>>> [ CAPTIONER STANDING BY ]
>>> ARE WE ON? EXCELLENT. GOOD
MORNING, TODAY IS MONDAY
APRIL 8th AND THE MEETING WILL
COME TO ORDER. I'M HERE WITH
MY FORECAST COUNSEL
COLLEAGUES. THE INTERIM CITY
FINANCE DIRECTOR, JAMIE
CARNELL, JEREMY RACCA IS
UNABLE TO ATTEND AND ASK THAT
JULIET JOIN US IN HIS PLACE.
WE ALSO HAVE REPRESENTATIVES
FROM THE CITY BUDGET OFFICE AND
THE COUNCIL CENTRAL STAFF. THE
MAIN PURPOSE OF THE MEETING IS
TO REVIEW THE UPDATED ECONOMIC
REVENUE FORECAST. THIS UPDATE
IS THE FIRST OF THREE REVENUE
FORECASTS WE WILL BE REVIEWING
THIS YEAR. WE WILL RETURN IN
AUGUST AND OCTOBER TO RECEIVE
THE IMPROVISED FORECASTS. EACH
WILL BE PREPARED AND PRESENTED
BY THE INDEPENDENT OFFICE OF
ECONOMIC FORECASTS THAT WAS
ESTABLISHED IN 2021. BASED ON
SIMILAR FORECASTING OFFICES
OPERATING IN WASHINGTON STATE,
THE PURPOSE IS TO INCREASE
TRANSPARENCY AND CAN ABILITY
AROUND THE STATE REVENUE AND
FORECASTING PROCESS AND TO
ENSURE THERE IS NO POLITICAL
INFLUENCE ON THE FORECAST
ITSELF. WHICH I BELIEVE IS
HAPPENING AND GREAT WORK.
BEFORE MOVING ON TO
PRESENTATION OF THE FORECAST
UPDATE LET'S BEGIN BY FORMALLY
ADOPTING THE AGENDA FOR
TODAY'S MEETING. DO I NEED TO
CALL THE ROLL? I'M GOING TO
LOOK TO YOU, BEN.
>> IN THE PAST IT HAS JUST
BEEN, ARE THERE ANY OBJECTIONS
TO THE AGENDA, IF NOT, MOVE ON.
>> FAIR. I SEE EVERYONE IS
PRESENT. LET THE RECORD REFLECT
AND THEY WILL MOVE TO ADOPT THE
AGENDA. IS THERE A SECOND? IT
HAS BEEN MOVED AND SECONDED. AT
THIS TIME, THIS IS THE
OPPORTUNITY FOR MEMBERS TO MOVE
TO AMEND THE AGENDA OR ADD AN
ITEM, ANY PROPOSED AMENDMENTS?
HEARING NO AMENDMENTS, IF
THERE ARE NO OBJECTIONS, THE
AGENDA WILL BE ADOPTED. HEARING
NO OBJECTIONS, IT IS ADOPTED.
MOVING ON TO ITEM ONE, IT HAS
BEEN CIRCULATED TO THE MEMBERS
AND POSTED ONLINE, I WILL MOVE
TO SEEK A SECOND FOR THE
APPROVAL OF THE MINUTES. IS
THERE A SECOND?
>> SECOND.
>> IT HAS BEEN MOVED AND
SECONDED. IF THERE ARE NO
OBJECTIONS, THE MINUTES WILL BE
APPROVED. HEARING NO
OBJECTION, MINUTES ARE
APPROVED. MOVING ON TO ITEM
NUMBER 2, MOVING DIRECTLY INTO
THE MAIN ITEM ON THE AGENDA,
THE PRESENTATION OF THE
ECONOMIC REVENUE FORECAST TO
ENSURE THE FORECAST COUNSEL IS
FULLY INFORMED AND ABLE TO HAVE
A FULL RANGE OF QUESTIONS
ADDRESSED, STAFF FROM THE CITY
COUNCIL CENTRAL STAFF AND
BUDGET OFFICE WILL PARTICIPATE
IN THIS BRIEFING. I WILL TAKE A
PAUSE TO SAY I'M A BIT OF A
FORMAL PERSON. I ALSO
UNDERSTAND THE BENEFIT OF A
MORE ORGANIC CONVERSATION. SO
I WANT US TO FEEL LIKE WE CAN
HAVE AN ORGANIC CONVERSATION. I
DO REQUEST THAT YOU RAISE YOUR
HAND OR SIGNAL THAT YOU WOULD
LIKE TO BE CALLED UPON SO WE
CAN, IT ALLOWS ME TO FACILITATE
THE MEETING. PLEASE BE ORGANIC
AND FORMAL , WE CAN DO BOTH.
WE CAN DO BOTH. THE FORECAST
OFFICE WILL PRESENT THREE
ECONOMIC AND REVENUE SCENARIOS
AND THEN PROVIDE A
RECOMMENDATION ABOUT WHICH OF
THESE SCENARIOS SHOULD BECOME
THE FORMAL FORECAST. WE WILL
THEN HAVE THE OPPORTUNITY TO
DISCUSS THIS RECOMMENDATION AND
WHETHER TO AFFIRM THE
RECOMMENDATION OR CONSIDER A
DIFFERENT FORECAST SCENARIO.
WITH THAT I WILL TURN IT OVER
TO THE FORECAST OFFICE TO
PRESENT THE APRIL FORECAST. THE
FLOOR IS YOURS.
>> GOOD MORNING.
>> COUNCIL PRESIDENT, YOU HAVE
A QUESTION?
>> I JUST WANT TO APOLOGIZE
FOR BEING TARDY TO THE ROLL
CALL. THANK YOU.
>> THANK YOU.
>> THIS IS BASICALLY THE
OUTLINE OF THE PRESENTATION
HERE TODAY FOR THE APRIL UPDATE
OF THE ECONOMIC AND REVENUE
FORECAST. WE WILL START FIRST
REVIEWING THE RECENT
DEVELOPMENT FOR THAT NATIONAL
AND REGIONAL ECONOMY. BEFORE
MOVING ON TO THE FORECAST
THEMSELVES. THEN WE WILL LOOK
AT THE ECONOMY FORECAST BEFORE
MOVING TO THE REVENUE
FORECAST. THIS IS THE ECONOMIC
SITUATION UPDATE AND THE FIRST
SLIDE IS ACTUALLY ON REVENUE.
HERE IS THE REASON WHY WE WANT
TO PROVIDE SOME ADDITIONAL
CONTEXT. ON HOW THE ECONOMY
FORECAST LINKS TO OUR REVENUE
FORECAST. IN APRIL, BY THE
TIME WE STARTED WORKING ON THE
APRIL FORECAST WE HAD VERY
LITTLE INFORMATION ABOUT THE
REVENUE COLLECTION FOR THIS
CURRENT YEAR. THE REVENUE
COMING IN IN JANUARY AND
FEBRUARY ARE MOST OBLIGATIONS
FOR THE PREVIOUS YEAR . AT THE
END OF FEBRUARY IT ALL GOES
BACK TO THE PREVIOUS YEAR. THE
APRIL FORECAST, WE ARE BASING
ON THE COLLECTION REVENUE FROM
THE PREVIOUS YEAR AND THE
ECONOMIC OUTLOOK FOR THE
CURRENT YEAR. THE CHART ON THE
RIGHT SHOWS HOW THE REVENUE IS
COMING IN OVER THE YEAR. AGAIN,
IN APRIL WE HAVE ESSENTIALLY
NO REVENUE INFORMATION
AVAILABLE. BY AUGUST, THE
FORECAST DEPENDS ON THE
REVENUE STREAM. FOR SOME OF
THEM WE ARE SOMEWHERE AROUND
ONE QUARTER. ABOUT 40% -50%
OF SALES TAX AND PROPERTY TAX,
ABOUT 70% AND THEN BY THE
OCTOBER FORECAST , ABOUT HALF
OF THE OVERALL FUND REVENUE ,
SO WE ARE STILL TRYING TO
PROVIDE THE FORECAST ESTIMATE
FOR HOW MUCH THE REST OF THE
GENERAL FUND, THE SECOND HALF
OF THE GENERAL FUND REVENUE
WILL BE. THERE IS A LOT OF
VARIATION. DIFFERENT REVENUE
STREAMS ARE COMING IN AT
DIFFERENT SPEEDS. WE HAVE
ABOUT 80% OF REVENUE BY THE
TIME OF THE OCTOBER FORECAST.
THE EXPENSE TAX FOR 2023, WHAT
WE HAVE SEEN , A LARGE AMOUNT
OF REVENUE CAME IN IN THE LAST
QUARTER. WE WILL DISCUSS THAT
A LITTLE BIT MORE ABOUT WHY
THAT IS THE CASE. EVEN WHEN WE
ARE DOING THE LAST FORECAST
UPDATE WE HAD LESS THAN HALF
RECEIVED. AGAIN, AS A
SUMMARY, LOOKING BACK AT THE
PREVIOUS YEAR FOR REVENUE
COLLECTION . LOOKING AT HOW THE
ECONOMY HAS PERFORMED AND
BUILDING A DEEPER FORECAST
FROM WHAT WE PRESENT HERE. 2023
STARTED WITH EXPECTATIONS OF A
RECESSION. THE CHART ON THE
RIGHT SHOWS THE NATIONAL
FORECAST FROM S&P GLOBAL FROM
OCTOBER 2022. AT THE TIME WHEN
WE WERE WORKING ON THE ADOPTED
2023 FORECAST, THIS IS WHAT IT
LOOKED LIKE. IMPLEMENT WAS
EXPECTED TO FALL RIGHT AT
ABOUT HALF PERCENT. VERY LITTLE
RETAIL GROWTH WAS EXPECTED,
SIMILAR FOR PERSONAL OUTLAYS.
THEY WERE EXPECTING RECESSION
IN THE FORM OF SLOWER
EMPLOYMENT AND CONSUMER
SPENDING IN REAL TIME. THE
OVERALL EXPECTATION WAS THERE
WAS MORE THAN A 60% CHANCE OF
RECESSION SOMETIME DURING
2023. LUCKILY THE ECONOMY
OUTPERFORMED THOSE EXPECTATIONS
AND THERE WAS A VERY STRONG
GROSS, REALLY RESILIENT LABOR
MARKET AND CONSUMER SPENDING.
