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.
Last week, City Councilmember Cathy Moore proposed a 2 percent local tax on capital gains—earnings from investment income—above $262,000 a year. In a statement, Moore said the tax is necessary to help supplement the JumpStart payroll tax, a marginal tax on high-income workers’ wages paid by large employers. JumpStart was originally earmarked to fund affordable housing, green jobs, and equitable development, but the proposed 2025-2026 budget would use a majority of revenues from the tax to close a gaping budget hole (more on that in a moment).
“After a thorough review of the budget and the mayor’s proposal to utilize Payroll Expense Tax dollars to cover the General Fund deficit, it’s clear that our city is still facing the need for additional revenue to address the unmet needs of thousands of households that are rent and food insecure,” Moore said in a statement. Her proposal would explicitly restrict the use of the tax to “rental assistance for rent burdened households, down payment assistance to low, moderate, and workforce households, and food assistance to food insecure households.” The ordinance doesn’t lay down specific percentages for each category, and notes that the spend plan could be subject to future amendments.
Even as Moore proposes earmarked progressive revenue, the council is poised to pass a separate budget bill that would gut the adopted spending plan for the JumpStart tax by making it optional instead of mandatory.
Since the first year the city began collecting the tax, in 2021, it’s used a portion of JumpStart revenues to backfill general-fund shortfalls, justifying these transfers with the ongoing impact of the COVID pandemic.
This year, facing a budget shortfall of more than $260 million, Mayor Bruce Harrell avoided “public-facing” cuts (and added another $100 million in spending on his own priorities, like CCTV surveillance and police emphasis patrols) by dipping deeper into JumpStart than in any previous year, with less than half of JumpStart’s higher-than-anticipated revenues going to the purposes it was created to fund. The council (whose new members ran on pledges of fiscal responsibility) piled on their own spending requests, and the result is the city’s largest budget proposal ever.
To pay for it all, elected officials appear committed to using JumpStart—which was supposed to pay for additive programs, not city obligations that would ordinarily be funded through the general fund—as a fungible source of general fund revenues in perpetuity.
Technically speaking, the bill amending JumpStart expresses the council’s “wish to maintain the intent of the original 2020 spending plan,” then Xes out that entire spending plan, replacing it with a section that says it “may be used” to support programs along the same lines as what was in the original proposal. “May,” in legislation, is the legal equivalent of “may not,” and the effect of the change is to release the council from any future legal obligation to fund the priorities laid out in the 2020 bill. It also appears to allow the city to use JumpStart to fund JumpStart-style spending, like funding for housing, equitable development, or Green New Deal-type programs that would ordinarily be paid for out of the general fund, as opposed to new programs made possible by the additive tax.
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This wasn’t unexpected. Since the first JumpStart collections began in 2021, the mayor and council have treated its spending plan like a suggestion, repeatedly adopting short-term bills that provide exceptions that have allowed the city to stave off major budget cuts without raising new taxes or cutting back on any of the city’s biggest cost drivers, like the police department’s budget. This kind of thing used to be controversial—when then-mayor balanced her 2019 budget with $6 million from the soda tax, a widespread backlash led to legislation that imposed a strict spending plan—but has become so routine that merely suggesting the city keep the commitments it made when it passed the tax is treated like an outrage by the same conservative organizations that opposed JumpStart to begin with, but now see it as a useful slush fund.
The council’s legislation (technically sponsored by the budget committee, an indication of majority support) will also eliminate an oversight committee that provides updates on the impact of the tax.
One issue with relying on JumpStart to fund basic, ongoing city services is that the tax is potentially quite volatile, because its revenues are largely based on the payrolls of a handful of large tech companies, primarily Amazon. With only a few years of data, the city is essentially just assuming revenues will continue to go up forever, without much of a visible plan for what to do if they don’t. By tying future general-fund budgets to the fate of JumpStart, the city is making a bet that tech companies won’t cut jobs in Seattle, now or in the future.
