>> GOOD MORNING AND WELCOME TO
THE SEATTLE REVENUE AND
ECONOMIC FORECAST CANS OF.
TODAY IS AUGUST 28, 2022 AND
I'M TERESA MOSQUEDA, CHAIR OF
THIS COUNCIL AND I'M JOINED
TODAY WITH THE COLLEAGUES AND
PRESENTERS.
WOULD YOU LIKE TO INTRODUCE
OURSELVES, STARTING WITH THE
SENIOR DEPUTY MAYOR?
>> SENIOR DON'T UPPITY DEPUTY
MAYOR, MONISHA HARRELL.
>> I'M BRITTANY BELL SWIFT,
CHIEF OF STAFF.
>> EXCELLENT.
DR. DINGLEY?
>> FROM THE CITY BUDGET OFFICE.
>> ANYONE ELSE ONE TO JUMP OFF
BEFORE WE HAD TO FOLKS IN THE
ROOM?
>> THIS IS JAMIE CORNELL, CITY
FINANCE DIRECTOR.
>> WONDERFUL TO HAVE YOU,
INTERIM DIRECTOR AND WE WISH
THE OUTGOING DIRECTOR THE BEST.
THANKS.
I WLL TURN IT OVER TO FOLKS IN
THE ROOM FOR INTRODUCTIONS.
>> I'M THE SENIOR ECONOMIC
úOFFICE COUNCIL.
>> OKAY.
>> I'M BEN NOBLE, THE DIRECTOR
OF OFFICE AND REVENUE
FORECASTS.
I WANT TO INTRODUCE THE NEWEST
AND FINAL MEMBER OF THE
ECONOMIC FORECAST COUNCIL
OFFICER AND WE JUST BROUGHT HIM
ONBOARD IN JUNE AND WE ARE
APPRECIATIVE TO HAVE HIM
ONBOARD.
>> GOOD MORNING.
I'M SEAN THOMPSON, OFFICE OF
ECONOMIC REVENUE AND FORECAST.
NICE TO MEET YOU ALL.
>> DAVID HENNES, MANAGER OF THE
ECONOMIC COMMUNITY.
>> GOOD MORNING.
ALEX ZHANG, ECONOMIST.
>> WONDERFUL AND THANK YOU VERY
MUCH.
WELCOME TO EVERYONE AND AS
MENTIONED, WE ARE VERY EXCITED
TO HAVE ACTING CITY FINANCE
DIRECTOR, JAMIE CARMEL.
THANK YOU SENIOR DEPUTY MAYOR
AND THE MAYOR FOR THAT
APPOINTMENT.
WE WISH GLENN LEE THE BEST AND
HE WORKED WITH US TO ESTABLISH
THIS ECONOMIC REVENUE FORECAST
MODEL.
I'M EXCITED TO BE WITH THE
FORECAST COLLEAGUES, THE SENIOR
DEPUTY MAYOR AND FROM THE
PRESIDENT'S OFFICE AND CHIEF OF
STAFF, BRENDA L SWIFT, AS YOU
HEARD HER INTRODUCE HERSELF.
WE HAVE PRESENTERS FROM THE
OFFICE OF ECONOMIC REVENUE
FORECAST AND WE HAVE
PRESENTATIONS FROM DIRECTOR
JULIE DINGLEY FROM THE BUDGET'S
OFFICE AND THE CITY COUNCIL
STAFF AND INDIVIDUAL OFFICES.
THE MAIN PURPOSES FOR THE
REVENUE FORECAST TO RECEIVE THE
UPDATED REVENUE PROJECTIONS FROM
THE OFFICE OF ECONOMIC REVENUE
FORECAST AND AS THE COUNCIL, TO
REVIEW THE ECONOMIC FORECASTS.
THEY ARE KEY ELEMENTS TO THE
PROCESS AND IT'S A NEW PROCESS
WE HAVE INTRODUCED THIS YEAR
THAT WILL HELP US DEFINE THE
FINANCIAL RESOURCES THAT WE, AS
A CITY, HAVE AVAILABLE TO
ALLOCATE THROUGHOUT THE
PROCESS.
WE ARE EXCITED ABOUT THE
OPPORTUNITY TO HEAR THE AUGUST
REVENUE FORECAST.
WE KNOW THE EXECUTIVE AND THE
MAYOR'S TEAM IS DEEP IN THE
THROES OF FINALIZING THEIR
PROPOSED BUDGET FOR 2023-2024
AND IT ALLOWS FOR US, IN REAL
TIME AS EXECUTIVE AND
LEGISLATIVE BRANCH TO HEAR THE
INFORMATION FOR THE FIRST TIME
AND ALLOWS FOR US, AS A
COLLECTIVE CITY FAMILY TO BEGIN,
IN A FEW WEEKS, ON SEPTEMBER
27, TO HAVE THE DISCUSSION AND
DELIBERATION WITH COMMUNITY
MEMBERS WHEN THE CITY OF
SEATTLE COUNCIL RECEIVED THE
PROPOSED BUDGET.
MAYOR HARRELL, THE PROPOSED
BUDGET FOR THE CITY COUNCIL
WILL BE TRANSMITTED ON
SEPTEMBER 27 AND THAT GIVES US
NEAR TWO MONTHS TO HEAR WHAT
THE ECONOMIC REVENUE FORECAST IS
FOR 2023, 2024 AND BEYOND AND
ALLOWS A TRANSPARENT
CONVERSATION WITH THE COMMUNITY
ABOUT HOW THE UPDATED REVENUE
PROJECTIONS CAN INFORM OUR
BIANNUAL BUDGET PROCESS.
LET'S BEGIN BY FORMERLY
ADOPTING THE PROPOSED BUDGET
WITH A COPY OF THE AGENDA
CIRCULATED.
THANK YOU VERY MUCH TO DIRECTOR
BEN NOBLE FOR POSTING THIS AND
CIRCULATING IT.
MID-WEEK LATE LAST WEEK, AND
AVAILABLE ONLINE AT THE
ECONOMIC REVENUE FORECAST
COUNCIL WEBSITE.
COLLEAGUES, I MOVED TO ADOPT
THE AGENDA FOR TODAY.
IS THERE A SECOND?
THANK YOU VERY MUCH, SENIOR
DEPUTY MAYOR.
IT HAS BEEN MOVED AND SECONDED
IT.
THE AGENDA IS BEFORE THE
COUNCIL.
ANY ADDITIONAL QUESTIONS,
COMMENTS OR OPPORTUNITIES TO
MOVE THINGS AROUND IF YOU SO
DESIRE?
HEARING NO ADJUSTMENTS, IF
THERE IS NO OBJECTION, TODAY'S
AGENDA WILL BE ADOPTED.
WE WILL MOVE TO THE FIRST ITEM
OF BUSINESS AND OUR AGENDA,
APPROVAL OF THE MINUTES FROM
APRIL 8th, 2022, THE LAST TIME
WE HAD THE CHANCE TO MEET AND
THE MEETINGS HAVE BEEN
CIRCULATED AND POSTED ONLINE.
I MOVE THAT THE COUNCIL ADOPT
THE MINUTES AND APPROVE THE
MINUTES FROM APRIL 8, 2022.
IS THERE A SECOND?
THANK YOU.
THANK YOU SENIOR DEPUTY MAYOR.
IT HAS BEEN MOVED AND SECONDED
TO APPROVE THE MINUTES FROM THE
MEETING.
ANY ADDITIONAL COMMENTS OR
QUESTIONS?
HEARING NONE, THE MINUTES WILL
BE APPROVED IF NO OBJECTION.
NO OBJECTION AND THE MINUTES ARE
APPROVED.
MOVING RIGHT ALONG, ITEM NUMBER
2, THIS IS THE REVIEW OF THE
SECOND QUARTER REVENUE REPORTS
FROM THE OFFICE OF ECONOMIC AND
REVENUE FORECASTS.
I'M REALLY EXCITED FOR US TO
HAVE THIS SUBSTANTIVE ITEM ON
TODAY'S AGENDA FOR US TO HAVE A
TRANSPARENT AND PUBLIC
DISCUSSION ABOUT WHAT THE
SECOND QUARTER REVENUE
MONITORING REPORTS REVEAL.
AND, FOR US TO HAVE THE
OPPORTUNITY TO WALK THROUGH THIS
IN DETAIL WITH THE OFFICE OF
ECONOMIC AND REVENUE FORECAST.
ONE OF THE SPECIFIC PURPOSES OF
THE SEATTLE CITY COUNCIL
IDENTIFIED PURPOSE IN CREATING
THIS NEW REVENUE FORECAST WAS
TO MAKE SURE WE ARE ENHANCING
TRANSPARENCY AND IMPROVINGTHE
PUBLIC ACCESS AND FOR THE CITY
COUNCIL, AS A WHOLE, THEIR
ACCESS, AS WELL, FOR
INFORMATION ABOUT THE CITY
REVENUE.
THESE QUARTERLY REPORTS ARE
TANGIBLE EXAMPLES OF HOW WE
ACCOMPLISH THE GOAL OF SHARED
INFORMATION BETWEEN THE
EXECUTIVE BRANCHES AND WITH
MEMBERS OF THE PUBLIC.
WITH THE CURRENT REPORT WE ARE
ABOUT TO REVIEW AND GOING
FORWARD, OR A CITY LEADERSHIP
IN THE EXECUTIVE BRANCH AND THE
LEGISLATIVE BRANCH ARE INVITING
THE PUBLIC AT LARGE TO HAVE
ACCESS TO THIS INFORMATION IN A
TIMELY AND COMPREHENSIVE WAY.
THIS IS A SUMMARY OF THE CITY'S
CURRENT REVENUE RECEIPTS, IF
YOU WILL.
THIS INFORMATION IS REALLY
IMPORTANT BECAUSE THE CITY
BUDGET IS BALANCED TO A
FORECAST OF THE CURRENT YEAR
REVENUES AND MONITORING THAT IS
A CRITICAL PART OF THE
MANAGEMENT AND OVERSIGHT ROLE
AND IT WOULD NOT BE POSSIBLE
FOR US TO CREATE A BALANCED
BUDGET OVER THE NEXT TWO YEARS
WITHOUT AN ACCURATE AND TIMELY
REFLECTION OF WHAT THE EXPECTED
REVENUES WILL BE PAIRED WITH AN
INTRODUCTION, I TURN IT OVER TO
DIRECTOR NOBLE FROM THE OFFICE
OF ECONOMIC AND REVENUE
FORECAST.
AGAIN, THIS IS AN INDEPENDENT
DEPARTMENT, INDEPENDENT AGENCY
WITHIN THE CITY REPORTING AS
YOU ARE HEARING TODAY WITH THE
EXECUTIVE BRANCH AND THE
LEGISLATIVE BRANCH.
WE WILL HEAR THE OVERALL REPORT
OUT ON THE STRUCTURE OF THE
QUARTERLY REPORT AND WILL
HIGHLIGHT SPECIFIC DEVELOPMENT
IN THE SECOND QUARTERLY
RESULTS.
I WANT TO MAKE SURE FOLKS KNOW
WE'VE INVITED DIRECTOR JULIE
DINGLEY WITHIN THE CITY BUDGET
OFFICE TO BE HERE WITH US TO
PRESENT, AS WELL.
WE CAN ROUND OUT THE
INFORMATION.
THE CITY BUDGET OFFICE IS
SEPARATE FROM THE OFFICE OF
ECONOMIC AND REVENUE FORECAST.
WE WELCOME THE CITY BUDGET AND
DIRECTOR DINGLEY TO BE HERE TO
PRESENT LATER ON IN THE AGENDA.
I WANTED TO ORIENT US TO THE
TWO DIFFERENT ROLES EACH AGENCY
HAS.
WITH THAT, DIRECTOR NOBLE, I
TURN IT OVER TO YOU TO WALK
THROUGH THE PRESENTATION ON
ITEM NUMBER 2.
>> THANK YOU VERY MUCH.
WHEN I WILL DO IS GO TO THE
SLIDE DECK AND WALK YOU THROUGH
THIS SECOND QUARTER REVENUE
MONITOR REPORT.
THE ACADEMIC FORECAST OFFICE ON
A QUARTERLY BASIS IS THAT AT
THE END OF THE QUARTER, THE END
OF MARCH AND AT THE END OF JUNE
AND SEPTEMBER AND ULTIMATELY
THE END OF THE YEAR -- AND I
WILL TALK ABOUT THAT IN A
SECOND, WE LOOK INTO THE
ACCOUNTING SYSTEMS TO SEE HOW
MUCH CASH HAS BEEN RECEIVED AND
WE TOTAL IT UP.
WE WERE REPORTED BY CATEGORY SO
YOU CAN SEE WHAT'S GOING ON.
THERE IS A CERTAIN AMOUNT OF
DELAY WHEN PEOPLE ARE PAYING
FEES AND TAXES WITH A DELAY IN
THE PROCESSING OF THEM.
WHAT WE GET IS THE INFORMATION
THAT I WILL DESCRIBE AND HOW IT
WILL BE BEST INTERPRETED AND
UNDERSTOOD.
THE FOCUS ON THIS IS THE DOLLAR
VALUES FOR THE SECOND QUARTER
AND I WILL POINT OUT A COUPLE
OF THINGS AND I WANT TO ORIENT
YOU TO THE STRUCTURE AND REPORT
ON THE SUBSTANCE OF IT.
CANDIDLY, I WON'T TAKE TOO LONG
BECAUSE A SECOND PRESENTATION,
THE AUGUST REVENUE FORECAST --
IN TERMS OF MOVING FORWARD -- A
REALLY IMPORTANT PIECE AND
INCLUDES ADDITIONAL INFORMATION
OF WHERE WE THINK WE SIT WITH
CURRENT REVENUES.
WITH THAT, LET ME PUT UP THIS
PRESENTATION AND WALK US
THROUGH THIS REPORT.
I WILL ORIENT MYSELF.
SO, HERE WE GO.
THE SECOND QUARTER REPORT TALKS
ABOUT THE PURPOSE AND THE
TIMING AND FORMAT.
AGAIN, IN TERMS OF PURPOSE, AS
COUNCILMEMBER MOSQUEDA
DESCRIBED, ITS CASH RECEIPTS
WITH INFORMATION AVAILABLE TO
YOU ALL AND TO THE PUBLIC.
THE PRESENTATION IS UP ON THE
CITY WEBSITE FOR THE ECONOMIC
AND REVENUE FORECAST ON THE
CITY WEBSITE.
YOU CAN SEE THE LINK.
>> SORRY, DIRECTOR NOBLE.
A QUICK SUGGESTION AS WE DO
THIS VIRTUALLY AND WANT TO MAKE
SURE WE BROADCAST THIS OUT, I
THINK THE SEATTLE CHANNEL FOR
PUBLISHING OF THIS. I
WAS GOING TO SUGGEST IF THEY
WANTED TO DROP THE EXTRA BOX SO
WE CAN SEE YOUR FACE, THAT IS
GREAT AND IT LOOKS LIKE THEY'VE
ALREADY DONE THAT.
YOU CAN CONTINUE.
>> WITH THE TIMING, FOLLOWING
EACH OF THE FOUR QUARTERS OF
THE YEAR, WE PRODUCE THIS
REPORT FOR THE FIRST THREE
QUARTERS AND WE CAN DO THAT TWO
WEEKS AFTER THE END OF THE
QUARTER WITH THIS DOCUMENT UP
ONLINE IN THE MIDDLE OF JULY
FOLLOWING THE END OF THE SECOND
QUARTER OF JUNE.
THE FOURTH QUARTER REPORT WILL
TAKE SOME TIME AND WON'T BE
COMPLETED UNTIL MID-MARCH.
THE REASON WITH THE TECHNICAL
REFERENCE FOR THE ACCRUALS
PROCESS, WITH FINANCES, WE
BALANCE THE BUDGET FOR THE
MONEY OWED TO THE CITY BECAUSE
OF ACTIVITY FROM JANUARY 1
THROUGH DECEMBER 31.
THERE IS A 4-8 WEEK DELAY IN
WHEN PAYMENTS ARE MADE FOR
TAXES AND FEES.
THEY ARE OBLIGATED IN THAT
CALENDAR YEAR.
IN SOME SENSE, WE CATCH UP IN
JANUARY AND FEBRUARY AND WAIT
FOR IT TO FLOW IN WITH THE
OBLIGATIONS AND ACTIVITY IN THE
PREVIOUS CALENDAR YEAR.
THAT PROCESS WINDS DOWN AT THE
END OF FEBRUARY.
THE REPORT IS IN EARLY MARCH.
IN TERMS OF THE FORMAT -- AND
YOU WILL SEE IN A SECOND -- AND
A HIGHLIGHT THAT -- THERE IS
DETAIL ON LARGER REVENUE STREAMS
AND WE WILL TRACK THOSE AND
HAVE TRACKED THOSE
INDIVIDUALLY.
SOME OF THE OTHER ONES ARE IN
CATEGORIES AND IT'S MORE
REASONABLE AND EASY TO READ AND
TO KEEP TRACK.
WE ARE COMPARING THE PAYMENTS
WE RECEIVED AT THE END OF EACH
QUARTER TO WHAT WE GENERALLY
EXPECT TO HAVE AT THAT TIME.
WHEN I SAY GENERALLY, WHAT
WE'VE DONE IS LOOKED BACK AT
THE LAST FEW YEARS TO SEE THE
TIMING OF THE FLOW OF EACH OF
THESE REVENUE STREAMS AND WE
LOOK TO SEE IF WE MATCH THAT.
AT THE END OF THE FIRST QUARTER
WE MIGHT THINK WE HAVE 25% AND
I WILL EXPLAIN BUT WE CHECK TO
SEE WHETHER WE ARE ON PACE.