JUST HELPING THE ECONOMY IN
GENERAL , SO THE ECONOMY
AVOIDED THE RECESSION AND
GREW BY 2.3% IN THE END.
INFLATION, WHAT WAS EXPECTED
IN THE FALL OF 2022, THERE WAS
A LITTLE BIT OF A REVISION, BUT
IN THE END, THERE WAS A DECLINE
INFLATION FROM WHAT THE
ECONOMY WAS EXPECTING. SO,
OVERALL , EVEN THOUGH INTEREST
RATES WERE HIGH , THOSE YEARS
OF RECESSIONS HAVE ESSENTIALLY
FADED AND IT SEEMS LIKE THE FED
IS CONCEDING IN TERMS OF
GUIDING THE ECONOMY, LOWERING
INFLATION WITHOUT TRIGGERING
ANY RECESSION ON ANY OF THOSE
LIKE EMPLOYMENT OR SPENDING.
THIS IS HOW THINGS LOOK LIKE
FOR THE REGIONAL ECONOMY. WE
ARE DEVELOPING OUR FORECAST BY
STARTING WITH THE NATIONAL
ECONOMY FORECAST AND TAKING
THAT TO DEVELOP AT THE REGIONAL
ECONOMY FORECAST AND THEN THAT
LEADS INTO THE REVENUE
FORECAST. SO IT IS IMPORTANT TO
UNDERSTAND ALL THE FACTS FIRST
THAT MIGHT BE DIFFERENT WITH
THE REGIONAL ECONOMY COMPARED
TO THE NATIONAL. BACK TO THE
FALL OF 2022 , EXPECTATIONS
WERE THAT EMPLOYMENT WILL FALL
AND IN ADDITION WE WERE
EXPECTING INFLATION TO BE
HIGHER THAN THE NATIONAL , AND
THAT TURNED OUT TO BE THE CASE.
NOT AS HIGH OF AN INFLATION AS
WE WERE EXPECTING. IT LOWERED
THROUGHOUT 2023 TWO 5.7, THAT
IS WHERE IT ENDED UP IN THE
END. EMPLOYMENT DID GROW OVER
OUR EXPECTATIONS FROM FALL OF
2022 AND ROUGHLY IS IN LINE
WITH THE REVISED FORECAST FROM
OCTOBER OF 2023. 1.3%, SO
OUTPERFORMED THE EXPECTATION
THAT WE HAD , HOWEVER MODEST ,
AND UNEMPLOYMENT GROWS
SLOWER THAN THE NATIONAL LEVEL.
1.3 VERSUS WHAT WAS SHOWING
UP IN THE PREVIOUS SLIDE, 2.4.
INFLATION IS 5.7 IN REGION
COMPARED TO 4.1 ON THE NATIONAL
LEVEL.
>> IF I MAY, COLLEAGUES, FEEL
FREE TO ASK QUESTIONS AS WE
MOVE ALONG. GRANTED TAXABLE
SALES, YOU WERE CLOSER IN THE
2022 THEN THE 2023 FORECAST,
ALL OF THAT SAID, THE ACCURACY
OF THESE FORECASTS IS VERY
IMPRESSIVE. YOU ARE REALLY
TRYING TO USE A CRYSTAL BALL TO
UNDERSTAND WHAT OUR ECONOMY
WILL BE DOING SO WE CAN BUILD
BUDGETS AND YOUR ACCURACY,
AGAIN, IS IMPRESSIVE. THANK
YOU.
>> THANK YOU VERY MUCH. IT IS
NICE TO HEAR. THAT IS ONE
THING I WANT TO BRIEFLY COMMENT
ON AND WE WILL SPEND MORE TIME
TALKING ABOUT THE SALES TAX AND
WHAT EXACTLY HAPPENED THERE.
THAT IS PART OF THE REVENUE
THAT GROWS SLOWER THAN WHAT WE
WERE EXPECTING. 2.5% OF
NOMINAL GROWTH, BELOW OUR
EXPECTATIONS. AND THERE ARE A
COUPLE OF REASONS, AND WE WILL
GO A LITTLE BIT MORE INTO
DETAIL. BEFORE THAT, I WANT TO
WEEKLY ADDRESS, THE MISSING
BAR IN PERSONAL INCOME, I DID
NOT MESS UP THE ANIMATION HERE
IN THE SLIDE, IT IS REALLY NOT
THERE, BECAUSE PERSONAL INCOME
ESTIMATES FOR 2023 WILL BE
ONLY RELEASED BY THE CURRENT
GROWTH ANALYSIS IN NOVEMBER OF
2024. AFTER OUR LAST FORECAST
UPDATE THIS YEAR, IT WILL
RELEASE ESTIMATES FOR PERSONAL
INCOME FOR YEAR 2023. THAT IS
OUR STARTING POINT TO DEVELOP
ESTIMATES FOR PERSONAL INCOME
OVER 2024 AND INTO 2025 AND
2026.
>> IS THAT JUST AN ANOMALY
FOR 2024 TO DO THAT CADENCE OR
IS THAT A NORMAL THAT WE SHOULD
EXPECT?
>> BEFORE, THAT WAS WHAT THEY
WERE DOING AND IT IS WHAT THEY
WILL BE DOING. IT IS PERSONAL
INCOMES FOR THE REGIONS, THE
SEATTLE METROPOLITAN AREA,
THAT IS KING AND SNOHOMISH
COUNTIES. AND THEY ONLY
PROVIDE ANNUAL UPDATES AT THE
END OF NOVEMBER . FOR STATE
LEVEL DATA THERE IS MUCH LESS
OF A DELAY. WASHINGTON STATE,
PERSONAL INCOME DATA FOR LAST
QUARTER IT WAS RELEASED VERY
RECENTLY. AND THAT IS
ESSENTIALLY WHAT WE ARE DOING,
TAKING THE WASHINGTON PERSONAL
STATE INCOME , AND BASED ON HOW
EMPLOYMENT IS CHANGING IN THE
REGION VERSUS THE STATE. THIS
IS THE KIND OF THING THAT WE
ARE ALWAYS DEALING WITH. SO
LOOKING A LITTLE MORE INTO THE
DIFFERENT EMPLOYMENT GROWTHS
IN THE NATION AND THE REGION,
THE RED BAR SHOWS 1.3% TOTAL
EMPLOYMENT GROWTH FOR THE
SEATTLE METRO AREA. THAT WAS
LAST YEAR, COMPARED TO THE 2.4%
SHOWN BY THE BLUE BAR FOR THE
UNITED STATES. SO ABOUT 1%
DIFFERENCE. THESE INDIVIDUAL
BARS BELOW THE TOTAL SHOW HOW
MUCH OF THE TOTAL IS COMING
FROM DIFFERENT SECTORS. SO IF
YOU HAVE THE INDIVIDUAL ON THE
RED BAR, FOR THE INDUSTRIES,
AND FOR THE COMMERCE. SOME ARE
CONTRIBUTING TO THE GROWTH, AND
SOME OF THEM, AS YOU CAN SEE,
IN PARTICULAR WE ARE LOOKING AT
INFORMATION AND RATIONAL
BUSINESS SERVICES, THOSE TWO
SECTORS HAVE ESSENTIALLY BEEN
BEHIND THE FACT THAT THE
REGION UNDERPERFORMED COMPARED
TO THE NATION. WE SOUGHT
LAYOFFS STARTING IN LATE 2022
AND CONTINUED THROUGHOUT 2023
AND OVERALL EMPLOYMENT IN THE
INFORMATION PROFESSIONAL
BUSINESS SECTOR .
>> LOOKING AT MANUFACTURING AND
TRADE, THESE TWO SECTORS OF
OUR BUSINESS ARE ONLY ABLE TO
OPERATE WITHIN THE INDUSTRIAL
SECTORS OF OUR CITY, THE
INDUSTRIAL ZONES, WHICH IS
LIMITED COMPARED TO THE REST
OF THE CITY ZONING. AND WHILE
OTHER THINGS HAVE DECREASED,
THIS HAS STAYED STEADY, IF
NOT, INCREASED.
>> MANUFACTURING OUTPERFORMED
THE NATION AS A WHOLE. REGIONAL
EMPLOYMENT IN MANUFACTURING
OR THE EMPLOYMENT GROWTH
TOGETHER WAS RATHER STRONG IN
LEISURE AND HOSPITALITY. THAT
WILL COUNTER THOSE LAYOFFS
GOING FORWARD, AND THAT IS
WHAT WE ARE EXPECTING,
TOGETHER WITH SECTOR
STABILIZING. WE WILL GET TO
THAT LATER ON, BUT IT IS STILL
BACKWARD LOOKING. SO THE LAST
THING I WANT TO POINT OUT HERE
IS THAT SLIGHTLY SMALL
DECREASE SHOWN FOR
CONSTRUCTION, WHICH KIND OF
HIDES THE OVERALL BEHAVIOR
THROUGHOUT 2023. THE
CONSTRUCTION SECTOR STARTED TO
DECLINE AND EMPLOYMENT IS 4.8%
LOWER COMPARED TO THE SUMMER
OF 2022. THERE IS JUST LESS
DEMAND FOR OFFICE SPACE, THE
INTEREST RATES ARE AT A 23
YEAR HIGH LEVELS AND THAT IS
COOLING IN COMMERCIAL REAL
ESTATE SPACE, RESIDENTIAL.