The capital gains tax suffers from a similar volatility. An analysis by the city’s Office of Economic and Revenue Forecast, which looked at state capital gains tax revenues, concluded that revenues from the tax “are very likely to fluctuate significantly for year to year and from forecast to forecast.” In 2027, for example, the forecast council concluded that depending on compliance rates, a 2 percent local capital gains tax could pull in as little as $16 million, or as much as $51 million—a huge, and somewhat unsettling, range.
The city council will hold the second of two public budget hearings tomorrow, Tuesday, at 5 pm in council chambers; find out how to attend and comment here.
Mayor Bruce Harrell delivers his annual budget speech in September.
The mayor and city council have a spending problem.
By Erica C. Barnett
Buried in Mayor Bruce Harrell’s proposed budget, on page 661, are two numbers that strongly suggest the city is not done pulling money out of the JumpStart payroll tax fund, and will probably rely even more heavily on revenues from the tax in the future. The JumpStart tax, also referred to as the payroll expense or payroll tax, is a tax large employers pay on the compensation of their highest-paid employees; it’s currently earmarked for affordable housing and economic development in marginalized communities,
Those numbers, at the bottom of a chart showing a big-picture view of the city’s general fund, are a projected budget deficit of $78,609,000 in 2027 and $151,238,000 in 2028.
Although out-year budget numbers are always more speculative than projections in the immediate future, the scale of these potential deficits could lead the mayor’s office to propose using even more JumpStart revenues to backfill those shortfalls in the future—just as a projected budget deficit of $229 million in Harrell’s mid-biennial budget raised alarms last year and prompted the mayor to propose a 2025-2026 budget that uses $287 million in payroll tax revenues for general purposes that are not a part of the city’s JumpStart spending plan..
The numbers are cumulative, so the 2028 figure represents an unaddressed 2027 deficit of $78 million, plus an additional shortfall of $73 million in 2028. Both of these projected deficits already account for ongoing increases in the amount of JumpStart payroll tax the city will transfer into the general fund—$469 million in 2027, and half a billion dollars in 2028.
It isn’t unusual for the city to project deficits in future years. But prior to this decade, these projected deficits, when they showed up in the budget, were tens of millions of dollars, not hundreds of millions. Once the projections started showing future shortfalls near or above $200 million, back in 2022, city officials began wringing their hands in public about the “looming budget cliff” and talking about ways to raise more revenue to forestall major cuts. That led to Harrell’s decision, supported by most of the council, to take hundreds of millions of dollars out of JumpStart to close a deficit most recently projected at $260 million. Harrell’s budget shows the deficit immediately bouncing back into the hundreds of millions, indicating this year’s fix—raiding JumpStart—won’t be enough to close the long-term gap.
PubliCola requested an interview with the budget office last week and followed up on Monday. We’ll update this post if we hear back.
The mayor’s budget indicates that this year’s controversial use of JumpStart funds, which are currently earmarked by law to specific spending categories (affordable housing, Green New Deal programs, equitable development, and small businesses), may be the tip of the spear for a wholesale reallocation of payroll tax revenues in the future.
The most obvious alternative, assuming the city does not come up with new revenue sources or expand the payroll tax, would be to cut existing programs and refrain from creating new ones.
Fiscal restraint, needless to say, doesn’t win popularity contests, and Harrell—who’s up for reelection next year—has mostly taken the opposite approach. Although his proposed budget would eliminate 159 positions—mostly in IT (including the Seattle Channel), human resources, and the Department of Construction and Inspections—it also adds $100 million in new spending on “mayoral priorities,” like police, downtown activation, and jails.
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Among other new and expanded programs, the mayor’s budget would add funding for police “emphasis patrols” around downtown Seattle; expand the Unified Care Team, which removes encampments and refers people to shelter; fund dozens of new jail beds for misdemeanor offenders, such as drug users; and create a “real time crime center” where police will monitor new surveillance cameras mounted in neighborhoods across the city.
(The city council, which will approve a final budget in November, includes many new members who ran on the anti-tax premise that the city “doesn’t have a funding problem, it has a spending problem.” That claim is a bit hard to reconcile with spending $100 million on new programs in the face of a $260 million budget deficit.)
