The 2022 budget: a recap of the “issues” discussions

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Last week the City Council held three days of “issue identification” discussion on the Mayor’s proposed 2022 budget, in advance of drafting amendments starting this week. Here’s a summary of what they talked about.

The three days were broken up into several thematic presentations, some focused on a specific department while others covered cross-department topics:

This doesn’t suggest that there won’t be amendments proposed for other departments, but rather that these are the priority areas for the Councilmembers.

General Fund Balancing

As laid out in this article last week, the issue with the General Fund — the least restricted funds in the city budget that the Council has the most freedom to spend as it sees fit — is really an issue about the “JumpStart” payroll tax. The Council passed a spending plan for the tax revenues that essentially converted them from “general fund” to restricted-use, and Mayor Durkan’s proposed budget asks the Council to revise that spending plan to leave more of the revenues as “general fund”, add homelessness response as another acceptable use, and relax future years’ spending plan restrictions. At the same time, the Mayor proposes to use one-time federal ARPA funding for additional spending in the payroll tax spending plan’s original categories, claiming to meet “the spirit” of the spending plan. Councilmember Mosqueda, the original sponsor of the payroll tax and spending plan, is leading several of her colleagues is vocally disagreeing with the Mayor’s proposal; she has said that she intends to claw back the extra $64 million diverted in the proposed budget and direct it back to the Council’s spending plan categories. For the most part the “color of money” paying for the investments is an issue only politicians could care (or argue) about; the one exception is the question of what happens in 2023 and beyond. The federal ARPA dollars one time-time and won’t be available in 2023, which raises issues with continuity of funding and whether other funding sources can be found. Either way, $85 million of payroll tax revenues will be diverted to the general fund in 2022 because the city’s GF revenues have not yet returned to 2019 levels; but if they recover further in 2023 then that will lessen the amount siphoned off to the general fund and available for to back-stop ARPA funding. But there are two big caveats to that: first, no one knows what the city’s revenues will be in 2023. Second, the actual payroll tax revenues are still unknown: the city has been spending 2021 predicted revenues while deferring collection until February 2022, so it has zero data points as to what the actuals will be. They could be substantially higher (both in 2021 and beyond), or they could be substantially lower. And unfortunately, if there is a major downside surprise in 2021, it could create not only a deficit in the 2022 budget, but also retroactively in the 2021 budget that the city would need to address to meet the legal requirement for a balanced budget.

But in the short term, expect Mosqueda to pull back the payroll tax spending that the Mayor proposed outside of the spending plan, while in some cases looking for alternative ways of funding those items. We’ll see several examples of those items below.

Department of Education and Early Learning

DEEL manages two large programs: the Seattle Preschool Program and the Seattle Promise college scholarship program, both largely funded by the Families, Education, Preschool and Promise Levy. The department is wrestling with two issues:

  • The Preschool Program and Seattle Promise are attracting more demand than originally envisioned, putting financial pressures on the programs.
  • A recent Racial Equity Toolkit analysis for the Seattle Promise program led to ten recommendations of changes to the program to increase equity.

The Mayor’s budget proposes addressing the 2022 funding shortfall with one-time federal ARPA dollars, which effectively kicks the can down the road for a year. Further confusing matters, the COVID-era shutdown of schools led to an underspend of several million dollars; DEEL is recommending that the funds be held in reserve to handle future years’ budget shortfalls.  The council will need to wrestle with whether it wants to try to find additional ongoing funding for DEEL’s programs now to replace the one-time funding, or wait it out.

In addition, Councilmember Morales signaled three additional budget amendments she is considering:

  • funding a culturally-responsive program for Black girls and trans youth;
  • funding for restorative justice programs in schools;
  • after-school programming at El Centro de la Raza.

Office of Economic Development

The two major issues that Councilmembers have raised with OED are:

  • the department is apparently not working as a regional partner with other agencies on workforce development programs;
  • internal re-orgs seem to have de-prioritized the creative industries.

