Mayor Bruce Harrell’s 2026 City budget proposal involved several new revenue sources but has failed to address Seattle’s long-term structural deficit. The City projects the 2027 deficit will exceed $127 million, and economic turmoil and increasing chaos and hostility from the federal government further undermine the future financial stability of the city. 

As the Seattle City Council nears the finishing line for the city’s 2026 budget, some councilmembers seem determined to limit Mayor-elect Katie Wilson’s options once she takes office in January.

Harrell’s budget proposal used two direct new revenue sources: a 0.1% “public safety” sales tax increase and a business & occupation (B&O) tax restructure, dubbed the Seattle Shield Initiative and just greenlit by voters. Additionally, the new Families, Education, Preschool, and Promise (FEPP) Levy, recently approved by voters, more than doubles the amount of money the City will be collecting compared to the levy’s previous iteration.

Some of this new funding has been allocated in such a way as to free up General Fund, JumpStart payroll tax, and sweetened beverage tax dollars for other purposes. According to a Central Staff memo, these sources created an additional $148 million of new resources for the General Fund, some of which was used to backfill a Jumpstart tax shortfall and some of which was used for new spending priorities, including more money for the Seattle Police Department (SPD), the Community Assisted Response & Engagement (CARE) department, and the Downtown Activation Plan (including another boost to the City’s graffiti abatement program).

Wilson will have to grapple with a future budget deficit that grew in spite of the amount of new resources identified this year.

Budget Chair Dan Strauss’s balancing package, introduced earlier in November, included an additional $45 million in new spending, divided between each councilmember’s priorities. For his part, Mayor Harrell proposed $53 million in new spending, layering on top of about $100 million in new spending approved in his previous budget. 

The balanced 2026 budget relies on a one-time $141 million fund balance left over from 2025, as well as a permanent assumed $10 million annual underspend. Many of the items funded in 2026 utilize one-time funding only, including some of the Seattle Shield funding going to backfill federal cuts. If Wilson wants to continue any of these one-time investments in 2027, the deficit will increase. 

Central Staff called this approach “inherently unsustainable” since one-time funds create fiscal cliffs for ongoing programs:  “While the use of these new resources is a well-intended effort to support priorities that enhance the community, it must be made clear that few clear options, other than potentially drastic and immediate cuts, remain to respond to future fiscal challenges.”

Putting it more bluntly, PubliCola’s Erica Barnett described the budget as balanced only by accounting “tricks” and short-term patches, handing his successor a mess to clean up in an economic environment that is likely to be more challenging.

While Seattle’s most recent revenue forecast was more favorable than was expected, it included a high amount of uncertainty about the city’s economic trajectory. In October, Moody’s Analytics chief economist Mark Zandi said that states representing one third of the nationwide GDP are either in a recession or at high risk of one, including Washington state. 

The risk of the artificial intelligence (AI) technology bubble bursting is another concern. The seven largest tech giants, accounting for 37% of the S&P 500’s total value, are all heavily invested in AI technologies. Their spending spree has temporarily propped up the economy, but fears are growing about the possibility of the AI bubble bursting, causing painful economic fallout. 

In Seattle, such an occurrence would particularly impact the JumpStart payroll tax, since tech giants are the biggest payers of the tax. When passed, JumpStart was mainly intended to fund affordable housing, but Harrell has taken to using it to backfill the General Fund. 

Federal overreach darkens outlook

Earlier this month, in the shadow of the continuing federal government shutdown, both community members and local governments were working to try to mitigate the potential suspension of the SNAP food aid program, which would have led to many in the region going hungry. States are bracing for the SNAP and Medicaid (Apple Health) eligibility changes rolling out over the next year and struggling to keep up with policy changes that impact funding to a variety of different programs. 

A recent federal policy change that is likely to lead to deep cuts in King County’s housing and shelter programs–especially permanent supportive housing – illustrates both the caprice and the cruelty behind the federal government’s approach. 

Late last Thursday night, the U.S. Department of Housing and Urban Development (HUD) released its latest Notice of Funding Opportunity (NOFO) for its Continuum of Care (CoC) contracts. Seattle and King County receive $65 million in these contracts every year, of which about $60 million is used for permanent housing, per Jennifer LaBrecque from Seattle’s Office of Housing, who spoke to the budget committee last week. 

Rinck underscored the devastation these cuts would cause to social programs already spread thin, and pointed out that the idea came out of Project 2025, the 920-page ultra-conservative policy manifesto hatched by the billionaire-backed Heritage Foundation and embraced by the Trump administration. 

“After months of delay, the NOFO has finally been released late last night, after hours, and under the sweeping changes, it is estimated that 170,000 people across the United States could fall into or in many cases, back into, homelessness,” Rinck said. “To be clear, this is directly out of the Project 2025 playbook. The federal CoC program plays a major role in housing people who may not otherwise be able to house themselves, including families, veterans, people with disabilities, youth and older adults.” 

About $42 million of the CoC funding goes to permanent supportive housing throughout the region, which houses people with serious behavioral health issues that need extra assistance to remain housed. LaBrecque said 17 permanent supportive housing projects in Seattle currently receive $17 million of these dollars every year. 

The new NOFO only allows 30% of federal funding to pay for any kind of permanent housing, including permanent supportive housing. This new rule creates a gap of $23 million in the region’s spending on permanent supportive housing.

In addition, the NOFO has been released late, meaning current funding will lapse before new grants are awarded, causing a funding gap that will also jeopardize people’s housing. Less of the funding will now be available year-over-year as a stable basis of funding for programs and projects, instead being put through a competitive process every year.

The new rules also state that permanent supportive housing should only be provided for those who have physical disabilities and/or are elderly, even though this model of housing is specifically designed for people experiencing serious, and often permanent, behavioral health conditions. 

The New York Times reported that the new rules allow HUD to reject applicants that used criteria and policies to explicitly help transgender and specific racial groups, “previously or currently.” 

It is possible the new CoC rules might be delayed until later next year, and regardless, local officials will shift their applications for CoC grants to try to be competitive within the new rules. But uncertainty abounds as to how successful such an attempt will be. 

In order to meet this new funding threat, as well as others that loom on the horizon, Rinck proposed putting a proviso on $11.8 million in the Human Services Department, currently earmarked for a new short-term shelter program proposed by Harrell. The proviso prevents the money from being spent, creating a potential reserve of funds for addressing the CoC changes. Councilmember Bob Kettle whittled that number down to $11.1 million, but the amendment did pass. 

The budget already includes investments to backfill federal investments in shelter, emergency housing, and food. Strauss also added $1.06 million for a Federal Response Reserve last week.

Meanwhile, King County Councilmember Teresa Mosqueda added an amendment to the county budget that requests the Executive create a county contingency fund to address the CoC shortages. 

Councilmembers try to exert budgetary control over new mayor

In the latest phase of the Seattle budget process, councilmembers have added many amendments to the proposed budget that seem designed to limit Wilson’s options once she enters office. 

Perhaps the most striking attempt is Councilmember Rob Saka’s amendment to proviso $29.9 million in several different departments for Unified Care Team (UCT) activities. The UCT performs the City’s homeless encampment sweeps and cleanups and has been one of Harrell’s signature priorities. The proviso would prevent Wilson from spending these funds for other purposes. 

The UCT amendment passed on a 5-1 vote; Saka, along with Councilmembers Debra Juarez, Kettle, Sara Nelson, Maritza Rivera, and Mark Solomon voted yes, while Rinck voted no and Strauss and Joy Hollingsworth abstained.

Strauss said he abstained in order to avoid coloring the waters between himself and the new mayoral administration. 

“I look forward to working with the next administration to continue and improve the Unified Care Team and how it operates because there are some process improvements. Like anything we do in life, there’s always opportunity to improve, and there’s some good ways that we can,” Strauss said. “So I’m going to abstain from this because I don’t want to muddy those waters without starting into the conversation with the next administration.”

Outgoing Council President Sara Nelson introduced three successful amendments, seeking to dictate policy direction in her absence next year: 

• A proviso of $289,000 in the Seattle City Attorney’s Office to continue outgoing City Attorney Ann Davison’s Drug Prosecution Alternative,
• An amendment that prohibits the CIty from using funds for harm reduction supplies for people suffering from substance use disorder (with the exception of needles), and 
• A proviso of $4.1 million in SDOT solely for use for graffiti abatement. 

Kettle introduced two noteworthy provisos related to SPD spending that were included in the balancing package. One proviso earmarks $26 million of SPD funds to be spent for new sworn staffing, and the other sets aside $4.9 million in SPD for the “Technology Assisted Crime Prevention Program,” aka SPD’s surveillance program that includes CCTV cameras and the real-time crime center. 

While Nelson and Wilson’s terms won’t overlap, Saka and Kettle will be working with Wilson next year. Their amendments suggest possible concern that the new Executive has different policy priorities in mind when it comes to encampment sweeps and surveillance.

While the council holds the power of the purse, in practice, provisos only have so much power. Provisos prevent a mayor from spending certain dollars for other purposes, but the mayor can simply refuse to spend the money, full stop, a strategy that might be particularly appealing to Wilson given the unspent money can then be used to address the 2027 budget deficit. Former Mayor Jenny Durkan deployed this strategy on numerous occasions.

Even with budget guardrails via proviso, the Mayor has the ability to set department priorities, hire key personnel, and develop key policies. 

With two new councilmembers taking their seats soon – Dionne Foster replacing Nelson and Eddie Lin replacing Solomon – there is also a chance of 2026 budget provisos being lifted next year. 

When Wilson takes the helm next year, she has announced that she intends to address the city’s structural budget deficits through a combination of new progressive revenue and targeted cuts. 

“I’m very committed to making sure that we’re using our existing resources as effectively and efficiently as possible,” Wilson said at her victory press event last week. “So we’re going to be reviewing the ways that the city is spending money, and I think we’re going to have to do that given the size of the budget deficit. And I am not averse to ending spending on programs that were maybe well-intentioned when they were first implemented but aren’t fulfilling their goals. So we’re going to be doing our very best to be the best stewards of public resources we can.”

Wilson played an important role in passing the JumpStart payroll tax in 2020 and later served on the Revenue Stabilization Workgroup. On the campaign trail, Wilson was an enthusiastic proponent for more progressive revenue. 

“I do think that we will need to pursue new progressive revenue in order to fund our priorities and make sure that we’re delivering services to the people of Seattle,” Wilson said. “And you know, there’s several progressive tax options I proposed as part of my platform, and so we’re going to have city staff looking into developing those into legislation.”

Most progressive revenue proposals would either need some lead time to take effect (such as a city-wide capital gains tax) or need state law to be changed in Olympia. Wilson’s timeline will be important in determining the degree to which future budget woes will be able to be addressed via new revenue as opposed to cuts.

The post Katie Wilson to Inherit Seattle’s Budget Woes first appeared on The Urbanist.

Harrell offered his final budget proposal before he faces Seattle voters in November, contending with frontrunner Katie Wilson, who led by 10 points in the primary.

While the most recent revenue forecast significantly reduced the City’s deficit, Harrell was still forced to scramble to make up the difference. Earlier this year, he extended the City’s hiring freeze, along with cutting or slowing new contracts, training and travel budgets, and new technology projects. He also asked City departments to spend less than their allocated 2025 budgets. Altogether, these measures saved $30 million this year.

Harrell plugged the remainder of the $122 million deficit with $51 million from the new business and occupation (B&O) tax restructure proposal, which Seattleites will vote on in November. He also reduced total spending by around $37 million for next year.

This year, the state legislature allowed a new 0.1% “public safety” sales tax increase, which Harrell put forward last week. Sales taxes are widely considered to be among the most regressive of taxes, falling hardest on the poor and on working families, who spend a greater share of their income on taxable goods.

Should the city council approve the sales tax hike, it will allow Harrell to invest in a few new spending priorities, as will some of the new revenue from the B&O tax. Seattleites generally approve tax hikes to fund new services.

Contrasting with his initial conciliatory tone toward Trump, Harrell repeatedly flagged negative impacts from Trump policy changes and his effort to fight them.

“In the face of continued federal uncertainty, our 2026 budget reflects a commitment to our local values and building strong, resilient communities,” Harrell said. “With a focus on proven solutions for the challenges of today – from affordability and homelessness to accessible food and childcare – this budget will keep Seattle on a positive trajectory and protect our residents from the chaos and disinvestments we are seeing out of the other Washington.”

