JumpStart tax comes to the rescue, City Hall job cuts in mayor’s plan to overcome Seattle’s $250 million budget deficit

It will the Start tax to the rescue for Mayor Bruce Harrell and the Seattle City Hall budget for 2025.

Seattle’s mayor unveiled his administration’s 2025-26 budget plan on Tuesday, including proposals to close an estimated $250 million deficit by cutting JumpStart revenue and eliminating more than 150 jobs at City Hall.

The city’s expected budget will be $8.3 billion, according to the plan.

The tax on payrolls for Seattle’s largest employers was enacted to help bolster the city’s post-pandemic recovery with affordable housing and social services. But it’s now one of the few flexible sources of big revenue available for the city’s spending plans.

On Tuesday, Harrell justified the 2025-2026 JumpStart decision by saying that revenue from the tax has doubled over the past four years and that the city has relied on the tax “every year since its inception” to support general expenditures.

“The proposals you’re hearing about in this budget — and the deep, unacceptable cuts we didn’t have to propose — are only possible because of this approach,” Harrell said.

Harrell’s proposed budget calls for $287 million in JumpStart Payroll Expense Tax revenues to be allocated to support the city’s general fund to pay for core city expenses, including city and police salaries, leaving a projected $233 million for what the mayor called “Payroll Expense Tax categories,” including affordable housing and social services. The proposal would also appropriate $43 million to create a new Payroll Expense Tax reserve “to add fiscal stability to the revenue pool.”

The 2025 budget deficit is looming.

A review of the city’s spending found that it faces the same pressures as the rest of the country when it comes to rising costs. An audit of the city revealed that nearly 80 percent of Seattle’s $1.7 billion budget increase was due to inflation and rising wages. New programs accounted for just 19 percent of the jump, with the remaining two percent of spending driven by one-time revenue injections such as federal aid during the pandemic.

Seattle is facing continued cost increases as a result of a new agreement to increase wages for its workers and a new deal with a 23% pay raise for its police officers.

Officials have eyed revenue from the JumpStart tax the city imposes on its largest employers as a possible source to close some of the gap.

The city’s 2024 budget includes more than $200 million in JumpStart tax money for affordable housing and social services.

Last year, “Changes to the JumpStart Payroll Expense Tax” topped the city’s Revenue Stabilization Workgroup’s so-called “short list” for potential alternative revenue sources to help Seattle overcome its budget deficit.

Meanwhile, the City Council is also looking to borrow more money with its alternative ballot measure, which would use tax money to pay for a new type of affordable housing development in the city. Critics say limits on JumpStart revenue that would eliminate the opportunity for affordable housing development across a broad spectrum of income levels would hamper the city’s emerging economy. Developer of social housing government agency.

On Tuesday, a coalition of community and labor organizations criticized the mayor’s decision to lean on JumpStart and called on Seattle City Hall to develop sources of “new progressive revenue to meet our city’s obligations as quickly as possible.”

“Balancing the budget by cutting essential City programs and services is not acceptable. Additionally, the Jumpstart Payroll Expense Tax provides critical revenue for affordable housing, Green New Deal programs, Small Business Assistance, and the Equitable Development Initiative,” said a statement from the group, which includes the Transit Passengers Union and the Seattle/King County Coalition Against Homelessness. said. “The need for all of these investments has increased significantly since the tax was first introduced, and the need for strong urban infrastructure and resources is needed now more than ever. For these reasons, the city needs to create additional revenue streams.”

“In total, the Mayor’s proposed budget includes $8.3 billion in expenditures, including $1.9 billion in the General Fund. Within the General Fund, the budget proposal includes $916 million for public safety services, $264 million for education and human services, $145 million for arts, culture and recreation, $91 million for utilities, transportation and the environment, and $57 million for livable and inclusive communities,” Harrell’s office said.

Harrell’s office said the proposal also includes a $342 million investment in support of affordable housing in 2025 and another $343 million in 2026, “the largest single investments in affordable housing in Seattle’s history, building on significant investments in housing during his tenure as mayor.”

About half of the planned layoffs have not yet been filled, as a hiring freeze has been put in place this year in preparation for the coming shortage.

You can view the full set of budget proposals for 2025-2026 here.

Learn more about selected proposed investments, organized by category: Public safety | Public health | Housing and homelessness | Thriving communities

Additional investment highlights in the 2025-26 budget proposal include:

$3.2 million to keep open 300 shelter beds that were previously funded by one-time federal investments and would otherwise have closed.

$1.9 million to add 23 new positions to the Community Assisted Response and Engagement (CARE) department, expanding services citywide, seven days a week.

$19.25 million for Seattle Youth Mental Health and Safety, continuing the investment strategy announced at the start of the 2024-25 school year and building on the $12.5 million in ongoing investments in youth through the Department of Human Services.

$7.4 million in supporting small businesses, including activating vacant retail space and supporting access to capital.

$5.7 million to establish the Opioid Recovery & Care Access (ORCA) Center, a stabilization center for patients after an overdose.

$28 million for the Equitable Development Initiative to prevent displacement and support property ownership and capacity building in community-based organizations.

$1.2 million to more than double the number of automated school zone cameras in 19 school zones to tackle dangerous speeding and ensure student safety.

$3.1 million to establish a Real Time Crime Center to use technology to sort and coordinate emergency response efforts and to hire civilian staff to support sworn officers.

$2.9 million to provide dedicated detox and inpatient treatment beds for substance abuse disorders.

$2.7 million to add firefighters and paramedics in training to the Seattle Fire Department.

$2.5 million to create new art activities in the city centre, building on the success of the Downtown Mural Project.

$2.3 million to extend the Unified Care Team’s hours of operation so that the team can focus on areas where camps are most common, keeping public spaces accessible and inviting.

$2 million to improve support services for victims of commercial sexual exploitation on Aurora Avenue and throughout the city.

$500,000 to demolish and remediate dangerous vacant buildings, in support of legislation Mayor Harrell introduced this year to reduce fires and other hazards.

$350,000 for an additional environmental impact statement in support of the One Seattle Plan and identifying new housing opportunities in places where population density has already increased, such as regional centers.

The Seattle City Council will now consider the proposal and debate it for weeks and make changes to the plan.

The Council’s Budget Chairman Dan Strauss supports the redistribution of JumpStart and the layoffs in City Hall.

“As budget chair, I look forward to leading a transparent and collaborative process,” Strauss said. “It is critical that we both put fiscal responsibility first and prioritize the investments that the people of our city depend on: improving public safety, creating affordable housing, and addressing homelessness. We can and must do both.”

District 3 Representative Joy Hollingsworth, In the meantime, she encouraged her voters to delve into the 2025 budget plan.

“As we enter a pivotal time in Seattle, District 3 is at the forefront of shaping the future of our community. With the city’s budget season upon us, there is no better time to get informed and involved in the process,” Hollingsworth said. “From addressing housing affordability, resources, city services, transportation improvements, public safety and economic development, the decisions made will impact our community.”

You can reach the council member at [email protected].

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