>>> GOOD MORNING, IT IS THE
APRIL 17th SELECT BUDGET
COMMITTEE COMING TO ORDER.
WILL THE CLERK PLEASE CALL THE
ROLL? I THINK WE ARE GETTING
SOME FEEDBACK OR SOMETHING
THERE.
>> HERE, AGAIN.
>> [ ROLL BEING CALLED ]
>> THANK YOU , AND COUNCIL
PRESIDENT NELSON IS EXCUSED,
UNTIL SHE JOINS IN A FEW
MINUTES. COLLEAGUES, IT IS
9:30. LET'S CALL THE ROLL
AGAIN. THE FIRST SELECT BUDGET
COMMITTEE MEETING OF THE YEAR,
IT IS APRIL 17th. I DON'T KNOW
THAT WE HAVE HAD A BUDGET
COMMITTEE MEETING THIS EARLY
IN THE YEAR. WE WILL TAKE A
PAUSE AND WE WILL ROLL ONCE
AGAIN. 9:32, I AM CHAIR OF THE
BUDGET COMMITTEE. WILL BE
CLERK PLEASE CALL THE ROLL?
>> [ ROLL BEING CALLED ]
>> A PRESENT . -- EIGHT
PRESENT.
>> THIS IS THE FIRST SELECT
BUDGET COMMITTEE OF 2024, I
WOULD LIKE TO SET SOME CULTURAL
EXPECTATIONS FOR MY COMMITTEE.
PLEASE RAISE YOUR HAND OR GIVE
ME AN EYE SIGNAL IF YOU WOULD
LIKE TO BE RECOGNIZED. IF I DO
NOT SEE YOU, JUST SAY CHAIR
AND I WILL RECOGNIZE YOU. THIS
IS GOING TO BE A CALM MEETING,
WHEN WE GET TO FALL, IT MIGHT
NOT BE , FOR PARTICIPANTS IF
YOU ARE INTERESTED IN SHOWING
APPRECIATION FOR ANY PUBLIC
SPEAKERS OR ANYTHING THAT IS
GOING ON, WE DO ASK THAT YOU DO
NOT APPLAUSE, BECAUSE IT TAKES
MORE TIME, RAISING YOUR HAND
BECOMES A VERY EFFECTIVE WAY.
NOW COLLEAGUES, THIS IS A TEAM
SPORT. WE CANNOT REVIEW THIS
BUDGET WITHOUT EACH OF YOU
PLAYING AN ESSENTIAL ROLE,
MUCH LIKE THE VICE CHAIR DID
WITH THE LIBRARIES AND THEIR
BUDGET, I AM ASKING EACH OF YOU
TO LOOK INTO THE DEPARTMENTS
THAT REPORT TO YOUR
COMMITTEES, TO MAKE SURE THAT
WE ARE GETTING ALL OF THE FACTS
CORRECT IN THAT WE HAVE ALL OF
THE INFORMATION POSSIBLE.
BECAUSE IT TAKES ALL OF US AND
I REALLY WANT TO THANK THE CITY
BUDGET OFFICE , THEY HAVE BEEN
EXTREMELY HELPFUL IN
PARTNERING WITH US. I WANT TO
THANK THE CENTRAL STAFF AND
THE AMOUNT OF WORK THAT THEY
HAVE PUT IN ALREADY THIS YEAR,
IT IS UNPRECEDENTED. I HAVE
STOPPED USING THAT WORD SINCE
THE PANDEMIC. BUT I MUST
REALLY SAY THAT I DO NOT THINK
WE HAVE HAD THIS LEVEL OF
REVIEW EVER, DEFINITELY NOT IN
THE LAST DECADE. WITH THAT, WE
HAVE FOUR AGENDA ITEMS, WE
HAVE A BRIEFING AND DISCUSSION
ON THE ECONOMIC REVENUE
FORECAST, THIS IS A RECAP FROM
OUR FORECAST MEETING LAST
MONDAY MORNING. AND THEN WE
WILL HAVE A BRIEFING AND
DISCUSSION ON THE 2024 BUDGET
DISCUSSION OVERVIEW. I WANT TO
TAKE A MOMENT TO RECOGNIZE THAT
COUNCILMEMBER SAKA IS JOINING
REMOTELY. I APPRECIATE THAT.
I PERSONALLY AM A FIVE DAYS
IN THE OFFICE TYPE OF PERSON,
BUT WHEN IT COMES TO TAKING
CARE OF YOUR PARENTS, YOUR
KIDS, HEALTH ISSUES, I KNOW
THAT COUNCILMEMBER JUAREZ DID
NOT COME IN PERSON. NEED TO
RECOGNIZE THE AMOUNT OF CARE
THAT WE NEED TO GIVE OUR
FAMILY MEMBERS AND OURSELVES.
SO, COUNCILMEMBER SAKA, I
THANK YOU FOR CARING FOR YOUR
FAMILY.
>> THANK YOU , MR. CHAIRMAN,
BUT TODAY, MY SON IS HOME
SICK. AND SO MY WIFE TOOK THE
PRIMARY POINT YESTERDAY, WHILE
I LET MY TRANSPORTATION
COMMITTEE MEETING, AND I WANTED
TO JOIN THIS MEETING REMOTELY.
AND I THANK YOU , MR. CHAIR,
FOR YOUR FLEXIBILITY. WE CAN
NORMALIZE THIS KIND OF THING
FOR WORKING PARENTS TO CARE FOR
THE KIDS, AND JOIN LATE, JOIN
REMOTELY, SO I THANK YOU.
>> I REALIZE, I DID GO OFF
SCRIPT. SO, BACK TO THE
MEETING, BEFORE WE BEGIN, THE
AGENDA WILL BE ADOPTED. HEARING
NO OBJECTIONS, THE AGENDA IS
ADOPTED, WE WILL NOW OPEN THE
HYBRID PUBLIC COMMENT AND WE
WILL TAKE SOME SPEAKERS IN
IVAN PERSON FIRST FOLLOWED BY
FOLKS ONLINE, THIS WILL BE THE
CULTURAL NORM THROUGHOUT THE
YEAR, WE WILL START WITH FOLKS
IN PERSON AND THEN MOVE INTO
FOLKS ONLINE. FOR THE GENERAL
PUBLIC, IF WE HAVE MORE THAN 15
, YEAH, MORE THAN 15 PEOPLE
SIGNED UP, WE WILL REVERT TO
ONE MINUTE. IF WE HAVE MORE
THAN 20 SIGNED UP, WE WILL
REVERT TO 30 SECONDS, THIS
WILL HAPPEN SO THAT FOLKS ARE
NOT CAUGHT OFF GUARD WITH HOW
MUCH TIME THEY HAVE. ONLINE, WE
HAVE JEROME LEONARD . YOU ARE
NOT PRESENT. BUT WE SEE THAT
YOU ARE SPEAKING ABOUT THE
COMPREHENSIVE PLAN, YOU MAY
HAVE SIGNED UP FOR THE LAND USE
COMMITTEE, WHICH STARTS AT
2:00. LURK, HOW MANY SPEAKERS
DO WE HAVE SIGNED UP?
>> ONE IN PERSON , ONE ONLINE
PERSON.
>> WE WILL START WITH THE
IN-PERSON SPEAKERS, THE PUBLIC,
WILL BE MODERATED, THE PUBLIC
COMMENT PERIOD IS UP TO 20
MINUTES, PEOPLE WILL BE CALLED
IN THE ORDER IN WHICH THEY
REGISTERED, WE WILL BE
ALTERNATING, AND THEN WHEN
SPEAKERS HEAR THE CHIME, THEY
WILL HAVE 10 SECONDS LEFT, SO
THE PUBLIC COMMENT PERIOD IS
NOW OPEN, AND WE WILL BEGIN
WITH THE FIRST SPEAKER
NONETHELESS. CLERK, THE YOU
HAVE THE LIST FOR ME? MR.
ZENON , WE HAVE ONE SPEAKER IN
PERSON. MR. ZIMMERMAN? PLEASE.
>> [ SPEAKING IN A NON-ENGLISH
LANGUAGE ]
>> CLERK , PLEASE PAUSE THE
TIMER. SIR, YOU HAVE
REPEATEDLY FAILED TO DIRECT
YOUR COMMENTS TO AN ITEM ON THE
WORK AGENDA. AND YOU ARE USING
OFFENSIVE AND HARASSING
LANGUAGE , AS DESCRIBED IN THE
PAST. I ASK YOU TO STOP USING
OFFENSIVE LANGUAGE WHEN YOU
DELIVER YOUR PUBLIC COMMENT.
>> WHAT HAPPENS RIGHT NOW ,
IT IS VERY IMPORTANT . I AM
BUSINESSMAN . VERY INTERESTING
HOW YOU COME TO THIS
APPROXIMATION . HOW IS THIS
POSSIBLE? I AM TOTALLY
CONFUSED . YOU KNOW WHAT THIS
MEANS , WITH THIS $300
MILLION DEBT . I SEE YOU ALL.
YOU HAVE KNOWN ABOUT THIS FOR
MANY YEARS BEFORE. DESTROYS THE
CORPORATION, DESTROYS THE
CITY. I HAVE NEVER SEEN IT
LIKE THIS BEFORE IN MY ENTIRE
LIFE. [ INDISCERNIBLE ] WE
NEED CHANGES. HOW IS THIS
POSSIBLE. YOU, SIR , WHY ?
WHY THEY CHOOSE YOU ? $300
MILLION IN DEBT , SEATTLE,
750,000 PEOPLE $300 MILLION
DEBT . PEOPLE WHO DO THIS FOR
A LONG TIME BRINGS US TO THE
COLLAPSE. AGAINST THE
DEFINITION. IT IS A CRIME.
YOU SHOULD BE IN JAIL FOR THIS
$300 MILLION. YOU KNOW WHAT
THIS MEANS. THE SHAREHOLDERS
OF THIS CORPORATION, YOU KNOW
[ INDISCERNIBLE ] [
INDISCERNIBLE - LOW VOLUME ] .
>> THANK YOU, MR. ZIMMERMAN ,
THAT IS YOUR FIRST WARNING FOR
USING OFFENSIVE LANGUAGE IN
OUR CHAMBERS. PLEASE BE
ADVISED. SEEING AS WE HAVE NO
MORE SPEAKERS SIGNED UP IN
PERSON OR REMOTELY, THE PUBLIC
COMMENT PERIOD IS CLOSE. THE
FIRST IS THE ECONOMIC
FORECAST. I CHAIRED THE
FORECAST MEETING AND I
RECEIVED THIS BRIEFING AT THE
ECONOMIC DEVELOPMENT FORECAST
APRIL 8th. WE ARE JOINED HERE
BY THE INTERIM DIRECTOR AND
CHIEF , I DIDN'T REALIZE YOU
WERE STILL ON . I AM GOING TO
CALL YOU DIRECTOR, CHIEF
DIRECTOR OF ECONOMIC AND
REVENUE FORECAST, AND I
WASN'T BEFORE, WE ALSO HAVE
SEAN THOMPSON, JOANNA VALENCIA,
AND JOSEPH RUSSELL. SEAN
THOMPSON IS FROM THE FORECAST
OFFICE, AND ALEXANDRIA AND
JOSEPH ARE FROM THE CITY
BUDGET'S OFFICE. WE WILL
ADDRESS THE WHOLE TEAM AND HAVE
THEM AVAILABLE. DIRECTOR,
DIRECTOR JAN DURAS, WILL YOU
PLEASE TAKE IT AWAY?
>> GOOD MORNING,
COUNCILMEMBERS.
>> DIRECTOR, YOU WILL NEED TO
BRING THAT MICROPHONE RIGHT UP
YOUR FACE. JUST LIKE AT THE
OKAY HOTEL, THIS DAY IN 1991,
WHERE TEEN SPIRIT WAS FIRST
PERFORMED ON STAGE, JUST EAT
THAT MICROPHONE.
>> MY NAME IS JAN DURAS. I AM
THE DIRECTOR OF THE ECONOMIC
AND REVENUE FORECAST OFFICE. I
AM HERE TO PRESENT THE APRIL
UPDATE, THIS PRESENTATION WILL
BE AN ABBREVIATED VERSION OF
WHAT WE PRESENTED ON APRIL 8th
TO THE FORECAST COUNCIL. THE
PRESENTATION IS DIVIDED INTO
THREE PARTS. THE FIRST PART IS
AN UPDATE ON THE ECONOMIC
DEVELOPMENTS, BOTH FOR NATIONAL
AND THE REGIONAL ECONOMY. THE
SECOND PART GOES TOWARDS THE
OUTLOOK , AGAIN, FOR THE
NATIONAL ECONOMY AND THE
REGIONAL ONE. IN THE LAST PART
FOCUSES ON THE APRIL REVENUE
FORECAST.
>> YOU CAN MOVE THAT
MICROPHONE FORWARD, JUST PULL
IT FORWARD TO
>> THE REASON WHY WE ARE DOING
IT THIS WAY. THE REVENUE
FORECAST IS DEVELOPED IN TWO
STEPS , THE FIRST STEP IS THE
ECONOMIC FORECAST FOR THE
ECONOMY, THAT SERVES FOR THE
FORECASTING MODELS THAT WE USE
TO DEVELOP REVENUE FORECAST,
BEFORE WE DIVE INTO THIS
PRESENTATION I WOULD LIKE TO
FIRST SPEND A FEW MOMENTS
PROVIDING SOME BACKGROUND ON
THE FORECAST AND EXPLAIN WHAT
WE HAVE IN DEVELOPING THE
FORECAST. OUR OFFICE HAS BEEN
ESTABLISHED IN 2021. IT WAS
CREATED AS AN OBVIOUS
INDEPENDENT FROM THE EXECUTIVE
AND LEGISLATIVE BRANCH. THE
MAIN GOAL WAS TO , IT WAS TO
IMPROVE THE TRANSPARENCY AND
THE ACCOUNTABILITY FOR THE
FORECASTING PROCESS, AS WELL AS
TO PROVIDE THE SAME ACCESS FOR
RESOURCES, THE RESOURCES THAT
WE HAVE WHEN DEVELOPING THE
FORECAST FOR THE VARIOUS
ECONOMIC ANALYSES. LOT OF
EFFORT HAS BEEN PUT IN BY A
LARGE NUMBER OF PEOPLE,
STARTING WITH THE FOUNDATION
FOR THE OFFICE. AND THEN I
WOULD LIKE TO TALK ABOUT OUR
FORMER DIRECTOR BEN NOBLE , WHO
SERVED AS THE DIRECTOR OF THE
OFFICE AND WAS VERY FUNDAMENTAL
IN GIVING US A GREAT START
FOR OUR OFFICE . AND WE
GAINED MORE FOR CENTRAL
STAFF. NOW, OUR OFFICE IS
RESPONSIBLE FOR FORECASTING
ROUGHLY $1.2 BILLION IN
REVENUE. NOT JUST GENERAL FUND
REVENUE, BUT WE ARE ALSO
RESPONSIBLE FOR EXPENSE TAXES,
THE ADMISSIONS TAX, AND THE
SALES TAX FOR THE BENEFIT
DISTRICT, AND THEN THERE IS A
LARGE NUMBER OF REVENUES THAT
ARE STILL THE RESPONSIBILITY
OF CBO . CBO PREPARES THE
FORECAST FOR OTHER REVENUE
STREAMS , AND OVERSEES THE
FORECAST DEVELOPED IN
SITUATIONS WHERE THE
DEPARTMENTS ARE IN THE BEST
SITUATION TO DEVELOP THOSE
FORECASTS. OKAY.
>> DIRECTOR JAN DURAS, LET'S
TAKE A MOMENT TO INTRODUCE
EVERYONE AT THE TABLE.
>> GOOD MORNING, MY NAME IS
STP. I AM WITH THE BUDGET
OFFICE AND I AM THE MANAGER OF
THE ECONOMICS AND REVENUE
TAPERED
>> I AM ALEXANDRIA ZHANG, I AM
AN ECONOMIST WITH THE CITY
BUDGET OFFICE.
>> JOE? I'M NOT SURE, ARE YOU
ON THE LINE?
>> SEAN CAN INTRODUCE HIMSELF.
>> MY NAME IS OPPOSITE THREE, I
AM AN ECONOMIST WITH THE
OFFICE OF REVENUE FORECAST.
>> WHAT WAS MENTIONED EARLIER,
IT WAS ALSO JOE RUSSELL WHO IS
ON OUR TEAM NOW, FROM CBO.
>> WONDERFUL.
>> IF WE CAN NOW MOVE TO THE
UPDATE? I WILL PROVIDE MOSTLY
BACKWARDS -LOOKING OVERVIEW
OF HOW THE REGIONAL ECONOMY
COMPARES TO THE NATIONAL
ECONOMY, THE REASON WHY, AND
AGAIN, WE WANT TO SPEND
SIGNIFICANT AMOUNT OF TIME
MONITORING THE CONDITIONS,
THERE ARE A LARGE NUMBER OF
ECONOMICALLY -DRIVEN REVENUES
THAT DETERMINE THE OVERALL
CONNECTION. OVER TIME, LET ME
START WITH THE APRIL UPDATE,
THERE IS VERY LITTLE REVENUE,
MOST OF THE REVENUE COMING IN,
IT IS COMING IN IN JANUARY AND
LIBERTY, IT HAS ACCRUED
THROUGH THE PREVIOUS YEAR,
BECAUSE THOSE ARE THE
OBLIGATIONS FOR 2023, AS YOU
CAN SEE IN THIS CHART, THERE IS
ESSENTIALLY NO REVENUE FOR THE
EXPENSE TAX OR THE BUSINESS
AND OCCUPATIONS TASKS -- TAX.
VERY LITTLE IN SALES TAX , A
LITTLE BIT HIGHER , BUT 20% AS
OF THE APRIL FORECAST, IN
OCTOBER, YOU CAN SEE THE
AMOUNT OF OVERALL REVENUE, WITH
THE SHARE OF THE TOTAL REVENUE
. IT GOES UP, BY THE TIME OF
THE OCTOBER FORECAST, WE STILL
HAVE ONLY COLLECTED ABOUT 50%
OF THE REVENUE, AND THE REST IS
COMING IN FASTER SINCE I
PROVIDED THE LAST UPDATED AND
YOU CAN ALSO SEE THAT THERE IS
A SIGNIFICANT AMOUNT OF
VARIANCE AMONG THOSE REVENUE
STREAMS, FOR SOMETHING LESS
THAN 50% OF REVENUE FOR PAYROLL
TAX EXPENSE , IN PARTICULAR.
UNDERSTANDING, THE ECONOMIC
CONDITION IS CRUCIAL AND
IMPORTANT IN DEVELOPING THE
REVENUE FORECAST. LOOKING BACK,
AT 2023, WE WERE GOING INTO
2023 , THE PREVAILING OPINION
WAS THAT WE WERE GOING TO SEE
A RECESSION. AND THERE WAS MORE
THAN A 50% CHANCE OF A
RECESSION OCCURRING,
FORTUNATELY, THE ECONOMY
OUTPERFORMED EXPECTATIONS,
AVOIDED THE RECESSION AND THERE
WAS QUITE A STRONG ECONOMIC
CLOSING. THE EMPLOYMENT FOR
THE REGION , IT WAS EXPECTED
TO DECLINE 0.3% , GOING INTO
2023. OVER TIME, WE IMPROVED
OUR FORECAST. THE LABOR MARKET
IS QUITE STRONG. IN THE END,
THE EMPLOYMENT GREW 1.3% IN
2023, OUTPERFORMING OUR
EXPECTATIONS FROM 2022 , AND IT
WAS ROUGHLY IN LINE WITH THE
EXPECTATIONS FOR FALL 2023, ALL
OF THAT SAID, WELL THE JOB
MARKET OUTPERFORMED OUR
EXPECTATIONS , IN THE REGIONAL
ECONOMY, THE REGIONAL
EMPLOYMENT GREW SLOWER THAN
THE EMPLOYMENT IN THE U.S. AS
A WHOLE. ABOUT 1% SLOWER, IN
ADDITION TO THAT, LOCAL
INFLATION WAS HIGHER THAN THE
NATIONAL, ON THE NATIONAL
LEVEL.
>> BEFORE YOU MOVE TO THE NEXT
SLIDE , I KNOW WHY, BUT CAN YOU
SHOW WHY PERSONAL INCOME DOES
NOT HAVE A 2023 ACTUAL?
