>> THIS MEETING OF THE
ECONOMIC AND REVENUE FORECAST
COUNCIL WILL COME TO ORDER.
I'M COUNCILMAN DAN
STRAUSS, CHAIR OF THE ECONOMIC
AND
REVENUE FORECAST COUNCIL. HERE
TODAY WITH MY
FORECAST COUNCIL COLLEAGUES, WE
DON'T
FORMALLY CALL ROLL,
ALTHOUGH I THINK WE MAY IN THE
FUTURE.
WE HAVE COUNCIL PRESIDENT SARA
NELSON.
COUNCIL PRESIDENT, ARE YOU HERE?
WE HAVE CHIEF OF STAFF ANDREW
MEYERBERING.
ANDREW, ARE YOU
PRESENT?
>>
PRESENT.
>> AND CITY FINANCE DIRECTOR
JAMIE
CARNEL.
>> PRESENT.
>> WONDERFUL.
WE'LL COME BACK TO THE
COUNCIL PRESIDENT BECAUSE I KNOW
SHE WAS
HERE JUST A SECOND AGO.
COUNCIL PRESIDENT, YOU ARE
HERE,÷÷CORRECT?
>> HERE.
WHAT
ARE WE WAITING FOR?
>>
FANTASTIC.
>> WE ARE WAITING FOR THEM
TO KICK OFF THE
MEETING.
>> WE CAN HEAR YOU.
YOU ARE OFF MUTE.
>> I'M NOT SEEING MY CAMERA
ICON
AT THE VERY BOTTOM NEXT TO THE
AUDIO.
>> THIS ECONOMIC AND REVENUE
FORECAST COUNCIL WILL BE ON
RECESS FOR JUST A MOMENT.
>> CITY OF SEATTLE THE
BIGGEST DAY IN FRANCHISE HISTORY
NO
MATTER WHAT THE OUTCOME,
AND WE ARE EXCITED FOR
AEROMARINERS. LOOKING FORWARD TO
THAT OPPORTUNITY TO PROVE
OURSELVES FOR THE WORLD SERIES.
WITH THAT TODAY IS
MONDAY, OCTOBER 20th, 2025, AND
THIS MEETING OF THE ECONOMIC AND
REVENUE FORECAST COUNCIL WILL
COME TO ORDER.
COUNCIL PRESIDENT, SARA NELSON.
ARE YOU PRESENT?
CHIEF OF STAFF ANDREW
MEYERBERG.
>> PRESENT.
>> CITY CHIEF FINANCIAL
DIRECTOR JAMIE CARNEL.
>>
PRESENT.
>> THANK YOU.
WE HAVE QUORUM, AND WE'LL
ANNOUNCE COUNCIL PRESIDENT
BEING HERE.
I KNOW SHE IS HERE.
WE'RE JUST HAVING SOME
TECHNICAL DIFFICULTIES, AND
WE'VE GUT A
LITTLE ADMINISTRATIVE WORK TO DO
BEFORE WE GET INTO THE MEAT
OF THIS MEETING.
WE ARE JOINED TODAY BY STAFF
OF THE ECONOMIC AND
REVENUE FORECAST OFFICE AS WELL
AS
REPRESENTATIVES FROM THE
CITY BUDGET AND CITY COUNCIL
CENTRAL
STAFF. THE PURPOSE OF TODAY'S
FORECAST COUNCIL IS TO RECEIVE
THE
UPDATE ON THE ECONOMIC AND
REVENUE
FORECASTS. CITY COUNCIL'S
CURRENTLY
REVIEWING THE MAYOR'S 2026
PROPOSED BUDGET, AND WE ARE
NOW GOING TO RECEIVE AND REVIEW
A
FINAL REVENUE
FORECAST UPDATE FOR
THIS YEAR. THIS REVENUE FORECAST
IS ESPECIALLY IMPORTANT -- GOOD
MORNING, MR. G.
HOW ARE YOU
TODAY?
>> YEAH, I'M
SORRY.
>> ALL RIGHT.
WITH THAT THE MAIN, THIS
REVENUE FORECAST IS ESPECIALLY
IMPORTANT
BECAUSE IT WILL SERVE
AS THE BASIS FOR THE REMAINDER
PROCESS UPDATING THE 2026
ADOPTED
BUDGET.
IT'LL SET THE STAGE FOR THE
CITY COUNCIL'S DELIBERATIONS
FOR
THE REMAINDER OF OUR BUDGET
PROCESS.
BEFORE MOVING ON
TODAY, WE HAVE TWO ITEMS ON THE
AGENDA TODAY.
WE HAVE APPROVAL OF THE
MINUTES FROM AUGUST
4, 2025. WE HAVE A PRESENTATION
ON
THE OCTOBER 2025 ECONOMIC
AND REVENUE FORECASTS.
AND WE HAVE THE FORMAL ADOPTION
OF THE 2025 FORECASTS.
IF THERE'S NO OBJECTION,
THE AGENDA WILL BE ADOPTED.
HEARING NO OBJECTION, THE AGENDA
IS
ADOPTED. AND -- SORRY, WE'RE
JUST USING
A DIFFERENT FORMAT OF THE
SCRIPT,
SO IT LOOKS LIKE I DO NEED
TO FORMALLY ADOPT THE AGENDA.
IS THERE A
SECOND.
>>
SECOND.
>> THANK YOU.
IT HAS BEEN MOVED AND
SECONDED TO ADOPT TODAY'S
AGENDA.
TODAY'S AGENDA IS BEFORE
THE FORECAST COUNCIL.
ANY -- IS THERE ANYONE
THAT WOULD LIKE TO ADD OR REMOVE
AN
ITEM?
OR ARE THERE ANY PROPOSED
AMENDMENTS? IF THERE ARE NO
OBJECTIONS
TODAY'S AGENDA WILL BE ADOPTED.
HEARING NO OBJECTION, THE
AGENDA IS ADOPTED.
WE'RE GOING TO MOVE ONTO
THE FIRST ITEM OF BUSINESS.
READING IN THE APPROVAL
OF MINUTES FROM AUGUST
4, 2025. A COPY OF THE MINUTES
FROM
THE AUGUST 4th MEETING OF
THE FORECAST
COUNCIL HAS BEEN CIRCULATED TO
THE MEMBERS
AND POSTED ON THE WEBSITE OF
THE FORECAST OFFICE.
I MOVE AND SEEK A
SECOND FOR THE APPROVAL OF THE
MINUTES.
>> SECOND.
>> THANK YOU.
IT HAS BEEN MOVED AND
SECONDED TO
APPROVE THE MINUTES FROM OUR
LAST MEETING.
ARE THERE ANY OBJECTIONS?
HEARING NO OBJECTIONS THE
MINUTES ARE APPROVED.
MOVING ONTO THE SECOND ITEM
ON THE AGENDA WHICH IS
A PRESENTATION OF THE OCTOBER
2025
ECONOMIC AND REVENUE
FORECASTS AND RECOMMENDATION
FROM THE
OFFICE OF ECONOMIC AND REVENUE
FORECASTS REGARDING THE 2025 AND
2026 REVENUE FORECASTS.
MOVING IN TO THIS MAIN ITEM ON
TODAY'S AGENDA WHICH IS THIS
PRESENTATION OF THE REVENUE
FORECAST,
THIS PRESENTATION WILL BE LED BY
STAFF FROM THE
CITY WAS OFFICE OF ECONOMIC
AND REVENUE FORECASTS AS WELL
AS STAFF FROM THE CITY
BUDGET OFFICE BECAUSE THE WORK
IS
STILL SPLIT WITHIN TWO
DIFFERENT
DEPARTMENTS. TO ENSURE THE
FORECAST
COUNCIL'S FULLY INFORMED AND
ABLE TO
HAVE ITS FULL RANGE OF QUESTIONS
ADDRESSED, THE STAFF FROM
THE CITY COUNCIL CENTRAL
STAFF WILL ALSO BE PARTICIPATING
IN
THIS BRIEFING.