The Central Staff memo takes the unusual step of suggesting that the Council might want to stall out any organizational changes until Durkan is out of office in the hopes that the next Mayor has a perspective closer to the Council’s.

The Council can’t force the executive branch to adopt a particular organizational hierarchy, or to hire positions it doesn’t want, but it can either take away budget and positions or place provisos on existing budget to prevent them from being spent until the department comes back with a plan that the Council likes. Expect to see some provisos here, and some hard conversations next year.

Office of Planning and Community Development

OPCD is the department that does long-term urban planning for Seattle, including revisions to the state-mandated Comprehensive Plan. It also runs the Equitable Development Initiative, a program that makes investments to try to make economic opportunities available across the city while fighting gentrification and the displacement of low-income and BIPOC communities.

With the Comprehensive Plan up for a major update in 2024 — and the City Council harboring big ambitions for what it hopes to accomplish in that major update, such as eliminating “single family” residential zoning — OPCD will begin work in earnest next year on preparing for it. Eventually the department will need to lead both community outreach and input-gathering, as well as the necessary SEPA Environmental Impact Statement analysis on any changes to be proposed. The Mayor’s budget proposed to invest in the outreach phase immediately but wait on the EIS work until later in 2022. But the Council wants to staff up the department faster and possibly begin some of the EIS work before outreach is complete.

OPCD also needs to update the plans for the city’s six Regional Growth Centers, but the Council believes that the Mayor’s proposed budget under-budgets what is needed to do this work well. Look to the Council to add more resources here.

As for the EDI, the Mayor’s proposes merging the remnants of the one-time Strategic Investment Fund, originally funded by proceeds of the sale of the Mercer Megablock, into the EDI program since the goals heavily overlap. This year both RFPs for the EDI and the SIF were heavily oversubscribed with projects that the city deemed to be worthy of funding, so the Council will be looking to add more funding to the EDI for next year.

In addition, Councilmember Morales mentioned a few other amendments she intends to bring forward related to OPCD:

  • a budget amendment to support the Chinatown-International District community’s desire to create a neighborhood plan. Doing so will require funding for community engagement, as well as translation/interpretation services.
  • an amendment that would move some Department of Neighborhoods staff over to OPCD.
  • an amendment that would fund research to create a coordinate approach to community wealth-building across neighborhoods.

Department of Human Services and community-led investments

The big change in Human Services this year is the outsourcing of most of the homelessness response to the King County Regional Homeless Authority (KCRHA); HSD will be writing a $114 million check instead of managing a collection of contracts itself. But beyond that, there are a few issues with the services that remain in the department.

HSD’s food access programs have been expanded during the COVID pandemic, in part using federal aid dollars. But with the pandemic subsiding and the economy recovering, the Mayor’s budget begins to ramp down that extra funding. To keep services at the 2021 level would require an additional $8 million beyond what the Mayor proposed. There are possibilities of new state funding, but the exact amount is still unknown. And if Mosqueda succeeds in clawing back the payroll tax funding for the Council’s spending plan, that could free up federal ARPA dollars to support food access next year.

The Participatory Budgeting program’s budget is still a big question. The Office for Civil Rights is staffing up to help coordinate it and to contract with an outside organization to run the program, and in the meantime it looks like $27 million of the 2021 budget will go unspent this year. Mayor Durkan has proposed rolling the entire amount over into 2022, and allocating an additional $30 million of ongoing funding to extend the program into the future. That would give the PB program $57 million in total next year, with some options for how to spend it with the knowledge that there is only a commitment for $30 million of ongoing funding in future years. For example, PB could fund a combination of $27 million in one-time investments (such as capital expenses) and $30 million in program investments that would be ongoing. However, Councilmember Mosqueda, in her enthusiasm to re-capture funding related to the payroll tax and related expenditures, has positioned this as a $57 million “fiscal cliff” in 2022 that would set the wrong expectations for community members that they would be getting $57 million in future years as well. Instead, she is proposing carrying over the $27 million unspent in 2021 and adding only $3 million more to “true up” the total to $30 million. Councilmember Morales wants to see more for the PB program, but wants to follow the past precedent and take the money from SPD’s budget instead.

