City Council Overrides Durkan COVID Relief Bill Veto then Pivots to New Fiscal Reality

Wednesday afternoon in a special meeting, the City Council overrode Mayor Durkan’s veto of a bill that authorizes the spending of $86 million from the city’s two reserve fund to pay for COVID-19 relief programs. Then it immediately passed a new bill that reduced the amount to $57 million, reflecting the most recent news about the city’s increasing revenue shortfall this year.

It’s been an ugly week for the City Council. After weeks of outright hostility between the legislative and executive branches, the Council’s momentary victory in passing a “rebalanced” city budget on Monday that made a first round of cuts to SPD came crashing down to earth when the widely-respected SPD Chief Carmen Best resigned a few hours later and yesterday laid the blame squarely at the feet of the City Council for what she considered poorly-considered, politically-driven and punitive cuts and layoffs to the police department. The Council members ran for political air cover, issuing hastily-written statements trying to explain themselves (and in one case issuing a statement and a short time later recalling it and reissuing a shorter, less confrontational one).

Monday also brought a new revenue forecast report from the City Budget Office, with the revelation that this year’s revenue shortfall is $26 million worse than previously thought. That brought heightened focus to the Council’s COVID-19 relief bill, which borrows $86 million from the city’s two reserve funds this year — nearly depleting them — to fund a range of relief programs. The Budget Office memo argued that with the additional revenue shortfall this year, and similar predictions for next year, those same reserve funds would be needed to sustain existing city programs and services instead of being used for new spending. Whether Mayor Durkan knew of the updated forecast last Saturday when she vetoed the COVID-19 relief bill is unknown, but the sentiment expressed by the budget office was front-and-center in her stated reasons for the veto.

According to the city charter, the City Council is required to meet within five days to vote on whether to sustain or overturn the veto, and that was the pretext for Wednesday’s special meeting of the full City Council. But while it was at it, there were a few last-minute 2020 budget bills left over from Monday that it would finish up as well – and that turned out to be a good thing, as one was repurposed to fix a problem. That bill, which was introduced on Monday, would have reduced the COVID-19 relief package to $83 million to allow $3 million to be repurposed for community-led research into participatory budgeting and new models for public safety.

As of Monday morning, the Council’s plan for today was to override the Mayor’s veto and then immediately pass the $3 million tweak. But then the Budget Office memo happened, and then Chief Best’s resignation happened. By end of day Monday the Council was looking like the far-right’s worst caricature of impulsive tax-and-spend liberals with no sense of fiscal responsibility, beholden to advocacy groups, and oblivious to the consequences of its actions. The earlier pledge by seven of the nine Council members to defund SPD by 50% this year, before they understood the constraints or developed a plan, only served to further reinforce that caricature.

Wednesday’s meeting began with Council President Gonzalez, budget chair Mosqueda, and public safety chair Herbold explaining that they had spent the last forty eight hours in intense negotiations with the Mayor’s Office trying to find a compromise both sides could live with — and it was notable that most Council members (with the exception of Sawant) considerably softened their rhetoric and attacks aimed at the Mayor. They said that negotiations were ongoing and promising, but an agreement had not yet been reached, and they trotted out as political air cover letters of support (obvious edits of the same base letter) from the “usual suspects” of progressive advocacy groups:  housing and homeless service providers, labor unions, and immigrant and refugee support organizations.

Nevertheless, the Council was at an impasse: it was up against its deadline for taking a vote to override the Mayor’s veto, but according to Council members’ comments today the Mayor was negotiating hard and was unwilling to commit to a compromise unless (and after) the Council voted to sustain her veto.  It’s worth nothing that the deadline was somewhat self-imposed: the City Charter notes that the Council must take a vote to reconsider a vetoed bill not less than five days but no more than thirty days after the Mayor vetoes it. But the Council’s upcoming two-week August recess means doing it either now or in early September.

The Council didn’t do that. By a 6-2 vote, it overruled the Mayor’s veto — though that is itself a story that takes us into a a grey area of city law.  The City Charter requires a 2/3 vote to overturn a Mayoral veto: six of the nine Council members. But it also requires all budget appropriations bills to pass by a 3/4 vote: seven of nine. Which raises the question: when the Council is overriding the veto of an appropriations bill, does it require six votes, or seven? Today the answer mattered, because the override vote was 6-2 (Lewis and Pedersen voted to sustain the veto; Juarez was absent).

