-Hello, I'm your host, Brian Callanan.
A sobering economic report shows Seattle is facing
a budget deficit of more than $240 million
over the next two years.
That includes possible cuts in federal funding,
as the white House targets welcoming cities like Seattle
across the country.
I'm talking with Councilmember Dan Strauss,
the council's budget committee chair,
plus, Alexis Mercedes Rinck,
the council member who's heading up a committee
focused on federal policy changes
to see what kinds of cuts and new revenue proposals
might be on the table.
We're answering viewer questions, too,
next on "City Inside Out: Council Edition."
-I am horrified by the findings of this,
and I'll be taking every possible step I can
to be providing that oversight and accountability,
because this cannot continue.
-When property taxes capped at 1%,
that means that the revenue coming into the city
is not meeting the same rate as inflation.
-All that and more coming up next on
"City Inside Out: Council Edition."
♪♪
Welcome back to "City Inside Out: Council Edition."
I'm Brian Callanan.
Glad you're here with us on the Seattle Channel.
And I'm very glad to be hosting two council members
at the center of some major policy issues right now.
That would include Alexis Mercedes Rinck,
Seattle's position eight citywide Council member.
Thanks a lot for being here. -Thanks for having me.
-Also with us, Councilmember Dan Strauss,
who represents district six in northwest Seattle.
Councilmember Strauss, Good to be with you, too.
-Thanks for having me.
-And I'll start with you, Councilmember Strauss,
if I could, because you're also the chair
of the council's budget committee,
which has received some pretty tough news this month.
We have some international issues,
like tariffs clouding the economic picture.
We have some weak job growth locally,
and Seattle has a decline in projected revenues from several
taxes, including the payroll expense tax
on big businesses known as JumpStart.
It adds up to a budget deficit for the city
of more than $240 million over the next two years.
So recently, Jan Duras,
the interim director of Seattle's Office
of Economic and Revenue Forecast,
the city's chief economist,
described a financial situation with a lot of uncertainty.
-What do we expect is the uncertainty to linger on,
and that uncertainty then leads to overall lower spending
by consumers who might be worried about the future.
Lower business sentiment would lead
to less investment, less hiring.
It's hard to make longer term plans since there is
just an incredible amount of uncertainty.
-Councilmember Strauss, this is the first time,
as I understand it, since the pandemic era of 2020,
that the city has taken on a pessimistic
revenue outlook here.
I want to talk about the big budget picture,
if I can, for the city right now.
And I'm sure you're hearing this,
where are you going to make cuts?
What are you talking about with Progressive Revenue possibly?
Let's dive into it, please. -Yeah.
So this is a very similar thing that I said in October
when we had a downturn forecast for the first time
since the pandemic years of 2020.
Beyond that, for both a downturn forecast,
which means when we received the mayor's budget in September,
there were fewer dollars available to us by November
to put into that budget.
And so we had to, for the first time,
look at the entire budget overall in a way
that we hadn't since the pandemic.
But that was during the pandemic.
It was a little bit more of a short-term situation
because the downturn forecast
and the pessimistic outlook were both short term.
And then we were able to stabilize pretty quickly,
come back to where we are today.
What this shows you today, though,
is that the downturn economic situation
that is still kind of trickling along from the pandemic,
we're still in the middle of it.
And so I've tried to say this every single year
for the past number of years.
We're not out of the woods yet.
And this is another indication.
Before 2020, the last time that we had
either a downturn forecast mid-budget
or a pessimistic outlook was in the 2008 recession.
And so I can't more loudly say
we're in a bad position right now.
And there's a number of things that this is coming from.
Last year we had a structural budget hole
that we had to work on that was not economically related.
Right.
What this was a product of
is Seattle experienced ten years of high growth.
We can all remember what the skyline looked like in 2010.
There were maybe a quarter of the buildings built...
-Okay. -...as we have today.
The city of Seattle received revenue both in sales tax
from construction, but also increased property tax.
That allowed us to build a larger budget
than just based on one-time funds.
We've continued funding those programs.