SO, WHAT DOES THAT LOOK LIKE?
THIS NEXT SLIDE IS AN EXAMPLE
OF WHAT THAT LOOKS LIKE.
TAKEN RIGHT FROM THE REPORT AND
THIS IS THE HIGH LEVEL WITH THE
GENERAL FUND.
THE BLUE SHOWS WHAT WE WOULD
EXPECT TO GET AND BASED ON
RECENT FORECAST, IT SHOWS THE
SHARE OF REVENUE AND THE DOLLAR
TERMS WOULD EXPECT TO SEE.
THOSE SHARES ARE BASED ON A
HISTORIC PATTERN OF PAYMENTS
PAID ONE OF THE REASONS THE
FIRST QUARTER IS SO LOW IS THEIR
ARE MANY TAX PAYMENTS THAT ARE
PAID QUARTERLY THAT THEY ARE
NOT PAID ON MARCH 31.
RATHER, THE TAXPAYERS ARE
OBLIGATED BY THE END OF APRIL
TO PAY THEM.
AS WE ADD UP THE CASH THE CITY
RECEIVED AT THE END OF MARCH,
WE ARE NOT SEEING THOSE
QUARTERLY OBLIGATIONS.
IT'S A RELATIVELY SMALL
PERCENTAGE WITH THE TENDENCY AT
THE END OF THE FIRST QUARTER.
YOU CAN SEE THAT THE FOURTH
QUARTER HAS A TOTAL BUT ALSO
REPORTS THE LARGER SHARE, ABOUT
40%.
THAT IS IN THE FIRST QUARTER
REPORT AND WHAT YOU SEE IS THE
ACTUAL RECEIPTS AND THE MATH
BELOW IS THE NUMBERS OF THE
CHARTS THAT ARE EXPLICITLY LAID
OUT.
THE FIRST QUARTER, WE WERE
BEHIND THE PACE WE MIGHT HAVE
EXPECTED AND AT THE END OF THE
SECOND QUARTER, WE SEE IT
NOTABLY AHEAD.
I WILL COME BACK TO DESCRIBE TO
YOU WHY THAT IS.
IT'S LESS OF A WONDERFUL NEW
STORY, BUT MORE OF A TIMING
QUESTION.
THERE ARE SOME REVENUES THAT
HAVE COME IN THAT WE DID NOT
ANTICIPATE AND THEN IN THE NEXT
PRESENTATION, AS WELL.
THIS NEXT CHARGE LOOKS VERY
SIMILAR AND YOU MAY NOT HAVE
BEEN ABLE TO TELL BUT IT
FOCUSES ON THE INDIVIDUAL
REVENUE STREAM.
WE ARE KNOSSOS REPORTING THE
TOTAL, BUT DIGGING INTO THE
SPECIFICS AND THE MORE
IMPORTANT REVENUE STREAMS.
THEIR ARE CHARTS COMPARABLE TO
THIS FOR THE SALES, THE PMO TAX
AND SEVERAL OTHER REVENUE
STREAMS.
WE GIVE YOU THAT DETAIL LEVEL
AND THEN PROVIDE NARRATIVE
DESCRIPTIONS FOR WHAT IS GOING
ON.
HERE ARE RETAIL TAX RECEIPTS,
SLIGHTLY AHEAD OF PACE IN THE
FIRST QUARTER AND FURTHER HEAD
IN THE SECOND QUARTER.
THESE RESULTS ARE PART OF THE
FEED INTO THE REVENUE
FORECASTING PROCESS AND THE
INFORMATION WE REFLECT.
WE DO HAVE A BIT OF DETAIL FROM
THE TABLE WITH THE INDIVIDUAL
ROSE EITHER INDIVIDUAL REVENUE
STREAMS OR A CATEGORY OF
REVENUE STREAMS.
YOU CAN SEE AT THIS LEVEL OF
GROUPING THINGS, IT'S A PRETTY
DETAILED CHART.
IF YOU LOOK ACROSS, WITH THE
EXAMPLE OF PROPERTY TAX, WHAT
WE REPORT IS AT THE END OF THE
SECOND QUARTER WE HAD OVER $197
MILLION IN PROPERTY TAX TO THE
CITY.
I WILL REMIND YOU IN THE SECOND
COLUMN OF THE FORECAST, THE
MOST RECENT FORECAST, THE APRIL
FORECAST -- THE FORECAST IS FOR
THE REVENUE AND THE PERCENTAGE
IS HOW MUCH OF THAT TOTAL WE
RECEIVED TO DATE AND IT'S 53%.
THE NEXT COLUMN, HOW DOES THAT
COMPARE TO MORE RECENT HISTORY?
THE ANSWER IS THAT IT IS CLOSE,
54%.
YOU MIGHT WELL ASK AND I
ANTICIPATE THAT YOU MIGHT, WHY
WE ONLY FOCUS ON 2018 AND 2019 %
AS A HISTORIC COMPARISON POINT.
TWO DIMENSIONS TO THAT ANSWER
AND ONE IS THAT THE CITY
SHIFTED THE ACCOUNTING SYSTEM IN
2018.
OUR HISTORIC RECORD IS CLEAN
FROM 2018 ON.
THE REASON WE DON'T HAVE 2020
AND 2021 IS THAT THE PAYMENT
CALENDAR WAS VERY DIFFERENT IN
THESE PANDEMIC YEARS.
WE DON'T COMPARE THE PACE THAT
WE ARE COLLECTING REVENUES NOW
THAT THOSE TWO YEARS DON'T
REALLY TELL THE STORY OF
COMPARISON.
YOU CAN SEE THAT WE ARE ON PACE
AND THE PERCENTAGES IN THOSE
TWO COLUMNS WOULD BE ABOUT THE
SAME.
YOU CAN SEE THAT IS THE CASE
FOR MOST OF THE REVENUE STREAMS
WITH THE PROPERTY TAX AND SALES
TAX, ET CETERA.
YOU MIGHT THINK IT LOOKS
NOTABLY DIFFERENT AS THE COURT
FINDS WE ARE TRAILING BEHIND
THE PACE.
IF WE ACHIEVE THE REVENUE WITH
THE FORECAST, WE WOULD EXPECT
THIS TO BE CLOSER TO HALF THAT
REVENUE.
YOU WILL SEE THERE IS A
REVISION IN THE FORECAST PARTLY
INFORMED BY THESE RESULTS AND
THAT WILL BE THE NEXT
PRESENTATION.
GRANTS ARE A LITTLE AHEAD OF
PACE AND THEY CAN BE LUMPY AND,
AT DIFFERENT TIMES.
THE COURT PATTERN MAY NOT BE AS
USEFUL.
THE FUND BALANCE TRANSFERS, THE
2022 BUDGET WAS BALANCED
AGAINST A SIGNIFICANT TRANSFER
INCLUDING THE USE OF RESOURCES
FROM THE PAYROLL EXPENSE TAX.
THOSE ARE TRANSFERRED ON AN
ACCOUNTING BASIS LATE IN THE
YEAR AND THEY SHOW ZERO BUT
WE'VE BEEN CERTIFIED GETTING
THOSE REVENUES AND THERE IS NO
ISSUE. I'VE HIGHLIGHTED TWO
ROSE, SERVICE CHARGES AND
REIMBURSEMENTS AND THE PAYROLL
TAX LATENT FROM 2021 PAYMENTS.
THOSE ARE DIFFERENT AND WORTHY
OF NOTE.
THE SERVICE CHARGES AND
REIMBURSEMENTS ARE WELL AHEAD
OF PACE WITH ALMOST $80 MILLION
AND WE ONLY EXPECTED $100
MILLION FOR THE YEAR,
ESSENTIALLY DOUBLING WHAT WE
EXPECT.
THE REASON IS THE MEGAWATTS
SALE WENT THROUGH IN THE CITY
RECEIVED A LARGE CHUNK OF MONEY
ALL AT ONCE.
OUR MODEL OF EONOMIC NORMAL
PACE OF REVENUE DOESN'T
ANTICIPATE A ONE-TIME PAYMENT
LIKE THAT VERY WELL.
IT'S NOTED HERE AND THE
NARRATIVE REPORT EXPLAINS WHAT
I JUST DID EXPLAIN TO YOU.
AHEAD OF PACE, BUT NOT REALLY,
BECAUSE OF THAT LARGE, ONE-TIME
PAYMENT.
THE OTHER ONE OF NOTE IS THE
PAYROLL TAX LINK FROM THE 2021
PAYMENTS.
WHAT HAS HAPPENED IS THE 2021
PAYROLL EXPENSE TAX PAYMENTS
WERE DUE, ESSENTIALLY, THE END
OF JANUARY.
AT ONE TIME ANNUAL PAYMENT DUE
AT THE CLOSE OF THE YEAR.
WE RECEIVED THE PAYMENTS TO THE
END OF FEBRUARY BUT THE WAY THE
SYSTEM WORKS, WE CLOSED THE
BOOKS AND RAN THE ACCRUAL
PROCESS.
THE MONIES PAID IN FOR 2021
WERE ADDED TO THE RESOURCES FOR
2021 AND CLOSED THOSE BOOKS.
SINCE THEN, MULTIPLE TAXPAYERS
HAVE COME FORWARD TO SAY THAT
WE ARE STILL JUST UNDERSTANDING
HOW THAT PAYROLL TAX WORKS.
YOU SHOULD HAVE BEEN PAID IN
2021 OR BY THE END OF JANUARY
AND INTO FEBRUARY AND WE DIDN'T
AND WE ARE COMING CLEAN, IF YOU
WILL AND HERE IS OUR MONEY.
THAT IS NOT IN THE FORECAST
BECAUSE WE HADN'T COLLECTED THE
TAX BEFORE AND DIDN'T KNOW WHO
WOULD BE SUBJECT TO THE TAX.
WE COULDN'T TELL THAT THERE
WERE PEOPLE THAT SHOULD HAVE
PAID AND HADN'T PAID.
WE DIDN'T SEE THAT COMING, IF
YOU WILL.
IT WASN'T IN THE FORECAST.
THE THIRD COLUMN OVER, WE HAD
NO REASON TO EXPECT PAYMENTS IN
2021.
THEY HAVE ARRIVED. AS AN
ACCOUNTING MATTER, YOU CAN'T
PUT THEM INTO THE 2021 COLUMN,
IF YOU WILL.
THAT IS WITH ACCOUNTING RULES.
PER COUNCIL ORDINANCE, THE CITY
ORDINANCE, THE PAYMENTS FOR
2021 BELONG TO THE GENERAL FUND
AND THAT EXPLAINS THAT FOR
2022, FOR THIS YEAR, ALL
PAYMENTS AND ALL OBLIGATIONS
FOR 2022 PAYROLL EXPENSE TAX
ARE DEPOSITED INTO A SEPARATE
FUND, DISTINCT FROM THE GENERAL
FUND.
THESE 2021 PAYMENTS ARE COMING
IN AND WHERE DO THEY GO?
PER CITY ORDINANCE, OBLIGATIONS
FOR 2021 GO TO THE GENERAL
FUND.
IT'S AT THE REVIEW OF THE
PAYMENTS FROM THE PAYROLL
EXPENSE TAX AND IDENTIFYING
THOSE FOR 2021 AND SHIFTING
THOSE TO THE GENERAL FUND.
THE INCREASE OF $14 MILLION IS
A NET INCREASE OF REVENUES THAT
WE IN NO WAY ANTICIPATED AND
YOU WILL SEE IT HAS BECOME AN
ISSUE WITH THE OVERALL FORECAST
OF 2022.
IT'S A GOOD NEWS STORY IN A
COUPLE OF WAYS.
ONE, MORE MONEY TODAY BUT IT
ALSO IMPLIES THAT THE PAYROLL
TAX BASE FOR THE AMOUNT OF
MONEY COMING IN FOR THE PAYROLL
TAX IS LARGER THAN WE HAD
ANTICIPATED WITH OUR INITIAL
FORECAST AND WITH OUR
REVISIONS, PREVIOUSLY.
THAT'S A MATERIAL CHANGE AND
YOU WILL SEE THIS IS AT THE END
OF JUNE WITH THE NUMBERS BEING
LARGER AND YOU WILL SEE THAT IN
THE NEXT PRESENTATION.
THOSE ARE THE TWO THINGS I DID
WANT TO CALL OUT.
WE'VE BEEN FOCUSED ON THE
GENERAL FUND AND IN THE SAME
REPORT, WE HAVE UPDATES ON A
NUMBER OF OTHER REVENUE
STREAMS.
OF PARTICULAR INTEREST, PAYROLL
TAX IS ONE OF THEM.
YOU CAN SEE THAT FIGURE REPORTED
AND WE ARE AT ABOUT 22%.
IN THE LAST COLUMN, WITH THE
PERCENTAGE, INSUFFICIENT DATA IS
THE BENCHMARK BECAUSE WE'VE
NEVER COLLECTED THIS TAX ON A
QUARTERLY BASIS BEFORE.
IT WAS DUE ONCE AT THE END OF
2021 AND WE HAVE NO INFORMATION
FOR THE PATTERN TO EXPECT AND
THAT'S A CHALLENGE FOR US.
WE WILL TALK ABOUT THAT UPDATE
FOR THIS YEAR.
YOU CAN SEE THE BEVERAGE TAX,
GENERALLY ON PACE.
THE REAL ESTATE EXCISE TAX,
WEEK 1 AND WEAK TWO ARE WELL
AHEAD OF FORECAST, AS YOU CAN
SEE.
WE'LL VISIT THAT FUND AGAIN IN
THE NEXT PRESENTATION TO PREVIEW
THE OVERALL FORECAST FOR 2022.
IT WILL, IN FACT, INCREASE AND
IS LARGELY BECAUSE OF THESE
MIDYEAR RESULTS.
THERE IS A SEPARATE CATEGORY OF
TRANSPORTATION SPECIFIC
REVENUES AND THESE ARE NOT ALL
THE TRANSPORTATION REVENUES BUT
OF PARTICULAR INTEREST AND ONES
THAT WE'VE BEEN TRACKING.
WE ARE GENERALLY ON PACE WITH
NOTABLE EXCEPTIONS IN
COMMERCIAL APARTMENT TAX AND WE
WILL LEAVE IT AT THAT FOR THE
NEXT INDICATION.
THE REPORT COVERS THE GENERAL
FUND AND COMPONENTS AND THESE
OTHER KEY REVENUE STREAMS OF
INTEREST.
ONE THING I FORGOT TO MENTION
IS THAT THE FORMAT OF THIS
TABLE AND THE PREVIOUS ONE,
THIS LIST OF REVENUE SOURCES --
YOU WILL SEE THIS AGAIN WHEN WE
DO THE REVENUE FORECAST.
WE ARE WORKING TO PROVIDE A
CONSISTENT SET OF CATEGORIES
FOR THESE REVENUES.
OVER TIME, VARIOUS CATEGORIES
HAVE EVOLVED AND WE REALIZE THAT
IS NOT VERY HELPFUL FOR YOU,
NOR THE PUBLIC.
THIS IS THE STANDARD APPROACH
IN THIS REPORT.
THE SAME APPROACH IN THE SIX-
YEAR FINANCIAL PLAN AND IT HAS
CONSISTENCY THAT WILL HELP,
OVER TIME.
THE GENERAL FUND SOURCES AND TO
OVERWHELM YOU INTENTIONALLY
WITH THIS ONE, THERE IS EVEN
MORE DETAIL IN THE APPENDIX OF
THE REPORT.
DRILLING IN AND YOU CAN'T SEE
THIS WITH EACH OF THE UTILITIES
THAT CAN POSE THE UTILITY TAX
CATEGORY AND YOU CAN LOOK IN TO
SEE IF THERE ARE INDIVIDUAL
UTILITY STREAMS ON PACE OR OFF
PACE.
YOU CAN SEE, IN GENERAL, THAT
THE LEVEL OF INFORMATION IS
BEING PROVIDED IN THE REPORT,
TO GET A SENSE OF THAT.
THAT'S WHAT I HAVE FOR THIS AND
I WANTED TO GIVE YOU THE
OVERALL SENSE OF THE FORMAT AND
A FEW COMMENTS ON THOSE
SPECIFIC RESULTS AND THEN I'M
HAPPY TO TAKE QUESTIONS BEFORE
WE MOVE ON TO THE FORECAST,
ITSELF.
>> WONDERFUL.
THANK YOU VERY MUCH, DIRECTOR
NOBLE.
BEFORE I OPEN TO OTHER
QUESTIONS AND COMMENTS, THANKS
FOR HIGHLIGHTING THE ADDITIONAL
REVENUE COMING IN FOR 2021
RECEIPTS FROM THE JUMPSTART
PROGRESSIVE PAYROLL TAX.
I THINK THE COMPANIES, THE
PAYERS THAT ARE CONTINUING TO
REACH OUT TO FINANCE AND
ADMINISTRATIVE SERVICES TO MAKE
SURE THEY FULLY UNDERSTAND HOW
TO COMPLY WITH JUMPSTART.
AS WELL, I THINK THE TEAM AT FAS
WHO, UNDER THE LEADERSHIP OF
GLENN LEE AND THE ENTIRE TEAM
WORKING WITH THE PAY ORDERS AT
FAS, THEY'VE BEEN WORKING WITH
FOLKS WHO HAVE QUESTIONS ON A
FIRM BY FIRM BASIS TO HELP
PEOPLE UNDERSTAND WHAT THE
TOTAL IS THEY OWE OR HOW TO
CALCULATE UNDER JUMPSTART.
I APPRECIATE THE PROACTIVE WORK
MANY COMPANIES HAVE DONE TO
REACH OUT TO FAS TO SAY THEY'RE
WORKING ON CALCULATIONS AND
THAT FAS HAS BEEN BENDING OVER
BACKWARDS TO MAKE SURE FOLKS
HAVE A PARTNER IN HELPING TO
DETERMINE WHAT THE PAYMENT IS.