>> AS YOU CAN SEE, THERE IS A
BAR MISSING FOR THE 2023
PERSONAL INCOME, IT IS MISSING.
THAT INFORMATION WILL BE
RELEASED ONLY IN NOVEMBER,
2024. SO, OFFICIAL ESTIMATES
FOR PERSONAL INCOME IN 2023 ARE
ONLY RELEASED SINCE THE LAST
FORECAST UPDATE IN OCTOBER, SO
WE WILL HAVE TO RELY ON
PERSONAL INCOME FROM WASHINGTON
STATE TO DEVELOP THE PERSONAL
INCOME IN THE REGION, THAT
SERVES AS ONE OF THE INPUTS FOR
THE REVENUE FORECAST FOR THE
CITY OF SEATTLE. NOW , LOOKING
A LITTLE BIT MORE CLOSELY AT
THE EMPLOYMENT , AND THE
REGIONS WHY REGIONAL EMPLOYMENT
UNDERPERFORM , UNDERPERFORMING
THE NATIONAL ECONOMY, THE CHART
HERE SHOWS THE DECOMPOSITION BY
INDUSTRY, THE TOTAL EMPLOYMENT
GROWTH , SHOWN AT THE TOP, THE
BLUE BARS ARE FOR THE UNITED
STATES. THE RED BARS OFF OF THE
SEATTLE METROPOLITAN DIVISION,
THAT IS KING COUNTY AND
SNOHOMISH COUNTY. OUR INCOME
FORECASTS , IN GENERAL, THEY
ARE FOR THE REGIONAL ECONOMY.
BECAUSE OF THE LIMITED DATA
AVAILABILITY . PRETTY MUCH ALL
OF THE DATA AVAILABLE IS ONLY
AVAILABLE AT THE COUNTY LEVEL
AND MOST OF IT IS AVAILABLE AT
COUNTY OR REGIONAL LEVELS, SO
WE HAVE TWO WORK WITH WHAT WE
GET AND THIS IS ONE PARTICULAR
EXAMPLE OF THAT. THE
DECOMPOSITION BY INDUSTRY
SHOWS THAT THE REASON WHY
REGIONAL EMPLOYMENT GREW
SLOWER THAN THE REGIONAL ONE
WAS THE TECH SECTOR SLOWDOWN
AND THE LAYOFFS. AND
PROFESSIONAL AND BUSINESS
SERVICE SECTORS HAVE GONE DOWN
ON OVERALL EMPLOYMENT GROWTH,
UPSETTING THOSE STRONG GAINS
THAT YOU CAN SEE FOR
MANUFACTURING, WHERE THE
REGIONAL EMPLOYMENT GREW FASTER
THAN THE NATIONAL WANTED
LEISURE AND HOSPITALITY AGAIN
WERE OUTPERFORMING THE NATION.
SO, THOSE BARS, IF YOU STACK
THEM ON TOP OF THEM FOR
INDIVIDUAL INDUSTRIES, YOU
WOULD GET THE TOTAL AMOUNT OF
THOSE BARS. WHICH SHOWS HOW
THEY CONTRIBUTE TO THE OVERALL
ECONOMY, FOR WHICH WERE
CLOSING IN 2023. AND SO, THOSE
LAYOFFS IN THE TECH SECTOR
HAVE BOTTOMED OUT. THE OUTLOOK
IS FOR THE TECH SECTOR TO
STABILIZE, AND WE ARE NOT
EXPECTING ANY SIGNIFICANT ,
FURTHER , ANY FURTHER NEGATIVE
EFFECTS ON THE OVERALL
EMPLOYMENT GROWTH, YOU WILL
SEE THAT FROM A COUPLE OF
SLIDES EARLIER, THERE ARE SOME
NEGATIVE FACTORS THAT WILL
STILL, THEY WILL, THEY WILL
STILL BE CAUSING HEADWINDS
THROUGH THE ECONOMY. AND ONE
OF OUR PARTICULAR CONCERNS ,
THE CONSTRUCTION SECTOR. YOU
CAN NOT REALLY SEE, FROM THAT
SMALL RIGHT BAR, HOW MUCH ,
HOW MUCH OF A DOWNTURN THE
SECTOR HAS EXPERIENCED ,
BECAUSE, FIRST OF ALL, IT IS
JUST THE CONTRIBUTION OF THAT
SECTOR, AND IT DOES NOT SHOW
ANY DEVELOPMENT OVER TIME. FROM
THE PEAK IN THE SUMMER OF 22
-- '22, IT HAS DECLINED AS OF
DECEMBER, 2023, WHICH IS A
NOTABLE DECLINE OF REGIONAL
EMPLOYMENT IN THE CONSTRUCTION
SEDIMENT
>> DIRECTOR GERI POOR, BEFORE
WE MOVE ON. UNDERSTAND, THAT IS
A REDUCTION IN THE
CONSTRUCTION INDUSTRY FROM LAST
YEAR, IS THAT CORRECT?
>> THAT IS THE REDUCTION IN
KING AND SNOHOMISH COUNTIES.
THE NUMBERS ARE FOR THE
METROPOLITAN DIVISION AND THE
DATA FOR THE CITY-LEVEL
EMPLOYMENT IS NOT AVAILABLE ON
A MONTH-TO-MONTH BASIS, THIS IS
OVERALL EMPLOYMENT IN KING AND
SNOHOMISH COUNTIES.
>> IS MY UNDERSTANDING CORRECT
THAT WE HAVE BEEN THE FASTEST
I'VE BEEN GROWING NATION --
CITY IN THE NATION AND THIS IS
BASED ON THAT?
>> YEAH, THAT IS TRUE. WE HAD
THE CONSTRUCTION BOOM AND NOW
WE ARE COMING UP THE OTHER SIDE
OF THE HILL.
>> WE MAY BE EMPLOYING MORE
PEOPLE IN THE CONSTRUCTION
INDUSTRY THAN OTHER PLACES IN
AMERICA, BUT WE ARE STILL
SEEING A DISC LINE, --
DECLINE, BECAUSE WE ARE STILL
SLOWING.
>> GENERALLY.
>> OKAY, AND THEN I WILL TAKE
ONE MOMENT TO NOTE THAT
MANUFACTURING OUTPERFORMED THE
TRADE HOLDING CONSTANT WITH
THE UNITED STATES, THESE TWO
INDUSTRIES CAN ONLY OCCUR IN
THE INDUSTRIAL AND
MARITIME-ZONED AREAS, WE
PASSED THE PROTECTIONS , THE
STRONGEST EVER, THE LAST TIME
THERE WERE CHANGES, IT WAS
2007 AND IF WE REDUCE THE
ZONING IN THESE INDUSTRIAL
MARITIME AREAS, WE LOSE THE
ABILITY TO ENGAGE IN THE
MANUFACTURING AND TRADE
ELEMENTS THAT WE SEE ON THE
CHART RIGHT NOW, IN THE GOOD
TIMES, WHEN CONSTRUCTION IS
BOOMING, OR WHEN TECH IS
BOOMING, WE DO NOT NECESSARILY
NOTICE THE INDUSTRIAL MARITIME
ADDITIONS TO THE ECONOMY,
BECAUSE EVERYTHING ELSE IS SO
MUCH LARGER, IT IS
MANUFACTURING AND TRADE
REMAINING CONSTANT AND BULLYING
THE ECONOMY, THANK YOU FOR
LETTING ME EDITORIALIZE, I JUST
WANTED TO CALL ATTENTION TO THE
MARITIME AND INDUSTRIAL LAND,
THAT CONNECTS TO I-90, THAT
CONNECTS TO THE HEARTLAND IN
BOSTON.
>> THANK YOU, CHAIR. I JUST
WANTED TO POINT OUT HERE, THAT
THE SHARP REDUCTION IN DEMAND
FOR OFFICE SPACE HAS IMPACTED
OBVIOUSLY THE VACANCY RATES.
AND THAT SOME OF THAT HAS BEEN
IMPACTED BY SEATTLE WORKERS ,
LOBBYING THE TREND FOR
RETURN-TO- OFFICE. IT IS
SOMETHING THAT MANY OF US HAVE
TALKED ABOUT A LOT AND I
WANTED TO POINT OUT, THESE ARE
BASED ON REAL DATA AND REAL
IMPACTS TO THE ECONOMY IN
SEATTLE. AND I WANTED TO NOTE
THAT, AS WELL, FROM THIS
PARTICULAR STUDY.
>> WELL SAID, VICE CHAIR. NOW,
THANK YOU, DIRECTOR JAN DURAS
?
>> WE HAVE A FEW MORE THINGS
REGARDING THE RETURN TO OFFICE,
WE HAVE ACCESS TO AGGREGATED,
ANONYMIZED CELL PHONE DATA
THAT ALLOWS US TO ANALYZE
TRENDS IN THE EMPLOYEE
WORKPLACE AND CORRECT HOW FAST
THE RETURN TO OFFICE IS BEING
USED, AND IT IS USED TO INFORM
PAYROLL EXPENSE TAX. IT ALSO
INFORMS THE TAX FORECAST. AS
YOU CAN SEE, IN THIS CHART,
THERE HAS BEEN A SLOW BUT
STEADY RETURN , STARTING FROM
2022, 420 23, IN PARTICULAR,
WE HAVE SEEN A SIGNIFICANT
INCREASE IN THE EMPLOYEE
PRESENTS IN THE WORKPLACE,
PREDICTING THE MOVE TO THE
THREE-DAY OFFICE, IN SPRING,
2022, IT CAN CLEARLY BE SEEN
IN THAT REDLINE , WHERE THE
EMPLOYEE PRESENTS HAS GROWN
FROM AROUND 50% IN JANUARY ,
2023, TO SOMEWHERE AROUND 75%
. THESE COMPARISONS, THESE
LINES ARE THE COMPARISONS OF
THE , OF, OF THE EMPLOYEE
PRESENTS, IN THAT PARTICULAR
MONTH, RELATIVE TO THAT SAME
MONTH IN 2019. SO, 100% WOULD
MEAN THE SAME AMOUNT OF
EMPLOYEE PRESENTS IN THE
WORKPLACE , AS THE PANDEMIC.
NOW, GOING DOWN TO THE SECOND
RELATED POINT, ONE MORE THING
WE ARE SEEING IN THE DATA, THE
HIGHER OFFICE VACANCY RATES,
AND AGAIN THAT HAS
IMPLICATIONS FOR HOW MUCH
CONSTRUCTION ACTIVITY WE ARE
EXPECTING. THE CHART COMPARES
VACANCY RATES FOR THE UNITED
STATES, THE CITY OF SEATTLE,
AND THE SEATTLE CENTRAL
BUSINESS DISTRICT. AS YOU CAN
SEE, PRE-PANDEMIC , THE CITY
OF SEATTLE WAS VERY LOW, IN
TERMS OF OFFICE VACANCY RATES.
THEY HAD BEEN LOWER IN THE
U.S. , AS A WHOLE, BUT THEY
HAVE CHANGED SIGNIFICANTLY, AND
WE ARE SEEING A LARGE INCREASE
IN OFFICE VACANCY RATES. WE
HAVE NOT SEEN THE WORST OF
IT, IT INCLUDES THE FORECAST,
BY COMPARING WHERE WE ARE
RIGHT NOW , LET'S SAY FOR THE
CITY OF SEATTLE, THE OFFICE
VACANCY RATE IS SOMEWHERE
BELOW 20%, BUT THEY EXPECT TWO
MORE YEARS OF OFFICE VACANCY
RATES, PEAKING SOMEWHERE AROUND
EARLY 2026. AND FOR THE CITY
OF SEATTLE, THE EXPECTATION BY
COSTAR IS THAT IT WILL BE
SOMEWHERE AROUND 25% OFFICE
VACANCY RATES. SO, THERE IS
OBVIOUSLY A LOT OF
UNCERTAINTY IN THIS FORECAST,
THE ANSWER, IT CLEARLY
ILLUSTRATES WHAT THE CITY OF
SEATTLE IS FACING , COMPARED
TO OTHER PARTS OF THE REGION.
THERE WILL BE A SIGNIFICANT
AMOUNT OF CONVERSATION,
EXACTLY WHERE THE EMPLOYEES
ARE, WHEN THE LEASES ARE
EXPIRING. THEY WOULD BE
EVALUATING WHAT LEADS TO
RENEWAL, AND WHERE THEY ARE
REDIRECTING THE WORKERS.
MOVING ONTO THE OUTLOOK,
FIRST, A GENERAL CONTEXT FOR
THE FORECAST, OUR OFFICE
DEVELOPED THREE SCENARIOS,
BASELINE, PESSIMISTIC, AND
OPTIMISTIC SCENARIO FORECASTS
, RECOMMENDING ONE OF THOSE
SCENARIOS TO BE APPROVED ,
DURING THAT APRIL 8th MEETING,
THE FORECAST COUNCIL HAS
ADOPTED THE BASELINE SCENARIO
FORECASTS, WHICH WE HAVE
RECOMMENDED, WE HAVE USED
PESSIMISTIC SCENARIOS SEVERAL
TIMES IN THE PAST, AND IT IN
2008, BUT RIGHT NOW, OUR
ASSESSMENT IS THAT THE
BASELINE IS THE MOST LIKELY
FUTURE OUTCOME, AND THERE ARE,
IN FACT CONCERNS, THAT THE U.S.
NATIONAL FORECAST IS EITHER
OVERLY OPTIMISTIC OR
PESSIMISTIC, AND WE HAVE
ACCOUNTED FOR THOSE VARIOUS
RISKS TO THE REGIONAL ECONOMY
THAT MIGHT CAUSE DEVELOPMENT IN
THE REGION TO DEVIATE. THE
TREND THAT WE ARE SEEING FOR
THE NATION AS A WHOLE, AGAIN,
THIS BASELINE SCENARIO HAS
BEEN ADOPTED. IT IS MOST
LIKELY THE FUTURE OUTCOME.
>> DIRECTOR JAN DURAS,
COLLEAGUES, THE PANDEMIC OF HIS
HAD INCREDIBLE ACCURACY WITH
THEIR FORECAST, AND WE
OUTPERFORMED THE STATE IN THE
ABILITY TO OUTPERFORM, BECAUSE
OF DIRECTOR JAN DURAS, SHAWN,
NOBLE, I KNOW THAT THERE IS
SOMETHING WE ARE ABOUT TO
PRESENT AND IT IS SOMETHING
THAT WE JUST COULD NOT SEE. I
WANTED TO TAKE THIS MOMENT TO
RECOGNIZE THE ACCURACY THAT WE
NEEDED TO CREATE THESE PRODUCT.
NOW, THANK YOU.
>> THANK YOU VERY MUCH.
LOOKING AT THE OUTLOOK FOR THE
U.S. ECONOMY FIRST, I WILL BE
FOCUSING ON THE BASELINE
SCENARIO, BECAUSE THAT IS THE
ONE THAT SERVED TO DEVELOP THE
ECONOMIC FORECAST, THE REVENUE
FORECAST, ESSENTIALLY, THE
PROVIDER FOR THE , AS IN THE
GLOBAL, THEY ASSIGN 55% TO THE
BASELINE SCENARIO, IT IS 15%
ASSIGNED TO THE OPTIMISTIC, SO
THE BASELINE IS MOST LIKELY TO
OCCUR, IN MORE THAN HALF, MORE
THAN THE 50% CHANCE. AND SO
THE RED LINE PRESENTS THE
FORECAST FROM SEPTEMBER, 2023,
AND THE DARK RED, THAT SHOWS
THE FORECAST FROM MARCH, THE
DIFFERENCE BETWEEN THE TWO IS
HOW THE OUTLOOK FOR EMPLOYMENT
GROWTH HAS CHANGED. AND IT HAS
BEEN REVISED, SINCE WE HAD
PRESENTED OUR LAST FORECAST IN
FALL, 2023. BUT THE ECONOMY,
THE LABOR MARKET HAS
OUTPERFORMED VACATIONS. IT HAS
SHOWN GREAT RESILIENCE. AND
THAT IS WHY S&P GLOBAL
REVISED BY ROUGHLY 1%. AS
YOU CAN SEE, IN THE CHART,
STARTING IN THE SECOND HALF OF
2025, 2020 , -- 2024, THERE
WAS VERY LITTLE PROJECTED, AND
EMPLOYMENT IS NOT EXPECTED TO
DECLINE. IT WILL STAY STABLE
AS THE IMPACT OF THE INTEREST
RATES ARE WORKING , THROUGH THE
ECONOMY, AND IT THE
OUTLOOK, THE PESSIMISTIC
SCENARIO HAS THE EXPECTATIONS
OF A VERY MILD RECESSION
BUILD IN, THERE COULD BE SOME
EMPLOYMENT OR SOME JOB LOSSES
INCURRED IN THAT SCENARIO. BUT
OVERALL, THE OUTLOOK IS
LOOKING NOT AT STELLAR
GROWTH, BUT THE ECONOMY HAS
CONTINUED TO OUTPERFORM
EXPECTATIONS DESPITE THE
TIGHTENING OF THE MONETARY
POLICIES. AND IT IS EXPECTED
TO GO TOWARDS INTEREST RATES
LATER THIS YEAR, IF YOU ARE
FOLLOWING IN THE NEWS, THE
INFLATION RATES BEING HIGHER
THAN EXPECTED, THE RECENT
GROWTH NUMBERS WERE HIGHER THAN
EXPECTED. IN GENERAL, THAT IS
MAKING THE FED MORE CAUTIOUS.
AND THEY ARE GOING, THEY ARE,
THEY ARE TRYING TO OBTAIN MORE
CONFIDENCE THAT THE EMPLOYMENT
IS COMING DOWN -- UNEMPLOYMENT
IS COMING DOWN TO THE
SUSTAINABLE RATES. AND WE ARE
LIKELY TO SEE SOME DELAYS IN
THOSE INTEREST RATE CUTS,
WHICH AGAIN, IF THAT PLAYS
OUT, THE WAY , HOW IT SEEMS
TO, THAT THE CONSTRUCTION
SECTOR SLOWDOWNS MAY BE LONGER
THAN WHAT WE ARE CURRENTLY
PROJECTING. THAT SAID, BASED
ON THE MARCH FORECAST, THIS IS
HOW THE REGIONAL EMPLOYMENT
OUTLOOK LOOKS LIKE. THE
REDLINE, THE FAINT RED LINE,
THAT IS THE FORECAST FROM FALL.
THE DARKER REDLINE SHOWS THE
REVISED EMPLOYMENT FORECAST,
THE YEAR OVER YEAR CHANGES, WE
ARE PROJECTING , WE ARE
PROJECTING EMPLOYMENT GROWTH OF
AROUND 1.9% IN 2024. THE
REASON , AGAIN, WE HAVE SEEN
STRONGER THAN EXPECTED GAINS
IN MANUFACTURING, LEISURE,
HOSPITALITY, WE ARE EXPECTING
LAYOFFS AND THE EFFECTS ARE
MOSTLY DONE. DESPITE THE
WEEKEND OUTLOOK -- WEAKENING
OUTLOOK FOR CONSTRUCTION, WE
ARE EXPECTING EMPLOYMENT
GROWTH IN THE NEXT FEW YEARS.
NOT PARTICULARLY STRONG
AGAIN, BUT NOTHING LESS THEN
THE BASELINE SCENARIO, JUST
LIKE THE NATIONAL ECONOMY, IT
IS A SCENARIO WHERE THE
ECONOMY GOES INTO RECESSION AND
THERE ARE JOB LOSSES ASSOCIATED
WITH THAT. IT IS A RECESSION
NEVERTHELESS. IF THERE ARE
SOME QUESTIONS, WE WILL MOVE
ON TO THE REVENUE FORECAST.
>> SEEING NONE , PLEASE. I
THINK THIS IS WHAT EVERYONE HAS
BEEN WAITING FOR.
