Mike McGinn (former Mayor)
SUBJECT: Recent job growth has positive impact on City revenue projections
9/4/2012 10:30:00 AM
Recent job growth has positive impact on City revenue projections
SEATTLE - Job growth and economic activity in Seattle is outperforming the Puget Sound region and the rest of the country, according to statistics presented by Mayor Mike McGinn today. This growth, combined with prudent fiscal management of City dollars, has led to improvements in the City's General Fund outlook for 2013.
"Seattle got hit hard by the recession, and though we're not all the way back yet, we are starting to make measurable progress," said McGinn. "This will help us protect and in some cases strengthen the core services that contribute to making Seattle a great place to live and work."
Since the end of the Great Recession, employment growth in the Seattle Metro area, which includes King and Snohomish counties, is up 6.6%, compared with the rest of the United States at 3.1% and the rest of the State of Washington at 1.9%. Taxable sales growth from the First Quarter of 2010 to the First Quarter of 2012 in Seattle is 13.2%, compared with the State of Washington at 6.3%, King County at 8%, and Tacoma at 8.2% over the same time frame. Activity in the construction, technology, tourism and the housing sectors accounts for much of this growth.
This local strength has had positive results for the City's current-year revenue collections, particularly sales tax receipts. Collectively, actual revenue collections for 2012 are trending ahead of forecast by about $7.6 million. This is driven in part by economically-driven growth such as sales tax. Taxable sales in the construction industry are up 34%, driven mostly by apartment construction. Real Estate Excise Taxes are up, as are B&O taxes. City revenue collections are further enhanced by one-time, non-economic boosts to current year revenues from things like the City's share of liquor store proceeds following the privatization of liquor stores in Washington State. The revenue picture is also helped by the anticipated increase in the county EMS property tax levy rate for 2014.
Taken together, the City's revenue forecast adds $11.4 million in additional revenue to the City through 2014. This forecast will help the City work to close the previously projected $32 million General Fund budget shortfalls in each 2013 and 2014. Other factors helping our outlook include the passage of the Library Levy, cost savings negotiated with firefighters, and the conclusion of negotiations with the Department of Justice.
However, overall economic forecasts for 2013 and 2014 remain uncertain. Slow economic growth due to federal budget cuts, ongoing problems in the Eurozone, and rising energy prices mean that tax revenues may drop in coming years.
McGinn will announce the details of the 2013-14 budget on September 24.
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