The biggest winner in this year’s budget proposal, marking a repeat of last year’s budget, is the Seattle Police Department (SPD).

New spending focuses on SPD, public safety

SPD will receive the largest general fund increase of any department, with a $34.5 million boost from 2025 funding levels. Part of this increase is due to the increased hiring of officers. SPD is on track to hire 76 net new officers this year, and they expect to reach similar numbers next year. This is in deep contrast to 2024, when SPD hired one net officer.

SPD’s budget might further balloon should the City and the Seattle Police Officers Guild (SPOG) finish their current contract negotiations, which Harrell has said he expects to happen before the end of the year. Already, public safety departments have grown to about half of the City’s General Fund as it stands.

Harrell’s proposed new spending primarily focuses on public safety and responding to threats to federal funding posed by the Trump administration. 

The public safety sales tax will fund several new investments in the public safety space, including doubling the number of Community Assisted Response and Engagement (CARE) first responders and adding 18 dispatchers at the 911 call center. The tax will also fund some of CARE’s ongoing expenses, freeing up dollars in the General Fund to use for other purposes.

The public safety sales tax is set to fund $5.9 million in new drug treatment investments, $2.1 million to add 20 new firefighter recruits, and $1.5 million to add a new “Post Overdose Treatment” unit to Health 99.

In addition, the new sales tax will give an additional $5 million to LEAD, a pre-booking diversion program. In July, Lisa Daugaard, the co-executive director of Purpose Dignity Action (PDA), which manages LEAD, told The Urbanist that LEAD needed $5 million to maintain the current level of service and start to prepare for greater case management needs when Trump’s Medicaid cuts hit. 

Meanwhile, the B&O tax restructure proposal, in addition to backfilling the General Fund, will also generate $28 million that the City plans to invest to help protect residents from federal-level budget decisions. The City is making investments to support immigrant communities, to increase food investments, to increase emergency rental assistance, and to backfill shelter and emergency housing needs. 

Harrell also plans to open three new noncongregate emergency shelters, which will provide 155 new housing units. Seattle has lost 128 beds since Harrell took office; this investment will finally move his administration into the black when it comes to shelter. 

Investment in affordable housing, in contrast to spending at SPD, stays steady in this budget, with the total investment increasing by $5 million, which doesn’t entirely account for inflation. 

Harrell touted $350 million in affordable housing investment, including a down payment on a promised $80 million four-year investment in a new Anti-Displacement and Reparations Housing Fund, which Harrell intends to help Black residents who have been historically redlined in Seattle. These funds could help Black residents afford down payments and rent. The mayor has allocated $250,000 to do planning and stakeholdering around the details of how to spend the rest of this money. 

Harrell pitched $350 million as record affordable housing investment, though it only beat the previous year by $1 million, ignoring inflation. In inflation-adjustment dollars, the Seattle Office of Housing’s spending power is down.

Continuing budget struggles

Seattle has been struggling with budget deficits since the Covid-19 pandemic in 2020, with no relief in sight. Last year, Harrell and the council chose to transfer $304.6 million from the JumpStart payroll tax revenue to both plug the large General Fund deficit and add more spending to other priorities. The original JumpStart spending plan, passed in 2021, had allocated those dollars to affordable housing, Green New Deal investments, the Equitable Development Initiative, and small business support.

Last year’s siphoning of JumpStart funds included removing nearly $190 million originally intended for affordable housing. 

Harrell’s proposal this year moves almost half of JumpStart funds to the General Fund.

Looking forward, there is already a projected deficit of $140 million in 2027, a position that could easily grow worse through some combination of tariffs, an economic downturn, and federal and state spending cuts, including massive cuts to the federal safety net through Medicaid and SNAP. 

“Every year there’s been a forecast of another revenue shortfall, or revenues not rising as fast as costs,” said Dan Eder, director of the city’s budget office. “That’s a future issue, that each time we get to the future, we address it.” 

However, in this case, the problem might not be so far in the future. The balancing of the budget depends on voters approving both the Families, Education, Preschool, and Promise (FEPP) levy and the B&O tax restructure, known as the Seattle Shield Initiative, in November. 

The proposed FEPP levy would mark an 145% increase from the last FEPP levy passed in 2018. Harrell is planning to use FEPP levy funds to pay for mental health services for students and school safety investments, which could include money to SPD to pay for school enforcement officers (SEOs).

The budget proposal also does little to grapple with greater federal cuts that could be coming. Harrell is currently proposing $28 million for this purpose. However, when asked to estimate the amount of federal dollars in the City’s budget at a press event last week, the mayor acknowledged the scale of the risk is significantly larger. 

“We’re looking at hundreds of millions of dollars that are in jeopardy,” Harrell said.

In addition, while the most recent city revenue forecast was less dire than it had been earlier in the year, a great deal of uncertainty remains around what the revenue picture will actually look like come January. 

“When developing a budget, decisions should recognize that the risk is really high there will be a downward revision, not necessarily to the extent of a pessimistic scenario, but somewhere

in between,” interim Office of Economic Revenue Forecast director Jan Duras said in early August.

Washington State’s forecast council just released a new forecast anticipating an additional drop of $900 million in state revenue over the next four years, citing a slowing national economy. 

The city’s budget office referenced a weakening labor market and expectations of higher inflation in their budget overview presentation. However, they planned their budget proposal without accounting for the likelihood of the downturn predicted by Duras. 

The City’s last budget forecast of the year is due October 20. If the forecast worsens, the city council will be on the hook to make cuts or generate additional revenue to reach a balanced budget. The same is true should either the FEPP levy or the Seattle Shield Initiative fail at the ballot box. 

This strategy allows Harrell to present a rosy budget proposal in advance of the November election, but it might lead to difficult choices for the council later in the fall, with the brunt of the effort likely to fall on Budget Chair Dan Strauss’s shoulders. 

The council will have a few reserve funds they could choose to use to shore up smaller shortfalls. Harrell’s budget includes small contributions to both the City’s rainy day fund, which will then stand at $71 million, and the emergency fund, which will then stand at $87.7 million. The proposal would also add $9 million to the JumpStart’s stabilization account, a payment that councilmembers could choose to defer. 

However, councilmembers will also have to consider the upcoming deficit for 2027. 

Eder said the City will continue to advocate for changes in state law to allow the City to impose new and different taxes, citing the lifting of the property tax cap, which is currently limited to an increase of 1% per year. 

Harrell’s opponent, Wilson, has been advocating strongly for more progressive revenue options, including a city-level capital gains tax. Wilson also supported Proposition 1A earlier this year, which passed a new business tax on top salaries in order to fund social housing. Harrell opposed the measure, becoming the public face for the opposition’s campaign.

Proposition 1A passed with a 26-point margin in February. 

The council will now take up its budget deliberations, with two public hearings planned on October 7 and November 6. The council’s final vote on the 2026 budget is scheduled for November 21.

The post Harrell Budget Doubles Down on Police Spending first appeared on The Urbanist.

On Monday, the Seattle City Council voted unanimously to send the Seattle Shield Initiative, a new progressive revenue proposal, to Seattle voters this November. 

Championed on council by new Councilmember Alexis Mercedes Rinck and with support from Mayor Bruce Harrell, the initiative would restructure the city’s Business & Occupation (B&O) tax in such a way that 75% of the city’s businesses would no longer have to pay the tax, with 90% paying less than they do today. The remaining 10% of businesses, those that generate more than $2 million in annual gross revenue, would pay more. 

The Seattle Shield Initiative will raise an estimated $81 million in new annual revenue. The proposal calls for spending $60 million to backfill the city’s General Fund in various specified categories, while up to $20 million will be used to address the financial impacts of federal funding reductions and policy changes. 

“This legislation began with three simple goals in mind,” Rinck said at a council meeting last week. “First, to shield critical city investments from cuts in a very challenging budget environment. Second, to shield small businesses from the impacts of rising costs to ensure they can continue to fuel our region’s vitality. And third, to shield our community from massive cuts in federal funding that are coming our way that will increase demand on city services from the most vulnerable of our constituents.”

As originally drafted, the initiative was intended to guarantee continued funding for emergency shelters and homelessness prevention, food access, addressing gender-based violence, and supporting small businesses and workers’ rights. 

Council adds more buckets, decreases funds collected

Last week’s meeting saw council adding a host of amendments to the initiative that both increased the number of allowable uses for the funding and reduced the total amount of funds available.

During public comment, Hali Willis, the community policy manager for the Seattle/King County Coalition on Homelessness, expressed worry at such a strategy. 

“We need to prepare ourselves for an influx of people relying on homelessness shelter and homelessness services when they lose their emergency housing vouchers and an influx of people relying on food banks and meal programs when they lose their SNAP benefits,” Willis said. “I’m so glad that we have this $90 million progressive proposal on the table today, and I urge you to send it to the voters, but frankly, I’m really scared of what will happen if this revenue proposal is reduced or further peanut buttered across many different worthy causes.”

Councilmembers proceeded to do exactly what Willis warned against. 

To the bucket of allowable uses for the dollars backfilling the general fund, Councilmember Joy Hollingsworth added public health, arts, and culture, and Councilmember Maritza Rivera added workforce development and job readiness training. 

To the bucket of allowable uses for the dollars used to offset federal fund reductions, Council President Sara Nelson added substance use disorder treatment, Councilmember Rob Saka added transportation, and Rivera added immigrant and refugee services.

Some of those programs have steadier funding in existing sources. Seattle voters passed a record-breaking $1.55 billion transportation levy last year and are being asked to vote for a new Families, Education, Preschool, and Promise (FEPP) levy this November that more than doubles the previous levy’s investment.

Rivera also clawed back nearly $10 million of the B&O restructure’s additional revenue by adding exemptions that were specifically tailored to benefit Fred Hutchinson Cancer Center and Seattle Children’s Hospital. 

“Both organizations are experiencing federal impact impacts, as we have said, due to cuts to research and severe Medicaid cuts,” Rivera said. “It is critical that we ensure we are taking care of cancer research and patients, including those who can’t afford care, and for children who need dedicated, specialized care, in the face of federal research and Medicaid cuts. This is the very problem this bill is claiming to address — that is impacts to our residents, including our kids, based on federal cuts and policy changes.”

Because Rivera introduced these two amendments late in the process without earlier disclosing them to her council colleagues, Rinck was not able to easily adjust the B&O tax rates to make up the difference in revenue, meaning the expected $90 million from the legislation was whittled down to $81 million.

“I would note that between these two amendments we’re creating carveouts for two organizations only, and the amendment sponsor, as well as all of us on the dais, will have to answer to why every other hospital and nonprofit in the health space, why they’re not getting the same treatments,” said Rinck, who abstained from the votes. “I would argue that if this body wants to support the entire health sector, we should do so in a comprehensive way and separate from this legislation.”

Councilmember Dan Strauss attempted to add a tax credit for stevedoring, which he said would stabilize commerce coming and going from the port. Central staff estimated this credit would reduce the B&O tax revenue by another $1.5 million. However, the amendment failed to pass, with only Strauss, Saka, and Councilmember Mark Solomon voting in favor. 

Councilmember Bob Kettle offered a successful amendment that removed the initiative’s sunset clause. Instead, the tax break for small businesses would be permanent while maintaining the current tax rate for seven years. In 2033, the tax rate would be reduced to an intermediate level that would no longer generate the extra $81 million in revenue but would still be able to cover the cost of the tax break for smaller businesses.

While all the councilmembers voted in favor of the final bill, some had more misgivings than others, with Nelson lamenting the possibility of “unintended consequences” and the change’s impact on the overall economy. 

New budget forecast and its political ramifications

“This is a significant win for Seattle’s small businesses and our broader community. By reducing taxes for 90% of businesses, we are helping local entrepreneurs thrive and compete while ensuring they can continue to contribute to the fabric of our neighborhoods,” said Harrell. 

Harrell held a bill signing ceremony directly after the council vote on Monday, conveniently timed to take place a day before the primary election.

Harrell is facing an unexpectedly strong challenge in this year’s mayoral race. Transit Riders Union General Secretary Katie Wilson, who played a key role in the passage of the major progressive JumpStart payroll tax in 2020, entered the race in March.

