The economic forecast has improved at Seattle City Hall and a looming budget deficit may end up smaller than originally predicted, according to an analysis presented Wednesday morning at Seattle City Council’s Finance, Native Communities, and Tribal Governments Committee.
At the core of the changes are decisions over which “scenario” city analysts should build from — the most “pessimistic” models including high impacts from threatened tariffs and job loss or the “optimistic” view fueled by gains in the tech stock market and “significantly lower” inflation.
The result has Mayor Bruce Harrell and his administration making plans against a forecasted $143 million revenue shortfall over the next two years — down significantly from fears earlier this year of a $251 million deficit.
The mayor included the $143 million number in his announcement that a proposed B&O tax overhaul that would exempt companies generating less than $2 million while raising taxes on those making more will go in front of Seattle voters in November.
In the presentation (PDF) to the council committee Wednesday, city analysts say global economic forecasts have improved, but Trump administration tariff threats and weakening employment numbers could spin those numbers lower. Locally, they worry “additional risks to the revenue forecast arise from the uncertainty around the response of employers to the larger tax burden due to a number of recent tax changes in a relatively short period of time.”
For now, the forecast is for an improving but still weakend economic condition for the city — with a caveat. “Funding decisions should recognize that there is a rather high risk of a future downward revision, and we strongly encourage to plan for such an eventuality,” Wednesday’s presentation concludes.
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