Budget Recap: Seattle City Council Approved $8.3B 2025 Budget, Voted Down Capital Gains Tax

Seattle's budget season ended in dramatic fashion on Nov. 21, just before the Thanksgiving holiday, with the City skirting a fiscal cliff by plugging its roughly $260 million shortfall with revenue from a lucrative payroll tax despite concerns from some councilmembers and staff about its unpredictability.

The council also voted down Councilmember Cathy Moore's (D5) proposed capital gains tax, which would have brought in between $16 million and $51 million by levying a 2% tax on the sale of certain assets controlled by some of the wealthiest Seattleites. Moore's legislation earmarked that cash for tenant services and food benefits, two items that saw cuts in the final budget.

Councilmember Tammy Morales (D2) was the sole "no" vote on the proposed budget. Two weeks later, she shocked the city by resigning from her seat, saying that the council had "eroded our checks and balances as a legislative department and undermined [her] work as a policymaker."

In a statement, Mayor Bruce Harrell celebrated the new budget, saying he was grateful to the council for preserving some of his priorities. "This budget reflects our continued commitment to the residents of Seattle to create a safe, equitable, and thriving city for everyone," Harrell said in the statement.

The budget, as passed, uses more than $300 million in JumpStart funds to either pay for things that formerly came out of the general fund or for new spending. It eliminates the spending plan for JumpStart, which was seen as critical to the passage of the tax in 2020. That plan dictated that specific percentages of JumpStart revenue would go to three "buckets": affordable housing, the equitable development initiative, and the Green New Deal.

But councilmembers decided that was "too prescriptive" and voted to ditch the plan, essentially opening the door to future mayors to use the money however they please. Over the course of the budget process, Select Budget Committee Chair Dan Strauss repeatedly stressed that councils had "historically" dipped into JumpStart funds for basic priorities.

But JumpStart's "history" dates back only four years, during which the coronavirus pandemic raged.

The budget spends heavily on public safety, such as the Seattle Police Department and the CARE Team, which deploys police and social workers to address homeless encampments and respond to people in crisis. The CARE Team will expand by 21 positions and operate seven days a week instead of five.

The money will also go toward Harrell's Downtown Activation Plan, a project that aims to rejuvenate downtown Seattle ahead of the 2026 World Cup. The emphasis on the downtown at times elicited concern from Morales and Moore, whose districts constitute the furthest south and north regions of the city, respectively.

Nearly 80 staff will lose their jobs under the adopted budget. The cuts are meant to be internal and not "public facing," but many come from the Seattle Department of Construction and Inspections, a department that does everything from signing off on building permits to assisting with tenant services.

The City brings in a good bit of cash from construction, an area that has lagged in recent years. Should construction rebound, however, there will be fewer staff to process applications, resulting in potential bottlenecks.

During their 2023 campaigns, new councilmembers emphasized the need for public safety and fiscal responsibility. They approved money for the first and showed little regard for the latter, fighting to preserve money for their policy preferences. On Oct. 30, three weeks before the passage of the budget, Strauss released a "balancing package" that actually expanded spending by another $15 million on top of the $100 million proposed by the mayor in an attempt to incorporate his colleagues' requests.

The budget process put the relative inexperience of the council front and center, a factor that will be exacerbated before the legislation is reviewed in 2025. Six councilmembers — Rob Saka (D1), Joy Hollingsworth (D3), Maritza Rivera (D4), Moore, Bob Kettle (D7), and Tanya Woo (Citywide) — took office at the beginning of 2024, making it the least seasoned council in recent memory.

And it's about to lose some of the institutional knowledge it's been able to accrue.

Woo lost her seat in the Nov. 5 election to Alexis Mercedes Rinck, who was sworn in on Dec. 3, and the council will now have to scramble to appoint someone to replace Morales. It took them more than a month to appoint Woo, who replaced King County Councilmember Teresa Mosqueda after the 2023 election.

During that time, they took on no new business, citing the need for a full council.