Recent polling showed the two candidates in a statistical tie, putting pressure on Harrell to deliver tangible results to win over voters.

The Seattle Metropolitan Chamber of Commerce, traditionally one of Harrell’s supporters, opposed the Seattle Shield Initiative. 

“Raising the B&O on any employer right now is a bad idea – especially given the economic facts presented last week by the City of Seattle itself,” Rachel Smith, president and CEO of the Seattle Metropolitan Chamber of Commerce, said in June. 

However, Smith has endorsed Harrell’s mayoral run.

Harrell also benefits from the slightly rosier budget forecast delivered on Monday, which downgraded the estimated 2025-2026 deficit from April’s $240 million forecast to $150 million. 

The Office of Economic and Revenue Forecasts (OERF) recommended the baseline scenario for the new budget forecast, as opposed to the pessimistic scenario, which was their recommendation in April. Harrell will be able to base his proposed budget, due on September 23, on the improved outlook. 

Harrell also has the option to exercise the 0.1% public safety sales tax with the new authority granted by the state legislature. Last week the council passed Nelson’s resolution preempting up to 25% of the proceeds of the tax, should it be implemented, for addiction treatment services. 

However, Harrell might have to tread lightly, as a regressive sales tax increase might prove less popular with swing voters.

The last economic forecast of the year, scheduled for later in October, is still the source of much uncertainty. 

“When developing a budget, decisions should recognize that the risk is really high there will be a downward revision, not necessarily to the extent of a pessimistic scenario, but somewhere

in between,” said interim OERF director Jan Duras. 

Sales tax revenue has been weak for more than a year, at least partly due to a downturn in the construction sector. Demand for commercial space in Seattle remains the lowest among tracked cities, and fewer international visitors are expected in Seattle in 2026 due to the volatile political climate. 

The new tariffs announced on July 31 and the recent weak employment numbers add additional risk to an uncertain economy. At the same time, the Jumpstart payroll tax is sensitive to the stock prices of tech companies that are currently growing due to the promise of artificial intelligence (AI) software, which some observers think is a bubble due for a correction.

However, any downgrade to the revenue forecast in October will become the problem of the council, who will be responsible for any additional cuts or layoffs that may need to be proposed to balance the budget. 

The council would also need to fill the subsequent budget hole should the Seattle Shield Initiative fail to pass in November. 

Still, this initiative represents a major victory for progressive newcomer Rinck, who was able to garner Harrell’s support and build enough momentum to achieve a unanimous vote on a progressive revenue proposal.

New councilmember Debora Juarez remarked on how impressive an achievement Rinck’s policy was “out of the gate.”

In contrast, former Councilmember Cathy Moore’s proposal last November to institute a city-wide 2% capital gains tax narrowly failed to pass, with a close 4-4 committee vote. At the time, Harrell didn’t support the proposal.

Voters will get their chance to weigh in at the ballot box on the Seattle Shield Initiative on November 4.

“Collectively, with a vote for this, we’ll have shown that local government can step up when federal leadership steps back,” Rinck said. “This is our opportunity to show that Seattle remains a city that chooses collaboration over division, that invests in each other, and that builds a future we all deserve. And I believe that when we give Seattle voters the choice they deserve, they will choose to shield our city and protect what matters most.”

The post Seattle Council Greenlights Rinck’s B&O Tax Overhaul first appeared on The Urbanist.

The proposed restructure of the B&O tax would result in a more progressive tax due to a higher exemption. Seattle’s current B&O tax has an exemption of $100,000, meaning businesses that don’t earn more than $100,000 in annual gross receipts don’t owe any tax. Rinck is proposing raising this exemption to $2 million, which would create new tax exemptions for many small businesses. 

Under the Shield Initiative, 76% of small businesses in Seattle won’t pay any B&O tax, and 90% of small businesses will pay fewer taxes in 2026 than they pay right now. Meanwhile, about 2,300 businesses will pay higher B&O taxes. 

The restructured B&O tax is expected to generate an additional $90 million per year by increasing the tax rates for those businesses still eligible to pay the tax by around 50%. This rate hike is not dissimilar to the change in the state-level B&O tax made by the Washington State Legislature earlier this year. 

A ballot measure to increase the B&O tax is not unprecedented in Seattle. In 1989, Seattle’s city council sent a B&O tax increase to the voters in order to fund additional public safety investments. 

“Today, we are facing a defining moment for Seattle,” Rinck said. “While federal cuts threaten the services our working families and most vulnerable neighbors depend on, we have a choice. We can either stand by and watch essential programs disappear, or we can give Seattle voters the power to protect what matters most.”

The new revenue will be earmarked for three priority buckets of funding: housing, which includes housing stability for low-income tenants and funds to stabilize affordable housing providers; the Human Services Department, with prioritization for homelessness, food assistance, and services for survivors of gender-based violence; and small business support, including funding for vulnerable workers’ rights. 

The priority buckets reflect concerns about potential federal cuts on the horizon, including to the SNAP food assistance program and the United States Department of Housing and Urban Development (HUD) emergency housing vouchers program. Funding for workers’ rights could potentially assist immigrant and refugee workers who are at increased risk of abuse from employers and detainment by the federal Immigration and Customs Enforcement (ICE) agency.

“Here’s what I want people to understand,” Rinck said. “The programs we’re protecting with this initiative, they work and they change lives, and we need them now. The $90 million generated annually will protect services that keep families fed, housed and safe. As the Trump regime cuts federal funding for food banks, emergency shelter, and housing programs, local investment becomes the difference between maintaining these lifelines and watching them disappear.”

Should the levy pass, the city council will develop a detailed spending plan for the levy funds in early 2026 based on these buckets. This revenue strategy would avoid the troubles experienced around the JumpStart payroll tax, whose priority buckets can be changed by a vote of City Council. That flexibility has meant payroll tax revenue is often used to backfill budget holes and whatever General Fund expenses the mayor and council deem necessary instead of going to its spending plan priorities, which originally focused on affordable housing. 

The additional funds from a B&O levy would start being collected immediately in 2026, meaning that for the first year, the additional revenue would be allocated in the 2026 adopted budget. The council is scheduled for a final vote on that budget on November 21. 

Harrell touted the Seattle Shield Initiative as “a new proposal to support small businesses and raise progressive revenue to respond to Trump’s threats and the ideological bullying that we see.”

Shifting political lines?

Beyond offering the prospect of budgetary boost, the Seattle Shield Initiative also could be a lifeline for Mayor Harrell’s reelection chances. Recent polling has shown Harrell running neck and neck with leading challenger Katie Wilson, the long-time leader of the Transit Riders Union and several progressive coalitions.

Harrell’s support for a new tax hike on large companies has not earned him praise from the Seattle Metropolitan Chamber of Commerce, which came out hard against the proposal. However, it could help present a progressive face heading into an election fight with a challenge flanking him from the left. After winning election in 2021 as a business-friendly centrist, Harrell hasn’t worked with progressives much during his term, but partnering with Rinck could mark a new tactic.

Chamber president and CEO Rachel Smith criticized the proposal, which she called rushed, but it appears highly unlikely Wilson would earn support from big business after leading the Jumpstart payroll tax push.

“Raising the B&O on any employer right now is a bad idea — especially given the economic facts presented last week by the City of Seattle itself: regional employment has declined, Seattle office vacancy is one of the highest in the U.S., consumer spending has weakened, there are fewer international visitors expected, and economic uncertainty looms from tariffs,” Smith said in a statement. “And this proposal comes just months after the legislature passed the largest tax increases in state history.”

On the other hand, Wilson hit Harrell for his late arrival to the progressive revenue discussion, and she painted him as dragging his feet and then trying to take credit for Rinck’s initiative.

“We’ve known about the City’s structural budget shortfall since 2022, and we’ve had almost eight months to contemplate the additional threat of federal cuts,” Wilson said. “In the absence of leadership from Mayor Harrell, Seattle is lucky that Councilmember Rinck has stepped up to propose new progressive revenue to help sustain vital services that our residents depend on.”

In addition to playing a key role in passing the JumpStart payroll tax in 2020, Wilson later served on the Revenue Stabilization Workgroup, which listed restructuring the B&O tax among its possibilities of new progressive revenue for Seattle. Those revenue proposals gathered dust for the last two years.

“It’s clear that Harrell is terrified he won’t win re-election, and he suddenly feels the need to show progressive leadership by backing this proposal from Councilmember Rinck,” said Wilson. “It’s disappointing that it takes the threat of being unseated for our mayor to do the right thing. We need a mayor who will responsibly manage the city budget and lead on progressive revenue every year they are in office, not just in an election year.”

Senior Deputy Mayor Tim Burgess all but admitted the Harrell Administration had been kicking the can down the road, telling the Seattle Times they had “cobbled together” budget patches over the previous budgets without raising taxes, but ran out of wiggle room.

“We’re sensitive to that issue [of business impacts], but we have to ask, what are our options?” Burgess told the Seattle Times.

Budget storms ahead

At April’s revenue forecast meeting, the Office of Economic and Revenue Forecast Council director Jan Duras informed the council that total revenue projections for the upcoming 2025-2026 biennium had been lowered by $241 million.

Earlier in June, interim director of the City Budget Office Dan Eder told the council that in spite of several actions taken by Harrell — including freezing non-essential travel and training, new program spending, and new contracts, as well as extending the hiring freeze — the projected budget shortfall had grown to $150 million through the end of 2026. 

Harrell has requested that City departments plan for a 5% budget underspend for 2025. He’s also asked departments to identify cuts for spending supported by both the General Fund and the JumpStart tax, including an 8% reduction for most departments and a 2% reduction for some departments related to homelessness and public safety, as well as certain very small departments. 

Two revenue forecasts, one in August and one in October, remain before the council finalizes the 2026 budget. 

Between President Donald Trump’s on-again, off-again tariffs, as well as his One Big Beautiful Bill that could cut large amounts of federal spending and immigration policies that are already leading to a shortage of workers in some sectors, economic uncertainty is high, weakening the City’s confidence in the news those forecasts might hold. 

What is a $150 million deficit now could easily expand by the end of the year, making the council’s job of closing the budget gap even more difficult. The Washington state revenue forecast released on June 24 showed an additional $720 million deficit over the next four years compared to the estimate upon which the state legislature passed their budget only a few short months ago. 

The Seattle Shield Initiative will only collect an additional $90 million per year, which doesn’t address the entirety of the 2026 deficit, even if it doesn’t grow any larger. 

The 2026 budget Harrell is proposing in September will assume voters approve the Seattle Shield Initiative.

“This is a smart, sensible progressive proposal from Councilmember Rinck and the Mayor to raise critical revenue from our region’s biggest businesses while lowering costs for our small businesses,” said Rian Watt, executive director of the Economic Opportunity Institute (and board vice president at The Urbanist).

Other revenue possibilities 

With the Shield Initiative falling short of covering the entire budget deficit, the Harrell Administration is eyeing two other tax measures to allow for new investments.

Earlier this week, Harrell signed legislation that places the Families, Education, Preschool, and Promise (FEPP) levy on Seattle voters’ ballots in November. The FEPP levy will cover six years and make a record $1.3 billion investment in Seattle’s youth. 

As part of this large increase (the last FEPP levy invested $619 million over seven years), the FEPP levy provides investment in areas not formerly covered by the levy. The council raised the JumpStart tax by a small amount at the end of 2023 in order to provide $20 million for student mental health services. The new FEPP levy proposal seeks to transfer at least some of these youth mental health investments to the levy and away from JumpStart support by providing $188.5 million (approximately $30 million per year) for school health clinics and mental health services.

The FEPP levy also contains $46.6 million for school safety investments. Rinck proposed an amendment to the levy that would have prevented any levy funds from being used to contribute to the school-to-prison pipeline, but her fellow councilmembers, wanting the option of using levy dollars to pay the Seattle Police Department (SPD) for school emphasis officers (SEOs), didn’t support the proposal.

Councilmember Joy Hollingsworth proposed a change to Rinck’s amendment that struck the school-to-prison pipeline language, while retaining equity language, as well as stating that in implementing the levy, councilmembers would “ensure that safety investments prioritize addressing the root causes of violence and nonpunitive approaches, including but not limited to restorative practices.”

The revised amendment passed with four votes in favor, from Councilmembers Hollingsworth, Bob Kettle, Dan Strauss, and Rinck. 

