Understanding the Mayor’s Proposed 2022 Budget, Part III: Expenses

This is the second in a series of articles drilling into the details of Mayor Durkan’s proposed 2022 budget. The first installment, looking at city revenues, is here, and the second part on the payroll tax is here. This installment dives into the expense side of the the budget: the Mayor’s proposal for department budgets.

There are 43 top-level “departments” in the City budget that collectively will spend $7.1 billion under the Mayor’s proposed 2022 budget. As with revenues, the division of money is very uneven. The top two spenders are the city’s two utilities businesses, Seattle City Light and Seattle Public Utilities; collectively they are $2.78 billion, which is 39.1% of the entire city budget. As discussed in previous budget articles, the utilities are a special case in the budget since they are run as separate businesses; the Mayor and Council have some say over how they spend money to run the business, but the revenues must stay in the businesses — they can’t be reallocated to other city purposes (other than by imposing utility taxes).

There are twelve other city departments each with budgets over $100 million, with SDOT being the largest at $718.3 million.  Together these twelve add up to $3.82 billion, or 53.8% of the entire budget.

There are fifteen departments with budgets between $10 million and $100 million: altogether $457 million, 6.43% of the budget.

Fourteen departments have budgets less than $10 million: collectively $47.2 million or 0.66% of the entire budget.  $47.2 million is less than the budget for Seattle Center alone.

Here’s the full list of city departments and their budgets for both 2021 and 2022:

Recognizing the widely varying sizes of departments is important because it determines what constitutes a meaningful change to the budget numbers. $100,000 is a big deal for a department with a $2 million budget, but it’s a rounding error for SDOT. Similarly, if you are looking to find $10 million to fund a new program, there are only a handful of departments whose budget could manage such a large cut. Also of concern: arguably many of the smaller departments probably don’t have the internal capacity to manage an increase of $10 million to their budget, so where the money is allocated also matters.

We also need to consider “the color of money.” Many departments have some mix of unrestricted “general fund” dollars that can be repurposed, and funds that have restricted uses. Moving money from one department to another — or even between budget line-items within the same department — requires understanding if the revenues funding those dollars allow for the proposed new use. Here’s another look at those 43 departments, and their split of general fund and restricted-use funding:

A few departments immediately jump out as being lopsided. SDOT is almost entirely restricted-use funding; that’s a combination of voter-approved levies, REET, and federal and state grants.  On the other hand, the police department is almost entirely funded with general-fund dollars; that’s good news for those who would like to see some of SPD’s budget redirected to alternative public-safety programs. Other departments that are heavy on restricted-use funds include:

  • Human Resources: nearly all of their budget goes to paying for healthcare for the city’s 12,000 employees.
  • Seattle IT: the IT department essentially contracts with other city departments to provide them IT services, so the internal transfers funding them are not fungible.
  • Office of Housing: their funding is a combination of the Housing Levy, payroll tax revenues, and government grants.
  • Department of Education and Early Learning: much of their budget comes from the Families, Education, Preschool and Promise Levy to fund the Seattle Preschool and Seattle Promise programs.
  • Department of Construction and Inspections: they are largely funded by license and permit fees, which must be spent to support the programs they are charged for.

With that baseline, we can start to look at what significant changes the Mayor is proposing from the 2021 budget. And generally there aren’t a lot. With the recovery in revenues as the economy comes back to life, the Mayor is proposing to restore funding cuts made in 2020, particularly to the Parks Department and Libraries, to return them to pre-pandemic levels. Other notable changes:

  • Human Services: 2022 is the year when the responsibility for most of the city’s homeless response transfers over to the new regional homeless authority — and with it, a large chunk of HSD’s budget. It will write a $104 million check to the RHA to keep the homeless programs running.
  • SDOT: The Parking Enforcement Officer division recently moved from SPD to SDOT; that is now reflected in the 2022 SDOT budget. There are also big line-items for the West Seattle Bridge repairs (scheduled to be completed next summer), ongoing work on the waterfront (paid for with Waterfront LID dollars), and increased funding for transit services.
  • Housing: The Mayor is going big on investing in new affordable housing, particularly new housing that could provide homes and wrap-around services for the city’s homeless.
  • Public safety: SPD’s budget is approximately flat, after factoring in the transfer out of the Parking Enforcement Officers, expected hiring and attrition, and cost-of-living adjustments. The department is expecting to hire 125 officers next year, while losing 90 to attrition, for a net increase of 35; that’s still well below recent years and doesn’t even begin to make up for the high attrition the department has seen since June 2022. But meanwhile the Mayor is also proposing to invest in spinning up alternatives to policing, with continued funding for the $10 million in capacity-building grants awarded this year. The Mayor’s budget also proposes $30 million of ongoing funding for her Equitable Communities Initiative task force’s recommended investments, as well as $30 million in ongoing funding for participatory budgeting in addition to carrying over the $27 million of one-time participatory budgeting funding in the 2021 budget that won’t get spent this year.
  • “Finance general”: this is where the city stashes away money that it wants to allocate for a program but when the plan for exactly how to spend it isn’t in place yet, or when timing considerations require the money to be allocated later in the year. The extra funds for participatory budgeting sit here. There is also $25 million to continue to replenish the city’s emergency reserve funds, which were largely depleted in 2020’s fiscal emergency. This is a “department” that has seen substantial growth in its budget-line, but it’s more of a reflection of changes in budgeting and money-management tactics at the city than policy shifts.
  • Office of Sustainability and the Environment: new payroll-tax-funded Green New Deal investments will largely be managed out of this office.

Overall, the Mayor’s proposed 2022 spending plan is not that headline-grabbing. There will no doubt be a fight over how to spend the payroll tax dollars, and words will be exchanged over SPD’s budget, but beyond that the changes are mostly uncontroversial and the Mayor chose to fund many of the things on the Council’s wish-list.  Most of the large departments see modest budget increases that reflect the recovering city revenues and cost-of-living adjustments, and are in-line with past years (see chart below).  The budget deliberations tend to be easier in the years where revenues are increasing, and this year appears to be no exception: there is a very large pot of new revenues to be spent, enough for the Mayor and the Councilmembers to cover many of the items on their wish-lists.

Next up: a deep-dive on SPD’s budget, and on other public-safety investments.

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