THERE IS A LOT OF INTEREST TO
MAKE SURE EVERYONE IS
COMFORTABLE WITH UNDERSTANDING
THE DETAILS AND THAT EVERYBODY
IS COMPLYING WITH JUMPSTART.
THAT HAS BEEN APPRECIATED.
I WANT TO HIGHLIGHT WHAT YOU
NOTED AROUND THE PAST
ORDINANCE, THE JUMPSTART PAYROLL
TAX, AS PASSED IN STATUTE.
IT DIDN'T INTENTIONALLY WANT TO
USE THE RECEIPTS FROM 2021 TO
GO INTO THE GENERAL FUND,
REALLY, TO HELP WITH THE
IMPORTANT ASPECTS OF RECOVERY,
AS WELL.
YOU ARE CORRECT FOR 2021 THAT
WE WANTED TO MAKE SURE THERE
WAS RECOGNITION THAT MUCH OF
THESE FUNDS WERE BEING USED TO
DEAL WITH THE CRISIS OF COVID
AND TO HELP SMALL BUSINESSES
AND FRONTLINE WORKERS AND OUR
ECONOMY TO RECOVER.
THAT WAS INTENTIONAL AND THERE
IS NO CHANGE IN HOW THE ORIGINAL
ORIENTATION OF THE VISION OF
WHAT JUMPSTART COULD DO IS
GOING INTO PLACE.
AS YOU NOTED, WE CODIFIED IN
THE STATUTE THAT GOING FORWARD
AFTER 2022, THERE WOULD BE A
SEPARATE FUND TO MAKE SURE WE
HAD GREATER TRANSPARENCY AND
ACCOUNTABILITY FOR THOSE
DOLLARS TO DO THINGS LIKE THIS
TO MAKE IT EASIER TO REPORT OUT
ON WHAT FUNDS ARE SPECIFIC TO
JUMPSTART AND THAT THIS BAND
PLANNED WE CODIFIED WOULD BE
ADHERED TO.
IT'S A GOOD REMINDER THAT THIS
IS COMPLETELY AND ALIGNED WITH
THE LEGISLATION ALREADY PASSED
AND AN IMPORTANT REMINDER OF
THE BALANCED APPROACH WE TOOK IN
THESE FIRST FEW YEARS TO HELP
RESPOND TO COVID AND TO PAY
BACK OUR EMERGENCY FUNDS, OR
RAINY DAY FUNDS, IF YOU WILL.
ALSO, TO BUILD FORWARD A
SEPARATE JUMPSTART ACCOUNT TO
MAKE SURE THE SPENDING PLAN WAS
ADHERED TO AND THERE WAS GREATER
TRANSPARENCY ON WHAT WAS COMING
IN THE DOOR.
THIS IS THE TWO PIECES LEFT
OUT.
ANY ADDITIONAL COMMENTS OR
QUESTIONS ON AGENDA ITEM NUMBER
2, THE QUARTER 2 FORECAST
UPDATE?
OKAY.
NOT SEEING ANY, ANY ADDITIONAL
COMMENTS FROM THE OFFICE OF
ECONOMIC REVENUE FORECAST
FOLKS?
>> NO.
I THINK WE ARE GOOD AND READY
TO MOVE ON IF YOU ARE.
>> LET'S GO AHEAD AND DO THAT.
THANKS FOR THAT PRESENTATION
AND WE WILL MOVE ON TO AGENDA
ITEM NUMBER THREE.
FOR THE RECORD, IT'S A
PRESENTATION OF THE AUGUST 2022
ECONOMIC REVENUE FORECAST AND
THE RECOMMENDATION FORECAST
REGARDING THE REVENUE FORECAST
FOR 2022-2023 AND 2024.
THIS IS PROBABLY THE MOST
EXCITING AND MOST INTERESTING
PART OF THE DAY WITH THE
PRESENTATION THAT WILL
FORECAST, FOR US, KEY PARTS OF
THE CITY BUDGETING PROCESS THAT
WE ARE GOING TO USE TO THEN
CREATE A BALANCED BUDGET IN
2023 AND 2024.
THE REVENUE FORECAST IS REALLY
WHAT DEFINES WHAT RESOURCES WE
HAVE AVAILABLE TO ALLOCATE OVER
THE NEXT TWO YEARS.
TODAY, THE OFFICE OF REVENUE
FORECAST WILL PRESENT THE
REVISED FORECAST FOR THIS YEAR,
2022.
AND, FOR THE UPCOMING YEARS
THAT THE NEW BUDGET WILL BE
DEVELOPING IN SEPTEMBER, OCTOBER
AND NOVEMBER.
THAT IS HOW WE USE THE
PROJECTED FORECAST DOLLARS TO
CREATE OUR BIANNUAL BUDGET FOR
2023 HAVEN'T 124.
THE REVISED ESTIMATES FOR 2022
WILL CONFIRM WHETHER THE BUDGET
APPROVED LAST FALL IS IN
BALANCE THIS YEAR.
THE REVISED FORECAST FOR 2023
AND 2024 WILL DEFINE RESOURCES
TO BE ALLOCATED IN THE PROPOSED
BUDGET COMING DOWN FROM THE
MAYOR IN SEPTEMBER, AS NOTED IN
THAT WILL COME TO THIS SEATTLE
CITY COUNCIL ON SEPTEMBER 27.
BEFORE THE COUNCIL COMPLETES A
REVIEW AND APPROVAL OF THE 2023
AND 2024 BY ANNUAL BUDGET WITH
A THREE MONTH PROCESS TO REVIEW
THE BUDGET AND MAKE AMENDMNTS
AND MAKE SURE IT IS IN BALANCE,
WE ALSO WILL BE ABLE TO HAVE A
LAST REVENUE FORECAST THAT WILL
HELP INFORM OUR FINAL BUDGET
BEFORE THE COUNCIL PASSES THAT.
THAT WILL HAPPEN IN NOVEMBER,
BEFORE THE FINAL PROPOSED BUDGET
WITH THE COUNCIL BEING
PUBLISHED.
THE PURPOSE OF TODAY'S UPDATE
WILL BE TO ADJUST THE FORECAST
FOR AND A SIGNIFICANT ECONOMIC
DEVELOPMENT THAT MAY OCCUR OVER
THE NEXT 2-3 MONTHS TO HELP
INFORM THE BUDGET TRANSMITTED
TO COUNCIL.
AS DISCUSSED IN OUR MAY 4th --
I BELIEVE -- MAY THE FORCE BE
WITH YOU, I REMEMBER THAT
MEETING.
WE TALKED ABOUT HOW THERE WAS
MUCH IN FLUX.
THE ECONOMIC CONDITIONS THAT
ARE CHANGING AND EVOLVING.
AS THE REST OF THE NATION AND
THE GLOBE SEEK TO ADJUST AND
MAKE SURE THEIR ECONOMIC
REVENUE FORECASTS ARE MATCHING
WHAT THEY ANTICIPATE COMING IN,
WE BEGIN A SIMILAR SITUATION IN
SEATTLE AND WE WILL CONTINUE
SEEING VARIABILITY IN THE
PROJECTIONS.
WE WANT TO MAKE SURE THERE IS
AN OPPORTUNITY TO TRANSPARENTLY
AND PUBLICLY TALK ABOUT HOW
THOSE VALUES ARE POTENTIALLY
CHANGING.
TODAY IS AN OPPORTUNITY FOR US
TO BUILD ON THE PRESENTATION
THAT WE HAD OVER THE LAST FEW
MONTHS.
AGAIN, APRIL WAS THE REVENUE
FORECAST AND ON MAY 4th, THE
CITY BUDGET OFFICE AND THE
OFFICE OF ECONOMIC REVENUE
FORECAST CAME TO THE FINANCE
AND HOUSING COMMITTEE AND WE
RECEIVED THE PRESENTATION FROM
THE OFFICE OF ECONOMIC AND
REVENUE FORECAST.
TODAY'S PRESENTATION IS
SLIGHTLY DIFFERENT THAN THIS
COUNCIL RECEIVED IN THE APRIL
MEETING.
AFTER CONSULTING WITH STAFF --
AND THANK YOU TO THE CENTRAL
STAFF, ALY PENNUCCI AND TOM
MAXELL AND SEJAL PARIKH AND THE
SENIOR DEPUTY MAYOR AND WITH
JULIE DINGLEY, THE DIRECTOR OF
THE CITY BUDGET OFFICE.
AS WELL, THE TEAM OF THE OFFICE
OF ECONOMIC AND REVENUE
FORECAST, I THOUGHT IT WOULD BE
HELPFUL TO RECEIVE A
COMPREHENSIVE OVERVIEW OF THE
REVENUE STREAMS IN TODAY'S
PRESENTATION.
THESE ARE SEPARATE OFFICES IN
THE INDEPENDENT OFFICE OF
ECONOMIC REVENUE FORECAST, WITH
US TODAY AND JUST PRESENTED.
WITHIN THE EXECUTIVE TEAM, THE
CITY BUDGET'S OFFICE LED BY
JULIE DINGLEY.
WE PREVIOUSLY HAD A SEPARATE
PRESENTATION IN THE MAY 4th
MEETING AT THE FINANCE AND
HOUSING COMMITTEE AND ONLY HAVE
THE OFFICE OF REVENUE FORECAST
AT THE COUNCIL MEETING.
TODAY, WE'VE OFFERED THE
OPPORTUNITY TO HEAR FROM THE
CITY BUDGET'S OFFICE AND WE'VE
INVITED JULIE DINGLEY TO BE
WITH US FOR THAT.
WE WILL GET A SEPARATE
PRESENTATION, AS WE DID LAST
TIME AND IN APRIL, FROM THE
OFFICE OF REVENUE FORECAST.
JULIE DINGLEY FROM THE CITY
BUDGET OFFICE WILL BE HERE TO
PRESENT AND ADDRESSED QUESTIONS
ABOUT THEIR PORTION OF THE
REVENUE NOT COVERED BY THE
STREAMS WITH THE OFFICE OF
FREAKONOMIC FORECAST THAT IS
REQUIRED TO PRESENT TO US.
I WANT TO THANK BOTH TEAMS WITH
THE INDEPENDENT OFFICE OF THE
ECONOMIC REVENUE COUNCIL,
OFFICE AND THE CITY BUDGETS
OFFICE TO PROVIDE THIS SINGLE
BRIEFING AND AN OVERVIEW OF ALL
AVAILABLE GENERAL FUND
RESOURCES.
WE KNOW THIS WILL BE IMPERATIVE
FOR THE MAYOR AND THEIR
DELIBERATIONS IN CREATING THE
2023-2024 BUDGET.
DIRECTOR NOBLE, YOU CAN WALK US
THROUGH YOUR PORTION AND I
UNDERSTAND YOU WILL THEN BE
INCLUDING INPUT AND OPPORTUNITY
FOR THE CITY BUDGETS OFFICE TO
BE PRESENTED, AS WELL.
I WILL TURN IT OVER TO YOU,
DIRECTOR NOBLE.
>> THANK YOU.
THE BEST WAY MIGHT BE TO SHARE
THE SCREEN WITH THE PRESENTATION
AND AS I REVIEW THE OUTLINE FOR
THE PRESENTATION, TO DESCRIBE
THE RELATIVE ROLE OF THE
OFFICES.
GIVE ME ONE SECOND AND YOU WILL
SEE THE ORIGINAL -- I WILL
SWITCH QUICKLY TO THE OTHER.
THIS IS THE AUGUST REVENUE
UPDATE AND WE HAVE THE OFFICE
OF REVENUE FORECAST AND SUPPORT
FROM THE CITY BUDGET OFFICE.
THE AGENDA, ITSELF, WILL
DESCRIBE THE OUTLINE.
THE FIRST TWO PARTS, YOU WILL
ONLY HEAR FROM THE ECONOMIC AND
REVENUE FORECAST OFFICE AND THE
FIRST THING TO DO IS GIVE YOU
AN UPDATE ON CURRENT CONDITIONS
IN THE NATIONAL AND REGIONAL
ECONOMY.
ESSENTIALLY, WHAT HAS HAPPENED
SINCE WE MET IN APRIL.
THEN, WE WANT TO UPDATE YOU ON
THE ECONOMIC FORECAST.
THE REVENUE FORECAST RELIES ON
THE ECONOMIC FORECAST.
WITH THE EMPLOYMENT GROWTH AND
THE INCOME GROWTH AND THE LIKE.
WE TAKE INPUT AFTER THE THREE
NATIONAL FORECASTS WITH THE
BASELINE, A PESSIMISTIC AND
OPTIMISTIC AND THEN FEED THOSE
INTO THE ECONOMIC MODEL AND
EMPLOYMENT AND THE LIKE. GIONAL
THE FORWARD LOOKING ECONOMIC
FORECAST, THEY HAVE NOTABLY
CHANGED SINCE APRIL, AS WELL.
FOR THE PRESENTATION, WE WILL
MAKE REVENUE FORECAST AT THE
OFFICE REGARDING WHICH OF THOSE
SCENARIOS TO USE, THAT WE
BELIEVE YOU SHOULD USE AN
INCH'S SHOULD SERVE AS THE
BASIS OF THE REVENUE FORECAST
AND THEN WE WILL SHIFT TO TALK
ABOUT THE REVENUES AND
HIGHLIGHT FROM THE OFFICE
PERSPECTIVE, THE REVENUE
STREAMS MOST ECONOMICALLY
DEPENDENT THAT COLLECTIVELY
REPRESENT 70% OF THE GENERAL
FUND.
WE HAVE ALEC SCHENCK FROM THE
BUDGET OFFICE TO REVIEW THE
PORTIONS WITHIN THEIR PURVIEW.
THEIR CLOSE CONNECTION TO THE
DEPARTMENTS MAKES THEM IDEAL
FOR TRACKING THINGS FOR THE
FEES AND THE RATES INCLUDING THE
CITY UTILITY AND THE LIKE.
THERE IS A LOGICAL DIVISION AND
YOU WILL SEE IT IN THE
PRESENTATION.
FOR THE OVERALL SUMMARY FOR
2022, 2023 AND 2024 AND LOOK AT
NON-GENERAL FUND SOURCES WITH
THE PAYROLL EXPENSE TAX.
I WILL DO A LOT OF THE TALKING
BUT JAN IS A CRITICAL COMPONENT
AND WITH THE ECONOMIC FORECAST,
AVAILABLE TO PRESENT AND ANSWER
QUESTIONS.
WITH THAT, WE BEGIN WITH THE
ECONOMIC UPDATE.
WHAT HAPPENED SINCE APRIL?
SINCE APRIL, OVERALL CONDITIONS
HAVE DETERIORATED.
THAT IS NOT NEWS TO ANY OF YOU
AND THE BETTER HEADLINE HAS
BEEN INFLATION.
ALSO, THE FEDERAL RESERVE
RESPONSE TO THAT INFLATION.
THERE WAS INFORMATION FROM TWO
WEEKS AGO THAT THE U.S.
DOMESTIC PRODUCT HAS ACTUALLY
SHRUNK FOR THE FIRST HALF OF
THE YEAR.
TRADITIONALLY, THAT MIGHT BE
LABELED A RECESSION BUT
RECESSION IS MORE COMPLICATED.
IT GIVES YOU A SENSE THAT THE
ECONOMY IS IN A SOMEWHAT
FRAGILE SPACE AT THE MOMENT.
WE ARE SEEING INFLATION PICK UP
AND AT THE SAME TIME, STRONG
EMPLOYMENT GROWTH WITH THE
ANNOUNCEMENT OF OVER $500,000
ADDED IN JUNE.
THAT WAS A SURPRISE TO ALL, IF
YOU WILL.
THE FED IS CURRENTLY RESPONDING
TO THAT SIGNAL WITH A VERY
STRONG COMMITMENT ABOUT
CONTROLLING INFLATION, IN
PARTICULAR.
THEY ARE DOING THAT BY INFUSING
THE FUNDS RATE.
THAT IS CERTAINLY AN ELEMENT OF
THE OVERALL DYNAMIC.
IT'S NOT JUST INFLATION, IT'S
THE STEPS THE FED IS TAKING TO
FIGHT INFLATION THAT WILL HAVE
AN ECONOMIC IMPACT.
THE KEY QUESTION WITH THE
RESULTS SUGGEST THAT EMPLOYMENT
IS STRONG AND INFLATION CAN BE
BROUGHT UNDER CONTROL WITHOUT
COOLING OFF OR ANYBODY DRIVING
THE LABOR MARKETS INTO A
RECESSION AND LOSS OF JOBS.
WE DON'T KNOW THE ANSWER TO
THAT.
BEFORE MOVING ON, AND WE WILL
COME BACK TO THIS, THE
FORECASTS YOU ARE SEEING WERE
DEVELOPED FROM THE NATIONAL
FORECASTS THAT WE GOT IN JULY
THAT PREDATED THE RECENT
ANNOUNCEMENTS ABOUT GDP
SHRINKING AND THAT THE SECOND
.75% INCREASE FROM THE FED.
THOSE WERE NOT KNOWN IN THE
FORECASTS THAT WE ARE USING.
HOWEVER, AND THE MORE IMPORTANT
POINT, THE BASELINE FORECAST
DID ANTICIPATE BOTH THOSE
THINGS.
THE FORECASTS EXPECTED A SECOND
QUARTER OF GDP DETERIORATION
AND ALSO EXPECTED THAT .75%
INCREASE AT THE FED.
THAT'S NOT GREAT NEWS FOR
IMPLICATIONS FOR REVENUES BUT
WERE BAKED INTO THE FORECAST
AND THAT IS IMPORTANT AS WE GO
FORWARD.