Seattle also has the option to institute a new 0.1% public safety sales and use tax established by the Washington state legislature during their last session. Proceeds from this tax must be used for “criminal justice purposes,” but this category is defined broadly, to include such uses as domestic violence services, public defense, diversion and reentry programs, programs reducing homelessness and improving behavioral health, and alternative crisis response. 

Eder said this new tax is expected to generate $38 million in ongoing revenue. While it could legally be used to pay for expanding the Community Assisted Response and Engagement (CARE) alternative response program, increasing diversion programs, or shoring up the City’s homelessness and behavioral health programs, it is perhaps more likely that at least part of this money would go to SPD.

King County Executive Shannon Braddock has already transmitted the proposal to institute the public safety sales tax in King County. If Seattle were to institute the tax as well, Seattle goods and services would be subject to an increased 0.2% sales tax as a result. And given a proposal in King County to increase the sales tax another 0.1% to provide transportation services, residents of both Seattle and King County could see a noticeable jump in the sales tax they pay. 

Sales tax is considered a regressive tax since it takes a higher percentage of income from low-income residents than higher-income residents.

“[The public safety tax] is being considered, is on the table for discussion, but because we understand the regressive nature of it, we are treading very carefully,” said Harrell.

Another option for more revenue would be to reconsider a city-wide capital gains tax. Such a tax would not be able to be implemented immediately, but it could help plug the budget gap starting in 2028. 

Councilmember Cathy Moore proposed such a capital gains tax last fall, when it was estimated it would bring in anywhere between $16 million to $51 million per year. Moore’s capital gains tax legislation failed in committee in a 4-4 vote, with Councilmembers Hollingsworth, Tammy Morales, and Strauss also supporting it. 

At the Wednesday press conference, the Mayor left the door open to the possibility of increasing the JumpStart payroll tax, whether in order to address potential federal cuts of Medicaid and Obamacare or to further bridge the city’s budget deficit.

“We’re not excluding anything or including anything,” Harrell said.

Harrell didn’t signal support for Moore’s capital gains tax proposal last year. How much support for other progressive revenue options that he’ll offer will become more clear when he announces his 2026 budget proposal at the end of September. 

Should it make the November ballot, voters will get the opportunity to choose whether to support the Seattle Shield Initiative. February’s Prop 1A might give a clue as to how voters will lean. The measure, which enacted a new excess compensation tax to fund social housing, passed by a resounding 26 points.

The post Rinck, Harrell Propose Progressive Business Tax Overhaul to Bolster Seattle Budget first appeared on The Urbanist.

The City of Seattle and King County, like cities and counties across the nation, are reeling from both immediate and anticipated impacts from the second Trump administration. From precarious local budgets to the loss of civil rights of our most marginalized communities to the risk to basic services many people depend on, we are living in a vastly different landscape than we were a few short months ago. 

But local elected officials are stepping up to try to chart a course forward. 

Seattle’s new Committee on Federal Policy Changes

On January 31, less than two weeks after Donald Trump took office as President of the United States, Seattle Councilmember Alexis Mercedes Rinck proposed creating a new Select Committee on Federal Administration and Policy Changes. 

“Many organizations, programs and people within Seattle rely on federal funding to carry out their work and live healthy lives,” Rinck wrote at the time. “What is clear is that major changes are underway on the federal front, and local leaders must be tuned in.” 

President Sara Nelson agreed to form the new committee, with Rinck serving as its chair. Its first meeting will be this Thursday, March 6 at 2pm and will feature round tables for community partners and City offices focusing on the issues of LGBTQ rights, reproductive rights, immigrant rights, and labor protections. 

“As the chair of the select committee on Federal Administration and Policy changes, I’m focused on how federal policy shifts directly impact Seattle residents’ everyday lives,” Rinck told The Urbanist. “This committee was specifically established to address all the cascading effects from these federal administration policy changes on our community services and protections. We’re trying to take a more proactive approach to identify challenges and develop local responses that safeguard Seattle residents’ rights and well being.”

Financial impacts on Seattle

Last week Seattle joined a lawsuit with 15 other cities and counties that is challenging retaliatory actions of the Trump administration against so-called “sanctuary cities,” which include withholding federal funds from municipalities that don’t cooperate with federal immigration officials carrying out civil immigration enforcement.

“The loss of millions in federal grants and support would have an immediate and devastating impact on these vital [safety] programs,” Mayor Bruce Harrell said in a press release. “When Seattle’s local values, policies, and priorities are challenged by illegal federal actions, we will not hesitate to do everything in our power to defend our people and our rights.” 

Seattle received $207 million in federal funds in 2023, although $50 million were one-time Covid relief dollars. Of the remaining $157 million, $26 million were allocated to transportation, $23.5 million to medical assistance, $12.25 to public safety and security programs, $11.5 million to housing, $9.2 million for programs to assist the elderly, and $8.9 million to the clean water state revolving fund. 

The report on federal funds received by Seattle in 2024 should be completed in the next few months. 

Rinck highlighted two different streams of funding that her committee will be considering. “There’s the funding that the City of Seattle as a government receives directly from our federal government, and then there’s the ways in which federal funding is showing up within our city broadly, whether it be at research institutions or any of our service providers that have direct federal grants,” Rinck said.

An example of the latter is funding for food programs. The U.S. House of Representatives passed a budget resolution last week that would slash the Supplemental Nutrition Assistance Program (SNAP). Also last week, Governor Bob Ferguson proposed a $52 million cut in funds provided for food banks by the state in the 2025-2027 biennium. If either or both of these cuts proceed as planned, people throughout Washington State, including in Seattle, will experience greater food insecurity.

Across the region, the hit on housing could be severe. Rinck referenced Enterprise Community Partners’ recent announcement that they have lost their Section 4 nonprofit capacity building grants. They’ve deployed these grants, along with technical assistance, throughout the country to build and preserve affordable homes as well as community resources like child care centers, health clinics, and homes for the elderly. 

Rinck also expressed concern that Congress might not reconfirm some of the area’s housing vouchers. 

“We are talking about people becoming homeless, a major loss to our housing resources,” Rinck said. “We’re talking millions of millions of millions of dollars, thousands of people that are housed through federal resources that flow through local agencies. That is a frightening reality to just think about the precariousness of all of that housing.” 

Rinck’s worry over housing dollars seems well-founded given the recent news from King 5 that the Trump administration intends to make major cuts to Housing and Urban Development (HUD) programs and offices in the Pacific Northwest. In HUD’s Seattle office, 150 people are expected to lose their jobs, and King 5 reported that two sources believe the targeting of this region could be due to Washington’s politics.

Harrell’s press secretary Callie Craighead was more optimistic about Seattle’s exposure to loss of federal funding. “Strong constitutional protections exist that limit the federal government’s ability to coerce cities by conditioning funds,” Craighead said. “We will continue to assess actions that impact Seattle’s access to federal funding that supports all of our residents and respond appropriately.” 

But if federally-funded programs are simply cut across the board in the federal government’s next budget, local municipalities will be unable to avoid potentially disastrous impacts on their residents.

What will a cash-strapped Seattle do? 

Craighead said the City is not aware of any federal funding to their departments being frozen or impacted at this time. 

However, there appear to be some public works projects that have already been affected. The Native American Carving House project, set to build a Northwest Native Canoe Center in South Lake Union, is having trouble unlocking some federal funding, causing the winning contractor on the project to be asked to hold their bid longer than usual. 

The Seattle Center Monorail Station reconfiguration, a $15 million project of planned accessibility improvements, has not yet had its federal funding released. Its schedule must be planned around the World Cup games next summer, meaning that further delays at the start of the project could cause complications.   

And if future federal funding gets cut, whether that’s direct funding to the City or to programs within Seattle more broadly, the City will be on the hook to figure out if there’s a way to bridge the gap. 

Last fall, Rinck campaigned on the need for more progressive revenue in Seattle. “A lot of folks see that there’s a tremendous amount of wealth in this community and a real need to be investing in our basic services, and we’re not meeting the needs of our full community,” Rinck said. 

The recent success of Seattle’s Proposition 1A at the ballot has set a new corporate tax in motion that will invest in social housing. The 26-point win could also indicate public support for additional progressive taxation to invest in community needs

“There is a real appetite from Seattle voters to be making sure that billionaires and corporations are paying into the solutions to address our most pressing challenges,” Rinck said. “We’re going to have to keep talking about progressive revenue solutions because the funding will need to come from somewhere, and if we’re in a place where we need to reduce our reliance on the federal government, to keep services and life as we know it going, then that’s what we need to do.”

Raising taxes often stirs up backlash  and contentious conversations, but Rinck referenced the gravity of the moment as requiring leaders to lead. 

“We’re talking about a direct assault on working people, immigrants, LGBTQ folks, and reproductive freedom. People are struggling right now. Federal workers are facing uncertainty. Families are worried about losing health care, housing, and so many marginalized communities are under an unprecedented attack,” Rinck said. “With so much on the line, it would be irresponsible if we did not consider the full range of funding options to be able to keep our services and programs going. So that’s what people can expect from me this year trying to go about addressing this.”

King County’s budgetary woes

Worries about federal dollars for King County come as it is already struggling to address a $150 million budget deficit over the 2026-2027 biennium. Executive Dow Constantine has been preparing a budget proposal that includes large cuts across the board and would eliminate all county general fund revenue ($17.6 million) going to Public Health – Seattle & King County (PHSKC). Constantine’s proposal cuts $25.2 million from King County Community and Human Services (DCHS).

The largest departmental cut proposed is to the King County Sheriff’s Office (KCSO), where the proposal would cut $30.2 million. Around 72% of King County’s General Fund is used for criminal legal and public safety services including the KCSO, the King County Superior Court, the King County Prosecutor’s Office, Adult and Juvenile Detention, and the Department of Public Defense. Total anticipated cuts for public safety in Constantine’s proposal add up to over $85 million for the biennium.

One hope to begin to staunch the ever-worsening outlook for the King County budget is HB 1334, currently in the state legislature, would increase the amount the county could raise property taxes. Were it to pass this year, it is estimated to bring in an additional $25 million for the 2026-2027 biennium. The rate increase would compound over time, meaning it would help alleviate future budgetary strain that would otherwise continue to worsen.

At the end of January, King County Councilmember Claudia Balducci called for a “stress test” of King County funding sources to analyze the county’s exposure to federal funding volatility and plan a response. 

“The most alarming thing I heard was from one of the organizations in my district that serves youth in homelessness. They said that if their federal disbursements were stopped, they would have to close their doors within days, not weeks. And you know, that means putting young people directly onto the street,” Balducci told The Urbanist. “That was the thought about what we could do to just show people that we are going to be as ready as we can be.”

King County Budget Director Dwight Dively presented before the King County Council last week about the county’s access to money already appropriated in current or past federal budgets. In 2025, King County is expected to receive over $200 million in operating funds from the federal government, as well as hundreds of millions of dollars in current and future capital projects. 

Many of those capital dollars are for King County Metro, which is expecting two $50 million federal grants in 2025. Metro has about $130 million in federal revenue budgeted in 2025, much of which is for the purchase of new buses. 

Several other county departments have a lot of exposure to federal dollars. The Climate Office is supposed to receive over $50 million in federal grants for their work. DCHS is set to receive $100 million of non-Medicaid federal funds.

“Federal funds primarily support housing and homelessness efforts and behavioral health services, with some additional federal resources coming through the state to support individuals with intellectual and developmental disabilities,” said Kelly Rider, DCHS’s department director. “Any loss of federal funds will have harmful impacts on the people who rely on those services.”

PHSKC is supposed to receive $70 million of non-Medicaid federal funds, and about 100 of their employees are at least partially supported by federal grants. 

“Reductions to federal funding for these services overall would contribute to higher costs for people needing care and may lead to people going without important health services they can’t afford,” said James Apa, PHSKC’s Communications Director. “It would increase the likelihood for more and larger local outbreaks of preventable communicable diseases, like measles, and leave us less ready to respond to future pandemics and emerging diseases, like bird flu.”

Balducci said that it doesn’t appear at this time that the federal government is talking about stopping funding that is already congressionally committed. But she said the County will need to be careful with anything that is counting on new federal funding going forward.

