Council staff flags forecast risk as city considers carry‑forward, grant acceptances and midyear supplemental

City budget staff told the Select Budget Committee July 16 that an April revenue forecast prompted a change in approach to the annual carry‑forward ordinance and to the midyear supplemental package, which includes grant acceptances and targeted appropriations.

Central facts: Ben Noble, director of council central staff, and Dan Eder, director of the city’s Central Budget Office, said the April forecast reduced payroll‑expense tax projections and made the originally transmitted carry‑forward package “over‑appropriated” for 2025. To avoid approving appropriations the city may not have the revenue to support, the executive prepared a companion midyear package that reduces a transfer from the payroll‑expense tax fund to the general fund and requests several technical and programmatic adjustments now.

What the package includes - Grant acceptance (midyear grant bill, CB121030): about $23,000,000 in external funds are being authorized for acceptance and council appropriation of roughly $22.4 million. Highlights in the transmitted packet include a $4,000,000 Department of Commerce grant to Seattle Center for Memorial Stadium work, $3,700,000 for the Washington Cares administration (HSD), and $2.5 million for criminal‑justice diversion services administered by a community‑based organization under contract with the Human Services Department. - Midyear supplemental (CB121031): described by central staff as reducing total city appropriations technically by roughly $202,221,000 because capital carry‑forwards are reconciled; when that accounting is normalized the bill increases annual appropriations by roughly $43.6 million. The supplemental adds 11 full‑time equivalent positions across departments (for example, to manage Washington Cares funds and to staff a drug‑diversion program) and makes other technical corrections.

Why staff reconfigured the carry forward Central staff explained that operating appropriations lapse at calendar‑year end unless carried forward. The executive first transmitted a carry‑forward ordinance before the April forecast; after the forecast reduced certain projected revenues, the executive proposed a change that reduces the transfer to the general fund from the payroll‑expense tax fund for 2025 and relies on targeted underspend to manage the 2026 impact. Director Eder said the executive will propose further adjustments in the mayor’s fall budget transmittal.

Budget tradeoffs and risks Council staff and the executive emphasized tradeoffs. The executive proposes to use available one‑time fund balances and to underspend the 2025 budget to buy down near‑term pressure. Council central staff warned that concentrating revenue on a smaller number of taxpayers adds volatility and that a final forecast in October could require rapid rebalance. Ben Noble urged council members to bring amendment ideas earlier than the formal July 22 deadline to allow technical work.

Next steps Committee staff said the package will return to the committee on July 30 for further review; amendments for the B&O proposal and for supplemental items are due July 22. The mayor will transmit the proposed 2026 budget in late September.

Ending note Committee members pressed the executive and central staff on whether some city housing funds that are encumbered but not yet spent could be used to cover near‑term needs; the executive said those awards generally fund projects with multi‑year construction timelines and that repurposing them would be a policy choice with tradeoffs for future housing production.