The Chamber of Commerce’s Seattle Budget Fix Is Slashing City Services and Freezing Wages

While running government like a business is a dream of chambers of commerce, businesses don’t freeze wages and spending when they need to hire and grow.

The Seattle Metropolitan Chamber of Commerce has been banging the drum for austerity heading into the fall budget season. The City invited Chamber President and CEO Rachel Smith to participate in its Revenue Stabilization Task Force. While the rest of the task force brought forth additional options to raise revenue in a progressive fashion, the chamber’s take was the city can just cut programs and tighten its belt, so to speak.

In a recent chamber press release, Smith noted the city’s budget was bigger than ever before. “The City has collected new taxes totaling over $1 billion between 2021 and 2023, and General Fund revenues have grown every year for a decade,” Smith wrote. “The city has a spending problem, not a revenue problem.”

Of course, unspoken was that Seattle had seen high population growth and inflation rates over that period, which means that same pot of money doesn’t actually go as far. In fact, Seattle recently has led the nation in both inflation and population growth rate.

Strangely, Smith seems to argue services can be offered without labor or that new labor agreements that have offered City workers inflation adjustment raises were soft and foolhardy.

“Additionally, the city is on pace to have an eye-popping $221 million deficit in 2025, and an additional $207 million in 2026. These increases are not being driven by new services, but by assumed increases in labor agreements yet to be negotiated. From the report: ‘85% of projected expense growth is due to anticipated labor agreements.’”

While this seems to insinuate City leaders are being weak or beholden to labor, in actuality many City departments are severely understaffed and struggling to recruit after the pandemic shook up their workforce. Basic economics would suggest the simplest solution to a shortage of labor is to raise wages and improve working conditions — particularly when they are underpaid versus private sector colleagues.

Raising wages to attract workers is exactly the solution Seattle’s leading corporations use when they’re managing their own workforce needs. Seattle’s population growth was fueled by strong hiring in the tech sector, which has grown 11.5% during the pandemic according to CBRE Consulting, and the Seattle area’s average annual tech salary has reached a new high of $122,341.

The irony becomes more pronounced when we consider that Smith and the chamber have been the ones cheerleading intensely for higher pay for city workers so long as those workers carry a gun and a badge. The police budget is a huge chunk of the city budget and it has grown as the chamber-dominated political establishment has repeatedly thrown more money at numerous problems at the Seattle Police Department (SPD) and then thrown SPD at numerous problems that would be better solved by other agencies. It’s not a recipe for success. The average police officer pulled in $153,000 in compensation in 2019, outpacing essentially every other department in town, and new hiring incentives haven’t solved the recruiting issue yet.

When it comes to police, the chamber is bullish about throwing money at the problem. It’s every other agency in the city that is primed for austerity. Contending that big problems — except for policing — can be solved with less money might earn applause from corporations and the megawealthy. But it doesn’t make it a viable solution to long-standing problems like homelessness, the lack of affordable housing, climate change, and environmental injustice.

In one breathe, the chamber agrees that the homelessness crisis is a top issue facing the city, but in another, it criticized the decision to set aside JumpStart Seattle revenue primarily for affordable housing investments. Of course, the chamber did not want the JumpStart stream of revenue to exist in the first place, and attempted to block the progressive payroll tax in an unsuccessful legal challenge.

When you’re afraid to raise more revenue to solve the pressing issues of our era, then everything will be a zero sum game, with departments and programs that people count on doomed to face steep cuts in the name of fiscal discipline and not asking the rich to contribute more. The chamber conveniently has named none of the specific cuts they are prepared to make. While playing the part of the adult in the room, they’ve accepted none of the responsibility for the hard decisions.

Nonetheless, the chamber has considerable influence and has partnered with a favorable mayor their members helped elect for three straight administrations. The business community has had plenty of opportunity to lead on the issues they say are most important to them. They just haven’t.

Save for the dissent from Smith, the City’s Revenue Stabilization Taskforce has come forward with a menu of options to close the budget shortfall and invest in future priorities.

The nine identified revenue sources for further consideration are:

• Changes to JumpStart Payroll Expense Tax;
• City-level Capital Gains Tax;
• High CEO Pay Ratio Tax;
• Vacancy Tax;
• Progressive Real Estate Excise Tax;
• Estate Tax;
• Inheritance Tax;
• Congestion Tax; and
• Income Tax.

The inclusion of a road congestion tax was odd given that such taxes generally fund transit or other transportation-related investments rather than being funneled into the general fund to backfill shortfalls. Plus, they take a good while to implement.

However, most of the suggested revenue sources are ready to advance to plug budget holes and fund new investments in Seattle’s infrastructure, in addressing its housing crisis, and in greening the city. Growing the pie is a lot better than fighting for crumbs.

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