Understanding the county budget
Understanding the King County Budget
The biennial county budget is the single most important document through which the King County Council sets policy for county government and oversees the delivery of services you need and expect. This “big picture” look will help you understand how the King County budget works.
The budget process begins with County Executive submitting his proposed budget to the King County Council in late September. The Council then holds a series of public hearings and panel meetings to scrutinize the proposal and develop its own. The Council traditionally adopts the final county budget before Thanksgiving.
Note: The following information provides a general understanding of the King County budget. Specifics, such as numbers and percentages, vary slightly from biennium to biennium.
Restricted and unrestricted funds
The county budget is composed of two types of funds: dedicated funds and the General Fund. Dedicated funds are the largest portion of the county budget, at about 83% of the total budget. These funds include contracts for services, fees, and levies that have been collected for specific purposes and must be allocated by law toward those purposes. For example, bus fares must go towards paying for transit, sewer fees towards paying for wastewater treatment, and the voter-approved EMS property tax levy to funding Emergency Medical Services.
There is more flexibility in the General Fund, which is about 14% of the total budget. This fund pays for the traditional functions of county government, such as the Sheriff's office, and critical day-to-day services that are not supported by dedicated revenues. Nearly three quarters of the general fund (72%) goes to support state-mandated criminal justice and public safety services. The remainder pays for other programs, such as health and human services (see pie chart below.
King County General Fund expenditures
Funding the services you receive
The General Fund and the many services it provides to county residents is supported by two principal sources of tax revenue: property tax and sales tax.
King County is the property tax collector for all taxing districts within the county. Although you pay your property tax to King County, the County receives only 17 cents of every dollar. The rest goes to other agencies, including 57 cents to schools, 16 cents to cities and towns, and 10 cents to other taxing districts (see graph below).
Where your property tax dollar goes
King County residents pay an average sales tax of 10 percent. The state keeps 6.5 percent; 1.4 percent goes to Sound Transit and 0.9 to Metro Transit; 0.2 percent is set aside for criminal justice, and mental health and substance abuse services; and the remaining 1 percent is split between cities and the County. (See graph below.)
Where your sales tax goes
Structural gap, or why is there a budget shortfall?
King County is now the 13th most populous county in the nation, with about 2.3 million residents, and King County government is the second largest provider of public services in Washington State.
In addition to the services they usually provide to residents, counties have had to fill the gap as federal and state governments have made significant reductions to their support of vital human services and left other critical needs unfunded. These service responsibilities have come without additional funding from the state or other sources to meet the expenses they incur.
Annexations and incorporations have also reduced King County’s tax base, as previously unincorporated areas now send their tax revenues to cities.
Counties have only two principal sources of tax revenue to support public services—property tax and sales tax. In contrast, the State of Washington and cities have more revenue sources, such as business and occupancy taxes and utility taxes, in addition to property tax and sales tax revenues.
By voter initiative in 2001, subsequently passed into law by the Washington State Legislature, the amount of property taxes levied by counties can increase by only 1 percent per year, plus revenue from new construction. As a result, revenues counties receive grow at a much lower rate than the cost of maintaining services to residents. This gap is called the “structural gap.”
While no significant budget deficit is predicted in the 2023-2024 biennium, the budget is not sustainable and the General Fund is projected to be out of balance by $80 to 100 million for 2025-2026.
King County is not alone in this situation. Counties across the Washington State face the problems created by this structural gap.
Effect of the structural gap
Due to the cap on property taxes, King County revenues grow by 1 percent a year. In the past several years, the County has been able to contain growth in costs to about 3.5 percent a year through various cost saving measures. However, the rising cost of providing the same level of public services has gone up by 5 to 9 percent a year due to historic inflation.
Inflation is at the highest levels seen in decades. After years in the 1.0 to 3.5 percent annual range, the Seattle CPI-W for August 2021 versus August 2020 was up 5.2 percent, and the same measure for August 2022 versus August 2021 was up 9.0 percent. This inflation is driven by many factors. The latest County forecast puts the June-to-June CPI-W at 4.99 percent for 2023 and 2.85 percent for 2024.
In the past decade, predicted deficits, or difference between revenues and costs, have forced King County to cut a few hundred million dollars in services. Such deficits must be addressed by the County Executive when he presents a balanced budget, as required by law, for review and approval by the County Council.
How can the budget deficit be eliminated?
In the short term, the County must make difficult decisions to balance its budget, as counties are required by law to adopt a balanced budget. In the long term, this structural gap between revenues and costs of county services can be resolved only through the collaboration of the State Legislature, counties, and voters.