Seattle Mayor Bruce Harrell issues hiring freeze

Mayor Bruce Harrell has issued a hiring freeze for most city departments as his office looks toward a budget deficit in 2025 of at least $229 million, possibly higher.

Additionally, Harrell has asked city departments to review the scope of any projects over $1 million advertised for bidding. The review does not mean those projects will not eventually move forward, according to spokesperson Jaime Housen, but is instead part of a process “to provide a complete understanding of upcoming financial commitments.”

Harrell’s hiring freeze applies to all departments except those that touch on public safety: police officers, firefighters and members of the city’s new alternative response team will still be greenlit. Other positions deemed “essential” will also be spared and any offers for vacant positions before Jan. 19 are still good.

The moves are the first salvo in what’s likely to be a major issue for the mayor and new City Council as tax revenues from commercial real estate decline, projected labor costs increase and emergency federal funding falls away.

In a city required to run deficit-neutral budgets, the choice before the council is between cuts or new revenue. The previous City Council preferred exploring the latter, hosting a workgroup for new “progressive” revenue sources, such as a capital gains tax. They also considered transportation impact fees on development and increasing the city’s existing payroll tax on large businesses, but neither moved forward.

The new City Council swept the previous one away and rode in with a far more cautious tone toward new or higher taxes. Supported by business-backed political action committees, members have called for sweeping the budget for cuts. Only then, if the delta hasn’t disappeared, are they likely to look around for new dollars.

For his part, Harrell did not rule out new revenue.

“Mayor Harrell remains committed to thoughtfully considering all factors, including the potential for new or adjusted revenue sources, to help the City reach a sustainable fiscal trajectory,” Housen said.

In addition to decreases in tax revenue and general inflation, a major driver of cost is projected labor costs. The Coalition of City Unions, made up of 11 unions that represent more than 8,000 city of Seattle employees, is likely to see wage increases. The city is also in negotiations with the Seattle Police Officers Guild for a new contract, which will likely come with a hefty price tag.

One question hanging over the process is how this new council will handle the so-called JumpStart tax — a payroll tax levied against the city’s largest companies.

The previous council earmarked those dollars — north of $200 million a year — primarily for building affordable housing. But unlike some revenue sources, the current City Hall could take steps to divert those dollars toward the general fund.

In addition to budget issues in 2025 and 2026, the forecast for 2024 is also not as positive as it once was, Housen said. Inflation, along with higher-than-projected overtime costs, are causing issues for the city’s budget.