>> FIRST A LITTLE BIT OF A
CONTEXT ABOUT THE DIFFERENT
REVENUES, WHAT WE ARE
FORECASTING AND FOCUSING
PRIMARILY ON THOSE LARGE
ECONOMICALLY DRIVEN TAXES,
SHOWING THEM BY INDUSTRY ON
THIS SLIDE, THE YELLOW BARS
SHOW THE CONTRIBUTIONS OF
DIFFERENT INDUSTRIES TO THE
SALE TAX -- SALES TAX REVENUE
A LARGER IS COMING FROM THE
VARIOUS SECTORS, ACCOUNTING FOR
MORE THAN HALF OF TOTAL SALES
TAX REVENUES. IT IS NOT
PARTICULARLY DIVERSIFIED MUCH
LESS DIVERSIFIED THAN BUSINESS
AND OCCUPATION TAX , FOR
BUSINESS AND OCCUPATION TAX,
THE CONTRIBUTION IS A LARGER
SHARE OF OVERALL REVENUE, BUT
IN GENERAL, MORE DIVERSIFIED
REVENUE STREAMS THAN SALES
TAX. AND THEN, FINALLY, THE RED
BARS SHOW PAYROLL EXPENSE TAX.
AND THEY SHOW THAT THIS
PARTICULAR REVENUE STREAM IS
VERY CONCENTRATED . AND IT HAS
JUST 500 COMPANIES PAYING
THIS TAX. IT IS A REVENUE
STREAM, I THINK , ONLY A
LIMITED NUMBER OF COUNTRIES.
THE TOP 100 , THE TOP 100 OF
THEM CONTRIBUTE ABOUT 90% OF
THE REVENUES. AND ABOUT 70% OF
THE REVENUES ARE COMING FROM
THE TOP 10 FIRMS, MOST OF THEM
IN THE TECH SECTOR. AND HERE, I
WANT TO POINT OUT THAT THE TECH
SECTOR AND INFORMATION SECTOR,
THEY ARE NOT THE SAME THING.
SOME COMPANIES ARE CONSIDERED
TO BE TECH COMPANIES AND THEY
OPERATE IN THE BUSINESSES
SERVICES SECTOR, CLOUD
SERVICES, FOR EXAMPLE, WOULD BE
THERE, AND RETAILERS , ONLINE
RETAILERS, THEY MIGHT BE FOUND
IN THE INFORMATION SECTOR.
SO, AGAIN, PAYROLL TAX , IT
COMPARES TO ABOUT 25,000 OR
SO. THE TAXPAYER IS FOR
BUSINESS AND OCCUPATION,
ALMOST 70,000 TAXPAYERS FOR
THE SALES TAX. SO, EACH OF
THESE REVENUE STREAMS HAS A
TAX BASE QUITE DIFFERENT FROM
THE OTHER. AS A WHOLE, WE ARE
QUITE DIVERSIFIED AND THAT IS
ONE OF THE STRENGTHS WHEN IT
COMES TO THE REVENUE SOURCES,
WE ARE NOT OVERLY RELIANT ,
IF YOU HAVE SEATTLE AS A MUCH
LARGER VARIETY OF REVENUE
STREAMS, GENERALLY MUCH BETTER
POSITION TO FACE THE
CHALLENGES THAT MIGHT BE
COMING IN 2024 , '25, AND
'26. THIS SLIDE NOW COMPARES
THE '23 ACTUALS FOR THE
GENERAL FUND . OUR FORECAST,
THE MIDDLE PART SHOWS BOTH THE
ADOPTED '24 BUDGET FORECAST
FROM FALL '23. THE REVISED
APRIL FORECAST SHOWS THE
DIFFERENCE BETWEEN THE TWO, AND
STARTING FROM THE VERY
BOTTOM, FROM THE TOTAL, YOU
CAN SEE THAT THE FORECAST HAS
BEEN REVISED UPWARDS, FROM
$1.7 BILLION TO $1.74 BILLION,
ROUGHLY WHAT HE 5 MILLION
EXTRA, AND A LARGE PART OF
THAT IS THE UPWARD REVISION,
AND THAT THEN SHOWS THE TOTAL
WITHOUT THE GRANTS AND
TRANSFER. THOSE TWO REVENUE
STREAMS ARE QUITE DIFFERENT IN
THEIR NATURE. AND I THINK THAT
DAVE CAN PROVIDE ADDITIONAL
INFORMATION ON WHAT EXACTLY
MOTIVATED THE DISTRIBUTION,
WITHIN THE FORECAST.
>> THANK YOU, SO, AS YOU KNOW,
GRANTS ARE SORT OF ONE-TO-ONE,
WE DO THE WORK, WE GET
REIMBURSED FOR THE GRANT
AMOUNT, AND THE REASON WE
SEPARATE THEM OUT, WE DO NOT
CONTRIBUTE ANY ADDITIONAL
FLEXIBLE DOLLARS THAT COULD BE
PROGRAMMED FOR OTHER THINGS.
SO, THERE ARE A LOT OF
KERRY-FORWARD GRANTS, AND WHEN
DEPARTMENTS RECEIVE A GRANT,
THEY HAVE TO GO THROUGH THE
GRANT ACCEPTANCE PROCESS. WE
HAVE CAPTURED SO FAR, THE
QUARTER ONE GRANTS, THE
REMAINDER ARE KERRY FORWARDS
, OF GRANTS THAT WERE NOT
COMPLETELY SPENT , WE ARE
MOVING THAT MONEY FORWARD TO
REFLECT THE ACTIVITY THAT
OCCURRED IN PREVIOUS YEARS.
THAT WILL BE , NOT COMPLETELY ,
BUT WHAT WILL BE WORKED OUT
IN 2024 AND WILL BE REIMBURSED
IN 2024.
>> DIRECTOR GERI POOR, FROM
THIS SLIDE, LOOKING AT THE
PAYROLL TAX, I SEE A NEGATIVE
NUMBER, IT CAME IN ABOVE
EXPECTATIONS. I AM NOTING THAT
THIS , IS IT CORRECT? THIS IS
BECAUSE OF THE RESTRICTIONS
THAT REPLACED ON THE PAYROLL
TAX AND THIS IS JUST THE
GENERAL FUND PROJECTION, IS
THAT CORRECT?
>> THE LINE FOR THE PAYROLL
TAX JUST SHOWS THE PAYMENTS
FOR THE 2021 OBLIGATIONS. THE
PAYMENTS FOR THOSE OBLIGATIONS
AND REFUNDS. WHATEVER HAS BEEN
PAID BEFORE. AND THEY ARE
STILL DEPOSITED, THEY ARE
AFFECTING THE GENERAL FUND ,
STARTING WITH 2022
OBLIGATIONS, THOSE ARE GOING
INTO THE EARLY EXPENSE TAX
FUND, BUT 2021 CONTINUES TO BE
THE LINK.
>> THAT $3.4 MILLION THAT IS
SHOWN FOR THE APRIL FORECAST?
DO YOU DO SOME REFUNDS? THEY
HAVE BEEN REQUESTED AND THEY
HAVE BEEN APPROVED. WE HAVE
EXPECTED IT TO AFFECT THE 2023
REVENUE, WHICH THAT IS WHY THE
ADOPTED FORECAST HAS A ZERO.
BUT THAT REFUND HAS BEEN
FINALIZED, ONLY AFTER
DECEMBER 21st , AND SO IT IS
AFFECTING THE 2024 GENERAL FUND
REVENUE THAT HAS NOT ACCRUED
AND THAT IS THE REASON WHY IT
SHOWED UP IN 2024.
>> MOVING TO THOSE
ECONOMICALLY-DRIVEN REVENUES,
LOOKING A LITTLE BIT MORE AT
WHAT IS MOTIVATING THOSE
DIFFERENCES IN THE FORECAST,
FOR RETAIL SALES TAX, WE HAVE
REVISED THE FORECAST DOWN.
FOR 2023, THE ACTUAL REVENUE
UNDERPERFORMED OUR EXPECTATIONS
AND THE CONSTRUCTION SECTOR
SLOWED DOWN BIT THAT STARTED TO
OCCUR A COUPLE OF MONTHS
EARLIER THAN WE WERE
EXPECTING, AND THAT WAS ONE OF
THOSE REVENUE STREAMS WHERE THE
REVENUE WAS BELOW EXPECTATIONS.
AND THAT LED TO THE REVISION
OF THE FORECAST, TOGETHER WITH
JUST A SLOWER PASS OF INTEREST
RATE CARDS THAT WE WERE
EXPECTING AND THE REVISED
CONSTRUCTION SECTOR OUTLOOK, AS
A RESULT OF THAT, FOR THE
BUSINESS OCCUPATION, THE
DOWNWARD REVISION, PRIMARILY
DUE TO REFUNDS. IT IS NOT THAT
WE ARE EXPECTING [
INDISCERNIBLE ] IT JUST SO
HAPPENS THAT THERE HAS BEEN
LARGER THAN TYPICAL AMOUNTS OF
REFUNDS THAT WERE REQUESTED
AND APPROVED. THAT IS AFFECTING
THE '24 GENERAL FUND. THOSE
ARE REFUNDS FOR OBLIGATIONS
FROM PAST YEARS. AGAIN,
TYPICAL FOR THE CITY TO RECEIVE
A REFUND REQUEST, AND THIS
PARTICULAR YEAR, THERE IS A
LARGER THAN USEFUL AMOUNT OF
SIGNIFICANT OR MEDIUM-SIZED
REFUNDS. THEY JUST ACCUMULATED
UP TO QUITE A LOT. BUT AS YOU
CAN SEE, GOING FORWARD IN '25,
'26, WE ARE PREDICTING BOTH OF
THESE TAXES TO GROW, THE
DOWNWARD REVISION, IT IS JUST
FOR 2024, BUT 2025, 2026, THOSE
REVENUE STREAMS ARE EXPECTED
TO GROW, BOTH OF THEM ARE
EXPECTED TO GROW ABOUT AT THE
RATE OF INFLATION, THE
BUSINESS, THE OCCUPATION TAX,
AGAIN , IT IS QUITE A WELL
DIVERSIFIED REVENUE STRING --
SCREAM. THE GROWTH SHOWS 5.7%,
THAT IS VERY SOLID, VERY STRONG
GROWTH. BUT, '24, IT IS
OBVIOUSLY QUITE DIFFERENT
FROM THE OVERALL OUTLOOK,
REFLECTING THAT OUTLOOK FOR THE
EMPLOYMENT GROWTH, THAT IS FOR
THE REVENUES TO GROW. AT THE
VERY BOTTOM, THE VERY BOTTOM
PART OF THIS SLIDE, COMPARES
THE ANNUAL GROWTH FOR THE
GENERAL FUND AS A WHOLE, IN
COMPARISON TO THE INFLATION
RATE. THE INFLATION RATE FOR
THE SEATTLE AREA. AS YOU CAN
SEE , FOR '25, '26, THOSE
TWO ARE ROUGHLY COMPARABLE ,
FOR THE FOLLOWING YEARS. THERE
HAS BEEN, THE PREVIOUS YEARS,
I'M SORRY, FOR PREVIOUS YEARS,
THOSE COMPARISONS ARE MORE
COMPLICATED, THERE HAVE BEEN A
COUPLE OF ADDITIONAL FACTORS ,
FOR EXAMPLE, SOME ARE BEHIND
THAT 0.9% DECREASE BETWEEN
2022 AND 2023 , THERE WAS
$60 MILLION IN ON-TIME REVENUE
THAT INCREASED IN 2023, 2022,
AND AS A RESULT, IT HAS CAUSED
THIS APPARENT DECLINE BETWEEN
'22 AND '23.
>> EXCUSE ME, OKAY, IF I CAN
DRAW YOUR ATTENTION TO A COUPLE
OF THINGS, PROPERTY TAX, WE
ARE AT A DIFFERENCE FROM 2024
DUE TO AN ERROR ON THE PART OF
KING COUNTY WITH WHAT WE HAVE
CALLED THE REFUND LEVY, THESE
ARE LEVY AMOUNTS THAT SHOULD
HAVE BEEN PAID BY TAXPAYERS,
BUT BECAUSE OF ACTIONS THEY
TOOK , HAVING TO CHANGE THE TAX
AMOUNT, WE WERE NOT ABLE TO
COLLECT, WHAT HAPPENED THIS
YEAR, AS KING COUNTY FAILED TO
REFUND, RE-LEVY THE REFUND ,
THAT WE SHOULD HAVE RECEIVED,
THIS HAPPENS EVERY YEAR, THIS
YEAR, THEY FORGOT TO INCLUDE IT
IN THE LEVY AMOUNT, SO THAT
WOULD BE INCLUDED IN THE 2025
LEVY AMOUNT, THAT IS NOT A LOSS
JUST A DIFFERENT ROLE FOR US.
WE HAVE TO RECOGNIZE, IN 2024,
AS YOU CAN SEE, GOING UP, WE
HAVE THE ADJUSTMENT FOR THAT
2.5 MILLION COMING OUT, WE
RETURNED TO THE TREND, THE
PUBLIC UTILITY TAX . $15.5
MILLION INCREASE IN 2024,
ABOUT $8 MILLION OF THAT IS DUE
TO ACCOUNTING ISSUES THAT WERE
RESOLVED. BUT AFTER THE YEAR
CLOSED. WHAT WE ENDED UP WITH
IS PLACEMENT OF MONEY IN YEARS
WHERE IT IS ALL GOING INTO
2024, RATHER THAN 2023. SO,
GOING FORWARD, THERE IS AN
ADJUSTMENT FOR THAT, AS WELL.
AND THE MONEY IS NOT GONE, IT
IS JUST PUT INTO A DIFFERENT
YEAR. I AM NOT SURE IF THERE
ARE QUESTIONS ABOUT ANY OF THE
OTHER.
>> SEEING NONE, LET'S
CONTINUE. I THINK THIS WILL BE
THE MEAT OF THE DISCUSSION, BUT
WE ARE LITTLE OVERTIME.
>> I JUST WANT TO SAY, I AM
TRYING TO MAKE SURE THAT I
HAVE THESE CORRELATIONS RIGHT
IN MY HEAD. IN TERMS OF THE
STABILITY OF THE JUMPSTART
BASE, VERSA GENERAL FUND, WHAT
I HEARD YOU SAY IS THAT GENERAL
FUND IS A MORE STABLE FUNDING
SOURCE, BECAUSE IT IS MORE
DIVERSIFIED.
>> CAN YOU -- VICE CHAIR?
>> CAN YOU NOT HEAR ME? I
HAVE A VERY LOUD VOICE.
SOMETIMES I CANNOT TELL WHEN
OTHER PEOPLE CANNOT HEAR ME.
ANYWAY, WHAT I WAS SAYING IS,
I WOULD LIKE TO MAKE SURE THAT
I HEARD CORRECTLY, THAT GIRL
FUND IS A MORE -- GENERAL FUND
IS A MORE DIVERSIFIED FUND
THAN THE PAYROLL JUMPSTART AND
IN PART, THE STABILITY OF THE
JUMPSTART FUND IS IMPACTED,
THE SECTOR APPEARS TO HAVE
STABILIZED FROM LAYOFFS IN THE
LATTER PART OF 2022. BUT THE
DEMAND FOR OFFICE SPACE IS LOW,
LEASES ARE NOT GOING TO BE
RENEWED AND WE DO NOT KNOW
WHERE THOSE EMPLOYEES MAYBE
MIGHT GO, WHICH WOULD HAVE
FURTHER IMPACT ON THE ABILITY
OF THE JUMPSTART TAX, IS THAT
CORRECT?
>> THAT IS A VERY GOOD SUMMARY
OF THOSE SLIDES.
>> I WANTED TO MAKE SURE THAT I
HEARD ACCURATELY. THANK YOU SO
MUCH, CHAIR.
>> WE CAN MOVE TO THE PAYROLL
EXPENSE TAX AND SOME OTHER
SELECT REVENUE FORECAST.
>> COUNCILMEMBER NELSON ?
>> I WANTED TO TAKE THIS
OPPORTUNITY, NOW THAT I HAVE
LOGGED ON, TO ANNOUNCE THAT I
AM PRESENT.
>> THANK YOU FOR JOINING US.
>> THE SALES TAX FORECAST HAS
BEEN REVISED FOR 2024 UP BY
$70 MILLION, TO ALMOST, $400
MILLION FOR THIS YEAR, AND
THEN EXCEEDING $400 MILLION IN
'25, '26 WHICH WOULD MAKE IT
THE LARGEST REVENUE STREAM,
LARGER THAN TAX, B&O TAX, AND
RETAIL SALES TAX. BUT RIGHT
NOW, WE ARE APPROXIMATELY THE
SAME IN SIZE BUT THAT CAN
CHANGE SIGNIFICANTLY. WITH ALL
THAT SAID, THERE WAS A LARGE
AMOUNT OF UNCERTAINTY,
REGARDING THE FORECAST FOR
PAYROLL EXPENSE TAX, AND THERE
ARE TWO MORE SLIDES ON THAT,
FOLLOWING THIS ONE, BEFORE
GETTING THERE, VERY QUICKLY ,
ON THE RATE , WE HAVE ANOTHER
REVISED REAL ESTATE EXCISE
TAX BUILT AROUND $50 MILLION,
SO ABOUT HALF OF MORE THAN
$100 MILLION FROM A COUPLE OF
YEARS AGO, AND THE HIGH
INTEREST RATES ARE COOLING DOWN
THE ACTIVITY. THERE ARE LESS
SALES OF HOMES. AND THERE HAS
BEEN VERY LITTLE , IN TERMS OF
THE SALES OF COMMERCIAL REAL
ESTATE. PART OF THAT IS, IT IS
HARD TO ASSESS WHAT THE ACTUAL
VALUE OF OFFICE SPACE IS. IN
GENERAL , THIS IS NOT A GOOD
TIME FOR BUYERS, UNLESS THERE
IS A REASON TO PURCHASE MORE
OFFICE SPACE. OVERALL, REVENUE
IS DOWN FROM THE PEAK, BUT
THERE IS VERY LITTLE CHANGE IN
THE FORECAST FOR '24. WE ARE
EXPECTING A RECOVERY WHEN THE
INTEREST RATES START COMING
DOWN AND THERE IS EXPECTED TO
THEN BE MORE ACTIVITY WITH
PEOPLE BUYING AND SELLING HOMES
, MORE THAN THEY ARE NOW. SO,
FOR SALES TAX FOR THE
TRANSPORTATION DISTRICT , IT IS
MOTIVATED BY THE SAME AS THE
DOWNWARD SALES TAX IN THE
CONSTRUCTION SECTOR THAT HAS
BEEN COOLING DOWN, AND THAT
HAS BEEN AN INCREASE IN THE
OTHER ONE, AND THEIR
EXPENSES, FROM GOODS AND
SERVICES, NOT ALL OF THE
SERVICES ARE SUBJECT TO THE
SALES TAX. AGAIN, THAT
CONTRIBUTES TO THAT DOWNWARD
TRADITION. NOW, MOVING WITH
MORE DETAIL ON THE PAYROLL
EXPENSE TAX , THE REASON FOR
THAT UPWARD REVISION IN THE
FORECAST IS THE CHANGE IN THE
OUTLOOK FOR STOCK PRICES, WE
HAVE TO SAY HERE, WE HAVE ONLY
THREE YEARS OF TAX COLLECTION
FOR PAYROLL EXPENSE TAX. THERE
IS NOT MUCH BEING USED FOR THE
ANALYSIS, BUT OUR WORK SO FAR
SUGGESTS THAT THE TAX BASE FOR
PAYROLL EXPENSE TAX MOVES WITH
THE STOCK MARKET, THE REASON
WHY A LOT OF TECH COMPANIES
PAID THEIR LARGE PART OF THE
PAY TO THEIR EMPLOYEES IS
WHATEVER THE STOCK PRICES ARE
DOWN, THE VALUE GOES DOWN AND
THERE IS THREE YEARS WHERE WE
HAVE SEEN LARGER THAN EXPECTED
COLLECTION IN '21, BEFORE THE
REVENUE DECLINED NUMBER THEN
IT OUTPERFORMED EXPECTATIONS
IN 2023. THIS SHOWS THE YEAR
CHANGE IN AVERAGE STOCK PRICE
FOR SELECT COMPANIES , FOR SOME
OF THE LARGE COMPANIES. BECAUSE
THEY ARE THE EXPENSES, THEY
ARE HERE FOR ILLUSTRATIVE
PURPOSES, BECAUSE THEY WERE
KNOWN TO HAVE A SIGNIFICANT
PRESENCE IN THE REGION. AS YOU
CAN SEE, YEAR OVER YEAR CHANGES
IN STOCK PRICES VERY A LOT,
YEAR OVER YEAR, AND THEY RUN,
ON AVERAGE, FROM 40% , TO A
DECLINE OF AROUND 5% TO 10%
AND ON AVERAGE, 20% IN 2023.