THE FORECAST OFFICE WILL
PRESENT THREE ECONOMIC AND
REVENUE
SCENARIOS, BASELINE PESSIMISTIC
AND OPTIMISTIC.
THE OFFICE WILL THEN PROVIDE
A RECOMMENDATION ABOUT WHICH
OF THESE SCENARIOS SHOULD BECOME
THE FORMAL FORECAST.
WE'LL HAVE THAT OPPORTUNITY
TO DISCUSS THIS RECOMMENDATION
AND WHETHER TO AFFIRM THE
RECOMMENDATION OR CONSIDER
A DIFFERENT REVENUE
FORECAST
SCENARIO. WITH THAT SAID,
DIRECTOR DURAS,
WELCOME. PLEASURE TO HAVE YOU
HERE.
I'M GOING TO HAVE YOU LEAD THE
CONVERSATION.
AND IF EVERYONE WHO'S
PRESENTING TODAY BOTH FROM THE
FORECAST OFFICE AS WELL
AS THE CITY BUDGET OFFICE, WE'D
LOVE TO
HAVE YOUR INTRODUCTIONS
AND THEN TAKE IT AWAY WITH THE
PRESENTATION.
>> THANK YOU VERY MUCH, CHAIR
STRAUSS.
NAY NAME IS JAN
DURAS. I'M THE CHIEF DIRECTOR
AND
CHIEF ECONOMIST AT THE OFFICE
OF ECONOMIC AND REVENUE
FORECASTS.
>>
HELLO.
>> I'M
RICHARD.
>>
GOOD MORNING. I'M ALEXANDRIA
ZHANG,
AN ECONOMIST WITH THE CITY
BUDGET
OFFICE.
>> GOOD MORNING. JOSEPH RUSSELL,
ECONOMIST,
BUDGET OFFICE.
>> BEN NOBLES, CITY
COUNCIL CENTRAL STAFF DIRECTOR.
>> SARA NELSON,
COUNCIL PRESIDENT.
>> I'M NOT SURE WHY BUT SHARING
DIFFERENTLY ON EACH SCREEN.
I GUESS, LET'S JUST TAKE IT
AWAY.
ALL RIGHT, ONCE AGAIN
GOOD MORNING,
FORECAST COUNCILMEMBERS.
THE OUTLINE OF
TODAY'S PRESENTATION IS THE
USUAL ONE.
WE ARE FIRST --
I DON'T THINK THE SCREENS ARE
ACTUALLY
UPDATING.
>> WITH THE USUAL OUTLINE I'LL
FIRST TALK ABOUT THE
RECENT ECONOMIC DEVELOPMENTS
AND CHANGES IN THE U.S.
ECONOMIC FORECAST AND HOW THAT
FEEDS INTO THE CHANGES AND HOW
IT
RESULTS IN CHANGES IN THE
REGIONAL ECONOMIC FORECAST.
AND IN THE SECOND PART
WE'LL HAVE A LOOK AT THE
OCTOBER
REVENUE FORECAST UPDATE ITSELF.
FIRST FOR GENERAL FUND REVENUES
AND SELECTED GOVERNMENT
REVENUES.
THIS IS A PICTURE THAT SHOWS
WHAT'S GOING ON THROUGHOUT THIS
YEAR OR IN FORUMS AND WHAT'S
BEHIND THE CHANGES WE HAVE
SEEN THROUGHOUT THE YEAR.
THERE HAS BEEN QUITE THE
DRAMATIC SPIKE IN
ECONOMIC UNCERTAINTY FOLLOWING
THE VARIOUS ANNOUNCEMENTS IN
APRIL.
AND AS YOU CAN SEE THIS
ECONOMIC POLICY UNCERTAINTY
INDEX JUST
SUMMARIZES HOW MUCH
UNCERTAINTY THERE IS OVERALL HAS
COME
DOWN SINCE THAT PEAK AND THAT
BIG SPIKE IN APRIL.
BUT THE AMOUNT OF UNCERTAINTY
STILL HIGHLY ELEVATED,
CERTAINLY NOTICEABLY ABOVE
WHAT'S BEEN
KIND OF MORE TYPICAL BEFORE
PANDEMIC BUT EVEN ELEVATED
ABOVE WHAT HAPPENED
THROUGHOUT 2022 THROUGH 2024.
THAT SAID, THERE HAS BEEN
IN APRIL QUITE DRAMATIC DROP
IN FINANCIAL MARKET AND THE U.S.
STOCK MARKET.
IT FELL ABOUT 20%
BETWEEN FEBRUARY AND APRIL IN
RESPONSE,
AGAIN, TO THOSE POLICY CHANGES
ANNOUNCEMENTS, A FEAR OF
TRADE WAR.
BUT OVER TIME AS THE
TRADE NEGOTIATIONS STARTED AND
CONTINUED ON AND AS THE
RETALIATION BY TRADE PARTNERS
HAD BEEN RELATIVELY
RESTRICTED, THE IMPACT ON THE
INFLATION HAS BEEN SMALLER THAN
WHAT WAS
INITIALLY FEARED.
YOU CAN SEE IN THIS
CHART THAT THE STOCK MARKETS
HAVE
RECOVERED, SO THE CHANGE BETWEEN
THAT APRIL 10 DOT AND THE AUGUST
DOT REPRESENTS THE CHANGES THAT
HAPPENED BETWEEN THE
APRIL REVENUE FORECAST AND THE
AUGUST REVENUE FORECAST.
SO ESSENTIALLY ALL
THE LOSSES HAVE BEEN RECOVERED,
AND
SINCE THEN STOCK MARKETS
CONTINUED TO
GROW. THEY ARE 30% ABOVE THAT
BOTTOM THAT WE SAW IN APRIL.
5% ABOVE THE AUGUST 4th LEVEL.
THERE ARE THINGS GOING ON.
IN ADDITION TO THAT
UNCERTAINTY THERE IS QUITE A LOT
OF
EXPECTATIONS, HIGH
EXPECTATIONS REGARDING THE
IMPACT OF A.I.
AND HOW THAT IS GOING TO IMPROVE
THE PRODUCTIVITY AND
IMPROVE ECONOMIC PROBLEMS AND
GAINS
ARE HEAVILY CONCENTRATED IN TECH
AND I'LL TALK MORE ABOUT THAT.
AS I MENTIONED TARIFFS HAVE
NOTNOT HAD ANY MAJOR IMPACT ON
INFLATION, CERTAINLY NOT THE
KIND OF IMPACT THAT WAS EXPECTED
AFTER THOSE
INITIAL ANNOUNCEMENTS.
THIS CHART HERE SHOWS WHAT WAS
UNDERLYING THE AUGUST FORECAST.
THE RED LINE SHOWS THE BASELINE
SCENARIO.
THE BROWN ONE REPRESENTS
THE PESSIMISTIC SCENARIO.
AS YOU CAN SEE, THERE IS
ANY PARTICULAR BIG INCREASE
IN INFLATION -- OR THERE WASN'T
ANY
BIG INCREASE IN
INFLATION
EXPECTED BACK IN AUGUST. UNDER
5% IN THE BASELINE
SCENARIO, SO
NOTHING COMPARABLE TO WHAT WE
HAVE SEEN A COUPLE
OF YEARS AGO WHERE THE
INFLATION WAS REACHING 9, 10% AT
ITS PEAK.
