Harger: Seattle’s budget deficit is nearly $500M. Mayor Katie Wilson’s plan is more taxes and no meaningful cuts
May 13, 2026, 6:57 AM | Updated: 3:27 pm
Seattle is facing a projected budget deficit of $488 million over the next three years. Mayor Katie Wilson, five months into the job and facing numbers that are $113 million worse than what her predecessor left behind, went on the Seattle Channel last week to explain how the city got here.
She brought Budget Director Aly Pennucci. She asked for the cameras. To her credit, she didn’t have to do this publicly. Then moderator Brian Callanan asked a simple question: “Does it mean the city is spending beyond its means?”
Pennucci’s answer was remarkable. “I don’t think it’s spending beyond the means,” she said. “We’re delivering services that people need, and the costs of those services are more than our property taxes, our sales taxes, all the fees that support the city.” She blamed the state’s 1% cap on annual property tax increases. “Inflation has significantly outpaced 1%,” she said. “So that makes it hard to sort of keep up.”
The costs exceed the revenue. She said no, and then described yes. In the same breath.
The mess belongs to Wilson’s predecessors. What she does with it belongs to her.
Wilson had never held elected office before January 2026. Now she manages Seattle’s $8.9 billion budget
Wilson had never run a government agency, never overseen a budget beyond a two-person nonprofit. The Transit Riders Union, which she co-founded in 2011, ran on a shoestring. On election night, she told reporters, “No one saw this coming.”
Now she oversees 41 city departments, 13,000 employees, and a budget of $8.9 billion. KIRO Newsradio reporter Luke Duecy reported Tuesday that Wilson’s revised projections show deficits of $175 million in 2027, $164 million in 2028, and $149 million in 2029.
Seattle’s real structural gap is nearly half a billion dollars. The JumpStart housing fund is covering the difference
That $175 million figure only exists because the city is already diverting roughly $200 million a year from the JumpStart payroll expense tax to plug the general fund. JumpStart was created in 2020 to fund affordable housing, Green New Deal programs, and economic resilience.
Wilson confirmed the real number on camera.
“The only reason why it’s $150 to $200 million instead of $400 million is because of the transfers from JumpStart that we have started doing year after year,” she said. “Even if we wanted to paper it over with one-time fixes, we’re kind of out of tools.”
The JumpStart raids started under former Mayor Bruce Harrell. The council loosened the spending rules. Wilson inherited it. But she wasn’t a bystander when JumpStart was created. She co-authored a report on progressive tax options for Seattle’s Revenue Stabilization Workgroup and pushed hard for the payroll tax that became JumpStart. The tax she championed to build housing is now keeping the general fund afloat. Rather than working to restore it, she’s proposing new taxes on top of it.
Seattle’s general fund has nearly doubled in a decade. It will never be enough
The general fund grew from roughly $1.1 billion in 2016 to about $2 billion today. Pennucci confirmed that figure on the Seattle Channel. A 79% increase in a decade. And it still isn’t enough. It never will be.
Pennucci coined her own term for how Seattle has handled this: “Triage budgeting.”
“We’re just kind of patching together solutions one time, but we’re not really addressing the ongoing challenges.”
The city received more than $300 million in federal ARPA relief during the pandemic, launched 25 new programs, and its own 2025 report acknowledges some “will continue to be offered in 2026 and beyond.” One-time emergency money. Permanent programs. The cash ran out. The spending didn’t.
When pressed on whether anything could be cut, Pennucci said, “All of these dollars matter to someone that are going out the door. It’s delivering a service, it’s providing access to a class or that sort of thing that matters to someone. And so I don’t think it’s that we’re overspending. It’s that the needs and our costs are more than our revenues can support right now.”
Nearly double the budget in 10 years, and every single dollar is sacred. If every dollar matters equally, no dollar can ever be reduced. Revenue will never catch spending that has no ceiling. The gap just gets a new name each budget cycle.