THE OVERALL CONSTRUCTION
ACTIVITY IS MUTED AND LIKELY
WILL REMAIN SO FOR A COUPLE OF
YEARS . THERE ARE SOME GOOD
THINGS ABOUT THE OFFICE SPACE
IN TERMS OF THE RETURN TO THE
OFFICE. WE HAVE SEEN SOME
POSITIVE DEVELOPMENT OVER THE
LAST YEAR. THE CHART HERE SHOWS
EMPLOYEE PRESENCE AT THE
WORKPLACE AS MEASURED BY AI,
AGGREGATED, AND ANONYMIZED
CELL PHONE DATA AND IN
PARTICULAR IT COMPARES HOW
MUCH FOOT TRAFFIC THERE HAS
BEEN IN THESE THREE
NEIGHBORHOODS INCLUDED IN THE
CHART RELATIVE TO THE FOOT
TRAFFIC IN THE SAME MONTHS OF
2019. THE OVERALL TRENDING UP
BEHAVIOR FROM SOUTH LAKE UNION
IN PARTICULAR PRIVIES TO THE
FACT THAT AMAZON MOVED TO
THREE DAYS IN THE OFFICE POLICY
LAST SPRING. THE CELL PHONE
LOCATION DATA SHOWS HOW MUCH
OF AN IMPACT IT HAD ON
RESIDENTS AND EMPLOYEES. SO
THAT IS FOR SEATTLE DEVELOPMENT
AND SEATTLE AS A WHOLE, THOSE
ARE THE IMPLICATIONS. SOME
THINGS WHICH ARE NOT SO GREAT
, IN THE OFFICE SPACE WE HAVE
SEEN OFFICE VACANCY RATES
BEHIND OVER THE LAST FOUR
YEARS. STARTING SINCE THE
PANDEMIC AND COMING OUT OF THE
PANDEMIC. THERE HAS BEEN LESS
DEMAND FOR OFFICE SPACE . AS
YOU CAN SEE, WE ARE STILL NOT
REACHING THE TOP. WE ARE
SOMEWHERE HERE IN THE FIRST
QUARTER OF 2024 AND THE
FORECAST FOR NEXT YEAR ,
CO-STAR KEEPS TRACK OF LEASES
BY INDIVIDUAL COMPANIES WHEN
THEY ARE EXPECTED TO EXPIRE.
THEY HAVE SOME ASSUMPTIONS IN
TERMS OF WHAT LEASES THEY
EXPECT TO BE RENEWED. ALL THE
INFORMATION, WHAT THEY
PREDICTED NOW, THEY ARE
EXPECTING VACANCY RATES TO
CONTINUE TO CLIMB FOR A WHILE
AND REACH, DEPENDING ON THE
GEOGRAPHICAL AREA THAT WE ARE
LOOKING AT, FOR SEATTLE AS A
WHOLE, IT IS 25%, BUT WITHIN
THE CENTRAL BUSINESS DISTRICT,
ACCORDING TO THIS , IT WILL
BE OVER 30% BEFORE IT FINALLY
STARTS TO TURN AROUND. SO THAT
MEANS LESS CONSTRUCTION DEMAND,
LESS DEMANDS FOR OFFICE SPACE
AND LESS CONSTRUCTION AND
SALES TAX REVENUE . IN ADDITION
TO THOSE HIGH VACANCY RATES,
THERE ARE SOME DISTRIBUTIONAL
IMPLICATIONS. SO THIS CHART
HERE SHOWS , QUICKLY COMPARES
THE INTAKE BY SEATTLE AND BY
TRAIN 22, FIRMS ARE COMING
IN, REQUESTING DEVELOPMENT
AND THERE IS THE REVIEW PROCESS
WHERE THERE IS USUALLY A
COUPLE OF ROUNDS OF REVIEW
BEFORE PERMITS ARE FINALLY
ISSUED. THE BLUE LINE SHOWS
THE TOTAL VALUE OF BUILDING
PERMITS ISSUED AFTER SOME DELAY
DUE TO THE REVIEW. YOU CAN
SEE THAT THERE ARE SPIKES IN
PERMIT INTAKE, THEY TAKE PLACE
USUALLY BEFORE THE CHANGE IN A
BUILDING CODE WHEN A DEVELOPER
IS TRYING TO INVEST INTO THE
CURRENT BUILDING CODE. THIS
IS USED INSTEAD. SO IT WAS BIG
AT THE BEGINNING OF 2016 AND
IN 2021. SO A VARIATION IN THE
BUSINESS INTAKE. IT IS
SMOOTHER IN THIS CHART, WHAT I
WANT TO POINT OUT MOST
IMPORTANTLY IS THAT KIND OF
DECLINE FROM THE LEVELS OF
BUSINESS PERMITS ISSUED BACK IN
2018. WE HAVE COME DOWN QUITE
SUBSTANTIALLY , IN THE OVERALL
TREND IN THE LAST YEAR OR TWO.
IT IS STILL A SMALL DECLINE.
THERE IS STILL THAT NEGATIVE
IMPACT ON HOW INTEREST RATES ,
DEVELOPERS ARE WAITING FOR
INTEREST RATE TO COME DOWN.
LIKE I SAID, THIS HAS
IMPLICATIONS FOR SALES TAX
REVENUE. IN PARTICULAR, SALES
TAX IS THE ONE THAT IS AFFECTED
MOSTLY. THE REDLINE IN THE
CHART SHOWS TAXABLE SALES IN
THE CONSTRUCTION SECTOR. IT
DOESN'T FOLLOW THE BLUE LINE
OR THE GRAY LINE COMPLETELY.
THERE IS SOME POSITIVE
CORRELATION BETWEEN THE
BEHAVIOR OF THE BUILDING
PERMITS ISSUED AND WHEN THE
CONSTRUCTION ACTIVITY TAKES
PLACE. IT HAPPENS OVER A PERIOD
OF TIME. AND THAT IS WHEN WE
SEE THE SALES TAX START TO COME
IN . SOME PROJECTS MAY
OBVIOUSLY BE ABANDONED OR
DELAYED, SO NOT A PERFECT
CORRELATION, BUT WE HAVE FOUND
THIS TO BE USEFUL WITH THE
BUILDING PERMITS ISSUED. AS YOU
CAN SEE, THE REDLINE DID
DECLINE AND LOOKING AT THE
VERY END OF THAT REDLINE ,
THE CONSTRUCTION TAXABLE SALES
NEGATIVELY AFFECTED THE
CONSTRUCTION WITH THE INTEREST
RATE. MOVING ON TO THE OUTLOOK
, WRAPPING UP WHERE WE WERE IN
2023 AND MOVING ON TO THE
OUTLOOK FOR THE NATIONAL
ECONOMY. THE CHART HERE SHOWS
THE EMPLOYMENT FORECAST FROM
OUR NATIONAL FORECAST FROM
S&P GLOBAL. THE FAINT REDLINE
IS SEPTEMBER 2023 BASELINE
SCENARIO FORECAST. IT WAS USED
TO DEVELOP THE REVENUE
FORECAST FOR LAST FALL.
COMPARED TO THEIR FORECAST
FROM THE FALL OF 2023, THE
LABOR MARKET IS STILL GROWING
FASTER FOR THE FIRST QUARTER,
ABOUT 1.8% OF GROWTH YEAR OVER
YEAR IN THE U.S. AS A WHOLE.
IT IS LIKELY AT OR ABOVE , AND
THE DARKER REDLINE REPRESENTS
THE MARCH BASELINE SCENARIO
FORECAST FOR EMPLOYMENT GROWTH.
S&P GLOBAL, OVER THE LAST
COUPLE OF MONTHS THEY HAVE
REVISED THE APPOINTMENT
FORECAST. INSTEAD OF VIRTUALLY
NO EMPLOYMENT GROWTH OVER
2024, ACTUALLY SEEING SOME
SMALL DECLINES INTO 2025, THEY
ARE NOW EXPECTING ABOUT 1.3%
GROWTH SPURT FOR 2024 AS A
WHOLE. NO EMPLOYMENT GROWTH
STARTING SOMETIME NEXT SUMMER.
SO OVERALL, IMPROVEMENT FOR
THE BETTER. S&P GLOBAL
ASSIGNED A 55% PROBABILITY,
THE PESSIMISTIC SCENARIO, STILL
A SCENARIO WHERE A RECESSION
OCCURS OR THIS PARTICULAR
RECESSION, IT WOULD BE A
RELATIVELY MILD ONE. NOT A
PARTICULARLY LONG RECESSION,
BUT A RECESSION NONETHELESS.
SO THAT HOLDS FOR THE
NATIONAL, THE REGIONAL AND THE
FORECAST AREA ALL HAVE AN
ASSUMPTION OF RECESSION BUILT
INTO IT. BECAUSE OF THAT THEY
WILL SEE REVENUE SIGNIFICANTLY
BELOW THE BASELINE SCENARIO.
IN TERMS OF DEVELOPMENT, WITH
THE FEDERAL FUNDS RATE,
INFLATION HAS BEEN COMING DOWN
, DOWN QUITE SIGNIFICANTLY
FROM THE PEAK IN THE SUMMER OF
2022. THERE HAS BEEN A SMALL
REVISION IN EXPECTATIONS FOR
2024. THE LAST COUPLE OF MONTHS
WE HAVE SEEN INFLATION
SLIGHTLY HIGHER AND MAYBE NOT
DECLINING AS FAST AS THE
ECONOMY WAS PROBABLY HOPING
FOR. STILL, NOT TOO HIGH OR
TOO RADICALLY CHANGED, THE
EXPECTATION THAT THE FED WILL
BE ABLE TO HAVE RATE CUTS.
THAT SAID, THE RATE CUTS ARE
EXPECTED TO START APPEARING IN
THE SECOND HALF OF 2024. THEY
COULD BE SMALLER AND MORE
SPREAD OUT IF INFLATION
CONTINUES TO COME UP SLIGHTLY
HIGHER THAN EXPECTED AND THE
LABOR MARKET CONTINUES TO SHOW
A LOT OF STRENGTH AND
RESILIENCE. THAT WOULD MAKE THE
FED WERE CAUTIOUS ON THE SIDE
OF KEEPING INTEREST RATES
HIGHER SO THEY CAN AVOID
INFLATION SOARING UP AGAIN.
THEY WILL INCREASE THE
INTEREST RATE AGAIN. THE LABOR
MARKET CONTINUES TO BE
RESILIENT AND SHOWS MORE GROWTH
THAN WHAT IS FORECASTING AND
CONTINUES TO BE SLIGHTLY ABOVE
EXPECTATIONS OF THE CUT RATES.