IN A PESSIMISTIC SCENARIO WHERE
THERE WAS THIS ASSUMPTION THAT
THE TRADE RESPONSE WILL BE
STRONGER, THE RESTRICTIONS
ON TRADE WILL BE MORE
SEVERE, TARIFFS WILL BE HIGHER.
YOU CAN
SEE THAT THE CHART SHOWS A MORE
MEANINGFUL INCREASE
IN INFLATION.
BUT IF WE COMPARE THAT -- AND
IF WE COMPARE THAT TO WHAT THE
CURRENT FORECAST LOOKS LIKE,
THE RED LINE, THE BRIGHTER RED
LINE REPRESENTS THE CURRENT
BASELINE
SCENARIO.
AND THE DARKER BROWN LINE
THE CURRENT PESSIMISTIC
SCENARIO.
THERE HAS BEEN A LITTLE BIT OF
AN UPTICK, SO INFLATION
IS EXPECTED TO RISE GRADUALLY.
CERTAINLY IT'S EXPECTED TO
BE HIGHER COMPARED TO THE
PREVIOUS BASELINE SCENARIO BY
ABOUT
HALF A PERCENTAGE POINT.
BUT, AGAIN, NO DRAMATIC
INCREASE AT LEAST WITH THE
CURRENT U.S.
FORECAST BY MOODY'S
ANALYTICS AND S&P GLOBAL WOULD
SUGGEST.
SO WHAT THAT MEANS IS THE
BALANCE FORECAST SHIFTED
FROM HIGH INFLATION TOWARDS WEAK
JOB
GROWTH.
AND THE FED ACKNOWLEDGED
THAT THIS BALANCE OF RATE
CUTS SHIFTED AND HAS ALREADY
MOVED
TO SUPPORT THE LABOR MARKET
AND ECONOMY MORE PROUDLY BY
CUTTING INTEREST RATES, BY
LOWERING 0.
25 PERCENTAGE POINTS.
AND AT THIS POINT AT LEAST
ONE MORE INTEREST RATE CUT IS
EXPECTED IN
OCTOBER, QUITE POSSIBLY EVEN TWO
CUTS.
SO THE SECOND ONE THEN WOULD
BE FOLLOWING IN DECEMBER
MEETING.
NOW TURNING FROM THE
INFLATION FORECAST TO THE
ECONOMIC FORECAST ITSELF, AGAIN,
THE CHART HERE, THESE TWO
PANELS SHOW WHAT THE FORECAST
LOOK
LIKE BACK WHEN WE WERE
PRESENTING THE
AUGUST ECONOMIC FORECAST.
THE RED LINES ARE THE BASELINE
SCENARIO. THE BROWN ONES SHOW
THE PESSIMISTIC SCENARIO.
AS YOU CAN SEE THE PESSIMISTIC
SCENARIO MEANS THAT
THE ECONOMY GOES INTO A
RECESSION AS GDP
FALLS -- GDP GROWTH FALLS BELOW
ZERO, AND THERE IS A NOTABLE
DECREASE IN EMPLOYMENT IN
A PESSIMISTIC SCENARIO AS WELL.
THE CURRENT BASELINE SCENARIO.
AND HERE THE FORECAST THAT
ARE PRESENTED ARE THE AVERAGE OF
THE TWO FORECASTS.
ONE FOR MOODY'S ANALYTICS
AND ONE FROM S&P GLOBAL JUST
LIKE
WE DID
IN AUGUST. THE AVERAGE OF THOSE
TWO FORECASTS CURRENTLY SHOWS
THE REAL GDP GROWTH SOMEWHERE
AROUND 2%, SO THAT'S PRETTY
SOLID REAL
GDP GROWTH.
AT THE SAME TIME WEAKER
EMPLOYMENT GROWTH
IS STILL A PART OF THE BASELINE
SCENARIO
FORECAST.
AGAIN, IN RESPONSE TO TRADE,
IMMIGRATION POLICIES,
IN RESPONSE TO -- OR AS A RESULT
OF A.I.- RELATED
INVESTMENTS THERE IS THIS
GENERAL SENSE TAT
FIRMS ARE A LITTLE BIT MORE
RELUCTANT
TO HIRE.
THEY ARE TRYING TO WAIT AND SEE
HOW THINGS PLAY
OUT AND THAT OVERALL INCREASE
UNCERTAINTY JUST DELAYS THE
HIRING.
SO THERE HASN'T BEEN ANY
UPTICK IN LAYOFFS BUT HIRING AND
JOB GROWTH HAS CERTAINLY BEEN
VERY
WEAK, AND IT'S EXPECTED TO
BE LIKE THAT AT LEAST IN
NEAR FUTURE.
THE CURRENT
PESSIMISTIC SCENARIO NOT
DRAMATICALLY DIFFERENT
FROMFROM THE ONE IN AUGUST, JUST
KIND
OF RESPOND OR DELAYED RECESSION.
SO THE RECESSION WOULD NOT
START AT THE SAME AS IT WAS
EXPECTED
IN SECOND HALF OF 2025 BUT MORE
IN THE SECOND HALF OF 2026
SO DELAYED BY ABOUT A YEAR,
BUT IT WILL HAVE SIMILAR IMPACT
ON THE
ECONOMY AND THE JOB GROWTH
ITSELF. TURNING FROM THE
NATIONAL ECONOMY TO THE REGIONAL
ONE, HERE THE PICTURE IS A
LITTLE BIT
MORE -- MAYBE EVEN A LITTLE BIT
MORE WORRYING WHEN IT COMES
TO THE EMPLOYMENT GROWTH IN THE
REGIONAL ECONOMY.
THERE HAS BEEN SOME BAD NEWS.
WE HAVE SEEN DOWNWARD
REVISION IN THE EMPLOYMENT
ESTIMATES.
WASHINGTON STATE
EMPLOYMENT, SECURITY DEPARTMENT
HAS
REVISED DOWN THEIR ESTIMATES OF
EMPLOYMENT NUMBERS GOING BACK TO
THE FOURTH QUARTER OF 2024.
AND CURRENTLY THOSE
EMPLOYMENT
ESTIMATES SHOW THAT THE
EMPLOYMENT HAS DECLINED ABOUT
0.7% OR ABOUT 13,000 JOB IN
THE SEATTLE METROPOLITAN
DIVISION
AREA.
AND THAT DECLINE IS YEAR
OVER YEAR FIRST EIGHT MONTHS OF
2025 RELATIVE TO THE SAME PERIOD
OF
2024.
THE CHART THEN SHOWS HOW
DIFFERENT INDUSTRIES
HAVE CONTRIBUTED TO THAT
DECLINE.
SO THE TOP BAR, THE RED
BAR, THAT'S 0. 7% TOTAL
DECREASE
IN TOTAL ROOM
FOR EMPLOYMENT. AS YOU CAN SEE
THOSE DECLINES IN
EMPLOYMENT ARE ONLY
THREE SECTORS, EDUCATION AND
HEALTH LEISURE AND HOSPITALITY
AND
GOVERNMENT HAVE CONTRIBUTED
TO THE GROWTH AND OFFSET
DECLINE.
BUT ALL OTHER SECTORS, THEIR
JOB NUMBERS IN THOSE SECTORS
HAVE
DECLINED.
MOST NOTABLY PROFESSIONAL
AND BUSINESS
SERVICES WHERE THERE ARE ABOUT
11,000 FEWER JOBS
IN THE FIRST EIGHT MONTHS OF
2025 COMPARED TO THE SAME PERIOD
OF 2024.