We’ve written about the primary way Harrell has proposed paying for all this new spending—by using $287 million in payroll tax revenues next year, and more every year after that. But Harrell’s 2025-2026 budget also depletes the JumpStart fund balance—essentially, a non-renewable reserve of unspent money—taking $140 million from this pot next year and another $90 million in 2026. By 2026, the total amount of funds left over at the end of the year, after all spending is accounted for, will be reduced from $97 million to $179,000.
Harrell’s budget does propose funding a payroll tax “revenue stabilization reserve” of $43 million, established last year to provide a cushion if revenues come in lower than expected—for example, if a large tech company leaves the city and takes its tax base with it. But the budget also dips into this fund in 2026, a year when payroll taxes are projected to continue their skyward trajectory, pulling out $8 million before replenishing the fund over the next two years.
Neither the mayor nor the council have discussed the $158 million deficit projection publicly yet, much less articulated a plan for dealing with it. Using JumpStart to close indefinite budget gaps (while piling on new spending every year) has significant risks: Because the majority of JumpStart revenues come from a tiny number of companies, a decision by even one of those companies to move jobs out of Seattle could tank the fund. The city is basing its projections—an arrow that always goes up, up, up—on less than three years’ worth of data, compared to other taxes whose fluctuations are well understood.
There’s also the question of political risk: Does this council, and this mayor, want to eliminate or severely handicap a source of funding for affordable housing in a city where people who don’t have six-figure incomes are being displaced?
The JumpStart tax, paid by companies that employ highly compensated workers, was designed to offset the impacts that companies like Amazon have had on Seattle’s housing market and economy by providing access to housing, jobs, and small-business development opportunities for people who haven’t benefited from the city’s tech boom. Now, it’s being used as a funding source for programs that arguably run counter to its original purpose, like jails, surveillance of low-income neighborhoods, and police.
Turning JumpStart into an anything-goes revenue stream is an idea that’s sure to get pushback—especially from advocates who remember how hard businesses fought to stop the tax. This year’s budget may be remembered as a proof of concept for repurposing even more, or all, of the revenues from JumpStart, using a tax opposed by businesses and pro-business elected officials to avoid coming up with a stable solution to the city’s budget challenges.
Mayor Bruce Harrell’s proposed budget turns an estimated $212 million funding shortfall in 2026 into a $247 million shortfall, according to a city council staff analysis.
By Erica C. Barnett
Seattle City Councilmember Sara Nelson raised objections to funding several small harm-reduction programs using funds from the state’s settlements with opioid makers and distributors on Thursday, saying that the funds might better be spent on “treatment” rather than drug user health programs at the Hepatitis Education Project (HEP), Evergreen Treatment Services, and the People’s Harm Reduction Alliance.
These programs, which total less than $500,000, were originally funded using money the council set aside for a safe consumption site; in the face of strong political opposition to that idea, including from former mayor Jenny Durkan, the city worked with advocates to come up with alternatives that would still fulfill the original mission of harm reduction and health care without requiring a physical site.
Nelson, who has advocated for the city to fund traditional, abstinence-based inpatient treatment, said she wanted to know “what is the harm that is being reduced by the use of this money, and how do we measure the the performance of that investment? Because I know people know that I prefer that our scarce dollars should be used for treatment.” Although the three groups received funding from King County through a competitive Request for Proposals process, Nelson said they should go through another one, since the funding source is new.
According to City Attorney Ann Davison’s office, any lot for storing RVs that were previously used as residences has to be directly adjacent to a noncongregate shelter site—a requirement that has had the effect of virtually prohibiting such a lot. Davison said RVs could be allowed in this situation for up to 90 days, with extensions on a “case-by-case basis if the resident is working in good faith towards permanent housing”—a significantly more paternalistic approach than the previously approved proposal.