Upon the advice of city attorneys and their staff, the Council took a relatively conservative interpretation of the vote: that the portions of the vetoed bill that were not appropriations-related were overridden, but the appropriations themselves were not. But unlike many other days where it seemed that no one had figured out the likely vote-count in advance, this time they were ready with a plan — and this is where the next bill comes in.

Gonzalez, Mosqueda and Herbold had prepared a new, substitute version of the bill mentioned above, which originally re-purposed $3 million for community-led efforts. The new version did three things:

• it fully restated all the appropriations in the COVID-19 relief bill, instead of just making a small modification;
• it made an across-the board cut of $26 million to both the amount borrowed from the reserve fund and appropriated to COVID-19 relief programs, to account for the new $26 million revenue shortfall;
• it provided some additional language giving the Mayor’s Office flexibility in spending the funds, since it is anticipated that in the last four months of the year it may be hard to get it out the door. The new language said that the Council is willing to work with the executive branch to let funds roll over into 2021 if necessary — or if further revenue updates show an even serious shortfall, to divert the money to help cover the gap.

That killed several birds with one legislative stone. It fixed the issues with the veto override; it patched over the revenue shortfall; and it offered an olive branch of sorts to the Mayor’s Office (though not necessarily the one she was hoping for) in indicating that the Council wanted to find a compromise.

Overall, it’s a good sign — the first sign in quite a while that the Council majority is in a mood to work with the Mayor, bridge their differences, and start things moving forward again.

It’s not clear whether the Mayor will sign the new bill, return it unsigned (which allows it to go into effect), or veto it again. We’ll learn soon enough. In the meantime, the Council has now officially tied up the final loose ends on its 2020 budget rebalancing work, just in time for it to recess for two weeks. We can all hope that they will return well rested and to a new level of comity between the second and seventh floors of City Hall.

UPDATE 8:15pm:  The Mayor’s office provided the following statement from Durkan:

There is no doubt that our residents and businesses are feeling the deep impact of the COVID-19 pandemic and resulting economic crisis. This pandemic has put people out of work, caused families to struggle to put food on the table and pay rent, and caused some of our most beloved small businesses to shutter for good. The City has worked hard these last five months to provide approximately $233 million for COVID-19 relief programs including grocery vouchers, support for small businesses, rental assistance and child care assistance. We can and must continue these programs. 

I originally made the hard choice to veto Council’s irresponsible decision to spend 90 percent of our emergency and rainy day funds because I was concerned our budget deficit would grow and that we might have additional emergencies. Unfortunately these realities came true: This week we learned we had $50 million in unexpected losses for 2020 and 2021, and we learned unexpected emergencies can happen including one of our downtown piers failing. Without these emergency one-time resources, it will be unlikely we can weather the months ahead without the need to cut basic services and programs. This is even more dire if our financial situation gets worse or we encounter new emergencies.  

For weeks, I have been asking to collaborate with the City Council to provide relief, acknowledge our worsening financial situation, and ensure we had an honest and transparent spending plan of resources that we could actually deliver in the weeks and months to come. To date, the needed collaboration has not occurred, though I was grateful Council reached out to explore compromises this week. 

While Council now acknowledges their original spending was unsustainable because of the additional $26 million revenue shortfall in 2020, I continue to have concerns that this modified bill still spends 90 percent of our emergency funds in a deepening multiyear crisis with worsening economic realities. Most importantly, I believe the City must be honest, transparent and realistic about who we can help and how we actually get money in people’s pockets for this year and next year. Appropriating money should be done knowing individuals can apply, qualify and get money so we’re actually providing immediate relief.   

In the spirit of the collaboration, I proposed creating a new bill and an agreed spending and priorities plan to ensure the City could actually implement tens of millions of additional assistance in 2020 and 2021, while continuing to have resources to address our growing budget gap and any emergencies. Council chose to reject that proposal and take a different path. I deeply hope that we can actually move towards meaningful collaboration and agreement with Council at this critical moment.