Seattle government expects more than $ 100 million lost in revenue from coronavirus

The novel coronavirus pandemic that is wreaking medical and social havoc in Seattle could also drive a hole of $ 100 million or more in the city’s budget, forcing leaders to make tough decisions about cuts and emergency funds a senior official said on Monday.

Seattle’s budget manager Ben Noble’s team estimated last week that the city could raise $ 110 million less than expected in general fund tax revenue this year due to an economic crisis caused by the virus. and efforts to slow its spread, Noble said.

At the same time, some city council members are adjusting their efforts to tax large companies like Amazon, now saying the money could initially be used to help those affected by the virus crisis.

The $ 110 million revenue hole would represent a 7% reduction, Noble said, and that estimate is already increasingly out of date. The Noble team did not know last week that Governor Jay Inslee would take more drastic action on Monday by ordering the closure of all bars, restaurants and places of entertainment and recreation.

“I think it’s the best of times,” Noble said in an interview. “Economists are now predicting a recession across the country.”

The Seattle budget team assumed for the purposes of the estimate that the worst impacts of the outbreak would last around three months and then the local economy would rebound over time.

The budget could be hit hard as the city relies heavily on sales tax, business tax, and utility tax. These sources represent about 60% of Seattle’s general fund, Noble said.

For years, Seattle’s tax revenues grew, thanks to the city’s technology, real estate, and construction booms and tax increases as the city sought to tackle the housing crisis, fill in the gaps in housing. education, improve transit options, maintain parks and modernize libraries.

“We depend heavily on local economic activity,” Noble said. “What is happening in the local economy today is simply unprecedented. This is not a recessionary slowdown. It’s a forced shutdown for many businesses, the budget manager said, “so depth isn’t like something we’ve seen before.” Because Noble’s team is not sure how long the outbreak will last, “it’s very difficult to understand” the potential fallout, he added.

Some revenue streams outside of the Seattle General Fund could see even more dramatic cuts, Noble said. For example, city taxes on short-term rentals and sugary drinks could bring in 20-50% less money than expected, as tourism has plunged and people no longer buy drinks in towns and cities. restaurants, he said.

Then there are the unforeseen expenses Seattle can incur as city hall responds to the pandemic. Mayor Jenny Durkan has already deferred business and occupancy tax payments for some small businesses and has reallocated millions of dollars to help some small business owners.

The mayor on Monday announced a new plan to spend $ 5 million on supermarket vouchers for more than 6,000 families. And more money may be needed in the weeks and months to come.

In a phone call Monday, Noble ordered CFOs in various Seattle departments and offices to spend only on staff, essential utilities and the city’s response to the coronavirus, he said.

He warned them to stop spending on travel, training and consulting contracts and justify design work for new projects, and he asked them to report by March 27 with options to save. money, he said.

Durkan administration officials “are trying to determine if we could look for opportunities” for some city workers to turn away from their normal duties and “get more directly involved” in the Seattle coronavirus response, said Noble. Such changes should be discussed with the municipal workers’ unions, he added.

The city started this year with about $ 65 million in an emergency fund (designated for surprise spending) and about $ 58 million in an income stabilization account sometimes referred to as a “rainy day fund” (kept for shortfalls), Noble said.

“We’re going to hit both” for the money this year, he said. “I don’t know how far we’ll go. “

City council members Kshama Sawant and Tammy Morales, who unveiled a bill earlier this month for a new big business tax, renewed that pressure on Monday.

They said their tax could raise $ 500 million a year, and the revenues could fund relief for those shaken by the current crisis. We do not yet know what is the appetite among others at the town hall for this.

“We are in a civil emergency, a national emergency,” Morales said in an interview. “We must ask our neighboring businesses to mobilize. “

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