I WANT TO TALK MORE ABOUT
INFLATION AND EXPLAIN HOW
QUICKLY THINGS HAVE MOVED.
THIS CHART ON THE RIGHT THAT I
TRIED TO ANIMATE WITH THESE
ARROWS SHOWS THE REAL AND
PROJECTED PATH OF INFLATION
SINCE THE FORECAST THAT
UNDERLIES THE ADOPTED BUDGET,
THE NOVEMBER FORECAST FROM
OCTOBER DATA.
THAT WAS A STRONGER PATTERN
SINCE THEN.
THE LOWER LINE WAS PROJECTED
FOR INFLATION BACK IN OCTOBER
WITH IT INCREASING RAPIDLY AND
IT WOULD BE SHORT-LIVED AND NOT
TOO HIGH.
THE PEAK OF IT, AND ALREADY
BEING IN DECLINE AT THIS POINT,
WELL IN DECLINE.
THE APRIL FORECAST WITH THAT
EXPECTATION SHIFTED NOTABLY AND
ALREADY MOVED PASSED 5% WITH
THE EXPECTATION THAT IT WOULD
PEAK BELOW 8% AND WOULD FALL
QUICKLY, IN PART, WITH RESPONSE
TO THE FED'S ACTIONS.
THE MOST RECENT JULY FORECAST
ON THE FAR RIGHT IS
ACKNOWLEDGING THAT INFLATION IS
NOW SURPASSING 8% AND HEADING
TOWARD 9%.
THERE IS STILL THE EXPECTATION
-- AND YOU CAN SEE IN ALL
THREE, THE EXPECTATION THAT THE
FED ACTION WILL BRING IT UNDER
CONTROL.
BY THE MIDDLE OF NEXT YEAR,
INFLATION WILL BE BACK TO MORE
HISTORIC LEVELS OF CLOSER TO 2%
AND 3%.
BY WAY OF INFORMATION, THE
ECONOMY HAS BEEN A LITTLE WORSE
WITH ECONOMY AHEAD OF THE
NATIONAL FIGURE AND THAT IS TRUE
. EVERYONE IS NOTING THE
INCREASES IN FOOD AND GAS AND
ENERGY PRICES.
THE GLOBAL INFLATION RATE IS
8.8%, QUITE HIGH.
IT GIVES A SENSE OF HOW QUICKLY
INFLATION HAS BECOME A
SIGNIFICANT FORCE DRIVING THE
FINANCIAL AND LOCAL ECONOMY.
THE FED'S RESPONSE TO THAT IS
PART OF THE STORY BECAUSE THE
FED, IN AN EFFORT TO BRING DOWN
INFLATION, IS RAISING INTEREST
RATES.
THE SAME TIME PERIODS AND
BENCHMARKS.
WHAT WAS FORECAST AND WHAT THE
FED WAS GOING TO BE DOING AND
WHAT IS NOW EXPECTED.
AS THE PANDEMIC HIT, THE FED
MOVED QUICKLY TO DROP RATES AND
YOU CAN SEE THAT IS ESSENTIALLY
PART OF THIS SEAMLESS EFFORT TO
MAKE IT MORE RELATIVELY CHEAPER
SO FOLKS WILL BE SPENDING
MONEY, TO BE FRANK.
THEY EXPECTED THAT IN OCTOBER
OF THE NOVEMBER FORECAST, THAT
AS THE ECONOMY BEGAN TO RECOVER
FROM THE PANDEMIC, THEY WOULD
SLOWLY AND MODESTLY BRING UP
INTEREST RATES, THAT LOWER
LINE, INTO THE FUTURE.
IT IS GAINING ITS OWN MOMENTUM
WITH THAT KIND OF STIMULUS.
BY MARCH, THE APRIL FORECAST,
EXPECTATIONS WERE THAT MOVING
THE INTEREST RATES, AS WELL.
INCREASING INTEREST RATES, FOR
THE BASELINE FORECAST THAT IS
ILLUSTRATED HERE.
NOT ONLY ANTICIPATING THE MOST
RECENT .75% INTEREST RATE IS
ANTICIPATING FURTHER INCREASES.
THAT IS WHAT THE FED'S SIGNALING
AND THAT IS GOOD, IF THE
FORECAST IS ACCURATE.
THESE ACTIONS WILL COOL THE
ECONOMY.
THAT IS THE GOAL.
THAT WILL BE REFLECTED IN THE
FORECAST, AS WELL, AS YOU WILL
SEE.
THAT GIVES YOU A SENSE OF WHAT
THE FED IS UP TO.
JUST TO TALK MORE ABOUT
EMPLOYMENT, THIS IS A CHART
SHOWN BEFORE THAT IS A LITTLE
OUTDATED, BASED ON THE MOST
RECENT ANNOUNCEMENTS.
THE DARKER LINES ON THE LEFT ARE
SHOWING JOB LOSSES THAT
OCCURRED IN PERCENTAGE TERMS
FROM THE PEAK OF THE PANDEMIC
AND THE ANNOUNCEMENT OF THE
PANDEMIC TO THE WORST POINT,
THE NATIONAL LEVEL WITH MORE
THAN 40% OF JOBS LOST.
YOU CAN SEE THE RECOVERY SINCE
THEN AFTER THE NATION WAS
OUTPACING WITH DIFFERENT
RESPONSES OR THE PANDEMIC AND
THE ECONOMY.
WE'VE BEEN -- THE LINE SHOWS
THE PATTERN OF RECOVERY WITH
THE JOB RECOVERY AND HOW IT
LOOKS IN THE RECESSION AND IN
GENERAL.
WHAT WE'VE SHOWN IS THAT AS OF
JUNE, NATIONAL EMPLOYMENT, THE
BLUE LINE, WAS ALMOST BACK TO
PANDEMIC LEVELS WITH MOST
RECENT ANNOUNCEMENTS SLIGHTLY
ABOVE.
THIS IS PERHAPS SLIGHTLY OUT-OF-
DATE BECAUSE OF THAT
INFORMATION.
THE RED LINE, WE WERE LITTLE
úBEHIND BUT ARE WELL ON THE WAY
TO A JOB RECOVERY CONSISTENT
WITH THE EMPLOYMENT LEVEL OF
PRE-PANDEMIC MAGNITUDES.
JOB GROWTH HAS BEEN GOOD.
THAT'S THE GOOD NEWS PIECE AND
FROM THE FED PERSPECTIVE, THE
GOAL IS TO CONTROL INFLATION
WITHOUT DISCOURAGING THE JOB
MARKET TOO MUCH.
THERE IS GOOD NEWS ON THAT
FRONT.
ONE THING THAT IS TRUE AND WHAT
WE HIGHLIGHTED, RECOVERY HAS
BEEN DIFFERENT FOR DIFFERENT
SECTORS.
FOR THE INFORMATION, THERE IS
ADDITIONAL BACKGROUND ABOUT
WHAT IS GOING ON LOCALLY.
THE GRAPH ON THE RIGHT IS USING
CELL PHONES AT AN AGGREGATE
LEVEL TO TRACK THE ACTIVITY IN
THE DOWNTOWN AREA AND THE BLUE
LINES OUR DISTRICTS.
YOU CAN TELL WITH THE CELL
PHONE CONTACTS BECAUSE THEY
COME DOWNTOWN AND DON'T SPEND
DOLLARS.
YOU CAN TELL WHO IS TRANSIENT,
IF YOU WILL END THE RED LINE IS
FOLKS COMING IN AND STAYING FOR
THAT TIME.
THE BLUE LINE -- AND IF YOU
BEEN DOWNTOWN AND NEAR THE
WATERFRONT, YOU SEE THAT
TOURIST TRAFFIC IS CERTAINLY
NOT UP TO PRE-PANDEMIC LEVELS.
THAT WOULD BE 100% ON THE
CHART.
THERE HAS BEEN A GOOD RECOVERY
AND EVIDENCE OF AN UPWARD
SLOPE.
YOU WILL SEE IN A MINUTE THAT
EMPLOYMENT IN THE HOSPITALITY
AND LEISURE SECTOR IS STILL NOT
UP TO WHERE IT WAS.
THIS IS A PROMISING SIGN FOR
WHERE IT MAY BE HEADED.
WE ARE NOT SEEING SIGNIFICANT
RETURN BUT THERE IS A POSITIVE
TREND TO THE RIGHT.
FOLKS ARE BEGINNING TO COME
BACK BUT AS YET, NOT IN LARGE
NUMBERS.
THAT REFLECTS THE TAXABLE
ACTIVITY DOWNTOWN AND THINGS
LIKE THE PAYROLL EXPENSE TAX
WITH WHERE PEOPLE WORK
AFFECTING THOSE REVENUE
STREAMS, AS WELL.
IT MIGHT GIVE YOU A SENSE OF
WHERE WE ARE WITH THE RECOVERY.
THIS GRAPH LOOKS AT ACTUAL JOB
COUNTS SINCE THE MEASURE OF
CHANGE SINCE THE PANDEMIC. SO,
FEBRUARY 2020 IS THE BASELINE
AND THIS IS THE TOTAL.
WITH JUNE, WHAT YOU CAN SEE IS
IT SHOWS THE PATTERN FOR THE
DIFFERENT SECTORS.
WITH THESE SECTORS, THEY ARE
SIGNIFICANTLY COMPENSATING FOR
THE JOB LOSS IT WAS RELATIVE TO
THE PANDEMIC.
WE ARE SEEING A MIXED PATTERN
AND WE WANT TO EMPHASIZE THAT
THESE HAVE LEISURE AND
HOSPITALITY TRAILING.
ALSO, JUST HOW DEPENDENT THE
LOCAL ECONOMY HAS BEEN WITH
THAT GROWTH ILLUSTRATED AT THE
BOTTOM WITH TRADE
TRANSPORTATION WITH RETAIL,
AMONG OTHER THINGS AND
INFORMATION WITH INVESTMENT
SOURCES.
CASTING SOME CONCERN ABOUT
THAT, LET ME EXPLAIN BECAUSE IT
FOCUSES ON THOSE SECTORS AT THE
BOTTOM RIGHT THAT WILL DRIVE JOB
GROWTH.
IT'S IN TERMS OF JOB GROWTH AND
ANNUAL JOB GROWTH OVER THE PAST
DECADE.
FOR THE REGION, IT'S THE BLUE
LINE AND AS A WHOLE, WE'VE BEEN
ADDING JOBS TO THE SECTORS,
2.5% TO 5% ON A CONSISTENT
BASIS.
THE REGION HAS BEEN BENEFITING
BUT THE CITY IS LEADING THAT.
THE CITY NUMBER IS A COMPONENT
OF THE BLUE LINE BUT THEN THESE
JOBS HAVE BEEN LOCATED WITHIN
THE CITY OVER THE PAST 10 YEARS
AND WE'VE SEEN THAT IN THE
DEVELOPMENT SPEAKING TO THAT
POINT.
THE DATA HERE ARE FROM THE
PUGET SOUND REGIONAL COUNCIL,
PART OF ITS WORK WITH THE
REGIONAL PLANNING THAT IS TRYING
TO TAKE REGIONAL EMPLOYMENT
LEVEL DATA AND DISAGGREGATE IT
TO THE INDIVIDUAL CITIES AND
SMALLER REGIONS.
IT'S A CHANCE TO LOOK AT THE
SEATTLE DATA.
IT TAKES TIME BECAUSE IT'S NOT
AS CURRENT AS WE WOULD LIKE.
THE POINT ABOUT THE CHART AS
THE LAST DATA POINT THAT
COMMUNICATES THAT THE GROWTH
WITHIN THE CITY TAILED OFF IN
2021.
THE PREVIOUS GRAPH I SHOWED YOU
-- AND LET ME JUST GO TO IT --
THIS GRAPH IS FOR THE REGION, AS
A WHOLE AND NOT JUST THE CITY
OF SEATTLE.
IT'S MORE CONSISTENT WITH THAT
BLUE LINE, IF YOU WILL.
THE BLUE LINE IS ABOVE ZERO AND
THERE IS JOB GROWTH HERE.
IT'S NOT THE NUMBER OF JOBS BUT
IT INDICATES THAT FOR THE CITY,
THERE IS SOME EVIDENCE -- AND
WE WILL WATCH THIS TREND WITH
THE INITIAL DATA POINT -- THAT
JOB GROWTH IN THESE SECTORS IS
SLOWING WITHIN THE CITY.
THAT DOES -- AND THE DOLLARS
THEY ARE INVESTING -- THE
EXPANDING FACILITIES, IN
PARTICULAR, ON THE EAST SIDE OF
THE LAKE.
IT WOULD BE CAPTURED IN THE
BLUE LINE BUT NOT THE RED LINE.
PRELIMINARY RESULTS ARE
SOMETHING WE ARE WATCHING AND
WITH THE ANECDOTAL INFORMATION,
AND FORMS THE LONGER-TERM
GROWTH IN THIS SECTOR.
THIS IS ECHOING SOME OF THAT
DEMAND FOR OFFICE SPACE AND
WHAT YOU CAN SEE IS THAT THESE
ARE VACANCY RATES.
VACANCY RATES SPIKED UP AS THE
PANDEMIC HIT.
THEY HAVEN'T COME DOWN A GREAT
DEAL.
IN PARTICULAR, IN SEATTLE, WE
SEE HIGH VACANCY RATES AN WE
SEE VACANCY RATES CLIMBING.
FOR THE U.S., THINGS ARE
STABILIED AND THAT IS THE BLUE
LINE.
FOR THE SEATTLE REGION, IT'S
LOWER AND IN PARTICULARLY,
DOWNTOWN SEATTLE, WE ARE SEEING
LESS DEMAND.
THIS QUESTION ABOUT THE JOB
GROWTH FOR THE CITY,
SPECIFICALLY, GOING FORWARD.
IT'S A POINT OF CONCERN AND IT
IS EARLY IN TERMS OF THOSE
RESULTS.
SO, THAT IS WHAT WE HAVE, IN
TERMS OF THE UPDATE FOR THE
REGIONAL AND THE NATIONAL SINCE
APRIL.
WE ARE SHIFTING TO TALK ABOUT
THE FORECAST AND THE TIME GOING
FORWARD AND BEFORE THEY REDO.,
LET ME CHECK THEIR QUESTIONS ON
THE UPDATES THEMSELVES.
WE CAN GO BACK TO ANY
PARTICULAR SLIDE.
>> I'M NOT SEEING ANYBODY JUMP
IN WITH QUESTIONS.
DR. NOBLE?
>> GREAT.
WE WILL PLOW AHEAD AND WE WILL
SHIFT AND TALK ABOUT THE
FORECAST.
WE ARE LOOKING FORWARD AND WHAT
TO EXPECT GOING FORWARD?
THAT HAS CHANGED. INFLATION AND
THE FED RESPONSE IS COOLING THAT
OUTLOOK.
I WILL TRY TO ANIMATE THIS WITH
THE ARROWS BUT THE VERY LATEST
LINE, AND LET ME BACK UP, THIS
IS A FORECAST OF NATIONAL
EMPLOYMENT WE RETAKE THE NUMBER
OF JOBS PRE-PANDEMIC AS A
BASELINE.
THIS IS THE NUMBER OF JOBS IN
PERCENTAGE TERMS.
IT'S NOT GROWTH EMPLOYMENT,
IT'S TOTAL EMPLOYMENT IN
PERCENTAGE TERMS.
YOU CAN SEE A VERY STEEP DROP
AS THE PANDEMIC HITS AND THEN
YOU SEE THE RECOVERY.
THE WHITE LINE IS THE OCTOBER
FRECAST WITH THE REVENUE
NUMBERS AND WHAT YOU CAN SEE IS
THE FIRST PART OF THIS YEAR --
THE DARK LINE IS THE MOST
RECENT BASELINE FORECAST AND
THESE ARE COMPARED TO THE
BASELINE.
IN THE FIRST PART OF THIS YEAR,
WE ACTUALLY WERE OUTPACING IN
TERMS OF THE NATIONAL LEVEL IN
TERMS OF THE JOB RECOVERY AND
THE OCTOBER FORECAST.
THERE WAS MORE JOB GROWTH, MORE
JOBS AT THE NATIONAL LEVEL THAN
EXPECTED BACK IN OCTOBER.
LOOKING FORWARD, WHAT IS
EXPECTED IS A SLOWER RATE OF
RECOVERY. IN PRINCIPLE, BECAUSE
IT IS TAKING STEPS TO BRING
DOWN INFLATION AND IT WILL
DISCOURAGE LEVELS OF SPENDING.
WE EXPECT LOWER JOB GROWTH AT
THE NATIONAL LEVEL, GOING
FORWARD WITH THE BASELINE
SCENARIO. A RELATIVELY STABLE
LEVEL OF EMPLOYMENT FOR 2023 AND
INTO 2024 WITH MORE JOB GROWTH
LAT INTO 2024 AND INTO 2025.
COMPARED TO WHAT WE FORECASTED
ABOVE AND IN THE LINES ABOVE,
AS RECENTLY AS MARCH, EXPECTING
NOT ROBUST JOB GROWTH, BUT
CONTINUED JOB GROWTH
THROUGHOUT.
WE DON'T EXPECT MUCH MORE
SLOWER PERIODS OF GROWTH FOR
2023 AND 2024 AND STARTING TO
UPDATE MORE INTO 2025.
WE'VE PUT UP SOME OF THE OTHER
FUNDAMENTALS WITH A SIMILAR
PATTERN AND A NICE SUMMARY.
SO, AT THE BASELINE, OVERALL, A
COOLER FORECAST, IF YOU WILL.
BOTH INFLATION AND THE RESPONSE
TEAM KEY DRIVERS.
