If economic forecasts were weather forecasts, we’d be grabbing galoshes and rain slickers.
With continuing chaos around tariffs and weak job growth, the Seattle City Council wisely adopted “pessimistic” revenue projections for the next few years. The metro area is not expected to slip into recession, but economic activity and corresponding taxes — particularly the payroll expense tax on businesses, so-called JumpStart — have been revised downward.
Mayor Bruce Harrell responded to an April 10 report by the Office of Economic and Revenue Forecasts by cinching down on city travel and other spending. He also promised to take a “big-picture view of potential expense reductions by looking at lines of business and program outcomes.” Good idea. But he also advocated for higher property taxes and “other revenue solutions.”
The state Legislature is moving along a bill allowing cities and counties to levy higher property taxes, now capped at 1%. If this passes, businesses, homeowners and renters can expect increases in monthly expenses.
And the recent performance of Seattle’s payroll tax underscores the perils of going after big employers.
Since these taxes are based on an employee’s compensation including stocks, conventional wisdom would suggest that Seattle’s JumpStart revenues would be healthy. Stocks, particularly in tech, did very well last year.
Yet JumpStart generated $46.7 million less last year than expected, and city economists revised revenue projections down $81 million this year and $86 million in 2026. All this as businesses such as Amazon and Meta moved jobs from Seattle to the Eastside in recent years.
Seattle has a reputation as an economic powerhouse, but the reality is far more precarious.
Overall, Seattle-area employment grew only 0.8% in 2024, compared to the 1.3% growth at the national level, according to the Office of Economic and Revenue Forecasts.
Seattle experienced a sharp decline in the construction sector as the national average grew.
As reported by the Puget Sound Business Journal, the Seattle metro area lost 5,100 construction jobs between February 2024 and February 2025, according to data from the Washington State Economic Security Department.
The market for new office buildings — filled by the kind of employers likely to be subject to a payroll expense tax — has fallen through the basement.
On the flip side, what sector had the top job growth in 2024 compared to the year before? Government.
It’s easy to go after wealthy corporations — particularly those likely to benefit from big federal tax cuts. But it should not be lost in the discussion that Seattle must remain competitive with the region and other states, or it will hemorrhage good-paying jobs.
As city leaders put together a budget, they ought to agree that the biggest growth sector of the economy should never be government itself.
