As promised, Mayor Durkan delivered her proposed 2019-2020 budget to the City Council today. It’s going to take several days for me to go through all of the details, but here’s a high-level first take on it, with highlights and lowlights of what’s new.
Revenues
The Mayor’s budget doesn’t propose any new taxes, other than the Families, Education, Preschool and Promise Levy on the November ballot — a large part of which is continuation of two current levies. So that means the city’s revenue growth for next year is dependent on growth in the existing tax base — which in turn is highly dependent on the local economy. Nationally, the economy is predicted to continue to see strong growth into 2019, but slower growth and higher risk of a recession in 2020. Locally, construction activity is expected to drop by 10.7% between 2019 and 2021. Sales taxes are predicted to increase 3.5% in 2019 and 2.0% in 2020.
Nearly three quarters of the city’s revenues come from only four sources: general property tax, B&O tax, retail sales tax, and utilities taxes. That means the city’s overall revenue growth is largely determined by these four sources.
Revenue from all sources is expected to grow 6.16% in 2019, though “general subfund” revenue, money that isn’t restricted on how it can be spent, will only grow at 3.5%. In the meantime, local inflation is around 3.0%, which means that the city is sustaining its buying power over time but isn’t gaining the ability to do more. You can see in this graph that the “big four” are predicted to continue growing steadily in absolute dollars, but as the total amount grows, the percentage growth decreases — even before accounting for a potential economic slowdown.
There are a few revenue highlights as well; in particular, both the soda tax and short-term rental tax are returning higher-than-expected revenues (I’ll leave the policy implications of those taxes for another day). But changes in revenue sources other than the big four are just fiddling around the edges; the net result is still that revenues are flattening out, and that is the biggest constraint on spending.
Expenditures
With no big influx of revenues, any new spending will come by cutting spending elsewhere. And this is what Durkan claims she has done with her proposed budget: she found nearly $50 million by scouring every department for places where money can be saved. They eliminated 150 positions, most of which were vacant and were determined not to be needed any more. They also reduced discretionary spending, travel budgets, and consultant contracts, on top of specific cuts within each department as deemed appropriate. And they reduced fuel expenditures, and this afternoon Mayor Durkan signed an executive order to cut the city government car fleet by 10%.
With the money they found, here’s what they chose to prioritize:
- Overall, making the budget “sustainable” by establishing ongoing funding for important programs that had been paid for in 2018 with one-time funds — in particular, homeless response and housing programs.
- For SPD: increased payroll costs due to the new contract (assuming the City Council approves it in the coming weeks), an increase of 40 new officers (10 in 2019, 30 in 2020), and 12 Community Service Officers.
- For the Fire Department: adding 120 new recruits, intended to dramatically reduce the amount of overtime being logged by current staff.
- For Seattle City Light and Seattle Public Utilities: adding 24 additional staff (12 permanent, 12 temporary) in the customer call center to reduce wait times.
- For Seattle Public Utilities: expanding the “Clean City” garbage cleanup program.
- For the Human Services Department: converting from one-time to ongoing funding for permanent supportive housing, rental housing assistance, and the new emergency shelter beds added in 2018; increased case management at tiny home villages; expanding the Navigation Team to a sustained 30 people (King County funded the expansion this year with one-time funds); expanding neighborhood outreach associated with navigation team activities; a 2% wage increase each year for workers at service providers (which is better than nothing, but still lags inflation).
- A new pilot project on having a safe lot for people living in vehicles.
- For SDOT: a $128.3 million increase in funding over 2018. SDOT has requested Metro to deliver 100,000 additional bus hours in 2019 (paid for by SDOT) on top of the existing 277,000 hours. This morning, Durkan said that Metro had not yet committed to be able to deliver those additional hours, but this evening Metro tweeted out that support for those additional hours are in the King County Executive’s proposed budget (which was also released today). Also in the SDOT budget: $26.7 million for safe routes, $101.6 million for maintenance and replacement of key roads, trails, bike paths, and bridges (though not the Magnolia Bridge — that will require state intervention). Durkan also wants to increase enforcement on bus-only lanes and bike lanes, preferably by getting the state legislature to allow camera enforcement (currently legal only in school zones). And the Mayor intends to contribute funds to Sound Transit to make the proposed Graham Street infill light rail station a reality.
- Adding $150,000 for outreach around the 2020 census to ensure an accurate count. Durkan stressed how important this is, since federal funding for some local programs is based on census counts.
- Staffing the new Office of Employee Ombud with three permanent positions. In addition, investigators currently spread across multiple departments’ HR departments will be consolidated into one investigation team within the city’s central HR department.
- For the Office of Labor Standards, additional resources for enforcement of the recently-passed Domestic Workers’ Bill of Rights, plus sustained funding for OLS staff that were paid for in 2018 with one-time funding.
In her speech today announcing the proposed budget, Durkan emphasized four priorities: delivers basic city services, doing more to address the crisis in housing affordability and homelessness, “doing what’s right” to address inequities, and investing in building a city of the future that is welcome, innovative and vibrant.
While there are dozens of city departments, 88% of the expenditures are in just the ten largest. The two utilities, Seattle Public Utilities and Seattle City Light, represent more than have of the “top ten” and 46% of the city’s overall expenditures.
With the investments that Durkan made this year, most departmental budgets are relatively flat, with two notable exceptions: Seattle Public Utilities and SDOT. SPU is on a path to spend nearly as much as City Light in 2020; most of the increase is due to the Ship Canal Water Quality Project, a massive effort to fix the city’s sewer overflow problem over the next few years that is required under a consent decree the city signed with the EPA. The good news is that in a few years when the project is done, SPU’s expenses should drop back down to a more manageable level.
A few additional notes on issues related to the budget:
- Durkan’s budget retains the capital funds allocated to the Center City Connector streetcar, despite the ongoing review of the project that she has commissioned (due to wrap up in October). She also said that SDOT had renewed its application for FTA funds for the project. In other words, she is leaving everything in place so that the project could move forward quickly if deemed fiscally and logistically sound, while not yet committing to green-light it.
- Durkan said that assuming Debra Smith, her nominee to head Seattle City Light, is confirmed next week, the Mayor intends to work with her to do a deeper scrub of the utility’s expenses. With electricity demand declining in Seattle due to effective conservation efforts, SCL’s financial model is currently not sustainable in the long term.
- Durkan’s budget meets the city’s obligation to continue to deposit funds into the city’s “rainy day” and “emergency” funds — a total of $60 million.
- The budget also carries over unspent 2018 funding for a safe consumption site into 2019, though moving forward on the site is dependent on King County since it manages public health initiatives for the region, including Seattle.
You can watch Mayor Durkan’s budget speech here, and read her press release here.
Wednesday and Thursday this week, the Council will be diving further into the details of the Mayor’s proposed budget.