Both council president Debora Juarez and Councilmember Lisa Herbold seemed exasperated by Nelson’s objections. Juarez said it was already the city’s policy to fund both conventional treatment and harm reduction, while Herbold noted that the King County Board of Health, which includes Herbold and Councilmember Teresa Mosqueda, just unanimously approved a resolution supporting harm reduction as one use for the opioid settlement funds.
The council, Herbold pointed out, just approved spending $5 million in block grant funds for a new low-barrier opioid treatment facility, along with $2 million for a post-overdose recovery site, on Tuesday.
Another odd detail that emerged on Tuesday: Although the city allocated $1 million a year last year for people who had been living in RVs to store their vehicles for up to a year while they transitioned to living in shelter or permanent housing, the money has not been spent. The reason? According to City Attorney Ann Davison’s office, any lot for storing RVs that were previously used as residences has to be directly adjacent to a noncongregate shelter site—a requirement that has had the effect of virtually prohibiting such a lot.
The reason for allowing people to hang on to their old vehicles, at least for a while, while they transition into shelter is obvious. Many people are reluctant to move from the relative safety and privacy of their own RV into a shelter bed or tiny house, and don’t go into shelter as a result. If people can keep their RVs as a backup option, they’re much more likely to say yes to offers of shelter.
In a memo, an advisor to the city’s Human Services Department told the KCRHA that Davison’s office had determined that RV storage is “not identified as a permitted princip[al] use in the Seattle Land Use Code and is prohibited” everywhere in the city. RVs, the city attorney’s office said, could be allowed as an “accessory use” to a tiny house village for up to 90 days, but only if each resident who owned an RV started meeting with a case manager within 90 days to move toward permanent housing; extensions allowing people to store their vehicles longer “could be granted on a case-by-case basis if the resident is working in good faith towards permanent housing.”
This significantly more paternalistic version of the original proposal will require a provider willing and able to meet the city’s new conditions and restrictions. KCRHA put out an initial “letter of intent” seeking providers that are interested in opening an RV storage lot and a tiny house village next to each other on Wednesday.
On Thursday, Councilmember Lisa Herbold called the city attorney’s interpretation a “pretty significant misunderstanding” of the reason people want to store their RVs while they stay in a shelter. “The idea is is that this is a lot—much like a tow lot—where people voluntarily allow their vehicles to be towed into a fenced-in area,” Herbold said. “There are tow lots all over the city and they don’t all have to be next to housing for formerly homeless people.”
The council is just starting its annual budget deliberation process. At a high level, the council will be debating how best to prepare for a “structural” general-fund budget deficit that’s now estimated at $212 million in 2025, an improvement from earlier predictions. Harrell’s budget plan would increase that structural deficit by adding $51 million in new expenditures, of which almost $28 million are ongoing annual costs.
Although the general fund is actually projected to do better in 2024 than anticipated, a lot of one-time funds that created new programs during COVID are set to expire, and the new council, which will likely have at least five new members, will have to come up with new revenues and, most likely, cuts.
Given that reality, it’s likely the council will scrutinize Harrell’s decision to add 110 new city employees next year, most of them permanent positions that create ongoing new funding obligations for the city. Overall, Harrell’s 2024 budget adds $51 million to the 2024 budget the council and Mayor Bruce Harrell “endorsed” last year) and increases the estimated deficit in 2025 to $247 million. Of the 110 positions, 40 are funded through the general fund—the part of the budget that pays for most of the city’s operations—and another 16.5 come from Jumpstart.
Jumpstart revenues are now expected to come in about $21 million below previous predictions; the tax is based on payroll expenses for the highest-paid employees at the city’s very largest companies, which makes it susceptible to swings when big tech companies cut jobs or move offices elsewhere.
The mayor’s proposal would extend an exemption from the tax for highly paid employees of nonprofit hospitals who make between $150,000 and $400,000. If this exemption was allowed to expire as scheduled, the city would take in an additional $5 million. Most of the private hospitals in Washington state are nonprofits and are exempt from many other taxes.
Harrell’s budget transfers $27 million from the Jumpstart tax fund to the general fund, an ongoing practice that the council has approved every year for the past several years to keep COVID-era programs going. Much of that includes new spending beyond what the council approved last year in the “endorsed” 2024 budget.