SO THAT HAS AN IMPACT ON
THE EMPLOYMENT FORECAST AND
THE REGIONAL ECONOMIC FORECAST
AND
BY EXTENSION ALSO ON THE REVENUE
FORECAST ITSELF.
WE HAVE FOR THE
BASELINE SCENARIO INCORPORATED
THE NEW
EMPLOYMENT ESTIMATE.
AND THAT'S WHY WHEN YOU
COMPARE THOSE TWO RED LINES, THE
ONE THAT'S HIGHER IN 2025,
EARLY
2025 THAT SHOWS THE BASELINE
SCENARIO FROM AUGUST AND
THEN THE DARKER, BRIGHTER ONE
THAT'S BELOW, THAT'S THE
CURRENT BASELINE SCENARIO FROM
OCTOBER, AGAIN, INCORPORATING
THAT
ESTIMATED 0. 7% DECLINE IN THE
FIRST EIGHT MONTHS OF 2025.
SO GOING FORWARD TO THE RIGHT
OF THAT FORECAST LINE, THE
GROWTH
IS EXPECTED TO PICK UP
SOMEWHAT, AND WE ARE NOT
EXPECTING REVENUE -- SORRY, WE
ARE
NOT EXPECTING EMPLOYMENT AND
JOB LOSSES TO CONTINUE
ON. IT'S EXPECTED TO TURN TO
MODEST GROWTH BELOW 1% IN THE
BASELINE SCENARIO.
IN THAT PESSIMISTIC
SCENARIO SIMILAR TO THE U.S.
ECONOMY, THERE WOULD BE JOB
LOSSES
KIND OF COMPARABLE TO THE 2008
OR
2001 RECESSION, AROUND 2. 5%
JOBS LOST IN THE BOTTOM AND
THE RECOVERY -- COMPLETED
RECOVERY WILL BE REACHED BY THE
END OF
2029. SO THAT'S THE OVERALL --
THAT'S A SUMMARY OF THE
REGIONAL
FORECAST. NOW MOVING TO THE
REVENUE FORECAST ITSELF, FIRST A
QUICK
SUMMARY. BY THIS POINT IN THE
YEAR, THE
CITY HAS COLLECTED
OBLIGATIONS FOR FIRST AND THE
SECOND QUARTERS --
>> JUST ONE MOMENT.
I JUST WANT TO PAUSE TO SEE
IF ANY OF THE MEMBERS OF
THE FORECAST COUNCIL HAVE
ANY QUESTIONS ON THE
INFORMATION LEADING UP TO
TODAY'S
RECOMMENDATION.
COUNCIL PRESIDENT, IF YOU'VE
GOT QUESTIONS, I'LL JUST NEED
YOU
TO SPEAK UP BECAUSE WE SAW
SOME TECHNOLOGICAL
DIFFICULTIES HERE. WONDERFUL.
SEEING NO QUESTIONS, PLEASE TAKE
US INTO THE MEAT OF THIS
AGENDA.
>> THANK YOU.
SO ABOUT HALF OF THE REVENUES
IS IN GENERAL COLLECTED BY THE
TIME WE WORK ON THIS
OCTOBER
FORECAST. SO EVEN THOUGH THE
CURRENT
YEAR IS ALMOST OVER -- LESS THAN
A QUARTER OF THE YEAR LEFT --
THE CITY HAS BY THIS POINT
COLLECTED ONLY ABOUT HALF OF IT
REVENUES FOR THE
CURRENT YEAR. IT VARIES
SIGNIFICANTLY DEPENDING ON
WHICH REVENUE STREAM WE ARE
LOOKING AT.
ABOUT 75% OF REVENUES FOR RATE
ARE COLLECTED BY THIS POINT
SO WE HAVE A GOOD SENSE
WHERE READ IS HEADING FOR THE
YEAR.
MUCH LESS IS
AVAILABLE FOR BUSINESS AND
OCCUPATION OR
FOR SALES TAX OR PAYROLL
EXPENSE TAX.
THE PAYROLL THAT WE ARE
RECEIVING ARE JUST
ESTIMATES BASED ON THE PREVIOUS
YEAR'S
OBLIGATION, SO THAT'S
VERY LIMITED TO NO
INFORMATION REGARDING THE
EVENTUAL OUTCOME
FOR PAYROLL EXPENSE TAX.
ALL RIGHT, SO I'LL TALK A
LITTLE BIT MORE ABOUT SALES TAX
IN A
SECOND.
THIS CHART HERE PROVIDES
SOME KIND OF ADDITIONAL CONTEXT
FOR
WHAT WE ARE SEEINGSEEING -- WHEN
IT COMES TO SALES TAX
COLLECTION.
THE CHART HERE SHOWS THE
YEAR OVER YEAR CHANGE IN THE
CONSUMER SPENDING AS MEASURED BY
THE
SPENDING BY CONSUMERS
USING CREDIT AND DEBIT CARDS.
IN RECENT MONTHS WE HAVE
SEEN SIGNIFICANT WEAKNESS IN THE
CONSUMER SPENDING.
THE RED LINE SHOWS THAT
YEAR OVER YEAR CONSUMER SPENDING
HAS
DECLINED IN THE METRO AREA.
AGAIN, SIGNIFICANTLY WEAKER SORT
OF PICTURE COMPARED TO
THE NATIONAL ECONOMY WHERE THE
CONSUMER SPENDING GREW VERY
MODESTLY BUT STILL GREW YEAR
OVER YEAR THROUGHOUT 2025.
SO, LIKE I SAID, THIS IS IN
LINE WITH WHAT WE ARE SEEING
FOR SALES TAX REVENUES,
IN PARTICULAR SALES TAX REVENUES
COMING FROM RETAIL TRADE.
I HAVE SHOWN THIS CHART A
NUMBER OF TIMES IN PAST
MEETINGS.
THE BLACK LINE HERE SHOWS
THE YEAR OVER YEAR CHANGE IN
THE TOTAL SALES TAX REVENUES,
AND THEN THOSE DIFFERENT BARS,
THEY
SHOW HOW DIFFERENT PARTS OF
THE ECONOMY CONTRIBUTE TO THE
OVERALL SALES TAX GROWTH OR
DECLINE.
AND RECENTLY IT HAS BEEN IN
DECLINE.
SO 5 OUT OF 7 MONTHSMONTHS
WHICH WE HAVE SALES TAX
OBLIGATIONS FOR 2025 SALES
TAX REVENUE HAS DECLINED YEAR
OVER YEAR LARGELY
DUE TO A WELL- KNOWN SLOW DOWN
IN A
CONSTRUCTION SECTOR. THAT SECTOR
IS IN A NOTABLE
DOWNTURN, BUT LOWER
REVENUES FROM TRADE -- FROM
RETAIL TRADE
AND WEAKENING LEISURE
AND HOSPITALITY REVENUES
ARE CONTRIBUTING TO THOSE
DECLINES
AS WELL. GOING FORWARD AND IT'S
MORE IMPORTANTLY CERTAINLY FOR
THE FORECAST ITSELF, LOWER
INTEREST RATES SHOULD PROVIDE
SOME RELIEF
STARTING LATE THIS YEAR
AND GOING INTO 2026.
AND AT LEAST ONE MORE INTEREST
RATE CUT EXPECTED THIS YEAR
MORE LIKELY TWO, A COUPLE MORE
IN 2026 DEPENDING ON HOW
THINGS EVOLVE AND HOW THAT WILL
REACT TO THE CHANGES IN THE
OUTLOOK
AND BALANCE RISK.