“As of today, we’re budgeting for the gap that is in county funds, not budgeting for a gap in federal funds. If a gap in federal funds appears, that will be an additional challenge,” Balducci said.

As the county moves to address future impacts, they will have to contend with the fact that both PHSKC and DCHS are extremely reliant on federal and state Medicaid funds for various programs, including community public health clinics, the behavioral health system, and other health programs. For example, the most common insurance that patients use to pay for behavioral health treatment at the Connections Kirkland crisis center is Medicaid. 

And Medicaid might be on the chopping block. Last week the U.S. House of Representatives voted to approve a budget proposal that would include $2 trillion in cuts over 10 years, which could result in $880 billion of Medicaid cuts. More than 20% of Washingtonians receive their health care through Medicaid, and the total cost, currently split between the federal and state governments, is $22.1 billion. Meanwhile, the Washington State budget is already facing what Governor Bob Ferguson is now saying is a $15 billion deficit over the next four years. 

In 2024 King County received $310 million in state and federal Medicaid funds, and DCHS receives an additional $57 million from the federal government and $15 million indirectly through the state that supports other human services programs. If Medicaid were to be cut, Balducci said the County would need to come up with a very different way to help people get health care, and it would be unlikely to be funded at the same scale. 

King County departments attempting to withdraw their federal funds in the last six weeks have had mixed results. Some funds have remained accessible, while others have stalled. Some departments have received responses that appear to indicate the relevant technology has failed. Different funds are at different levels of risk depending on whether they are subject to certain types of congressional budget resolution or already have an existing contract. 

“The questions are not just about policy-based pressure using federal funding. It’s also just, if we fire a whole bunch of federal employees whose job it is to process things, how will they get processed?” Balducci said. “Every week we’re learning more about what does this really mean.” 

Dively is getting weekly status updates from various departments as to whether they have been able to access their federal funds. He said the situation continues to change rapidly. 

Looking forward for Seattle and King County

Balducci plans to continue focusing on this issue. “We can keep our eye on the horizon, see the threats coming over it, and potentially be ready to backfill or support especially critical services that people rely on if we have to do that,” she said.

While the County lacks the resources to backfill all federal funding, they still have agency, Balducci said, with the ability to borrow against their cash flow reserve, go to the voters, and go to the state. 

“Knowledge is power, knowing where our risks are, and working to make sure that we are actively coming up with plans to address them. We should be ready,” Balducci said. 

Emphasizing the importance of relationships with local, regional, and national partners, Balducci suggested setting up reserve funds where possible, guarding any excess funding in case the County needs it for an emergency.

And in Seattle, Rinck is eager to get to work through her new select committee.

“This committee is not just another government meeting. This is going to be a platform for community and civic power against the arbitrary and capricious forces that are trying to roll back our rights,” Rinck said. “When the federal government abandons its responsibility to protect people, we and the City of Seattle will not stand by. We’re going to fight back at the local level, and I reject the idea that we need to water down our values or compromise on fundamental human rights. People can count on me to continue to champion these protections and work on solutions that are going to keep our neighbors safe.”

The post Seattle and King County Grapple with Federal Disinvestment and Threats first appeared on The Urbanist.

In mid-January, Seattle Mayor Bruce Harrell announced the city had awarded $22 million in grants to 42 organizations as part of the city’s Equitable Development Initiative (EDI), a program launched 2016 to prevent displacement of marginalized communities and help those communities reduce disparities and build generational wealth. It was one of the first programs in the nation to dedicate significant dollars to programs designed to address systemic racism, funding more than $116 million in grants since its inception.

EDI funds a variety of capital-based initiatives, including affordable housing, community centers, arts and cultural spaces, child care and education centers, and outdoor spaces and environmental remediation. The program relies heavily on partnerships with community-based organizations and is managed by the Office of Planning and Community Development (OPCD). 

Seattle’s EDI program was briefly in the crosshairs of Councilmember Maritza Rivera (District 4) last fall during the council’s search for programs to cut or reduce spending on in order to address a $240 million deficit. Rivera initially insinuated the program was poorly run and too slow in delivering results. 

Rivera’s attempt to place limits on the program didn’t succeed, and she walked back her criticisms as community groups pushed back. Still, the program could fall victim to cuts in future budget cycles, with centrists like Rivera and Council President Sara Nelson pledging to trim programs rather than raise taxes.

OPCD Director Rico Quirindongo said that even though the 2025-2026 budget cycle was “a difficult time for the city,” he portrayed Harrell as “very committed to and excited about this program. He is passionate about what he sees related to the program affecting positive change and positive support for our diverse communities.” 

Harrell’s final budget passed by the council increased EDI funding to $26 million for 2025.

“Our city is steadfast in its commitment to delivering real results for communities disproportionately impacted by displacement,” Mayor Harrell said in a press release announcing the grants.

However, as reported by PubliCola in April, the Harrell administration removed more ambitious plans for new anti-displacement programs from its early drafts of the One Seattle Comprehensive Plan – so EDI remains the city’s primary tool for meeting its racial equity goals. 

The lion’s share of the current EDI funding cycle is intended to help existing partners complete capital projects or build their organizational capacity, EDI director Jenna Franklin said. “We’ve heard a lot of feedback about the need to help people close funding gaps,” Franklin said, noting that OPCD also increased technical funding to assist organizations navigate the world of nonprofit management and fundraising. 

The list of this cycle’s capital grant recipients, which generally range from $300,000 to more than $1 million, is loaded with prominent projects in predominantly communities of color across Seattle, including Africatown Community Land Trust (completing the Africatown Plaza development), Cham Refugees Community (completing a Cham community center), Rainier Beach Action Coalition (completion of the Food Innovation Center), the Somali Health Board (assisting construction of the Somali Community Cultural Innovation Hub), and Trans Women of Color Solidarity Network (to build House of Constance, a place for housing and support for trans and queer people of color).

In addition, in this cycle, OPCD awarded smaller capacity-building EDI grants in the $35,000 to $150,000 range to wide variety of organizations, including ARTE NOIR (to support building a recording studio); Wa Na Wari (capacity building for the Central District arts space); Friends of Little Saigon (in support of the Little Saigon Landmark housing and community space); and Duwamish Valley Sustainability Association (to help create a demonstration biofuel systems project).

EDI is funded largely by the JumpStart Tax on high wage earners at large Seattle companies – by law, 9% of JumpStart revenue was designated toward EDI — though subsequent mayors and council have raided the JumpStart fund for other priorities, depleting resources for EDI and affordable housing investments. 

Franklin said that the EDI program is an integral part of the city’s strategy to combat displacement and helps grassroots organizations develop the skills, knowledge and reputation to attract other funding. She notes that Chief Seattle Club, prior to receiving an EDI grant, had difficulty even getting meetings with funders.

“They told us: ‘We got laughed at, we got hung up on. We’d finally get a meeting and no one would really listen. We’d get 15 minutes and then be told to leave,’” Franklin said. “Then they got their EDI award, and suddenly people were willing to take the meeting, and they ended up building affordable housing and a community-serving space that has health clinics and all kinds of other amenities.”

The latest round of EDI funding comes as the Trump administration is rapidly shutting down, erasing, and de-funding anything in the federal government associated with diversity, equity and inclusion (DEI) programs directed at combating systemic racism. Quirindongo made it clear that the federal government provides no funding to Seattle’s EDI program.

Franklin believes EDI is needed more than ever in the current political climate. “The marginalized and socially vulnerable populations that our organizations primarily serve or exist to support are the populations who are most impacted by all forms of oppression and all sorts of regressive policies.”

Franklin also noted the durability of the groups funded through EDI, noting that of 77 projects admitted to the program, 75 are still operating. “Our grantees are completing their projects in roughly the same timeframe as market rate developers,” she said, “while they’re simultaneously capacity building, learning development, and completing a project – which is pretty awesome.”

Quynh Pham is executive director of Friends of Little Saigon, which received a $75,000 EDI grant to help complete the Little Saigon Landmark Project, a cultural and economic center for Seattle’s Vietnamese American community. Pham said that her organization, which first envisioned the center more than 10 years ago, was an early participant in the creation of the EDI program.

“Before we received any funding, we were actually part of the initial demonstration projects and helped to pilot and launch the EDI program,” she said.

Pham noted that rising real estate prices and rents are putting pressure on the International District’s Asian American population. To address this, the Landmark Project will also include 71 units of affordable housing.

“We’ve lost a lot of our social, cultural, and economic assets in the neighborhood,” Pham said. “So this project is bringing back all those elements. The cultural center will offer small business opportunities, cultural programming and social programming.”

Though affordable housing is critical to addressing displacement, Pham said that EDI supplements existing housing levy funds by favoring projects that strengthen Black, Indigenous, and people of color (BIPOC) communities. “Housing is definitely a big priority,” she said. “But we need resources to support projects like cultural centers and community spaces that aren’t tied to housing, and EDI fills that gap.”

During the city council debate over EDI last fall, Pham co-wrote an editorial defending EDI. 

“What is happening in Seattle is a wake-up call to all cities using a racial equity lens to plan for and fund equitable growth and public goods. Other cities and communities across the country must organize and prepare for similar backlash,” Pham and her co-authors wrote.

In January, OPCD released an impact report on the program, noting that “EDI program is a powerful tool for inclusive growth, cultural preservation, and economic development that shifts power into the hands of marginalized communities.” The report found that 90% of EDI grant recipients found additional funding sources outside the program and that 15% of projects are now self-sufficient and have grown beyond the need for EDI funds.

Rainier Beach Action Coalition (RBAC) received a $300,000 EDI grant in this cycle to help complete its Food Innovation Center. The center, located near Rainier Beach’s light rail station, will increase access to local, healthy, organically sourced food in the community. RBAC managing strategist Gregory Davis said the grant will help the organization expand its facility from 4,000 square feet to more than 48,000. The second phase of the project will offer condominiums affordable for families earning between 80% and 120% of area median income, he added. 

“The idea is to have it in the range $250,000 to $300,000 – something that somebody coming out of college earning $70,000 should be able to do,’ Davis said.

The EDI capital grant will help RBAC leverage additional funds for housing as well as addressing the issue of the longtime “food desert” in Rainier Beach where fast food restaurants have proliferated. RBAC works to build networks connecting local, BIPOC growers with community members, while also fighting displacement. 

“This climate for development is really a challenging one, even for private developers, let alone nonprofit developers, let alone community based organizations, who are in many cases, getting into it for the first time,” Davis said of rising land prices in Rainier Beach. “[EDI] helps to support them to build their capacity as an organization around development, as well as having a substantial anchor facility for the neighborhoods they serve.”

Davis observed that last year’s council fight over EDI funds demonstrated at OPCD and the organizations supported by EDI need to do more to tell their stories.

“One of the challenges we have is, how do we make sure those stories are durable?” Davis said. “When a city council district changes leadership, what’s happening to communicate with that incoming leadership about what has happened before?”

Franklin said that funding equity developments through community-based organizations isn’t the same as simply funding and building an affordable housing project. “If an organization is struggling, we’ll help them figure out what’s going on and make sure they write their operating plan to keep it successful,” she said. 

“When they hit a challenge, they can come to our project managers for resources and support because they know we’re really genuine in our sense of partnership,” Franklin said.

“For a program that’s only been in existence and awarding funds for eight years, we’ve done a lot,” Quirindongo said. “I’m excited for the future.”

The post Seattle Awards $22 Million in Equitable Development Grants Aimed to Combating Displacement first appeared on The Urbanist.

In the wake of passage of the Seattle Transportation Levy last November, the City is preparing a hiring spree of new staff to handle transportation projects ranging from bridge maintenance to sidewalk construction. Separate from that new levy-funded work is another hiring spree of approximately 51 new employees that will be brought on to engage in planning work for Sound Transit light rail projects within the city.

More than eight years after the 2016 Sound Transit 3 (ST3) ballot measure was approved by voters, Sound Transit is still a long way from starting construction on Seattle’s two major ST3 rail projects, West Seattle Link and Ballard Link. As the two projects advance further in design, the City of Seattle will need to review hundreds of permits, along with myriad design elements requiring city coordination.

In a brand new move, most of the funding for this planning work is set to come out of the 2020 Seattle Transit Measure (STM), a revenue source that was approved by voters to directly fund King County Metro bus service, upgrades to transit facilities, and transit passes for in-need Seattleites.

