Former Seattle council president on Katie Wilson’s budget strategy: ‘There is going to be a push for higher taxes in places we’ve never had them before’

While the City of Seattle is devising plans to surmount a nearly half-billion-dollar budget deficit, Mayor Katie Wilson offered some potential solutions in a recent interview on the Seattle Channel.

Wilson said her team is exploring additional revenue options alongside cuts as the city grapples with rising costs and slowing revenue growth. Another likely, unavoidable option, Wilson said during the interview, was budget cuts, which could include layoffs of government workers, who account for one of the city’s largest capital expenditures.

In light of Wilson’s recent interview, former Seattle City Council President Sara Nelson joined “Seattle’s Morning News” on KIRO Newsradio to explain why she believes the updated numbers are simply “par for the course,” but believes Wilson is teeing up something even bigger.

“My immediate reaction was that this is nothing new,” Nelson said. “That $480 million, when you’re just looking at the following year, 2027, that was about, they said, $175 million short. That is right in the range that we’ve been short every year since about 2023, so my reaction was that this is really nothing new. What is new is when she is bringing it up, which is in May, which is early.

“These numbers are par for the course,” Nelson continued. “I believe that what was going on in that conversation was a laying of the table, an opening of the conversation, but really trying to prime the pump for new taxes. It does sound like there is going to be a push for higher taxes in places we’ve never had them before.”

Nelson noted that she always supports transparent leadership, but was curious why the announcement came several months in advance.

“I wouldn’t say it’s necessarily a concern; it’s a question,” Nelson said. “First of all, I want to say I applaud transparency and informing the public anytime, all the time, but at the same time, the May conversation raises questions for me. We don’t really start talking about the budget until September. To me, that was a cue that she is teeing up something that’s fairly big. I just wondered why. Normally, those conversations would happen with council members present to ask questions and have a back and forth about what the options are.”

Nelson: Deficit numbers are “nothing new,” but the timing is

The updated forecast marks one of the largest projected budget deficits Seattle has faced in years and sets up what could become a contentious debate over taxes, city services, and spending priorities at City Hall.

As for the public’s opinion on the matter, Nelson polled the room and found some are wondering what tricks Wilson has up her sleeve to remedy the budget, noting she is heavily influenced by progressive revenue, or additional taxes.

“I’m hearing a lot of talk about the income tax, which is dominating conversations, and will have an impact on small businesses, etc. That’s where our jobs come from,” Nelson said. “Word on the street is wondering what Mayor Wilson really has in store. She is very much focused on progressive revenue, which is another way of saying higher taxes or new taxes. This is her specialty: progressive revenue, new revenue, and taxes. A while ago, they had a list of possible taxes, so I expect that a couple of those will be showing up later this year for discussion.”

Following reports of Wilson stating she would be very interested in exploring an income tax on Seattle residents if she could, KIRO host Charlie Harger asked what Nelson’s concerns would be if the taxes started to get too high in the city.

“The concern is, first of all, that your tax base will leave,” Nelson said. “The situation was presented as we make cuts or we find new revenue. Those are not the only two solutions. One solution I never hear offered is helping small businesses generate more revenue, more sales tax revenue, etc. Let’s grow the economic pie. I think that’s underrated. Another one is seriously looking at how we’re spending our existing dollars, and perhaps move them from programs that aren’t working, to other programs that might work better.”

Nelson finds Wilson’s comments toward Seattle businesses to be ‘insensitive’

In light of a recent article written by Howard Shultz, the former CEO of Starbucks, and his gripes about doing business in Seattle, he wrote that Wilson has “chosen to cast business as a foil rather than a partner,” and her “socialist rhetoric vilifies employers, even while she continues to rely on them for revenue.”

While Nelson noted she had read Shultz’s article, she found Wilson’s treatment of businesses in Seattle “insensitive” after she waved and said “bye” to millionaires as they left the state over new tax laws.

“You know, the ‘bye’s’ that are getting waved at wealthy people leaving Seattle, I think it’s insensitive,” Nelson said. “The income tax that was passed will primarily impact small businesses because 85% of them operate as LLCs or S Corps, which means the net income figures directly on the owner’s personal tax filing. There aren’t millionaires; these are small business owners.

“I think that today’s small businesses are tomorrow’s large businesses and large employers,” Nelson continued. “We really have to look out for what we are doing to support our small businesses now so that they can continue to create jobs and revenue tomorrow.”

Contributing: Luke Duecy, KIRO Newsradio

Watch the full discussion in the video above.

Listen to “Seattle’s Morning News” with Charlie Harger and Manda Factor weekday mornings from 5-9 a.m. on KIRO Newsradio. Subscribe to the podcast here.