The Harrell administration’s first budget, proposed in the face of a historic deficit and uncertain economic conditions, raised early red flags for councilmembers and advocacy groups by paring back cost-of-living adjustments for human services workers and unraveling procedural gains born out of protests in 2020.
The mayor announced the budget at a Seattle Department of Transportation yard in the Chinatown-International District, on Sept. 27, characterizing it as a back-to-basics document that invested in core services and public safety.
“We know the investments that we make in this budget can chart Seattle’s course for years to come. We are redefining the city together,” Harrell said at the press conference.
That’s what people are worried about.
If adopted as is, the budget would require revision to underlying legislation passed by the City Council to loosen restrictions over the use of money generated by a progressive tax on large businesses, cap wage increases to homeless services workers and remove parking enforcement services from the Seattle Department of Transportation (SDOT) and return them to the Seattle Police Department (SPD).
That final move is expected to save nearly $5 million in administrative costs, an issue that Council Central Staff plans to explore before the council enters the next phase of budget deliberations.
Even with those changes, spending continues to outpace revenues in 2025 and 2026, City Budget Office Director Julie Dingley told councilmembers on Sept. 28.
The coronavirus pandemic ate into city funds over the past two years, as legislators rushed to spend nearly $200 million in one-time funding and real estate-related windfalls to prevent cuts to safety net programs and city services. However, that left 2023 with a $140 million gap in general fund revenue going into the new biennium; the city of Seattle traditionally proposes budgets in two-year increments, revisiting and adjusting them in odd years.
To close that gap as city revenues lose purchasing power due to high inflation, Harrell proposed a budget seeking 3 to 6 percent cuts from each department and swapping some general fund costs with “General Fund-adjacent revenue sources” — in this case, a euphemism for money generated by the payroll tax passed on large businesses in 2020 alongside two other funds.
Specifically, the proposed budget moves approximately $94.6 million of $294 million in revenues from the payroll tax to the general fund to pay for things like investments in affordable housing and ecological investments. Further proposed changes to the legislation underlying the use of the payroll tax money would allow for as much as $105 million to transfer to the general fund in 2023 and $130 million in 2024.
The payroll tax — also called JumpStart — was passed in 2020 with legislation to ensure that the money was used for affordable housing, equitable development, economic resilience and Seattle’s “Green New Deal.” Crucially, the City Council put guardrails against “supplantation” — making it harder to cover existing expenses using payroll tax money as a substitute for more flexible general fund dollars. The goal was to ensure that the money was used to enhance programs and expand services.
That was done, in part, by allowing payroll tax funds to support the general fund only when general fund revenues dropped below a $1.5 billion “floor.” The new proposal would link that floor to inflation, meaning that the floor number would grow.
Other adjustments to the tax legislation would expand the use of the money on housing projects for residents making up to 60 percent of the area median income (AMI) instead of concentrating on the lowest income residents, in the zero to 30 percent AMI range. It also creates a 10 percent reserve for the fund using “higher than anticipated revenues” from 2022.
Budget Chair Teresa Mosqueda, who championed the tax in 2020, signaled concern about the proposed use of the money and reiterated her support of spending payroll tax money to prevent cuts and austerity, the priorities backed by the coalition of organizations that put their weight behind the payroll tax in the first place.
“I think we’re going to have questions later about how the freed up revenue going into the general fund really does protect against cuts,” Mosqueda said.
One area that already appeared to see some backtracking was wages for homeless services workers.
Even as the budget seeks to index the use of the payroll tax to inflation, it would require the council to cap wage increases in Human Services Department contracts at 4 percent. Inflation hit 7.6 percent this year. That’s a functional cut to the purchasing power of homeless services workers at a time that that sector is experiencing high workforce turnover and hiring problems. The city is promising to expand shelter capacity, requiring a greater number of qualified human services employees.
The additional money to cover inflation is critical to maintaining current levels of service, said Steve Daschle, executive director of Southwest Youth & Family Services and co-chair of the Human Services Coalition, which represents the voices of local nonprofits in that field. His organization planned to increase wages for its staff and will have to identify new resources to do so if the promised contract increases don’t come through.
“Part of the motivation to increase salaries is to make us more competitive in the market,” Daschle said. “We have turnover rates that we’ve never seen before, in part because we simply can’t keep up with the market in terms of paying our staff a livable wage in this extremely expensive city.”
Public safety also looms large in the budget. Harrell proposed undoing a signature progressive win from 2020 by removing the parking enforcement division from SDOT and returning it to SPD. The reorganization makes more sense, Harrell said, because parking enforcement officers (PEOs) still work out of SPD facilities and use SPD equipment. Bringing them back under the SPD fold is also expected to save more than $5 million in administrative costs.
But the prospect of PEOs returning to SPD is about more than technical efficiencies, said Clara Cantor, of Seattle Neighborhood Greenways. Cantor is part of the Solidarity Budget, a coalition of progressive organizations that came together in 2020 to fight for common budget demands rather than be pitted against one another in a competition for resources.
“I think that we’re a lot more powerful when we come into it together and say, ‘These are the ways this budget is failing, and this is what we need to change,’” Cantor said.
SDOT is about curb and street resource management, and PEOs can be a key piece of that by identifying where violations occur, indicating a problem with street design. That’s different from their use as a purely punitive tool, she said, and requires a culture shift within the division that takes more than a year to accomplish.
The mayor’s proposed budget is a first shot across the bow, and the City Council will have nearly two months to adjust it before they pass an amended version and send it back to the Mayor’s Office for final approval.
Constituents can write in to comment at any time, but there will be a public hearing on the budget on Oct. 11 before councilmembers dive into their preferred adjustments.
Ashley Archibald was the editor of Real Change through July 2023, and is now a communication specialist for Purpose. Dignity. Action.
Read more of the Oct. 5-11, 2022 issue.