I WANT TO POINT OUT AS INDICATED
THAT WE'VE WORKED WITH THREE
DIFFERENT SCENARIOS FROM THE
NATIONAL FORECASTERS WITH THE
BASELINE, PESSIMISTIC AND
OPTIMISTIC.
ONE OF THE OTHER THINGS IS THAT
THE RISK OF THE PESSIMISTIC
FORECAST HAS BEEN INCREASING
AND NOW 45% AND WAS JUST 35%
BACK IN THE SPRING.
THE PROBABILITY OF THE BASELINE
IS 50%.
WE ARE TEETERING BETWEEN A
PERIOD OF SLOW GROWTH VERSUS
THE RISK OF AN ACTUAL RECESSION
AND EMPLOYMENT FALLING AGAIN.
THE OPTIMISTIC SCENARIO IS ONLY
5%.
THE GRAPH IS THE FLUTTER OF THE
IMAGE AND WE DON'T THINK IT'S
WORTH A LOT OF ATTENTIN, AT
THIS POINT.
IT'S NOT REALISTICALLY A HIGH
PROBABILITY EVENT.
THE PESSIMISTIC FORECAST FOR
THE MOST RECENT UPDATE WOULD
INDICATE JOB LOSS AGAIN.
RECOVERING EMPLOYMENT LEVELS TO
PRE-PANDEMIC LEVELS IS THE
SCENARIO TO PLAY OUT AND WE
WOULD EXPECT JOB LOSSES AGAIN
AS THE ECONOMY ENTERED
RECESSION.
OVERALL DEMAND WOULD COOL AND
THE DEMAND FOR EMPLOYMENT, AS
WELL.
WE WOULD SEE JOB REDUCTIONS IN
THE MIDDLE PART OF 2024 BEFORE
JOB GROWTH WOULD START AGAIN
AND THEN WE WOULD MOVE OUT OF
THE RECESSION.
AS WE MOVE TO THE REVENUE
PORTION OF THIS, WE WILL SHOW
YOU WHAT THAT KIND OF SCENARIO
WOULD IMPLY FOR OUR REVENUES,
AS WELL.
THE SHIFT AGAIN IS TO TALK
ABOUT THE REGIONAL FORECAST
WITH THE PICTURES WE'VE SHOWN
TO DATE WITH THE NATIONAL
FORECAST.
THE REGIONAL FORECAST ECHOES
THE DYNAMICS ARE DIFFERENT
BECAUSE WE HAVE A DIFFERENT MIX
OF JOBS.
AND, SECTORS.
AGAIN, WITH THE ARROWS
INDICATING THE DIRECTION OF THE
FORECAST SINCE OCTOBER AND
MARCH, ANTICIPATION FROM OUR
MODEL IS THAT EMPLOYMENT GROWTH
WILL CONTINUE IN THE BASELINE,
BUT AT A SLOWER PACE THAN WE
EXPECTED WITH JOB GROWTH,
EXPECTING 2% ABOVE WHERE WE
WERE WITH THE NATIONAL ECONOMY
IN THE REGIONAL ECONOMY BEFORE
THE PANDEMIC. IN THE MIDDLE OF
2024, AND IT MIGHT HAVE
HAPPENED AS EARLY AS 2023,
THERE IS A DELAY WITH A SLOWER
PERIOD OF JOB RECOVERY EVEN IN
THE BASELINE SCENARIO.
WHAT WE ARE HEARING ANECDOTALLY
ABOUT SLOWDOWNS WITH THAT KIND
OF A FORECAST, IS THAT I WANT TO
EMPHASIZE, AS WELL -- IF THE
PESSIMISTIC SCENARIO PLAYS OUT,
WE WOULD RUN THE SCENARIO
THROUGH OUR MODEL AND THIS
SHOWS THE DIFFERENCE BETWEEN THE
BASELINE AND THE CURRENT
PESSIMISTIC, AGAIN, LOOKING AT
JOBS.
THE BASELINE, AS INDICATED, IS
THE SAME LINE AS THIS.
TO ANCHOR YOURSELF, INSTEAD OF
GETTING STEADY BUT SLOW JOB
GROWTH, WE FOUND THE
PESSIMISTIC SCENARIO TO PLAY
OUT THAT WE WOULD SHIFT INTO A
RECESSIONARY MODE AND FACED JOB
DECLINES AGAIN, RELATIVE TO PRE-
PANDEMIC LEVELS.
FOR THE SAME PERIOD OF TIME, WE
WOULD BEGIN TO SEE JOB LOSSES
CONTINUING WELL INTO 2024 AND
THEN SHIFT INTO GROWTH TO THE
MIDDLE OR SECOND PART OF 2024.
YOU CAN'T SEE IT ON THE GRAPH
BUT WE WILL GET BACK TO LEVELS
OF 2026. IF THAT SCENARIO WERE
TO PLAY OUT, THAT'S WHAT IT
WOULD LOOK LIKE WITH THE DEEPER
RECESSION SCENARIO THAN
ANTICIPATED PREVIOUSLY.
14,000 JOB LOSSES REGIONALLY,
THIS ONE COULD BE AS MUCH AS
48,000.
IT IS MORE CONCERNING IF THAT
SCENARIO WERE TO PLAY OUT.
THE NEXT SLIDE TALKS ABOUT OUR
RECOMMENDATION WAS SCENARIOS TO
BASE THE FORECAST ON. BEFORE I
GO THERE, ANY QUESTIONS ABOUT
THE OVERALL PATTERNS OF
ECONOMIC GROWTH AND THESE
DIFFERENT SCENARIOS WE
ANTICIPATE NATIONALLY AND
REGIONALLY?
>> DO THE JOB PROJECTIONS TAKE
INTO ACCOUNT THOSE WHO MAY
VOLUNTARILY LEAVE THE MARKET OR
BE ELIGIBLE FOR PENSIONS OR
RETIREMENT?
WE HAVE THE DIFFERENCE IN THE
RAW NUMBERS FROM BABY BOOMERS
AND THE YOUNGER GENERATIONS.
>> THEY DO.
ESSENTIALLY, THE EMPLOYMENT
DATA IS REGARDLESS OF
SEPARATIONS.
>> THIS IS THE TOTAL NUMBER OF
JOBS FILLED, IF YOU WILL, IN
THE LOCAL ECONOMY FILLED BY
SOMEBODY.
THAT'S THE BEST WAY TO DESCRIBE
THAT.
>> I WAS HOPING, PERHAPS, THE
NUMBERS WERE A LITTLE MORE ROSY
BECAUSE SOME OF THESE FOLKS --
THOUGH THERE MIGHT BE FEWER
JOBS -- THERE MIGHT BE SOME
PEOPLE ON RETIREMENT OR
PENSION.
YOU KNOW, RIGHT NOW, IT SEEMS
LIKE THERE IS A LOT OF JOB
AVAILABILITY.
THIS IS NOT THE BEST NEWS, BUT
I SEE JULIE'S HAND.
>> I WAS WONDERING IF, DR.
NOBLE, YOU COULD GIVE US A
SENSE OF HOW THIS POTENTIAL AND
PESSIMISTIC SCENARIO COMPARES
TO PRIOR DIPS IN EMPLOYMENT,
EITHER UNDER COVID OR THE GREAT
RECESSION?
HOW WOULD THAT 40 8K LOSS OF
JOBS COMPARE?
>> YOU CAN SEE SOME OF IT ON
THIS PICTURE.
THE JOB LOSS ASSOCIATED WITH
THE PEAK OF THE PANDEMIC DIPPED
DOWN PAST 10%, 11% DROP IN
TOTAL NUMBER OF JOBS THAT WE
EXPERIENCED WHEN THE PANDEMIC
HIT.
WHAT WE ARE SHOWING IS THAT THE
PRE-PANDEMIC LEVEL, THE BOTTOM
OF THAT DARKER LINE IS ABOUT
3.5% AND THE DATA ARE RIGHT IN
FRONT OF ME.
IT WOULD BE NOTICEABLY LESS
DRAMATIC THAN THE PANDEMIC
LOSSES.
I WOULD ALSO NOTE THAT IT IS
POTENTIALLY FOR A LONGER PERIOD
OF TIME.
THEY WOULDN'T EXPECT THE KIND
OF STIMULUS THAT BROUGHT THE
ECONOMY QUICKLY BACK FROM THOSE
LEVELS.
IT WOULD BE MORE SHALLOWER THAN
THE PANDEMIC.
YOU COULD SEE POTENTIAL FOR
SOMEWHAT EXTENDED PERIODS.
>> DR. DINGLEY, DID YOU HAVE A
FOLLOW-UP QUESTION OR ANY
ADDITION?
>> I SEE THAT IN THE CHART AND
THAT'S VERY HELPFUL.
I'M WONDERING ABOUT THE GREAT
RECESSION AND THAT COULD BE AN
UNFAIR QUESTION IF YOU DON'T
HAVE THAT AT YOUR FINGERTIPS.
>> YES.
IT WOULDN'T BE AS BAD AS THE
GREAT RECESSION WITH THE
REGIONAL EMPLOYMENT DROPPING
MORE THAN 6%.
IT WOULD BE NOTABLY LESS THAN
THAT.
I'M GOING TO MOVE TO THE NEXT
SLIDE BECAUSE IT ADVANCES SOME
STUFF, NOTABLY.
WE ARE NOW MAKING A
RECOMMENDATION AND THIS IS THE
NEXT AGENDA ITEM THAT WE WILL
DISCUSS WITH THE IMPROVEMENTS
AND WE WILL GET TO THAT IN THE
REVENUE FORECAST.
WE ARE PRESENTING THIS AND WE
REACH THE RECOMMENDATION ABOUT
THIS BEFORE WE RAN THE REGIONAL
FORECAST THROUGH THE REVENUE
MODELS.
WE WERE TRYING TO MAKE A
DETERMINATION FROM A
PROFESSIONAL PERSPECTIVE,
PROFESSIONAL JUDGMENT
PERSPECTIVE, ON WHAT WAS
APPROPRIATE WITHOUT THINKING
ABOUT THE FINANCIAL
IMPLICATIONS.
YOU DON'T WANT THAT CLOUD TO BE
A DECISION ABOUT WHAT WE
UNDERSTAND AND WHAT WE THINK.
LET ME WALK THROUGH BEFORE I
GET TO THE PUNCHLINE.
WE'VE ALREADY MADE THIS POINT
BUT IT'S A DELICATE BALANCE.
IT'S BEHAVING VERY STRANGELY,
WHERE WE SAW GDP FALL TWO
QUARTERS IN A ROW AND ALSO SAW
500,000 JOBS ADDED IN ONE
MONTH.
THOSE ARE MIXED SIGNALS AND
LIKELY RESULT FROM COMING OUT OF
A PANDEMIC THAT HAS IMPORTANT
IMPACT ON THE ECONOMY AND IT
STRIKES ME AS A OVERWHELMING
POINT BECAUSE PEOPLE SHIFTED
AWAY FROM SPENDING MONEY ON
SERVICES AND PURCHASING GOODS.
YOU COULDN'T GO TO RESTAURANTS
OR TRAVEL. INSTEAD, MAKING
PURCHASES OF PHYSICAL PRODUCTS
AND IT LED COMPANIES TO PRODUCE
STUFF AND THERE WAS EVIDENCE
THAT THEY OVERPRODUCED AND
BUILT UP THEIR INVENTORIES.
WALMART ANNOUNCED THAT THEY
WILL CUT PRICES ON THINGS TO
BRING THEM DOWN.
AT THE SAME TIME, WE ARE
SHIFTING BACK TOWARDS SERVICES
THAT MAY HAVE THE DEMAND FOR
BEING BACK INTO THOSE SECTORS.
IT'S AN ODD SITUATION IN WHICH
WE FIND OURSELVES.
THE FED MADE IT CLEAR THAT
INFLATION IS THE NUMBER ONE
TARGET AND AFTER THEY HAD
SPOKEN THESE WORDS, EVEN IF IT
COST JOBS, WITH THE FULL
KNOWLEDGE THAT IT WILL.
TO THEIR CREDIT, WE ARE NOT BUT
IT'S WORTH SHORT TERM PAIN TO
BRING DOWN THE INFLATION RATE
TO BRING A LONGER PERIOD
EXPANSION.
IT'S A TRADE-OFF, VERSUS
EMPLOYMENT EMPLOYMENT, IF YOU
WILL.
THEN IN THE BEGINNING OF THE
PRESENTATION, THE BASELINE
FORECAST ALREADY INCLUDES SOME
OF THE BAD NEWS YOU SEE.
IT'S NOT A ROSY SCENARIO, IN
ANY WAY AND FULLY ANTICIPATED
THE SECOND-QUARTER GDP FALL.
IF FULLY ANTICIPATED, THAT
SECOND .75% RATE INCREASE
ACTUALLY ANTICIPATED FURTHER
INCREASES.
WE'VE GOT $500,000 -- 500,000
JOBS IN THE ECONOMY AND
CONTINUES TO STRENGTHEN THE
LABOR MARKET.
GIVEN THAT MIX OF THINGS, IT
ANTICIPATED MUCH OF THE BAD NEWS
WE'VE HAD BUT THERE IS ACTUALLY
GOOD NEWS, AS WELL PER THE
RECOMMENDATION IS THAT WE BASE
THE FORECAST ON THE FINANCES
AND BASED ON THAT SCENARIO, IT
MAKES THE MOST SENSE.
WE ALSO THINK WE NEED TO WATCH
THIS VERY CLOSELY.
IT'S ACTUALLY BEING REVISED
WITH THE ECONOMIC FORECAST
TODAY.
WE WILL CHECK ON THAT AND THERE
WILL BE ANOTHER ONE IN
SEPTEMBER.
THE PLAN IS CURRENTLY TO USE
THE OCTOBER UPDATE, NOT
SEPTEMBER, BUT THE OCTOBER
NATIONAL FORECAST UPDATE TO
FEED THAT NOVEMBER REVISION.
AS THINGS MOVE QUICKLY,
PARTICULARLY IN A DOWNWARD
DIRECTION, YOU MIGHT COME BACK
TO TALK ABOUT WHETHER IT WOULD
MAKE SENSE TO REVISE NUMBERS
EARLY TO PROCESS THROUGHIT BUT
WE ARE NOT THERE YET.
WE OWE YOU AN UPDATE BY
NOVEMBER AND YOU COULD PROVIDE
INFORMATION IN THE.
THAT'S SOMETHING WE WILL
CONTINUE TO CONSULT WITH, GOING
FORWARD.
>> ANY ADDITIONAL QUESTIONS ON
THIS COMPONENT?
DIRECTOR NOBLE, REMIND ME --
ARE YOU GOING TO TURN IT OVER
TO DIRECTOR DINGLEY TO SHARE
COMMENTS OR IS THAT INTEGRATED
INTO THE PRESENTATION?
>> THE NEXT PART OF THE
PRESENTATION WHEN WE TALK ABOUT
THE PORTION OF REVENUES THAT IS
THE RESPONSIBILITY OF THE BUDGET
OFFICE, THERE WILL BE A TALK
ABOUT THOSE IMPLICATIONS AND
CHANGES.
>> LET'S PAUSE TO SEE IF THERE
ARE QUESTIONS, SO FAR.
>> NO QUESTIONS BUT I WANT TO
COMMENT THAT THEM INTERIORS WILL
EXTREMELY WELL PRESENTED AND
THANK YOU, DIRECTOR NOBLE.
THANK YOU TO YOUR TEAM.
EXTREMELY WELL PRESENTED AND
CLEAR.
I KNOW EVERYBODY WOULD LOVE TO
PROVIDE THE ROSY LIST OF
OUTLOOKS BUT YOU'VE PROVIDED
WHAT LOOKS LIKE A REALLY FAIR
AND REPRESENTATIONAL
PRESENTATION.
AND, THAT THE PUBLIC CAN REALLY
BENEFIT FROM WHAT WE ARE SEEING
AND HOW THAT MIGHT IMPACT US.
I WANT TO THANK YOU AND YOUR
TEAM. I
KNOW IT'S ALWAYS BETTER TO SAY
THAT EVERYTHING LOOKS 100%
PERFECT.
THE BALANCE FOR WHAT YOU
PRESENTED IS OUTSTANDING AND
VERY CLEAR AND I WANTED TO
THANK YOU.
>> MUCH APPRECIATED.
JAN IS A WORKFORCE AND ALL OF
THIS AND ALSO, WITH CENTRAL
STAFF, WE'VE BEEN REACHING OUT
ALONG THE WAY AND I CONSULT
WITH THEM TO PROVIDE UPDATES.
THAT IS MUCH APPRECIATED AND
THE PERSPECTIVE WE TAKE.
THAT'S WHY WE TRIED TO REACH
REPRESENTATIONS FOR REVENUES
BEFORE WE LOOK AT THEM.
WE DON'T WANT THEN TO CLUTTER.
WE WANTED TO BE AS FAIR AND
EVENHANDED AS WE CAN.
I WILL MOVE ON.
I'M SENSITIVE TO TIME.
LET'S TALK MONEY, TALKING ABOUT
THE REVENUES.
BEFORE WE DO THAT, I WILL TAKE
A MINOR DETOUR FOR SECOND TO
TALK ABOUT WHAT INFLATION DOES
TO CITY REVENUES.
IT'S A COMPLICATED TRACK AND
WON'T TAKE LONG BUT THERE'S AN
IMPORTANT POINT.
YOU MIGHT THINK THE PRICE OF
EVERYTHING IS GOING UP WITH ALL
OF OUR REVENUES GOING UP, TWOS.
THE PROBLEM IS, IT'S NOT TRUE.
IN PARTICULAR, FOLLOWING THIS
GRAPH ON THE RIGH, THERE IS A
PIE CHART OF THE GENERAL FUND
REVENUES FROM THE BROAD
CATEGORIES.
