Seattle forecasts $40M revenue decline amid economic uncertainty and tariff impacts

The Seattle City Economic and Revenue Forecast Council met on April 10, 2025, to discuss the city's financial outlook, revealing a cautious forecast for the coming years. The meeting highlighted a projected modest growth in revenues for 2025 and 2026, despite significant downward revisions compared to previous estimates.

Key discussions centered around the city's general fund, which is primarily supported by taxes and service charges. Council members noted a decrease in cash balances contributing to the general fund, attributed to a notable reduction in internal service rates and a shortfall in grant revenues. The forecast indicates that while revenues are expected to grow, they will do so at a slower pace due to economic uncertainties, including the impact of tariffs and a weaker stock market.

The pessimistic scenario presented during the meeting painted a more concerning picture, with an anticipated overall revenue reduction of approximately $40 million, particularly affecting sales tax and business occupation tax revenues. This scenario reflects a broader economic slowdown rather than a recession, but it raises alarms about the potential for reduced funding for city services.

In addition to the general fund, discussions included non-general fund revenues, which are also expected to decline. Factors such as decreased tourism and spending, along with higher interest rates affecting real estate investment trust (REIT) revenues, were cited as contributing to this downturn. The council acknowledged that these trends could lead to less funding for community programs and services.

As the city navigates these financial challenges, the council emphasized the importance of adapting to changing economic conditions. The meeting concluded with a call for continued monitoring of revenue streams and economic indicators to ensure the city can respond effectively to future uncertainties. The discussions underscored the need for strategic planning to maintain essential services for Seattle residents amidst a shifting economic landscape.