(The Center Square) – Seattle’s new City Budget Office Director Aly Pennucci said on Tuesday that “all options are on the table” as she looks at programs or services that might have to be cut to deal with a large budget deficit next year.
City council legislative staff has estimated the deficit between $125 million and $140 million.
That deficit could grow to more than $300 million by 2029, legislative staffers have estimated.
Pennucci made those comments to The Center Square after the Seattle City Council unanimously approved her appointment to the position.
Pennucci had been serving in an interim capacity since early January after being named by Mayor Katie Wilson to a four-year term.
Pennucci said it was too early to tell where cuts will have to be made next year and cautioned that the actual budget numbers were a moving target to be updated in March.
In written comments last month to the city council’s Finance, Native Communities & Tribal Governments Committee, Pennucci offered a little more detail, without going into specifics.
“We also need to recognize that this will mean, in some cases, limiting our ability to address some community needs immediately to provide time to reach a longer-term, more sustainable solution,” Pennucci said.
Whether that solution will also mean higher taxes or fees for Seattle residents and businesses is an open question.
Pennucci said in her written remarks that she will be “undertaking a clear-eyed multi-year process to resolve the structural deficit by exploring both cost savings and progressive revenue.”
During her campaign for mayor last year, Wilson proposed a 2% city capital gains tax to raise approximately $30 million to reduce homelessness by building more housing.
Wilson also promoted a vacancy tax on office building owners that would require them to pay an unspecified tax for empty offices.
A fourth quarter 2025 report by real estate broker Cushman & Wakefield said the downtown Seattle office vacancy rate has reached record highs of between 34.7% and 35.6%.
The broker said it represents one of the highest office vacancy rates for a major city in the United States, driven by remote work and tech-sector downsizing.
City hall legislative staff reports said that outgoing Mayor Bruce Harrell’s $8.9 billion budget for 2026 relied on “one-time fixes” such as redirecting $277 million from a payroll tax on companies that employ high earners making more than $189,371 to the city’s general fund for core services.
The money was supposed to be used to build housing and for climate change initiatives.
Pennucci will be paid $242,354 in her new position. Prior to being appointed by Wilson, Pennucci had served for 18 months as the deputy executive for Whatcom County. She had previously served as a senior staff member for the Seattle City Council.
