A new analysis by Seattle’s Office of Economic and Revenue Forecast provided city officials with a pleasant surprise when it projected that the city’s economy and budget will hold steady through 2027.
Members of the city’s Economic and Revenue Forecast Council, comprised of Councilmembers and staff from the Mayor’s office, expected inflation, tech layoffs, higher oil prices, and international turbulence to slow the economy and drive up the city’s projected budget shortfall. However, the analysis found that those negative factors are being counterbalanced by growth in health care and education.
On the budget front, the impacts of inflation and a sluggish economy are being offset by higher revenue generation by the JumpStart payroll tax, a new $.01 sales tax for public safety, and voter-approved changes to the city’s business and occupancy (“B&O) tax. The revised B&O tax shifts the burden from small and medium-sized businesses to large ones.
Councilmember Dan Strauss, chair of both the Council’s Select Budget Committee and the Economic and Revenue Forecast Council, reacted cautiously to the neutral budget forecast.
“I’m glad that the forecast is a wash because it’s better than a negative. . . . I also think we as a city need to be acting as if this is a negative revenue forecast.”
The city is expected to face a budget shortfall of about $150 million in 2027, so Mayor Katie Wilson has asked city departments to prepare for 5% – 10% cuts.
One area where international turmoil is expected to impact Seattle is FIFA World Cup tourism. While Visit Seattle anticipates that the games will bring about $846 million to the area, the tourism projections are down about 10% from earlier estimates.
