 2020 for violating consumer mortgage lending laws. Earlier this year, she distributed a detailed spreadsheet containing personal details and sensitive medical information about dozens of homeless individuals to political allies, police, and a businessman who paid The More We Love to remove an encampment on his property.

George, meanwhile, was recently sued by three of Burien CARES’ employees, who alleged that they routinely had to work more than 40 hours a week without additional pay in order to perform their duties, and that one of the three employees was improperly classified as an overtime-exempt manager.

In her response, George denied most of the allegations, and said the three employees would often show up late and leave early to keep from going over 40 hours a week, “because they were told repeatedly that overtime was not authorized.”

The response also argues that George was not the workers’ employer or supervisor, but a fellow employee of Burien CARES; however, George founded and incorporated the organization, serves as its only registered agent, and is the group’s primary governor—a person with authority to make decisions on behalf of a business.

3. Burien Councilmember Cydney Moore, who is running for reelection this year, is the director of the Burien Community Support Coalition, a nonprofit that announced plans yesterday to open a sanctioned encampment for three months at the Oasis Home Church in the Sunnydale neighborhood. According to an announcement from the group, residents of the encampment will have to comply with a strict code of conduct: No drugs or alcohol (including in the surrounding neighborhood), no visitors, and no “nuisance behavior” at the encampment or in the vicinity, such as “littering and loitering.”

“We take couples, we take pets, and we’re trying to collaborate with local providers who already work with the homeless population here,” Moore said. Religious institutions have special rights to host unsheltered people on their property under state law, which restricts local jurisdictions’ authority to ban encampments, “safe lots” for people living in their vehicles, and other sheltering activities churches conduct as part of their mission.

The code of conduct “is going to be a barrier for a lot of people,” including some in active addiction, Moore said, “but we had to meet conditions to even get this agreement with the church.” Worries about safety, noise, and intoxication around encampments “are valid concerns,” Moore added, and “even if we could take everyone with no [limitations], we don’t have the capacity to take everyone.”

According to KING 5, which spoke to City Manager Bailon about the proposal, Bailon said the church would need to seek a special temporary use permit to host unsheltered people on its property. The city has the ability (but is not required) to grant temporary use permits for up to 60 days per year for uses that don’t conform to local zoning; however, it’s unclear that the city has the authority to impose such a requirement on a church.

City Council, Economy, Taxes

Proposals to Close City Deficit Prompt Immediate Backlash from Businesses, Business-Backed Council Members
A look at the ongoing structural shortfall in the city budget through 2026; “PET” refers to the JumpStart payroll tax.

By Erica C. Barnett

A list of potential progressive revenue options put forward by a city task force this week is already stirring controversy among businesses (and business-backed city council members) because it involves new taxes, rather than spending cuts, to maintain existing services and meet the city’s labor obligations. The policies, which are not recommendations, would help offset an average projected revenue shortfall, beginning in 2025, of $244 million a year.

Immediately after the task force published its list of options, one of the group’s own members, Seattle Metro Chamber CEO Rachel Smith, issued a statement denouncing the city for its “lack of budget transparency, accountability, and practical problem-solving” and arguing that the city’s real problem is overspending, not a lack of revenue.

Instead of proposing any new taxes, Smith said, Seattle should “look at reducing or eliminating services that do not meet measurable outcomes, are duplicative of other entities, are no longer aligned with current priorities, or have grown faster than real-world demands.” Smith did not identify any specific programs the Chamber believes the city should eliminate.

During a presentation of the recommendations to the council’s finance committee Thursday morning, Councilmember Alex Pedersen echoed Smith’s comments. “I believe City Hall doesn’t have a revenue problem. It has a spending problem,” he said. Chiming in, Councilmember Sara Nelson added that she believes the city should “live within our means” and cut the budget instead of raising taxes.

“I am simply suggesting that spending within our means is not austerity. It’s our responsibility,” Nelson said.

 

“The definition of austerity is a situation in which people’s living standards are reduced because of economic conditions,” Herbold responded.  

The projected shortfall, which is the result of declining revenues, expiring short-term funding, and spending increases, represents more than 15 percent of the city’s annual discretionary budget.

The progressive revenue work group, which included representatives from business and labor as well as the council and mayor’s office, came out of a statement of legislative intent the council passed in 2021, expressing the council’s commitment to work with the mayor to come up with permanent funding sources for a number of new general-fund programs that the city paid for using federal COVID relief dollars and revenues redirected from the JumpStart payroll tax.