RIGHT NOW THEY STILL
BELIEVED TO BE CUTTING INTEREST
RATES IN THE SECOND HALF OF
2024. PESSIMISTIC SCENARIO,
WHERE INFLATION STARTS TO CLIMB
UP AND THE ECONOMIC DOWNTURN,
FORCING THE FEDS TO CUT RATES
EARLIER. IT WOULD BE
COUNTERINTUITIVE, INTEREST
RATES COMING BACK DOWN FASTER
IN A WAY TO AVOID A DEEPER
DOWNTREND IN UNEMPLOYMENT. THE
ECONOMIC FORECAST, LIKE I SAID,
THE REGIONAL ECONOMIC FORECAST
ARE BASED OFF OF THE NATIONAL
FORECAST FROM S&P GLOBAL. WE
ARE LOOKING AT DATA FROM
OTHER FORECASTERS AS WELL TO
KIND OF GET A SENSE OF HOW
OPTIMISTIC OR PESSIMISTIC THE
U.S. FORECAST IS. THE CHART
HERE SHOWS THAT S&P GLOBAL'S
FORECAST FOR THE MAIN ECONOMIC
INDICATORS AND COMPARES IT TO
THE FORECAST FROM THE WALL
STREET JOURNAL , ABOUT 16
ECONOMIES HAVE A SURVEY EVERY
THREE MONTHS. ANOTHER ONE
COMING IN ABOUT A WEEK . THE
CHART SHOWS THEIR LAST SURVEY
FROM JANUARY OF 2024. AS YOU
CAN SEE, THE S&P GLOBAL
FORECAST IS NOT OVERLY EITHER
OPTIMISTIC OR PESSIMISTIC,
THEY ARE VERY CLOSE TO THE
MEDIAN. THEY ARE ALSO QUITE
CLOSE TO THE FORECAST FROM THE
ANALYTICS , WHICH IS THE SECOND
MAIN FORECASTER, WE ARE
TRACKING THEIR FORECAST AND
TRY TO GET THERE SINCE OF
WHERE THE ECONOMY IS HEADING.
SO OVERALL, THIS IS ACROSS
THE BASELINE , THAT IS THE
MOST LIKELY FUTURE BEST FOR
THE ECONOMY. NOT TOO
OPTIMISTIC, OR TOO PESSIMISTIC.
COMPARED TO THE REST OF WHERE
THE ECONOMY IS. BUILDING ON
THE NATIONAL FORECAST, HERE IS
THE REGIONAL EMPLOYMENT
FORECAST FOR THE SEATTLE METRO
AREA . IT LOOKS LIKE, STARTING
WITH THE DECEMBER 2023
BASELINE SCENARIO AND BUILDING
THE UPDATED FORECAST. WE HAVE
REALIZED THAT EMPLOYMENT IS UP
AS A RESULT OF AN OVERALL
STRONGER PROSE INTO THE
NATIONAL ECONOMY THAT FEEDS
INTO THE REGIONAL FORECAST.
I HAVE WENT OVER SOME DECLINES
IN SOME SECTORS IN THE ECONOMY
FOR 2023 BUT IT LOOKS LIKE THE
OUTLOOK IS IMPROVING AND
STABILIZING. GOING FORWARD
THERE SHOULDN'T BE OFFSETTING,
DRAGGING UNEMPLOYMENT , AND THE
STRONG GROWTH AND MANUFACTURING
AND HOSPITALITY OVERALL MAKES
US MORE OPTIMISTIC ABOUT THE
OUTLOOK FOR EMPLOYMENT IN THE
SEATTLE METRO AREA. THE MAIN
REASON WE ARE NOT RECASTING
EMPLOYMENT FOR OTHER CITIES
IS JUST LACK OF DATA. THERE
IS NOT ENOUGH DATA ON A
MONTHLY BASIS OR EVEN A
QUARTERLY BASIS THAT WOULD
ALLOW US TO DEVELOP A REGIONAL
FORECAST THAT WOULD BE MORE
USEFUL FOR REVENUE PURPOSES. WE
ARE DOING THE BEST WE CAN WITH
THE DATA THAT IS AVAILABLE. IT
IS FOR THE SEATTLE METRO AREA
AS A WHOLE. BETTER OUTLOOK,
OVERALL , SLIGHT DECLINE AND
EMPLOYMENT. LIKELY DOWN, 25
AND 26, 1.9% GROWTH IN 2024
AND THEN 1% FOR 2025 AND 1%
GROWTH IN 2026. THAT IS A
BASELINE. THE PESSIMISTIC
SCENARIO, JUST LIKE THE
NATIONAL ONE IS RECESSION,
UNEMPLOYMENT, AROUND 2% BY
THE FIRST QUARTER OF 2025
BEFORE TURNING AROUND WITH
COMPLETE RECOVERY BY 2026,
AGAIN, NOT A VERY LONG
RECESSION. A COUPLE OF
ADDITIONAL REGIONAL
FORECASTING MODELS, SEVERAL
OTHER THINGS WE ARE
FORECASTING. EMPLOYMENT, NOT
JUST OVERALL BUT UP AND DOWN
BY INDUSTRY. THE UNEMPLOYMENT
RATE FORECAST, FORECASTING
PERSONAL INCOME WAGES , PERMITS
THAT ARE USED TO INFORM THE
CONSTRUCTION FORECAST. WE ARE
USUALLY PRESENTING THE
EMPLOYMENT FORECAST HERE
BECAUSE IT IS THE BEST WAY ON
HOW TO ASSESS THE OVERALL
OUTLOOK FOR THE REGIONAL
ECONOMY . PERSONAL INCOME, WE
ARE FACING SOME ISSUES WITH
DATA AVAILABILITY , SO LESS
CONFIDENCE ON THAT SIDE . THERE
ARE USUALLY BIGGER REVISIONS ,
THERE IS QUITE A BIT OF A DELAY
AND IT IS QUITE SIGNIFICANT.
EMPLOYMENT IS THE BEST
INDICATOR OF THE OVERALL
HEALTH. OR THE BEST SUMMARY OF
WHAT WE ARE LIKELY TO SEE.
BEFORE MOVING TO THE FORECAST
FOR THE REVENUE , THIS IS A
QUICK SUMMARY. KIND OF HINTING
AHEAD AT WHAT OUR
RECOMMENDATION WILL BE AT THE
END, WE CHOSE SEVERAL SCENARIOS
TO ADOPT . THE S&P GLOBAL
BASELINE SCENARIO , NEITHER
OVERLY OPTIMISTIC NOR
PESSIMISTIC, ASSIGNED 55%
PROBABILITY TO IT INCLUDING ALL
THE OTHER FACTORS . EVEN WITH
THAT, WE ARE EXPECTING
REASONABLY STRONG GROWTH IN
2024. BUT NOT OVERLY
OPTIMISTIC , WE ARE NEITHER TOO
WORRIED OR BEING TOO HIGH WITH
THE BASELINE SCENARIO
FORECAST. IT IS MOST LIKELY
GOING FORWARD , BUT THERE ARE
SOME RISKS TO REVENUE STRINGS
AND WE WILL TALK ABOUT THEM
WHEN WE GET THE INDIVIDUAL
REVENUE FORECASTS. AGAIN, AS A
CONCLUSION, THIS IS OUR
FORECAST TO RECOMMEND,
RECOMMENDING A BASELINE
SCENARIO FORECAST
>> I THINK WE SHOULD FINISH
THIS PRESENTATION AND COME BACK
TO THE SLIDE TO DO THE
RECOMMENDATION AT THE END. I
WILL JUST SAY THAT I AM
COMFORTABLE WITH THE BASELINE
SCENARIO, HAVING ALREADY
REVIEWED THE MATERIALS WE ARE
ABOUT TO SEE.
>> I DIDN'T HEAR THAT
SENTENCE , YOU SAID SOMETHING
ABOUT THERE IS RISK TO SOME
OF THE REVENUE STREAMS. AND YOU
SAID WE WILL TALK ABOUT THAT.
>> I AM GOING TO INTERJECT.
THAT IS WHAT WE ARE ABOUT TO
HEAR.
>> I JUST WANTED HIM TO REPEAT
HIS WORDS.
>> WE ARE GOING TO SEE THAT
THERE ARE RISKS TO SOME OF
THE REVENUE CLAIMS AND THEY
ARE LINKED TO THE DOWNTURN IN
THE CONSTRUCTION SECTOR AND
THE FACT THAT THIS TABLE HERE
SHOWS THE SALES TAX REVENUE
UNDERPERFORMED OUR
EXPECTATIONS AND SHOWS THE
ACTUALS FOR 2023 AND COMPARES
THOSE ACTUALS TO THE FORECAST
FROM OCTOBER , 2023. THE MAIN
THING TO NOTICE, STARTING FROM
ALL THE WAY AT THE BOTTOM,
OVERALL THE REVENUE CAME VERY
CLOSE TO THE FORECAST. 0.5%
LESS ACTUAL REVENUE COMPARED TO
THE FORECAST. STILL $8
MILLION, GIVEN THE SIZE OF THE
GENERAL FUND, BUT 0.5% LESS IN
THE TOTAL FORECAST. THAT SAID,
FOR SOME OF THE REVENUE
STREAMS, IN PARTICULAR, THE
SALES TAX, THE AMOUNT OF THE
REVENUE STREAM UNDERPERFORMED,
IT IS LARGER, THE RETAIL SALES
TAX CAME IN 2.3% BELOW THE
FORECAST, TRANSLATING TO $8.1
MILLION. THAT IS DUE TO THOSE
RISKS AND WE WILL TALK A
LITTLE BIT MORE ABOUT THE
CONSTRUCTION SECTOR. AND JUST
HOW THE TEXTBASED RETAIL SALES
LOOKS LIKE. LOOKING INTO THAT
A LITTLE BIT CLOSER , THIS IS
WHAT WE ARE SLIGHTLY WORRIED
ABOUT. THE SALES TAX REVENUE
STARTED TO DETERIORATE IN THE
FALL OF 2023, ABOUT RIGHT
AFTER WE RELEASED OUR FORECAST
WE SAW A COUPLE OF MONTHS WHERE
THE SALES TAX DECLINED YEAR
OVER YEAR. THAT IS PART OF THE
BLACK LINE TOWARDS THE END
WHERE WE HAVE GROWTH
YEAR-OVER-YEAR AROUND 2.5%.
