Seattle economy և tax revenues could recover from the COVID-19 crisis a little faster than the city had predicted, which means the city would have to spend a little more money by 2021.
However, the instructions still support the pessimistic scenario, which was perceived by the previous predictions of the city, so there is no huge reason for the celebration! The recovery of the local economy is unequal, some areas of risk still remain.
That’s what City Council members heard on Tuesday when Seattle’s budget director Ben Noble’s team updated the forecasts used by Mayor Dürkan and the council to build this year’s budget in November.
“It’s good to be back on track, but there’s been a lot of damage, we’re not back all the way,” Noble told the City Council Finance Committee.
The new forecast envisages more utility, sales tax, property tax and business tax revenues than in 2021 than previously forecast, increasing the city budget by about $ 20 million. That’s a small amount compared to Seattle’s $ 1.6 billion total fund. The November forecast is almost at the mark.
But Seattle also expects to receive about $ 240 million in federal aid this year. Together, the various resources can help the city expand COVID-19 assistance programs, increase homeless shelters, services, deplete resources by 2020, boost businesses such as tourism, and prepare for another budget crisis next year.
“We must redouble our efforts to create a fairer recovery, continue to support our small businesses, employees, jobs in the city center,” Durkan said in a statement, promoting the city’s progress on COVID-19 vaccines.
After rising from 3% to 15% last spring, unemployment in Seattle fell below 6%, according to data from the Noble budget office until February. Retail և information jobs (according to Amazon և tech companies) contribute to the city’s profits, while the city’s hospitality (manufacturing industries lag behind (think hotels and Boeing) for reasons unrelated to the epidemic.
It took more time in Seattle than in the rest of the country to create jobs and restore consumer spending, and construction permits fell last year, especially for large commercial projects, according to the budget office.
What happens next to business taxes is possible, but uncertain, says budget analyst Dave Hennes. Seattle may return or lose taxable business in the suburbs as more people work from home և Some companies are expanding in Eastside.
The city’s tax collection has begun to close at pre-epidemic levels in most sectors, most likely with business activation in hotels, bars and restaurants. The new city council estimates include an additional $ 18 million in real estate excise tax revenue due to Seattle’s hot market.
Seattle’s November forecast used an economic model that suggested that unemployment in the city would return to pre-epidemic levels in early 2023 rather than late 2022, according to an optimistic scenario.
“We feel we are moving towards a more pessimistic scenario,” Noble said on Tuesday.
The adoption of a new high-wage tax on large corporations by the city council last summer helped Seattle avoid much deeper budget cuts in 2021, said council member Theresa Moskeda. The so-called JumpStart tax is expected to bring in $ 214 million this year, which is a rough estimate as the tax is brand new.
“The income is starting to develop in the direction we want to see,” added the chairman of the council M. Lorena Gonzalez. “There is still a lot of work to be done.”