Budget Committee - June 15, 2024

This June 16, 2025 Select Budget Committee meeting revealed **Seattle facing its most severe budget crisis in years**, with a **$150 million combined deficit** through 2026. Key participants included Chair Strauss, Budget Director Eder, and Central Staff Director Noble, who outlined both immediate crisis response measures and fall budget process reforms. **Major outcomes:** - **Approved two ordinances**: 2024 budget exceptions ($1.8M) and early bond repayment ($3.5M) - **Unveiled new budget calendar** with enhanced transparency measures - **Confirmed department reduction targets**: 8% for most departments, 2% for public safety - **Established revenue discussion framework** for summer committee work The meeting duration of 119 minutes covered process reforms, crisis management, and immediate fiscal housekeeping, setting the stage for what promises to be Seattle's most challenging budget cycle in recent memory. ---

### Budget Crisis Scope and Response **Background context:** The April 2025 revenue forecast delivered devastating news - **$217 million less revenue** than projected for the General Fund and Payroll Expense Tax (PET) fund through 2026. This represents the most significant budget shortfall Seattle has faced since the 2008 financial crisis. **Current status:** Mayor Harrell implemented immediate spending freezes on April 11th, including: - All non-essential travel and training - New contracts not already committed - New program spending - Extension of hiring freeze from 2024 into 2025 **Technical details explained:** - **General Fund deficit**: Primary operating fund facing major shortfall - **PET fund challenges**: Seattle's unique payroll expense tax showing revenue decline - **Federal funding cuts**: Additional hundreds of millions at risk from federal policy changes - **Compounding factors**: Inflation, employment pattern changes, and forecast uncertainty ### Fall Budget Process Reforms **Key changes for transparency:** - **New discussion phase**: October 28-30 for councilmember budget proposals before chair's balancing package - **Earlier public hearing**: Moved up 10 days to provide more public input opportunity - **Sponsorship requirements**: Three sponsors needed for all amendments to focus on viable proposals - **48-hour publication goal**: Chair's balancing package to be public before hearing **Strategic implications:** These changes address last year's criticism about lack of transparency in amendment development and aim to prevent the "walk-on amendment" problems that created technical errors. ---

### Coalition Patterns and Strategic Positioning **Key alliances emerging:** - **Fiscal hawks alignment**: Councilmembers Kettle and Rivera emphasizing accountability and performance metrics - **Progressive revenue coalition**: Councilmember Rinck advocating for new revenue sources, coordinating with King County - **Public safety prioritization**: Multiple members (Kettle, Nelson) pushing back on treating law enforcement as non-priority **Strategic motivations behind positions:** - **Chair Strauss**: Positioning as reform-minded leader while managing crisis - **Budget Director Eder**: Balancing executive priorities with council demands for transparency - **Central Staff**: Rebuilding credibility after staffing turnover and previous year's challenges **Power dynamics at play:** The **sponsorship requirement** for amendments represents a significant shift in council dynamics. Chair Strauss noted that amendments with 5-7 sponsors will likely be included in the balancing package, creating incentives for coalition-building and potentially marginalizing individual members' priorities. ### Interest Group Influence **Public commenters** reflected broader tensions: - **Alberto Alvarez** representing progressive advocacy for millionaire taxes over cuts - **David Haynes** expressing frustration with perceived lack of transparency and "wool-pulling" The **federal funding uncertainty** adds external pressure that could reshape local political calculations, particularly around revenue measures. ---

### Immediate Opportunities for Public Input **Key decision points and timelines:** - **August revenue forecast**: Critical update that will shape mayor's proposed budget - **September 23**: Mayor's budget transmission - first concrete look at proposed cuts - **October 7**: Initial public hearing on mayor's proposal - **October 28-30**: Councilmember budget proposal discussions (prime engagement window) - **November 6**: Public hearing on chair's balancing package **Contact strategies for maximum impact:** - **Before August forecast**: Contact councilmembers about revenue priorities and service protection - **September-October**: Focus on specific department presentations and policy alternatives - **Late October**: Engage during councilmember proposal discussions when amendments are being shaped **Action items for engaged citizens:** - Monitor the **six-year budget lookback** document when released - Track **department reduction proposals** as they emerge - Prepare testimony for **multiple public hearings** rather than single opportunity - Coordinate with advocacy organizations during **October discussion phase** ### Strategic Timing Considerations The **compressed timeline** means public engagement must be more strategic. The new discussion phase (October 28-30) represents the **best opportunity** for public input to influence final decisions, as this is when councilmembers will be sharing their priorities before the chair's package is finalized. ---

### Related Policies and Initiatives **Budget reform connections:** - **Fiscal stewardship program**: Reducing exceptions from $30M+ to $1.8M shows reform success - **Six-year lookback analysis**: Critical for understanding spending pattern changes - **Performance metrics integration**: Links to department accountability measures **Revenue exploration framework:** - **State-authorized options**: New 0.1% sales tax authority ($38M annually) - **Voter-approved measures**: Property tax levies with $150-200M headroom - **Regional coordination**: King County partnership discussions for joint revenue strategies ### Upcoming Milestones and Deadlines **Critical summer deadlines:** - **July**: Department under-spending analysis due - **August**: Revenue forecast update (shapes mayor's proposal) - **Late August**: Carryforward ordinance and midyear supplemental **Fall budget calendar:** - **September 23**: Mayor's budget transmission - **October 20**: Final revenue forecast before council action - **November 21**: Final budget adoption (before new councilmember takes office) ### Cross-cutting Themes and Implications **Federal impact cascade:** Multiple programs face cuts beyond city control, creating **compound pressure** on local resources. This external factor may provide political cover for difficult local decisions while constraining options. **Regional coordination necessity:** The scale of challenges facing all local governments creates opportunities for **joint revenue strategies** and shared service delivery models. ---

### Budget Implications and Funding Sources **Exception ordinance details:** - **Industrial Insurance Fund**: $1.1M for unpredictable pensionable workers' comp claims - **General Fund**: $658K for criminal case management system timing mismatch - **Total exceptions**: Down from $30M+ in previous years to $1.8M (major improvement) **Bond repayment mechanics:** - **2014 bonds**: $3.5M early redemption using available interest earnings - **Funding sources**: $1.9M from past taxable bond interest, $1.2M from cumulative reserve fund interest, $300K from capital funds - **Savings**: $675K in nominal interest payments through 2034 ### Procedural Insights and Next Steps **Amendment process changes:** - **Three-sponsor requirement**: Reduces frivolous proposals, encourages coalition-building - **Verification process**: Prevents unauthorized name attachment to amendments - **24-hour publication**: Allows public review before committee discussions **Staffing and capacity constraints:** Central Staff operating with **reduced capacity** due to turnover, affecting timeline flexibility and document preparation. This creates **pinch points** in the calendar that limit council's ability to make last-minute changes. ### Implementation Challenges and Opportunities **Department reduction exercise risks:** The 8%/2% reduction target exercise could become **self-fulfilling prophecy** if economic conditions don't improve. Departments may begin implementing cuts preemptively, creating service disruption before final budget adoption. **Revenue timing challenges:** New revenue measures require **months of preparation** but budget process focuses on immediate needs. This creates tension between short-term crisis management and long-term fiscal sustainability. **Technology integration opportunities:** Discussion of **AI tools** for operational efficiency represents potential for significant cost savings, but implementation timeline may not align with immediate budget crisis needs. The meeting revealed a city government grappling with unprecedented fiscal challenges while attempting to maintain democratic processes and public services. The success of both the crisis response and process reforms will depend heavily on council unity and public engagement in the coming months.