On April 20, the Seattle City Budget Office (CBO) presented its revenue forecast to the Seattle City Council’s Finance and Housing Committee. This was a complement to the forecast presented by the new Office of Economic and Revenue Forecasts (OERF) on April 8. The OERF is responsible for forecasting most of the city’s revenue streams, but CBO is responsible for others—including the property tax (the city’s largest source of revenues).

Altogether, general fund revenues for 2022 are now estimated to be $1.671 billion, which is $25.5 million (1.6%) higher than expected for 2022 in the previous forecast. Including forecasted non-general fund revenues, the April forecast for 2022 is $69.2 million (3.5%) higher than the previous forecast.

Comparing 2021, 2022, and 2023 revenues is complicated by a fund shift and some major one-time items in 2022. General fund revenues for 2022 are estimated to be $81.1 million (4.6%) lower than actual 2021 revenues. However, as I noted in my post on the OERF forecast, the city’s new payroll expense tax was part of the general fund in 2021 but is moved to a dedicated account in 2022. If you remove the payroll expense tax revenues from 2021 general fund collections (to compare apples to apples), the 2022 general fund forecast is $167.1 million (11.1%) higher than actual 2021 revenues.

But the 2022 figure includes some major one-time items: a $64.2 million transfer of federal relief funds, a $85.4 million transfer from the payroll expense tax, and $65 million from the Mercer mega block sale. Without those items, 2022 general fund revenues would be $47.5 million (3.2%) lower than 2021 (excluding the payroll expense tax). For 2023, general fund revenues are estimated to be $1.526 billion—4.7% above 2022 (excluding the one-time revenues) and 1.4% above 2021 revenues (excluding the payroll expense tax). General fund revenues are expected to continue to grow in 2024.

On top of that, as I wrote previously, payroll expense tax revenue collections were $248.1 million in 2021 and are expected to increase to $277.5 million in 2022, $296.3 million in 2023, and $312.0 million in 2024.

The chart shows the history (through 2021) and forecast for general fund revenues plus payroll expense tax revenues (the city’s fourth-largest revenue source).

According to CBO’s presentation, “Revenues continue to recover from pandemic; however, expense growth is outpacing revenues. This results in structural deficits in the General Fund.” (Apparently there will be more information on these gaps at the committee’s May 4 meeting.)

During the April 20 meeting, Councilmember Alex Pedersen compared the forecast to the level of revenues in 2019 (pre-pandemic) and said,

We are in a good position with revenues, it appears . . . I guess what I’m seeing here is that Seattle does not have a revenue problem, but we potentially have an expenditure problem because of all the great needs that we have. So May 4^th will be vital in terms of how are we going to live within our means, spend within our means with our budget.