Seattle facing $117 million revenue shortfall in 2023

Associated Press

SEATTLE — Seattle is facing a projected $117 million gap between revenues and expected expenditures in 2023, and the city’s budget chief says there’s no easy way to bridge the gap.

“This has been a slow build, many years in the making, where the city’s expenditures have begun to exceed revenues,” said Budget Director Julie Dingley, who took charge of the city’s budget office earlier this year.

The Seattle Times reports that in 2019, though the city was in its fifth consecutive year of significant revenue growth then-Budget Director Ben Noble began to caution against increasing spending, forecasting a $116 million shortfall in 2023, based on historical patterns. Seattle’s 2022 general fund budget is approximately $1.6 billion.

While the city had a couple of years to brace for the 2023 shortfall, the pandemic hit just months later, moving a distant budget concern down the triage list.

When the pandemic first hit, the city implemented a hiring freeze. As time went on, the city had to increase spending to provide help to the community through programs like rent relief, hazard pay and noncongregate shelters.

With about $128 million in one-time federal relief and $231 million from the City Council’s newly enacted Jumpstart payroll tax, in 2021 and 2022 the city managed to bandage the gaps created by the declining growth revenue and other revenue shortfalls, like parking, which tanked during the pandemic.

But the one-time funds, Noble says, were also problematic.

“As much as it helped in those years, the pandemic funds in some ways exacerbated this pattern of ‘Oh, we have some one-time money, we’re going to invest in an ongoing thing,’” Noble said, noting increased spending on housing and homelessness prioritized by the council and a $100 million investment into minority communities, committed by former Mayor Jenny Durkan without a funding source.

To bridge the projected gap in 2023, the city either needs to make significant cuts, find new money to cover planned expenditures or a combination of the two.

Though the mayor’s office is in the early stages of forming its budget, which will be presented to City Council for approval in September, the administration is looking to find new revenue rather than slash existing spending.

“The short version is, absolutely nobody desires or is looking for an austerity budget. That has to be an absolute worst-case scenario,” Senior Deputy Mayor Monisha Harrell said.