EVEN WITH THOSE INTEREST
RATE CUTS, THE FORECAST WOULD
SHOW ONLY MODEST GROWTH IN SALES
TAX
REVENUES. THE TABLE ON THE NEXT
SLIDE
WILL SHOW A MORE DRAMATIC
INCREASE,
BUT THAT'S LARGELY DUE TO
POLICY
CHANGES. THE SENATE BILL 5814
AND
THE HOUSE BILL 2015 HAVE
ADDED ADDITIONAL REVENUES, AND
THOSE ARE -- THOSE ARE ALREADY
INCORPORATED IN THIS OCTOBER
FORECAST HERE.
SO FIRST AT THE VERY
BOTTOM YOU CAN SEE THAT OVERALL
THERE HAS BEEN AN INCREASE IN
THE GENERAL
FUND REVENUES FOR 2025 AND 2026.
SO IN GENERAL THIS CAN
BE CONSIDERED GOOD NEWS
OR CERTAINLY NOT
BAD NEWS. THE INCREASE IS
MODEST.
IT'S ABOUT 0. 3% FOR 2025, 0.
5% FOR 2026, IF WE ARE TAKING
OUT THE GRANTS AND FUND
TRANSFERS.
AND THE AMOUNT -- THE
DOLLAR AMOUNT $12. 1 MILLION
IS OBVIOUSLY MORE SUBSTANTIAL
RATHER LOOKING AT THE
PERCENTAGE CHANGE AND ITS DOLLAR
AMOUNT PROBABLY MATTERS MORE
HERE.
SO, AGAIN, POSITIVE NEWS IN
GENERAL. WE'LL LOOK AT THOSE
INDIVIDUAL
REVENUE STREAMS.
THOSE THAT ARE HIGHLIGHTED BLUE
ARE THE ONES THAT ARE IN
PURVIEW OF THE ECONOMIC AND
REVENUE
FORECASTS.
THE REST ARE FORECASTED OR
THE FORECASTS ARE OVERSEEN BY
THE
BUDGET -- THE BUDGET OFFICE.
SO FIRST LET ME TALK A
LITTLE BIT ABOUT THOSE REVENUES
THE FORECAST OFFICE IS
RESPONSIBLE FOR.
SALES AND USE TAX GOING FROM
340 TO 344 IN 2025 AND THEN 400
--
ALMOST 400. 2 MILLION IN 2026.
AGAIN, A TOTAL INCREASE BETWEEN
THE CURRENT YEAR AND THE
NEXT ONE.
AGAIN, THAT INCORPORATES
THE IMPACT OF THE SENATE BILL
5814, WHICH IS EXPECTED TO
INCREASE SALES TAX REVENUES AND
THE NEW
0.1% PUBLIC SAFETY SALES TAX.
SO THAT'S YEAR OVER YEAR
CHANGE.
WHEN IT COMES TO THE
DIFFERENCE FROM THE OCTOBER --
BETWEEN
THE OCTOBER AND THE AUGUST
FORECASTS, THE TOTAL TWO- YEAR
DIFFERENCE IS $1. 6 MILLION,
SO NOT PARTICULARLY LARGE.
AGAIN, ABOUT HALF A PERCENT
ONLY FOR NEXT YEAR.
AGAIN, PART OF IT IS THAT THE
OVERALL UNCERTAINTY REMAINS.
THERE IS WEAKNESS IN JOB MARKET,
WEAKNESS IN CONSUMER
SPENDING, SO THERE ARE FEW
THINGS THAT
WOULD SUGGEST ON DRAMATIC OR
UPWARDS REVISION WOULD BE
CALLED FOR IN GENERAL AND THOSE
UPWARD
ONES ARE IMPORTANT FOR THE
FORECAST
HERE.
>> DIRECTOR DURAS, WOULD YOU
MIND STOP HAVING THIS AS
FULL SCREEN BECAUSE WE'LL NEED
THIS TO ATTEND THE ZOOM
PARTICIPANTS.
>> PLEASE SAY
AGAIN.
>> PLEASE EXIT OUT OF FULL
SCREEN.
IT'LL STILL SHARE FULL SCREEN
FOR
SEATTLE CHANNEL. OR COUNCIL
PRESIDENT,
IF YOU WANT TO JOIN US IN PERSON
OR
SPEAK UP, WE DON'T HAVE
ACCESS TO SEE IF YOU
HAVE QUESTIONS. THAT'S THE
PROBLEM AT THE
MOMENT.
>> YEAH.
I'LL VOICE IF I HAVE
QUESTIONS.
>> LET'S
CONTINUE. THANK YOU, COUNCIL
PRESIDENT.
SORRY FOR THROWING YOU
OFF, DIRECTOR
DURAS. YOU WERE RIGHT IN THE
MIDDLE OF
IT.
>> PERFECTLY FINE.
HAPPY TO ANSWER ANY QUESTION AND
TRY TO ACCOMMODATE AS BEST
WE CAN.
SO MOVING ONTO THE BUSINESS
AND OCCUPATION TAX, SLIGHTLY
MORE NOTICEABLE UPWARD REVISION.
AGAIN, LESS THAN 1% FOR '25 AND
'26, BUT MORE NOTICEABLE AS
THE REVENUE COLLECTION SO FAR
AS THIS YEAR HAS EXCEEDED THE
FORECAST. FOR SALES TAX REVENUES
THE CURRENT COLLECTION IS CLOSE
TO WHERE WE WERE EXPECTING IT TO
BE. YOU MIGHT HAVE SEEN IN THE
THIRD QUARTER REVENUE REPORT WE
SENT OUT EARLIER THIS WEEK OR
LAST
WEEK. AND THEN WHEN IT COMES
TO PRIVATE UTILITY TAX HAS
SHOWN CAN PROVIDE
MORE CONTEXT FOR
THAT.
>> OUTLOOK CONTINUES TO IMPROVE
FROM LAST FORECAST.
REVENUES AFFECTED BY THE
WEATHER ACTUALLY HAD A COLDER
WINTER THIS YEAR THAN INITIALLY
EXPECTED RAISING REVENUES
BUT HAS ACTUALLY BEEN TEMPERED
BY A
WARMER SPRING.
OUTSIDE OF THOSE WE SEE
CABLE AND TELEPHONE.
CABLE ACTUALLY HAS
BEEN BOTTOMING OUT RECENTLY IN
TERMS OF DECLINE, WHICH IS
REALLY NICE
TO SEE. FINALLY SAW IN THE FIRST
MONTH THERE WAS NO DECLINE
FROM PREVIOUS MONTH, NO REAL
GROWTH
EITHER, 0%.
STILL, ALONGSIDE THAT
TAX REVENUES ALSO HAD
LARGER INCREASES WHICH IS
EXCITING TO
SEE.
OVERALL ALL THE IMPACTS OF
THOSE EVENTS ULTIMATELY MADE
PRIVATE UTILITY TAX REVENUES
INCREASE OVER 2025 AND 2026 3. 2
MILLION AND 1. 7 FOR 2026.
OVER, YEAH, SEEMS TO BE A REALLY
STABLE REVENUE GROUP.
I'LL TOSS IT OVER TO
CBO.
>> SURE.
I WILL SPEAK TO THE
PROPERTY TAX.
SO THE UPWARD REVISION IN
2026 HAS TO DO WITH THE FACT
THAT WE'VE BEEN STARTING TO GET
MORE INFORMATION ABOUT THE
DIFFERENT
DETERMINANTS OF THE PROPERTY TAX
FOR THE NEXT TAX YEAR FROM THE
ASSESSOR'S OFFICE. AND SO THOSE
TWO -- THE TWO
MAIN DETERMINANTS ARE NEW
CONSTRUCTION, WHICH IS THE EXTRA
AMOUNT THAT WE'RE ABLE TO LEVY
BEYOND THAT 1% GROWTH FACTOR.