To unlock this funding, Mayor Bruce Harrell last fall proposed a change to what the STM can legally fund, expanding the allowed spending categories to cover Sound Transit work. While the Seattle City Council was debating a Delridge Way SW median and the future of the South Lake Union streetcar, this piece of legislation slipped by under the radar, expanding the scope of the 2020 transit ballot measure beyond what voters initially signed off on.

Unanimously approved by Council and signed by Mayor Harrell in late November, Council Bill 120887 allows the 0.15% sales tax on goods purchased within the city to now fund “staffing resources to support and complete The City of Seattle’s agreements and requirements necessary for implementation of the Sound Transit 3 program, including but not limited to dedicated and part-time staff to support project planning, permitting, and delivery of Sound Transit projects in Seattle.”

If that weren’t enough, Council Bill 120887 also allows the city to use the STM funding for contributions needed to pay for add-ons that come with its preferred light rail alignments, including a tunnel under West Seattle Junction and a tunnel under the Lake Washington Ship Canal to get to Ballard. That change could open the door to diverting a significant amount of transit service funding toward Sound Transit construction, even though the annual amount collected by the STM — around $50 million — pales in comparison to the costs associated with those projects. For now, the Harrell Administration is only proposing to use STM funding for planning staff.

While completing the permitting process for projects as large and complex as these two lines is undoubtedly a significant lift, it’s unlikely that voters had ST3 planning in mind when they voted to approve the 2020 transit ballot measure, which was set to be 33% smaller under the original renewal plan proposed by the Durkan Administration until it was revised by the City Council. With Metro facing a potentially significant financial crisis within the next few years as its fund reserves start to become depleted, Seattle will likely need all of the transit funding it can get its hands on in the coming years, but the adopted budget siphons nearly $9 million in STM funding away for new staff.

Overall, the adopted budget lays out $12 million in spending over the next two years on the approximately 51 additional positions, which will be added across various departments including the Seattle Department of Transportation (SDOT), the Office of Planning and Community Development (OPCD), and the Office of Sustainability and the Environment (OSE). Apart from the close to $9 million of that coming from STM, the remainder is earmarked to come from the JumpStart payroll tax, under the auspices of the original 2020 JumpStart spending category of Green New Deal spending. Last fall, the Seattle City Council authorized ditching the original JumpStart spending plan (mostly dedicated to affordable housing) to fund a wide variety of other priorities.

This planned expenditure is set to more than double the number of Seattle city employees working on ST3. “Currently, 28 staff across multiple departments dedicate all or part of their time to the ST3 program,” the 2025-2026 budget book states. “This reserve would fund approximately 51 additional staff in multiple departments to support on schedule delivery of ST3 projects while ensuring compliance with relevant statutes and codes and upholding the 2018 Partnering Agreement [with Sound Transit].”

That 2018 partnering agreement, signed by then-Mayor Jenny Durkan, was intended to allow the city to work with Sound Transit to “meet the challenge of delivering projects as fast as possible,” and called for preferred alternatives for both Ballard and West Seattle Link to be selected within a year-and-a-half, with the Sound Transit board selecting a “project to be built” by 2022. Those timelines have not been met — West Seattle Link reached that milestone last year, two years late, while Ballard isn’t set to get there until 2026, in large part because of the addition or exploration of additional station alternatives supported by Mayor Harrell and King County Executive Dow Constantine.

It’s unclear where exactly things would sit if these planning agreements hadn’t been reached, but it’s hard to find any evidence of actual acceleration, despite pledges from the last two mayors to speed up ST3 work. Ballard Link has slipped from its original target of a 2035 opening to 2039, with even that tenuous due to projected budget overruns across the ST3 portfolio.

Regardless of the merits of the spending, the formal change to the Seattle Transit Measure sets a strong precedent for continued use of those funds beyond its formerly narrow scope.

Seattle has been directly funding Metro bus service to provide additional transit options for the city’s residents since 2014, when voters approved the precursor to the STM, the Seattle Transportation Benefit District. That six-year measure utilized close to 80% of its funding for Metro service, allowing Seattle to head into the pandemic at the end of 2019 with an additional 349,000 annual service hours on top of what Metro was already providing. But in 2024, the STM only funded an additional 140,000 hours, utilizing just over 50% of available funding. A major factor contributing to that wide gulf has been Metro’s struggle to hire enough operators to be able to expand service, with additional funding from Seattle sitting underutilized.

However, now Metro is making significant headways on hiring, and future expansion of service will depend heavily on how much funding is available to the agency.

Changes to the scope of the STM aren’t without precedent. In 2023, the Seattle Council approved a change to the STM allowing more funding to be used to support physical transit improvements, which was allowed under the original measure but only at a lower level. But with the allocation of funding for ST3 planning work, the STM seems to have fully transitioned to becoming Seattle’s all-purpose piggy bank, even as Metro has had to cut bus service on several highly-used bus routes within the city, including trips on the Route 10, 12, and 49. Last fall’s service change even left a swath of the city around Green Lake previously served by a bus route without one, after the deletion of the Route 20.

The $12 million for ST3 planning is currently budgeted as a two-year expenditure only, which aligns with the timeline of the Seattle Transit Measure, set to expire on April 1, 2027. While some regional leaders are starting to explore what it would look like for a transit-funding measure to go countywide, it’s not at all clear what the City of Seattle’s vision for the next iteration of its citywide transit measure would be, beyond being a handy source of revenue for transit-related projects. But the city will likely need some type of funding source for ST3 planning beyond 2026, with Ballard Link not expected to reach final design until four years after that.

Seattle Department of Transportation (SDOT) spokesperson Ethan Bergerson told The Urbanist that the department is still working on a specific plan on how the STM funding will be used for ST3 planning, but that the positions will be divided into three buckets: station area planning and access projects, technical support for Sound Transit, and ultimately permit review when the agency starts to submit the more than 200 applications that are expected as part of West Seattle and Ballard Link.

“SDOT is developing a resource plan that will detail how the new 2025-2026 budget authority will support these bodies of work,” Bergerson said. “The 2025-2026 budget authority was held in reserve knowing that we will return to Council in 2025 with a specific staffing request once the resource plan has been developed in concert and alignment with Sound Transit’s schedule and workplan.”

Bergerson painted the planned expenditures to hire this small army of staff as being necessary to deliver the ST3 projects as fast as possible. Final delivery of West Seattle Link has already slipped two years, from 2030 to 2032, and Ballard Link has slipped four years, from 2035 to 2039.

“The City has critical roles to support Sound Transit’s projects that, if fully resourced and realized, will facilitate project delivery, maximize public benefit, and minimize harm to existing communities,” Bergerson said. “In the next four years, as planning moves to final design, permitting, and construction, the City will oversee an enormous volume of work to support on time and on budget project delivery. By dedicating additional staffing resources to the City’s ST3 Program, we are working to prevent ST3 project schedules and overall delivery timelines from negative impacts.”

The post Seattle Hiring Small Army of Planners for Sound Transit 3 Work first appeared on The Urbanist.

On Thursday the new centrist-led Seattle City Council passed their first city budget as a cohort, with Councilmember Tammy Morales casting the sole opposing vote. The council’s 8-1 vote greenlit the mayor’s plan to slash investments in affordable housing and social services and trim 48 staff positions in order to boost police spending by 16% and close a large deficit without raising new taxes.

This year, Mayor Bruce Harrell’s proposed budget transferred a record-breaking $287 million from the JumpStart payroll revenue tax into the general fund to both plug a $250-million-plus budget deficit and fund $100 million in new priorities. Rather than clawback the transfer, Council blew an even bigger hole in the JumpStart fund, which is largely dedicated to investing in affordable housing.

After an unfavorable revenue estimate in October and the addition of Council’s earmarked spending priorities, the transfer from JumpStart grew even larger in Budget Chair Dan Strauss’s balancing package, coming out to $304.6 million in 2025. Nonetheless, Strauss spoke proudly about the council’s work “to be able to address one of the biggest budget deficits in recent memory while safeguarding the vast majority of public-facing services that our community depends on.”

Morales saw the issue differently. She argued against diverting affordable housing funds and permanently removing the guardrails around JumpStart spending categories, which could turn it into a perpetual slush fund for future mayors and councils.  

“Despite calls for fiscal responsibility, good governance, and data-informed decision making, this budget does not reflect Seattle’s values of care, prevention, equity, nor does it reflect the bold vision we need to create thriving, healthy neighborhoods for our seniors, our young people, our families and our small businesses,” Morales said. 

SPD is biggest budget winner

While Seattle has a large budget of more than $8 billion due to the inclusion of the large Seattle City Light and Seattle Public Utilities portfolios, most of the council’s tinkering took place in the $1.9 billion general fund, where the city’s discretionary expenses lie. 

In his proposed budget, Harrell grew the Seattle Police Department’s (SPD) budget by 16%, which included spending on the 23% raises for officers negotiated by the Seattle Police Officers Guild (SPOG), hiring bonuses, adding 19 new civilian positions for 2025, funding and growing the City’s new closed-circuit camera and real time crime software surveillance apparatus, and adding $10 million of additional overtime. Harrell also increased spending on the Unified Care Team to expand sweeps to weekends, jail contracts at both the King County Jail and the South Correctional Entity (SCORE), and his Downtown Activation Plan.

In order to do all this, in addition to transferring nearly $300 million from JumpStart and drawing down reserves, Harrell proposed many cuts to services and layoffs of City employees. 

The Council largely let Harrell’s new spending stand. Indeed, when Morales suggested using some of the money proposed for SPD civilian staff to staff the real time crime center in order to reinstate some money for tenant services, Councilmember Bob Kettle appeared to lose his temper. 

“This point just drives me over the edge over this continuing theme of budget actions versus committee actions. I don’t know how many budget actions should really be committee actions,” Kettle said while repeatedly pointing his finger. “And here’s the ironic thing related to this one: the committee has been doing its work.”

Centrists blockade Morales amendments

This was far from the only budget amendment proposed by Morales that was voted down. After a contentious discussion, her amendment adding $50,000 for a new tenant workgroup, which Strauss had included in his balancing package, was removed. Her amendment to add money to the Seattle Department of Human Resources to reinstate the workforce equity division, also included in the balancing package, was likewise voted down. 

No other council member had any of their items removed from the balancing package by their colleagues. And neither of her statements of legislative intent (SLIs) directing Central Staff to research potential new sources of progressive revenue for the city found enough support from colleagues, in spite of being purely informational in nature.

Strauss even acknowledged this before the final budget vote, telling Morales, “I’m sorry your priorities were targeted in the amendment process.” 

Transportation cuts and levy money grab

In contrast, Councilmember Rob Saka successfully defended his amendment to freeze via proviso $2 million in the Seattle Department of Transportation (SDOT) budget in order to strongarm the agency into removing a traffic safety barrier preventing illegal left turns into the preschool his children attended along Delridge Way. Saka claimed the measure was in service to both safety and equity, without offering much detail to substantiate that assertion.

You know I had to do it to ‘em on the traffic divider Rob Saka is spending $2,000,000 to remove.

[image or embed]

— Katherine Mitchell (@katherinemitchell.bsky.social) November 16, 2024 at 10:43 AM

District 1’s first-year councilmember also successfully added an amendment to spend $1.5 million to convert a playing field where he coaches Little League from grass to turf. These two Saka amendments cost more than eight times what Morales’s rejected amendments would have cost.

Clara Cantor, a community organizer with Seattle Neighborhood Greenways, said she’s disappointed in the budget cuts to transportation improvements to comply with the American Disability Act, funding the undoing of safety projects, and diverting automated enforcement revenue away from street safety.

The new budget will also allow the council to exercise an unusual amount of control over the spending of the newly passed $1.55 billion transportation levy. Via proviso, the budget sets aside $89 million in levy dollars for 2025 subject to the council’s approval and creates a district transportation fund of $1 million for district councilmembers to spend as they see fit. 

“Most concerning is the hold council has placed on a full half of the 2025 transportation levy revenue, which voters just approved by 67%,” Cantor said. “It seems to be a part of a trend towards funding pet projects instead of implementing the overwhelming will of the community.”

