The City of Seattle is Staring at a $230 Million Deficit. How Did We Get Here?
The City of Seattle is facing a big budget crunch this year, with the Mayor and City Council staring down a deficit of approximately $230 million. Several of our newly-elected Council members campaigned, in part, on how they would address this situation, often promising audits before raising taxes. But as next fall’s “budget season” approaches, none of them has come up with good answers. The deficit is an incredibly difficult problem, and there certainly aren’t any quick or easy solutions on hand.
How did we get into this situation, which had developed over many years? The crisis centers on one big bucket of money in the city’s budget: the General Fund. General Fund dollars are unrestricted. The city can spend them on almost any legitimate purpose, so they are the best kind of money to have. This year the General Fund budget is about $1.7 billion. There is another $6.1 billion of restricted-use funds in the overall city budget. About half of that is City Light and Public Utilities revenues for services and they must stay inside those businesses. The rest is scattered across the 40-odd city departments.
Whether money is restricted-use depends on its source: the state Legislature controls what the city is allowed to levy taxes on, and often attaches restrictions so that money collected is used in ways that benefit those who pay them. For example, fuel taxes go to roads and other transportation infrastructure; real estate excise taxes (REET) are plowed back into infrastructure that helps mitigate the effects of growth.
The vast majority of the city’s funds come from four sources: property taxes, utility taxes, business & occupation (B&O) taxes, and retail sales taxes. The latter two reflect economic growth; the first two track general population growth.
https://www.postalley.org/2024/03/22/the-city-of-seattle-is-staring-at-a-230-million-deficit-how-did-we-get-here/