For example, the mayor’s budget would use revenues from the Jumpstart tax—which are supposed to be dedicated to affordable housing, small businesses, equitable development, and Green New Deal investments—to pay for higher human service worker pay, relocation costs for a tiny house village that needs to move off Sound Transit property; and subsidies for child care workers.
Nelson noted that she was the only councilmember to vote against raising human service workers’ pay, because she thinks the goal of eventually raising human service workers’ wages by 37 percent—the increase a University of Washington study concluded they would need to get to parity with similarly skilled workers—is unrealistic.
“The taxpayers are paying for a lot,” she said, citing several voter-approved human services levies.
“Regardless of what jurisdiction, it is—city, county, state, federal—it’s all taxpayer money,” Councilmember Lisa Herbold responded, and noted that other local jurisdictions, like King County, are also contributing to higher wages for human services workers, who often make so little that they qualify for social service programs themselves.
Harrell’s budget does not continue funding for a one-time 4 percent pay increase, plus an ongoing 3.6 percent increase, for homeless service workers, which the city had hoped the KCRHA would figure out a way to fund long term. Paying for these pay increases would cost the city an additional $1.9 million a year.
Councilmember Alex Pedersen, who represents the University District, suggested that it would potentially harm the people living at the tiny house village to “quibbl[e] about the pots of money”—a position that runs counter to his frequent calls for audits and “accountability” for programs he believes may be wasting money.
The mayor’s proposal also includes $1 million a year in new funding to evaluate the effectiveness of the Jumpstart tax, which would include two new permanent employees and unspecified additional expenses. It would also extend an exemption from the tax for highly paid employees of nonprofit hospitals who make between $150,000 and $400,000. If this exemption was allowed to expire as scheduled, the city would take in an additional $5 million. Most of the private hospitals in Washington state, including Virginia Mason, Providence/Swedish, and Pacific Medical Centers, are organized as nonprofits and are exempt from many other taxes.
Given how often the council has had to agree to exemptions from the spending plan since Jumpstart went into effect in 2021, a council staff memo asks semi-rhetorically, “is it time to consider expanding the areas of spending the JS Fund can be used for on a permanent basis?” Jumpstart architect Teresa Mosqueda may object to changing the spending plan, as she has in the past, but she’s likely to be replaced by a new, appointed council member next year, assuming she wins election to the King County Council.
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.
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.
The city council’s budget “balancing package” still leaves a large gap the city will have to address in the future, possibly through new progressive taxes that have not yet been identified.
By Erica C. Barnett
Twelve days after a late-breaking revenue forecast punched new holes in the city of Seattle’s biennial budget, city council budget committee chair Teresa Mosqueda released a two-year “balancing package” that amends Mayor Bruce Harrell’s October budget proposal by eliminating proposed new programs and initiatives, allowing revenues from the JumpStart payroll tax to fund programs that would not ordinarily qualify for JumpStart spending, and reducing the number of vacant police positions the city will continue to hold open next year from 200 to 120.
Mosqueda’s plan would eliminate proposed new funding for Shotspotter (or another gunshot detection system); reduce the proposed increase in police recruiting efforts; reduce the amount of new funding SPD will receive for new guns and ammunition; and reduce the amount of new spending on SPD’s Develop Our People leadership academy, a management training program for sergeants.
Harrell’s budget assumes that the 120 vacant positions Mosqueda’s proposal leaves untouched won’t be filled, and “reinvests” those on-paper savings back into other police programs. Mosqueda’s budget proposal doesn’t touch this “reinvestment” and still funds the vast majority of Harrell’s police hiring and recruitment plan, which still includes large bonuses for new recruits and enough money to hire a net 30 new officers over the next two years—an ambitious plan that would represent a rapid reversal of police hiring trends over the last several years.
