SEATTLE — Seattle Mayor Jenny Durkan says her 2021 proposed budget, presented to the city council Tuesday, reflects the challenges of recovering from 2020.
"Take 2020 and 2021 together and we're hundreds of millions of dollars in the hole," Durkan said. “We had to make some hard choices for this budget, but there's some things we knew we had to do as a matter of principles and values."
The mayor says she has a goal of preserving "critical city services" while accomplishing four key things:
- Investing in response to the COVID-19 pandemic
- Making the city's "largest-ever" investment in racial equity and justice, including $100 million for Black, Indigenous and people of color (BIPOC) communities
- Addressing the city's homelessness and housing crisis
- Building "true community safety while also re-imaging policing."
The Seattle Police Department noted on its blog that the mayor's proposal cuts funding for personnel, equipment, supplies and overtime by $22 million and transferring services such as the 911 communications center and parking enforcement to different city departments.
The city is facing financial challenges "created by the historic events of 2020."
That includes the COVID-19 pandemic that has resulted in an economic slowdown of "nearly unprecedented magnitude."
Before the pandemic, the city's anticipated general fund revenues totaled $1.4 billion for this year. Based on recent trends, the city was looking forward to 4% to 5% growth for 2021. However, current 2021 revenue forecasts now total $1.28 billion, a decline of $120 million relative to 2020. A decline of an additional $65 million is possible due to declines in other revenue sources such as the soda tax.
Sales tax revenue declined by 15% in the first six months of 2020 compared to the same period in 2019. Sales tax revenue as a whole is expected to drop by 16% to 21%.
Though more stable, the business and occupation tax revenue were 12.8% lower in the first two quarters of 2020 compared to the same time in 2019. By the end of the year, they could be as low as 19.5%.
A new source of revenue could help offset those declines, however. The new payroll tax is projected to generate $214 million in 2021. It's noted in the proposed budget that there is "risk and uncertainty" in the forecast for the payroll tax, as there are only estimates with no prior revenue.
Still, the city's underlying costs are expected to grow from 2020 to 2021, driven by inflation and the contractual obligations to unionized workers. Additionally, the pandemic and economic downturn has led to increased demand for basic services such as food assistance and shelter.
The mayor's proposed budget also takes steps toward addressing the historic underinvestment in communities of color, including $100 million in new funding.
To balance this spending and address revenue shortfalls, the proposed budget reduces $63.5 million in the general fund and relies on $52.2 million from the rainy day and emergency funds.
There are currently 33 employees at risk of layoffs across nine city departments. A few others could be at risk of layoff pending ongoing labor discussions, according to a city spokesperson.