Budget Committee - June 16, 2024

This June 17, 2025 Seattle City Council Select Budget Committee meeting revealed a city facing its most severe fiscal crisis in recent memory. **Chair Strauss** led discussions on budget reform processes while **Director Eder** (CBO) and **Director Noble** (Central Staff) outlined the stark reality: a **$150+ million combined deficit** through 2026, driven by the devastating April revenue forecast downgrade. **Key participants included:** - Chair Strauss, Vice Chair Rivera, Council President Nelson, Councilmembers Kettle, Rinck, Hollingsworth, Saka - CBO Director Eder, Central Staff Director Noble, analysts Calvin Chow and Tom Mikesell **Major outcomes:** - **Approved two ordinances:** 2024 budget exceptions ($1.8M) and early bond repayment ($3.5M) - **Established new budget calendar** with enhanced transparency measures - **Confirmed department reduction targets:** 8% for most departments, 2% for public safety/homelessness - **Committed to revenue options discussion** before fall budget process **Timeline:** Fall budget process runs September 23 - November 21, with final vote before Thanksgiving to ensure current council composition participates.

### Budget Process Reforms **Background context:** The committee implemented significant calendar changes responding to last year's transparency concerns and the current fiscal emergency. **Current status:** New three-sponsor requirement for amendments, mandatory verification of co-sponsorships, and elimination of walk-on amendments except in extraordinary circumstances. **Technical details explained:** - **October 28-30:** New "discussion of budget proposals" phase allows public transparency of councilmember priorities before chair's balancing package - **48-hour publication rule** for chair's package before public hearing - **Online amendment tracking tool** will show all viable proposals with required sponsorships - **Revenue forecast integration:** August forecast sets mayor's proposal baseline, October forecast informs final deliberations ### Fiscal Crisis Magnitude **Background context:** April 2025 revenue forecast eliminated $217 million from general fund and payroll expense tax projections through 2026. **Current status:** - **Immediate actions taken:** Hiring freeze extended, discretionary spending frozen, new contracts halted - **Department reduction exercises:** Most departments asked for 8% reduction scenarios, public safety/homelessness departments 2% - **Federal funding threats:** Hundreds of millions in committed federal grants face elimination **Technical details:** - **$150M+ deficit** represents conservative estimate not including known cost pressures - **Police hiring success** creating budget pressure (good problem but still costly) - **Inflation impacts** on contracts, construction, and services not fully captured

### Coalition Patterns and Strategic Positioning **Key alliances emerging:** - **Fiscal hawks coalition:** Councilmembers Kettle and Rivera emphasizing operational efficiency and accountability - **Progressive revenue advocates:** Councilmember Rinck pushing for new taxes rather than cuts-only approach - **Pragmatic center:** Chair Strauss and Council President Nelson balancing reform with political reality **Strategic motivations behind positions:** - **Chair Strauss** positioning as competent budget manager while avoiding transportation levy-style disasters - **CBO Director Eder** carefully framing reduction exercises as information-gathering, not predetermined cuts - **Council President Nelson** concerned about adequate time for amendment development and public input **Power dynamics at play:** - **Central Staff capacity constraints** creating bottlenecks in amendment development process - **Mayor's early action** on spending freezes demonstrates executive urgency and leadership - **Federal uncertainty** providing political cover for difficult local decisions ### Interest Group Influence **Public safety advocates** likely to resist any cuts to police/prosecutor funding, with Councilmember Kettle already signaling Law Department should be treated as public safety. **Human services community** facing double hit from federal cuts and local budget pressures, creating intense advocacy pressure. **Business community** caught between opposing tax increases and needing city services for economic recovery.