Last year we did do a gut check where we had to scale back some,
but for the most part,
we were able to continue meeting the needs of Seattleites
on the programs and projects
that they want and rely on.
-Okay. -Here we are today.
We have a downturn and a pessimistic forecast outlook.
The reason that we -- and Director Duras indicated
that we should, take the pessimistic view
at this forecast.
Let's dig into this. -Okay.
-To build the forecast, takes about three weeks.
In those three weeks was when the tariffs were announced.
And then we had the forecast.
And then after the forecast the tariffs were repealed,
-Paused right? -Were paused.
Right. And so I can't focus in enough
that it was literally the week before--
And once Director Dura had run his numbers,
then the numbers changed and then they were presented
and then the numbers changed again.
It is critical that in this time of economic fluctuation,
what we saw in his presentation
is that the volatility index is very high right now.
What that means is that we're in an uncertain time.
The things that happened last week
may not be true next week.
For everything else,
We should be taking a pessimistic outlook
on this forecast.
The good news is, between now
and the mayor crafting their budget
or the council taking up our budget,
we will have two additional forecasts.
Hopefully, we will have a smoother economic situation.
Things will stabilize, whether good or bad.
Because having volatility and instability
is what is causing the most kind of heart,
heartache, headache and heartache
here because we're talking about potentialities
that we don't know to be true.
So we've got two more forecasts.
One before the mayor's proposed budget
and then one before the council approves our budget.
We don't know what they're going to hold,
but what I'll tell you is it goes back to
over the last decade.
We expanded our budget because our city was growing.
Over the last four years,
we've seen our our economy stagnating
and at times shrinking.
So we know that we're going to have to make more adjustments.
We ran a very good process last year to preserve as much
as we could of what the city is doing today,
and that's a process that I hope to engage in again this year.
I see you've got more questions. I've got more to say.
-No, I know.
I appreciate that breakdown there of the big picture.
I did want to move on to another piece of this.
And Councilmember Rinck, maybe I can bring you in
because you've indicated recently
that you're going to be pushing
for some new revenue to be coming in,
possibly some new taxes in the city's upcoming budget process.
I want to talk about that,
want to offer a few different comments on that approach.
One writer says this...
Another says...
I just wanted to talk about this
and your ideas for a new revenue.
-Yeah, certainly.
Well, I think I've been on record
as really wanting to make sure that we have corporations
and the ultra wealthy in our community
pay their fair share to ensure
that we can deliver on critical community services.
And that's certainly something that
I'm thinking about during this time.
And I think it's also worth noting
that Seattle is not alone in our budget challenges.
The county is also struggling
with millions of dollars shortfall.
-The state. -The state is struggling
with what is it, $16 billion across four years.
And it's looking more and more likely every day
that the legislature is going to be moving into special session
as they're trying to reconcile that.
So Seattle is not alone. We have a structural challenge.
We know in Washington State
we have a tremendously regressive tax code.
Recently, a UW professor from the Evans School,
Jacob Vigdor,
cited that our our tax code system is akin
to the Cayman Islands,
and we continue to see that working families,
the bottom 60% of Washingtonians,
pay 13.8% of their income into taxes,
whereas the top 1% of Washingtonians pay 4.1%.
So we have structural challenges,
and we know that our communities need investment.
And so as we're looking to grapple
with our own budget deficit within the city,
we should have all options on the table,
particularly options
that do not put more of a disproportionate burden
on working families.
-Got it. Is that a capital gains tax
or what do you think?
-All options definitely need to be on the table,
whether it be local capital gains,
reexamining JumpStart or other tax options
that are available and have been studied.
We had the progressive or the Revenue Stabilization Task Force
that met just a couple of years
back, and identified some options
to be able to address this challenge.
You know, they saw that this challenge was on the horizon.
And so I think it's certainly worth revisiting that report.
I know my team is, and we're trying to develop some options
to be able to address this. -Okay.
Councilmember Strauss, some ideas here about new, new taxes.
New revenue. Is that on the table for you?
What are we looking at here?
