The City of Seattle’s Office of Economic and Revenue Forecast has published an update.
Total General Fund revenues are approximately on-track , though the individual line-items vary.
However, 2023 Payroll Tax revenues are projected to be $30 million less than originally budgeted, with Real Estate Excise Tax revenues down another $12 million.
Some of the forecast’s observations on the underwhelming payroll tax revenues:
- The majority of revenues are generated from relatively few firms, concentrated in the technology sector.”
- “This sector has been significantly affected by the shift to hybrid work, and is also one where a significant share of compensation is tied to stock values.”
- “Although the available data are limited, an empirical analysis shows a correlation between tax payments and two key factors: (i) changing stock values; and (ii) evolving ‘work from home’ practices.”
The REET revenue shortfall is attributed to rising interest rates, which has limited financing for purchases of buildings.