Seattle mayor’s proposed budget closes $250M gap through layoffs and payroll tax
(The Center Square) – Seattle Mayor Bruce Harrell announced his 2025-2026 biennium budget proposal that closes a $250 million general fund gap through staff layoffs and a reliance on the city’s payroll expense tax.
Harrell’s budget cuts 159 city positions. More than half of those positions were not filled due, in part, to a hiring freeze that was ordered earlier this year.
Out of the proposed 159 positions eliminations, 76, or 48%, would be layoffs.
Harrell ordered city department directors to review their departments to make efficiency gains. Yet, layoffs were still included in the budget.
“For city employees potentially impacted, I recognize that this is a challenging and uncertain time,” Harrell said in his budget proposal announcement on Tuesday. “You have my commitment that we will put forward every effort to support you in this time of change.”
Nearly two-thirds of those layoffs would come from Seattle’s internal services departments, including the Seattle Information Technology Department, Human Resources Department, and the Department of Finance and Administrative Services.
The Seattle Department of Construction and Inspection could see 17 layoffs due to less permit review work as a result of a declining number of permit applications. This decline is due to the city council and mayor voting to eliminate design reviews for affordable housing in order to boost capacity.
Harrell’s proposed 2025-2026 budget closes the $250 million gap without implementing any new taxes as promised by the mayor during his 2024 state of the city address. This was done by relying on the city’s JumpStart Payroll Expense Tax.
According to the proposed budget, the payroll tax is expected to generate $520 million in revenue next year.
The tax is paid by Seattle businesses with at least $8.5 million in local annual payroll. The rate the businesses pay ranges between 0.7% and 2.4% on salaries and wages paid to Seattle employees who make at least $150,000 per year. Companies such as Amazon, Meta and Google are subject to the tax.
The proposed 2025-2025 budget utilizes $287 million in payroll expense tax revenues to support the general fund.
Seattle previously authorized approximately $105 million in 2023 and $130 million in 2024 as the maximum amounts available to transfer from the JumpStart Payroll Expense Tax Fund to the general fund to address the budget gap.
Seattle’s budget deficit is the result of general fund revenues growing slower than the rate of growth for general government costs. The end of one-time federal COVID-19 relief grants also dealt a significant blow to Seattle’s budget.
The budget will now go to the Seattle City Council for a series of discussions over the next two months. A final vote on the proposed budget is tentatively set for Nov. 21.