-Yeah, I think Council Member Rinck took a statement
that I oftentimes say,
which is all options are always on the table, right.
We have a big budget, shortfall.
Um, we have declining revenues based on our economy
that's stagnating at the moment.
How are we going to move forward?
And you know, for me,
I look at we've raised progressive revenue
in the city of Seattle three out of the last five years.
It's you know, that that is real.
And I'm proud original co-sponsor
of the JumpStart legislation.
People did not necessarily think highly of it.
That legislation was vetoed and we had to override a veto.
And today, relying on it in our budget so heavily,
so heavily that when it had.
And I'll go back to the forecast, sorry to talk about.
-This a little bit, but.
-You know,
there was a downturn in the JumpStart forecast of revenue
received last year.
And that's part of this Pessimistic outlook.
That is in part due to the fact
that we've only collected revenue for 3 or 4 years now,
and anyone in economics
will tell you you need five year smoothing
to really get more accurate trends.
-Okay. And you don't see that as an indication
that businesses are moving jobs out.
I know I've heard that criticism before.
I've heard anecdotally that as well.
But I've also heard, you know,
non-fiction that we are
that these businesses are requiring their people
to come back into the office.
So whether they've moved their workstations
or not is a little bit anecdotal
because people have been working from home.
Have businesses been tracking how much they're working at home
versus in the office?
These are all of the known unknowns
that create noise when we're having these conversations,
because we need to have five-year smoothing
so that we can have forecasts that we can rely on.
And there's no -- I'm not throwing shade
at Director Duras in any way,
It's just the fact that we've only had 3 or 4 years of data.
-Okay. Okay.
That's that's an important piece.
-Yeah. and if I may just add a point to this,
I know we're talking specifically about the budget,
but I'd be remiss if I didn't mention
that we're seeing federal dollars dry up in our community.
-I did want to talk about this.
You're overseeing this this committee
that looks at different changes in federal policy.
Let's break this down, please.
-Yeah, absolutely.
So while the city is grappling with our own deficit,
it's important to note that many organizations
that serve our residents
have been receiving federal grants for some time.
These are things that wouldn't be captured necessarily
by our city budget,
but rather, again, these are resources within our community.
So when we look at things like this is something
that we've been exploring
in the Federal Administration and Policy Change Committee.
-Yes. -Um, we had a recent panel
focused on housing,
looking at the spectrum of affordable housing development,
with having folks that work in the low income
housing tax credit program at the table,
all the way to King County Regional Homelessness Authority,
talking about federal funds
that go directly towards homelessness response,
but also organizations like Chief Seattle Club
and Downtown Emergency Services Center.
Um, wanted to highlight DESC in particular because
their model relies on Medicaid reimbursement, for example.
And it was unearthed in that committee
that a fourth of their budget
comes from Medicaid reimbursement.
That's $35 million --
that supports some of our most vulnerable community members.
So that would certainly -- Should that go away,
that's a huge loss to our community.
And something that I think a number
of our community organizations would look to the city
to help develop a plan for what's our plan to backfill?
Um, especially when we're talking about an organization,
again, serving some of our most vulnerable residents
and looking at a reality
where if we don't backfill or come up with some solution,
those folks might need to go to the streets again.
-Right. -And I'll take it one step further,
which is that homelessness as an example,
education is another one.
-Right, where federal cuts are having an impact.
-And at the end of the day,
these are state issues that haven't been dealt with.
And so the city of Seattle
has stepped up to address.
Homelessness, I didn't see necessarily
addressed by the state
until it was on the freeways outside of Olympia.
And then we had the right of way program
that has really good results,
because it's a well built program based upon work
that we've done here in the city.
And still, I'm now worried
that we'll receive cuts to the state's work.
But at the end of the day,
I just I have to bring this up
that the city of Seattle funds so many things
that are outside of what our core services should be.
And we do so because it's our responsibility to Seattleites.
So I'm talking about education. -Sure.
-I'm talking about... -The levee. Yeah.
-Well, but basically, I mean, we're one of the only cities,
if not the only city in the state,
that provides city funding to the school district
within our jurisdiction. -Yeah.
