A predicted slowdown in tax collected on the sale of real estate means belt tightening at Seattle City Hall (Image: Seattle.gov)
The Seattle City Council’s process to finalize the city’s budget will be delayed a week and proposed additional spending will face even greater challenges as the latest budget forecasting at City Hall predicts a nearly $80 million revenue shortfall over the next two years over slowdowns in key sectors of the economy.
Budget chair Teresa Mosqueda announced the new forecasts and schedule Wednesday. The city is predicting “a net $64 million decrease in Real Estate Excise Tax revenues,” “a net decrease of $9.4 million in general fund revenues,” and “a net decrease of $4.5 million in revenues from the Sweetened Beverage Tax.”
Mosqueda said the council’s “balancing package” of proposed amendments for the new budget will be delayed a week to Monday, November 14th.
CHS reported here on the 100 amendments on the table to finalize the mayor’s budget proposal with its steps back on Seattle reforms including spending to create a larger SPD and a controversial new plan for how to redirecting funding from the city’s big business tax from COVID-19 recovery, housing, and the Green New Deal to patching up the city’s general fund. Harrell’s plans also call for nearly $40 million for “clean city, trash mitigation, encampment resolution, and RV remediation initiatives.”
In the statement, Mosqueda’s office call the decline in REET funding “especially sharp” and said the shortfalls will create “immense challenges for balancing the budget as the REET revenue stream has typically been used for capital projects in transportation and infrastructure.”
“Today’s revenue forecast demonstrates the instability and insufficiency of the existing revenue streams to meet the growing needs of Seattle’s residents and the inequities exacerbated by COVID-19,” Mosqueda said in a statement. “We will respond with urgency and compassion to this new revenue forecast by continuing to craft a budget that focuses on core city services, avoids austerity, and invests in a more equitable economy. Today’s revenue forecast news amplifies the need for more long-term, sustainable, progressive revenue for future budgets to ensure we can meet the needs of our city’s residents, infrastructure and local economy.”
The council is encouraging constituents to explore and provide feedback on proposed budget amendments here:
Understanding Council’s Budget Amendments: An Interactive, Visual Tool
You can access the tool on the Council’s website. It lays out all 100 amendments with detailed information about each one:o The department it pertains to
o The amendment number
o A short summary of what it does
o The Councilmembers who originally sponsored it
o A link to read a memo from Council’s policy staff
o And a link to watch the Council’s discussion of the amendment – timestamped to go right to that specific part of the meeting
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“a net decrease of $4.5 million in revenues from the Sweetened Beverage Tax.” I really don’t think our Council has any idea how business and consumers even work. That’s ultimately on us for electing them, but a statement like this should be a wake-up call Mosqueda is completely out of her element setting fiscal policy.
But the REET is a new progressive source of income intended to address the needs of Seattle residents. While the tax has existed for years, it’s rates were recently doubled on higher end real estate transactions and lowered on lower end transactions. The higher end rate went from 1.78 percent to 3.5 percent – quite an increase by any measure. Sorry if the normal real estate cycle got in the way of constantly increasing revenue.
Does crafting a budget to accommodate existing income streams constitute austerity? Not if you consider how Seattle’s city budget has inflated over the last five years. We all knew a slowdown would occur, yet Council continued to grow programs without regard to consistent longterm revenue. Now they’ll look for more money to support the programs. Big surprise.