On Tuesday, Seattle Mayor Bruce Harrell introduced his 2026 budget proposal, which uses two new sources of revenue to avoid layoffs and major program cuts. This budget proposal marks the first time in his mayoral tenure that Harrell has championed new revenue.
Harrell offered his final budget proposal before he faces Seattle voters in November, contending with frontrunner Katie Wilson, who led by 10 points in the primary.
While the most recent revenue forecast significantly reduced the City’s deficit, Harrell was still forced to scramble to make up the difference. Earlier this year, he extended the City’s hiring freeze, along with cutting or slowing new contracts, training and travel budgets, and new technology projects. He also asked City departments to spend less than their allocated 2025 budgets. Altogether, these measures saved $30 million this year.
Harrell plugged the remainder of the $122 million deficit with $51 million from the new business and occupation (B&O) tax restructure proposal, which Seattleites will vote on in November. He also reduced total spending by around $37 million for next year.
This year, the state legislature allowed a new 0.1% “public safety” sales tax increase, which Harrell put forward last week. Sales taxes are widely considered to be among the most regressive of taxes, falling hardest on the poor and on working families, who spend a greater share of their income on taxable goods.
Should the city council approve the sales tax hike, it will allow Harrell to invest in a few new spending priorities, as will some of the new revenue from the B&O tax. Seattleites generally approve tax hikes to fund new services.
Contrasting with his initial conciliatory tone toward Trump, Harrell repeatedly flagged negative impacts from Trump policy changes and his effort to fight them.
“In the face of continued federal uncertainty, our 2026 budget reflects a commitment to our local values and building strong, resilient communities,” Harrell said. “With a focus on proven solutions for the challenges of today – from affordability and homelessness to accessible food and childcare – this budget will keep Seattle on a positive trajectory and protect our residents from the chaos and disinvestments we are seeing out of the other Washington.”
The biggest winner in this year’s budget proposal, marking a repeat of last year’s budget, is the Seattle Police Department (SPD).
New spending focuses on SPD, public safety
SPD will receive the largest general fund increase of any department, with a $34.5 million boost from 2025 funding levels. Part of this increase is due to the increased hiring of officers. SPD is on track to hire 76 net new officers this year, and they expect to reach similar numbers next year. This is in deep contrast to 2024, when SPD hired one net officer.
SPD’s budget might further balloon should the City and the Seattle Police Officers Guild (SPOG) finish their current contract negotiations, which Harrell has said he expects to happen before the end of the year. Already, public safety departments have grown to about half of the City’s General Fund as it stands.
Harrell’s proposed new spending primarily focuses on public safety and responding to threats to federal funding posed by the Trump administration.
The public safety sales tax will fund several new investments in the public safety space, including doubling the number of Community Assisted Response and Engagement (CARE) first responders and adding 18 dispatchers at the 911 call center. The tax will also fund some of CARE’s ongoing expenses, freeing up dollars in the General Fund to use for other purposes.
The public safety sales tax is set to fund $5.9 million in new drug treatment investments, $2.1 million to add 20 new firefighter recruits, and $1.5 million to add a new “Post Overdose Treatment” unit to Health 99.
In addition, the new sales tax will give an additional $5 million to LEAD, a pre-booking diversion program. In July, Lisa Daugaard, the co-executive director of Purpose Dignity Action (PDA), which manages LEAD, told The Urbanist that LEAD needed $5 million to maintain the current level of service and start to prepare for greater case management needs when Trump’s Medicaid cuts hit.
Meanwhile, the B&O tax restructure proposal, in addition to backfilling the General Fund, will also generate $28 million that the City plans to invest to help protect residents from federal-level budget decisions. The City is making investments to support immigrant communities, to increase food investments, to increase emergency rental assistance, and to backfill shelter and emergency housing needs.
Harrell also plans to open three new noncongregate emergency shelters, which will provide 155 new housing units. Seattle has lost 128 beds since Harrell took office; this investment will finally move his administration into the black when it comes to shelter.
Investment in affordable housing, in contrast to spending at SPD, stays steady in this budget, with the total investment increasing by $5 million, which doesn’t entirely account for inflation.
Harrell touted $350 million in affordable housing investment, including a down payment on a promised $80 million four-year investment in a new Anti-Displacement and Reparations Housing Fund, which Harrell intends to help Black residents who have been historically redlined in Seattle. These funds could help Black residents afford down payments and rent. The mayor has allocated $250,000 to do planning and stakeholdering around the details of how to spend the rest of this money.
