Today, Mayor Bruce Harrell and Councilmember Teresa Mosqueda (Pos. 8 – Citywide) announced that the Revenue Stabilization Workgroup has completed their work and issued a final report considering revenue options to address the City’s widening budget gap. Founded last year, the group of diverse civic, policy, community, and business leaders worked together to consider progressive revenue options, address looming revenue gaps, and continue to support critical City services and programs.
“Last year, my administration worked with the City Council to close a significant budget gap – ensuring we funded necessary programs to provide the essential services residents rely on and make progress on our greatest priorities from public safety to homelessness and affordable housing. In the years to come, we will face even greater deficits and additional challenging decisions,” said Mayor Bruce Harrell. “I’m grateful for the work of this group of leaders, who brought innovative thinking and a wide array of perspectives to identify potential solutions in a thoughtful and collaborative way. This was a significant commitment of time and energy, and I want to thank each member for their effort and dialogue. With these ideas in hand, we’ll continue working on the comprehensive and long-term strategy to reduce fiscal deficits and uncertainties so that we can deliver a sustainable, balanced budget and a bright future for every Seattle resident.”
“Given the looming gap between projected expenses and projected revenue, we all must find solutions to close this gap with additional revenue. I appreciate that this report outlines what options exist,” said Councilmember Teresa Mosqueda. “New revenue is critical to creating a resilient economy and avoiding an all-austerity budget, which we know harms families, businesses, and slows growth. The growing population and increased needs of our residents, small businesses, and community, demand results that scale to meet the need of all Seattleites. I am thankful to the Workgroup members and the Executive for the commitment to finalize this report. There is much work ahead of us to close this gap together.”
About the Revenue Stabilization Workgroup
Originally announced by Mayor Harrell and Councilmember Mosqueda in October of 2022, and including elected officials, community and business leaders, and budget policy experts, the Workgroup evaluated different tax strategies to increase revenue as one method to address the increasing General Fund deficit. Evaluation criteria included potential revenue generation, practicality of approval and implementation, tax progressivity, and impact on underrepresented communities and citywide economic conditions, with an emphasis on small businesses.
After generating an initial list of over 60 potential ideas, the Workgroup applied the evaluation criteria to narrow to a shortlist of nine new or expanded taxes, all of which are options – not recommendations – that the City may consider implementing.
The nine identified revenue sources for further consideration are:
- Changes to JumpStart Payroll Expense Tax;
- City-level Capital Gains Tax;
- High CEO Pay Ratio Tax;
- Vacancy Tax;
- Progressive Real Estate Excise Tax;
- Estate Tax;
- Inheritance Tax;
- Congestion Tax; and
- Income Tax.
The group also noted areas for possible future lobbying to change Washington law to allow additional flexibility, concerns about unintended consequences for businesses, and the need for evaluation tools to quantify impacts of taxes on underrepresented communities.
These recommendations have not undergone a detailed legal analysis and are intended to be the start, not the end, of ongoing conversation and collaboration as tools toward a sustainable budget. The Workgroup was asked for feedback specifically on revenue suggestions and not on other deficit reduction strategies. City leadership is separately analyzing and evaluating proposals around spending reductions, revenue re-purposing, or growing the City’s tax base. The City’s General Fund expenses are currently projected to grow by $547 million from 2022 to 2026, outpacing increases in revenue and leading to a projected $221 million budget deficit in 2025.
The City’s currently available revenue tools are determined by the laws and statutes of Washington state. Washington’s tax system is among the most regressive in the United States, meaning that taxes disproportionately impact lower-income earners and workers. The Workgroup responds to (SLI) FG-002-B-001, passed in 2021, which requests Mayor’s Office and Council collaboration “to review Seattle’s tax structure and identify ways to make it more equitable and to raise new progressive revenue.”
Full list of Workgroup Members:
- Teresa Mosqueda – Seattle City Councilmember, Budget Chair, At-large/Position 8
- Tiffany Washington – Deputy Mayor, Seattle Mayor’s Office
- Louise Chernin – former Executive Director, Greater Seattle Business Association
- David Frockt – former Washington State Senator, 46th Legislative District
- Joe Fugere – Founder, Tutta Bella
- Katie Garrow – Executive Secretary-Treasurer, MLK Labor, AFL-CIO
- Lindsey Grad – Legislative Director, SEIU Healthcare 1199NW
- Alisha Gregory-Davis – Coalition of City Unions Representative
- Andrew Guillen – Chief Public Affairs Officer, Seattle Indian Health Board
- Hyeok Kim – Principal, Insa Consulting; former Deputy Mayor of Seattle
- Patience Malaba – Executive Director, Housing Development Consortium
- Darrell Powell – Managing Director, Pinnacle Financial Services, PLLC
- Rachel Smith – President and CEO, Seattle Metropolitan Chamber of Commerce
- Misha Werschkul – Executive Director, Washington State Budget & Policy Center
- Katie Wilson – General Secretary, Transit Riders Union