On Tuesday, Seattle Mayor Bruce Harrell presented his budget proposal for 2026, highlighting two new revenue sources to help avert layoffs and significant program cuts.
This proposal marks Harrell’s first major advocacy for new revenue during his time in office, as he prepares to face voters in the upcoming November election against frontrunner Katie Wilson, who currently leads by 10 points following the primary.
While the latest revenue forecast demonstrated a reduction in the city’s deficit, Harrell still faced a significant challenge in balancing the budget.
To contend with the financial shortfall, earlier this year, he initiated a hiring freeze and curtailed new contracts, along with limiting travel budgets and delaying technology projects. Furthermore, he encouraged city departments to restrict their spending to less than their respective 2025 budget allocations, yielding a total of $30 million in savings this year.
In total, Harrell addressed a $122 million deficit by incorporating $51 million from the proposed restructuring of the business and occupation (B&O) tax, which will be voted on by Seattle residents in November.
He also reduced overall spending by about $37 million for the upcoming year.
Earlier in the week, the state legislature approved a new 0.1% increase to the “public safety” sales tax, a measure that Harrell proposed last week.
Experts consider sales taxes among the most regressive forms of taxation, disproportionately affecting lower-income individuals and working families, who tend to spend a larger portion of their income on goods that incur sales tax.
If the city council endorses this sales tax increase, it is expected to enable Harrell to prioritize new expenditure initiatives, supplementing some of the fresh revenue generated through the B&O tax.
Historically, Seattle residents exhibit support for tax increases that fund new services and community investments.
In a stark contrast to his earlier conciliatory stance towards President Donald Trump, Harrell emphasized the negative repercussions stemming from Trump’s policy changes and reiterated his commitment to countering these impacts.
He stated, “In the face of continued federal uncertainty, our 2026 budget reflects a commitment to our local values and building strong, resilient communities.
With a focus on proven solutions for today’s challenges – from affordability and homelessness to accessible food and childcare – this budget aims to keep Seattle on a positive trajectory while shielding our residents from the chaos and disinvestments emanating from the other Washington.”
This year’s budget proposal sees a significant allocation for public safety, with the Seattle Police Department (SPD) receiving the most substantial general fund increase compared to other departments, amounting to $34.5 million over 2025 funding levels.
This allocation primarily aims to support the recruitment of new officers, with SPD on pace to hire a net of 76 officers this year alone, anticipating a similar number in the next year. This represents a notable progression from 2024 when SPD hired only one officer on net.
The SPD’s budget may expand further contingent upon the conclusion of ongoing contract negotiations with the Seattle Police Officers Guild (SPOG), which Harrell expects to finalize by the year-end.
At present, public safety entities consume roughly half of the City’s overall General Fund.
Harrell’s new spending plan predominantly concentrates on public safety and mitigating potential threats posed by federal funding cutbacks driven by the Trump administration.
Under the proposed public safety sales tax, several investments are earmarked for new public safety initiatives, such as a plan to double the number of Community Assisted Response and Engagement (CARE) first responders, along with the addition of 18 dispatchers at the 911 call center.
The tax will also finance ongoing CARE expenses, thereby freeing up funds from the General Fund for alternative uses.
Among the public safety investments, the sales tax is set to yield $5.9 million for new drug treatment initiatives, $2.1 million for the recruitment of 20 additional firefighter trainees, and $1.5 million for a new “Post Overdose Treatment” unit within Health 99.
Additionally, the new sales tax will offer $5 million in support for LEAD, a pre-booking diversion program crucial for maintaining current service levels amid looming Medicaid cuts from the Trump administration.
The B&O tax restructure proposal promises not only to replenish the General Fund but also to generate an additional $28 million, which the City intends to utilize for protecting residents against adverse federal budget maneuvers.
This investment will bolster immigrant communities, enhance food assistance, expand emergency rental support, and address shelter and emergency housing needs.
Moreover, Harrell is set to establish three new non-congregate emergency shelters, thereby providing 155 new housing units, a critical development considering Seattle’s loss of 128 beds since Harrell assumed office.
However, investment in affordable housing remains flat compared to the significant funding allocated to SPD, with an increase of just $5 million, failing to completely keep pace with inflation.
Harrell highlighted a substantial commitment of $350 million towards affordable housing, including an initial investment in a promised $80 million Anti-Displacement and Reparations Housing Fund targeted at assisting Black residents affected by historical redlining in Seattle.