Harrell pitched $350 million as record affordable housing investment, though it only beat the previous year by $1 million, ignoring inflation. In inflation-adjustment dollars, the Seattle Office of Housing’s spending power is down.
Continuing budget struggles
Seattle has been struggling with budget deficits since the Covid-19 pandemic in 2020, with no relief in sight. Last year, Harrell and the council chose to transfer $304.6 million from the JumpStart payroll tax revenue to both plug the large General Fund deficit and add more spending to other priorities. The original JumpStart spending plan, passed in 2021, had allocated those dollars to affordable housing, Green New Deal investments, the Equitable Development Initiative, and small business support.
Last year’s siphoning of JumpStart funds included removing nearly $190 million originally intended for affordable housing.
Harrell’s proposal this year moves almost half of JumpStart funds to the General Fund.
Looking forward, there is already a projected deficit of $140 million in 2027, a position that could easily grow worse through some combination of tariffs, an economic downturn, and federal and state spending cuts, including massive cuts to the federal safety net through Medicaid and SNAP.
“Every year there’s been a forecast of another revenue shortfall, or revenues not rising as fast as costs,” said Dan Eder, director of the city’s budget office. “That’s a future issue, that each time we get to the future, we address it.”
However, in this case, the problem might not be so far in the future. The balancing of the budget depends on voters approving both the Families, Education, Preschool, and Promise (FEPP) levy and the B&O tax restructure, known as the Seattle Shield Initiative, in November.
The proposed FEPP levy would mark an 145% increase from the last FEPP levy passed in 2018. Harrell is planning to use FEPP levy funds to pay for mental health services for students and school safety investments, which could include money to SPD to pay for school enforcement officers (SEOs).
The budget proposal also does little to grapple with greater federal cuts that could be coming. Harrell is currently proposing $28 million for this purpose. However, when asked to estimate the amount of federal dollars in the City’s budget at a press event last week, the mayor acknowledged the scale of the risk is significantly larger.
“We’re looking at hundreds of millions of dollars that are in jeopardy,” Harrell said.
In addition, while the most recent city revenue forecast was less dire than it had been earlier in the year, a great deal of uncertainty remains around what the revenue picture will actually look like come January.
“When developing a budget, decisions should recognize that the risk is really high there will be a downward revision, not necessarily to the extent of a pessimistic scenario, but somewhere
in between,” interim Office of Economic Revenue Forecast director Jan Duras said in early August.
Washington State’s forecast council just released a new forecast anticipating an additional drop of $900 million in state revenue over the next four years, citing a slowing national economy.
The city’s budget office referenced a weakening labor market and expectations of higher inflation in their budget overview presentation. However, they planned their budget proposal without accounting for the likelihood of the downturn predicted by Duras.
The City’s last budget forecast of the year is due October 20. If the forecast worsens, the city council will be on the hook to make cuts or generate additional revenue to reach a balanced budget. The same is true should either the FEPP levy or the Seattle Shield Initiative fail at the ballot box.
This strategy allows Harrell to present a rosy budget proposal in advance of the November election, but it might lead to difficult choices for the council later in the fall, with the brunt of the effort likely to fall on Budget Chair Dan Strauss’s shoulders.
The council will have a few reserve funds they could choose to use to shore up smaller shortfalls. Harrell’s budget includes small contributions to both the City’s rainy day fund, which will then stand at $71 million, and the emergency fund, which will then stand at $87.7 million. The proposal would also add $9 million to the JumpStart’s stabilization account, a payment that councilmembers could choose to defer.
However, councilmembers will also have to consider the upcoming deficit for 2027.
Eder said the City will continue to advocate for changes in state law to allow the City to impose new and different taxes, citing the lifting of the property tax cap, which is currently limited to an increase of 1% per year.
Harrell’s opponent, Wilson, has been advocating strongly for more progressive revenue options, including a city-level capital gains tax. Wilson also supported Proposition 1A earlier this year, which passed a new business tax on top salaries in order to fund social housing. Harrell opposed the measure, becoming the public face for the opposition’s campaign.
Proposition 1A passed with a 26-point margin in February.
The council will now take up its budget deliberations, with two public hearings planned on October 7 and November 6. The council’s final vote on the 2026 budget is scheduled for November 21.
Amy Sundberg is the publisher of Notes from the Emerald City, a weekly newsletter on Seattle politics and policy with a particular focus on public safety, police accountability, and the criminal legal system. She also writes science fiction, fantasy, and horror novels. She is particularly fond of Seattle’s parks, where she can often be found walking her little dog.