NOW, GIVEN THAT THERE ARE ,
EVEN GIVEN THAT THERE ARE
JUST A HANDFUL OF COMPANIES
THAT PAY A SIGNIFICANT SHARE OF
PAYROLL EXPENSE TAX, THE
MOVEMENTS FOR THOSE INDIVIDUAL
COMPANIES AFFECTS REVENUE
QUITE A BIT AND CHANGES IN THE
OUTLOOK THEN FEED INTO CHANGES
IN THE REVENUE FORECAST. THOSE
BLUE DOTS , THEY SHOW '23
FORECAST FOR YEAR-OVER-YEAR
CHANGE BACK FROM FALL, 2023,
WHICH WAS ALMOST AT THE END
OF THE YEAR, SO, THE ACTUAL
CHANGES IN STOCK PRICES ARE
NOT DRAMATICALLY DIFFERENT
FROM WHAT THE WALL STREET
JOURNAL ANALYSTS WERE
EXPECTING, IN THE FALL, 2023,
AND LOOKING AT 2024, THAT IS
WHAT IS INFORMING THE FORECAST
FOR THE CURRENT YEAR. THE
OUTLOOK, THE OUTLOOK FROM
FALL 2023, THE DOTS SHOW THE
AVERAGE . THE AVERAGE EXPECTED
CHANGE IN STOCK PRICES
AVERAGING OUT ACROSS THOSE
AND LOOKING AT THEIR, LOOKING
AT THEIR AVERAGE, GOING
FORWARD, THE LINE CONNECTS THE
LOW AND THE HIGH ESTIMATES,
EACH PROVIDES A LOW AND A HIGH
ESTIMATE, AND, AS YOU CAN
SEE, THERE IS A VERY LARGE, A
VERY LARGE AMOUNT OF
UNCERTAINTY IN THE FORECAST.
THAT UNCERTAINTY HAS BEEN
DECREASING TO SOME EXTENT, THE
RED DOTS AND LINES SHOW THE
CURRENT OUTLOOK FOR STOCK
PRICES OVER THESE COMPANIES.
AND THE DOTS SHOW THE AVERAGE
OF THE LOW END AND THE HIGH
END ESTIMATES, FOR THE STOCK
PRICE CHANGES FOR 2024. BUT
OVERALL , THE OUTLOOK HAS
IMPROVED, AND THOSE DOTS HAVE
MOVED TO THE RIGHT, AGAIN,
LEADING TO AN IMPROVED OUTLOOK
FOR THE PAYROLL EXPENSE TAX.
IT IS NOT JUST THOSE INDIVIDUAL
COMPANIES, BUT THE S&P GLOBAL,
THAT IS AGIN, THE COMPANY THAT
PROVIDES US WITH THE FORECAST
FOR THE U.S. ECONOMY. THE S& P
INDEX IS EXPECTED TO GROW BY
20% IN 2024 WHICH HAS BEEN
REVISED FROM EVENTUALLY ZERO IN
2023. SO, THE FORECASTS DO
CHANGE, AGAIN, GIVEN WHAT WE
HAVE SEEN IN THE PAST AND HOW
CLOSELY THE CHANGES IN STOCK
PRICES GO, THAT LEADS US TO
ESSENTIALLY REVISING THE
FORECAST. IN QUITE SIGNIFICANT
WAYS. NOW , ONE THING, ONE
THING THAT OUR FORECAST DOES
NOT INCORPORATE DIRECTLY ARE
SOME ADDITIONAL SOURCES OF
UNCERTAINTY . THERE IS A RISE
IN VACANCY RATES AND THE
UNCERTAINTY REGARDING WHERE THE
EMPLOYEES ARE GOING TO RETURN
TO THE OFFICE, IN THE REGION.
THAT IS BEYOND WHAT WE CAN
FORECAST AND THE COMPANIES ARE
STILL REEVALUATING THEIR NEED
FOR OFFICE SPACE AND WHERE
EXACTLY THEY WANT TO LOCATE
THOSE WORKERS. ONE THING THAT
HAS BEEN RECENTLY REPORTED IS
THAT AMAZON EMPLOYMENT FOR
AMAZON HAS DECLINED BY 1000
EMPLOYEES SINCE THE PEAK IN
2020 WITH A TEAK IN
EMPLOYMENT, THAT HAPPENED AND
THE NUMBER OF EMPLOYEES FROM
THE LINK. AND THAT WILL
CONNECT THOSE, AND THAT WILL
BE THIS PARTICULAR REVENUE
STREAM, IN ADDITION TO THOSE
CLIMBING VACANCY RATES, WHICH
, AGAIN, SUGGEST THAT THERE
WILL BE QUITE SIGNIFICANT
COMPETITION AMONG, AMONG
WHERE THEY ARE EXACTLY, WITH
THOSE OFFICES AND WHERE EXACTLY
THE EMPLOYEES WILL BE
RETURNING, TO THOSE OFFICES.
>> I SEE THAT YOU HAVE VICE
CHAIR MARITZA RIVERA WITH SOME
QUESTIONS. ANYTHING ELSE FROM
YOU?
>> NO, WE ARE HAPPY TO REST.
>> THANK YOU, CHAIR, THANK YOU
FOR THIS PRESENTATION. BUT MY
QUICK QUESTION IS, ON THE WALL
STREET ANALYSTS PROJECTION ON
THE DECLINE OF THE STOCK
MARKET BY 2% IN 2026, THE
FACTORS FOR THE EXPECTATIONS
ON PAYROLL TAX OUR EMPLOYMENT
AND VACANCY RATES. IN TERMS
OF THE DECLINE OF THE STOCK
MARKET PROJECTIONS, 2% IN
2026, DO YOU KNOW WHAT FACTORS
ARE CONTRIBUTING? ARE THEY
SIMILAR? SINCE IT IS EXPECTED
TO GROW BY 1% IN 2025 AND IT
LOOKS LIKE IT HAS GROWN IN
2024, WHY THE PROJECTION THAT
IT WILL DECLINE IN 2026?
>> FOR 2024, THE PROJECTION IS
NOW THE PROTECTION JOSH
MACKIE -- PRODUCTIONS , THOSE
FIGURES, IN THE BULLET POINTS,
THOSE ARE IN THE S&P 500 INDEX
AS A WHOLE. IT IS A SLIGHTLY
DIFFERENT SOURCE, THE S&P
GLOBAL IS FORECASTING A VERY
STRONG ONE IN 2024, FOLLOWED
ESSENTIALLY BY THE 2% DECLINE,
THE FORECAST CAN CHANGE EASILY
, GIVEN HOW MUCH THEY ARE
REVISING THE FORECAST, THE
CURRENT THINKING IS THAT THOSE
INTEREST RATES ARE GOING TO
CONTINUE EFFECTING THE ECONOMY
AND THE EMPLOYMENT WILL SLOW
DOWN , AND THE OVERALL ECONOMY
WILL BE SLOWING DOWN.
>> MOSTLY FOCUSED ON INTEREST
RATES?
>> THEY ALWAYS AFFECT THE
EMPLOYMENT AND OVERALL, THAT
OCCURS.
>> COUNCILMEMBER KETTLE ?
AND THEN COUNCILMEMBER SAKA.
>> THANK YOU FOR GIVING THIS
BRIEFING. I LOVE FOLLOWING THE
NUMBERS. I SHOULD NOT SAY THAT
SO LOUD, I HAVE ALWAYS
FOLLOWED THE FED , BUT NOW AS A
COUNCIL MEMBER, I HAVE A
BETTER UNDERSTANDING OF WHAT
THE FEDERAL RESERVE IS TRYING
TO DO, IN TERMS OF THE
INFLATION LEVELS, BECAUSE THEY
REALLY HAVE IT , WHEN WE
INCLUDE THE UPCOMING BUDGET
DISCUSSIONS. AND I AM MINDFUL,
TOO, I AM ANTICIPATING SOME
TYPE OF CLIFF , BECAUSE THOSE
INDUSTRIES , PARTICULARLY THE
REAL ESTATE SIDE, AND THEN, BY
EXTENSION, CONSTRUCTION. AND I
AM MINDFUL OF CPI, I THINK WE
HAVE HAD INFLATIONARY PIECES
LONG BEFORE THE NATIONAL UPTICK
IN INFLATION, YOU KNOW, BECAUSE
OF THE LOCAL ECONOMY BEING SO
HOT. AND I DON'T KNOW IF THAT
IS IN THE, I DON'T SEE
GOVERNMENT REALLY TALKING ABOUT
THAT OVER THE PAST DECADE, I
THINK THAT IS SOMETHING THAT WE
SHOULD BE MINDFUL OF, BUT NOW
IT IS REAL, BECAUSE WE HAVE THE
MORE BROAD, NATIONAL
INFLATIONARY ASPECTS COMING
INTO PLAY, I FOUND THE BRIEFING
REALLY INTERESTING, TOO,
BECAUSE YOU TALKED ABOUT THE
MAINLY REGIONAL APPROACH, NOT
GETTING QUITE AS SPECIFIC AS
SEATTLE, REGARDING FINANCIAL
AND PROFESSIONAL BUSINESS
SERVICES. AS YOU NOTED , THERE
IS SOME SHIFTING THAT CAN
HAPPEN. BUT THAT WAS A REGIONAL
NUMBER. THAT KIND OF SUGGESTS
THAT EITHER THERE IS SOME
DOWNTICK GOING ON , IT IS NOT
JUST AN EAST SIDE-WESTSIDE
THING GOING ON, THERE ARE MORE
BROAD IMPACTS THAT WE SHOULD BE
MORE MINDFUL OF. SO, THANK YOU
FOR THAT, BECAUSE IT IS
HELPFUL. AND I ALSO WANT TO
THANK CHAIR DAN STRAUSS ON THE
INDUSTRIAL MARITIME PEACE,
BECAUSE WE NEED TO UNDERSTAND
THAT THE PORT NEEDS TO BE
VIABLE 100 YEARS FROM NOW, WE
CANNOT ESCAPE OUR GEOGRAPHY OR
OUR TOPOGRAPHY, AS I HAVE SAID
1 MILLION TIMES, AVIATION,
TECH, THEY ALL AND INFLOW, WE
WILL STILL BE A PORT, AND THAT
WILL STILL REQUIRE
INTERNATIONAL TRADE, MARITIME
TRADE, SO THANK YOU, CHAIR
STRAUSS, WE REALLY NEED TO
MAINTAIN THE DIVERSE ECONOMY
PIECE. MY CONCERN REALLY COMES
DOWN TO THE COMMERCIAL AND THE
COMMERCIAL REAL ESTATE SIDES
OF THINGS, A LOT OF WHAT WE ARE
SEEING, THIS IS NOT GOING TO
COME OUT OF THESE BRIEFINGS,
THIS IS GOING TO BE PLAYING OUT
IN SO MANY WAYS, WE TALK ABOUT
RETURN TO OFFICE, THE SAFETY
PIECE IS SO HUGE, THE PUBLIC
TRANSPORTATION PIECE THAT WE
HEARD YESTERDAY, YOU KNOW, WE
HEARD IT IN THE PUBLIC COMMENT
ABOUT TAKING THE BUS TO
DOWNTOWN. THIS NEEDS TO BE
TACKLED, BECAUSE IT GOES TO
SOME OF THE NUMBERS THAT WE ARE
DRIVING, YOU KNOW THEY WILL
GIVE US HEADWINDS IN TERMS OF
THE BUDGET EXERCISE, SO WE NEED
DOWNTOWN ACTIVATION PLANS,
MUCH LIKE SOUTH LAKE UNION .
THIS GOES TO WHAT AMAZON HAS
DONE AND OTHER CORPORATIONS.
AND SO, WE NEED GOVERNMENT FOR
THE CENTRAL BUSINESS DISTRICT.
I HEARD THIS YESTERDAY, WE
NEED THE CENTRAL BUSINESS
DISTRICT TO COME UP AND WE
NEED THE GOVERNMENT TO SHOW
LEADERSHIP ON THE RETURN TO
OFFICE PEACE. THE LEGISLATIVE
SIDE IS DOING IT, I AM NOT
SAYING EXACTLY WHAT NUMBERS,
BUT ALSO, THE COUNTY. WE NEED
KING COUNTY FOR THE CENTRAL
BUSINESS DISTRICT, WE NEED THAT
FOR THE DOWNTOWN AND WE SHOULD
SAY THAT OUT LOUD, WE NEED TO
DO OUR PART ON THE PUBLIC
SAFETY SIDE, PUBLIC
TRANSPORTATION, AND THIS WILL
PLAY OUT IN A LOT OF DIFFERENT
WAYS. AND AS YOUR NUMBERS, THE
TOURISM THESE IS GOING TO BE
HUGE, WE NEED TO HAVE THEM
STOP FOR DAYS, BEFORE THEY
COME BACK AND SPEND SOME MORE
DAYS. AND SO WE NEED THE
CENTRAL BUSINESS DISTRICT,
SEATTLE CENTER, THE WHOLE
COMBINATION GOING FORWARD, AND
OF COURSE, THERE IS A THING
CALLED FIFA WORLD CUP 2, I
WOULD BE INTERESTED IN TERMS
OF HOW YOU THINK THAT WILL
IMPACT THE NUMBERS. TO CLOSE,
THE BOTTOM LINE, WE DO NEED
BUDGET REFORM. AND CHAIR
STRAUSS HAS STARTED THIS, AND
HOW WE ARE DOING THE GRANT SIDE
OF THINGS, WE NEED A BOTTOM UP
REVIEW, IT IS A GOOD GOVERNANCE
PIECE. WE NEED TO LEVERAGE THE
EXPERTISE OF OUR OWN CENTRAL
STAFF PERSONNEL, YOURSELVES,
AND I WILL SAY , WHAT WOULD
PROFESSOR JUSTIN MARLOW SAY IN
TERMS OF HOW WE SHOULD DO THE
PROCESS BETTER? THIS IS AN
OPPORTUNITY, TO MAKE CHANGES,
IN TERMS OF BRINGING GOOD
PRACTICES TO OUR BUDGET
EXERCISE. SO, IF YOU HAVE
ANYTHING ON THAT TO SAY, I
WOULD LOVE TO HEAR ANY
RECOMMENDATIONS THAT YOU MAY
HAVE.
>> THAT, AND THE WORLD CUP, IN
TERMS OF YOUR EXPECTATIONS,
WHAT IS THAT IMPACT ON THE
FORECAST?
>> A QUICK FIGURE THAT I
FORGOT TO MENTION WHEN I WAS
PRESENTING THE SLIDES ON
RETURN-TO-OFFICE, THERE WAS A
NET GAIN FLOW INTO SEATTLE
DURING THE PANDEMIC, A LOT OF
EMPLOYEES ARE ESSENTIALLY
COMMUTING INTO THE CITY AND IT
IS EXACTLY THOSE CITIES THAT
ARE WHAT WE ARE KIND OF
CONCERNED ABOUT, AND WHAT IS AT
STAKE, FOR THE SALES TAX,
THERE IS VERY LITTLE
DIFFERENCE, IF A PERSON GOES TO
A STARBUCKS, GOES TO A
STARBUCKS IN DOWNTOWN, RATHER
THAN GOING TO A STARBUCKS IN A
DIFFERENT NEIGHBORHOOD. THOSE
EMPLOYEES COMING INTO THE CITY,
COMMUTING FROM LET'S SEE,
LET'S TALK ABOUT AMAZON
EMPLOYEES COMING IN FROM
MEDINA, SNOHOMISH, MERCER
ISLAND , THEY ARE COMING IN,
AND THEY ARE SPENDING IN THE
CITY OF SEATTLE, AND IN
ADDITION , FOR BUSINESS AND
OCCUPATION, PAYROLL EXPENSE
TAXES, CONSIDER THE AMOUNT OF
TAX, ON WHERE THE PAYMENT
TAKES PLACE. A WORKER COMING
TO THE OFFICE AND PERFORMING
WORK HERE, RATHER THAN
PERFORMING THE WORK AT HOME, IN
MEDINA, MAKING A SIGNIFICANT
DIFFERENCE FOR PAYROLL EXPENSE
TAXES, AND THOSE ARE THE KIND
OF THINGS THAT NEED TO BE KEPT
IN MIND HERE. ON THE OTHER
POINT, FOR TOURISM, ADMISSIONS
TAX , IT HAS PERFORMED ABOVE
EXPECTATION , IN 2023. AND WE
HAVE REVISED UP OUR FORECAST .
AGAIN, THERE HAS BEEN A VERY
STRONG SEASON. THIS WAS ALL
TAKEN PLACE LAST YEAR, THE
SEATTLE KRAKEN HAD A
SUCCESSFUL YEAR AND IT THE
RENOVATIONS , THAT BROUGHT IN A
LOT OF VISITORS. THOSE KIND OF
THINGS ARE A POSITIVE, NOT
JUST FOR DOWNTOWN, BUT FOR
SEATTLE AS A WHOLE. THOSE
VISITORS , TO THE EXTENT THAT
THEY ARE NOT CROWDING OUT
ACTIVITIES THAT WOULD HAVE
TAKEN PLACE, THEY ARE
INCREASING THE REVENUE . AND
FOR FIFA , WE ARE STARTING TO
LOOK AT THE IMPACT AND IT
WOULD BE IMPORTANT TO TRY TO
ACCOUNT FOR THE VISITORS THAT
ARE COMING IN , THEY MAY BE
REQUESTING VISITORS FOR OTHER
REASONS . AND THERE IS
DEFINITELY GOING TO BE MORE
VISITORS TO THE EXTENT THAT IT
WILL TRANSFER TO ADDITIONAL
SALES TAX REVENUE, WHICH MIGHT
BE LIMITED, THE TAX RATE IS
FAIRLY LOW , SO, THE CITY
COLLECTS 0.85% ON TAXABLE
SALES ACTIVITIES TO GENERATE
ADDITIONAL, ADDITIONAL , THE
ADDITIONAL $1 MILLION IN
REVENUE, YOU WOULD NEED MORE
THAN $1 MILLION OF ADDITIONAL
SPENDING. FOR SALES TAX
PURPOSES , THERE MAY BE VERY
LITTLE IMPACT, BUT FOR
GROWTH, THOSE KINDS OF EVENTS
ARE CERTAINLY VERY IMPORTANT
FOR LOCAL BUSINESSES. IT IS
SOMETHING, IT IS SOMETHING THAT
HELPS THE LOCAL ECONOMY, ON
HIS WAY TO RECOVERY.
>> DIRECTOR I WAS AKIN TO, MY
APOLOGIES. I AM GOING TO TAKE
RESPONSIBILITY FOR THIS. I DID
NOT PREPARE YOU CORRECTLY FOR
THIS PRESENTATION. WE HAD ONLY
30 MINUTES RESERVED FOR YOUR
PRESENTATION, AND WE ARE AT
ABOUT 70 MINUTES RIGHT NOW.
THAT IS MY FAULT AND I AM
TAKING RESPONSIBILITY, YOU HAVE
DONE AN EXCELLENT JOB TODAY.
COLLEAGUES, I DO STILL SEE
COUNCILMEMBER NELSON AND
COUNCILMEMBER SAKA WITH
QUESTIONS. THIS WAS INTENDED TO
BE A RECAP FROM THE FORECAST
MEETING THAT OCCURRED LAST
WEEK. AND IN THE FUTURE, I
WILL INVITE EVERYONE TO THE
FORECAST MEETING, BECAUSE THAT
IS WHERE IT IS A LITTLE BIT
MORE APPROPRIATE TO GO TO THIS
LEVEL OF DEPTH, I AM GOING TO
CHECK WITH COUNCILMEMBER SAKA,
AND COUNCILMEMBER ? WOULD YOU
LIKE A QUESTION OR CAN YOU
HOLD?
>> I WILL HOLD , IN THE
INTEREST OF TIME.
>> COLLEAGUES , ANY OTHER
QUESTIONS FOR DIRECTOR OF A 62
AND THE OFFICE OF FORECAST?
