Seattle’s economy and tax revenue could be rebounding from the COVID-19 crisis slightly quicker than City Hall had predicted, which means the city should have a bit more money to spend in 2021.

Yet indications still support the pessimistic scenario that undergirded the city’s prior projections, so there isn’t huge cause for celebration yet. The local economy’s recovery has been uneven and some areas of risk remain.

That’s what City Council members heard Tuesday as Seattle budget director Ben Noble’s team updated the projections that Mayor Jenny Durkan and the Council used in November to build this year’s budget.

“It’s good to be back on a growth trajectory, but there’s been significant damage done and we’re not all the way back,” Noble told City Council’s finance committee.

The new forecast assumes more utility-tax, sales-tax, property-tax and business-tax revenues in 2021 than previously predicted, boosting the city’s budget by about $20 million. That’s a small amount, relative to Seattle’s $1.6 billion general fund. The November forecast nearly hit the mark.

But Seattle also expects to receive state aid and about $240 million in federal assistance this year. Together, the various resources could help the city extend COVID-19 relief programs, add homeless shelters and services, shore up reserves depleted in 2020, promote business sectors like tourism and prepare for another budget crunch next year.


“We need to double down on our efforts to create a more equitable recovery and continue to support our small businesses, workers, jobs, and downtown,” Durkan said in a statement, touting the city’s progress on COVID-19 vaccinations.

Unemployment in the Seattle area has dropped below 6% after soaring from 3% to 15% last spring, according to a presentation by Noble’s budget office based on data through February. Jobs in the sectors of retail trade and information (think Amazon and tech companies) are driving the city’s gains, while the city’s hospitality and manufacturing sectors are lagging (think hotels and Boeing) for reasons related to and unrelated to the pandemic.

It’s taken the Seattle area longer than the rest of the country to regain pre-pandemic metrics for job openings and consumer spending, and construction-permit activity dropped here last year, especially for large commercial projects, according to the budget office.

What happens next with business taxes is important but uncertain, budget analyst Dave Hennes said. Seattle could bounce back or lose taxable activity to the suburbs as more people work from home and as certain companies expand on the Eastside.

The city’s sales-tax collections have started to close in on pre-pandemic levels in most sectors, with a spike likely as business picks up at hotels, bars and restaurants. City Hall’s new projections include an additional $18 million in real estate excise tax revenue, thanks to Seattle’s hot home market.

Seattle’s November forecast used an economic model that assumed employment in the city would return to pre-pandemic levels in early 2023, rather than in late 2022, under an optimistic scenario.


“We feel like we’re on track with the more pessimistic scenario,” Noble said Tuesday.

City Council’s adoption last summer of a new tax on high salaries at large corporations helped Seattle avoid much deeper cuts in 2021’s budget, Councilmember Teresa Mosqueda noted. The so-called JumpStart tax is supposed to raise $214 million this year — a rough estimate because the tax is brand new.

“Revenue is starting to trend in the direction we want to see,” Council President M. Lorena González added. “There’s still a lot more work to do.”