When you hear a politician promising to “run government like a business,” run away. Government and business fulfill distinctly different missions. This especially applies to the federal level, but also to local government.
That said, in April, Seattle was facing a budget shortfall of at least $117 million next year and it turned out not to be a one-time challenge. By August, the red ink for next year worsened to $141 million, $152 million in 2024 and an average of about $142 million through 2026, according to reporting by my colleague Sarah Grace Taylor.
The annual city’s budget is $7.4 billion.
I hesitate to say “deficit” because this too closely aligns to ideas about the federal deficit, which is rarely a danger. But Seattle doesn’t issue the world’s reserve currency, the safest haven on the planet. In our case, City Hall is like a business. It’s been overspending and must change course.
My modest proposal: It’s time for the Seattle City Council majority to not only make peace with business but focus on helping businesses recover from the pandemic and crime, while helping them survive the choppy waters ahead.
A host of businesses here are either freezing hiring, in the case of Amazon, or laying people off, including Meta, Redfin, Twitter and Zillow.
In other words, pet the goose that lays the golden eggs. Otherwise, the council will face even more drastic shortfalls.
The antipathy toward “big business” goes back some years, culminating in 2020’s JumpStart, sold as an “Amazon tax” to fund low-income housing, Green New Deal projects and “local business assistance” (I never understood that part as I watched small business after small business close, especially on Third Avenue).
In fact, JumpStart applied to 300 companies, those with at least $7 million in annual payroll.
With rates ranging from 0.7% to 2.4%, it applied to salaries paid to workers making at least $150,000 annually and working most of the time in Seattle whether in the office or remotely.
Sure, it’s shameful that Washington state doesn’t have a personal income tax, but my concern has been that JumpStart puts Seattle at a competitive disadvantage compared with other cities in the region, especially Bellevue.
Still, the tax was projected to bring in $277 million this year and it appeared to have little effect on employment, so far. I was happy to be proved wrong. But even if JumpStart is used to fill the city’s funding gap, it won’t fulfill the promises made when it was passed. Or city overspending will continue, and the red ink will rise.
According to a new analysis by the consultants ECOnorthwest for the Downtown Seattle Association, “over the past decade, Seattle general fund and other operating fund taxes have grown four times faster than the economy and the population.” Council-approved taxes have totaled $700 million since 2018.
Despite municipal revenue falling because of the pandemic, Seattle received $300 million from the federal government and revenues bounced back in 2021.
Still, this alienated many businesses, and not only Amazon, which no longer even thinks of Seattle as HQ1 and sees its growth happening in Bellevue. Taxpayers, too, as they watched homelessness rise despite millions thrown down an unaccountable hole, while crime rose.
No wonder a backlash elected moderates Bruce Harrell as mayor, Sara Nelson to council and tough-on-crime Ann Davison to city attorney.
The $2 million fund sponsored by Nelson to help small businesses repair the damage from vandals is a start. So is Harrell’s initiative of hiring bonuses aimed to add 500 police officers over the next five years. (During the past 2½ years more than 400 officers have left the force, leaving it at the lowest level in 30 years while Seattle has grown substantially.)
But much more is needed.
As of September, only 40% of workers have returned to the office compared with the onset of the pandemic, down from 45% in August.
Nationally, exclusively remote work is declining rapidly. Millions can’t work remotely, such as delivery drivers, tradespeople and those involved in transportation and logistics.
At the least, all government workers need to be required to return to the office. It sets a good example and would help support the ecosystem of restaurants and other businesses dependent on workers as customers. Work in the office doesn’t need to lack flexibility. But personally, I find people working remotely to be less responsive.
If remote work is to become a permanent fixture here, the City Council needs to work on constructive responses to aid the city center, which is the largest source of business taxes in Seattle.
A “central connectivity district” instead of a central business district requires foremost an emphasis on public safety. That includes more law enforcement officers riding light-rail trains so we can get people out of their cars again.
Lack of money isn’t the problem.
I hope Harrell, unlike his predecessor, is having regular conversations with the city’s largest employers about their needs.
I hope the City Council majority has the pragmatism to work with Harrell to address those needs, too.
Otherwise, nobody wins in the long run. Certainly not working people. Certainly not the businesses that employ them.