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New tax proposals floated on the Seattle Channel: capital gains, income tax, and expanding JumpStart
“I’ve been a big proponent of progressive revenue, and so we are definitely looking at all of the options that we have,” Wilson told Callanan.
A city-level capital gains tax is “absolutely on the table,” though she said the revenue would be modest.
“Probably in the lower double digits,” Wilson said.
At a Seattle University forum in April, she said she’d be “very interested” in a local income tax on Seattle residents if state law allowed it. Washington voters have rejected income taxes 11 times since 1932. She didn’t rule out expanding JumpStart, a tax already declining because of its dependence on volatile tech compensation. Pennucci confirmed revenues dropped in the latest forecast.
Wilson also told Callanan that “the obvious revenue tools that cities have available to them tend to be regressive.” She’s framing new progressive taxes as the only responsible choice. The math always leads to more.
Seattle can never spend less on homelessness, Wilson says. The permanent supportive housing model and the homeless industrial complex guarantee it
Wilson drew a hard line: “There is no world in which we need less funding for homelessness.”
Seattle’s primary model is something called permanent supportive housing (PSH) — government-subsidized apartments with no time limits, no treatment requirements, and no recovery expectations. Services are voluntary. Residents can use drugs inside. Staff won’t bring up rehab unless a resident asks first. A person deep in a fentanyl or meth addiction can be housed indefinitely with no pressure to get better.
The city has built more than 4,000 of these units. Operations costs keep climbing. An $18 million funding gap looms in 2028.
The incentive structure is the core problem. Nobody in this system gets paid when someone gets clean. Contractors get funded based on the number of people they serve, not the number who recover. Politicians who fund the contracts get campaign support from the contractors. If the people in those units got well, got jobs, and moved on, less money would flow through the system. So the spending only goes up. The model manages the crisis. A solved problem doesn’t need an agency. An agency that solves the problem loses its funding.
Wilson said we can never spend less on homelessness. Under this model, she’s right.
Howard Schultz left Seattle for Miami and published a Wall Street Journal op-ed the same week the mayor asked for more taxes
The same week Wilson went on the Seattle Channel to explain the deficit, former Starbucks CEO Howard Schultz published an op-ed in The Wall Street Journal calling Seattle “hostile” to business. Schultz left Seattle for Miami two months ago. He wrote that Wilson “has chosen to cast business as a foil rather than a partner” and that her “socialist rhetoric vilifies employers, even while she continues to rely on them for revenue.”
Wilson stood on a Starbucks picket line in November and said, “I’m not buying Starbucks and neither should you.” In April, she told a Seattle University audience that millionaires who leave over taxes can wave goodbye. Starbucks is now shifting jobs to Tennessee.
Every Seattle department was told to model 5% and 10% cuts. The mayor won’t name a single one
Near the end of the Seattle Channel interview, a viewer named Clarissa sent in a question.
“It feels fairly non-committal from this discussion. Are there tradeoffs that we’re already planning or leaning towards, or are we still in a phase where we’re unable to state specific tradeoffs?”
“It is premature for us to say, like, we’re going to slash this or slash this,” Wilson answered.
She’s directed every department to model 5% and 10% cuts. She still won’t name one. She called $175 million in reductions “a terrifying prospect.” She told Callanan that, “cities are really the last line of defense for people” and “we have to step up,” expanding the city’s mission to backstop federal funding losses.
More responsibility. More spending. No specifics on what stops. And when Callanan asked Pennucci if any city had found a better approach, she said: “I am not in this moment aware of a city that has a better budget situation.”
Nobody has solved it. Therefore, nobody can be expected to solve it.
Wilson inherited this deficit. Previous mayors and councils built it. But five months in, her answer is every new tax she can find, no meaningful cuts, a housing fund that doesn’t fund housing, a boycott of one of Seattle’s most iconic employers, and a wave goodbye to the taxpayers whose revenue she needs.
At some point, they wave back.
Charlie Harger is the host of “Seattle’s Morning News” on KIRO Newsradio. You can read more of his stories and commentaries here. Follow Charlie on X and email him here.