SO THAT CAME AFTER 2022, THAT
WAS A YEAR OF VERY STRONG
GROWTH AND THE INDIVIDUAL
COLORFUL BARS DELVE INTO THE
VISUAL SECTORS. THE LEISURE
AND HOSPITALITY SECTOR, TRADE,
CONTRIBUTED SIGNIFICANTLY TO
THE OVERALL GROWTH. THERE IS A
LITTLE BIT OF AN UPSET, IF YOU
REMEMBER IN EARLY 2024 THERE
WAS A CONSTRUCTION STRIKE
THAT CAUSED CONSTRUCTION
REVENUE TO BE LOWER. AFTER
THAT WAS RESOLVED, THE REST OF
THE YEAR, THE REST OF 2022
CONSTRUCTION TAXABLE SALES
GROUP. INTO 2023, THINGS AGAIN
STARTED TO SOFTEN AND OVERALL
TOWARDS THE END OF THE YEAR,
THE LAST FOUR MONTHS WE SAW
DECLINES IN TAXABLE SALES IN
THE CONSTRUCTION SECTOR
YEAR-OVER-YEAR , AND THAT WAS
DRAGGING DOWN THE TOTAL
REVENUE COLLECTED. IN ADDITION
TO THAT, REVENUE FROM THE
TRADE SECTOR DECLINED
YEAR-OVER-YEAR AS THE CONSUMER
SPENDING NEGATIVELY IMPACTED
THIS. STILL, CONSUMERS WERE
WORRIED ABOUT MAINTAINING THAT
SPENDING FROM 2022 AS THEY
ACCUMULATED SAVINGS FROM THE
FINANCIAL STIMULUS PACKAGE , IT
WAS GOING AWAY SLOWLY. THERE
WAS LESS EXCESS SAVING
ACCUMULATED. IN ADDITION TO
THAT, THERE WAS THE SHIFT FROM
SPENDING ON GOODS TO SPENDING
ON SERVICES. AND IT IS TAXING
ALL THE SERVICES. AND SO THE
SHIFT OF CONSUMER SPENDING
FROM A SPENDING ON GOODS TO
SERVICES LOWERS THE TAXABLE
SALES, AND THAT IS SOMETHING
THAT WE ARE STARTING TO SEE
ADDRESSED.
>> ANY QUESTIONS ON THIS SLIDE?
SEEING NONE, KEEP TAKING IT
AWAY. I WILL JUST KEEP JUMPING
IN A LITTLE MORE. IT IS
UNFORTUNATE FOR THE LAST FALL.
>> IT IS SOMETHING THAT
SURPRISED US, NOT JUST US BUT
OUR COLLEAGUES IN KING
COUNTY. THE SALES TAX REVENUE
UNDER PERFORMED , SIMILAR SORT
OF OUTCOME FROM BUSINESS
RESEARCH AT WASHINGTON
UNIVERSITY. THEY ARE
CONSTRUCTING A SIMILAR FORECAST
FOR THE REGIONAL ECONOMY AND
TAXABLE SALES THAT ARE USED BY
SOME SMALLER MUNICIPALITIES
AROUND KING COUNTY THAT DON'T
HAVE A DEDICATED FORECAST AND
THEY ARE RELYING ON WASHINGTON
UNIVERSITY'S FORECAST AND
WHEN THEY DEVELOPED THEIR
REVENUE OR CASTE.
>> SO IT SOUNDS LIKE WHAT
YOU'RE SAYING IS THAT THIS IS
NOT A DOWNTOWN PROBLEM, NOT
EVEN A CITYWIDE PROBLEM, IT IS
A COUNTY AND REGIONWIDE ISSUE
WE ARE EXPERIENCING. IS THAT
CORRECT?
>> IT IS NOT JUST A PROBLEM OF
DOWNTOWN, BUT THE OVERALL
CONSTRUCTION SECTOR DOWNTURN IS
HAPPENING THROUGHOUT KING
COUNTY AND IT IS AFFECTING
DIFFERENT PARTS OF KING COUNTY
DIFFERENTLY. THE AMOUNT OF
CONSTRUCTION THAT TOOK PLACE
IN THE LAST DECADE IN SEATTLE
WAS TREMENDOUS.
>> WE OUTPACED THE NATION.
>> EXACTLY. NOW WE ARE SEEING
OVER THE OTHER SIDE OF THE HILL
AND IT IS AFFECTING SEATTLE
BECAUSE SEATTLE IS A BIG PART
OF KING COUNTY. A QUARTER OF
THE EMPLOYMENT OF WASHINGTON
STATE. SO EVEN WASHINGTON
STATE IS AFFECTED BY HIGH
INTEREST RATE AND OVERALL
CONSTRUCTION SLOWING DOWN.
>> MARKET CORRECTION.
>> SO THAT IS THE RISK WE ARE
TALKING ABOUT. THE RISK IS THE
SALES TAX REVENUE BECAUSE OF
THE WAY THE PAST BASE LOOKS
LIKE. IT COMES THROUGH JUST TWO
SECTORS. CONSTRUCTION IS ABOUT
ONE QUARTER AND THEN THE TRADE
SECTOR , RETAIL, TRADE , SEWED
TOGETHER THOSE TWO ARE A
SIGNIFICANT SHARE FOR THE BASE
OF THE SALES TAX. NOT VERY
DIVERSIFIED UNLIKE THE
BUSINESS AND OCCUPATION TAX
THAT SHOW HOW THE TAX REVENUE
IS DISTRIBUTED THROUGHOUT THE
STATES. YOU CAN SEE IT IS MORE
EVENLY SPREAD OUT WITH
PROFESSIONAL AND BUSINESS
SERVICES ACCOUNTING FOR A
BIGGER SHARE. AND THEN, THE
LAST THING IN THIS CHART, THE
LAST TAX REVENUE SHOWN HERE IN
THE RED BAR IS AT THE EXPENSE
TAX, NOT PARTICULARLY
DIVERSIFIED, AND A LARGE
AMOUNT OF THAT REVENUE IS
COMING FROM JUST A FEW
COMPANIES OUT OF ROUGHLY 500
COMPANIES ALTOGETHER , ABOUT
90% OF THE OVERALL REVENUE IS
COMING FROM THE TOP 100
COMPANIES AND IT IS A REALLY
HIGHLY CONCENTRATION AT THE
TOP. 70% OF OVERALL REVENUE
WITH EIGHT OF THOSE COMPANIES
IN THE SECTOR.
>> JEN, I JUST WANT TO POINT
OUT, THIS IS PARTICULARLY APT
COMPARISON BECAUSE EACH
BRINGS IN A CERTAIN AMOUNT OF
REVENUE PER YEAR. SO I WANTED
TO POINT THAT OUT FOR FOLKS WHO
MIGHT BE LISTENING, SALES USE
AND TAX ROUGHLY BRINGING THE
SAME AMOUNT OF REVENUE. WE ARE
LOOKING AT A GOOD APPLES TO
APPLES
>> OVERALL AMOUNTS ARE VERY
COMPARABLE IN 2023. AS YOU CAN
SEE IT IS A COMPLETELY SORT OF
DIFFERENT TAX BASE. NOW --
THE WAY THEY ARE AFFECTED BY
THINGS THAT ARE HAPPENING IN
THE ECONOMY, IT MAKES SENSE TO
MOVE IN A SLIGHTLY DIFFERENT
DIRECTION. SALES TAX IS
PARTICULARLY AFFECTED BY THE
CONSTRUCTION SECTOR AND
ESSENTIALLY NO IMPACT ON THE
PAYROLL SALES TAX. ON THE
OTHER HAND, THE TAX SECTOR,
LAYOFFS AND SLOWDOWN HAVE
AFFECTED PAYROLL TAX AND
REVENUE SIGNIFICANTLY . MOVING
OUT TO THE FORECAST ITSELF. THE
BASELINE SCENARIO FORECAST
FOR THE GENERAL FUND REVENUE,
IT IS SHOWN IN THIS TABLE, THE
FIRST COLUMN SHOWS THE 2023
ACTUALS. WE MENTIONED, RETAIL
SALES AND THE BUSINESS SECTOR,
VERY SIMILAR, 340 MILLION FOR
RETAIL SALES, 356 MILLION IN
2023 , SO SIMILAR IN SIZE.
THE PAYROLL TAX AT THE VERY
BOTTOM, THAT IS NOT THE TOTAL
PAYROLL TAX, THAT IS JUST THE
OBLIGATIONS FOR THE YEAR 2021.
THE ORDINANCE DIRECTS THE
OBLIGATIONS FOR 2021 TO BE
DEPOSITED INTO THE GENERAL
FUND, NO MATTER WHEN THEY
ARRIVE. THAT MEANS ALSO THAT
FUNDS AND LATE PAYMENTS WILL BE
ENTERING THROUGH THE GENERAL
FUND OTHER THAN JUMPSTARTING
THE PAYROLL EXPENSE. FOR THAT
WE HAVE A SEPARATE TABLE. SO
THE BOTTOM LINE, THAT IS THE
OBLIGATIONS . STARTING FROM THE
VERY BOTTOM, THE VERY LAST
ROW THAT TAKES THE TOTAL
GENERAL FUND AND TAKES OUT THE
GRANTS AND TRANSFERS, THE
FORECAST UPDATE , APRIL
FORECAST UPDATE ADVISES DOWN
ROUGHLY BY 3.6 MILLION. SMALL
COMPARED TO THE SIZE OF THE
TOTAL REVENUE, A RELATIVELY
SMALL DECREASE. THAT SAID,
THAT IS NOT REALLY THE CASE FOR
INDIVIDUAL REVENUE STREAMS. IN
PARTICULAR, LOOKING AT THE
RETAIL SALES TAX FORECAST. THAT
HAS BEEN REVISED DOWN MORE
SUBSTANTIALLY BECAUSE OF THE
INFORMATION REGARDING THE
ACTUAL COLLECTION FROM 2023.
THE PROJECTION FOR THE
CONSTRUCTION SECTOR EMPLOYMENT
AND THE FACT THAT INTEREST
RATES ARE STILL HIGH . IT JUST
TEARS DOWN ON THE RETAIL
SALES TAX WHERE WE HAVE BEEN
COMPELLED TO REVISE THE
FORECAST DOWN AND TAKE ALL OF
THAT INTO ACCOUNT. FOR THE
BUSINESS OCCUPATION TAX,
DOWNWARD OF 4.5 MILLION IS NOT
REALLY A REFLECTION OF THE
WORST OUTLOOK OF THE TAX PACE
ITSELF, IT IS MORE OVER
UNRESOLVED REFUNDS THAT WERE
HIGHER THAN USUAL . OVER THE
LAST COUPLE OF YEARS, THERE
HAVE BEEN QUITE A BIT OF
REFUNDS THAT ADDED UP TO QUITE
A SUBSTANTIAL AMOUNT AND
LOWERED THE FORECAST FOR THE
BUSINESS AND OPERATION TAX. BUT
THIS YEAR, FOR 2025 AND 2026,
BUSINESS AND OCCUPATION TAX
IS EXPECTED TO GROW AT A VERY
HEALTHY RATE, AT ABOUT THE
RATE OF INFLATION. FOR THE
SALES TAX, A SIMILAR SORT OF
STORY. THE OUTLOOK FOR 2025
-2026 IS CERTAINLY BETTER THAN
THE FORECAST FOR 2024. THAT
ALSO FEEDS INTO THE OVERALL
FORECAST WHERE WE ARE
EXPECTING THE GENERAL FUND
WITHOUT GRANTS AND TRANSFERS
TO GROW AT ABOUT 2.6% IN 2025
AND 3.2% IN 2026.