Mosqueda is proposing similar thinking for the Equitable Communities Initiative (ECI): while more of the ECI $30 million will be spent this year (contracts are being negotiated right now to get the money out the door), she proposed carrying over the unspent amount and “truing it up” to $30 million, instead of the Mayor’s approach of carrying over the unspent dollars and adding an additional $30 million. There is one flaw with the Mayor’s approach here: her budget proposal does not identify an ongoing funding source for the ECI’s $30 million annual spend.

Homeless response

With HSD largely getting out of the business of managing the city’s homeless response, what remains falls largely into the laps of the Parks Department and SDOT, the two departments that manage land that homeless encampments occupy. The city’s HOPE Team, the successor to the disbanded Navigation Team, is also effectively being disbanded with some of its resources absorbed into SDOT and Parks, but as to be expected not without criticism and controversy. The original intent for the HOPE Team was that it would leave encampment outreach to third-party providers and simply provide coordination between internal and external teams; the reality, however, has proven somewhat different. While the number of encampment removals conducted by the city is far below past high-water marks and the city claims that whenever possible it waits until all the encampment’s residents accepted shelter or services elsewhere, in practice many, if not all, of the third-party service providers wish to be associated with encampment removals: outreach providers refuse to provide outreach on the day of an encampment removal, and shelters do not want to take referrals from an encampment removal in progress. The KCRHA has also stated that it does not want to be involved with any occupied encampment removals conducted by the City of Seattle. That has meant that the HOPE Team has had to step up to providing outreach in the cases where an encampment removal is happening and not all of the residents have left yet, as well as providing more assistance in finding shelter referrals for the remaining residents. Those Councilmembers who adamantly object to all encampment removals where residents remain as unethical “sweeps” do not want the HOPE Team, or whatever its successors become in SDOT and Parks, doing this kind of work. Look for proposals for the HOPE Team resources to be cut — though it is unclear what the outcome of those proposals will be in an environment where there are increasing public health and public safety hazards from encampments, limited shelter capacity, and thus restrictions on the city’s ability to create win-win situations where the residents of a problematic encampment get into safe shelter and the encampment can be cleared.

The KCRHA, for its part, is planning for the Seattle downtown area to be its first big priority effort. It has asked for an additional $27 million from the city for two new investments:

  • $19.4 million for a new, 150-bed “high acuity” shelter for homeless individuals truly in crisis. The shelter will be staffed with a doctor and multiple nurses, and provide more services that Permanent Supportive Housing.
  • $7.6 million for a 69-person Peer Navigator Network covering downtown, to help homeless individuals access services

Councilmember Lewis is enthusiastic about the proposals, though he points out that the high-acuity shelter won’t be easy to stand up nor will it be cheap; in fact, he called it a “stark reminder” of exactly how much it costs to address the needs of those in crisis. The ongoing operational costs for the shelter are expected to be $17.9 million annually.

The KCRHA has also asked for an additional $600,000 to cover a shortfall in its administrative expenses. The RHA is still getting up on its feet, and unfortunately its budgeting process has not yet synched up with the King County and Seattle annual budgeting processes, so this came in out of cycle.

Additionally, the city’s Clean City Initiative is only funded in the Mayor’s budget through August of next year; expect a proposal from the Council to extend it through year-end at an additional cost of $3.1 million.

The Councilmembers expressed a few other investments and programs they would like to put money into. Councilmember Herbold wants to see hygiene services made available at Camp Second Chance, possibly through a mobile hygiene trailer. Mosqueda and Herbold both wanted to see more investment in RV remediation, including an RV safe lot and a storage lot for RVs for those who have moved into a shelter or other housing solutions. Lewis noted that while there is a tremendous amount of new shelter units coming online before the end of 2021, there is very little in the pipeline for 2022, and the Mayor’s budget does little to change that.