-This is because the state is not funding education
at the level it should be.
we're funding -- Seattle, being the largest city in the state
and the largest county in the state.
We're taking on homelessness work.
That is a statewide issue.
I mean, we can just keep going down the list.
And this is not to be finger pointing at the state,
rather to say that in the times in the past
when the federal or state
government has not fulfilled their full duty,
the city of Seattle steps in because we know
Seattleites expect world class services.
-Let me keep going down that path with regard to the state,
because both of you signed an open letter to the governor
and the state legislature
calling for more progressive revenue options
and also some increased local authority over taxation as well.
You were the only two Seattle Council members
who signed on to this.
Nearly 70 lawmakers across the state offered their signatures.
I wanted to ask this to you, Councilmember Rinck.
We're recording this program just a few days
before the signature.
The legislature is supposed to wrap up its session here.
We'll see how that goes.
But what message are you trying to get through to the state?
Why was it important to you to sign that letter?
-Yeah, certainly.
Well, as Councilmember Strauss was saying,
you know, we've historically seen the state under-invest
in a number of critical services.
And so for me, in signing that letter,
I'm looking at, again, a $16 billion deficit,
that if unaddressed,
would also have continue to have devastating impacts
across the state and for our residents.
And so-- -Over the next four years.
Correct.
And so for me, signing that letter was one to provide that,
that real to send a message
that we want the state to step up.
We want the state to take this action
and to have us all moving together
in addressing these challenges.
And so by by adding that weight,
I need our Seattle state delegation to know
that we have their back.
We know that advocating for progressive revenue can be,
at times politically risky, to be really candid about it.
Um, and so really sending that signal to say,
no, we need to move in this direction again,
for the sake of services
that many of our most vulnerable residents depend on.
That was why I signed that letter
because I -- an all-cuts budget
would be devastating for too many across the state.
And I care about our residents,
and I care about residents across the entire state.
And it's time that we all move together on this.
-Councilmember Strauss, your thoughts about this letter?
Why did you sign it?
-I mean, beyond everything else,
cities are capped
at raising their property tax 1% every year.
-Big deal. Yep.
-And I signed this letter not just for the city of Seattle.
I signed this for the 281 other cities and towns in this state.
Because when property tax is capped at 1%,
that means that the revenue coming into the city
is not meeting the same rate as inflation.
So when residents are asking,
why am I paying more and getting less?
It's because they are in fact paying more,
because every year it's going to go up,
but they are getting less
because they are not paying the same amount of money
that it takes to keep the services up.
Got it.
And so if somebody is paying more and getting more,
they're going to be better served.
-I understand. -Right.
And so when we look at this it's across the state.
There are cities across the state
right now that have not been able to raise the revenues,
to keep up with inflation over the course of a decade or more
and are really suffering.
And we really need to be able to at least meet inflation.
3% is not going to meet inflation.
And it's not also saying that cities must increase it,
because here in the city of Seattle,
our voters have supported levee after levee after levee.
And so that is a way
that we have been able to mitigate against a 1% cap.
I see. And still deliver services to Seattleites.
-Okay.
-And we don't see every you know,
there are cities just to the north of us
that rejected a sales tax increase for public safety.
-Right. -Right.
Um, I signed this letter because it's not just Seattle.
It's many cities that are struggling.
-Thank you for that
and we'll keep an eye out on House Bill 1334
with regard to that property tax measure,
that's going to be a big one for the legislature.
Councilmember Rinck,
I want to move on to another challenging situation
for the city with Seattle City Light.
There was a two-year outside investigation
that has been finally made public.
It shows dozens of frontline workers
have been drinking on the job,
even stocking their city trucks with booze.
The report also showed a pattern of sexual harassment,
including groping, sexual advances from superiors,
and pornography at work.
City light CEO Don Lindell spoke to the council about this,
about the situation and how she's going to handle it.
-What I want you to know
is that we are addressing this situation head on
with directness and accountability.
It's not a gray area situation to me,
nor will it be going forward.
