Could a return of workers to downtown offices rescue Seattle’s ailing budget?

With Seattle facing a projected $241 million budget shortfall in 2025, the City Council is looking at how Seattle got into this hole and how it might climb its way out.

A combination of record inflation and a sharp revenue drop during the height of the pandemic put the city in a financial bind, analysts told the City Council Wednesday.

Aly Pennucci, Council central staff deputy director, said that while the economic forecast looks decent in Seattle, it costs a lot more than it did five years ago to make payroll.

“The number of employees in the city hasn't increased significantly in this period, but the cost of paying for employees has increased," Pennucci said.

Much of the growth in general fund spending aside from inflation was aimed at human services, analysts said, like addressing the homelessness crisis.

Jan Duras, who leads the Office of Economic and Revenue Forecasts, told the council one thing that could help fill city coffers is more suburban workers coming back to their Seattle offices.

“The amount of tax base depends on where the economic activity takes place. So a worker that's coming to the office performing work here, rather than performing the work at home in Medina, makes a significant difference for the [business and occupancy tax] and for the payroll expense tax," Duras said.

More workers commuting into the city would also boost Seattle sales tax revenues, which took a surprise dive late last year.

Other strategies could include an early retirement program for city workers, cutting programs, combining departments, and loosening restrictions on how certain funds are spent, like revenue from the city’s sweetened beverage tax.

Correction 1:31 pm 4/19/24 - An earlier version of this story misattributed a quote by Aly Pennucci.