Council lessens layoffs, delays some cuts

The council’s budget does reverse some of Harrell’s suggested cuts, adding funding for legal services for homeless youth, a tax preparation program, services for people trying to access public assistance, and averting massive cuts at the Seattle Channel. Council amendments also reduced the number of total layoffs being faced by city employees from 76 to 48, with an additional 7 coming in 2026, while delaying other layoffs for six months. 

While the newly passed budget restores some of the funding cut for tenant services and rental assistance, it doesn’t restore the City’s 2024 level of investment in these programs. It also doesn’t restore cuts to the Environmental Justice fund or indigenous-led sustainability projects. Other cuts that council went along with include parks programming and positions in the City’s IT and permitting and inspections departments.

Councilmember Cathy Moore added an amendment that will remove the right to free legal counsel for many Seattle tenants. Only those tenants making 200% or less of the federal poverty level will remain eligible, which fails to take into consideration the higher cost of living in Seattle as opposed to the country at large. A person working a full-time minimum wage job in Seattle will no longer be able to receive free legal assistance to help them protect their rights as a tenant. 

“The City of Seattle has failed renters. Bad landlords already face no real accountability,” said Kate Rubin, the co-executive director of Be:Seattle. “Organizations helping renters to push back against this power imbalance and stay housed compete for scraps. The burden of rising evictions and homelessness will fall disproportionately on Black and Indigenous communities, LGBTQ+ communities, older people, and disabled people.”

Other added investments to the budget include four new 911 Emergency Communication Dispatchers that the Community Assisted Response and Engagement (CARE) department Chief Amy Barden said weren’t necessary at this time, more money for food banks and meal programs, increased investment in We Deliver Care, and funding for the creation of two new non-congregate homeless shelters. Money was also added to the storefront repair fund.

While explaining why she couldn’t vote for the budget bill, Morales teared up, saying, “To the advocates who have worked so hard to protect funding for programs that serve communities of color, that serve the most vulnerable, or that could have addressed our housing and infrastructure needs, I’m sorry that this budget will cause more harm.”

Participatory budgeting

Another chapter in the participatory budgeting saga has also drawn to a close with this budget. An unprecedented investment in participatory budgeting in Seattle was one of the main demands put forward as part of the George Floyd protests in the summer of 2020. 

Then-Mayor Jenny Durkan pledged $100 million to support Black, Indigenous, and people of color (BIPOC) communities, out of which $30 million was ultimately directed to participatory budgeting. During the budget process in the fall of 2020, councilmembers allocated $3 million to the Black Brilliance Project to outline how to implement a participatory budgeting process, which was meant to empower Seattle residents to have direct control over a small portion of Seattle’s budget. 

People who live and work in Seattle were finally given the opportunity to vote on $27.3 million worth of projects last fall, selecting six projects to fund. 

However, early in this year’s budget process, Councilmember Joy Hollingsworth expressed qualms that the selected projects didn’t directly benefit Black people. Several councilmembers mentioned their particular surprise that the expansion of CARE alternate responders was being funded by one of the projects. 

Hollingsworth ultimately introduced several amendments to redirect some of the money from the voted-upon options for other uses. Around $10 million of investments were reallocated from the participatory budgeting projects in this fashion, undermining the democratic voting process laid out by the City last year. 

“Oftentimes people use selective Blackness to push their agenda,” Hollingsworth said at the final budget vote. “And I’m here to say our Black community is alive and well in our city. Their voice wants to be heard. Their voice was heard on this budget.” 

But in spite of several councilmembers initially questioning it, the CARE investment from participatory budgeting funds remained intact. 

JumpStart raid could become permanent, imperiling affordable housing

While both Harrell and the council are touting their historic investment in affordable housing – more than $340 million in 2025 – some opponents object to this framing, given that nearly $190 million of JumpStart dollars originally intended for affordable housing are being transferred to the general fund instead. The loss of funding comes at an inopportune time. Inflation, rising construction costs, and spiking operational costs are also straining budgets at the nonprofits tasked with maintaining and expanding affordable housing.

But more long-lasting will be the deep changes to the legislation governing the JumpStart tax, which does away with the original spending plan passed in 2021 allocating the collected funds to affordable housing, small business support, equitable development, and the Green New Deal. Opponents have characterized this change as transforming the JumpStart tax into a slush fund to pay for elected officials’ pet projects.

A group of nonprofit homebuilders and community organizations opposed to this change wrote, “This new source of revenue was never meant to permanently support the city’s General Fund or address the deficit: The spending plan outlined a commitment to sustained investments in priority areas specifically because such a source could otherwise be vulnerable to the political and budgetary expediencies of subsequent administrations.” 

The legislation also did away with all oversight on JumpStart dollars. Not only does Seattle’s new budget eliminate the oversight board intended to provide accountability over the large revenue source, but also the program assessment through the City Budget Office. The pro-JumpStart coalition objected to this as well.

“Mayor Harrell and the City Council made these permanent and damaging changes without thorough engagement with stakeholders or the public, reversing years of progress in a matter of weeks,” the coalition wrote in their budget letter. “This budget process demonstrates exactly why an independent oversight body is needed.”

Strauss attempted to remove a 2040 sunset clause on the JumpStart payroll tax, but Kettle introduced a successful amendment to reinstate it. 

City-wide capital gains tax

In her budget remarks, Council President Sara Nelson estimated that the council’s changes to Harrell’s proposed budget increased the 2027 deficit to around $100 million, presaging more rocky budget seasons to come.

In response to this ongoing structural deficit, Moore introduced legislation that would have initiated a 2% city-wide capital gains excise tax beginning in 2026. The tax wouldn’t have applied to retirement accounts or real estate, and it would have only applied to gains above $262,000. The City estimates it will bring in anywhere between $16 million to $51 million of new progressive revenue for the City. Moore proposed that the revenue be spent on rental assistance, down payment assistance, and food assistance to help address affordability in Seattle.

The Financial and Administrative Services department estimates it will take 18 to 24 months to implement the tax. Should the tax have been passed, the City would not have received any of its revenues until April 2027.

After the council’s deep dive into the budget this year, Moore said they found there simply isn’t very much to cut, which is consistent with Morales’s observation that the council’s amendments to the budget increased city spending in 2025 by 3%. 

“We need to be honest about the fact that we need more revenue to continue to provide the level of service and to meet the needs and the growing needs that the city is going to encounter, particularly with, I think, anticipated loss of federal funding,” Moore said.

The capital gains excise tax failed in committee earlier in the week, in a close 4-4 vote, with Moore, Morales, Strauss, and Hollingsworth voting in favor and Councilmember Tanya Woo abstaining. At the final budget meeting on Thursday, the bill failed by a 6-3 vote, with Woo and Hollingsworth joining the votes against. 

But Moore is already looking to next year, when newly elected Councilmember Alexis Mercedes Rinck is likely to add an additional vote in favor.

“If it doesn’t pass today, okay. I’ll be back with Councilmember Morales,” Moore said. ‘I’ll be back next year.” 

The Chamber’s influence on display

With the City’s budget season drawing to a close, the new council’s allegiances to downtown business interests are in full view. The Downtown Seattle Association wants to see increased investment in SPD, surveillance, jail space, and the clean-up and revitalization of downtown, all of which are heavily represented in the new budget. 

Seattle’s wealthiest corporations and individuals want to see no new progressive taxes, all proposals for which were scuttled, even those simply requesting further study. 

The council wasn’t even willing to remove a 2040 sunset clause on the tax they are currently depending on to fund a large proportion of the general fund, with Kettle, Moore, Nelson, Woo, Saka, and Councilmember Martiza Rivera all voting to maintain it, with Hollingsworth abstaining, as she did on all the amendments related to the JumpStart tax. (Two days later, Moore said she had changed her mind on this point.)

In a statement Thursday, Seattle Metropolitan Chamber of Commerce President and CEO Rachel Smith said she gave Harrell, Budget Chair Strauss, and the rest of the council “two thumbs up.”

“[I]t is important to close this biennial chapter with a reminder of three facts,’ Smith said. “One, today the city of Seattle has the most tax revenue it has had in the history of the city. Two, Seattle’s Office of Housing will see the most funds appropriated to the department, ever – nearly five times the amount the City spent on housing annually pre-pandemic. Three, the 2024-25 biennial budget is the largest budget in the city’s history and is a net increase from last year’s budget. Despite these facts, debates about the need for new revenue swirled – even without concrete plans to get results with additional tax revenue. Government levying taxes is a means to an end, not an act of righteousness, and it is prudent these did not move forward at this time.”

These three facts paint a misleading picture. After weathering a period of high inflation, it’s hardly a shock that City revenue and spending has gone up, even before accounting for new programs the mayor and council launched, some with Chamber support. The same financial headwinds affect affordable housing; builders need more money just to create the same amount of housing.

The crucial question for Seattle leaders to answer is whether we’re investing enough in housing, period, not simply clearing the very low bar of investing more than we did in the 2010s. Reports clearly show both an unprecedented population of unhoused people and suggest Seattle needs 112,000 new homes by 2044.

Business-aligned political action committees invested heavily in recent elections and succeeded in electing another mayor loyal to their interests and swinging the Seattle City Council to centrists. So far, those investments have paid off, stalling out a “tax the rich” push and focusing attention on budget cuts, outside of the sacred cow of SPD.

Less transparency and more austerity cuts on horizon

Beyond failing to address Seattle’s long-term revenue issues, this budget season was also marked by a noticeable decrease in transparency from previous years, with a shortened timeline, numerous last minute walk-on amendments, a key opportunity to give public comment announced only a day ahead of time, and some amendments not available for public review or media scrutiny in a timely fashion. 

Nelson promised this is just the beginning, referencing the large number of SLIs in the new budget. 

“What we also did was set ourselves up for making really good and detailed decisions as we look at these programs, as we receive the SLI responses during the year, and prepare ourselves for the budget and potential cuts that might make sense going forward,” Nelson said. “The criteria that we would use to decide that was looking at whether or not the outcomes of these investments are really meeting our needs and then having the political will to potentially reallocate those investments.”

Future councils will have to assess on how they’re going to address the specter of more staffing and service cuts in 2026 and beyond

Meanwhile, Seattle progressives already have one eye toward the 2025 election when they will have a chance to build on their momentum gained with Rinck’s decisive win, potentially dethroning Mayor Harrell and Council President Nelson, who are both up for reelection. The taste this budget season left in voters’ mouths may weigh heavily on who comes out on top.

The post Seattle Council Passes Budget Swiping Affordable Housing Funds to Boost SPD first appeared on The Urbanist.

If they had passed the tax, most of their constituents would have applauded. A late-breaking poll — breaking, that is, too late to sway any budget votes — from the Northwest Progressive Institute suggested that “Seattle voters want their elected representatives to levy new taxes on wealth so Jumpstart revenue can flow to housing.” A 2023 poll showed solid support for a Seattle capital gains tax, in particular.

Nonetheless, Councilmembers Sara Nelson, Rob Saka, Maritza Rivera, and Bob Kettle opposed the capital gains tax proposal, while its sponsor Cathy Moore and Councilmembers Tammy Morales, Joy Hollingsworth and Dan Strauss backed it. Mayor Bruce Harrell also opposed the proposal, but a spokesperson told the Seattle Times he is open to “a longer and more robust discussion” about progressive revenue options.

Disappointment aside, I think proponents of progressive revenue should take all this as a win, a sign of our success in shaping the public narrative. Hey, we’ve been losing a lot these days, we should pat ourselves on the back when we can.

Playing the long game on progressive taxes

Moreover, this sets us up for a real fight next year. Woo is shortly to be replaced by progressive Alexis Mercedes Rinck, following a decisive victory in the November election. That could mean a 5-4 majority for a capital gains tax — or even a supermajority, if Rob “this is the right tax at the wrong time” Saka can be convinced that the time is right.

City staff estimate that a 2% Seattle capital gains tax, layered on top of the 7% statewide tax that just survived a repeal effort with flying colors, could generate from $16 million to $51 million per year. It’s a wide range because the tax base is small (fewer than a thousand households) and revenue in a given year will depend on the vagaries of the stock market, individual decisions to sell assets, and so on. 

A tax that “lumpy” isn’t ideal for programs that depend on stable revenue from year to year, which could create challenges for Moore’s proposal to fund rental, down-payment, and food assistance programs. But proposing new spending at all strikes me as darkly amusing when the mayor and council just ransacked the JumpStart payroll expense tax to plug a massive structural budget hole. 