With federal funding running out and JumpStart reverting to its intended purpose (funding housing, equitable development, and Green New Deal programs), the city is seeking new revenue sources to fund needs that are still ongoing, including homeless services, alternative 911 responders, and business assistance.

In addition to new programs, the city has had to spend more each year to keep up with population growth (more people require more services) and inflation, which raises labor costs. The city has also committed to raise wages for workers at human service nonprofits that contract with the city, which are so low that many employees qualify for public benefits. Overall, internal labor agreements account for 85 percent of the city’s increased costs through 2026, according to the work group’s report, while raises for human service workers account for about 4 percent of the increase.

According to a memo from the council’s central staff,  if the city fails to deal with this structural shortfall, the budget gap between 2025 and 2030 will average $244 million a year.

The task force, which looked only at the revenue side of the equation, whittled a list of more than 60 potential new fees and taxes down to nine, including three the city could implement right away, without the need for a ballot initiative or a change to state law. Those options include increases to the size or scope of the existing JumpStart payroll tax; a local tax on capital gains above a specific level, modeled after the state capital gains tax that recently withstood a state supreme court review; and a local tax on businesses whose CEOs make significantly more than the average worker.

Councilmembers have already proposed—and council staff have already analyzed—a JumpStart tax increase and a local capital gains tax, which could form the basis for future legislation and reduce the time it takes to pass either option.

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In the council meeting Thursday, Nelson and Pedersen returned repeatedly to two ideas: First, they argued, the city should simply reduce the amount it spends on programs that, as Nelson put it, “do not meet measurable outcomes, are duplicative… [or] are no longer aligned with the city’s residents’ current priorities.”

“I am simply suggesting that spending within our means is not austerity. It’s our responsibility,” Nelson said.

Second, the pair argued, the city should get rid of all spending restrictions on the JumpStart tax, which provides a dedicated source of funding for housing and programs that benefit people and businesses disproportionately impacted by the presence in Seattle of large tech companies, like Amazon, and their wealthy employees. “I think the next city council could consider, once again, liberating those payroll tax revenues to handle that deficit, rather than locking up those dollars permanently for new programs [while] piling on another round of new taxes,” Pedersen said.

Councilmember Lisa Herbold—who, like Pedersen, is leaving the council next year—took issue with Nelson and Pedersen’s argument that budget cuts would not negatively impact the city. “The definition of austerity is a situation in which people’s living standards are reduced because of economic conditions,” Herbold said. “‘Just simply living within your means’ sounds nice, and it’s a great soundbite. I’m sure it’ll get picked up today. It sounds great. It’s just not accurate.”

The other taxes on the list include a tax on vacant residential or commercial units, which would have to navigate state law requiring uniform property taxes; a higher real-estate excise tax on the sale of properties above a certain value; a local graduated estate tax, with an exemption for the first $250,000; a local inheritance tax, paid by the beneficiaries of large bequests, which would be the first of its kind in the country; a congestion fee, or toll, on people who drive into highly congested parts of the city; and a flat income tax with rebates for low-income people.

All six of these options would require additional study, authorization from the state legislature, or a public vote, making them less viable solutions to the city’s near-term revenue shortfaull.

City Council, Environment, Police

Midyear Budget Proposal Adds Funding for Streetcar Study, Police Overtime—and $19 Million for Unanticipated Lawsuit Payouts

By Erica C. Barnett

The city council got a first look at a proposed mid-year budget package that would fund a graffiti cleanup team that Harrell recently rolled out as part of his Downtown Activation Plan; add funding to revive the delayed downtown streetcar connector; increase SPD overtime spending to pay for downtown emphasis patrols, expanded online crime reports, and public disclosure officers; and put an additional $19 million into a fund that pays out for lawsuits and claims against the city, many of them the result of alleged police misconduct.

Every year, the city council has to adjust the budget to reflect new priorities, as well as what the city has actually spent so far that year, in a midyear supplemental budget that’s often hundreds of pages long.

The council denied Harrell’s request to nearly double what the city spends on graffiti removal last year, increasing annual graffiti cleanup spending to almost $4 million. According to council staff, Harrell’s office reversed their decision by using unspent funds from Seattle Public Utilities public hygiene budget, including pump-outs for trailers that provide showers for unsheltered people, to fully the graffiti cleanup crews. Harrell announced the new spending earlier this month as part of his Downtown Activation Plan. Because the city has already executed the contracts, a council staffer explained Wednesday, the council now has little choice but to fund the expanded graffiti program.