>> I WOULD LIKE TO SAY, I DID
NOT CUT YOU OFF AT THE
30-MINUTE MARK, BECAUSE THE
INFORMATION THAT YOU HAVE IS
SO IMPORTANT AND YOU DO SUCH AN
EXCELLENT JOB FORECASTING, I
DID NOT WANT TO BREAK YOU UP
MIDSTREAM. SO WE HAVE DEEP
APPRECIATION FOR YOUR WORK.
AND I AM SURE THAT MY
COLLEAGUES WILL BE FOLLOWING UP
WITH YOU OFF-LINE. ANY FINAL
WORDS?
>> THANK YOU FOR THE CHANCE TO
COME HERE AND TALK TO ALL OF
YOU.
>> COLLEAGUES, WE WILL MOVE ON
TO THE NEXT AGENDA ITEM,
AGENDA ITEM 2. CLERK , WILL YOU
PLEASE READ THE SHORT TITLE
INTO THE RECORD?
>> ITEM NUMBER TWO, 2024
BUDGET DISCUSSIONS FOR
BRIEFING AND DISCUSSION.
>> COLLEAGUES, I KNOW THAT
EVERYONE HAS RECEIVED THIS
VISITATION, I DID NOT PREP
DIRECTOR GERI POOR, SAYING THAT
HE PROBABLY SHOULD HAVE COME
AND MET WITH EACH OF YOU FOR
DOING YOUR PRE-WORK. I WAS
GOING TO ASK FOR A SHOW OF
HANDS, BUT I KNOW THAT EVERYONE
HAS DONE THEIR HOMEWORK AND I
REALLY APPRECIATE YOU THERE.
TODAY, WE HAVE OUR DEPUTY
DIRECTOR OF CENTRAL STAFF, JAN
DURAS, AND TOM MIKESELL, ONE
OF OUR ANALYSTS , AND WE HAD
THE GRANT ACCEPTANCE AND
APPROPRIATIONS ORDINANCE, THIS
WAS, THIS WAS IN THE FINANCE
COMMUNITIES THAT MET
COMMITTEE, AND IT WAS NOTED
THAT OUR ANALYST WITH THAT
COULD NOT SPEAK TO EACH OF THE
GRANTS, BECAUSE EACH OF THE
GRANTS FALLS WITHIN THEIR OWN
PORTFOLIO. AND THAT IS THE SAME
REASON THAT I ASK THAT WE ARE
RELYING ON EACH OF YOU TO BE
AWARE OF THE DEPARTMENTS THAT
REPORT TO YOUR COMMITTEES, IN
THE SAME WAY THAT ALY PENNUCCI
AND JONATHAN LEWIS WILL BE
LEADING THE CHARGE. WE RELY ON
EACH ESSENTIAL STAFF MEMBER.
HERE WE ARE, APRIL 17th. WE
HAVE STARTED OUR SELECT BUDGET
PROCESS. THIS HAS NEVER BEEN
DONE BEFORE . AND TOM MIKESELL
AND ALY PENNUCCI HAVE BEEN
WORKING DILIGENTLY, MEETING
WITH YOU, ANSWERING QUESTIONS.
WITH THAT, SINCE YOU ALL HAVE
RECEIVED THE PRESENTATIONS, I
AM GOING TO ASK YOU TO HOLD
QUESTIONS UNTIL THE END SO THAT
THEY CAN ROLL THROUGH THIS.
ALY PENNUCCI, OVER TO YOU. AND
COLLEAGUES, I AM SO
EMBARRASSED TO ASK FOR MORE
TIME TODAY. I AM GOING TO BE A
STICKLER ABOUT STARTING ON TIME
AND ENDING ON TIME, DO FOLKS
HAVE A HARD STOP AT 11:30, OR
DO WE WANT TO GO UNTIL NOON?
>> I DO, CHAIR
>> YOU HAVE A HARD STOP? IS IT
OKAY IF WE CONTINUE UNTIL NOON?
>> FINE.
>> COLLEAGUES, WE ARE GOING TO
RUN THIS UNTIL NOON. THIS
CREATES A SCHEDULING CONFLICT
IN MY OWN LIFE BUT THIS IS
IMPORTANT WORK.
>> I AM ALY PENNUCCI OF YOUR
COUNTY CENTRAL STAFF.
>> GOOD MORNING, ALBERT 67.
>> TOM AND I ARE GOING TO TODAY
LEARN HOW TO USE THE COMPUTER.
IT IS REALTIME HERE, WE WILL
WALK YOU THROUGH A DEEPER DIVE
TO A PROJECTED GENERAL FUND
DEFICIT AND HIGHLIGHT AGAIN
SOME OF THE TOOLS THAT THE CITY
PROVIDE AN OVERVIEW THAT WORK
CENTRAL STAFF HAS OR WILL BE
USING TO REVIEW THE CITY BUDGET
IN PREPARATION FOR YOUR FALL
BUDGET DISCUSSIONS AND
DELIBERATIONS. I WILL DISCUSS
ADDITIONAL PRESENTATIONS THAT
WE HAVE BEEN WORKING WITH
CHAIR STRAUSS RELATED TO
BUDGET. IT WILL NOT COVER ALL
THINGS THAT WILL HAPPEN IN
CHAIR STRAUSS ' COMMITTEE,
BUT IT WILL HIGHLIGHT THE
BUDGET-FOCUSED DISCUSSIONS.
THIS PRESENTATION REALLY IS A
GOOD COMPLEMENT TO THE REVENUE
FORECAST, THAT IS ONCE OUT OF
THE EQUATION, WE START TO BUILD
IN SOME OF THE EXPENDITURE
SIDE, WE DO NOT YET KNOW HOW
INFLATION IS GOING TO FULLY
IMPACT IN THE FUTURE BUT IT
BEGINS TO BRING IT TOGETHER.
I AM GOING TO TURN YOU OVER TO
TOM, TO WALK YOU THROUGH
INFORMATION ABOUT THE GENERAL
FUND PROJECTED DEFICIT.
>> THANK YOU. SO, COMMITTEE,
THE NEXT THREE SLIDES WILL
SHOW SOME INFORMATION ABOUT
HOW WE GOT INTO THIS STATE SO I
AM WORKING BACKWARDS FROM THE
SCREEN. THIS IS THE GENERAL
FUND FORECAST BASED ON THE
ADOPTED BUDGET WITH A FEW
MEDICATIONS AND IT DOES NOT --
MODIFICATIONS, AND THAT KIND
OF OBSCURES THE PICTURE IN
2023. DOES NOT INCLUDE FUND
BALANCE, WHICH HAS BEEN USED
TO BALANCE THE BUDGET, IN THE
CURRENT BUDGET, NOT INCLUDED IN
THE PRIOR OR FUTURE YEARS . SO,
OTHERWISE, THIS SHOWS THE
ADOPTED BUDGET, THE REVENUES
AND EXPENDITURES TO THE
PROJECTED FUND, PROJECTED
THROUGH 2027. AND SOME KEY
THINGS TO STAND OUT, ONE IS
THAT THE REVENUE LINE, SHOWN IN
BLUE, IS LOWER THAN THE
EXPENDITURE LINE, THAT IS
INDICATIVE OF THE FINANCIAL
PROBLEM THAT THEY HAVE IN THIS
FUND. IN FACT, IN 2023 AND
2024, EVEN THOUGH WE HAVE, IN
NOMINAL TERMS, A BALANCED
BUDGET, IT IS BALANCED BECAUSE
WE ARE USING FUND BALANCE. FUND
BALANCE, IN PRIOR YEARS,
REVENUE CAME IN HIGHER THAN
FORECAST AND SPENDING WAS LOWER
THAN THE BUDGET. SO, THAT
GENERATES SOME ONE-TIME CASH
THAT CAN BE USED TO SUPPORT
SPENDING BUT IT IS ONLY
AVAILABLE UNTIL IT IS USED UP.
AND THAT MAY BE USED IN 2024,
AND THEN , THEY MAY RUN,
AND SO ANOTHER REASON WHY THE
LINES GET BIGGER, MOVING INTO
2025, THERE IS SOME ONE-TIME
BALANCE STRATEGIES THAT WERE
EMPLOYED IN THE 2022 AND 2023
BUDGET THAT ARE NOT ASSUMED
BASED ON CURRENT LAW, THOSE
HAVE AN ASSUMPTION OF $20
MILLION, BASICALLY SAYING, WE
HAVE A BUDGET OF 100 , AND WE
ARE ONLY GOING TO SPEND $80 OF
IT WHICH GENERATES SOME ORGANIC
SAVINGS IN THE FUND, WHICH IS
NOT ASSUMED FOR 2025. SO THAT
IS PART OF THE REASON WHY THE
GAP GROWS BIGGER. THE OTHER
KEY REASON IS, THAT WOULD BE
MONEY TRANSFERRING AND TO
JUMPSTART THE PAYROLL EXPENSE
TAX. SO , THIS IS SOMETHING
THAT HAS BEEN USED IN BUDGETS ,
SINCE THE TAX WAS ADOPTED, AND
IT HAS BEEN DONE PRETTY
REGULARLY ON A ONE-TIME BASIS.
IT HAS BEEN AMENDED IN EACH
BUDGET PROCESS TO PROVIDE EACH
OF THOSE TO THE GENERAL FUND
HOWEVER, THAT EXPIRES IN 2025,
THAT IS A DECISION, OF COURSE,
DIFFERENT DECISIONS CAN BE
MADE, BUT FOR THE PURPOSES OF
THIS CHART, WE ARE SHOWING THIS
CURRENT PICTURE. AFTER YOU TAKE
OUT THE FUND BALANCE , YOU TAKE
OUT THE BALANCES, AND YOU
CAN SEE THAT THE DEFICIT GROWS
TO ABOUT $241 MILLION IN 2025,
AND THEN IT ENGINEERS AT
ESSENTIALLY THAT SAME LEVEL IN
FUTURE YEARS. ONE THING THAT I
DO WANT TO POINT OUT IS THAT
THIS NUMBER DOES INCLUDE THE
IMPACT OF THE RECENTLY-SETTLED
COALITION BARBIE -- BARGAINING
AGREEMENT, IT GOES TO 15 IN
2026 IT DOES NOT HOWEVER
INCLUDE THE FULL IMPACT OF SOME
OTHER LABOR AGREEMENTS THAT ARE
NOT CURRENTLY SETTLED, THE
LARGEST OF WHICH IS THIS. AND
SO, ONCE THAT INFORMATION IS
SETTLED , THAT WILL BE THE
FUTURE PLANS. THIS, HOPEFULLY
AS BECOME A DISPLAY FOR YOU,
THIS IS SOMETHING THAT HAS BEEN
USED FOR THE PAST COUPLE OF
YEARS TO DEMONSTRATE THE
SUSTAINABLE ISSUE, WE PLAN TO
CONTINUE TO DO SO, WITH OUR
NEXT UPDATE BEING IN THAT MAY
BUDGET COMMITTEE MEETING, MAY
15. AND WE WILL INCLUDE,
INCLUDING THE REVENUE FORECAST
UPDATE THAT YOU HEARD THIS
MORNING, FROM THE FORECAST
OFFICE AND CEO AND ALSO ANY
LEGISLATION THAT BECOMES
ADOPTED
>> I AM NOT ASKING THE
QUESTION, COLLEAGUES , I AM NOT
BREAKING MY OWN RULE. BUT THIS
IS A NUMBER THAT CHANGES
REGULARLY, WHICH IS WHY THERE
IS AN APPROXIMATION, AND THAT
IS WHY I AM POINTING THAT OUT,
THIS HAS CHANGED A NUMBER OF
TIMES, EVEN DURING THE THREE
MONTHS OF THIS YEAR.
>> INDEED.
>> SO, HOW DID WE GET HERE?
THIS CHART SHOWS THE UNDERLYING
SKELETON OF THE CITY'S
FINANCES, SOME KEY FISCAL
DRIVERS, ON THE INCOME SIDE,
THE ONGOING REVENUE GROWTH
RATE, WHEN I SAY ONGOING, I
DIFFERENTIATE BETWEEN ONGOING
AND ONE-TIME, ONE-TIME MEANS IT
IS ONLY AVAILABLE UNTIL A
TEMPORARY BASIS, ONCE THE MONEY
IS SPENT, THAT IS IT, IT DOES
NOT CONTINUE, VERSUS SOMETHING
ONGOING, WHERE IT IS A PROGRAM
INTENDED TO BE PROVIDED YEAR IN
AND YEAR OUT. AND SO, THIS
CHART SHOWS REVENUE IN THE
BLUE LINE, THE ONGOING REVENUE
GROWTH, IN THREE DISTINCT
PHASES, AS WELL AS THE GROWTH
IN INFLATION, BY THE INFLATION
RATE THAT IS USED IN LABOR
CONTRACTS. SO, WE ARE BASICALLY
SHOWING THE UNDERLYING DRIVERS
IN THE CITY INCOME TO THE
GENERAL FUND, AND THE KIND OF
KEY COST INFLATION THAT
AFFECTS OUR EXPENDITURES IN
THE GENERAL FUND, AND FIRST ,
THE PRE-PANDEMIC PHASE FROM
2013, TO 2019, THE PANDEMIC
PHASE, SHADED IN BLUE, AND THAT
COVERS 2020 THROUGH 2022. AND
THEN FIRST YEAR POST-PANDEMIC,
2023, NOTHING BEYOND THAT,
BECAUSE EVERYTHING BEYOND THAT
IS A PROJECTION. THOUGH I WILL
TIE IN WITH THE PRESENTATION
YOU HEARD EARLIER IN THE
COMMITTEE MEETING TODAY, TO TRY
TO INDICATE HOW THAT
INFORMATION INTERFACES WITH
THIS. AND HELPS US TO BUILD
OUR WAY OUT OF THIS DEFICIT.
SO, JUST LOOKING AT THE
PRE-PANDEMIC PHASE, YOU CAN SEE
VERY CLEARLY THAT THE REVENUE
GROWTH RATE IS A COUPLE HUNDRED
BASIS POINTS, A COUPLE PERCENT
HIGHER THAN THE UNDERLYING
COST OF INFLATION, THE COST OF
GOVERNMENT SERVICES IS NOT
GROWING AS FAST IN EACH OF
THOSE YEARS, COMPARED TO
REVENUE, WHAT THIS MEANS WE
HAVE VERY BRISK INCOME GROWTH
TO THE GENERAL FUND, BUT THE
COST OF ADDING NEW SERVICES WAS
FAIRLY INEXPENSIVE, SO THAT
ENABLED THIS CITY TO EXPAND
THE PROGRAM OFFERINGS FROM THE
GENERAL FUND IN EACH YEAR TO
KEEP UP WITH GROWTH IN THE
CITY. IN FACT, THE REVENUE
GROWTH RANGED FROM 3.6% TO A
HIGH OF 9.6% AND ON AVERAGE,
IT WAS 6.2% OVER THOSE YEARS.
AND IN CONTRAST, THE INFLATION
RATE WAS VERY LOW, RANGING FROM
A RATE OF 0.9% TO 3.4%, AND
AVERAGE, 2.2%, SO YOU HAVE A
6% GROWTH IN INCOME, AND A 2%
INCREASE IN THE PRICES THAT YOU
PAY, YOU CAN SEE VERY CLEARLY
THAT THAT IS A GOOD SITUATION
TO BE IN AND UNFORTUNATELY, IN
2020, WE WERE HIT WITH THE
PANDEMIC, YOU CAN SEE CLEARLY
THAT THE REVENUE GROWTH, THE
REVENUE OF COURSE, THE DECLINE
WAS 9.7%. KIND OF LOOKING BACK
ON THE PAST, THAT IS
SIGNIFICANTLY GREATER THAN THE
REVENUE DESIGN -- DECLINE THAT
WE SOUGHT DURING THE GREAT
RECESSION. SO, THIS IS SORT OF
A UNIQUE CHALLENGE TO THE CITY
THAT WE EXPERIENCED IN THE
FIRST YEAR OF THE PANDEMIC AND
ALSO, YOU ARE GOING, IN 2019,
YOU ARE GOING FROM A DECLINE
OF 9.7% FROM 7%, THAT IS A 17%
SHIFT IN THE MOMENTUM OF
REVENUE GROWTH. AT THE SAME
TIME, INFLATION WAS TICKING
ALONG AT WHAT WE HAD SEEN IN
PRIOR YEARS. AS YOU RECALL,
SIGNIFICANT AMOUNTS OF FEDERAL
STIMULUS, THEY WERE PROVIDED
BY THE FEDERAL GOVERNMENT AND
THE FEDERAL RESERVE. AND, IT IS
HELPFUL TO PROVIDE RELIEF, AND
COVID AID, AND TO HELP PEOPLE
MANAGE THROUGH THE PANDEMIC,
WE DID HAVE SUPPLY-CHAIN
ISSUES, THE ECONOMY WAS
ILL-SUITED TO MEET THE DEMAND,
AND PRICES BEGAN TO RISE, YOU
CAN SEE THE ORANGE LINE,
INFLATION KICKING UP TO 5.2% IN
2021, THAT GREW TO 8.8% IN
2022. WE HAVE EXPERIENCED, OVER
THE LAST TWO YEARS, INFLATION
LEVELS THAT WE HAVE NOT SEEN
FOR DECADES, ETIQUETTE WAS THE
EARLY 80s SINCE WE HAD SEEN
INFLATION LEVELS THIS HIGH.
THIS IS IN CONTRAST TO THE
PRIOR 10 YEARS , WHERE WE WERE
SEEING INFLATION OF ABOUT 2%
OVER EACH YEAR, SO THE REVENUE
WAS CUT OUT FROM UNDERNEATH US.
OUR COSTS DID NOT GO DOWN AND
THEN STARTED TO ACCELERATE AT
HISTORICALLY HIGH LEVELS, SO
THAT IS WHERE THE PROBLEM
REALLY STARTED, THAT WAS IN
THE PANDEMIC PERIOD. AND IN
FACT, IF YOU LOOK AT 2021,
REVENUE GROWTH DID ACTUALLY
KICK UP RAPIDLY IN THAT NEXT
YEAR, WHEN YOU TAKE IT IN
CONTEXT WITH A 9.7% DECLINE,
YOU ARE ESSENTIALLY RUNNING IN
PLACE OVER THOSE TWO YEARS, YOU
ARE NOT REALLY GAINING ANY
GROUND, AS THOSE COSTS ARE
STARTING TO BUILD. IN THE LAST
YEAR OF THE PANDEMIC, WE DID
SEE INFLATION, AGAIN, HIGHER
THAN REVENUE GROWTH BY 300
BASIS POINTS OR SO. THAT, IN
ITSELF, IS NOT AS BAD AS THE
9.7% DECLINE, BUT IT SHOWS THAT
EVEN WHEN REVENUE WAS GROWING,
THE COST OF SERVICES WAS REALLY
KIND OF KEEPING MOST OF THAT
GROWTH FROM COMING UNDERNEATH
IT. THE FIRST YEAR, PLUS, THERE
WAS HIGH GROWTH, HIGH
INFLATION RATE TO KIND OF
INTERFACE WITH THE NEWS YOU
HEARD EARLIER TODAY, ON THE
GENERAL FUND REVENUE KIND OF
SUMMARY TABLE THAT YOU WERE
SHOWN. WHAT STUCK OUT TO ME WAS
THAT INFLATION AND REVENUE
GROWTH , IT IS ESSENTIALLY
KEEPING PACE WITH ONE ANOTHER .
