Budget Chair Teresa Mosqueda and the rest of the council will direct how the new funds are spent.
Budget Chair Teresa Mosqueda and the rest of the council will direct how the new funds are spent. SHITTY SCREENSHOT OF THE SEATTLE CHANNEL

With less than a month left for the Seattle City Council to finalize and vote on the 2021 city budget, on Monday the City Budget Office (CBO) announced a new revenue forecast that added $57 million in net revenue to the 2020 and 2021 budgets. (Yes, I realize it's Friday and this post is coming late, but you weren't reading city news this week anyway.) The 2021 budget currently under council deliberation received a $32.5 million increase to the 2021 general fund, bumping the total fund from $1.49 billion to $1.52 billion.

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The revenue increase comes at a time when the council needs to weigh hard decisions about where to staunch the bleeding from cuts in Mayor Jenny Durkan's proposed budget, where to add programs, and how to balance a mayoral budget proposal currently unbalanced by $12 million.

The new funds aren't necessarily a surprise. Back in September, the state announced it would only be dealing with a $4.5 billion budget hole across three years rather than a $9 billion one, thanks to higher-than-expected revenues mostly from consumer spending throughout the summer. Still dire, but less dire.

If Washington state saw these increases, then maybe Seattle's budget—which saw $350 million in shortfalls—would rebound, too. In early September's 2021 budget preview, CBO Director Ben Noble presented budget forecasts that didn't reflect similar trends seen at the state level. Noble didn't know whether the issue was that the city had done its revenue forecasts too early, or whether the state had just been more negative in its initial projection of COVID-19 impacts. Noble said the state's initial outlook was "deeper and worse" than the city's.

Two months later, Noble and Durkan announced the new revenues to the council. Both weighed in on how they believe the funds should be spent.

Durkan stressed caution about using all the extra $32 million at once. That money could be used in a variety of ways, especially when paired with the city's ability to use car-tab fees again, though the council would need to pass legislation to boost those fees, Durkan wrote.

"I understand additional areas such as restoration of cuts to Seattle Department of Transportation or alternatives to policing may be addressed as part of other budget considerations," Durkan wrote. Her budget proposal reduced SDOT's budget the most out of any city department. However, Durkan specified other areas where she'd like to see the money used, such as cleaning up the city, expanding shelter capacity, stopping city layoffs, and patching up the budgets in the Office of Sustainability and the Environment to fund Green New Deal priorities.

Select Budget Committee Chair Teresa Mosqueda told The Stranger over email that it was "encouraging to see the Mayor support many priorities councilmembers have been publicly proposing through the budget process." At least maybe this means she won't veto their budget this time?

Another thing Durkan mentioned was that the funds could go to repay the $30 million from the Strategic Investment Fund Durkan used to rebalance the budget. That money was from the $143.5 million Mercer Megablock sale, which was supposed to go toward financing community-development projects. While council members took issue with Durkan using the money to balance the budget instead of going toward its intended use, all of the new funds can't be used to backfill that spending.

Other factors will impact the 2021 budget going forward, Noble outlined in a sobering letter to the council. Many revenue sources such as the commercial parking tax and the short-term rental tax are projected to be lower in 2021 due to COVID-19. Noble emphasized how the general fund dollars will need to be spent to balance those funds. This is all part of the "slower [economic] recovery" Noble and the CBO have projected since the onset of the pandemic. All of it is somewhat uncertain, Noble said, because "the trajectory of the pandemic still remains highly uncertain."

One of the other uncertainties is how the new JumpStart Seattle payroll tax will fare during an extended work-from-home period. The tax will raise more than $200 million annually by placing a 0.7% to 2.4% tax on the high salaries at companies that reported over $7 million in payroll. JumpStart taxes employee salaries only for employees who work in Seattle. Work-from-home orders, which employers such as Amazon and King County just extended until next July, "could have significant effects" on that revenue stream. Durkan leaned heavily on JumpStart to account for losses in her proposed budget.

Mosqueda's priorities with the budget are first and foremost to make sure it's balanced and to refill the coffers of the city's rainy day fund and emergency fund, she wrote. Durkan's budget proposal left only $3 million in both funds. During the 2008 recession, the lowest those funds sank was $46 million.

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"With the almost certain need to respond to COVID-19 in 2021, not having money to respond to a known crisis leaves the city in a precarious position for over a year," Mosqueda wrote. "One of my top priorities in the 2021 budget is leaving the city in a healthy financial situation to weather future storms; not just build a budget for the next three months."

Mosqueda is taking a cautious approach to the budgeting process because of the "incredible volatility in the national and local [economic] forecasts" this year. "We cannot assume the forecast will remain stagnant," Mosqueda wrote.

Mosqueda will roll out the council revised budget next week. During those conversations, the economic revenue forecast, the imbalance in the budget, and the marginal reserves will all be taken into account. Those conversations start on Tuesday.

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