Seattle’s new Office of Economic and Revenue Forecasts presented its April 2022 revenue forecast to the city’s Economic and Revenue Forecast Council on Friday. The Council adopted the baseline forecast, under which selected revenues for 2022 are estimated to be $89.8 million (8.4%) higher than expected in the Nov. 2021 forecast for 2022.

Created last year, the Forecast Office is charged with forecasting revenues from the sales tax, business and occupation tax, payroll expense tax, real estate excise tax, private utility tax, business license tax certificate fees, and admissions tax. The City Budget Office is still responsible for forecasting the property tax (the largest source of general fund revenues), the public utility tax, and other non-tax resources. The City Budget Office will present those forecasts at the April 20^th meeting of the Seattle City Council’s Finance & Housing Committee. (The numbers in this post reflect only the revenues that are forecast by the Forecast Office.)

The Forecast Office estimates that the revenue sources it forecasts will increase 2022 general fund revenues by $37.7 million (5.6%) compared to actual 2021 revenues. Non-general fund revenues in 2022 are estimated to exceed 2021 by $39.9 million (9.8%). Together, these 2022 revenues are estimated to be $1.158 billion—$77.6 million (7.2%) higher than actual 2021 revenues.

Compared to the Nov. 2021 revenue forecast for 2022, the new forecast for general fund revenues is up $32.5 million (4.8%) and the new forecast for non-general fund revenues is up $57.3 million (14.7%).

The biggest factor of the non-general fund increase is the payroll expense tax, which was adopted in 2020. In 2021, collections went to the general fund, but beginning this year, collections will go to the JumpStart Payroll Expense Tax Fund.

The Nov. 2021 revenue forecast estimated that payroll expense tax collections for 2021 would be $200.1 million. The actual amount of payroll expense taxes collected for 2021 was $248.1 million. (It is the fourth-largest tax source for the city.) The current forecast estimates that payroll expense tax collections will increase to $277.5 million in 2022. That’s an increase of $43.6 million (18.6%) compared to the Nov. 2021 forecast for 2022 and an increase of $29.4 million (11.9%) compared to actual 2021 collections. (However, as the Forecast Office cautioned, there is considerable uncertainty here. The payroll tax is based on where employees are located, so 2021—a year in which many people worked remotely—may not be representative of future collections.)

Additionally, the Forecast Office produced a 2021 year-end revenue report in March. The chart below (from the Office’s presentation) shows payroll expense tax collections by industry. More than 82% of collections in 2021 came from information services and professional and business services.