Seattle Budget May Face a Looming Crisis
Three main sources of revenue could be hit by a “perfect storm,” forcing hard decisions for policymakers
Our challenge: What would candidates for Mayor and City Council do?
Seattle, July 24, 2017 – The City of Seattle could face a “perfect storm” of sharply declining revenues in the near future, creating a significant challenge for policymakers in governance and priority-setting, according to a new study of City of Seattle general fund spending released today by the Municipal League.
The League said its goal in the study is to draw the public’s attention to the City functions whose funding relies heavily today on a boom in sales taxes from construction, on voter-approved levies, and on federal funds, sources that may be at substantial risk.
“The Municipal League of King County has been studying and monitoring local government for more than 100 years,” said Clayton Graham, president of the Municipal League Foundation. “Today we are launching a challenge to candidates for Mayor and City Council to engage with voters on what they see as “basic” functions of City government. While the future is uncertain, the City may increasingly find it is hard pressed to pay for all the things it wants to do.”
Over the years, The Municipal League has looked into issue areas as wide-ranging as regional infrastructure, land use, transportation, government corruption, civil rights, mental health, and education. The study tries to draw the public’s attention to the shift over time from a limited number of early charter services funded by relatively stable property and B&O taxes to a much expanded set of City functions funded outside the general fund from sources that are subject to higher volatility.
In the last 50 years, the City has substantially expanded its governmental role, with over a dozen new departments and offices, and an expanded suite of services. For example, in 2017, functions such as human services, housing, education, and economic development, which were not in the budget in 1967, represent some 12% of the general fund. Our region has come to expect much more from their city in terms of basic services, and yet citizens still want to know what are the metrics for the impact of the taxes and how will their leaders adjust should a shortfall necessitate cuts.
The report notes that the City is considering an income tax to generate additional revenues. But the effort to enact an income tax only points to a deeper issue for the City: its reliance on special levies to fund basic services presents a looming financial crisis.
Policy Committee Chair Kathy Elias added, “We thus believe it imperative that our leaders and our citizens have an open, honest conversation about the City budget, funding priorities, and the real trade-offs that are required. There is no one right answer, but developing a City budget that strikes the right balance necessitates asking hard questions.”
The City budget report is part of a wider effort by the Municipal League to engage in non-partisan research on local and regional government issues. Research is more important than ever today and as a result the League is introducing a new multi-year research agenda. Other research topics could include vocational education, homelessness, county government, initiative reform, and the impact of City Council districting and “democracy vouchers.”