THE YELLOW IS THE REVENUE
STREAM THAT GENERALLY DOES GROW
WITH CRISIS.
INFLATION MAY COOL THE ECONOMY
BUT WITH NOMINAL VALUE OVERALL,
PRICES GO UP AND WE ARE
PRESENTING WITH THE SALES TAX
AND REVENUES GO UP.
CORPORATE TAX ON THE SERVICES
AND GOODS THEY SELL, THE GOODS
ARE THEN GOING UP.
THE TAXES GO UP, ACCORDINGLY.
THE UTILITY TAXES ARE GENERALLY
PASSING ON THEIR EXPENSES AND
THE RATES INCLUDE, IN THIS
CASE, AT THE STATE LEVEL BUT
ALSO GROWING INFLATION OVER
TIME.
THE REST OF THE PIE IS NOT
NECESSARILY THE CASE AND IN
PARTICULAR, THE BLUE PART THAT
IS PROPERTY TAX.
MORE THAN 25% OF THE CITY
GENERAL FUND REVENUES COME FROM
PROPERTY TAX AND PER STATE LAW
THAT CAN ONLY GROW AT 1% PLUS
THE VALUE OF NEW CONSTRUCTION.
IT HAS BEEN ADDING .5% AND WE
HAVE THE PROPERTY TAX GROWING IN
THE RATE OF 2% TO 3% AND
INFLATION IS RUNNING 2% TO 3%
PER YEAR.
BY COINCIDENCE, THAT HAS BEEN
KEEPING A LOSS WITH INFLATION
BUT IT'S NOT INHERENTLY SO.
WE WILL SUFFER FROM THE FACT
THAT 25% OF REVENUES
CATEGORICALLY WILL NOT KEEP UP
WITH INFLATION.
IF INFLATION IS SHORT-LIVED,
THE EFFECT WON'T GO AWAY
BECAUSE THE BASE DOESN'T CHANGE
BUT IT WON'T CONTINUE TO
MAGNIFY.
HIGH INFLATION WILL PERSIST AND
BECOME A BIGGER ISSUE.
THE DYNAMIC AT PLACE IS A MUCH
LARGER SHARE OF THE MONEY
COMING FROM PROPERTY TAX AND
INFLATION EATS AWAY AT THE
PURCHASING POWER.
THE GREEN STUFF HAS POLICY
CHOICES FOR THE COUNCIL.
DARK GREEN, 12% COMES FROM CITY
LIGHT AND STU.
THEY ARE APPLIED TO PUBLIC
UTILITY RATES AND FOR GOOD
POLICY REASONS, YOU MAY TRY TO
CONTAIN THE RATE INCREASES
PASSED ON AND YOU MAKE THAT
CHOICE ACCORDINGLY AND
APPROPRIAELY.
IT COULD IMPACT IF YOU ARE
TAXING THE GENERAL FUND.
THE RATE REVENUES AND THE TAX
ON THE SERVICE COMES FROM THE
GENERAL FUND.
IT DEPENDS ON WHAT HAPPENS WITH
THOSE RATES AND WITH DEMAND.
SIMILARLY, THE LIGHT GREEN'S
FEES AND SERVICES AND OTHER
CHARGES.
IN THE INFLATIONARY
ENVIRONMENT, IT MIGHT BE TO
KEEP DOWN THE FEE INCREASES
THAT WE ARE PASSING ON TO THE
RESIDENTS BUT IT WILL HAVE THE
EFFECT OF CONSTRAINING OUR OWN
REVENUES TO GROW AT LESS THAN
INFLATION.
THERE IS AN IMPACT WITH THIS ON
THE GENERAL FUND REVENUES AND
THAT'S THE OVERALL BIG PICTURE
AS WE GO FORWARD.
I WANT TO GET TO THE ACTUAL
FORECAST AND I WANT TO HIGHLIGHT
THAT WE RECOMMEND THE BASELINE
FORECAST -- AND WE DID BEFORE WE
LOOKED AT THE NUMBERS.
THE PESSIMISTIC FORECAST, IF IT
WERE TO PLAY OUT, WOULD BE A
SIGNIFICANT HIT TO CITY
REVENUES.
THE RETAIL SALES, THE DARK
LINES ARE PESSIMISTIC ON THE
BASELINE -- WHAT YOU SEE IS
THAT IT WOULD GENERATE LESS
REVENUE BUT IT GROWS OVER TIME,
GOING BACK TO THOSE CHARGES IF
IT SLOWS OVER THE NEXT TWO
YEARS.
FORECASTING OVER THREE YEARS,
$100 MILLION.
IT SIGNIFICANT BETWEEN THOSE
TWO FORECASTS.
I GIVE YOU THOSE AS CONTEXT, AS
WELL.
WE ARE NOW MOVING INTO THE
ABSOLUTE NUMBERS.
THIS IS THE GENERAL FUND
REVENUE UPDATE FOR 2022 AND WE
WILL DO THIS AND TWO PIECES
WITH ENOUGH NUMBERS ON THE PAGE,
TOO MANY FOR 2022, 2023 AND
2024 TOGETHER.
WE WILL START ON THIS PAGE AND
MOVE NEXT TO TALK ABOUT THE TWO
YEARS OF THE BIENNIUM.
THIS SHADING IS PURPOSEFUL AND
INDICATES THE REVENUE STREAMS
THAT ARE THE PRIMARY
RESPONSIBILITY OF THE ECONOMIC
AND REVENUE FORECAST OFFICE.
ALTHOUGH, FEWER ROSE, IT'S
ABOUT 70%.
I WOULD ADD THAT FOR THE OTHER
REVENUE STREAMS, WE GIVE THIS
TO THE BUDGET OFFICE.
IT HAS UPDATES AS WELL.
THE RELATIONSHIP FINDS THEIR
WELL POSITIONED THAN TO QUERY
THOSE DEPARTMENTS AND GET AN
EXCHANGE YEAR.
TO REVIEW THE STRUCTURE OF THE
TABLE, WE WILL FOCUS ON THE
RIGHT-HAND SIDE AND IN
PARTICULAR, THE VERY LAST
COLUMN.
WE INCLUDED 2021 IN THE ACTUALS
ASA POINT OF COMPARISON.
THIS GROWTH RATE WITH THE
GENERAL FUND REVENUES GROWING.
THE NEXT COLUMN IS THE ADOPTED
BUDGET, AS A REFERENCE POINT TO
SEE HOW THINGS HAVE EVOLVED
SINCE TO APPROVE THE BUDGET.
THE APRIL FORECAST IS WITH THE
NUMBERS WE SHOWED YOU BACK IN
APRIL AND THE AUGUST FORECAST
IS AN UPDATE ON THAT.
THE LAST COLUMN IS WHAT IS
CHANGING.
THE GOOD NEWS AND THE BAD NEWS.
ONE THING I WANT TO DRAW YOU
TOO, THERE WAS A PIECE HERE
WITH ONE OF THE THINGS WE ARE
DOING IN CONSULTATION WITH THE
BUDGET OFFICE AND CENTRAL STAFF
IS TO KEEP TRACK OF THE
CARRYFORWARD WITH 2021 CARRIED
INTO 2022.
WE COULD'VE DONE A BETTER JOB
IN APRIL OF FULLY ACCOUNTING
FOR THOSE.
IN ORDER TO DO A PROPER AUGUST
TO APRIL COMPARISON, WE'VE
ADDED A LINE SO THAT YOU CAN SEE
THAT THOSE WERE CHANGES THAT
HAPPENED IN APRIL THAT WE
DIDN'T FULLY CAPTURE WHEN WE
ADDED UP THE RESOURCES.
WE WANTED TO DO A GOOD
COMPARISON TO AUGUST WITH THE
TOTALS TO BE CORRECT.
WE ARE ADDING THAT SO WE HAVE
APPLES-TO-APPLES.
IT'S A DISTRACTION TO THE
BIGGER POINT ABOUT WHAT IS GOING
ON.
LET'S TALK ABOUT THAT.
I WILL MOVE DOWN THE RIGHT-HAND
COLUMN FOR WHAT HAS CHANGED
SINCE OUR APRIL FORECAST.
PROPERTY TAX DOESN'T CHANGE
MUCH.
WE KNOW THE ASSESSMENT RATES
AND WE KNOW IT'S A VERY
PREDICTABLE REVENUE.
THESE ARE THOUSANDS OF DOLLARS,
VERY SMALL CHANGE.
THE ECONOMIC FORECAST IS A KEY
DRIVER AROUND CHANGE IN RETAIL
SALES AND IN THE BNO.
ON THE RETAIL SALES, THAT
INCREASE OF MORE THAN $7.5
MILLION IS VERY MUCH RELATED TO
IN FOR INFLATION, BUT NOT
EXCLUSIVELY.
THIS IS THE CHANGE, AND THE
FACT THAT IT'S DIFFERENT THAN
THE SALES TAX.
IT HAS TO DO WITH THE WAY THE
BASE FOR THE TAX HAS BEEN
REPORTED AND I WILL TURN IT
OVER TO JAN TO TALK ABOUT WHAT
HAS HAPPENED.
THE ECONOMIC FORECAST IS ALSO
2021 VERSUS 2022 PAYMENTS.
>> A LOT OF IT IS ACCOUNTING
FOR THE ACTUALS FOR THE FIRST
SIX MONTHS. ACTUALLY, THE FIRST
QUARTER, FOR WHICH WE HAVE
RECEIPTS OF REVENUE.
THE PREVIOUS FORECAST WOULD
LIKELY BE THE ACTUALS AND THE
ADJUSTMENT FOR WHO IS
ACCOUNTING FOR THE ACTUALS WITH
THE DIFFERENT DIRECTION OF THE
FORECAST. IN ADDITION TO THE
FORECAST, THE ACTUALS WE ARE
SEEING IS THE UPDATED FORECAST.
OCCASIONALLY, THE DIFFERENT
IMPACT.
>> ONE OF THE CHALLENGES IS
THAT WITH THE PANDEMIC, THE
TIMING OF THE PANDEMIC CHANGE.
THEY ARE COMING IN LITTLE BIT
LATER AND FIGURING OUT HOW MUCH
IT WILL BE WITH IT BEING A NEW
WRINKLE FOR US.
WE ARE OVER FORECASTING AND
WE'VE ADJUSTED THE BASE TO APPLY
THE IMPACT OF THE REVENUE
FORECAST.
IT GENERALLY HAS A SMALLER
IMPACT ON BNO TAXES AND RETAIL
SALES.
THE NET ENDS UP BEING NEGATIVE.
I CAN ALSO TALK ABOUT THE
PRIVATE UTILITY TAXES AND IS
OUR PURVIEW THAT THE NATURAL
GAS HAS SMALL CHANGES IN EACH
OF THOSE AT THE GAS PUMP.
THINK OF IT AS A SMALL CHANGE.
THERE IS NOT A LOT GOING ON BUT
I WOULD NOTE THAT THE TELEPHONE
TAX CONTINUES TO FALL OFF. WE
ONLY TAX ACTIVITY AND PEOPLE ARE
NOT TALKING ON THEIR PHONES THE
WAY THEY USE TO.
THE NEXT FEW REVENUE STREAMS
ARE FROM THE PURVIEW OF THE
BUDGET OFFICE AND I WAS GOING
TO TURN IT OVER TO ALEX FOR
CHANGES.
>> THANK YOU.
THOSE NOT SHADED ARE CASTED AND
PROJECTED BY THE CITY BUDGET
OFFICE.
STARTING AT THE TOP, THE
UTILITY TAXES AND THROUGHOUT
THIS PRIMARY, THERE IS UPS AND
DOWNS IN ALL OF THE REVENUE
WITH ELECTRICITY AND SEWER, ET
CETERA.
THE BIG DIFFERENCE IS RELATED
TO WATER.
A COOLER SPRING WITH LESS WATER
USAGE IN THE FORECAST WAS
ADJUSTED DOWNWARD.
OTHER CITY TAXES INCLUDE A
NUMBER OF TAXES BUT THE MAIN
DRIVER IS THAT WE HAD INCLUDED
AN ESTIMATE FOR THE HEATING OIL
TAX BUT THE START DATE FOR THAT
TAX WAS MOVED BACK BY COUNCIL
TO 1123 AND THAT REPRESENTS
THAT ADJUSTMENT. AS WELL, THE
TONNAGE TAX PAID.
MOVING FORWARD, PARKING METERS
ARE UP GENERALLY WITH THIS
STORY THAT WE ARE MOVING
FORWARD WITH INCREASING RATES
AT A GRADUAL PACE TO REFLECT
TIMING OF CHANGES, SO IT'S NOT
A LARGE CHANGE.
YOU SEE SLIGHT INCREASES THERE.
THE PARKING DEMAND IS AS HIGH AS
PRE-PANDEMIC LEVELS, MORE OR
LESS, JUST SLIGHTLY BELOW.
THE RATES, THE 2023-2024
FORECAST, THE SAME STORY.
THE COURT FINDS A BIG STORY
WITH A LOT OF MOTION WITH
UNDERLINING AT ALL, CITATION
VOLUME.
PARKING CITATIONS ARE LARGELY
AT PRE-PANDEMIC LEVELS BUT ALL
THE OTHER CITATIONS WRITTEN BY
PAROLE OFFICERS WITH TRAFFIC
AND SO FORTH, THOSE ARE DOWN
CONSIDERABLY.
THAT IS ONE OF THE STORIES.
AS YOU GO THROUGH, WE HAD TO
VOID 200,000 TICKETS AND ISSUE
REFUNDS.
THAT IS CAPTURED IN THIS, AS
WELL.
THE LARGEST CHANGE WAS THAT IT
BECAME APPARENT THAT THERE IS
AN ACCOUNTING ADJUSTMENT WE
MADE IN THE BOOK OF REVENUE.
IT TURNS OUT THAT IS NON-CASH
AND ESSENTIAL FOR FINANCIAL
REPORTING AND BALANCE SHEET
REPORTING, ET CETERA.
IT'S A NON-CASH REVENUE AND
WE'VE REMOVE THAT AND IT LEADS
TO ALL THOSE CHANGES, SPEAKING
TO THAT $5.6 MILLION DIFFERENT
WITH A DOWNWARD REVISION IN
COURT FINDS.
GRANTS ARE THE CASE OF
CAPTURING THEM TO DESCRIBE
UNBALANCED TRANSFERS. THESE ARE
STILL INVOLVING THE FEDERAL
MONEY WITH CORONAVIRUS REFUNDS.
WHAT HAPPENED IS THAT SOMETHING
YOU ASSUMED WOULD BE GENERAL
FUND REVENUE WAS MOVED TO THE
HUMAN SERVICES DEPARTMENT, AND
THAT IS THE FUNCTION.
LICENSES, PERMITS AND INTEREST
INCOME AND THE OTHER IS A
CATCHALL CATEGORY. THAT
PRIMARILY IS A REDUCTION IN
BUSINESS LICENSES, AND $1.4
MILLION OF THAT -- $1.3
MILLION, A REDUCTION IN
EMERGENCY SERVICES.
IT'S A CHANGE IN HOW MUCH OF
THE EMERGENCY 911 REVENUES ARE
HELD BY THE COUNTY AND THEN WE
HAVE THIS DROPPING THROUGH WITH
A CHANGE IN THAT.
IT'S $1.3 MILLION AND THERE ARE
LESSER ONES ADDING UP AS WELL.
THOSE ARE THE TWO MAIN DRIVERS.
>> THE LAST ITEM IS THE BIGGEST
NEWS ON THIS COLUMN WITH
SOMETHING WE MENTIONED
PREVIOUSLY.
AGAIN, LATE PAYMENTS IN 2021
WITH OBLIGATIONS A PAYROLL TAX.
AT THE END OF THE JUNE, WITH
THE FIRST PRESENTATION, WE HAD
$14 MILLION OF THESE LATE
PAYMENTS WE RECEIVED AND SINCE
THEN, SIGNIFICANTLY MORE HAS
BEEN REMITTED TO THE CITY.
THERE IS NOW ALMOST $42 MILLION
IN LATE PAYROLL TAX PAYMENTS
THAT ARE REVENUES FOR 2022
GENERAL FUND REVENUE. I
WOULD NOTE THAT FROM A GENERAL
FUND PERSPECTIVE, THOSE ARE ONE-
TIME REVENUES.
GOING FORWARD, THE POTENTIAL
INCREASE IN THE BASE, THOSE
BASE REVENUES GO INTO THE NEW
PAYROLL EXPENSE TAX FUN.
IT'S A SIGNIFICANT INCREASE AND
HELPS MAKE UP FOR THE NET LOSS
IN THE OTHER CATEGORIES.
THE BOTTOM LINE IS THIS REVENUE
FORECAST HAS AN ADDITIONAL $24
MILLION EXPECTED WITH GENERAL
FUND RESOURCE IN 2022.
THAT'S THE BOTTOM LINE ON THIS
SLIDE. I
WILL MOVE ON TO LOOK AT THE NEXT
SLIDE, 2022-2023, BEING VERY
CONSCIOUS OF TIME.
IT'S THE SAME BASIC STRUCTURE.
THE COLUMN ON THE LEFT, THE
2022 AUGUST FORECAST HAS THE
SAME NUMBERS ON THE PREVIOUS
SLIDE AND IS INCLUDED AS A
REFERENCE POINT.
YOU CAN SEE THE MIDDLE GROUP OF
NUMBERS IS THE 2023 FORECAST,
THE SAME CATEGORIES AND THE
APRIL FORECAST COMPARED TO
AUGUST.