>> THANK YOU, JEN.
>> MOVING ON TO OTHER REVENUE
STREAMS. THIS TABLE SHOWS THE
REVENUE WITHOUT THE 2021
OBLIGATIONS. AGAIN, ENTERING
THE GENERAL FUND . THE LINE
HERE SHOWS THE AMOUNT GOING
INTO THE PAYROLL EXPENSE TAX
FUND. THERE HAS BEEN QUITE A
SIGNIFICANT UPWARD REVISION
FOR 2024 . THAT ALSO LEADS TO
SIGNIFICANTLY HIGHER FORECAST
FOR 2025 AND 2026. THERE ARE
A COUPLE OF REASONS FOR THIS
UPWARDS REVISION AND THERE ARE
SOME SLIDES THAT FOLLOWED THIS
ONE AND SPEAK TO THAT PART. FOR
THE REST OF THE REVENUE
STREAMS THERE ARE SOME SMALL
REVISIONS UP AND DOWN, BUT
NOTHING PARTICULARLY MAJOR AND
I AM HAPPY TO ADDRESS ANY
QUESTIONS IF THERE ARE
QUESTIONS ABOUT ANY OF THOSE
PARTICULAR REVENUE STREAMS.
>> COLLEAGUES, ANY QUESTIONS?
SEEING NONE, I THINK THE SLIDE
AND YOUR EXPLANATION PROVIDES
ENOUGH DETAIL FOR US TO
UNDERSTAND WHAT IS GOING ON.
>> LOOKING AT THE PAYROLL
EXPENSE TAX, THAT WILL REMAIN
THE LARGEST REVISION OF ALL THE
REVENUE STREAMS PRESENTED
TODAY. THE PAYROLL EXPENSE
TAX REVENUE IS LARGE, DUE TO
STOCK PRICES, AND IT IS NOT
VERY WELL DIVERSIFIED. WE DO
A SMALL NUMBER OF COMPANIES IN
THE TAX SECTOR IN ADDITION TO
A LARGE SHARE OF THE
COMPENSATION PAID TO THE
EMPLOYEES IN THIS SECTOR .
THAT MEANS THE AMOUNT OF
COMPENSATION GOES UP AND DOWN
AND TOGETHER WE STOCK PRICES
OF THOSE INDIVIDUAL COMPANIES.
THE CHART ON THE RIGHT IS
USED AS AN ILLUSTRATIVE
EXAMPLE. THEY ARE NOT THE
COMPANIES FOR THOSE MAINE
TAXPAYERS. THEY ARE COMPANIES
THAT OPERATE IN THE REGION, NOT
NECESSARILY IN SEATTLE, BUT IN
THE REGION. THEY ARE GOOD
EXAMPLES OF COMPANIES WHERE
THE STOCK PRICES HAVE SEEN A
REALLY SIGNIFICANT INCREASE IN
2021 BEFORE CORRECTION IN
2022. SO THAT IS THE SAME SORT
OF BEHAVIOR WE HAVE SEEN IN
THE PAYROLL TAX AND IT
SUGGESTS THAT IT IS JUST
SOMETHING THAT IS PART OF THIS.
IN 2023 THE REVENUE EXCEEDED
OUR EXPECTATIONS, WE BELIEVE,
IN PART, BECAUSE OF THE
OVERALL BETTER OUTLOOK, THINGS
HAVE STABILIZED AND THE
OUTLOOK FOR INDIVIDUAL STOCKS
RISE UP . SO THAT KIND OF
IMPROVED OUTLOOK ALSO CARRIES
OVER INTO 2024. THE CHART ON
THIS SLIDE COMPARES THE
FORECAST FOR 2023, BACK IN
OCTOBER, CLOSE TO THE END OF
THE YEAR. THE ACTUAL STOCK
PRICE CHANGES WERE VERY CLOSE
TO WHAT WAS EXPECTED BACK THEN.
THESE ARE THE EXPECTATIONS
COMPILED FROM THE WALL STREET
JOURNAL ANALYSTS WHO PROVIDE
THEIR STOCK PRICE TARGETS . NOT
NECESSARILY A FORECAST BUT THE
STOCK PRICE TARGETS FOR
INDIVIDUAL COMPANIES. YOU CAN
SEE THOSE LITTLE BLUE DOTS
MOVE TO THE RIGHT IN GENERAL AS
WE COMPARE THE OUTLOOK FROM
OCTOBER TO THE ACTUAL OUTCOME.
AND SO, LOOKING AT THE 2024
OUTLOOK, THE PURPLE DOTS
REPRESENT THE AVERAGE CHANGE
EXPECTED IN THE STOP -- STOCK
PRICES FOR THOSE COMPANIES IN
2024. THE LINE SHOWS THE RANGE
FROM THE LOW TO THE HIGH PRICE
TARGET. NOT REFERRING TO IT AS
A PESSIMISTIC OR OPTIMISTIC
SCENARIO BY ANALYSTS. HELLO
TARGET AND THE HIGH TARGET AND
YOU CAN SEE THAT THE RANGE IS
WHITE SUBSTANTIAL FOR SOME
COMPANIES. LIKE FACEBOOK, THE
LOW TARGET WOULD IMPLY ABOUT
30% INCREASE IN STOCK PRICE
OR THE FACEBOOK META PLATFORMS.
THE HIGH OUTLOOK FOR THE SAME
COMPANY APPLIES 50% GROWTH
YEAR OVER YEAR. LESS OF A
DEGREE FOR SOME OTHER
COMPANIES. BUT EVEN THE
SHORTEST LINE SPREADS OVER 40%
-50%, FOR GOOGLE, LET'S SAY ,
THE AVERAGE IS 25% BUT THE LOW
TARGET IS CLOSER TO 5% OR 10%
AND THE HIGH-END IS 50% OF
STOCK PRICE GROWTH IN 2024.
>> I HAD A QUESTION, IN PRIOR
COUNSEL MEETINGS YOU HAVE
HIGHLIGHTED THAT THAT TAX
REVENUES ARE REPORTED BY TWO
THINGS , I'M CURIOUS IF YOU
ARE SEEING THAT DYNAMIC SHIFT
OR IS THAT MARGINALLY STAYING
THE CASE?
>> THE STOCK PRICE AND THE
EMPLOYEE PRESENT AT THE
WORKPLACE ARE STILL THE TWO
FACTORS WE BELIEVE ARE THE
GROWING FACTORS BEHIND THE
PAYROLL TAX PERFORMANCE. IN
2023 , CHARTS SOMETIME IN THE
VERY BEGINNING SHOWED HOW
AMAZON'S RETURN TO THE OFFICE
THREE DAYS A WEEK HAD A LARGER
FOOT TRAFFIC. IT WAS LIKE
SOUTH LAKE UNION. THAT WOULD BE
ANOTHER CONTRIBUTING FACTOR TO
THEIR PERFORMANCE OF THE
PAYROLL TAX IN 2023. THAT IS
STILL AN INDICATOR THAT WE ARE
TRACKING WITHIN THE FORECAST.
THERE WAS A LITTLE BIT OF A
CHANGE BETWEEN THE OUTLOOK FOR
THOSE INDIVIDUAL COMPANIES .
THE FAINT PURPLE.AND LINE SHOW
THE OUTLOOK FROM OCTOBER OF
2023. SINCE THEN, THINGS HAVE
STARTED TO LOOK BETTER FOR THE
TECH SECTOR AS A WHOLE. FOR
FACEBOOK, IT IS SIGNIFICANT
HERE, TO THE 25% RANGE.
SOMEWHERE, THE AVERAGE,
SOMEWHERE AROUND 18% TO 19%,
SIMILARLY, THE SAME KIND OF
IMPROVEMENT FOR MICROSOFT, IT
JUST PROVIDES SOME KINDS OF
REPRESENTATIVE EXAMPLES FOR
THESE COMPANIES.
>> I REALLY APPRECIATE THIS
AND I THINK THE STOCK TRENDS
ARE REALLY INTERESTING. IN MY
HEAD , WE SEE THAT INFLATION
HASN'T DONE WHAT IT HAS
EXPECTED, THE STOCK MARKET
ALWAYS SEEMS TO PERFORM BETTER.
IS THERE A POINT THAT IF THE
FEDS DECIDE, THIS COULD CHANGE
AS WE GO THROUGH THE FORECAST
BECAUSE STOCKS MAY NOT PERFORM
AS WELL AS THEY HAVE BEEN DOING
BECAUSE INTEREST RATES WOULD
HAVE CHANGED, HOPEFULLY FOR THE
BETTER. I'M JUST TRYING TO GET
THOSE TWO THINGS, THEY ARE
REALLY KEY PIECES OF
INFORMATION FOR US. I AM JUST
SPECULATING AT THIS POINT. BUT
CONSTRUCTION WILL GO UP, SALES
TAX WILL GO UP, I KIND OF FEEL
LIKE WE WILL ALWAYS -- NOT
ALWAYS BE IN THE MIDDLE
STANDING PLACE. WE KNOW HOW
THINGS GO WITH INFLATION RATES
AND THEY SEEM TO BE VERY
STRONGLY CORRELATED. IT IS JUST
MORE OF AN OBSERVATION,
EXPECTING THAT WE MAY ALWAYS
BE IN THIS BALANCED SIDE OF
THINGS. GOOD, NOT NECESSARILY
GREAT COMPARED TO PAST YEARS.
BUT IT WILL BALANCE ITSELF
INTO SORT OF STEADY ARENA .