### Immediate Opportunities for Public Input **Revenue options discussion (summer 2025):** - Contact councilmembers NOW about revenue preferences - Attend upcoming committee meetings on tax proposals - Engage with business and labor groups forming positions **Department budget presentations (October 2025):** - **Key dates:** September 23 (budget transmission) through October 20 - **Strategy:** Attend presentations for departments affecting your priorities - **Focus areas:** Public safety, human services, parks likely to see significant changes ### Key Decision Points and Timelines **Critical dates for maximum impact:** 1. **August revenue forecast release:** Will determine severity of cuts needed 2. **October 28-30:** Councilmember budget proposals discussion - first public airing of priorities 3. **November 5:** Chair's balancing package release 4. **November 6:** Public hearing on chair's package 5. **November 14 & 17:** Committee votes on amendments ### Contact Strategies for Maximum Impact **Before August forecast:** - **Email councilmembers** about revenue options you support - **Coordinate with advocacy groups** for unified messaging - **Attend district meetings** to discuss local priorities **During October-November process:** - **Submit written testimony** 24 hours before hearings for maximum impact - **Coordinate testimony** with others affected by same programs - **Follow amendment tracking tool** to see which proposals have momentum **Target swing votes:** - Focus on councilmembers not yet committed to specific approaches - Provide concrete examples of program impacts, not just general support

### Related Policies and Initiatives **Budget reform implementation:** - Six-year budget lookback analysis (delayed due to staffing) - Historic spending pattern analysis - Early retirement incentive study - Youth programs inventory **Revenue exploration connections:** - State-authorized 0.1% sales tax increase ($38M potential) - Property tax levy options (significant headroom available) - Capital gains tax exploration (unproven revenue stream) - Regional coordination with King County on joint revenue strategies ### Upcoming Milestones and Deadlines **Summer 2025:** - **July:** Department reduction scenario submissions due - **August:** Critical revenue forecast update - **Late August:** Revenue options committee discussion **Fall 2025:** - **September 23:** Mayor's budget transmission - **October 20:** Final revenue forecast before deliberations - **November 21:** Final budget adoption (before new councilmember takes office) ### Cross-Cutting Themes and Implications **Federal funding uncertainty** affects multiple policy areas: - Homelessness services through King County Regional Homelessness Authority - Youth programs and education support - Housing assistance and development - Transit and transportation projects **Workforce implications** span all departments: - Hiring freeze continuation limiting service delivery - Potential layoffs affecting union relations - Early retirement incentives as alternative to layoffs - Vacant position elimination reducing future flexibility

### Budget Implications and Funding Sources **Exception ordinance trends:** - **2018:** 30+ exceptions totaling $30M+ - **2025:** 2 exceptions totaling $1.8M - Demonstrates successful budget monitoring reforms **Bond repayment mechanics:** - **$3.5M in 2014 bonds** being retired early - **Funding sources:** $1.9M from taxable bond interest earnings, $1.3M from cumulative reserve fund interest, $300K from capital funds - **Net savings:** $675K through 2034 in avoided interest payments ### Procedural Insights and Next Steps **Amendment sponsorship requirements:** - **Three sponsors minimum** for viability - **Verification process** prevents unauthorized name usage - **Co-sponsorship levels** signal likelihood of inclusion in chair's package **Central Staff capacity management:** - **Rolling deadline structure** allows 24-hour publication of proposals - **Quality control emphasis** over volume of amendments - **Technical expertise concentration** on viable proposals only ### Implementation Challenges and Opportunities **Revenue timing constraints:** - **Voter-approved measures** need early development for 2026 implementation - **Council-enacted options** limited to fees, fines, and state-authorized taxes - **Regional coordination** requires summer 2025 groundwork **Department reduction exercise risks:** - **8% targets** may force elimination of entire programs - **Service delivery impacts** will be visible to public - **Union negotiations** complicated by potential layoffs - **Federal funding losses** compound local reduction pressures **Technology and efficiency opportunities:** - **AI implementation** being explored for operational improvements - **Permit streamlining** could generate revenue and reduce costs - **Workforce optimization** through vacancy analysis and early retirement The meeting revealed a city government grappling with unprecedented fiscal challenges while attempting to maintain transparency and democratic participation. The success of the fall budget process will depend heavily on early revenue decisions and the August forecast results.