SIMILARLY, ON THE RIGHT, THE
APRIL AND AUGUST FORECAST AND
THE DIFFERENCE. BEING CONSCIOUS
OF TIME, THE PATTERN OF RETAIL
SALES -- WHAT WE SEE IS THAT
INFLATION CONTINUES TO HAVE A
POSITIVE IMPACT ON TOTAL
REVENUES INTO 2023 WITH THE
OVERALL EFFECT OF THE COOLING
ECONOMY SETTING IN AGAIN.
WE ARE SEEING THE ECONOMY GROW
BUT THE RELATIVE LEVEL OF
GROWTH IS LESS THAN WE EXPECTED
IN APRIL WITH THE OVERALL
FORECAST FOR A COOLER AND
ECONOMY.
THAT SAME AFFECT RIPPLES INTO
BNO, AS WELL.
THE ADJUSTMENT WE MADE TO THE
BASE BASED ON WHAT WE SAW IN
THE FIRST TWO QUARTERS IS
REFLECTED.
IT'S THE DIFFERENCE BETWEEN
RETAIL SALES BEING POSITIVE AND
BNO BEING NEGATIVE AND ADJUSTING
THE BASE FOR 2022.
YOU CAN SEE IT GROWS IN THE
AUGUST FORECAST WITH GROWTH
BETWEEN 2023 AND 2024 AND WE
LOOKED TO SEE, AS WELL.
OVERALL, THE ECONOMY EXPECTS
LOWER REVENUES AND WE HAD IN
APRIL FROM THAT SOURCE. UTILITY
TAX, AGAIN, A SIMILAR STORY
WITH IMPLEMENTS AROUND SOME OF
THE REVENUE STREAMS THAT ARE
SHIFTING DOLLARS INTO THESE
YEARS, AS WELL.
THAT'S LOOKING AT THE CDO FOCUS
AND YOU CAN SEE RELATIVELY
MODEST CHANGES FOR MOST OF
THESE CATEGORIES WITH THE COURT
DESCRIBING IT AS THE LARGEST
THAT CONTINUES WITH THE SAME
DYNAMICS PLAYING OUT TO
CONFIRM.
THE OTHER CATEGORIES, AS WELL.
THE NET EFFECT, OVERALL, WHICH
YOU CAN READ AT THE BOTTOM LINE
IS A REDUCTION OF JUST OVER
$6.5 MILLION IN EXPECTED
GENERAL FUND REVENUES FOR 2023
IN JUST OVER $11 MILLION FOR
2024.
AGAIN, CONSISTENT WITH THE
GENERALIZED COOLING OF THE
ECONOMY AND SOME REVENUES THAT
FALL, RELATIVE TO APRIL
EXPECTATIONS.
QUESTIONS ON THOSE?
THE NEXT THING WOULD BE TO
SHIFT TO NON-GENERAL FUND
SOURCES, INCLUDING B.E.T.
MOVING AHEAD, NOT SAME
QUESTIONS, THE OVERALL
SURPRISE, WE SEE THE EFFECT OF
SOME OF OUR PESSIMISTIC -- NOT
PESSIMISTIC -- BUT THE OVERALL
FORECAST RIPPLING INTO OUR
FORECAST FOR 2023 AND 2024.
I'M NOT GOING THROUGH THIS
SLIDE BUT THIS IS DOCUMENTS IN
WRITTEN FORM OF THE NARRATIVE
WHICH IS PROVIDED FOR YOU AND
IF SOMEBODY OPENS THIS IN THE
FUTURE, I WILL TAKE THOSE
EXPLANATIONS.
JUST TO HIGHLIGHT THE
DIFFERENCE BETWEEN THE GENERAL
FUND, BETWEEN THE BASELINE WITH
THE PESSIMISTIC FORECAST,
TAKING THAT TOGETHER, THE NET
EFFECT WOULD BE $150 MILLION
BUT WE RECOMMENDTHE BASELINE
FORECAST TO DRAW YOU SOME
CONTEXT.
SHIFTING TO THE SELECTED NON-
GENERAL FUND, BUT THE GENERAL
GOVERNMENT REVENUES, THIS STUFF
IS IMPORTANT, NOT SOMETHING WITH
UTILITIES.
THE SAME FORMAT, 2022, AND THEN
THE NEXT SLIDE, 2022 AND 2023.
THE RIGHT-HAND COLUMN IS THE
MAJOR STORY.
WE HAVE A COUPLE OF MORE SLIDES
ON PAYROLL WITH THE WHOLE
NARRATIVE WITH THE SMALL
PAYROLL TAX AND YOU WILL SEE
THAT PLAY OUT FOR THE NEXT
COUPLE OF YEARS.
A MINOR ADJUSTMENT IN TAX AND
SHORT-TERM RENTAL WITH THOSE
ACTIVITIES RECOVERING A LITTLE
FASTER THAN EXPECTED.
WE FORECAST UP WITH GOOD
RESULTS FOR THE FIRST HALF OF
THE YEAR AND THE MOST RECENT
MONTH WAS NOT AS ROSY AS THE
PREVIOUS FIVE.
WE ARE NOT JUST STRAIGHT LINING
THE FIRST HALF AND DOUBLING TO
GREATER FORECAST.
BUT A SIGNIFICANT INCREASE IN
THE FORECAST AND YOU CAN SEE
THAT GOES FORWARD, AS WELL.
SALES TAX IS .1% AND THE
PATTERN IS THE OVERALL REVENUE
FORECAST FOR SALES.
COMMERCIAL PARKING ACTIVITY IS
DOWN A LITTLE BIT AND PARKING
INFRACTIONS DOWN A LITTLE BIT
BUT NOT A WHOLE LOT THERE.
THE NEXT SLIDE, SAME STRUCTURE
OF A 2023 AND 2024, THE COLUMNS
IN THE RED AND BLACK SHOW A
CHANGE BETWEEN APRIL AND
AUGUST.
YOU CAN SEE THE PAYROLL TAX WITH
A SLIGHT DECLINE AND WE WILL
TALK ABOUT THAT WITH EVERYTHING
ELSE SMALL CHANGES AND WE ARE
RAISING 2023 AND 2024.
THE FORECAST IS UP WITH THE
ABSOLUTE NUMBER SMALLER AND YOU
CAN SEE IT RELATIVE TO THE
FIRST, BECAUSE INTEREST RATES
ARE GOING UP WITH A COOLING OF
THE REAL ESTATE MARKET AND WE
DON'T HAVE CONFIDENCE THAT
CURRENT NUMBERS WILL PERSIST.
YOU MIGHT WANT TO SAY MORE
ABOUT THE FORECAST?
>> IT'S ESSENTIALLY MIRRORING
WHAT IS HAPPENING WITH THE
REGIONAL ECONOMY GOING FORWARD
WITH THE OUTLOOK AND THE
REGIONAL ECONOMY IS SLIGHTLY
DOWNWARD FROM APRIL.
WE ARE SEEING A RECOVERY AT A
SLOWER PACE.
>> THEN WE TALK ABOUT PAYROLL.
IT'S A SIGNIFICANT STORY AND
THIS IS DOCUMENTING THE VERBAL
NARRATIVE PROVIDED AND WRITTEN
DOWN FOR THE RECOMMENDED
PAYROLL EXPENSE TAX, FORECAST
IS NOT LARGELY DIFFERENT THAN
THE ONE WE HAD IN APRIL.
>> I HAVE TO STOP YOU.
DIRECTOR NOBLE, WE CANNOT HAVE
ANOTHER ACRONYM.
PET, THAT'S THE FIRST TIME I SAW
THAT.
WHAT IS THAT AGAIN?
I THINK WE SHOULD JUST STICK
WITH JUMPSTART OR PAYROLL OR
SOMETHING LIKE THAT.
JUST FOR THE RECORD, I OBJECT
TO ANOTHER ACRONYM.
>> MY BUREAUCRATIC NATURE AGREES
AND I APOLOGIZE.
IT MAY APPEAR ALSO IN THIS
PRESENTATION AGAIN.
>> OBJECTION DULY NAILED IT,
LET'S GO AHEAD.
>> THIS IS A COINCIDENCE.
WE'VE COME AROUND IT IN A
DIFFERENT WAY.
WE MENTIONED THIS BEFORE.
THE VAST MAJORITY OF THE
REVENUES ARE COMING FROM THREE
PRIMARY SECTORS, TRADE,
INFORMATION AND SERVICES.
FOR ALL THE WORK WITH WHAT IS
GOING ON IN THOSE SECTORS, WE
REMIND YOU THAT THE STRUCTURE
OF THE TAXES IS SUMMARIZED IN
THE SECOND BULLET.
IT IS THE INDEX OF INFLATION
AND WILL GO UP.
IT HAS GONE UP FOR 2022 AND
WILL GO UP SIGNIFICANTLY FOR
2023, AS WELL.
ANOTHER THING TO NOTE, IT'S A
MEASURE OF TAXES WITH THE
INFLATION IN THE CITY AND YOU
COULD BE LIVING IN YOUR HOUSE
AND OUTSIDE THE CITY, WITH YOUR
EMPLOYER IN THE CITY.
IF YOU WERE IN SHORELINE AND
USED TO WORK DOWNTOWN AND ARE
NOW WORKING AT HOME, YOU ARE
NOT SUBJECT TO TAX.
IT'S A DYNAMIC FOR THAT.
WHAT DO WE KNOW ABOUT THE
PAYMENTS TODAY?
WE JUST SHOWED YOU THAT
INCREMENT OF $41 MILLION WITH
PAYMENTS ADDED THIS YEAR.
THAT MEANS THE TOTAL PAYMENT
FOR 2021 ARE ABOUT $290
MILLION.
LAST TIME YOU REPORTED THIS
FIGURE IN APRIL, IT WAS 248.
YOU CAN SEE ABOUT 40 MILLION
MORE DOLLARS BUT THAT'S VERY
SIGNIFICANT.
AND THIS IS DRIVING OUR
FORECAST.
YEAR TO DATE, WE NOW GET
QUARTERLY PAYMENTS AND LAST
YEAR, THEY WERE ANNUAL.
A SLOWDOWN WAS RECEIVED
RELEVANT TO THE PACE TO MAKE
THAT 290 TOTAL.
IF YOU EXTRAPOLATE THE CURRENT
PACE, IT WOULD BE ABOUT 260 IN
THE FINAL FORECAST IS ABOVE 260
WITH DATA FROM THE EMPLOYMENT
SECURITIES DEPARTMENT THAT
WOULD SUGGEST THE SECOND HALF
WILL BE OVERALL PAYMENTS THAT
ARE SOMEWHAT HIGHER.
THAT IS UNDERLYING PART OF OUR
FORECAST AND LOOKING FORWARD,
WE SAW A INDICATION ABOUT THE
SLOWING OF JOB GROWTH WITHIN
THE CITY IN THESE KEY SECTORS
AND THE FORECAST FOR GROWTH IS
SOMEWHAT MORE MODEST FOR 2023
AND 2024.
TO SAY A LITTLE MORE, WHAT IS
GOING ON, WHY ARE THESE
PAYMENTS FLOWING DOWN IN 2022
AND ONE YOU WILL SEE THAT WE
WILL PROJECT LESS OVERALL
REVENUE IN 2022 THAT WE TOOK IN
, IN 2021.
THEY'RE ALL POTENTIALLY SUBJECT
TO THIS TAX.
WE HAVE A SIGNIFICANT SHARE OF
COMPENSATION COMING IN STOCK
GRANTS AND THEY HAVE BEEN WITH
A CERTAIN AMOUNT DISTRIBUTED AT
CERTAIN FREQUENCY OVER YEARS OF
EMPLOYMENT.
IT'S THE NUMBER OF SHARES AND
THE VALUE OF THE SHARES HAS A
BIG INFLUENCE ON THE TAXABLE
COMPENSATION.
YOU CAN SEE THAT THESE MAJOR
EMPLOYERS, SINCE THE END OF LAST
YEAR IN THE FIRST PART OF THIS
YEAR, THE STOCK VALUES HAVE
BEEN DECREASING NOTABLY.
IN NO SMALL PART, WE THINK THAT
UNEXPECTED COMPENSATION FOR THE
YEAR IS LOWER AND FIRMS ARE
MAKING ESTIMATED PAYMENTS, AT
THIS POINT, BASED ON WHAT THEY
EXPECT WILL BE PAYMENTS FOR THE
YEAR.
WE THINK THIS DECLINE IS THE
EXPLANATION FOR A SIGNIFICANT
PART OF THE LOWER PAYMENTS WE
ARE SEEING IN THIS YEAR AND THE
PRIMARY MODELS BRING DOWN,
RELATIVE TO 2021 RECEIPTS,
LOWER THAN THAT BECAUSE WE
THINK THE TOTAL AMOUNT PAID
WILL BE LOWER AND THUS, THE
TAXABLE PAYMENTS WILL BE LOWER.
ANOTHER DYNAMIC IS THIS WORK
FROM HOME THING.
USING CELL PHONE DATA, WE HAVE
SPECIFIC NEIGHBORHOODS IN THE
CITY WHERE THESE SECTORS HAVE
ACTIVITIES AND WHAT WE ARE
SEEING IS FOLKS ARE NOT WORKING
IN THE OFFICE.
THAT HAS THE POTENTIAL, AS WELL
-- FOR FOLKS LIVING OUTSIDE THE
CITY -- TO THE EXTENT THEY WORK
FOR THESE FIRMS, IF THEY ARE
NOT IN THE OFFICE, THEIR PAY
MIGHT NOT BE PART OF THE TAX.
THAT MIGHT EXPLAIN WHY PART OF
THE PAYMENTS, TO DATE, ARE
LOWER THAN THEY WOULD OTHERWISE
HAVE BEEN.
ALL THAT TOGETHER, BACKING UP,
LEADS US TO A REVENUE FORECAST
-- SORRY, MOVING THROUGH WITH
THE PAYROLL TAX THAT FOR 2022,
WE HAD PREVIOUSLY FORECAST $277
MILLION. WE ARE RAISING THE
FORECAST TO JUST UNDER $280
MILLION AND IT'S STILL LESS
THAN THE $290 FROM 2021.
THE REASON WHY, WHAT WE SAID IS
THAT THE REDUCED PAYMENTS WE'VE
SEEN WITH THE INFORMATION FROM
THE FIRST HALF OF THE YEAR.
WE ARE ADDING A LITTLE BIT
BECAUSE WE THINK THE SECOND
HALF PAYMENTS WILL BE LARGER.
THE NET EFFECT IS HIGHER
FORECAST IN APRIL AND LESS
TOTAL DOLLARS IN 2021.
SHIFTING AGAIN TO 2023 AND 2024
FORECASTS, YOU CAN SEE THEY ARE
ACTUALLY SLIGHTLY LOWER THAN
THE APRIL FORECAST AND THIS IS
CONSISTENT WITH THE JOB GROWTH
AND WAGE GROWTH IN THESE
SECTORS WITHIN THE CITY,
SPECIFICALLY, NOT JUST THE
REGION, BUT IT WILL BE SLOWER
THAN WHAT WE HAD THOUGHT WHEN
WE DID THE FORECAST BACK IN
APRIL.
BETWEEN 2022 OFF TO MILLION
DOLLARS IN 2023 AND 2024 DOWN A
LITTLE BIT, THOUGH RELATIVELY
EFFECT OF THE BIENNIUM, WE ARE
LOOKING AT REAL REVENUES,
COMPLETE REVENUES TO 2021 AND
PARTIAL REVENUES FOR 2021
AREN'T QUITE ON PACE.
THAT'S THE NATURE OF THE
PAYROLL FORECAST AND WE ARE
SHOWING THOSE CHANGES.
THE MAIN COMPONENT IS FOR YOU
TO CONCUR OR NOT WITH THE
CONCLUSION OF THE BASELINE
BEING APPROPRIATE AND THAT IS
THE BASELINE BEING APPROPRIATE
FOR THE FORECAST STATION.
BEFORE WE OPEN IT UP, BEFORE
THE LEADERSHIP OF JULIE DINGLEY
INCLUDED IN THIS FORECAST FOR
THE FIRST TIME, THANKS AGAIN
FOR THE SHADING OF THE
MATERIALS WITH THE INFORMATION
FOR THE OFFICE OF ECONOMIC
REVENUE FORECAST.
DIRECTOR DINGLEY, IS THERE
ANYTHING YOU WOULD LIKE TO ADD
FOR CONTEXT?
FEEL FREE IF YOU WANT TO GO
BACK TO CERTAIN SLIDES.
GREAT PRESENTATION AND I
THOUGHT THESE MATERIALS WERE
INCREDIBLY THOROUGH AND
THOUGHTFUL.
AS DIRECTOR NOBLE NOTED, THIS
IS A CHALLENGING TIME TO BE IN
THE FORECASTING GAME.
WE ARE SEEING ALL THE
INDICATORS GOING MANY DIFFERENT
DIRECTIONS. I
WANT TO REMIND ANYONE WATCHING
THAT THIS IS ONE SIDE OF THE
LEDGER, JUST THE REVENUE SIDE.
WE WILL HEAR MORE ABOUT THE
EXPENDITURE SIDE IN THE WEEKS TO
COME AND THE PRESSURES THEREIN.
THANK YOU FOR HAVING ME.
I APPRECIATE IT.
>> I THINK THAT WILL SERVE AS A
GOOD TRANSITION TO RECEIVING THE
INFORMATION.
AS A COUNCIL, DISCUSSING AND
POSSIBLY VOTING ON THE ADOPTION
OF THE REVENUE FORECAST, AGENDA
ITEM NUMBER 4. I WILL LTI THIS
UP SO THAT, GIVEN THIS IS THE
INAUGURAL YEAR OF THE FORECAST
COUNCIL, THAT EVERY QUARTER WE
RECEIVE THE PRESENTATION AND
THE COUNCIL, THE FORECAST
COUNCIL, IT'S UP TO US WHETHER
OR NOT TO ACCEPT THE
RECOMMENDATION TO CONTINUE ON
THE PATH THAT THE OFFICE OF
ECONOMIC REVENUE FORECAST
SUGGESTED.
