Seattle Faces $518.5 Million Shortfall, Earning a “C” Grade

Seattle’s financial condition showed some improvement in fiscal year 2023, but the city still faced a $518.5 million shortfall. This equates to a Taxpayer Burden™ of $1,700, earning Seattle a “C” grade and classifying it as a “Sinkhole City” in Truth in Accounting’s latest report.

The city’s financial position improved as revenues exceeded expenses, and the Seattle City Employees’ Retirement System reported a 12.3% unrealized gain, reducing its unfunded pension liability by $171.2 million. However, these gains were small compared to the $684 million loss (10.8%) from 2022, highlighting ongoing challenges in managing pension obligations.

Public safety remains Seattle’s largest expense, totaling $790.7 million in 2023, or 15.2% of total citywide expenses. Rising costs, fueled by regional inflation, strong income growth, and increasing housing costs, are adding additional financial pressures. These factors underscore the need for careful financial management to maintain fiscal stability and essential services.
Key findings from the report include:

• Seattle had $4.4 billion available to pay $4.9 billion in bills.
• The city’s financial shortfall amounted to $518.5 million, leaving each taxpayer with a $1,700 burden.
• Higher revenues and reduced pension liabilities improved finances, but public safety costs and inflation pressures remain challenges.

Seattle must continue balancing rising costs with sustainable revenue strategies to ensure long-term financial health.

For those interested in a deeper dive into Seattle’s finances—and how it compares to other major U.S. cities—you can read the full Financial State of the Cities 2025 report here.