A workgroup of “civic, policy, community, and business leaders” tasked with unearthing possible new alternative revenue sources for the City of Seattle will present a report Thursday with nine “new or expanded taxes” for leaders to consider.
Meanwhile, the council is also scrambling to explain exactly why the city is in such a rough financial position.
The Seattle City Council’s Finance and Housing Committee will review the Revenue Stabilization Workgroup report Thursday morning as the city faces “a structural budget deficit upwards of $200 million.” The taskforce was convened last year to create and recommend options to narrow that gap.
“Given the looming gap between projected expenses and projected revenue, we all must find solutions to close this gap with additional revenue. I appreciate that this report outlines what options exist,” Councilmember and committee chair Teresa Mosqueda said in a statement. “New revenue is critical to creating a resilient economy and avoiding an all-austerity budget, which we know harms families, businesses, and slows growth.”
The city says the group came up with a list of over “60 potential ideas,” and then used evaluation criteria to narrow the list to nine new or expanded taxes, “all of which are options – not recommendations – that the City may consider implementing.”
Revenue Stabilization Workgroup Options
- Changes to JumpStart Payroll Expense Tax;
- City-level Capital Gains Tax;
- High CEO Pay Ratio Tax;
- Vacancy Tax;
- Progressive Real Estate Excise Tax;
- Estate Tax;
- Inheritance Tax;
- Congestion Tax; and
- Income Tax.
The full workgroup report is embedded at the end of this post with details on each of the possible alternative revenue opportunities.
The city’s 2023 budget plan provided money for more cops, and increased spending for human services but leaned heavily on the JumpStart tax on the city’s largest employers amid a predicted downturn in city tax revenues.
Wednesday, a city council statement on the committee session also included three factors that have Seattle City Hall facing a budget deficit:
The years preceding the pandemic, rapid growth in revenues and a low inflation environment, enabled the city to significantly expand city services in response to community needs (2012-2019).
The Covid-19 pandemic reduced ongoing general fund revenue while the service needs increased, requiring the use of one-time revenues to balance the general fund budget (2020-2024).
In the current post-pandemic period, portions of the City’s tax base are still below pre-pandemic levels, resulting in use of one-time funds to pay for ongoing spending. This transition to a low-growth, high-inflation economy, leads to structural deficit projection.
“The City is facing an annual budgetary cliff starting in 2025, with a revenue deficit average of approximately $224 million each year for the next six years,” the council announcement reads.
The Revenue Stabilization Workgroup member roster is below:
Co-Chairs:
- Teresa Mosqueda – Seattle City Councilmember, Budget Chair, At-large/Position 8
- Tiffany Washington – Deputy Mayor, Seattle Mayor’s Office
Workgroup Members:
- Louise Chernin – former Executive Director, Greater Seattle Business Association
- David Frockt – former Washington State Senator, 46th Legislative District
- Joe Fugere – Founder, Tutta Bella
- Katie Garrow – Executive Secretary-Treasurer, MLK Labor, AFL-CIO
- Lindsey Grad – Legislative Director, SEIU Healthcare 1199NW
- Alisha Gregory-Davis – Coalition of City Unions Representative
- Andrew Guillen – Chief Public Affairs Officer, Seattle Indian Health Board
- Hyeok Kim – Principal, Insa Consulting; former Deputy Mayor of Seattle
- Patience Malaba – Executive Director, Housing Development Consortium
- Darrell Powell – Managing Director, Pinnacle Financial Services, PLLC
- Rachel Smith – President and CEO, Seattle Metropolitan Chamber of Commerce
- Misha Werschkul – Executive Director, Washington State Budget & Policy Center
- Katie Wilson – General Secretary, Transit Riders Union
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Cut spending. There’s only so much the taxpayer can take until we throw in the towel and move 5 miles north/south/east.
For over a decade now the city has only spent more and more, refusing to even considering cutting spending. All while providing less services to those actually paying for everything. It’s about time we make some smart cuts and put this city back on the right track.
From the linked document:
This seems like a no-brainer? There has already been significant migration of upper-middle-class tech workers to the Eastside, where there seems to be less interest in funding the “homeless-industrial complex” (in favor of the “ship the homeless to Seattle” solution).
Basically they increased programs and spent like revenues would always be increasing at a rapid rate, like they did from 2012 to 2019. Now we have entered more challenging times, and anything other than more tax increases (don’t forget, they already imposed a massive tax increase via the “Amazon tax”) is described disparagingly as austerity. That is not austerity. It is called adjusting your expenditures to meet the budget allowed by current circumstances. But no, let’s raise the Amazon tax, tax CEO salaries, tax people with so-called vacant units, and raise the just doubled real estate excise tax again. Surely this won’t have an adverse affect upon our economy. As long as city government grows we will be just fine.
Keep it up, and it’ll kill the goose that laid the golden egg (Seattle). The state needs an income tax. It’s that simple. Otherwise you’ll be chasing fewer and fewer people (and businesses) with the money, until they’re done. Seattle acts like high-earning people and businesses don’t have options to move, and will just keep rolling over and paying. Eventually everybody who can afford it will move, because they will have had enough.
Bingo. For me, I have to admit Seattle vs. SF isn’t even that clear-cut anymore (unlike when I came here, 15+ years ago).
As someone who just wants a decent condo I can afford to buy within 2 blocks of a rail station (and not right next to a freeway), the Bay Area looks a lot more viable of a place to own a home compared to Seattle, incredibly.
Shame Washington State voters rejected the income tax last time by a 2 to 1 margin.
Why does spending need to grow 10% year over year in the future? Those are huge increases in spending. The graph shows that spending is forecasted to double between 2017 and 2027 while Seattle’s population is projected to grow only a little in that timeframe, even with inflation that’s still an enormous increase – and for what? What has gotten measurably better in that time?
Two things, First, Using the jump start tax to supplement the general fund would go a long way towards closing the “structural deficit.” That is the easy answer. Second, if rents rose as the same rate as that budget it would require massive city government intervention to restrain the out of control rise of rents. Why no similar effort to restrain this out of control budget. And yes a third thing. The income tax has been available for Seattle for several years but Council has declined to implement such a tax. Do it. Look at the projected revenue for that option versus the other options proposed. It is a broad based tax which would collect $10,000 from the wealthy and $750 from those of more moderate means. That seems pretty progressive to me, and will allow all of us to participate in solving this problem.
We found something to agree on Glenn! I’m all for an income tax, although from the report here it sounds like WA Supreme Court ruled municipalities cannot exceed 1% nor can they make it regressive, so still likely going to need a statewide push for a real income tax.
The 1 percent income tax would basically solve the deficit discussed in this article. It would raise over $500 million annually. That sounds like a solution to me, and it is broad based so everyone gets to participate in the solution. Happy to agree on that.
A flat 1% tax would also create a lot of need for those making the lowest incomes, and thus creating additional costs. Plus, having it just city-wide would likely lead to a small yet significant outflow to surrounding cities that will only exacerbate these issues there and worsen our regional traffic. I’m still for it, but I think statewide income tax is necessary.
Fees on drivers. Increase meter rates, resident permit prices, and commercial parking tax. Or else explain how keeping these fees low aligns with any city goal.