IF WE AGREE, FOR EXAMPLE, AS
PRESENTED TODAY, THAT WE SHOULD
CONTINUE WITH THE RECOMMENDATION
OF THE MEDIUM FORECAST, NOT THE
OPTIMISTIC OR PESSIMISTIC
FORECAST BUT STAYING RIGHT IN
THE MIDDLE WITH THE FORECAST
SUGGESTED.
WE WOULD NOT HAVE TO HAVE A VOTE
TODAY.
IN ESSENCE, WE ARE JUST
RECEIVING THE INFORMATION.
WOULD MAKE SURE TO HAVE THE
NOTES REFLECT THAT WE ARE
RECEIVING AND CONCURRING WITH
THE RECOMMENDATION.
IF THERE IS A DESIRE TO CHANGE
OUR FORECAST AND GO WITH AN
ALTERNATIVE SCENARIO, OTHER THAN
THE OFFICE OF REVENUE FORECAST
SUGGESTION, WE WOULD HAVE A
VOTE.
TO CHANGE THAT REVENUE
FORECAST, WE WOULD NEED THREE
VOTES AT AFFIRMING THE CHANGE
TO THE ALTERNATIVE PATH.
TO ORIENT US, THAT IS THE TASK
OF THE FORECAST AND WE ARE MADE
UP OF TWO INDIVIDUALS FROM THE
LEGISLATIVE BRANCH, MYSELF AND
COUNCIL MORRIS OFFICE IN TWO
INDIVIDUALS FROM THE EXECUTIVE
BRANCH, THE DEPUTY MAYOR
HARRELL AND THE CURRENT DEPUTY
INTERIM DIRECTOR.
THAT IS THE VOTING MEMBERS OF
THE FORECAST COUNCIL WITH US
TODAY.
COLLEAGUES, I WILL OPEN IT UP
FOR ADDITIONAL QUESTIONS,
ADDITIONAL COMMENTS REGARDING
THE FORECAST AND RECOMMENDATION
FROM THE FORECAST OFFICE.
I WILL NOTE TO SET THE TONE HAD
GIVEN THE INFORMATION WE'VE
RECEIVED -- AND WE ARE
RECEIVING THIS IN REAL TIME
WITH THE EXECUTIVE BRANCH AND
THE LEGISLATIVE BRANCH AND
MEMBERS OF THE PUBLIC,
INTENTIONALLY MODELED AFTER
WHAT WE'VE SEEN IN OLYMPIA
WHERE THE FORECAST OFFICE
PRESENTED OUT TO MEMBERS OF THE
PUBLIC WITH WHAT THE REVENUE
LOOKS LIKE.
FOR US, IT'S AN OPPORTUNITY FOR
US TO RECEIVE WHAT IS A MIXED
BAG OF INFORMATION.
GOOD NEWS FOR WHAT WE SEE
COMING IN FROM 2021 FROM
JUMPSTART PROGRESSIVE WITH THE
PAYROLL TAX AND WE WILL KEEP
FOLLOWING THE JUMPSTART FOR THE
EASY ACRONYM. WE KNOW IS THE
SAME THING, GOOD NEWS FOR
ADDITIONAL PAYMENTS COMING IN
FOR 2021 COMPLIANCE AND
OBVIOUSLY, A MIXED BAG FOR THE
CURRENT STATUS AND HOW WE USE
THAT TO PROJECT FOR 2023 AND
2024.
I'M PREPARED TO FOLLOW THE
OFFICE OF REVENUE FORECAST
RECOMMENDATIONS AND WON'T
SUGGEST TO OUR COLLEAGUES A
DIFFERENT PATH FOR A PESSIMISTIC
FORECAST.
GIVEN THE INCREASED LIKELIHOOD
OF A PESSIMISTIC FORECAST AND
AS YOU NOTED, DIRECTOR NOBLE,
THE DELICATE BALANCE THAT WE
WILL USE WITH THE OFFICE OF
ECONOMIC REVENUE THAT IS USED
TO DESCRIBE THE CURRENT ECONOMIC
RECOMMENDATIONS, I'M INTERESTED
IN WORKING WITH THE EXECUTIVE
BRANCH AND WE WILL BE IN CLOSE
CONNECTION WITH DEPUTY MAYOR
HAROLD AND DIRECTOR DINGLEY AS
THEY WORK ON PREPARING THE 2023-
2024 PROPOSED BUDGETS TO MAKE
SURE WE HAVE CONTINGENCIES FOR
THE POTENTIAL DECREASE IN
REVENUE THAT WE WILL SEE IN THE
UPDATED FORECAST.
NOBODY WANTS TO BE SURPRISED IN
NOVEMBER WHEN THE REVENUE
FORECAST COMES DOWN BEFORE THE
FINAL BUDGET IS TRANSMITTED
BACK TO THE EXECUTIVE.
HAVING CONTINGENCIES MAKES SENSE
AND AT THIS POINT, I OPEN IT UP
FOR QUESTIONS FOR MY
COLLEAGUES.
I UNDERSCORE THE DELICATE
BALANCE THAT THE REVENUE
COUNCIL HIGHLIGHTED BUT WOULD
SUGGEST THAT I PERSONALLY WOULD
FOLLOW THE RECOMMENDATIONS.
WHAT SAY YOU, COLLEAGUES?
ANY ADDITIONAL COMMENTS OR
QUESTIONS?
DEAD AIR, ANYBODY?
[ LAUGHTER ]
>> AGAIN, I THINK THAT THE
INFORMATION IS EXTREMELY WELL
PRESENTED.
YOU KNOW, AS YOU STATED,
COUNCILMEMBER, THE BASELINE IS
THE RIGHT WAY TO GO AND IT'S
GOOD TO HAVE THIS INFORMATION
IN MIND AS WE BUILD THE BUDGET.
IT DOES GIVE US A LITTLE BIT
MORE MORE -- I THINK HAVING THE
RIGHT MINDSET IS ALWAYS GOOD IN
BEING PREPARED AND HAVING
MULTIPLE PLANS IN PLACE ARE
VALUABLE.
>> AGREED.
ANY ADDITIONAL COMMENTS?
>> COUNCILMEMBER MOSQUEDA, WE
ARE IN CHALLENGING TIMES AND
I'M WITH YOU ALL THE WAY.
>> THANK YOU VERY MUCH, CHIEF
OF STAFF.
PLEASE PASS ON OUR APPRECIATION
TO THE COUNCIL PRESIDENT, AS
WELL.
ANYTHING, INTERIM DIRECTOR, TO
ADD? I
KNOW THE VIDEO IS NOT WORKING
BUT YOU'RE WELCOME TO CHIME IN.
>> THANK YOU.
FASCINATING FOR ME AS MY FIRST
REAL FORAY INTO THIS.
I THANK BANNON AND THE TEAM FOR
TRACKING THE INS AND OUTS OF
THE FORECAST AND THEY ARE DOING
A GREAT JOB.
I THANK THE BUSINESS LICENSED,
THE JUMPSTART TAX PROGRAM.
THEY DO AN AMAZING JOB AND I
WANT TO PUT THAT OUT THERE.
I'M IN AGREEMENT WITH YOU AND I
THINK THAT THE MEDIUM FORECAST
IS THE WAY TO GO, JUST BECAUSE
IT GIVES US A LITTLE BIT OF A
LESS RISK SCENARIO.
I KNOW FORECASTING WILL BE
WATCHING THIS VERY CLOSELY FOR
US.
>> THANK YOU VERY MUCH.
I ECHO YOUR APPRECIATION FOR
THE FAS TEAM THAT IS TRACKING
COMPLIANCE WITH JUMPSTART AND
WORKING HAND IN GLOVE WITH THE
PAYORS.
>> THANK YOU FOR THE
PRESENTATION.
I CONCUR WITH EVERYTHING AND
WANT TO HIGHLIGHT AND
APPRECIATE THE OFFER FROM THE
FORECAST OFFICE TO GIVE US
UPDATES ALONG THE WAY, SO THAT
WE ARE NOT GETTING A SURPRISE AS
WE ARE PUTTING THE BALANCING
PACKAGE TOGETHER FOR THE COUNCIL
BUDGET.
I WANT TO ENCOURAGE ONGOING
COORDINATION AND DISCUSSION
WITH THE FORECAST OFFICE, ALONG
WITH THE EXECUTIVES, SO WE CAN
PLAN ACCORDINGLY.
THANK YOU FOR THAT.
>> EXCELLENT.
THANK YOU.
WELL, FOLKS ON THE COUNCIL, I'M
NOT HEARING ANY OBJECTIONS TO
THE RECOMMENDATION BEFORE US.
THANKS TO THE OFFICE OF
ECONOMIC AND REVENUE FORECAST.
I'M INTERESTED IN MAKING SURE
THAT WE LIVE THIS UP AS A GOOD
EXAMPLE OF WHEN WE CREATE THE
OFFICE OF ECONOMIC AND REVENUE
FORECAST, WE PROVIDED DEFERENCE
TO THE OFFICE FOR A
RECOMMENDATION TO THE COUNCIL
AND IN DOING SO, OUR GOAL WAS
TO REMOVE POLITICAL INFLUENCE
AND WE RECOGNIZE THAT RECEIVING
RECOMMENDATIONS FROM A STAFF OF
INDEPENDENT PROFESSIONAL
EXPERTS WAS THE BEST WAY TO
ACHIEVE THIS.
TODAY, WE SAW TOUGH NEWS HARD
TO DELIVER AND IT WAS
DELIVERED, I THINK,
APPROPRIATELY TO BOTH BRANCHES.
WE CAN BOTH RECEIVE THIS IN REAL
TIME AND IN A TRANSPARENT WAY,
WORK TOGETHER TO BEGIN
ADDRESSING HOW THIS COULD
AFFECT OUR FUTURE BUDGETS.
AS THE ELECTED LEADERSHIP OF
THE LEGISLATIVE AND EXECUTIVE
BRANCHES, IT'S REALLY
APPROPRIATE AND A GOOD EXAMPLE
FOR US, IN TERMS OF HOW WE ARE
PROVIDING OVERSIGHT ON THIS
PROCESS, BUT ALSO, BEING
DEFERENTIAL TO THE INDEPENDENT
ANALYSIS OF THE OFFICE OF
REVENUE FORECAST.
IN MAKING NO MOTION TODAY, I
THINK WE ARE ESTABLISHING THAT
THE CITY FORECAST, THE FORECAST
PROCESS IS DOING WHAT WE
INTENDED, TO MAKE SURE THE
COUNCIL IS RECEIVING
INFORMATION IN REAL TIME FROM
THE EXPERTS LOOK AT THE EVER
INVOLVING SCENARIO FROM THE
REVENUE STREAMS.
I THANK THE TEAM UNDER DIRECTOR
NOBLE AT THE OFFICE OF FORECAST
AND SINCE WE HEARD FROM THE
CITY BUDGET OFFICE AND THE
INFORMATION WAS INTEGRATED INTO
THE PRESENTATION, I THINK JULIE
DINGLEY FROM CDO.
HEARING NO OBJECTIONS, WE WILL
HAVE THE NOTES REFLECT THAT WE
CONCUR WITH THE RECOMMENDATION
FROM THE OFFICE OF REVENUE
FORECAST.
THAT IS THE FORMAL STEP WE NEED
TO TAKE, ACCORDING TO OUR
BYLAWS, TO APPROVE THE FORECAST
AND MOVE FORWARD.
ASOF TODAY, THAT WILL HAVE THE
RECEIPT OF THE AUGUST FORECAST.
I WILL NOTE THAT I THINK WE
HAVE GONE ABOUT ONE-HALF HOUR
OVER IN OUR LAST TWO MEETINGS
AND WE MAY GIVE OURSELVES AN
EXTRA HALF AN HOUR IN THE NEXT
MEETING.
THIS IS DENSE INFORMATION AND
GREATLY APPRECIATED.
SINCE WE ARE RECEIVING IT IN
REAL TIME, WITH MEMBERS OF THE
PUBLIC WHEN POSTED, WE DO
APPRECIATE THE DETAILED WALK-
THROUGH OF INFORMATION BECAUSE
WE HAVEN'T HAD WEEKS TO SIT
WITH THIS INFORMATION.
IT'S THE OPPOSITE OF WHAT WE
INTENDED.
WE WANTED IT IN REAL TIME AND
GIVING ADDITIONAL TIME, WE CAN
MAKE THESE AS THOROUGH AS WE
CAN AND PEOPLE CAN ASK
QUESTIONS.
WE WILL ASK YOU, EVERYONE ON
THIS TEAM, IF WE CAN ADD AN
ADDITIONAL HALF HOUR TO THE
NEXT PRESENTATION.
IS THERE ANYTHING ELSE FOR THE
GOOD OF THE ORDER BEFORE I TURN
IT OVER TO BEN TO REVIEW NEXT
STEPS WITH MEETINGS WE CAN
ANTICIPATE, AS A COUNCIL?
THANKS FOR YOUR PARTICIPATION.
DIRECTOR NOBLE, WOULD YOU
REMIND US OF THE UPCOMING
MEETINGS AND THE TIME FRAME ON
THOSE?
LET'S ADD AN EXTRA HALF HOUR AS
WE THINK ABOUT THAT NEXT
MEETING.
>> THANK YOU FOR THAT.
I WAS INTERESTED IF IT MADE
MORE SENSE TO DO IT MORE QUICKLY
NEXT TIME.
OR, INSTEAD, EXTEND AND I
APPRECIATE YOU EXTENDING THE
MEETING.
THERE IS A LOT OF VALUE IN WHAT
WE'VE PRESENTED AND IT WOULD BE
HARD TO TALK MORE SPEEDILY.
I APPRECIATE YOUR TIME.
AS OF NOW, WE ARE SCHEDULED TO
MEET ON NOVEMBER 2nd.
WE WOULD BE PROVIDING THE LAST
UPDATE AT THE 12:30 MEETING AND
WE WILL EXTEND. IF WE HAVE TO
MOVE THE START TIME TO
ACCOMMODATE THE ADDITIONAL ONE-
HALF HOUR, OR ALTERNATIVELY, WE
WILL WORK ON THAT PIECE.
WE WILL CONTINUE CONSULTING TO
DETERMINE IF THERE IS REASON TO
PROVIDE A REVENUE UPDATE ON
THAT PARTICULAR DATE.
IT'S ORTH THE ORDINANCE
CREATING THE OFFICE TO DELIVER
THE REVENUE UPDATE BY THAT DATE
TO INCLUDE THAT THAT, MOVING
FORWARD.
OTHERWISE, WE WILL SEE YOU IN
NOVEMBER AND WE WILL BE IN
ONGOING CONTACT WITH STAFF AT
THE BUDGET OFFICE AND THE
CENTRAL STAFF.
WE VERY MUCH APPRECIATE THOSE
PARTNERSHIPS.
ALSO, FOLKS AT FAS WITH
UNDERLYING DATA, WITH THE
PAYROLL EXPENSE TAX, WE CAN
BETTER UNDERSTAND WHAT SAID.
WE LOOK FORWARD TO SEEING YOU
IN NOVEMBER.
>> EXCELLENT AND THANK YOU.
WE LOOK FORWARD TO SEEING YOU,
AS WELL.
IN TERMS OF WHEN THE
INFORMATION IS POSTED, LET'S
CONTINUE, AS YOU CURRENTLY
HAVE, WITH POSTING IN REAL TIME
AS THE MEETING IS SCHEDULED A
DAY OR SO OR MAYBE THAT MORNING
OF.
I CAN'T QUITE REMEMBER.
THE INTENTION WAS TO MAKE SURE
THAT MEMBERS OF THE PUBLIC AND
THE EXECUTIVE BRANCH AND
LEGISLATIVE BRANCH HAD A FULL
WEEK TO SIT WITH IT.
AS DESCRIBED EARLIER, WE THEN
GIVE OURSELVES A WEEK TO DIGEST
INFORMATION WITH A SHORT REPORT
IN THE NEXT MEETING, SO THAT IF
OTHER COLLEAGUES OR OTHER
MEMBERS OF THE PUBLIC HAVE
QUESTIONS, THEY CAN COME TO
THAT NEXT MEETING.
THE NEXT MEETING OF THE FINANCE
AND HOUSING COMMITTEE ON THE
LEGISLATIVE SIDE IN CITY COUNCIL
WILL BE ON THE 17th, AUGUST 17,
OUR REGULARLY SCHEDULED MEETING
AND THAT WILL GIVE US A CHANCE
TO HEAR THE ANALYSIS FROM
CENTRAL STAFF THAT PUTS INTO
CONTEXT THIS REVENUE FORECAST
WITH SOME EXPENDITURES WE'VE
SEEN FROM THINGS LIKE THE
AMERICAN RESCUE PLAN TO HAVE A
FINANCE MEETING ON AUGUST 11,
RESCHEDULED FROM LAST WEEK.
SO, WE LOOK FORWARD TO SEEING
MANY OF THE PRESENTERS AT THE
AUGUST 17 MEETING AT 9:30 A.M.
AND WE WILL THEN HAVE A CHANCE
TO SIT WITH THIS INFORMATION
FOR THE NEXT 1.5 WEEKS AND,
PERHAPS, ASK QUESTIONS AND
SHARE BROADLY WITH THE COUNCIL
AND MEMBERS OF THE PUBLIC.
WITH THAT, IT'S 12:31 AND
THANKS FOR YOUR GENEROUS TIME
TODAY AND WE WILL SEE YOU
NOVEMBER 2nd.
TAKE CARE, EVERYONE.
THE MEETING IS ADJOURNED.