IN AND OF ITSELF, THAT IS NOT
A BAD THING. HOWEVER, IT DOES
NOT PROVIDE A LOT OF ROOM FOR
A GOOD SITUATION, AND IT DOES
NOT DIG YOU OUT OF FISCAL ALL,
WHEN YOU ARE FACED WITH THIS
KIND OF A CHALLENGE, BUT THAT
IS KIND OF WHAT IS ATTACHED ,
AND TO KIND OF UNDERSTAND, IT
IS NOT THE WORST CASE, BUT, WE
WOULD LIKE TO SEE THE
EXPERIENCE HAPPENING NOW, AND
THAT WOULD GIVE US THE
ASSISTANCE TO MEET THAT
CHALLENGE. AND NOW, I WILL
JUST SAY, LINKED AT THE
BOTTOM OF THE SLIDE IS A PAPER
THAT WE DID EARLIER IN THE YEAR
THAT KIND OF GIVES MORE OF A
NARRATIVE OF THIS FISCAL
HISTORY. NOW, THIS NEXT SLIDE
TIES THOSE UNDERLYING GROWTH
DYNAMICS TO THE ADOPTED
REVENUE AND EXPENDITURE BUT
IT'S FROM 2019 TO 2024, TO
SHOW YOU REALLY TWO THINGS,
ONE, JUST HOW THE REVENUE IS
SHOWN IN THE GREEN LINE, AND IT
DID NOT KEEP PACE WITH THE
STACKED BAR CHARTS. AND THEN,
SECOND TO SHOW, YOU CAN LOOK,
IF YOU SEE, IN THESE CHARTS,
THERE ARE THREE COLORED
CATEGORIES, ONE IS THE 2019
BASE, AND WE USED 2019 FOR TWO
REASONS, NUMBER ONE, PRIOR TO
THAT, WE HAD CONTRASTING
BUDGET SYSTEMS MAKING IT HARD
TO PARCEL OUT INFORMATION IN
THE SAME WAY THAT OUR NEW
SYSTEM IS MORE FLEXIBLE AND
EASIER TO DO THESE TYPES OF
CATEGORIZATIONS. SECOND, THAT
WAS LAST YEAR, WE HAD A
STRUCTURALLY BALANCED BUDGET,
AS I WAS EXPLAINING, THE
EXPENDITURES ARE BROKEN INTO
THREE CATEGORIES, THE 2019 BASE
, SHOWN IN ORANGE, BASELINE AND
TECH CHANGES, AND ANNUAL WAGE
INCREASES, VENDOR CONTRACT
PAYMENTS. THINGS THAT ARE
SUBMITTED BY THE BUDGET OFFICE
FOR, YOU KNOW, KEEPING THE
BUDGET UP-TO-DATE, WITH THE
INCREASES IN OUR COSTS AND
OTHER LEGAL REQUIREMENTS THAT
WE WILL HAVE TO MEET, IT IS ALL
A POLICY DECISION. THESE ARE
VIEWED MORE AS UPDATING THE
BUDGET TO KEEP CURRENT WITH
COST GROWTH. AND THEN IN
ORANGE , NOT ORANGE BUT GRAY,
THESE ARE POLICY CHANGES, THIS
IS WHERE THE BUDGET WAS AMENDED
TO ADD NEW PROGRAMS. THE KEY
TAKE AWAY, AS YOU MOVE FROM
2019 THROUGH 2024, YOU CAN SEE
HOW THOSE DIFFERENT CATEGORIES
HAVE GROWN OVER TIME. AND THE
BLUE CATEGORY IS NOT GOING TO
GROW, ORANGE, HOWEVER , BY
2024, THAT REPRESENTS ABOUT
75% OF THE TOTAL GROWTH OVER
THOSE FOUR YEARS. THAT IS THE
BUDGET BEING AMENDED TO KEEP UP
WITH THE INFLATION THAT WE WERE
LOOKING AT IN THE PRIOR SLIDE
AND THEN, THE GRAY, THAT
REPRESENTS THE POLICY
DECISIONS. AND THAT IS ABOUT
$90 MILLION BY 2024, THAT
INCLUDES THINGS LIKE THE CLEAN
CITIES INITIATIVE, UNIFIED CARE
TEAM , AND SOME OF THESE BUDGET
CHOICES THAT IT BEEN MADE TO
KEEP UP WITH EMERGING PROBLEMS
DURING THE PANDEMIC. AS WELL,
I WOULD SAY, THIS INCLUDES
HUMAN SERVICE PROVIDER
CONTRACT ADJUSTMENTS. AND I
WANT TO HIGHLIGHT THOSE.
BECAUSE THOSE CONTRACT
ADJUSTMENTS ARE RESPONDING TO
THE SAME SORT OF INFLATIONARY
FACTORS THAT WE WERE ADDRESSING
IN THE BASELINE AND TECHNICAL
CHANGE CATEGORY. SO, IN A WAY,
THE ORANGE CATEGORY IS US
KEEPING UP WITH THE INTERNAL
CITY COST, THOSE HUMAN
SERVICES CONTRACTOR INCREASES
ARE ALLOWING THOSE CONTRACT
PROVIDERS TO KEEP UP WITH THE
SAME PRESSURES THAT THE CITY
WAS SEEING. AND THEN, FINALLY,
JUST TO KIND OF SUM THIS
CHARGE UP, GIVEN THE UNDERLYING
GROWTH DYNAMICS,
UNFORTUNATELY, THE GREEN LINE
IS BELOW THE STACKED BARS ,
THAT INDICATES WHAT HAPPENED
IN 2024.
>> THANKS, TOM. WE HAVE DONE
A DEEPER DIVE INTO WHAT IS THE
PROBLEM. NOW, THE NEXT QUESTION
IS, WHAT ARE THE TOOLS TO
ADDRESS THE PROBLEM? SO, WE
HAVE ORGANIZED THIS INTO THREE
BUCKETS, I WILL NOT SPEND A
TREMENDOUS TIME, BECAUSE WE
WILL HAVE DEEPER DIVES IN
FUTURE COMMITTEE MEETINGS AND
INTERNAL DISCUSSIONS. THESE ARE
GROUPED INTO THREE BUCKETS,
EXPENDITURES, REVENUES, AND
RESTRICTED FUNDS. ARGUABLY,
THE RESTRICTED FUNDS BUCKET IS
PART OF THE EXPENDITURE AND
REVENUE PROJECT. BUT, THERE
HAS BEEN ENOUGH FOCUS ABOUT
LOCALLY RESTRICTED FUNDS AND
WHAT ROLE THEY WILL PLAY IN
SEPARATING OUT THE ADJUSTED
BUDGETED THE EXECUTIVE HAS
ALREADY IMPLEMENTED A HIRING
FREEZE THIS YEAR AND IS LOOKING
AT NEW SPENDING CAREFULLY
BEFORE MOVING FORWARD WITH THAT
IS ONE STRATEGY TO HELP SAVE
MONEY THIS YEAR THAT CAN HELP
MITIGATE SOME OF THE STRUGGLES
IN BALANCING THE '25 AND '26
BIENNIUM. MANY OF THESE
REQUIRE PARTNERSHIPS WITH THE
EXECUTIVE, I MEAN, ALL OF THESE
TOOLS DO, BUT SOME OF THEM ARE
BETTER IMPLEMENTED OR
DEVELOPED BY THE EXECUTIVE, BUT
IT IS IMPORTANT FOR THE COUNCIL
TO WEIGH IN ON WHICH TOOLS YOU
ARE INTERESTED IN PURSUING AND
BEING A PARTNER IN THINKING
THROUGH HOW THAT MIGHT HELP
ADDRESS THE DEFICIT, INCLUDING
THINGS LIKE EARLY RETIREMENT
PROGRAMS, IN THE SHORT TERM IT
MAY NOT SAVE MONEY BUT IT IS A
GOOD STRATEGY TO RETAIN
YOUNGER AND MORE DIVERSE STAFF,
IN THE LONG TERM YOU WILL SAVE
MONEY ON WAGES, MAKING SOME OF
THOSE PERMANENT, LIKE TOM
MENTIONED, AND OF COURSE,
LOOKING AT REDUCTIONS TO REDUCE
ONGOING EXPENSES , AND/OR
CONSOLIDATING LINES OF
BUSINESSES IF THERE ARE
EFFICIENCIES THAT COULD BE
IMPLEMENTED THROUGH THOSE
ACTIONS, THAT MIGHT INCLUDE
SAVINGS OR JUST PROVIDING
BETTER SERVICES TO THE
COMMITTEE. ON THE REVENUE SIDE,
OF COURSE, YOU COULD ADOPT NEW
REVENUE, ANOTHER STRATEGY WOULD
BE TO NOT ADD NEW SPENDING,
ESPECIALLY ONGOING SPENDING OF
ACTUAL REVENUES OUTPERFORMING
THE FORECAST. IN THE
PRE-PANDEMIC YEARS, WHEN WE SAW
THAT BIG SEPARATION BETWEEN
INFLATION AND REVENUE GROWTH,
IF WE HAD MADE BIG
INVESTMENTS, RATHER THAN
EXPANDING THE ONGOING SERVICES,
WE MIGHT'VE HAD A DIFFERENT
CONVERSATION TODAY. ALSO
ACKNOWLEDGING , THE CITY WAS
RESPONDING TO THE NEEDS . NOT
AN EASY JOB THAT YOU ALL HAD
BEFORE YOU. AND THEN ALSO
LOOKING AT OUR CITY SERVICES.
SOME ARE A FEE FOR SERVICE, AND
LOOKING AT WHETHER OR NOT
THOSE PROGRAMS ARE ACHIEVING
COST RECOVERY. PERIODICALLY,
THE CITY WILL REVIEW THOSE.
SOMETIMES THERE ARE REASONS TO
NOT INCREASE THEM BUT IT MAY BE
WORTH REVIEWING AND SEEING IF
ADJUSTMENTS COULD BE MADE TO
ADDRESS THE GAP IN THE GENERAL
FUND AND OF COURSE, REVIEW
SPENDING ON LOCALLY-RESTRICTED
FUNDS, I LISTED SOME OF THEM
HERE, THESE ARE FUNDS THAT HAVE
SPECIFIC SPENDING RESTRICTIONS,
BUT THEY HAVE BEEN IMPOSED
LOCALLY BY THE CITY. AND SO,
COUNCIL HAS THE AUTHORITY TO
AMEND HOW THOSE FUNDS ARE
ALLOCATED AND INVESTED. I WILL
NOTE, THAT IS NOT AN EASY
CHOICE. MANY HAVE BEEN
PROGRAMMED FOR ONGOING EXPENSES
AND PART OF THAT IS THE
EXPENDITURE EXERCISE. THIS
JUST SUMMARIZES WHAT WAS
COVERED TODAY . YOU KNOW? IT
IS A HARD STORY, BUT WE HAVE
COVERED IT SO MANY TIMES, IT
WILL BE EVERYONE'S ELEVATOR
SPEECH. INFLATION, I THINK THAT
IS THE WORD OF THE DAY. AND SO,
THAT IS ACCOUNTING FOR MUCH OF
THE GROWTH IN EXPENDITURES AND
WHAT IS IMPACTING OUR REVENUES.
THAT HAVE NOT KEPT PACE WITH
THOSE INFLATIONARY INCREASES.
THERE ARE A MIX OF TOOLS FOR
YOUR CONSIDERATION THAT WE WILL
BE DIGGING IN WITH YOU ALL
THROUGHOUT THE YEAR SO THAT YOU
ARE READY TO MAKE DECISIONS
THIS FALL WHEN YOU RECEIVE THE
PROPOSED BUDGET. SO, WE ARE
GOING TO TRANSITION A LITTLE
BIT. DO YOU WANT ME TO KEEP
GOING THROUGH THE REST OF THE
PRESENTATION, SHARE STRAUSS ?
>> AT 11:15, I AM GOING TO ASK
FOR QUESTIONS FROM ANYONE WHO
HAS TO LEAVE AT 11: 30. I KNOW
THAT VICE CHAIR RIVERA IS
ONE OF THOSE FOLKS. I KNOW THIS
WILL LEAD INTO FUTURE
MEETINGS. THIS IS THE REVIEW
AND EXAMINATION OF OUR CITY
BUDGET THAT HAS NOT BEEN DONE
BEFORE. THE DEFINITION OF
AUDIT IS A REVIEW AND
EXAMINATION OF YOUR WORK, FOR
ANYONE WHO WANTED AN AUDIT OF
OUR BUDGET, THIS IS IT. TAKE
IT AWAY, DEPUTY DIRECTOR.
>> THANK YOU, CHAIR STRAUSS.
OKAY, TO FACILITATE THE
REVIEW AND EXAMINATION OF THE
BUDGET, THAT WE PREPARED FROM
2019 -2024, PROVIDING DETAILS
ON EACH DEPARTMENT'S BUDGET
AND DEVELOPING THE PROGRAMMATIC
CHANGES, FOCUSING ON KEY
DRIVERS OF GROWTH. THE INTENT
REALLY IS, AS CHAIR STRAUSS
SAID, TO PROVIDE THE
INFORMATION TO BE ABLE TO HAVE
THOSE INFORMED CONVERSATIONS
ABOUT HOW TO ADDRESS THE
STRUCTURAL PROBLEM. AND AGAIN,
BECAUSE OF THE PROJECTED
DEFICIT IN THE GENERAL FUND AND
BECAUSE THE MAYOR IS REVIEWING
THE EXPENSE TAX FUND, I WILL
JUST SAY THE JUMPSTART FUND,
THE POLICIES WILL DETERMINE ON
WHETHER THAT WILL BE USED, THE
FOCUS OF OUR ANALYSIS IS REALLY
ON THE JUMPSTART FUND AND WE
GROUP ALL FUNDS TOGETHER, WE DO
COVER THE BUDGET, THOSE ARE
REALLY ON THOSE TWO FUNDING
DISCUSSIONS, BUT WE ARE HAPPY
TO DIG IN , IF YOU HAVE
QUESTIONS, AND AGAIN, THE GOAL
IS TO HELP IDENTIFY PRIORITIES
AND FIGURE OUT WHICH NUMBERS
YOU ARE INTERESTED IN PULLING
UPON TO ADDRESS THE STRUCTURAL
DEFICIT. THROUGHOUT THE REVIEW,
WE HAVE SEPARATED OUT THE
CAPITAL BUDGETS , AND THIS
SLIDE GIVES YOU A PICTURE OF
THE SPLIT BETWEEN OPERATING
CAPITOL -- CAPITAL, IT IS
ABOUT 80/20 SPLIT, IT IS A
DIFFERENT ANIMAL, IT VARIES
FROM YEAR TO YEAR, AND THESE
CHANGES DO NOT NECESSARILY
REFLECT POLICY SHIFTS . THEY
REFLECT A LOT OF THINGS GOING
ON WITH THE CONSTRUCTION MARKET
AND HOW AND WHEN PROJECTS CAN
BE DELIVERED. BUDGETARY CHANGES
OVER TIME CAN REPRESENT AREAS
OF FOCUS DETERMINED BY THE
PLAN. WE SEPARATE OUT THOSE
SECTIONS OF CAPITAL
DEPARTMENTS FROM THE OPERATING
BUDGET. THEN, THROUGHOUT THE
REVIEW, AS I SAID, WE PRESENT
THE DATA, SEPARATED BY THE
GENERAL FUND, GEMSTAR FUND, AND
OTHER SOURCES, SO THIS TABLE IS
A SNAPSHOT OF THE CITYWIDE
LEVEL, TO PROVIDE A BROAD LOOK
AT THE FIVE-YEAR PERIOD, SINCE
2019 THE BUDGET HAS INCREASED
BY ABOUT $1.7 BILLION, THAT IS
A 29% INCREASE OVER THE
FIVE-YEAR PERIOD, REPRESENTING
AN INCREASE OF ABOUT 5.8%,
THIS IS DURING A PERIOD OF TIME
WHEN INFLATION WAS ABOUT 5%, SO
TRENDING BACK TREADING WATER.
AS TIME HIGHLIGHTED, THIS IS
DRIVEN BY BASELINE AND
TECHNICAL ADJUSTMENTS ,
RESPONDING TO HISTORICALLY
HIGH IN PLACEMENT, WHEN YOU ARE
LOOKING AT JUST SHEER DOLLARS,
THAT OCCURRED IN THE SEATTLE
PUBLIC UTILITIES, THE SEATTLE
CITY LIGHT, HUMAN SERVICES,
AGAIN, THE PRIMARY DRIVER IS
INFLATIONARY INCREASE ,
INFLATIONARY INCREASES AND A
LOT OF THAT IS HAVING TO DO
WITH THE COST OF LABOR, MOST OF
THE SERVICES RELY ON WORKERS TO
DELIVER THOSE CITIES,
PARTICULARLY THE SERVICES
DELIVERED BY THE GENERAL FUND,
SO THE PERSONAL COST ACROSS ALL
FUNDS COMPRISES ABOUT 20% OF
THE 2024 BUDGET, 30% OF THE
OPERATING BUDGET, WHEN
SEPARATING I, AND OVER HALF OF
THE GENERAL FUND BUDGET, THIS
EXCLUDES OTHER COSTS THAT MAY
BE ASSOCIATED WITH THIS
POSITION, FOR EXAMPLE, IF YOU
HAVE A POSITION THAT REQUIRES
THAT YOU HAVE ACCESS TO A
VEHICLE, YOU KNOW, IN ORDER TO
DO YOUR JOB? THIS DOES NOT
INCLUDE THOSE COSTS. A LOT OF
OUR BUDGET IS FOR PEOPLE TO
DELIVER SERVICES TO OTHER
PEOPLE. AND THEN OF COURSE,
THERE HAVE BEEN SOME NEW AND
EXPANDED SERVICES, FOR EXAMPLE,
THE JUMPSTART PAYROLL EXPENSE
TAX REVENUES, THEY ACCOUNT FOR
ABOUT 90% OF THE GROWTH IN THIS
PERIOD , SO THAT IS
SIGNIFICANT, THERE ARE NEW
LEVIES THAT REPRESENT SOME OF
THE GROWTH ACROSS ALL FUNDS.
AND OF COURSE, THERE HAS BEEN
SOME SPENDING SUPPORTED. AND I
WILL POINT OUT, AT THE BOTTOM
HERE, THE TOTAL FTE GROWTH,
AND I THINK THIS REALLY
REFLECTS, OVERALL, THE NUMBER
OF EMPLOYEES IN THE CITY,
HAVING INCREASED IN THIS, BUT
THE COST OF PAYING FOR
EMPLOYEES AS INCREASED, SO THAT
IS WHAT IS DRIVING MUCH OF
THAT.
>> WE HAVE REACHED 11:15 , AND
YOU HAVE ABOUT THREE MORE
SLIDES. VICE CHAIR, I WILL PASS
IT OVER TO YOU. TAKE IT OVER,
DEPUTY CHAIR.
>> THESE WILL BE VERY BRIEF,
THE NEXT TWO SHOWED THE BUDGET
GROWTH , FRAMED IN THE SIX
POLICY AREAS. WHAT WE HAVE DONE
IN THE CENTRAL STEP BUDGET
REVIEW, WE HAVE ORGANIZED
INFORMATION CONSISTENT WITH HOW
THEY ORGANIZE THE BUDGET
BOOKS, SO THAT WE ARE SWIMMING
IN THE SAME DIRECTION IN HOW WE
LOOK AT THE DATA AND PRESENT
INFORMATION. WHEN LOOKING
ACROSS THE ENTIRE CITY BUDGET,
IN SHEER NUMBERS, UTILITIES
AND TRANSPORTATION AREAS SAW
THE BIGGEST INCREASE, THESE ARE
CAPITAL DEPARTMENTS THAT
COMPRISE ABOUT 15% OF THE 2024
BUDGET, AND WITH THE FOUR
MAJOR UTILITIES AND THE MAJOR
CAPITAL DEPARTMENT
TRANSPORTATION, YOU WOULD
EXPECT THOSE TO BE LARGE. BUT
THE INCREASE IS NOT REALLY THAT
MUCH OF A SURPRISE. GOING TO
THE NEXT SLIDE, THIS IS THE
SAME FRAMING, BUT JUST LOOKING
AT THE GENERAL FUND. LOOKING AT
THIS SLIDE, YOU CAN SEE THE
PUBLIC SAFETY COMPRISES THE
MAJORITY, ABOUT 50% OR MAYBE
OVER 50% OF THE GENERAL FUND
BUDGET, LOOKING AT WHERE THE
MOST GROWTH HAS OCCURRED, THAT
IS IN THE EDUCATION AND HUMAN
SERVICES POLICY AREA, THAT IS
ABOUT A $120 MILLION INCREASE
OVER FIVE YEARS, FOLLOWED BY
THE PUBLIC SAFETY CATEGORY THAT
GREW BY ABOUT $109 MILLION.