If a capital gains tax does pass next year, maybe — hear me out on this one — the revenue could flow into the city’s general fund, and that would mean $16 million to $51 million more in JumpStart funds could go to affordable housing, climate investments, and equitable development projects as originally intended.

Moore’s capital gains tax proposal may not be the only option on the table. Tammy Morales has announced her interest in developing legislation for two new excise taxes, one on professional services and another on digital advertising. While her statements of legislative intent on these tax options were voted down in the budget process, nothing prevents her from continuing to develop these concepts further for introduction next year.

These two taxes are both ones the Transit Riders Union included in the Progressive Tax Options for Seattle report we released last August alongside the final report of the Seattle Revenue Stabilization Workgroup, of which I was a member. Both are relatively new ideas, and both come with some legal risks. Both can be conceived of as ways to correct loopholes or omissions in the existing tax system.

None of the revenue stabilization workgroup’s ideas made it into Mayor Harrell’s budget proposal this fall. Instead, the mayor closed a $260 million general fund deficit — and financed about $100 million in new spending on his priorities — by diverting restricted JumpStart funds and cutting City staffing and programs. An extra $200 million annually could help to generate another 2,000 affordable homes per year, according to estimates from housing providers.

Taxing professional services

Morales hopes to develop legislation to impose “a one percent excise tax on professional services, including, but not limited to, services provided by realtors, architects, accountants, and consultants.” 

These are services that are currently exempted from our 10.35% state-plus-local sales tax — which, by the way, appears to be the highest of any city in the country. When Washington first introduced a retail sales tax back in 1935, it applied only to sales of tangible personal property; services simply weren’t a large part of the state’s economy. Since then, some services have been added to the tax base, including repair and rental services, construction and landscaping, and some recreation and personal services. But that still leaves many other personal and professional services untaxed.

Why these continued exemptions? There doesn’t seem to be a good reason. It doesn’t make a lot of sense that you should have to pay sales tax when hiring a plumber but not an architect. The tax compliance software company Avalara explains that professional services represent “the least taxed service area” around the country, “in large part because professional groups have powerful lobbying presences.” Only a motley handful of states — Hawaii, Kentucky, New Mexico, and South Dakota — appear to tax professional services.

Services represent a much larger portion of the economy today than they did a century ago, so governments are missing out on a lot of revenue. In 2016, the Washington State Department of Revenue estimated that repealing the sales tax exemption on personal and professional services could generate an extra $2.4 billion in state revenue and $1.1 billion in local revenue in 2019. That’s a lot!

The catch, of course, is that Seattle can’t change state law, which governs Seattle’s portion of the sales tax, too. However, the City may be able to fashion an excise tax that accomplishes something similar. TRU estimated that a tax of just 1% — the rate Morales proposed — applied to all personal and professional services that are exempt from the sales tax could generate $70 million annually. It may make sense to exclude personal services that are often provided by small low-margin businesses, such as hairdressers and nail salons. But taxing professional services, which are disproportionately used by higher-income individuals and corporations, would be very progressive, even if you imagine the entire cost being paid by the customer.

In discussions on the Revenue Stabilization Workgroup last year, city staff indicated that there could be some legal risks in structuring such an excise tax too similarly to the sales tax or to the B&O (business and occupations) tax. I’m not a lawyer, and I don’t want to get too far into the weeds here, but if a percentage-of-sales or percentage-of-revenue approach is deemed too risky, one alternative structure worth considering would be a tax-per-billable-hour. Regardless, this is an idea worth pursuing.

Taxing digital advertising

Morales’s second proposal, a tax on digital advertising, is even more intriguing. Her proposed statement of legislative intent signaled interest in “a five percent tax on digital advertising services, or ads on a digital interface, including banner advertising, search engine advertising, interstitial advertising, and other comparable advertising services.”

The reasons to pursue such a tax are legion. Digital advertising services are among the services exempted from the sales tax, as discussed above. Advertising in general is undertaxed, as it’s considered a business expense that can be deducted from federal corporate income tax. And digital advertising in particular has proved pernicious in several respects. 

Google, Facebook, and other online platforms have soaked up ad revenue while spreading “borrowed” news content, contributing to the worsening funding crisis in the journalism industry. Ad-powered social media sites have proved addictive, making us miserable and depressed, with especially terrifying consequences for youth mental health. They’ve contributed to the polarization of politics and the spread of conspiracy theories. And so on.

A number of states have considered or are considering laws to tax digital advertising services, but only one has yet passed: Maryland’s Digital Advertising Gross Revenue Tax requires corporations with global annual gross revenues of at least $100 million to pay a tax on the portion of those revenues derived from digital advertising services within the state. The rate is graduated, ranging from 2.5% to 10% depending on a company’s size. Since the tax was enacted in 2021, it’s been subject to a number of lawsuits, some still unresolved. But the state is nevertheless collecting the tax, which appears to be generating on the order of $100 million annually — less than half the original projections, possibly due to noncompliance.

Seattle may not be able to copy Maryland’s tax exactly, as it would look very much like our existing B&O tax. But there are other ways one could structure a tax on digital advertising — a fraction of a penny per ad impression, for example. Another approach is to focus on the collection of data on individual consumers that’s used in targeting advertisements; House Bill 2107, introduced in the Washington state legislature in 2022, would have imposed a graduated excise tax on the collection of consumer data by commercial data collectors.

There are some sticky legal issues involved in digital ad taxes and related concepts, and additional technical challenges to implementation in a single city as opposed to statewide. But there’s also growing interest and scholarship in this area to draw upon, including an excellent recent report from UCLA entitled “Shearing the Sheep Without Skinning It: Policy Options for Extracting Revenue from Online Platforms.”

Looking ahead

I, for one, would be proud if Seattle pioneered any of these three progressive local taxes. Of course, none of it will happen without a fight. The online platforms, the purveyors of professional services, the wealthy whose incomes from capital gains exceed a quarter million dollars a year — they will oppose these proposals with energy, whereas a sales or property tax increase might warrant only a shrug. 

Sitting in my inbox right now is an email from the conservative lobby group Change Washington, urging me to send a message “to make sure Seattle City Councilmembers don’t use the media’s focus on the ‘bomb cyclone’ to slyly pass a City Income Tax opposed by 68% of Seattle residents.” Yes, they’re talking about the proposed capital gains tax, the laughable implication being that the council might try to sneak it through when they take their final vote on the budget. 

Those of us who want a progressive tax system, adequately funded public goods and services, and the JumpStart payroll expense tax restored to its intended uses have our work cut out for us in 2025.

The post Seattle Rejects Capital Gains Proposal, but Progressive Tax Time Is Nigh first appeared on The Urbanist.

Nonetheless, a budget amendment introduced by Seattle City Council President Sara Nelson and approved last week seems intended to give transit upgrades like those for the Route 40 additional scrutiny.

Nelson’s statement of legislative intent (SLI) asks SDOT to produce a report detailing the performance measures and evaluation criteria used when deciding to add bus-only lanes to “corridor projects outside of Regional Centers,” specifically citing projects like the Route 40 and the RapidRide R, which is still in planning and not set to come online until 2031. The 2015 Move Seattle Levy pledged RapidRide level upgrades to seven corridors including Route 40, but Mayor Jenny Durkan downgraded plans in 2018, along with Route 44 and 48.

“The report should detail the specific evaluation criteria used, such as: existing transit ridership and projected transit ridership after the bus lanes are installed, expected travel time savings (using nonaggregated, local data), improved transit speed and reliability, impact on general traffic capacity and congestion (using local data), and freight access and mobility considerations,” Nelson’s SLI text reads. “The report should describe the environmental and economic impacts considered, such as impacts to adjoining small businesses, net impact to carbon emissions including potential vehicle idling time, and neighborhood construction impacts.”

The business groups pushing to scale back the proposed transit improvements for the Route 40, which include the Ballard Alliance, the Fremont Chamber of Commerce, and the North Seattle Industrial Association, have also raised the specious argument that bus-only lanes increase carbon emissions. They argue that even though more than 8,000 people ride the Route 40 every weekday, speed and reliability improvements need a second look because ridership is lower than it was before the pandemic.

“One lane of car traffic headed north is very likely to cause long backups in the summer as the Fremont Bridge is raised. The summer cueing [sic] currently extends about a half mile down Westlake with two lanes for car traffic,” a letter signed by the coalition sent this past January read. “Again, with ridership still at ~ 50% of pre-COVID numbers and a lack of data on post-COVID ridership trends, this change would have significant impact on workers, residents and small businesses who must have dependable access over the Fremont Bridge.”

Even after the pandemic-era ridership drop affecting most (but not all) King County Metro routes, the 40 is the busiest bus route in North Seattle that isn’t yet a RapidRide line, and it’s trending upward. As of April 2024, Route 40 ridership was at 64% of its three-year pre-pandemic baseline. Running through the heart of Amazon’s campus, the route appears highly sensitive to return-to-office rates at tech giants with offices in South Lake Union.

At a budget meeting Friday, Nelson noted the concerns raised by the business coalition, which has been asking SDOT for granular traffic modeling data seemingly in the hopes of trying to pick it apart. In her comments, she seemed to suggest that if she had wanted to stop the Route 40 upgrades from happening, she could have already done it.

“Let’s be real — if a councilmember wants to kill a project, you can kill a project, by going into a [Capitol Improvement Program], or by doing something in one’s capacity as a chairperson,” Nelson said. “I am simply trying to respond to a request for data that is up-to-date, and there is some concern that perhaps the data that SDOT is using to plan not just this line but potentially future bus-only lanes, it could be out-of-date and perhaps not based on local data.”

In 2023, The Urbanist reported on an email sent by Eugene Wasserman, the president of the North Seattle Industrial Association, to D6 Councilmember Dan Strauss in which he asserted that Nelson would be opposing the Route 40 upgrades, in an apparent bid to get Strauss to do the same. A longtime ally of Nelson’s, Wasserman donated to her failed 2017 council campaign and her successful one in 2021.

So far Strauss has remained broadly supportive of the Route 40 upgrades, but at last week’s meeting he hedged.

“I support transit-only lanes 100%,” Strauss said, while immediately noting a limitation on his support for transit-only lanes. “The worry about peak hour versus non-peak hour […] along Westlake, under the Ballard Bridge at that pinch point, and along Market Street and Leary, those are the three specific pinch points. Because we see that during non-peak hours, there’s a lot of room on the roadway. During peak hours it’s absolutely necessary for those bus lanes to be bus-only.”

In the end, the amendment was fairly uncontroversial and passed unanimously. Nelson will get her additional report intended to provide fodder for the anti-bus-lane business coalition.

However, unwinding the transit upgrades could be a harder lift. The City has rated Westlake Avenue and Leary Way bus lanes as high priorities very recently in the Seattle Transportation Plan (STP), which Nelson and her colleagues approved earlier this year in another unanimous vote. The STP details quite specifically the criteria that SDOT uses to decide where to add bus only lanes. In a map included in the plan breaking down different types of transit streets, Westlake Avenue and Leary Way are both designated as “premium transit corridors,” a label that is intended to convey the “highest-level arterial transit need” of anywhere in the city.

That said, it’s always been clear that the high-level Seattle Transportation Plan would struggle to be a substitute for local fights over allocating street space on each discreet project — no matter how much legwork the plan did to try to address some of those potential conflicts ahead of time.

Innocuous on its surface, the future report appears intended to provide ammunition for future fights over creating dedicated space for buses, risking a precedent of second- and third-guessing once the project decision has been made. Route 40 bus lanes are not set to be fully open until 2026 — seven years after initial planning efforts were launched. So, the last ditch effort may have enough time to find a pretext and a political opening to scuttle the Route 40 lanes. But more broadly, it opens the door to routes across the city potentially having their existing bus lanes removed if ridership dips, creating a negative feedback loop.

Removing transit priority would come with significant costs, weakening Seattle’s credibility on climate. Adding even more red tape to the process of speeding up buses and making them more enticing to riders seems to be contrary to City goals around increasing transit ridership and reducing emissions.

But at least Seattleites can be thankful that Sara Nelson doesn’t want to kill their transit upgrade projects outright. At least not right now.

The post Sara Nelson Warns She Can Kill Any Transit Project She Wants first appeared on The Urbanist.