The city of Seattle is facing one of the grimmest economic outlooks in memory, the bottom line for the city budget will likely be even worse than in the painful recession days of 2008-12.
Since last November’s passage of a $6.5 billion budget for 2020, expected sales and business tax receipts have plunged. Real estate excise taxes too have plummeted. Taxes on new construction that swelled city coffers in recent years have fallen, while entertainment tax receipts have all but vanished. The coronavirus pandemic has had a devastating impact.
Seattle’s city budget office (CBO for short) projects a $378 million shortfall directly impacting the city’s general fund. It’s the general fund that pays for such basics as parks, libraries, human services and public safety.
Mayor Durkan has proposed a rebalancing package, since the city — unlike the federal government — must live within its means. Durkan’s package looks to cover losses with $188 million in federal aid, $13 million in grants from the state, $165 million in rainy-day and emergency funds and budget reductions in city departments of some $76 million. The mayor currently is planning to reduce the Seattle police department budget by $20 million for the remainder of the fiscal year, the largest departmental cutback. Her budget will likely mean many fewer police officers. Savings will go toward social service programs.
The mayor’s package now goes before the Seattle City Council which has the ultimate say in city expenses. To judge by the rhetoric of councilmembers, the council likely will make some more cuts to public safety and will propose new taxes, even though any new revenue might not materialize until 2022. Meanwhile, any expansion in expenditures would be recovered by borrowing from voter-approved parks, library and transportation funds.
Balancing a city budget that has slid into a deep depression is not for the faint of heart. I know that only too well: I was the councilmember overseeing the Finance and Budget Committee during the 2008-12 depression, brought on by “the Big Short,” proliferation of subprime mortgage lending. At that time — before the boom days and ample revenues of the tech explosion — the city faced shortfalls of many tens of millions. The blow was sudden and painful. We were not prepared for the depth of the national recession that arrived late in Seattle and lingered longer.
We had to cut city departments — all except for human services and public safety — up to 10-12 percent. When it came to midyear rebalancing, we worked overtime to keep from cutting jobs and services. We cut consulting, training and travel. We reduced hours and overtime. We tried to continue vital programs — like support for domestic violence victims — but often it wasn’t possible. We were having to make untenable choices, splitting the baby in half. We bargained with the unions, getting concessions like unpaid furloughs so that we could reduce the number of layoffs. We closed libraries for a week in August. We cut community center hours and reduced park maintenance.
We held budget forums, letting constituents tell us what had to be saved. They weren’t shy about responding. We signed up 900 speakers at one forum. There was a mom who came to the Rainier Beach Community Center with her brood clad in bathing suits begging to have the community pool kept open. After hearing the need for more shelter space, she testified again, saying that the homeless needs should come first. We listened and acted on her wish.
That budget crisis in earlier years taught us many things and helped us know what really mattered. We avoided going along with the financial wizard who told us that all we had to do was to put City Light up for sale and another who was eager to market the Seattle Municipal Tower to a private owner, leasing back space for city offices. Not only did we not fall for risky schemes but we began putting some of the meager tax receipts into a rainy day fund — the one that’s helping out a decade later.
Today’s councilmembers will have their turn at the agony of rebalancing a shredded budget. It will be a dismal but necessary exercise in sorting out priorities. The council will no doubt be further cutting the police budget, maybe beyond the 20 percent reduction that the mayor has proposed. Still it is hoped that they will act wisely and not slash away first and work out alternative means of maintaining public safety sometime later. As has been shown, resorting to untrained, armed militias and volunteer peacekeepers does not lead to better outcomes.
The council now has the city’s well-being in their hands. They’ll be rebalancing the 2020 budget and soon going to work on the 2021 budget with the local and national economy still in tatters. Budgeting is the most important tool councilmembers have and the most important work they do.
As Joe Biden once said: “Don’t tell me what you value, show me your budget and I’ll tell you what you value.”
Would-be and real public finance nerds out there, including myself, thank you. I don’t expect you to answer this question, but in general are there any incentives for city departments or others with a piece of the budget to spend less than the amount budgeted? What can I say to conservatives who insist that there is a perverse incentive to spend every penny even if they happen to think it is un-necessary?
Thank you for your comment, Claire. i do agree that there is a natural tendency to expend all of an agency’s budget. However, during the 2008-12 recession, many city departments made a real effort at restraint. We were able to save some by not filling vacancies due to attrition. City librarians all volunteered to take unpaid furloughs to keep from further layoffs. They did it for four years, an amazing gift to the city. Our efforts paid off in that we were able to maintain a triple A rating throughout.