THE OTHER DETERMINANT IS THE
REFUND RE- LEVY WHICH
IS ESSENTIALLY REFUNDS GIVEN IN
THE PRIOR YEAR THAT WE'RE ABLE
TO
RE- LEVY IN THE NEXT TAX YEAR.
AND SO THOSE NUMBERS HAVE
BECOME A BIT CLEAR.
NEW CONSTRUCTION IS HIGHER
THAN WE HAD ANTICIPATED AS WELL
AS
THE REFUND RE-LEVY.
SO THOSE ARE IMPACTING
2026 POSITIVELY.
FOR OTHER CITY TAXES, THIS
IS THE -- THE INCREASE IS JUST
DRIVEN BY THE TAX ON
TRANSPORTATION NETWORK
COMPANIES.
AND THAT'S MOSTLY BECAUSE
ACTUALS HAVE BEEN COMING IN
A BIT HIGHER THAN ANTICIPATED
FOR 2025 AND THAT'S RIPPLED
INTO 2026.
I GUESS I'LL PASS IT ONTO
JOE.
>> YEAH,
I'M GOING TO SPEAK TO THE LINE
LABELED PARKING
METERS HERE.
WE SEE A DOWNWARD REVISION
OF ABOUT 1. 4 MILLION ACROSS THE
TWO-YEAR PERIOD HERE.
THIS IS DRIVEN MAINLY BY A
PRELIMINARY VERSION OF
THE PARKING RATE CHANGES THAT
ARE
COMING NEXT MONTH THAT
ARE EXPECTED TO BRING REVENUES
DOWN A BIT ON NET.
AND THEN ALSO A REVISION TO THE
METER HOODING FORECAST FOR
THE FEES WE COLLECT FOR
METER HOODING.
THE ACTUALS THERE ARE TRENDING
DOWN SIGNIFICANTLY RELATIVE
TO LAST YEAR SO WE HAVE
REVISED DOWN ACCORDINGLY.
COURT FINDS HERE -- THE
LINE LABELED COURT FINDS, THIS
IS A
COMBINATION OF -- WE DON'T
SEE TOO MUCH -- ON NET TOO
MUCH CHANGE HERE.
THERE IS UNDERLYING THIS PARKING
CITATIONS, PARKING TICKETS WHICH
ARE UP A BIT.
THERE'S ALSO A DOWNWARD
REVISION
IN THE 70% SHARE OF RED
LIGHTS CAMERA CITATIONS THAT GO
TO GENERAL FUND.
THE SHARE THERE HAS BEEN
REVISED 70% BASED ON LEGISLATION
PASSED
BY CITY COUNCIL IN MAY
THAT ALLOCATED AN ADDITIONAL 10%
TO
SIDEWALK REPAIR OF THAT REVENUE
SOURCE, SO THAT'S WHY WE SEE
A SMALL DOWNWARD REVISION THERE.
>> THANKS, JOE.
SO I'LL SPEAK TO LICENSES AND
ALSO THE REVENUE FROM OTHER
PUBLIC ENTITIES.
THE FIRST ONE I WANT TO POINT
TO IS IN REGARDS TO INTEREST
INCOME
AND THE DOWN OF ABOUT 700,000.
REALLY IS A REFLECTION OF
SOME OF THE THINGS DIRECTOR
DURAS HAS
TALKED ABOUT WITH REGARDS
TO INTEREST RATE CUTS.
NEXT WEEK I BELIEVE WE'RE GOING
TO MEET AGAIN SO WE'LL FIND
OUT HOW MANY BASIS POINTS
THEY CHOOSE TO CUT IF THEY
CHOOSE
TO
DO SO. THERE WON'T BE A MEETING
IN NOVEMBER BUT THERE'LL BE
A MEETING IN DECEMBER AND
PERHAPS WE
MIGHT SEE ANOTHER RATE CUT THERE
AS WELL.
SO THE DOWNWARD REVISION HERE
OF ABOUT 700 IS REALLY A
REFLECTION OF THOSE KIND OF FACT
PATTERNS.
WITH REGARDS TO REVENUE
FROM OTHER PUBLIC ENTITIES
THE DOWNWARD REVISION HAS TO
DO MOSTLY WITH OUR DIGESTING,
IF YOU WILL, OF THE ACTUALS AS
THEY COME IN FROM THE STATE.
SO MANY OF THESE REVENUES ARE
STATE- SHARED REVENUES.
SO THE DOWNWARD REDUCTION
THERE IS A REFLECTION OF THE
FACT
SOME OF THESE ACTUALS HAVE NOT
BEEN
COMING IN AS PERHAPS WE WOULD
EXPECT.
>> AND I'LL WRAP IT UP WITH
THE LAST TWO CATEGORIES.
SO SERVICE CHARGES AND
REIMBURSEMENTS, THAT'S
ALSO REFLECTING HIGHER ACTUALS
THAT ARE COMING IN FOR
2025, SPECIFICALLY LAW
ENFORCEMENT
FEES. AND SO THAT INCLUDES
THINGS
LIKE POLICE PRESENCE AT
SPORTING EVENTS LIKE THE
MARINERS GAMES.
THE GRAND CATEGORY WE HAVE
DISCOVERED AN ERROR IN THE
REVENUE
TABLES. AND UNFORTUNATELY AFTER
THESE SLIDES WERE SENT OUT.
AND SO THE CHANGE IN GRANTS
SHOULD ACTUALLY -- I'M SORRY --
SHOULD ACTUALLY BE ZERO IN BOTH
'25 AND '26.
AND SO THE IMPACT OF THAT ON
THE BOTTOM LINE IS SIMPLY JUST
THE TOTAL GENERAL FUND LINE
SHOULD
BE THE SAME TOTAL AS
THERE'S ACTUALLY NO CHANGE IN
GRANTS
OR FUND BALANCE TRANSFERS, SO
WE'LL
MAKE THAT CORRECTION RIGHT
AFTER THIS
PRESENTATION.
>> I HAVE
A QUESTION.
>> COUNCIL
PRESIDENT.
>> FOR THE INTEREST INCOME,
FEW LINES UP THERE PURCHASE
FINANCE
INTEREST INCOME, INTEREST ON
WHAT? IS THAT MONEY SITTING
AND WAITING INCOME HAS BEEN
AWARDED, ET
CETERA?
>> MUCH OF THAT IS A
REFLECTION OF SORT OF THE CASH
BALANCES
THE CITY HOLDS WHICH ARE
THEN INVESTED IN VARIOUS SORT
OF TREASURIES BASED ON A VARIETY
OF THE CITY'S INVESTMENT
POLICIES THAT IT HAS.
SO MUCH OF THE INTEREST INCOME
THERE IS ACTUALLY REFLECTIVE
OF THE GENERAL FUND BALANCES
THAT HAVE NOT BEEN USED YET AND
ARE
THEREFORE INVESTED.
DOES THAT ANSWER YOUR
QUESTION, COUNCIL
PRESIDENT?
>> YES.
2026 OF THESE 73. 6 NUMBER
THERE,
HOW MUCH IS INTEREST INCOME?
>> SO THE INTEREST INCOME
NUMBER IS RIGHT AROUND
15.
>> OKAY.
ALL RIGHT, THANK YOU.
THAT'S
IT.
>> THANK YOU.
PLEASE CONTINUE, DIRECTOR.
>> THANKS.
ONE MORE THING REGARDING
THE BUSINESS OCCUPATION TAX,
THE TABLE ON THE PREVIOUS SLIDE,
AS I MENTIONED,
INCORPORATES CHANGES IN SALES
TAXES THAT ARE
ALREADY PART OF THE LAW.