-Councilmember Rinck, you chair the committee
that oversees City Light.
You said during the proceedings
you were horrified by the findings of this investigation.
Are you confident that City Light can clean up its act?
Because it appears complaints similar to this
have been coming into this agency for many years.
-Certainly, I share in a number of the concerns
that I imagine the community has about what is our path forward,
and I would state that it is going to be the role of,
of my committee to be providing that oversight
to city leadership,
to make sure they're delivering on culture change
and providing that oversight to make sure
that the HR protocols in place
to ensure accountability are working.
And so I'll be working alongside General Manager Lindell
as we're navigating this time,
but we're going to have to see some results first.
Um, and I would voice again.
-Meaning people need to get fired
or what are we talking about here?
-Um, we I know Council Member Moore
and I have been talking about some kind of
actionable deliverable
that City Light can provide in terms of a path forward,
in terms of how they're addressing culture change.
Um, we're going to have to work on it,
and we're going to have to revisit this topic often,
because the culture that has been perpetuated
is entirely unacceptable, entirely unacceptable,
the kind of behavior that we've seen.
And so while I came out of committee last week,
feeling and seeing city leadership
handle this with the level of seriousness
that I think it really requires,
I know we are going to have to work alongside
and continue to monitor the situation.
-Yeah, and looking at this, Councilmember Strauss,
you're a member of this committee too.
I was just really struck by the fact
that this investigation took two years to complete,
because in many cases, employees were too scared to come forward,
I guess, and had to be approached several times
by this investigator just to do an interview.
I guess I was looking at this point of
how long do you expect it to take for what sounds
like a system wide culture change at City Light?
-You know, I don't have a timeline,
but my rage was suppressed on the dais.
My rage is suppressed with you here.
And even in the executive sessions leading up to this,
I was unequivocal in my direction
that anyone engaging in this behavior
should not be employed by the city of Seattle.
Of course, investigations have to take place,
and of course,
findings have to, you know, conclusions have to be found.
And oftentimes this is a system
that's set up on making survivors expose themselves
and tell their story.
Survivors are oftentimes the ones that have
everything to lose and nothing to gain.
Because if they come out with their experience
and they receive--
because the threats that were reported
is that folks would receive poor work performances,
they wouldn't be given the schedules that they preferred.
That worked for the families. -Right?
-So many other things.
So if a survivor is not going to be believed,
or the survivor is not going to have
the investigation followed up with and they come forward,
then they have poor performance reviews,
bad work schedules, bullying, intimidation and predation
at the workplace.
And so they've got everything to lose and nothing
to gain necessarily.
And so we have.
And those are the that was the line of my questioning
at committee was,
how are we going to ensure that these folks know
that it is safe and show through action that it is safe
for them to come forward because them coming forward.
Unfortunately, is the foundation
to substantiating these allegations.
And if anyone in the city of Seattle is sexually harassing
or sexually assaulting.
Engaging in this predatory or bullying behavior,
they have no place working in our city.
-Got it. Thank you. And please.
-I-I would be remiss if I didn't mention, I mean,
at the time of this filming again,
April is sexual assault Awareness Month in the city.
Just brought forward a proclamation addressing this.
So the cruel irony of this situation,
and I know as a woman leader at this city,
it is a goal of mine to just ensure that Seattle's
the best employer of the city,
but that it's a safe place for women to work.
And so, again, I am horrified by the findings of this,
and I'll be taking every possible step
I can to be providing that oversight and accountability
because this cannot continue. -Thank you.
I have another challenging issue I'd like to wrap up with you,
if I could, here,
because you and Councilmember Strauss
were on the no side of a bill
that passed 63A couple of weeks ago
to build affordable housing in the SODO area,
a makers district, as it's been called, near T-Mobile Park.
It's a very contentious issue for the council.
I know you're aware of this, as of mid-April,
the Port of Seattle has filed a land use appeal
in King County Superior Court
in an attempt to overturn the council's decision.
I know, Councilmember Rinck,
you had some concerns about how this legislation came forward,
maybe some concerns about how the council president did this.