SDOT

The increase in SDOT’s budget comes largely from two sources: $19 million of additional transit purchases through Metro, and the transfer of the Parking Enforcement Officers into SDOT from SPD along with $18.4 million in budget to support them. Council staff pointed out that the Mayor’s proposed budget does not restore $5 million of other COVID-related cuts spread across SDOT divisions, but outside of that the 2022 budget is largely a continuation of the 2021 plan.

One issue facing the Council is how to spend the additional vehicle license fee revenues approved earlier this year. SDOT proposed using it for ongoing operational costs and investments; Councilmember Pedersen suggested that instead it could be used for debt service for $100 million of bonds in order to front-load a number of projects that have been on the wish-list for a while. The Council asked SDOT for a proposal for $100M of projects; none of the projects on the list received funding in the Mayor’s proposed budget, suggesting that she and SDOT are sticking with their original proposal. We’ll see which way the Council leans, as they have the final say.

Councilmember Pedersen also continues to flag the city’s substantial under-spend on bridge maintenance; whereas a report by the City Auditor recommended annual investments of at least $34 million, the Mayor’s proposed budget only spend $6.6 million. Pedersen’s original idea for the additional vehicle license fee revenues was to apply it toward bridge maintenance; most of his colleagues, however, did not agree.

The city is hoping that if Congress ultimately passes an infrastructure bill this fall, Seattle will be the beneficiary of some of that new federal funding. However, in terms of the 2022 budget at this point all they have is question marks and fervent hopes.

Another big question for the Council is what to do about the Center City Connector Streetcar proposal. Mayor Durkan balked on it for the first two years of her term, before coming around to support it; then COVID happened and put the project on the shelf. Durkan’s budget revives spending to planning for the project, but the Council may not agree; certainly Councilmember Herbold has made her opposition to the project well-known.

And finally, next year SDOT intends to launch a major overhaul to its modal transportation plans (pedestrian, bicycle, freight) to create an integrated plan. Their hope is to have that effort completed in time for the renewal of the Transportation Benefit District in 2024. The Council is unlikely to object to the spirit of the effort, though it may quibble about the details.

Community Safety Investments

The city’s community safety investments in the 2022 proposed budget fall largely into two buckets: community-led community safety programs, and reforms to the criminal justice system.

The Mayor has proposed continuing funding for the $13 million community safety “capacity building” RFP this year by carrying over an estimated $7 million of unspent funds and adding $10 million more on top of it. Mosqueda has once again positioned this as creating a “fiscal cliff” for the following year, and has suggested that it should be cut back. Herbold also agreed with reducing it to $10 million.

The future of the LEAD program is also an issue for the Council. This year the city is providing $9.2 million; the Mayor’s budget reduced that to $6.4 million for next year. Neither figure is close to the $21 million it would cost to scale the program up to city-wide and allow it to accept all priority qualifying referrals. Herbold further noted that if the city doesn’t scale up its funding, then there is an additional policy discussion that needs to happen around how to prioritize referrals for acceptance into the program.

The Council also had a lengthy discussion on electronic home monitoring, where there is a difficult balance being sought. The city’s task force on the criminal justice system has argued that wherever possible individuals should simply be released instead of placed in an electronic home-monitoring program, whether it is pre-conviction or as an alternative to prison time. On the other hand, state law requires electronic home monitoring in some situations, and judges have no discretion on that. But EHM currently requires the individual to pay the costs for the program, which can be substantial. The Mayor’s budget triples the amount available to subsidize the cost of EHM for those unable to pay for it, from $43,000 this year to $131,000 in 2022.

The Council also discussed whether to expand the pre-filing diversion program, adding 1.5 FTEs and $297,000 to the program budget as proposed by the Mayor. One question in front of the Council is whether to take the funds from the existing budget of SPD or the Seattle Municipal Court rather than use General Fund dollars.