>> FINGERS CROSSED. THERE IS
DEFINITELY UNCERTAINTY FACING
RATES, GOING TOO FAST OR TOO
SLOW. THEY TRIED TO DO THEIR
BEST. BUT THERE IS
UNCERTAINTIES, AND IT IS
ELEVATED FOR STOCK PRICES. YOU
CAN SEE THE SHEER RANGE OR
OUTLOOK FOR SOME COMPANIES AND
HOW MUCH HAS CHANGED OVER JUST
A FEW MONTHS. IT IS REALLY
TREMENDOUS. BECAUSE OF THAT
THERE TENDS TO BE A LOT OF
UNCERTAINTY REGARDING THE
ACTUAL OUTCOMES . NOW, THIS
CHART COMPARES THE BASELINE,
THE OPTIMISTIC AND PESSIMISTIC
FORECAST FOR THE MAIN , THE
LARGEST REVENUES. SALES TAX,
AND PAYROLL TAX, IN 2024 THEY
WERE ALL BETWEEN 320 MILLION
AND 350 MILLION . GOING
FORWARD, THAT COULD CHANGE
QUITE DRAMATICALLY DEPENDING
ON THE ADJUSTED SCENARIOS AND
WHAT BECOMES THE ACTUAL FUTURE.
WITH ALL OF THAT UNCERTAINTY
THERE COULD BE SOME REALLY
DRAMATIC SHIFTS WITHIN THE
SIZE AND PROPORTION IN THE
OVERALL REVENUE. LOOKING AT
THESE INDIVIDUALLY, LOOKING AT
THE SALES TAX, THE PESSIMISTIC
SCENARIO, LIKE I SAID, ASSUMES
A RECESSION THAT IS NOT LONG,
A RELATIVELY SHORT RECESSION,
BUT IT IS RECESSION
NEVERTHELESS AND THAT LEADS TO
LOWER REVENUE, REVENUE THAT
ACTUALLY DECLINES IN 2024
BEFORE THINGS TURN AROUND. IN
OTHER WORDS, THE RECESSION
WILL SIGNIFICANTLY LOWER
REVENUE COLLECTED, RESULTING
IN IT DOWNTURN IN REAL
TERMS. THAT WILL BEGIN AS THE
INFLATION IS ADJUSTED. THEN
FOR THE PAYROLL EXPENSES, IT
REFLECTS THE UNCERTAINTY
REGARDING THE OUTLOOK FOR
STOCK PRICES AND THE
UNCERTAINTY OF THE REVENUE
STREAM WHICH IS UNLIKE ANY OF
THE OTHER ONES.
>> I WILL ADHERE TO OUR ALLIES,
I THINK IT HAS BEEN DIFFICULT
TO FORECAST THE JUMPSTART
PAYROLL EXPENSE TAX BECAUSE WE
ARE , I CAN'T DO PHYSICAL
MATH, BUT GOING INTO OUR FOURTH
YEAR OF COLLECTION.
>> IT IS ONLY OUR FOURTH YEAR
OF COLLECTION AND IT IS A TAX
THAT IMPOSES AN ANNUAL
COMPENSATION, SO THAT MEANS
THAT WE DON'T REALLY KNOW MUCH
UNTIL WE COME TO FEBRUARY OF
THE FOLLOWING YEAR . THIS
PARTICULAR YEAR, IT WAS 60%
FOR THE ANNUAL COMPENSATION.
>> I KNOW ENOUGH ABOUT
BUDGETING AND FORECASTING AND
ALL OF THIS TO BE THE BUDGET
CHAIR, AND ONE OF THE HIGHEST
LEVEL PIECES OF INFORMATION
I'VE ALWAYS USED IS THREE
YEARS SMOOTHING AND FIVE YEARS
SMOOTHING TO BETTER UNDERSTAND
THE DIRECTION WE ARE GOING. WE
ARE NOT EVEN ABLE TO DO FIVE
YEARS SMOOTHING BECAUSE WE ARE
ONLY IN OUR FOURTH YEAR OF
COLLECTION. WE COULD DO THREE
YEARS SMOOTHING BUT IT IS THE
FIRST THREE YEARS WHERE, JUST
AS YOU HAVE DESCRIBED IN THIS
PRESENTATION, WHERE WE HAVE
BEGUN TO CONTINUE TO DIAL IN
OUR TOOLS TO UNDERSTAND THE
STOCK MARKET AND RETURN TO
OFFICE AND WHEN WE WERE IN A
GLOBAL PANDEMIC FOR THE FIRST
THREE YEARS. I COMPLIMENTED YOU
EARLIER ON YOUR ACCURACY IN
THE FORECAST AND AGAIN
COMPLEMENT YOU ON YOUR ACCURACY
HERE AND JUST SEEING THIS WIDE
ARRAY FROM THE PESSIMISTIC TO
THE OPTIMISTIC , THAT IS YOUR
LARGEST SPREAD. I WANTED TO ADD
THAT CONTEXT AS TO WHY THAT IS
STILL AN ACCURATE
REPRESENTATION IN MY OPINION.
>> THANK YOU VERY MUCH. AND
WE WILL TALK ABOUT THE WORK
PROGRAM AFTER THE ANNUAL
FORECAST, BUT THIS PARTICULAR
REVENUE STREAM IS WHERE WE
EXPECT TO SPEND A LOT OF TIME
DEVELOPING A BETTER FORECASTING
MODEL.
THIS FINAL SLIDE COMPARES THE
ALTERNATIVE SCENARIOS AND SHOWS
HOW IT IS NEITHER OPTIMISTIC
OR PESSIMISTIC AND HOW IT WOULD
CHANGE THE TOTAL REVENUE
RECEIVED FOR 2024 AND 2025 AND
BUDGET 2026. THE BIGGEST
DIFFERENCES ARE, AGAIN, IN
RETAIL SALES, THE EXPENSE TAX
THAT WE SHOWED ON THE
PREVIOUS CHART . AGAIN, THERE
IS SOME UPSIDE FOR THE SALES
TAX AND YOU CAN SEE THE
DIFFERENCE BETWEEN THE RED AND
YELLOW LINE ARE PARTICULARLY
LARGE. THE BIGGEST RISK HERE
WOULD BE A RECESSION IF THINGS
GO ALONG CLOSELY TOWARDS THE
PESSIMISTIC SCENARIO, THAT
WOULD IMPLY POTENTIALLY
SIGNIFICANT REVENUE LOSSES ,
REVENUE UNDERPERFORMING TO THE
BASELINE SCENARIO. AND FOR THE
PAYROLL EXPENSE TAX IT IS JUST
THE STOCK MARKET WHERE THE S&P
GLOBAL FORECAST ABOUT 20%
GROWTH FOR 2024. ESSENTIALLY
NO GROWTH FOR 2025 AND 2026.
THE STOCK PRICES IN GENERAL
ARE HARD TO FORECAST. SO THERE
IS LIKELY TO BE LARGE
REVISIONS THERE AS WELL.
>> IF YOU CAN TAKE US BACK TO
THE LAST SLIDE OF PART 2 ,
COLLEAGUES, ARE THERE ANY
QUESTIONS REGARDING THE
FORECAST AND RECOMMENDATIONS
FROM THE FORECAST OFFICE BEFORE
WE MOVE ON TO THE ADOPTION OF
THE FORECAST? I AM SEEING NO
QUESTIONS. JAN, AS USUAL, YOU
HAVE DONE A GOOD JOB. WITH
THAT, IF THERE ARE NO
ADDITIONAL QUESTIONS I WILL
MOVE INTO THE ADOPTION OF THIS
FORECAST .
>> SECOND.
>> SORRY, I'M JUST CATCHING
UP. IT SEEMS LIKE WE WILL MOVE
INTO ITEM THREE SO WE CAN
ADOPT THIS FORECAST. IT IS THE
ROLE OF THE FORECAST COUNSEL TO
IMPROVE THE FORECAST AND WE
CAN CONCUR WITH THE
RECOMMENDATION OF THE FORECAST
SCENARIO. IF WE CONCUR WITH THE
RECOMMENDATION OF THE FORECAST
SCENARIO WHICH IS ON THE
SLIDES NOT NUMBERED, IN TERMS
OF, IF WE ALL AGREE WE DO NOT
HAVE TO TAKE A VOTE . IF WE
HAVE A DISAGREEMENT AND WE DO
NEED TO TAKE A VOTE. THE GOAL
OF THE LEGISLATION WAS TO
REMOVE ANY RISK OR INFLUENCE
OVER THE FORECAST AND RECEIVING
RECOMMENDATIONS FROM A STAFF OF
INDEPENDENT EXPERTS. THIS IS
THE BEST WAY TO ACHIEVE THAT.
THAT SAID, WE'LL REPRESENT THE
ELECTED LEADERSHIP AND IT IS
ALSO APPROPRIATE THAT WE HAVE
THE AUTHORITY TO OVERRIDE THE
RECOMMENDATION OF THE FORECAST
OFFICE SHOULD WE JUDGE THAT
THIS IS PRUDENT AND MAKES
SENSE. SUCH A DECISION WOULD
REQUIRE A THREE-MEMBER VOTE IN
THE AFFIRMATIVE APPROVING THE
ALTERNATIVE SCENARIO. THAT IS
WHY IF WE ALL AGREE, NO VOTE,
IF WE DISAGREE, THREE IS THE
NUMBER WE HAVE TO REACH TO
APPROVE. IN THE CASE THAT THERE
ARE NO OBJECTIONS TO THE
RECOMMENDATION BEFORE US, I
WILL SIMPLY REQUEST THAT THE
MEETING MINUTES REFLECTS OUR
CONCURRENCE REGARDING THE
RECOMMENDED FORECAST. THAT
WOULD BE THE FORMAL STEP
CALLED FOR IN THE UNDERLYING
BYLAWS AS THE WAY WE WILL
REPORT RECEIVING THE APPROVAL
OF THIS FORECAST. I WILL JUST
TAKE A MOMENT TO SEE, AND THE
WAY WE WILL DO THIS IS TO SEE
IF WE HAVE ANY OBJECTIONS TO
THE RECOMMENDATION. SEEING THEN
FROM THE COUNCIL PRESIDENT OR
THE TABLE, THAT MAKES THAT
PART EASIER. NOT HAVING HEARD
ANY OBJECTIONS I WILL DIRECT
THE FORECAST OFFICE TO RECORD
OUR CONCURRENCE WITH THE
RECOMMENDED FORECAST IN THE
MEETING MINUTES. THE MOTION
BEFORE US TO CONSIDER, SO THAT
IS THAT. WE WILL JUST SKIP
THROUGH THESE OTHER PARTS, THAT
IS THE END OF ITEM THREE, SO
WE'VE GONE THROUGH ITEM ONE,
THE MINUTES, ITEM TWO, THE
PRESENTATION, ITEM THREE, THE
ADOPTION OF THE FORECAST. WE
WILL NOW MOVE INTO ITEM FOUR,
THE WORK PROGRAM. PER THE
ORDINANCE THAT CREATED THE
FORECAST OFFICE, EACH OF THE
MEMBERS MUST APPROVE THE WORK
PROGRAM. AFTER WE WILL HAVE
THE OPPORTUNITY TO DISCUSS AND
POTENTIALLY APPROVE THIS
PROPOSAL. I HAVE RECEIVED YOUR
SLIDE DECK. IT SEEMS LIKE WE
HAVE A LOT OF INFORMATION HERE.
