I write a lot in these notes to you about my optimism – optimism about the region and optimism about solving problems and seizing opportunities. And while I remain optimistic, I also recognize there is significant uncertainty for our communities right now, including businesses, and there is much work ahead to ensure our economy is strong, our employers continue to create good jobs, and our communities are healthy.

I’m optimistic because in his State of the City address, Seattle Mayor Bruce Harrell said he would soon announce much-needed relief for small businesses. I’m also watching with excitement how Amazon employees being back in the office five days a week is making downtown Seattle more vibrant. And regionally, I can’t wait for Sound Transit to open two new light rail stations in Redmond on May 10; King County announced its first crisis care center will be in Kirkland, and FIFA World Cup 2026 is only 470 days away.

But that optimism for what’s ahead comes with a heavy dose of uncertainty centered around governmental actions, election results, and economic drivers – and they are interplaying in complex ways that have real implications for individuals, families, and employers.

Federally, we have seen cuts to staffing and spending on important programs like medical research – some being reinstated and some sticking, proposals for tariffs that would negatively impact Washington, the most trade-dependent state in the nation – that were delayed but will go into effect in a matter of days, and Executive Orders that – if legal and implemented – could force changes in how you do business. As Rep. Marilyn Strickland said recently in a webinar we hosted: we know that the biggest enemy of businesses is uncertainty. And she is certainly right about that.

We will continue to be your advocate by working with our federal delegation, providing updates and best practices with changing directives, making any bi-partisan progress we can, and taking action locally, regionally, and in Washington state to support you. And we will do that work grounded in our community values.

In Seattle, voters recently approved Proposition 1A, which will increase the payroll tax to fund social housing. The Chamber supported Proposition 1B, which would have used existing payroll tax funding instead of a new tax, and would have brought accountability to the upstart-Social Housing Public Development Authority. We respect the voters’ decision on the matter, and we will stay vigilant to ensure the social housing authority actually delivers on what it promised voters, including 2,000 units of housing over 10 years.

During the public debate, some said Prop 1A was a good way to respond to threats to housing funding at the federal level, or that it was a way to push back on powerful individuals in Washington, D.C. But on the ground in Seattle, it could add to the uncertainty, as we could lose high-wage earners, or business units, or entire businesses to neighboring jurisdictions. This could create a ripple effect on the city’s broader economy—from restaurants to service providers losing clientele — and the city itself risking revenue shortfalls from declining commercial activity and reduced business tax revenues. In Seattle’s August revenue forecast, Interim Director of the Office of Economic and Revenue Forecasts Jan Duras said Prop 1A (then Initiative 137) posed threats to the city’s job growth and revenues. I don’t know if that sends a message to D.C., but it is a regional reality we have to contend with.

And at the state level, officials are wrestling with a major spending-caused deficit and lines are already being drawn: raise taxes on businesses or withstand significant cuts to services. Some have also said we need to raise business taxes to ward off cuts being made at the federal level.

But those tradeoffs – big cuts versus big tax increases on businesses – don’t line up with what is happening on the ground here in Washington. The reality is that new policy spending at the state grew by almost $14 billion in the last four years, driven by things like expansion of programs and eligibility, increased salary and reimbursement rates, and the creation of new initiatives that have yet to begin. Instead of addressing those real and recent cost drivers, there is talk of cutting core services that Washingtonians need and have relied on for years, creating both fear and uncertainty. But that doesn’t add up, and voters did not agree to these trade-offs. Plus, Washingtonians are already deeply concerned about the economy and availability of good-paying jobs and they are concerned that new taxes will make things even more unaffordable. And drawing these lines creates a false choice between drastic reductions and sweeping tax hikes.  

Instead, lawmakers should focus first on steps to improve efficiency, control spending, and build a sustainable budget that works for us and supports the state’s long-term economic health – something that Gov. Bob Ferguson has been advocating for.

And to be clear: managing the state budget deficit is not the same as the actions being taken at the federal level in the name of “government efficiency,” including cutting off long-standing government investments in agriculture, biomedical, and the green economy. These actions, and the whiplash, are not strengthening our economy. 

As we navigate this uncertainty, I know we can take the necessary action to protect our communities, and also do our best to make sure our local and state decisions strengthen our regional and state economy and respond to what is happening here, on the ground. And, even with uncertainty, I remain optimistic.  

 

Your relentless optimist, 

Rachel 

 

Rachel Smith 
President and CEO
Seattle Metropolitan Chamber of Commerce