What do you want to say about how this went down?
-Thank you for that question.
I was critical of the process from the beginning
when this legislation was directed to
not to the Land Use Committee, of which I'm a member of,
but rather to the Governance and Accountability
Committee instead.
Um, and I was critical of the process throughout
when we saw a tilted table
where some perspectives were heard at the beginning,
we saw some of that remedied
by bringing the partners at the port together.
But what I would say in this moment is what's clear
was that there remains a lot of hurt
between the various partners in this project,
and I think still a lot of outstanding confusion.
And what I walk away from this from is this,
this real feeling of it didn't have to be this way.
If we took our time,
if we really brought people to the table
to come for forward with a compromise,
with something that could work for everybody,
that's something that I was working to shepherd
in the days leading up to the vote.
And so coming into this moment, you know,
I know I remain committed to working
to support zoning changes
that allow for more housing across the city.
That's something my office is committed to,
especially as we're looking to stand up
and ensure that the social housing developer is
able to deliver on union-built social housing.
-We've got a comprehensive plan to worry
about too, keep going. -Totally, yeah.
And we are going to we're going to focus on all
of those opportunities.
But I think my main takeaway from the SODO vote
is I just it didn't have to be that way.
And certainly, you know,
we will see how things hash out with the lawsuit filed
by the Port of Seattle.
I worry about our relationship with our port partners,
especially during this time
of economic uncertainty and a trade war.
And so I walk away from this really committed
to building back those partnerships
and making sure that,
again, we're working together
because we are going to be weathering some
really uncertain times ahead of us.
-Councilmember Strauss, some thoughts about this.
I know you had some some concerns going
forward with this.
I saw it on the dais there,
and I wanted to get your take on what happened here.
-I'm going to ground us with --
We were just talking about the budget and the budget,
negative projections that are coming forward
and sales and use tax
and how construction increased our sales tax revenue
that the city relied on.
One third of our sales and use tax
is from port related activities.
So we've had a downturn in construction.
We're now relying on the foundational elements
of our sales and use tax.
and one of the one third of that are port related activities.
Port activities sometimes seem sleepy as you're driving by,
because all you see are containers,
or all you see is a ship.
You don't see the containers moving.
You don't see the ships moving.
You see things just kind of stagnant all the time
that they're not actually stagnant.
They're moving quite quickly,
and they're making a lot of revenue for our city
and protecting the ability to get cargo off of a ship
and onto I-90, or I-5,
is the basis for ensuring
that our port is able to weather any storm that we come to.
-Okay.
-The 2023 agreement that I helped Shepherd and pass
was an agreement that took years of stakeholder
work to build consensus and to repair harm that had done,
that had been done to relationships between landowners
and industrial businesses.
Because there had been a tension since 2007,
when the last and the most recent
industrial zoning changes had occurred.
There was such friction amongst those stakeholders
that we brought in a facilitator
to have a facilitated conversation.
That led to the 2023 agreement, with the understanding
that putting housing in SODO was the one thing
we couldn't find agreement on,
and so additional compromises were made.
We expanded the amount of office space in SODO
around the light rail station,
and we included more hotels
than originally expected in the SODO area.
And so you can build -- we can currently today build
three hotels in around the stadiums.
And I come back to this point. -Please.
-That project that they're proposing with the maker space
and then the housing units above,
if those housing units were a hotel,
they could build that project without this agreement,
without changing the law.
And that only came out at that last meeting.
And so it goes back to me again for process.
Because had we had more time to understand what
for colleagues to understand what the agreement was in 2023,
why and how we got there,
and the implications for the decision
that they were making right now.
I think we'd see a different vote.
But the process was rushed.
It was not sent to the Land Use Committee.
It was unfortunate.
-And I hate to rush our time here,
but we are finished here.
A big thanks to Councilmember Dan Strauss,
Councilmember Alexis Mercedes Rinck.
Really appreciate you being here.
-Thank you. -Thanks for having us.
-And we will see you next time
on "City Inside Out: Council Edition."
♪♪