At Monday’s initial council meeting to discuss the proposal, Councilmember Alex Pedersen said any proposal to cut vacant positions from SPD’s budget amounted to “revisiting the debate in 2020 and 2021” about “defunding” the police department. “I see in the [budget] proviso that it takes away the police department’s flexibility to use savings to address overtime needs, despite the fact that they have a severe staffing shortage,” Pedersen said.
Mosqueda anticipated the objection that eliminating funding for positions that will never be filled amounts to a “cut” in the police department. “We are not touching the 120 [police positions] and we are not touching the hiring plan,” Mosqueda told PubliCola Sunday. But “we know we are never going to fill [the remaining 80], so we are going to put those dollars back into the general fund.”
Councilmember Alex Pedersen said any proposal to cut vacant positions from SPD’s budget amounted to “revisiting the debate in 2020 and 2021” about “defunding” the police department.
Then, Mosqueda said, she looked at the items Harrell proposed funding with the money from the remaining 120 positions, and asked “what is above and beyond on that list. It was things like [the gunshot detection system] Shotspotter— gone. They wanted a PR firm that was in charge of the [police] recruiting plan. That’s gone. They wanted a website redesign investment. That’s gone. Anything that was not essential for the policy that was passed—gone.”
Eliminating Shotspotter, SPD’s marketing plan, and a new $1.2 million-a-year anti-graffiti program would save about $3 million a year. Cutting and delaying capital projects funded by the city’s Real Estate Excise Tax, which stands to take a $64 million hit over the next three years, would save millions more. Another source of unanticipated funding—about $5 million a year—will come from the money the city planned to spend expanding an existing shelter in SoDo, a project King County Executive Dow Constantine abandoned earlier this year.
And then, of course, there is the JumpStart payroll tax, which the council originally earmarked for housing, Green New Deal programs, equitable development, and small businesses. Harrell’s budget would have empowered the mayor to use JumpStart for non-JumpStart purposes in perpetuity, by overturning a law, passed just last year, that only allows JumpStart spending for general government purposes if the city’s general fund falls below $1.5 billion.
Although Mosqueda’s budget provides a two-year exemption to this rule, she says she’s confident the council won’t have to do the same thing after 2024,, because by then a revamped progressive revenue task force will have come up with new funding sources to make the annual budget less susceptible to economic downturns.
The balancing package also shifts some funds around so that JumpStart will mostly go to its intended purposes; for example, instead of using the payroll tax to 14 new city employees to staff Sound Transit’s light rail expansion plan, as Harrell proposed, Mosqueda’s proposal would use money from the Seattle Transportation Benefit District, funded mostly with vehicle license fees, to pay for those positions.
Although Mosqueda made some concessions on JumpStart, her budget also funds full inflationary wage increases for human service workers, rather than the sub-inflationary 4 percent increase Harrell proposed. Harrell’s plan would have required the council to overturn a 2019 law requiring cost of living adjustments that keep up with inflation; as Harrell, then council president, said in a speech supporting the measure at the time, the point of the law was to ensure that wages keep up with inflation during “hard times,” not just when things are going well.
The balancing package also keeps the city’s parking enforcement officers at the Seattle Department of Transportation, rather than transferring them back to the Seattle Police Department, as Harrell proposed. This plan, like Mosqueda’s proposal to stop funding 80 vacant police positions that cannot be filled, could end up a target for disingenuous accusations that the council is “defunding the police.”
PubliCola has heard that Councilmember Sara Nelson plans to resurrect Harrell’s original proposal to open up JumpStart spending permanently, including legislation originally sent down by Harrell’s office that would pin the threshold for JumpStart to go to non-JumpStart purposes to the rate of inflation, rather than a fixed $1.5 billion amount.
The balancing package also keeps the city’s parking enforcement officers at the Seattle Department of Transportation, rather than transferring them back to the Seattle Police Department, as Harrell proposed, and sets up a process for determining where parking enforcement will ultimately live at the city by next April.