LET'S MOVE RAPIDLY.
>> A SHORT REPRESENTATION ON
SUMMARIZING. JUST REALLY
QUICKLY ABOUT THE BACKGROUND
OF THE OFFICE , THIS OFFICE WAS
CREATED IN 2021 , AND IT IS
STRUCTURED SIMILARLY TO THE
OFFICES OF KINGS COUNTY AND
WASHINGTON STATE. THE MAIN
GOAL WAS TO ESTABLISH AN
INDEPENDENT OFFICE THAT WOULD
PROVIDE A CONFIDENTIAL
ANALYSIS AND FORECAST FOR THE
LEGISLATIVE AND EXECUTIVE
STAFF . OVER THE PAST TWO
YEARS, IT WORKED, I BELIEVE,
VERY SUCCESSFULLY AS THE
CENTRAL STAFF AND CEO
ESTABLISHED GOOD WORKING
RELATIONSHIPS. IN GENERAL,
ENSURE BETTER ACCOUNTABILITY
AND TRANSPARENCY IN BETTER
ACCESS TO INFORMATION FOR BOTH
SIDES. THE PLAN IS TO PRETTY
MUCH CONTINUE AS WE HAVE BEEN
DOING IN THE LAST TWO YEARS.
THE OFFICE OF ECONOMIC AND
REVENUE FORECAST AS A COUPLE
OF MAIN REVENUE STREAMS THAT IT
IS RESPONSIBLE FOR FORECASTING.
THE SALES TAX, BUSINESS AND
OPERATION -- OCCUPATION,
PAYROLL EXPENSE TAX AND SOME
SMALLER AND ECONOMICALLY DRIVEN
ONCE, REAL ESTATE EXCISE TAX,
PRIVATE UTILITY , ADMISSION
TAX AND BUSINESS TAX , AND
ALSO PROVIDING INFLUENCE BEFORE
THE PROPERTY TAX FORECAST,
FORECASTING ASSESSED VALUE
AND THE VALUE OF NEW
CONSTRUCTION . GOING INTO 2024
MORE SPECIFICALLY, THE PROGRAM
PROPOSES TO UPDATE THE FORECAST
THREE TIMES, IN APRIL, AUGUST
AND OCTOBER. IN ADDITION TO
THAT THERE IS A JANUARY
FORECAST, BUT NOT A REVENUE
FORECAST UPDATE. IT IS THE
REGIONAL ECONOMIC FORECAST
UPDATE. WE ARE PROPOSING TO
CONTINUE THE ECONOMIC FORECAST
IN JANUARY, MARCH, JULY AND
OCTOBER. THE FORECASTS ARE THEN
PRESENTED ON APRIL 8th, AUGUST
5th AND THE OCTOBER DATE IS
STILL TO BE DETERMINED AFTER
DISCUSSION WITH CBO AND CENTRAL
STAFF . WE WILL GET THAT
OVERLINE -- OVERALL TIMELINE.
WE ARE WORKING ON FORECASTS ,
COMPARING REPORTS, QUARTERLY
REVENUE REPORTS WHICH COMPARE
THE ACTUAL REVENUE AGAINST THE
FORECAST AND WE ARE GOING TO DO
ONGOING MONITORING FOR THE
INDIVIDUAL REVENUE INCOME
STREAMS AND ASSESSING TO
FORECAST ACCURACY AND TO WHAT
EXTENT THE MODELS NEED TO BE
REFINED. IN BETWEEN THE
FORECASTS, OUR STAFF WORKS ON
IMPROVING THE FORECAST MODELS,
THE PLAN FOR 2024 IS TO SPEND
A SIGNIFICANT AMOUNT OF TIME
ON THE PAYROLL EXPENSE
FORECASTING. WE HAVE THREE
YEARS OF REVENUE DATA
COLLECTION. WE HAVE SECURED
ACCESS TO PAYROLL DATA FROM
WASHINGTON STATE EMPLOYMENT
AND SECURITY DEPARTMENTS AND
FINALLY HAVE ACCESS TO THE
DETAILED DATA FOR INDIVIDUAL
EMPLOYEES WHICH CAN BE USED TO
INFORM THE FORECAST FOR THE
PAYROLL EXPENSE TAX. WE HAD TO
SPEND A SIGNIFICANT AMOUNT OF
TIME JUST UNDERSTANDING THE
DATA, CLEANING THE DATA AND
DEVELOPING THE FORECAST MODEL.
THE DATA ON PAYROLL, FILTERING
OUT PART OF THE TOTAL PAYROLL,
WHICH IS SUBJECT TO TAX IN
SEATTLE . WE ARE CREATING SOME
WAY TO INFORM THE FORECAST OF
THIS DATA. THEN, DEPENDING ON
HOW MUCH TIME WILL BE
AVAILABLE, THERE ARE ALWAYS
IMPROVEMENTS THAT CAN BE MADE,
BOTH TO THE MODELS THEMSELVES
IN TERMS OF METHODOLOGY OR
ADDITIONAL DATA INPUTS. WE ARE
PARTICULARLY LIKELY TO LOOK AT
SALES TAX AND HOW TO BUILD
ADDITIONAL DATA SOURCES OR
IMPROVE THE FORECAST. THAT IS
THE ONE THAT FACES PROBABLY
THE HIGHEST RISKS RIGHT AFTER
THE PAYROLL EXPENSE TAX
REVENUE. THE LAST BIG PART OF
THE PROGRAM IS THE POLICY
ANALYSIS AND WORK THAT
SUPPORTS OTHER DEPARTMENTS .
AGAIN, THE FORECAST OFFICE IS
INDEPENDENT AND WHENEVER THERE
IS A REQUEST FROM ANY MEMBER
OF THE FORECAST COUNSEL OR
THERE IS A NEED FOR SOME
ANALYTICAL WORK FOR A
PROPOSAL OR ECONOMIC
ESTIMATION FOR EXECUTE OF
STUFF, THAT IS THE KIND OF WORK
OUR OFFICE DOES. IT IS
ON-DEMAND, SORT OF WITHOUT A
PARTICULAR SCHEDULE AND TO THE
EXTENT AT WHICH WE HAVE
RESOURCES TO DO THAT. SO WE DO
IT AS MUCH AS WE CAN. LAST
POINT, OUR OFFICE PROVIDE
SUPPORT FOR CITY FINANCE,
PRESENTING, WHEN THE CITY IS
PRESENTING TO AGENCIES IT IS A
LIMITED TAX OBLIGATION BOND.
THAT IS PRETTY MUCH THAT.
HAPPY TO ADDRESS ANY QUESTIONS
ABOUT THE WORK PROGRAM OR ANY
SUGGESTIONS OR DIRECTION YOU
MIGHT BE HEADING.
>> FANTASTIC. I APPRECIATE
THIS. COLLEAGUES, ANY QUESTIONS
AT THIS TIME? IT WAS VERY
STRAIGHTFORWARD AND A LOT OF
YOUR WORK IS LEGISLATIVE. A
LOT OF YOUR PROGRAM IS
LEGISLATIVE, AND YOU'VE TAKEN
SOME ADDITIONAL STEPS IN
APPROPRIATE WAYS, ESPECIALLY
ADDITIONAL TIME WITH THE
JUMPSTART PAYROLL TAX.
COLLEAGUES, ANY QUESTIONS?
SEEING NONE, I WILL MOVE TO
APPROVE THE 2024 FORECAST
OFFICE WORK PROGRAM , IS THERE
A SECOND?
>> IT HAS BEEN MOVED AND
SECONDED. ANY COMMENTS OR
MOVEMENTS BEFORE RECALL THE
FINAL MOVE?
>> WILL YOU PLEASE CALL THE
ROLL ON THE ADOPTION OF THE
WORK PROGRAM? DO YOU CALL THE
ROLE -- I MEAN, I CAN CALL
THE ROLL. PRESIDENT NELSON. I
WILL HAVE ALLIE OR BEN CALL
THE ROLL.
>> SORRY. FOR THE RECORD, IT
HAS TRADITIONALLY BEEN, OR
LAST YEAR'S MEETINGS IT WAS
THE DIRECTOR BUT IT DOESN'T
ACTUALLY MATTER.
>> GREAT. DO YOU HAVE ALL OF
OUR NAMES READY TO CALL? THERE
IS THE CHEAT SHEET RIGHT THERE.
>> SO, CHAIR STRAUSS.
>> YES.
>> COUNCIL PRESIDENT NELSON ,
HOW DO YOU VOTE?
>> PARDON ME?
>> AYE .
>> THAT IS FOUR YESES AND
ZERO NOSE.
>> THE MOTION CARRIES, THE 2024
OFFICE WORK PROGRAM AS
PRESENTED FROM JAN DURAS HAS
BEEN APPROVED. THANK YOU, THE
MOTION CARRIES AND IS ADOPTED.
THAT BRINGS US TO THE END OF
OUR FORMAL AGENDA. I WANT TO
REMIND EVERYONE THAT WE WILL
HAVE TWO ADDITIONAL MEETINGS TO
RECEIVE UPDATED FORECAST IN
AUGUST AND OCTOBER. THE NEXT
SCHEDULED MEETING IS MONDAY,
AUGUST 5th AT 11:00 A.M. I
WILL NOTE THAT WE MIGHT CHANGE
THAT DATE, WE WILL FIGURE IT
OUT FROM HERE. JUST NOTING
THAT, ESPECIALLY TO THE
PROXIMITY OF COUNCIL BRIEFINGS
-- BRIEFINGS HERE. ANY
ADDITIONAL COMMENTS? SEEING
NONE, MEETING IS ADJOURNED.
THANK YOU FOR ATTENDING THE
APRIL 8th 2024 FORECAST
COUNCIL MEETING. THANK YOU.