One thing that became very clear in the Council’s discussion is that while there seems to be broad agreement — even within SPD — that many of the calls currently answered by SPD should be answered by civilians, no one has a comprehensive view of what the alternative should look like. The city’s current approach is to spin up a handful of city-run programs in existing departments such as Triage One and the CSOs, as well as to throw money at a variety of community-led programs. But there is still no definitive list of what needs to be created in order to have a comprehensive response; even if some or all of the current investments are successful, no one can say whether that will fill in all of the pieces of the puzzle. Worse, according to the city most community-based service providers have stated that they are not willing to receive and respond to 911 dispatch calls. So while investments being made in “upstream” programs to reduce violence, crime, poverty and homelessness may ultimately reduce the number of calls to 911, there is still a huge disconnect between the rest of the investments being made and an effective, holistic, civilian-based response system for the 911 calls that still come in. The Councilmembers are fond of throwing around figures from the recent NICJR report about the large percentage of 911 calls to SPD that didn’t require an armed officer to respond; however, they are balking at allowing SPD to do further analysis on whether the information available at the time of the 911 call would allow dispatchers to correctly determine the likelihood that an armed officer is required (what data scientists would call a Bayesian analysis). Instead we have a bottom-up driven set of investments (as represented in the proposed budget) paired with a healthy dose of magical thinking that they will somehow coalesce into a new, better 911 response system. The most generous description of the current path is that if the CSCC can meet its goal of implementing a new, upgraded 911 dispatch system, it could plug in new resources, it could update its protocols to plug in new civilian programs as they come online. But that will almost certainly result in a sparse patchwork of one-off programs with both holes in coverage and also unnecessary, potentially incompatible redundant programs. If this much money is going to be devoted to creating an alternative 911 response, there needs to be a real plan.

SPD

As reported previously by SCC Insight, the SPD’s budget is largely flat, despite transferring out the Parking Enforcement Officers and 911 call center, due largely to some inflationary departmental costs. Chief Diaz is maintaining the staff of the patrol division, by taking staff from other divisions including criminal investigations.

The Council had a fair amount of discussion about why 911 response times are going up if patrol staffing is remaining about the same. SPD’s response is two-fold: that the number of 911 calls is increasing; and that officers are traveling farther distances (from a “city-wide response” unit instead of from a precinct) and with worsening city traffic travel times are expanding. Councilmembers were skeptical of this answer.

Council staff dove into the details of how SPD intended to use $17.9 million of the projected $19 million in salary savings it will see next year because of higher attrition. Councilmembers were particularly doubtful of $5 million in proposed technology investments the department proposed, and will likely either cut the funds or place provisos on them until they can be convinced that the propsals will be worth the money. In addition, the Council will almost take back the $1.1 million of salary savings that SPD didn’t propose a use for.

The Council will also consider whether to re-impose over $7 million in cuts to SPD’s budget in 2021 that the Mayor’s 2022 budget restores. Those involve COVID-related cuts to event overtime, travel and training, and discretionary purchases. While the Council would like parking enforcement officers to take over more of the event-related tasks that SPD officers are handling now, Council staff pointed out that doing so will require bargaining with the unions for both PEOs and officers.

The Council also continues to debate the Community Service Officer program. Currently there are 18 CSO positions funded in 2021, with 10 vacancies that the department hopes will be filled soon (candidates are in the pipeline). The Mayor’s budget funds another 6 positions at a cost of $1.3 million. The Council had few questions about whether the new positions should be funded,but returned to the question of whether the whole CSO program should be moved out of SPD over to the new CSCC department. However, the CSOs themselves have made it clear that at least for the moment they prefer to stay in SPD.

Finally, the Mayor’s budget provides $1.1 million for hiring incentives for new recruits and “lateral transfers” to SPD. Both Councilmembers Herbold and Morales expressed displeasure with this proposal, with Herbold noting that many departments have vacancies at the moment and arguing that any hiring incentive program should be city-wide. She asked for a city-wide review of hiring incentive policies, using a Racial Equity Toolkit analysis (which frankly seems more like an attempt to weaponize the RET to delay the implementation of any hiring incentive program for several months at least). Councilmember Pedersen countered, however, that he was not aware of any department having the same level of attrition as SPD.

This coming week the Councilmembers will be working with their staff to assemble proposed budget amendments; those will be unveiled and reviewed starting next Tuesday, October 26th.

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