To fund other Downtown Activation Plan programs, a central staff memo notes, Harrell has proposed using the JumpStart fund, which includes funding earmarked for small businesses. Ironically, it was the Downtown Seattle Association, along with the Seattle Metro Chamber and other business groups, that proposed temporarily suspending the JumpStart tax—which only applies to the city’s largest businesses—earlier this year.

The memo outlines all the other proposed midyear budget adjustments, which also include $1 million “a delivery assessment of the Center City Cultural Connector”—as the proposed downtown streetcar was recently rebranded—”to determine if the design needs to be updated to reflect the intent of the project.”

“My original idea was, just lift the proviso and let them spend the salary savings on emergent needs,” Councilmember Sara Nelson said Wednesday, adding that the funding limitation “prohibit[s] the uses of salary savings on on expenses that are really important right now for the for Seattle Police Department.”

The council will also have to approve a $19 million increase to the city’s judgment and claims fund—including $14 million from the city’s planning reserves fund and $5 million from insurance—to pay for “higher than anticipated expenses” from lawsuits against the city. A spokesperson for the city’s budget office told PubliCola the city “cannot accurately predict how much money will be spent if the request is approved,” and said the city may not end up using all the money.

Still, the allocation represents a significant increase to the fund, which the city already expanded by $11 million in the 2023 budget last year, when it increased the fund from $30 million to $41 million “to pay for extraordinary settlements against the City.” Last year, lawsuits against the police department accounted for almost half of the $36 million the city spent on settlements, defense attorneys, and other litigation-related expenses, according to a report released in April.

The midyear budget also releases some funding to SPD to pay for improvements to the department’s online reporting system and unbudgeted overtime expenses the department has already made, along with position authority for four new public disclosure officers. Currently, SPD has to get council approval to spend funding allocated to vacant positions, including sworn officer positions the department is unable to fill, on unrelated purposes.

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Although the spending SPD is requesting is fairly limited—about $815,000—budget chair Teresa Mosqueda noted that whenever the city creates new SPD positions—on top of the hundreds of vacant positions that are included in the budget every year—”it compounds our increased costs year over year,” because the new positions become an additional SPD expense in future budget years.

“If there [are] positions that are vacant, that the department intends to hold vacant, that are no longer needed or are not part of the near term planning, it is okay to abrogate positions in order to put funding into other priorities,” Mosqueda said.

Councilmember Sara Nelson, who argued vehemently against restrictions on SPD’s spending authority last year, said another way to solve the annual funding problem would be to just allow SPD to spend salary savings on whatever they want. “My original idea was, just lift the proviso and let them spend the salary savings on emergent needs,” Nelson said Wednesday, adding that the funding limitation “prohibit[s] the uses of salary savings on on expenses that are really important right now for the for Seattle Police Department.” (In fact, it just requires the council to approve those expenses.)

Immediately after suggesting the council has made it too hard for the department to spend salary savings however it wants, Nelson spent 15 minutes questioning a $50,000 expenditure on a “living hotel” pilot that would create sustainable development standards for new hotels. Currently, the city has no way of endorsing or verifying that a hotel that calls itself “green” is actually adhering to green standards such as limiting water usage.

Suggesting that Mosqueda, who proposed the expenditure, was dropping the idea on the council out of the blue, Nelson said, “You make it sound like there’s a lot of talk going on between departments, but I’m the vice chair of the sustainability and renters rights committee, I’m on land use, I’m the chair of City Light, and  the first time I’ve heard about this policy is through some of those form emails coming in.”

“I appreciate that you might know a lot about it,” Nelson continued. “Again, talking about money, that transparency in budgeting ,and making sure that when we allocate money, it’s actually getting spent. So is it premature to be funding this work, given those factors?”

No one took the bait on the glaring contradiction between supporting a blank check for police and scrutinizing a tiny expense for the environment, but Councilmember Lisa Herbold did chime in on behalf of Mosqueda’s add, noting that “it’s really important to guard against greenwashing” by companies operating in the city.

As the central staff memo notes, Harrell’s Downtown Activation Plan includes a special land use change for a proposed hotel in Belltown that will not have to adhere to any green standards, and would extend master use permits for existing downtown hotels, prolonging their exemptions from current environmental rules.