THERE IS ONE MORE POLICY
CHANGE THAT HAS BEEN PROPOSED
AND
IT'S UP FOR THE VOTERS TO
DECIDE
THAT ARE TO APPROVE IT OR NOT
BECAUSE STILL NEED TO
APPROVE IT. THE IMPACT ON
REVENUES HAS
NOT BEEN INCORPORATED ON THE
PREVIOUS SLIDE THE
PROPOSED BUDGET ASSUMES
81 MILLION ADDITIONAL REVENUES.
IF THIS PROPOSAL PASSES
THE UPDATED ESTIMATE IS 85. 6
OR SOMEWHAT
HIGHER.
>> THANK .
AND DIRECTOR DURAS, SIMILAR TO
THE JUMP START PAYROLL TAX
WE'VE ONLY BEEN COLLECTING IT
FOR FEWER THAN FIVE
YEARS, WHICH
MEANS THERE'S BEEN A FAIR AMOUNT
OF VOLATILITY.
I THINK THAT MAKES SENSE
BECAUSE A FIVE- YEAR SMOOTHING
GETS US
TO THAT CONSTANT AVERAGE WE KNOW
WE
CAN DEPEND ON.
WITH THE UPDATE IN THE B AND
O TAX I WOULD ASSUME WE NEED
TO SEE HOW EVERYTHING SETTLES
AND THEN HAVE SOME TIME MAYBE
THREE
TO FIVE YEARS BEFORE WE
FEEL VERY SECURE ABOUT THE
FORECASTS MOVING FORWARD, TO
JUST LET
ALL THE CHIPS
FALL WHERE THEY ARE AND THEN
MAKE FORECASTS
FROM THERE.
DO YOU SHARE THAT OPINION?
WHAT IS YOUR RECOMMENDATION
FOR HOW WE ARE FORECASTING THE B
AND
O TAX OVER THE NEXT THREE
TO FIVE
YEARS?
>> THAT'S A CORRECT
ASSESSMENT OF HOW THINGS WILL
LOOK LIKE.
WE'LL NEED A COUPLE OF YEARS TO
FIGURE OUT WHAT THE
OVERALL IMPACT IS ON BUSINESS
AND OCCUPATION TAX, AND WE'LL
BE
FOLLOWING CLOSELY THE CHANGES
IN NUMBERS OF TAXPAYERS,
THE CHANGES IN OBLIGATIONS,
AND COMPARE IT TO WHAT WE
WERE EXPECTING TO SEE AND
ADJUSTING OUR FORECAST
ACCORDINGLY.
>> THANK
YOU.
>> SO MOVING ONTO THE
PESSIMISTIC SCENARIO FORECAST.
OVERALL YOU CAN SEE IT'S A LOT
OF RED ON THIS SLIDE.
THAT'S BECAUSE THAT
PESSIMISTIC SCENARIO ASSUMES A
RECESSION SLOWDOWN IN ECONOMIC
GROWTH, SLOWDOWN IN EMPLOYMENT
GROWTH, AND THAT CONTRIBUTES TO
OVERALL
WEAKNESS IN CONSUMER
SPENDING, SLOWER GROWTH OR
DECLINES
IN CROSS RECEIPTS FOR OUR
BUSINESS
AND OCCUPATION TAX.
AND SO IT'S ABOUT 33. 5
MILLION LESS OVER TWO YEARS IN
GENERAL FUND WITHOUT GRANTS
AND
TRANSFERS. SO THAT'S ABOUT 1.
7% DECLINE
FOR '26 FOLLOWING A 0. 3%
DECLINE
IN
2025. SO, AGAIN, THIS WOULD NOT
BE
A VERY DEEP RECESSION.
IT WOULD BE MORE CLOSELY
RESEMBLING THE 2001
RECESSION RATHER THAN THE
PANDEMIC.
BUT THE IMPACT ON REVENUES
WILL BE CERTAINLY NOTABLE
HERE.
>> DIRECTOR DURAS, BEFORE
WE MOVE ON, THE ONLY GOOD
THING ABOUT 2001
IN THIS SITUATION WAS THAT WAS
THE LAST TIME
THE MARINERS WERE THIS FAR IN
THE PLAYOFFS.
THAT SAID, THROUGHOUT THIS YEAR,
YOU KNOW, THIS YEAR WAS
THE FIRST TIME THAT WE ADOPTED A
DOWNTURN FORECAST IN APRIL IN
A LONG TIME.
WE HAVE SEEN THAT
VOLATILITY THROUGHOUT THE YEARS.
ONCE WE GET TO THE END OF THIS
PRESENTATION, I'LL ASK US TO
GO BACK TO SOME OTHER SLIDES
TO LOOK AT THE GROWTH, ET
CETERA.
RIGHT NOW WE'RE IN THE MIDDLE
OF A FEDERAL GOVERNMENT SHUTDOWN
AS
WELL, WHERE SOME OF THE
INFORMATION WE WOULD EXPECT
TO USE FOR FORECASTS SUCH AS
THIS,
AGAIN, I'M NOT WORRIED
BECAUSE THROUGHOUT THE PANDEMIC
THIS FORECAST OFFICE
HAD A BETTER AND MORE ACCURATE
FORECAST THAN
EVEN WASHINGTON STATE, SOI'M
NOT CONCERNED WITH THE QUALITY
OF
THE MATERIAL YOU
PRESENTED TODAY.
I JUST ASK BETWEEN APRIL AND
NOW AND APRIL WE MADE A DECISION
TO ADOPT A DOWNTURN FORECAST, A
PESSIMISTIC SCENARIO.
WHAT ARE THE FACTORS
YOU'RE LOOKING AT THAT WOULD
LEAD
YOU TO SUGGEST WE SHOULD
EITHER ADOPT THE BASELINE OR
PESSIMISTIC? IS THERE A REASON
WE ARE
NOT ADOPTING THE PESSIMISTIC
TODAY?
CAN YOU SHARE WHAT
WOULD LEAD YOU TO ASK US TO
ADOPT THE
PESSIMISTIC?
>> SO I
HAVE A CUP OF SLIDES ON THE %
FORECAST RECOMMENDATION
AND SCENARIO RECOMMENDATION,
AND I'LL GET TO THAT IN
A SECOND. THE GENERAL APPROACH
IS
TO CONSIDER THOSE
SCENARIOS, THOSE TWO SCENARIOS
AND EVALUATE
WHICHWHICH IS MORE LIKELY GOING
FORWARD AND WHAT THE OVERALL
RATES
ARE IF WE APPROVE A PARTICULAR
ONE, WHAT WOULD IT LATER MEAN
FOR
THE BUDGET PROCESS, HOW IT WOULD
--
HOW CHANGES IN APRIL THEN IMPACT
WHAT HAS TO BE DONE BY AUGUST.
HOW MUCH TIME IS THERE TO
INCORPORATE
THE CHANGES. BACK IN APRIL
THE REASON WHY THE PESSIMISTIC
-- THE MAIN
REASON WHY THE PESSIMISTIC
SCENARIO
WAS RECOMMENDED IS THAT THE
BASELINE
SCENARIO THAT WAS UNDERLYING
THE REVENUE FORECAST WAS BACK
FROM
MARCH.
AGAIN, THERE IS A LITTLE BIT
OF TIME IT TAKES BETWEEN THE
TIME THAT THE U.S. FORECAST IS
RELEASED. REGIONAL FORECAST IS
PREPARED, AND THEN THE REVENUE
FORECAST IS
PREPARED.