“We’re asking them for a little bit of time to take the temperature down, have a conversation, and ask them what they need,” Mosqueda told PubliCola. “And then we’ll figure out which department has that structure. Is it SPD? Is it [the Community Safety and Communications Center? Is it a totally different department?” This plan, like Mosqueda’s proposal to stop funding 80 vacant police positions that cannot be filled, could end up a target for disingenuous accusations that the council is “defunding the police.”
The new budget proposal also includes funding to hire up to 90 parking enforcement officers and pay for supplies and new uniforms for the parking enforcement unit, which had to cut costs when the city moved parking enforcement to SDOT. The move increased administrative costs for the department by about $5 million due to a quirk in how way general fund spending is allocated on administration; Mosqueda said neither SDOT nor then-mayor Jenny Durkan were honest with the council about the extra costs.
Other highlights of the balancing package, which the council will discuss in detail over the coming week:
• Instead of funding the mayor’s “Seattle Jobs Center,” which Harrell described in his first State of the City address as a portal “connecting workers and employers to new opportunities, workforce development, and apprenticeships,” the balancing proposal would use JumpStart revenues to fund the MLK Labor Council’s existing online “hiring hall,” while requesting a report from the city’s Office of Economic Development on what a city-run jobs site would look like.
Looking at Harrell’s budget proposal, which does not include any new details about the jobs center, “we were like, ‘what’s the plan here? What’s this going to look like? Have you consulted with labor partners?'” Mosqueda said. “And there wasn’t a lot of there there.”
• The proposal eliminates cash spending on large projects that would be funded by the Real Estate Excise Tax (REET) and proposes funding them instead with long-term debt, which increases the cost of projects but allows the city to fund them over time, rather than paying for entire big-ticket items up front. These include the redevelopment of Memorial Stadium, at Seattle Center, in collaboration with Seattle Public Schools, and the purchase of a building on the downtown waterfront for a new, 10,000-square-foot tribal interpretive center for the Muckleshoot Tribe.
• The balancing package would preserve most of the funding Harrell’s budget added for the new Unified Care Team, a group of city staffers from several departments that cleans up around and removes encampments. As we reported, Harrell’s budget adds 61 permanent positions to this team, the majority of them in the Seattle Department of Transportation and the Parks Department—the two departments primarily responsible for encampment sweeps.
However, the package would take most of the funding Harrell proposed spending to expand the HOPE Team, a group of city staffers that does outreach at encampments, and reallocate that money to the King County Regional Homelessness Authority to pay for contracted outreach providers, such as REACH. The plan would still add one new “system navigator” to the UCT, so that there will be one outreach worker for each of five areas of the city where the UCT will operate. The proposal also outlines clear, distinct roles for the city’s own system navigators and KCRHA’s outreach teams.
The formal request poses a list of 23 questions and sub-questions about “emphasis patrols” and the city attorney’s “high utilizers” list, such as “Does SPD have a theory of change for emphasis patrols?” and “How much has the City spent on jail beds for those arrested via emphasis patrols on the high utilizers list?
• As we reported on Monday, the regional homelessness authority approached the council in October, five months after submitting its annual budget request, to ask for more than $9 million in new funding to pay for ongoing programs that were originally funded with one-time federal dollars during the COVID pandemic. The balancing package provides $3.9 million—the sane amount KCRHA said it needs to continue federally funded rapid rehousing programs—and says KCRHA will use $5.4 million from its own 2022 “underspend” to fund these programs.
• The proposal includes $4 million in 2023 alone for the LEAD and CoLEAD programs, which provide case management, services, and, in the case of CoLEAD, hotel-based lodging for people who are involved in the criminal legal system, including people experiencing homelessness. The Public Defender Association, which runs both programs, has said it will need to make dramatic cuts to either or both in the absence of full funding for both. Harrell’s budget provided just $2.5 million over two years for CoLEAD, stipulating that the money was supposed to be spent moving CoLEAD clients from hotels into tiny house villages; the balancing package increases the city’s total contribution to both programs but says the PDA must come up with “other ongoing funding sources” after next year. Continue reading “Council Budget “Balancing Package” Cuts Vacant SPD Positions, Restores Human Service Worker Raises”→
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.
