For months now, Seattle City Council members have been insinuating that the city’s Office of Housing, along with other departments, has been “sitting on” unused money year after year that could and should be spent on other purposes. Back in July, for instance, Councilmember Maritza Rivera suggested the council should borrow money from the voter-approved housing levy to pay for unrelated city services, given that this money was “not being used” at the moment.
The theory, which is based on a misunderstanding of how funding for housing projects works, is that the city should not be holding on to money it collects for planned housing projects for as long as it does. When it comes to the full budget, the city has an “initial underspend” that includes all the money that hasn’t been spent by the end of the year, currently 9.9 percent; however, that total consists primarily of funds already allocated to specific projects, so the “true” underspend—the amount that goes back into the general budget—is consistently around 2 percent a year.
In addition to that “underspend,” every year, tens or hundreds of millions of dollars in housing funds (and funding for other projects that span multiple years) is “carried forward” to the following budget year, because the projects that money will eventually fund have not received the funding from other sources they will need to actually get built. Because the city is typically the first funder for housing projects—other funders, including the county and state, contribute to full funding for projects later—there’s no way to spend this money until the rest of the funding is in…