THIS IS JUST AN INITIAL LOOK AT
SOME OF THE REVIEW WE ARE
DOING, AGAIN, WE WILL BE
PROVIDING A DETAILED LOOK AT
EVERY DEPARTMENT. IT WILL TELL
YOU EVERYTHING -- WON'T TELL
YOU EVERYTHING, BUT YOU WILL
BE ABLE TO GET INTO THE
CONVERSATION AND FOCUS ON SOME
OF THE FUTURE ANALYSIS. AND ,
JUST THIS SUMMARIZES MUCH OF
WHAT I SAID. SO, I WILL NOT
REPEAT IT . BUT IT IS THERE FOR
YOUR REFERENCE.
>> PLEASE PUT A CAP ON YOUR
PRESENTATION.
>> AGAIN , IT GREW BY ABOUT
1.7%, THESE BULLET POINTS
OUTLINE WHAT I WENT OVER, THAT
IS ABOUT 5.8% PER YEAR, DURING
A PERIOD OF HIGH INFLATION,
MOST OF THE BUDGET GROWTH
OCCURRED ACROSS THOSE FOUR
DEPARTMENTS, AND INTRODUCTION
OF NEW REVENUE SOURCES IS ALSO
A SIGNIFICANT PORTION OF THE
CITYWIDE GROWTH , AND LOOKING
JUST AT THE GENERAL FUND, GIVEN
THAT THAT IS WHERE THE MOST
QUESTIONS ARE, BEFORE YOU,
THERE IS ABOUT 26% INCREASE, OR
5.2% PER YEAR, SO ALSO
TRACKING, AND THEN, THE
MAJORITY WAS WITHIN THE HUMAN
SERVICES DEPARTMENT AND THE
FIRE DEPARTMENT, WHEN LOOKING
AT DEPARTMENTS, FOLLOWED BY
GROWTH, THE NON-DEPARTMENTAL
BUDGET, THE PARKS DEPARTMENT,
THE DEPARTMENT OF
TRANSPORTATION, AND PUBLIC
UTILITIES. SO, LIKE I SAID,
THIS IS AN INITIAL DISCUSSION.
WE HAVE BEEN WORKING CLOSELY
WITH CHAIR STRAUSS TO IDENTIFY
KEY PRESENTATIONS FOR FUTURE
COMMITTEE DISCUSSIONS. THIS
WILL INCLUDE ANOTHER LOOK AT
OUR 2019-2024 REVIEW, LOOKING
AT THE DEPARTMENT LEVEL, THE
SOURCES OF REVENUE, WE WILL DO
A FULL LOOK, AND IT WE WILL
LOOK AT WHAT THE ASSOCIATED
RESTRICTIONS ARE, AND THAT
WILL PROVIDE BACKGROUND ON SOME
OF THE POLICY DECISIONS THAT
HAVE INFORMED THEM TO DATE, TO
HELP YOU THINK ABOUT WHAT THE
POLICY CHOICES MAY BE IN THE
FUTURE AND THEN WE WILL UPDATE
THE GENERAL FUND BALANCE
ANALYSIS, BASED ON THE FORECAST
UPDATE AND HOW IT ENDED. AND WE
WILL BE WORKING TO FINALIZE,
AND THEN PRESENT A FALL BUDGET
CALENDAR. AS WELL AS THE
PROCESS, BUT AGAIN, WE HAVE
BEEN AUTOMATING CLOSELY WITH
CHAIR STRAUSS AND WE WILL SHARE
THAT AS SOON AS WE HAVE READY.
>> MY APOLOGIES FOR NOT
MANAGING OUR TIME WELL ENOUGH.
IN THE FUTURE, I WILL PREFER
FOR THE ABILITY TO ASK
QUESTIONS AS WE GO ALONG, I
THINK THAT THE CONVERSATION IS
ALWAYS BETTER THAN A ONE-WAY
OR TWO-WAY CONVERSATION.
UNDERSTANDING WHERE WE ARE
TODAY. THANK YOU FOR HOLDING
YOUR QUESTIONS. VICE CHAIR, I
KNOW THAT YOU HAVE A HARD STOP
AND I HAVE A NUMBER OF
QUESTIONS AND I WILL HOLD MOST
OF THEM. BUT I WILL TURN THE
FLOOR MOSTLY OVER TO YOU.
>> NO NEED TO APOLOGIES. AS FAR
AS I AM CONCERNED, THIS IS
IMPORTANT AND WE DO NOT KNOW
HOW MANY QUESTIONS WILL GET
ASKED, SO I REALLY APPRECIATE
THE OPPORTUNITY TO ASK THE
QUESTIONS AND I AM SORRY, I
KNOW THAT I HAVE ALREADY ASKED
A NUMBER OF QUESTIONS. I WILL
TRY TO BE QUICK ON THIS ONE,
THIS IS A POINT TO UNDERSCORE
THE POINT THAT TOM MADE THAT I
THINK IS IMPORTANT TO THE
BUDGET DISCUSSION IN GENERAL
AND THAT IS THE IDEA OF THE
ONE-TIME ASK, ONCE THE ONE-TIME
ASK CONTINUES, IT NO LONGER IS
A ONE-TIME THING, IT IS NOW
ONGOING. THE TRICKY PART IS, IF
YOU WANT TO KNOW WHEN IT WAS
ADDED, YOU HAVE TO GO BACK INTO
PREVIOUS BUDGETS FOR THAT
DEPARTMENT TO SEE, WHEN WAS
THAT ADDED AS A ONE TIME, AND
THEN THE OTHER TRICKY PART,
WHEN IT IS ADDED IN SUBSEQUENT
YEARS, WE DO NOT ALWAYS HAVE
THE OUTCOME, BY WHICH WE CAN
MEASURE WHY IT COULD BE ADDED
IN SUBSEQUENT YEARS. SO I
REALLY WANT TO HIGHLIGHT THAT,
BECAUSE IF YOU ARE LOOKING AT
YOUR DEPARTMENT AND YOU ARE
CURIOUS ABOUT CERTAIN THINGS
THAT HAVE BEEN ADDED ONE TIME,
WHAT THEY ARE, YOU HAVE TO GO
BACK SOME YEARS TO FIND THAT.
AND THEN ALSO, YOU HAVE TO FIND
-- TALK TO THE DEPARTMENT ABOUT
THE OUTCOME'S PIECE. LIKE I
SAID, GENERALLY SPEAKING, WE DO
NOT ALWAYS DO THE OUTCOMES
EXERCISES THAT YOU SHOULD BE
DOING WHEN WE THEN MAKE THE
DECISION TO CONTINUE IT AS AN
ONGOING AD. AND THIS IS WHY I
AM ALSO GOING TO SAY THAT IT IS
TRICKY TO CALL THINGS ONE TIME
AND IT IS TRICKY TO CALL THINGS
PILOTS. AT THE CITY OF
SEATTLE, THOSE THINGS TEND TO
CONTINUE ON. AND SO, I JUST
FLAG IT FOR YOU COLLEAGUES, AS
YOU ARE LOOKING AT YOUR
DEPARTMENTS AND THEIR BUDGETS.
AND I VERY MUCH APPRECIATE THE
EXERCISE THAT CENTRAL STAFF IS
ENGAGED IN, IN TERMS OF
LOOKING BACK, A NUMBER OF
YEARS, TO HELP US, AS WE HAVE
THIS DISCUSSION AND WE GIVE YOU
THE DEPARTMENT 'S PARTICULAR
BUDGETS THAT WE LOOK AT, AS WE
DO OUR COMMITTEE WORK. THANK
YOU. AND THANK YOU FOR THIS
EXCELLENT PRESENTATION. THANK
YOU, CHAIR.
>> I SEE A NUMBER OF FOLKS
HAVE THEIR HEADS UP. I HAVE A
NUMBER OF QUESTIONS THAT I
WOULD LIKE TO PICK THROUGH
RATHER QUICKLY, IF YOU COULD GO
BACK TO SLIDE TWO. I HAVE
COUNCILMEMBER MORALES, AND
COUNCILMEMBER WOO WITH
QUESTIONS. THIS IS THE
EXERCISE OF THE YEAR, BUT WE
HAVE ON THIS CHART, THAT IS
CLOSING THE STRUCTURAL CHART.
IF YOU COULD FORWARD ONE MORE
SLIDE, YOU CAN SEE, WHEN I SAY
THAT WE HAVE KNOWN ABOUT THIS
PROBLEM SINCE 2019, WE HAVE
KNOWN THAT IT WAS A POTENTIAL ,
IF WE STOPPED BEING THE
FASTEST-GROWING CITY IN THE
NATION, OR IF REVENUES
INCREASED , WE WERE GOING TO BE
IN A LOT OF TROUBLE, SO IF YOU
COULD GO BACK TO SLIDE TWO,
THIS IS JUST THE GENERAL FUND,
AS THE DEPUTY DIRECTOR AND TOM
HAVE POINTED OUT, THIS DOES NOT
TAKE IN ACCOUNT ALL OF THE
FUNDS IN THE CITY. AND
ACTUALLY , THIS HOLE HAS BEEN
PATCHED WITH ONE-TIME FUNDS,
IF YOU WANT TO GO TO SLIDE
THREE, I SAID THIS BEFORE, IT
WAS NOT JUST A 9.7 DEGREES, IT
WAS 16.7% DECREASE. AND THAT
WAS REVENUE GROWTH, BECAUSE WE
WENT FROM A HIGH OF 7%. WE
COULD HAVE MADE IT REALLY HARD
DECISIONS DURING THE PANDEMIC,
WHEN YOU ARE WORKING FOR
VIRTUALLY . I CAN TELL YOU
BEING ABLE TO WORK WITH ALL OF
YOU IN PERSON AT CITY HALL HAS
INCREASED PRODUCTIVITY AND IN
MANY WAYS HAS INCREASED
COMMUNICATION, COLLABORATION, I
AM PERSONALLY VERY GLAD THAT WE
ARE LEAVING SOME OF THESE
QUESTIONS IN THE , QUOTE -
UNQUOTE, FIRST POST- PANDEMIC
PERIOD ON THIS CHART. THIS
DOES SHOW, SPEAKING ABOUT THE
PREVIOUS PRESENTATION, WE HAVE
SALES TAX DOWN, WE HAVE THE
REAL ESTATE EXCISE TAXES DOWN,
AND JUMPSTART IS UP, THAT IS
JUST WHERE WE ARE. SO, WITHOUT
JUMPSTART , WE WOULD BE IN A
VERY PROBLEMATIC SITUATION. I
CANNOT UNDERSCORE THAT ENOUGH.
IF WE COULD GO TO SLIDE FOUR,
AND OF MY QUESTIONS DO NOT
GET TO WHAT YOU ARE ASKING, WE
WILL SLIDE OVER TO YOU.
ORANGE, GRAY, AND BLUE. WHERE
DOES THE PROGRAM, OR THING, FIT
? ORANGE IS INFLATION, GRAY
ARE POLICY CHANGES AND THE
BLUE IS JUST THE 2019
BASELINE, NOT INCLUDING
INFLATION, IS THAT CORRECT?
>> THAT IS CORRECT.
>> SO, THE BLUE DOES NOT
INCLUDE THE 5% AVERAGE
INFLATION THAT WE HAVE HAD OVER
THE LAST COUPLE OF YEARS. SO,
THE HUMAN SERVICES PROVIDER ,
WHEN WE HAD PAY INCREASES FOR
THE CONTRACTED HUMAN SERVICES
PROVIDERS, THEY ARE PERFORMING
A CITY DUTY. BUT BECAUSE THEY
WERE CONTRACTED THROUGH A THIRD
PARTY, THEY HAD WAGES THAT DID
NOT MATCH CITY EMPLOYEES.
THEY WERE VERY FAR BELOW WHAT
WE ARE USED TO PLAYING HERE,
WITH THAT HAVE FALLEN INTO
POLICY CHANGES, OR WOULD THAT
HAVE BEEN BASELINE TECHNICAL
CHANGES, GROWTH ?
>> CHAIR STRAUSS, I DO
BELIEVE THERE IS SOME PORTION
OF THAT INCREASE, THAT SHOWS
IN THE ORANGE, BUT THE
PREPONDERANCE OF IT WOULD SHOW
UP IN THE BLUE. SO, ALL OF
THESE TERMS ARE BUDGET TERMS
USED IN THE BUDGET BOOK, THE
CITY OFFICE 'S BUDGET BOOK.
THE POLICY CHANGE CATEGORY
INCLUDES POLICY PROPOSALS AND
ALL OF THE CONTRADICT POLICY
ADJUSTMENTS. SO, THERE WAS SOME
EVIDENCE OF THE HUMAN SERVICES
CONTRACT PROVIDER GROWTH
INCLUDED IN THE TECHNICAL PHASE
AND THERE WERE ADDITIONAL
ELEMENTS OF HUMAN SERVICE
CONTRACT WROTE THAT WERE PUT
IN THE POLICY-BASED.
>> FOR EXAMPLE, I THINK IT WAS
IN THE FALL OF 2022 WHEN THE
COUNCIL WAS CONTEMPLATING THE
BIENNIUM BUDGET FOR 2023 AND
2024, THERE WAS A POLICY
PROPOSAL TO CAP THAT
INFLATIONARY INCREASE. AND SO,
THE PROPOSED BUDGET ONLY --
DIDN'T INCREASE, DIDN'T
PROVIDE AN INCREASE FOR THOSE
CONTRACTS, THAT CONTRACT WITH
CURRENT PROJECTIONS, AND THE
COUNCIL MODIFIED THAT PROPOSAL
AND ADDED ADDITIONAL FUNDS TO
ALLOW FOR THOSE CONTRACTS TO BE
ADJUSTED TO MEET THE
HISTORICALLY HIGH RATES OF
INFLATION. SO, WHERE IS THE
LINE BETWEEN POLICY AND
BASELINE TECHNICAL ? IT IS MORE
OF AN ART THAN A SCIENCE, AND
YOU ARE REALLY JUST TRYING TO
STAY CONSISTENT WITH THE
COATING USED BY THE BUDGET
OFFICE. WE ARE COMPARING APPLES
TO APPLES, BUT EVEN IN THEIR
FACE, IT IS, IN SOME CASES, YOU
KNOW? IT IS ABOUT MORE THAN ART
THAN SCIENCE. AS TOM SAID, AT
THE END OF THE DAY, ALL OF
THESE CHANGES ARE AT YOUR
DISCRETION . THE POLICY
CHOICES, THOSE CHANGES THAT ARE
INCREASING EXPENDITURES,
BECAUSE COSTS ARE GOING UP, IF
YOU REJECT THOSE PUZZLES, IT
WOULD MEAN THAT WE ARE PAYING
MORE FOR LESS SERVICE , AND
THOSE ARE THE HARD CHOICES
THAT YOU WILL ALL BE GRAPPLING
WITH.
>> THANK YOU, ADORNING THE
PANDEMIC, WHEN WE INCREASED
THE FUNDING , THAT DOUBLED
SOMEONE EBT OR FOOD STAMPS
BENEFIT, IT DOUBLES THAT, THAT
WOULD HAVE BEEN IN THE POLICY
CHANGE, IS THAT CORRECT?
>> THAT IS CORRECT.
>> EVEN THOUGH THAT PARTY
CANNOT SERVE THE INDIVIDUAL
DURING THE PANDEMIC.
>> THAT IS CORRECT.
>> I AM GOING TO HOLD ALL OF MY
OTHER QUESTIONS. AND I CAN SEE
COUNCILMEMBER ? I KNOW YOU HAD
A QUESTION ON THIS SLIDE, I
WILL JUST PASS THIS OVER TO
YOU.
>> THE ORANGE AREA, DOES THAT
INCLUDE THE LABOR CONTRACTS?
>> YES, THAT WOULD INCLUDE
CITY EMPLOYEE COST INCREASES.
AND I WILL JUST NOTE , THIS IS
BASED ON THE ADOPTED BUDGET,
THIS ORANGE DOES NOT YET
REFLECT THE COST OF THE
RECENTLY APPROVED COALITION,
LIKE THE 25 BUDGET, THAT HORN
SECTION .
>> THAT WILL BE COALITION
AGAIN?
>> I JUST USE COALITION, ANY
CONTRACT THAT CLOSE, BUT ARE
NOT YET REFLECTED, THAT WILL
CLOSE.
>> COUNCILMEMBER MOORE AND I
ARE HAVING WAVELENGTH
SYMMETRY. COUNCILMEMBER
MORALES?
>> YOU ALREADY ANSWERED A FEW
QUESTIONS ABOUT THIS PARTICULAR
SLIDE. THE ORANGE SECTION
INCLUDES THE RESERVES? WHY
DOES THAT KEEP INCREASING?
>>> RESERVE AMOUNTS FOR MANY
THINGS, WERE COST IS IN
DEVELOPMENT OF THE NEGOTIATION.
THEY ARE NOT INCLUDED IN THE
APPROPRIATION REQUEST. THE
APPROPRIATION PROPOSAL IS FROM
THE MAYOR. THEY HAVE ESTIMATED
COSTS FROM THE CITY. THEY ARE
NOT IN THE APPROPRIATED BUDGET.
THE FINANCIAL PLAN, THOSE
AMOUNTS ACCUMULATE OVER TIME,
UNTIL SUCH TIME AS THOSE COSTS
COME EFFECTIVE IN THE BUDGET.
THE LABOR AGREEMENT IS SIGNED.
THEY BECOME PART OF THE
APPROPRIATED BUDGET. FOR THE
PURPOSES OF THIS PARTICULAR
GRAPH, THOSE HAVE ALL BEEN
INCLUDED. THOSE ARE ALL
OBLIGATIONS AGAINST THE GENERAL
FUND.
>> I AM RECALLING, NOT EXACTLY
WHEN I SAW IT. THERE WAS
ANOTHER PRESENTATION IN THE
LAST SIX MONTHS OR SO. IT LOOKS
LIKE SPENDING WAS DRAMATICALLY
INCREASING. THE PLANNING
RESERVES WERE COMPOUNDING IN
THE WAY THAT IT WAS PRESENTED.
IT SEEMS TO ME, A BETTER WAY
OF US GETTING SOME TRANSPARENCY
AROUND THAT. WE CAN APPROPRIATE
PLANNING RESERVES EVERY YEAR.
MAYBE WE CAN HIDE THE BALL, SO
TO SPEAK. WE CAN PUT IT IN
TOWARDS THE END. CAN WE TALK A
LITTLE BIT ABOUT THAT PROCESS?
IS THERE A BETTER WAY FOR US TO
UNDERSTAND WHAT WE ARE REALLY
DEALING WITH?
>> ABSOLUTELY. TWO GRAPHS
PRIOR TO THIS, IS THE WAY WE
SHOW THE POLICY SEGMENT. WHERE
USING THE SAME NUMBER THAT THEY
USE TO DESCRIBE WHAT WE DO IN
THIS GRAPH. THIS IS US
DESCRIBING THE ANNUAL GROWTH AS
A COST. THIS ENABLES YOU TO
SEE VERY CLEARLY, WE HAVE
COMMON SENSE TERMS. THE
EXPENDITURES ARE THIS. WHEN YOU
ACCUMULATE THE PLANNING
RESERVES AS A BELOW THE LINE
ITEM, YOU DON'T REALLY SEE
THAT PICTURE VERY CLEARLY. I
HAVE A DEGREE IN FINANCE. I
HAVE TO WRAP MY MIND AROUND WHY
THAT MAKES SENSE. I'M MORE
FAMILIAR WITH THE REPROACH --
APPROACH, WE LOOK AT THE GAP.
THAT IS HOW YOU IDENTIFY THE
SUSTAINABILITY CHALLENGE THAT
YOU HAVE READ RESERVES IN THE
BUDGET, SIMPLY ADD MORE
TRANSPARENCY TO THE BUDGET.
LOOKING AT THE FINANCIAL PLAN,
THERE IS THE BREAD JUST --
BUDGET APPROPRIATION LINE. THIS
IS POSITIVE. YOU HAVE TO GO A
FEW STEPS DOWN, LOOK AT THE
PLANNING RESERVES, AND SEE WHAT
THOSE ARE, TO GET TO THE
RESOUNDING BALANCE. THIS IS HOW
CLEAR IT IS. IT IS A DIFFERENT
APPROACH, DEPENDING ON HOW
YOU'RE LOOKING AT THE GENERAL
FINANCES. WE ARE PULLING IN THE
SAME DIRECTION. IT IS JUST MORE
CLEAR TO SHOW IT. I THINK IT
EXPLAINS THE CHALLENGE BETTER.