These funds are intended to help provide Black residents with the financial means required for rent and down payments.
Despite claiming $350 million as a record investment in affordable housing, this only represents a marginal increase of $1 million over the previous year, largely ignoring the impacts of inflation.
Thus, the Seattle Office of Housing’s financial capabilities are currently diminished when adjusted for inflation.
Budgetary challenges have persisted in Seattle since the outbreak of the Covid-19 pandemic in 2020, with no relief projected in the near future.
Last year, Harrell and the city council opted to reallocate $304.6 million from JumpStart payroll tax revenues to not only fill the General Fund deficit but also to support various spending priorities.
Originally, JumpStart funds had been earmarked for affordable housing, green investments under the Green New Deal, the Equitable Development Initiative, and assistance for small businesses.
Instead, last year’s diversion of JumpStart funds led to the removal of approximately $190 million that had initially been allocated for affordable housing projects.
This year’s proposal also shifts nearly half of the JumpStart funds back to the General Fund.
Looking ahead, a projected deficit of $140 million looms in 2027, a figure susceptible to worsening as a result of potential tariffs, an economic downturn, and cuts to federal and state spending, including significant reductions to the federal safety net programs, such as Medicaid and SNAP.
As Dan Eder, director of the city’s budget office explained, “Every year there’s been a forecast of another revenue shortfall, or revenues not rising as fast as costs.
That’s a future issue that each time we get to, we need to address.”
This time, however, the financial hurdles do not appear to be distant, as the balancing act for the budget is contingent on voter approval of both the Families, Education, Preschool, and Promise (FEPP) levy and the B&O tax restructure under the Seattle Shield Initiative, both scheduled for ballots in November.
The proposed FEPP levy represents a 145% increase from the last approved levy in 2018. Harrell intends to deploy the FEPP levy funds to enhance mental health services for students and invest in school safety measures, potentially including funds allocated to the SPD for securing school enforcement officers (SEOs).
Nonetheless, this budget proposal barely addresses the potential for impending federal cuts.
Currently, Harrell has allocated $28 million to counter these threats, although he acknowledged during a press event last week that the magnitude of federal funding at risk is considerably higher.
“We’re looking at hundreds of millions that are in jeopardy,” he remarked.
Despite the more optimistic revenue forecast released recently, significant uncertainty persists regarding how the financial landscape will appear in January.
Interim Office of Economic Revenue Forecast director Jan Duras noted in early August, “When developing a budget, decisions should recognize that the risk is really high that there will be a downward revision, not necessarily to the extent of a pessimistic scenario, but somewhere in between.”
The Washington State forecast council recently published a new projection indicating an anticipated decrease of $900 million in state revenue over the next four years amid a slowing national economy.
Alongside forecasts of a weakening labor market and expectations of higher inflation, the city’s budget office prepared its proposal without accounting for the downturn predicted by Duras.
The final revenue forecast for the City will be published on October 20. Should there be deterioration in the forecast, the city council would either be forced to implement cuts or devise ways to generate additional revenue to maintain a balanced budget.
This situation stands true should either the FEPP levy or the Seattle Shield Initiative not gain support at the ballot box.
This approach permits Harrell to present an optimistic budget in the lead-up to the November elections, yet this could lead to challenging decisions for the council later in the fall, with the impact predominantly resting on the shoulders of Budget Chair Dan Strauss.
The council has access to some reserve funds that help address smaller shortfalls, as Harrell’s budget includes modest contributions to the city’s emergency fund, which would rise to $71 million, and the rainy day fund, which would then total $87.7 million.
Additionally, the proposal earmarks $9 million for the JumpStart stabilization account, a payment that council members can decide to defer if needed.
Meanwhile, council members will need to weigh the upcoming deficit projected for 2027 as they engage in budget deliberations.
Eder mentioned that the City intends to keep pushing for amendments to state law that would allow different tax impositions, including lifting the property tax cap, currently limited to a 1% annual increase.
On the other hand, Harrell’s opponent, Katie Wilson, has been vocal in advocating for more progressive revenue alternatives, championing a city-level capital gains tax.
She also supported the passing of Proposition 1A earlier this year, which generated a new business tax levied on higher salaries to fund social housing, a measure that Harrell opposed and actively campaigned against.
Proposition 1A ultimately secured passage with a 26-point advantage in February.
The city council is scheduled to commence its budget discussions, with public hearings set for October 7 and November 6.
The final vote on the 2026 budget is slated for November 21.
image source from：theurbanist
