The Seattle Times reports in depth on spending growth in Seattle city government. Rapid growth in the city fueled significant revenue growth and city officials weren’t shy about spending the windfall.
Almost every city department increased in size over the five years ending in 2016. Public-safety costs soared by $100 million. Transportation expenses doubled. The city shelled out $1.1 billion on employee wages last year, with nearly half of full-time workers making at least $100,000, according to a Seattle Times examination of thousands of payroll records, budget documents and financial statements.
Seattle added 11 percent more residents over these five years — the fastest of any U.S. city with at least a half-million people — but government spending accelerated even faster. Excluding city services like utilities that pay for themselves, government costs shot up nearly 40 percent, among the sharpest increases of any major U.S. city.
The story suggests a reckoning may be coming.
A building boom, rising property values and a general willingness by voters to approve ever-larger levies have contributed to a 35 percent surge in tax revenue in five years. Yet the construction frenzy is cooling. Future levy campaigns will have to win over voters feeling the bite of rising taxes on their homes and rents in an increasingly expensive city. Any decline could present a challenge for Seattle’s new mayor, Jenny Durkan, as she pushes to make community-college tuition free and provide more mental-health and drug-addiction services.
“So much of the city’s revenue thirst has been quenched with taxes that aren’t necessarily sustainable,” said John Wilson, King County’s assessor, who warned against assuming voters will approve future levies.
The Times points out that others have previously warned of potential fiscal problems in the city.
The city’s growing reliance on property, business and sales taxes has been noted with alarm by the Municipal League of King County and others.
“How does Seattle balance its progressive values and the looming reality of limited resources?” the League wrote in a report earlier this year.
We looked at the League’s report. It notes,
In the past 50 years Seattle’s general fund spending has grown more than 250 percent. What were once considered “basic” government services such as police, fire, parks and libraries have expanded significantly. More has come to be expected of government today, especially services that were once provided by churches and charitable organizations, the private sector, or not provided at all. For example, in 2017, functions such as human services, housing, education, and economic development, which were not in the 1967 budget, represent some 12% of the general fund.
Our goal is to draw the public’s attention to the City functions whose funding relies heavily today on a boom in sales and property taxes from construction, on voter-approved levies, and on federal funds, sources that may be at substantial risk. Declining revenue from any of these sources would create a revenue short- fall and require hard decisions to close the gap. And if a “perfect storm” of declining revenues from all three of these sources were to hit, our policymakers would face an extraordinary challenge in governance and priority-setting.
Earlier this year, we wrote of a Manhattan Institute article suggesting Seattle’s income tax may signal concern with pension funding.
The Seattle Times story is worthwhile reading. And not just for the city’s taxpaying residents.