>> I APPRECIATE THAT. ON THAT
PREVIOUS CHART, CAN YOU JUST
CONFIRM THAT THIS CHART DOES
NOT INCLUDE REVENUE FROM
LEVEES? HOW DO WE COUNT FOR
SERVICES HERE IN THIS
PRESENTATION? SERVICES ARE
PROVIDED BY GENERAL FUND
PURPOSES.
>> THIS WOULD INCLUDE ONE LEVY.
THIS WOULD BE THE GENERAL
EXPENSE LEVY TO THE GENERAL
FUND. THOSE ARE SPECIAL AND
ACCOUNTED FOR. THE LEGAL
PARAMETERS AROUND HOW THOSE
REVENUES CAN BE USED, WILL BE
CONTROLLED FROM THIS YEAR. THIS
IS ONLY THE INCLUDED PORTION OF
THE LEVY THAT IS INTENDED TO GO
TO THE GENERAL FUND FOR GENERAL
EXPENSES.
>> THE ONLY POINT THAT I WANT
TO MAKE RIGHT THERE, WHEN
BASELINE SERVICES ARE PROVIDED,
ALL THE SERVICES THAT ARE
PROVIDED BY THE $600 MILLION A
YEAR IN LEVY REVENUE THAT WE
GET, AREN'T INCLUDED IN THIS
BASIC GOVERNMENT SOURCES.
>> THAT IS RIGHT. MAYBE
CHAIRMAN STRAUSS REFERENCE THAT
EARLIER IN THE YEAR. THERE WAS
A PROPERTY TAX PROPOSAL TO
INCREASE THE CAP ON HOW MUCH A
CITY CAN INCREASE THEIR GENERAL
PROPERTY TAX LEVY TO GENERATE
MORE GENERAL FUNDS. BECAUSE OF
THAT CAP IN PART, THERE HAVE
BEEN SPECIALIZED LEVEES THAT
ARE NOT JUST ABOUT LARGE
CAPITAL INVESTMENTS LESS
SINCERITY. -- NECESSARILY. THIS
EXPENDITURE LINE ISN'T SHOWING
ANYTHING. THIS IS NOT THE FULL
COST NECESSARY FOR BASIC
OPERATIONS. THE OFFICE OF
HOUSING, FOR EXAMPLE, I DON'T
THINK RECEIVES ANY GENERAL
FUND, OR VERY LITTLE IN THAT
BUDGET. THIS IS A SMALL PORTION
OF THAT BUDGET. THAT IS
ACCURATE.
>> COUNCIL PRESIDENT NELSON,
FOLLOWED BY COUNSEL AMEND --
COUNCILMAN WATSON.
>> I LIKE WHAT I HAVE SEEN FROM
THE PAST COUPLE OF YEARS. ONE
TIME FUNDING SOURCES. I AM
STRUCK BY THE FACT THAT IT
SEEMS OUR REVENUE GROWTH SEEMS
TO BE TRACKING WITH INFLATION.
THAT BASICALLY MEANS, WE ARE
TAKEN IN -- TAKING IN MORE
REVENUE. THERE SEEMS TO BE A
FLAT GROWTH. IS THAT A SLIGHTLY
NEGATIVE GROWTH? I BELIEVE YOU
SAID SOMETHING LIKE IT DOESN'T
REALLY HELP DIG OURSELVES OUT
OF THE HOLE THAT WE ARE IN. TO
UNDERSTAND BETTER WHAT IS
HAPPENING WITH FUTURE
PROJECTIONS FOR 2025, I JUST
COME BACK LOOKING AT THE
PREVIOUS PRESENTATION. THE
REVENUE SOURCES THAT HAVE
ECONOMIC GROWTH, KNOWING THAT
IT WOULD BE A GOOD POSITIVE
SIGN, KNOWS THAT WE HAVE THE
INCREASED COST OF GOODS AND
INFLATION. THAT WOULD BE THE
SALES TAX. IS THAT CORRECT? I
SEE IN THE SLIDE ON THOSE PAGE
NUMBERS, THEY WERE NEGATIVE IN
THOSE DEPARTMENTS FOR THE
RESULT OF THE APRIL FORECAST.
THOSE NUMBERS AREN'T CHANGED
FOR 2025-2026. DOES YOUR GRAPH
FOR 2025-2026 SHOW YOU THE GAP
AND ACCOMMODATE THOSE FIGURES
INSTALLED?
>> COUNCIL PRESIDENT. THE
ANSWER IS NO READ NOT YET. WE
MENTIONED THAT THERE WILL BE AN
UPDATE FOR THE FINANCIAL PLAN.
THIS IS IN MAY. WE HAVE TIME
FOR THE NEW INFORMATION.
>> YOU HAVE TO MARRY BOTH
REVENUE SIZE THAT WAS PRESENTED
THIS MORNING. ALONGSIDE LOOKING
AT THE EXPENDITURE. ALSO IN
THAT TABLE THAT SUMMARIZED THE
CHANGES IN THE GENERAL FUND
THAT THE FORECAST PRESENTED,
YOU SAW THAT AT THE BOTTOM.
BASICALLY, THE SAME TAKE AWAY,
WE ARE TREADING WATER. THERE IS
GROWTH. THIS IS AT A RIGHT
THAT IS GREATER THAN WHAT THEY
ARE CURRENTLY PROJECTING FOR
INFLATION.
>> RETURNING TO THE ISSUE OF
THE COLORS, CAN YOU GO TO THAT
BLUE, ORANGE, AND GRAY? I TAKE
THE POSITION THAT MOST THINGS
ARE POLICY CHOICES. FOR
EXAMPLE, WE WERE MENTIONING
THE CONTRACTS WITH EXTERNAL
PROVIDERS. AS SOON AS WE MAKE
THE POLICY DECISION TO INCREASE
THE CONTRACT BY A CERTAIN
AMOUNT FROM ANNUAL ADJUSTMENTS,
THAT IS GOING INTO THE BASE,
AND BECOMES BLUE FOR THE
FOLLOWING YEAR. CORRECT?
>> IT DOES IN THE WAY THAT WE
BUILD THE BUDGET. IN THIS CASE,
THE BLUE LINE HAS BEEN HELD
STEADY. IT IS ESSENTIALLY
COMPARING IT WHEN YOU COMBINE
THE BLUE AND ORANGE. THIS IS
SHOWING WHAT WE WERE PAYING AND
WHAT THE COST IS IN 2024 TO PAY
FOR THE SAME SERVICES THAT WE
PAID FOR IN 2019. IF WE WERE
STARTING AT 23 AS THE BASE
COMPARISON, THE ORANGE AND THE
BLUE WOULD BE COMBINED INTO ONE
BAR. THAT WOULD BE THE BASE. WE
BUILD FROM RIGHT THERE. THIS IS
A POINT IN TIME ANALYSIS. 2019,
WAS THE LAST TIME WE WERE
STRUCTURALLY BALANCED. IT
SEEMED TO WORK.
>> THANK YOU.
>> ANY FURTHER QUESTIONS,
COUNCIL PRESIDENT?
>> WE WILL COME BACK TO YOU.
>> THANK YOU, MR. CHAIR. THANK
YOU FOR THIS INSIGHTFUL
PRESENTATION. LET'S STAY ON
THIS SLIDE. THIS IS THE
PUNCHLINE SLIDE. THANK YOU FOR
THE HARD WORK THAT WENT INTO
CATEGORIZING, PICKING VISUALLY,
AND CHARTING THE VISUAL FORMAT.
WE KNOW WHAT IS GOING ON IN
SOME OF THE UNDERLYING
CIRCUMSTANCES. VERY HELPFUL
FROM MY PERSPECTIVE. I
APPRECIATE YOUR ACKNOWLEDGMENT
THAT THIS IS MORE OF AN ART,
RATHER THAN A SCIENCE. GENERAL
REVIEW AND SENTIMENT EXPRESSED
BY COUNCIL PRESIDENT. 100% OF
OUR SPENDING, IS A POLICY
DECISION. THAT CHANGES
YEAR-OVER-YEAR. AFTER ALL, WE
CAN ONLY SPEND WHAT WE MAKE
EVERY YEAR. THAT REVENUE
FLUCTUATES. IT IS INCUMBENT
UPON US TO MINIMIZE TO THE FULL
EXTENT POSSIBLE, THE HUMAN
IMPACT. OPTIMIZING THE SPENDING
FOR THE MOST IMPACTFUL SERVICES
AND PROGRAMS. EVERYTHING IS A
POLICY CHOICE. I THINK THIS IS
HELPFUL, FOR ME PERSONALLY, AS
I'M BETTER UNPACKED. HELPING
ME DECIDE WHAT IS GOING ON.
I'M CONCEPTUALIZING IT. I ALSO
WANTED TO COMMENT ON
COUNCILMEMBER RIVERA. WE NEED
TO BE REMIND FULL -- MINDFUL OF
THE ONE TIME SPENDING SOURCES.
FILLING HOLES, AND COVERING
SHORTFALLS AND PROGRAMS.
DEPARTMENTS ARE HERE IN CERTAIN
AREAS. IT IS NO LONGER ONE
TIME. WE NEED TO THINK MORE
CRITICALLY ABOUT HOW WE DO
THAT. THE QUESTION IS, ON THIS
SLIDE, I APPRECIATE HOW YOU
ATTEMPTED TO GO TO SOME
ILLUSTRATIVE EXAMPLES. CERTAIN
BUCKETS, WHAT MIGHT BE
IMPACTED? WHAT'S INCLUDED ON
THE GREAT POLICY CHANGES? YOU
MENTIONED A NUMBER OF THINGS,
INCLUDING THE UNIFIED CARE
TEAM. CAN YOU HELP ME BETTER
UNDERSTAND AND UNPACK THAT? IT
USES THE 2019 ADOPTED BASELINE.
IN THE UNIFIED CARE TEAM
ESSENTIALLY JUST A REBRANDING
OF A PROGRAM THAT IS EXISTED IN
THE CITY SINCE 2017 AT LEAST?
THIS IS GOING TO BE PERFORMING
SUBSTANTIAL SERVICES AND
FUNCTIONS. I AM JUST CURIOUS TO
UNDERSTAND HOW THE UNIFIED CARE
TEAM, WOULD BE CONSIDERED A
POLICY CHANGE UNDER THIS
CURRENT FRAMING. MAYBE I'M
MISSING SOMETHING.
>> COUNCILMEMBER, EXCELLENT
QUESTION. SPOT ON.
FUNDAMENTALLY, THE UNIFIED CARE
TEAM, IS DIFFERENT FROM WHAT WE
HAD PREVIOUSLY. YES, WE HAVE
BEEN ADDRESSING THIS SINCE
4/20/17. WE ARE SHIFTING FROM
THE NAVIGATION TEAM THAT WAS
CLOSED AND OPENED. THE WHOLE
TEAM IS PART OF THE UNIFIED
CARE TEAM, OVER TO YOU, DEPUTY
DIRECTOR.
>> I WAS GOING TO COVER PART OF
THAT. I APPRECIATE THAT
HISTORY. THERE WAS A BASE
BUDGET IN 2019 FOR THE EVENT
CALLED THE NAVIGATION TEAM.
THIS SHOWED UP IN THE BLUE
PORTION. SINCE THEN, THE
FUNCTION HAS BEEN MODIFIED,
REFINED, AND ADDITIONAL
SERVICES HAVE BEEN ADDED.
DURING THE PANDEMIC, THE
UNIFIED CARE TEAM WAS CREATED.
I DON'T REMEMBER IF IT WAS
POST-PANDEMIC OR NOT. AS IT
EXISTS TODAY, THE BASE BUDGET
THAT EXISTED IN 2019, WILL SHOW
ANY INFLATIONARY INCREASES TO
THAT. THERE HAVE BEEN
ADDITIONAL SIGNIFICANT EXPENSES
INCLUDING BUDGETS FOR S DOT.
THIS INCLUDES THE PARKS. THEY
WORK WITH THE STAFF AND TEAMS
THAT DEPUTY MAYOR WASHINGTON
HAS LED IN THE HUMAN SERVICES
DEPARTMENT. ENHANCED SERVICES,
ARE MORE RESPONSIVE FOR
CLEANUP. IT IS THAT SORT OF
THING. THE ORIGINAL BUDGET
SHOWS UP IN BLUE. THE EXPANSION
OF THOSE SERVICES ARE
RESPONDING TO THE COMMUNITY
ASKS. THIS IS INCLUDED IN THE
GRAY PORTION.
>> THE CORE FUNCTION OF THE
PROGRAM, YOU CAN CALL IT
WHATEVER YOU WANT. THIS IS
REBRANDED AS THE APPROPRIATE
POLICY MATCH HAPPENS AT THIS
TIME. WE HAVE SOME NEW
FEATURES. THE CORE
FUNCTIONALITY REMAINS THE SAME.
WHATEVER WE WANT TO CALL IT. WE
HAVE SOME NEW CAPABILITIES AND
FEATURES, WHICH THERE FOR HAVE
INCREASED THE COST. FAIRLY
ACCURATE STATEMENT OF HOW YOU
SAID.
>> THE BLUE AND ORANGE PART IS
WHAT WE ARE DOING IN 2019. THIS
IS PART OF THAT EXPANSION. MORE
PEOPLE CAN RESPOND TO THE
ISSUE. WE HAVE MORE SERVICES TO
RESPOND TO THE ISSUE. THE
DETAIL AND EXAMINATION FROM THE
BUDGET, DOCUMENT THAT WE ARE
DISTRIBUTING, AND TALKING ABOUT
THE COMMITTEE IN A FEW WEEKS.
WE ARE LOOKING AT THE HUMAN
SERVICES DEPARTMENT BUDGET.
THIS IS WHAT HIGHLIGHTS THOSE
INVESTMENTS ACROSS SEVERAL
DEPARTMENTS. AGAIN,
COUNCILMEMBER STRAUSS, WE CAN
SHARE MORE DETAILS WITH SOME OF
THAT WORK WITH YOU OFF-LINE.
>> ANY FURTHER QUESTIONS?
>> NO. THANK YOU, MR. CHAIR.
>> I WILL RIFF OFF OF YOU. IF I
WANTED TO EXPAND THE UNIFIED
CARE TEAM, WHICH HAS THE SAME
CORE FUNCTION AS THE NAVIGATION
TEAM, BUT DOES MUCH MORE TO
EXPAND IT, HOW DO WE ADDRESS
HOMELESSNESS WHICH HAS RESULTED
IN BETTER OUTCOMES? MORE
FUNDING FOR THAT TEAM AS A
RESULT OF BETTER OUTCOMES? IF
WE WANTED TO EXPAND IT FROM
FIVE-DAY SERVICE TO SEVEN-DAY
SERVICE, WOULD THAT BE GRAY OR
ORANGE?
>> THAT WOULD BE GREAT.
>> WE ARE 13 MINUTES OVER. WE
ARE 17 MINUTES OVER.
COUNCILMEMBER, I SEE YOU HAVE
AN ADDITIONAL QUESTION. WE HAVE
GIVEN YOU EARLY QUESTIONS
BECAUSE YOU SAID YOU NEEDED TO
GO. I WILL PASS THE FLOOR TO
YOU. LET'S TRY TO WRAP UP.
>> I SEE THAT NONE OF MY OTHER
COLLEAGUES HAVE THEIR HANDS UP.
I'M LOOKING AT COLLEAGUES THAT
HAVE QUESTIONS. I DON'T WANT
TO TAKE UP ALL THE TIME. I
WANTED TO STICK TO THE SAME
CONVERSATION. WE ARE THANKING
THEM FOR ASKING THAT EXCELLENT
QUESTION. OBVIOUSLY, THE ORANGE
PIECE IS INFLATION. WE CAN'T
DO ANYTHING ABOUT THAT. HERE IS
THE TRICK ABOUT THAT. I AM VERY
SUPPORTIVE OF THE GREAT
OUTCOMES WITH THAT PARTICULAR
TEAM. IF WE ARE GOING TO EXPAND
SOMETHING IN THE GRAY, WE CAN
ALWAYS REDUCE SOMETHING IN THE
BLUE. THIS IS THE PIECE THAT I
THINK IS REALLY CRITICAL. WE
CAN'T JUST SAY THAT BECAUSE WE
NEED IT. WE ARE FURTHER
EXPANDING THE GRAY. WE NEED TO
LOOK AT SOMETHING THAT IS NOT
WORKING WELL, OR AS WELL. IT
DOESN'T HAVE TO BE IN THE
CAPACITY JUST IN GENERAL. WE
CAN MAKE THE POLICY DECISIONS
ABOUT WHAT WE SHOULD EXPAND.
THOSE THINGS NEED TO RUN
TOGETHER, BECAUSE WE ARE MAKING
A POLICY DECISION. WE NEED TO
EXPAND TO SOMETHING THAT IS
WORKING WELL. THIS DOESN'T
MEAN WE DON'T ENGAGE IN
EXERCISE. ARE THEY ALSO WORKING
WELL? PERHAPS WE SHOULD MAKE
CHANGES IN ORDER TO ACCOMMODATE
THE EXPANSION OF THE THING THAT
IS WORKING WELL. THANK YOU FOR
INDULGING ME IN THAT. THANK YOU
VERY MUCH.
>> I APPRECIATE YOUR COMMENT.
WE ALL HAVE THE PREROGATIVE TO
DO MANY DIFFERENT THINGS. AS
YOUR CHAIR OF THIS COMMITTEE,
WE ENDEAVOR TO FACILITATE THESE
CONVERSATIONS. WE HAVE
DIFFICULT DECISIONS, IN WAYS
THAT WILL SERVE SEATTLE THE
BEST.
>> ON A LIGHT NOTE, RETIRED
JUDGE AND ELLINGTON, FIRST ON
THE BENCH. THE FIRST CRIMINAL
MOTION, I SEE THAT I HAVE TO
CHOOSE BETWEEN COLORS AND
NUMBERS. I FIND THAT WE ARE NOW
ENGAGED IN A BLUE, ORANGE, AND
GREAT CONVERSATION. THANK YOU.
>> THANK YOU, COUNCILMEMBER.
SOME LEVERAGE IS ALWAYS
WELCOME. ANY OTHER QUESTIONS
BEFORE WE CONCLUDE THE SECTION
OF THE PRESENTATION? I'M
SEEING NONE. WE HAVE MORE
UPDATES. HANG ON TIGHT. AGAIN,
I WANT TO APPRECIATE THE
COUNCIL CENTRAL STAFF, FOR
ENGAGING THIS BUDGET REVIEW,
AND THE WORK THAT YOU HAVE BEEN
DOING WITH EACH COUNCILMEMBER.
I WANT TO HIGHLIGHT THE CITY
BUDGET OFFICE. THIS PARTNERSHIP
BETWEEN COUNCIL CENTRAL STAFF
DOING THEIR WORK, TRACKS WITH
THE CITY BUDGET OFFICE.
PREPARING FOR THIS YEAR'S
BUDGET. THEY ARE WORKING HARD.
WE ARE IN CAPACITY TO DO THIS
REVIEW EXAMINATION. THE NEXT
COMMITTEE, IS THE FINANCE
COMMUNITY MEETING. WE WILL BE
BRIEFING THE VOTES IN THE NEXT
SELECT BUDGET COMMITTEE. ALL
ARE WELCOME TO JOIN THE NEXT
MEETING. IF YOUR SCHEDULE DOES
NOT ALLOW, I ASK AS ALWAYS, TO
RECEIVE THE BRIEFING AHEAD OF
TIME. THIS IS HOW I AM MEETING
MY GOAL OF BRIEFING AND VOTING.
THIS IS SO THAT YOU ARE NOT
CAUGHT OFFGUARD. AT THE SAME
TIME, MOVING US FORWARD
EXPEDITIOUSLY. THE NEXT FINANCE
NATIVE COMMUNITY MEETING IS MAY
1st. THIS IS SCHEDULED FOR MAY
15th. LAST QUESTION, DOES
ANYONE KNOW WHAT TEAM SPIRIT
WAS?
>> OF COURSE.
>> SOME FOLKS DO. IT WAS
DEODORANT. COMMEMORATING TEAM
SPIRIT BEING PERFORMED ON
STAGE, THIS CONCLUDES THE
SELECT BUDGET COMMITTEE FOR MAY
15th, 2024. THANK YOU FOR
ATTENDING. WE ARE ADJOURNED.