Councilmember Bob Kettle (District 7) shared the following observations, following a letter he sent to Mayor Katie B. Wilson on Monday, July 20. As the City Council gears up for the upcoming fall budget process, the City of Seattle is facing a projected $175 million budget deficit next year.
There’s a narrative that West Coast blue cities are incapable of being well run. We must push back on that narrative, starting with prudence around our budget, spending, and taxes.
Every day, we must fulfill our charter responsibilities: provide services, support communities, protect the public and be wise stewards of taxpayer dollars, while adhering to our Seattle values of being a diverse, equitable, inclusive, accessible and welcoming city. Fulfilling these responsibilities requires us to take a hard look at what we can do better.
Seattle’s projected budget deficit has ballooned to $175 million next year, with even larger deficits beyond. Everyone acknowledges that the upcoming budget will be challenging, so we need to start the conversation now about how we should go forward and where we want to be. While our 2026 budget is balanced, it is, as stated in our City Council budget committee, “inherently unsustainable.” We’ve utilized progressive revenues to fill our budget gaps in recent years. But even with those new revenues, hard decisions for the 2027 biennium budget loom.
To be clear, I support progressive taxes, generally. It is the layering of progressive tax on top of progressive tax, again and again, that has me and many others worried. This also is “inherently unsustainable.” Important to note, continuing to use property levies to fund critical initiatives may not be an available option for both legal and political reasons in the future.
Moving forward, I’m calling for actions we can take as a city to reform our budget and ensure sustainability for the future. I am calling for three things that realign our city’s expenditures with what our city deserves:
- A priority-based budget system – currently, we simply roll over last year’s budget, add in inflation and pet projects and call this sufficient. This is inadequate.
- Withdrawing from unnecessary lines of business – the City’s charter articulates the basic services the city should provide; that’s in addition to services approved by voters that are also important. Still, there may be others we can reduce or cut entirely. Additionally, there are lines of business that belong to the county or state, but because of inadequate resources, the City has taken on those lines. We should review and call these out.
- Reviewing our Payroll Expense Tax – A hyper-targeted payroll expense tax is creating unintended consequences for the overall health of our business community and our business tax base. By broadening the tax base and lowering the rate with no net new revenue, we can stabilize the impact on businesses and the city’s revenue long term.
We need a “Spending Stabilization Work Group” to help understand our lines of business and where rationalization can occur plus pause further increases to city taxes and assess the impact of taxes on our economy.
I draw attention to these points because we do not live on an island in Seattle. For every action, there is a reaction, and we see this in tax policy as well. Recent taxes aimed at sizeable Seattle businesses are now experiencing a backlash. Companies are asking their employees to work in Bellevue to avoid the growing tax burden in Seattle. I know employees who wish to work in Seattle but cannot. Underlining this point is that while tech jobs are growing across King County, they have stalled in the region’s marquee city.
The signs of jobs shifting can be seen on our streets. And now on our light rail.
Our local economy is also facing severe headwinds as a result of disastrous (and recently struck down) national tariff policies, specifically impacting our maritime economy. This will impact our budget as will the inflation spiking because of the Iran War. Further headwinds exist in real estate, retail, manufacturing, and tech —all crucial to our tax base. We cannot delay taking real action on budget reform.
For all these reasons, I’m again calling on our city to take a pause on increasing piecemeal taxes until the opportunity cost impacts of doing so are truly understood. Taking a short-term approach can hurt our revenue opportunities in the long term. Incoming city revenue is not keeping up with rising costs, creating an ever-growing budget deficit.
Setting ourselves up for economic success requires looking critically at both revenue and spending. We need to ask ourselves, is this worth spending on? What is its effectiveness and efficacy? How does it align with our values and principles of good governance?
We’ll also need to ensure spending is not just one-time, but that our programs and services are accounted for, year after year. And we cannot continue to rely on levies.
If Seattle is to continue as a well-run West Coast blue city, we need to start now on shoring up our budget. We should evaluate our current economy, pause our piecemeal tax increases, and take a critical look at our spending. We cannot continue down the same road expecting different results. We need to take a new approach in moving forward to create a truly sustainable, long-term budget from the inside out.
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