Coronavirus crisis could put a $300 million hole in Seattle’s finances for this year
The city is at risk of losing roughly 20 percent of its budget. And the shortfall is expected to linger for several years.
The shortfall comes as the city estimates the economic damage of coronavirus and the shutdowns it has triggered. Its estimate shows King and Snohomish counties doing a little better than the nation for unemployment.
A bleak unemployment picture
It’s still going to be painful. Ben Noble, director of Seattle’s budget office, said in King and Snohomish counties, a slow recovery “has local unemployment peaking at 18 per cent or higher.”
That’s in the most pessimistic scenario. In the rapid recovery - the more optimistic scenario - unemployment here could hit 8 per cent.
Nationally, unemployment could peak in a range of 10 percent or 22 percent, depending on whether the recovery is rapid or slow.
The shock could put a $300 million dollar hole in the city’s budget this year, with more shortfalls in succeeding years.
“This probably will be the toughest economic climate that our city has faced in multiple generations.” Mayor Jenny Durkan said.
Durkan said a proposed payroll tax, the so–called Amazon tax, is not a way out of the crisis.
"We are not going to be able to avail ourselves of a payroll tax," she said during a virtual news conference Tuesday afternoon.
"I hope that council is very forthcoming with the public about that fact. That there are no ways, or mechanisms, or tricks to somehow have money magically appear this year or next year to fix these budget shortfalls.”
State law mandates that Seattle cannot run a deficit. Durkan said the city may get help from the federal government. But a hiring freeze, dipping into rainy day funds, and taking out debt are among the choices on the table.
City finances are being slammed even as Seattle is having to increase spending to help halt the spread of coronavirus in the community.
This story is developing and will be updated.