AND SO BY THE TIME THE REVENUE
FORECASTS IN APRIL
WAS PREPARED AND THE
ANNOUNCEMENT ABOUT
TARIFF WAS MADE, WE
HAVE REALIZED THAT THOSE
UNDERLYING
ASSUMPTIONS IN THE U.S.
NATIONAL FORECAST IN THE
BASELINE SCENARIO ARE JUST NOT
GOING TO
PLAY OUT.
IT'S VERY HIGH PROBABILITY IS
GOING TO BE MORE LIKE
A PESSIMISTIC SCENARIO.
THE OTHER THING IS THAT
THE PESSIMISTIC SCENARIO IN
APRIL
DID NOT ASSUME THERE WOULD BE A
RECESSION. IT WAS WORSE THAN THE
BASELINE, BUT THE U.S. FORECAST
AND
THE PESSIMISTIC SCENARIO CALLED
FOR
LOWER GROWTH, STILL GROWTH IN
GDP, STILL GROWTH IN EMPLOYMENT.
AND SO RECOMMENDING
THAT SCENARIO DID NOT MEAN WE
WERE EXPECTING TO SEE A
RECESSION.
WE WERE JUST EXPECTING TO
SEE LOWER GROWTH IN GDP,
LOWER GROWTH IN EMPLOYMENT,
LOWER
REVENUE GROWTH, AND THAT LED
US TO
THAT RECOMMENDATION. THE IMPACT
ON REVENUES
WAS SIGNIFICANT IN NOT JUST
BECAUSE OF THAT PESSIMISTIC
SCENARIO RECOMMENDATION BUT
ALSO BECAUSE THE -- THE REVENUES
FOR PAYROLL
EXPENSE TAX CAME
SIGNIFICANTLY BELOW WHAT WE WERE
EXPECTING
FOR 2024.
AND THAT WAS WHY THAT IMPACT
ON REVENUES WAS SO
LARGE.
>> THANK YOU.
VERY
HELPFUL.
>> SO I WILL TURN TO, AS I SAID,
THE SCENARIO RECOMMENDATION AND
OVERALL ASSESSMENT AND
WHY WE ARE RECOMMENDING THE
PARTICULAR
SCENARIO AFTER TALKING ABOUT
THE OTHER REVENUES.
FOR OCTOBER BASELINE
SCENARIO FOR THE PAYROLL EXPENSE
TAX, THERE IS A SLIGHT UPWARD
REVISION IN THE REVENUES.
THERE ARE SOME
LATE PAYMENTS STILL TRYING TO
FIGURE
OUT HOW MUCH -- HOW LARGE
THEIR OBLIGATIONS ARE, DIFFERENT
THINGS THAT HAVE AFFECT
THEIR OBLIGATIONS.
SO WE HAVE INCORPORATED
SOME INFORMATION WE OBTAIN FROM
THE OFFICE OF CITY FINANCE.
AND THEN THE OVERALL
IMPROVED OUTLOOK FOR -- FOR
STOCK
MARKET CONTRIBUTED TO, AGAIN,
PARTIALLY
TO THAT -- TO THAT INCREASE IN
PAYROLL EXPENSE TAX REVENUES FOR
THE TOP LINE.
THERE'S A SECOND LINE THAT'S
NEW IN THESE TABLES AND RICHARD
WILL
TALK MORE ABOUT
THAT ONE.
>> YEAH, SO THIS IS THE
PAYROLL
EXPENSE TAX FUND INTEREST
INCOME. SO SINCE THE PRIOR
FORECAST, SEVERAL OF THE THINGS
THAT
HAVE BEEN NOTICED WAS THAT, YOU
KNOW, A LOT OF INTEREST WAS
ACCRUING TO THE PAYROLL EXPENSE
TAX FUND.
AS A MATTER OF FACT, IN '24
THAT FUND ACCRUED ABOUT $11. 2
MILLION IN INTEREST.
SO GIVEN THAT WE WERE
STILL LIVING IN THIS WORLD
OF HIGH
INTEREST ENVIRONMENT, IT BECAME
PRUDENT FOR US TO PAY A BIT
MORE ATTENTION TO THAT
PARTICULAR SORT OF REVENUE
STREAM.
AND SO THE FORECAST
WE PREPARED SORT OF SHOWS THAT
IN '25
THOSE COLLECTIONS ARE GOING TO
GO
DOWN A LITTLE BIT.
BUT,
AGAIN, THAT'S A REFLECTION OF
THE INTEREST RATE
ENVIRONMENT AND THE CUTS THAT
HAVE OCCURRED.
AND THEN IN '26 WE EXPECT IT
TO GO DOWN EVEN FURTHER, AND
THAT
IS ALSO A REFLECTION OF THE
FACT WE EXPECT PERHAPS ONE OR
MAYBE
EVEN MORE RATE CUTS IN '26.
AND SO, YOU KNOW, I FIND
IT NECESSARY TO POINT
OUT, YOU KNOW, THIS -- THE
NECESSITY
TO PRESENT THIS HAS A LOT TO DO,
I
THINK, WITH THE FACT OF THE
MATTER WHICH IS THAT
INTEREST RATES HAVE BEEN
HISTORICALLY
HIGH SO CASH HAS BEEN EARNING
A TREMENDOUS AMOUNT OF RETURN.
SO WE'RE REFLECTING THAT HERE
TO POINT THAT OUT, THAT THIS
FUND HAS BEEN ACCRUING A LOT.
BUT I THINK IT WOULD BE --
IT WOULD BE VERY TENUOUS TO
THINK THAT THIS AMOUNT OF
INTEREST INCOME WILL BE ACCRUED
THROUGH
TIME, RIGHT, SIMPLY BECAUSE
WE'RE
TRANSITIONING TO PERHAPS A
DIFFERENT INTEREST
RATE ENVIRONMENT THAN
WE'VE EXPERIENCED OVER THE LAST
COUPLE OF
YEARS.
>> THANK YOU.
VERY
HELPFUL.
>> OKAY, MOVING ONTO THE
NEXT LINE RATE.
THERE HAS BEEN A COUPLE
OF LARGER PROPERTIES SOLD,
AGAIN THE AUGUST FORECAST THAT
IS PART
OF THAT 1. 4 MILLION -- 1.
4 MILLION UPWARD REVISION
FOR 2025.
FOR '26 THE UPDATED
FORECAST FROM S&P GLOBAL AND
FROM
MOODY'S ANALYTICS EXPECT FEWER
HOMES
SOLD AND LOWER HOME PRICES
COMPARED TO THAT PREVIOUS
FORECAST, AND THAT'S WHY FOR
'26 THE REVISION HAS BEEN A
DOWNWARD REVISION.
OVERALL IT'S VERY LITTLE
CHANGE FOR THE TWO YEARS, JUST
0.3%.
0. 3 MILLION MORE COMPARED TO
AUGUST.
THERE'S BEEN NO REVISION,
NO CHANGE TO THE ADMISSIONS
FORM FORECAST AS THAT ONE TRENDS
MORE TO OUR FORECAST, AND WE'LL
NEED MORE TIME THE INCORPORATE
POTENTIALLY A CHANGE IN
NUMBERS SEATTLE AND OTHER THINGS
TO EVALUATE THE OVERALL IMPACT
FOR
'26 AND TAKE MORE
CAUTIOUS APPROACH TO WORLD CUP
IMPACT
AND THINGS LIKE THAT.
THEN MOVING ONTO --
>> YEAH, FOR SWEET AND BEVERAGE,
THE ACTUALS HAVE BEEN COMING
IN A LITTLE BIT MORE ROSIER THAN
WE
WOULD TYPICALLY EXPECT,
SO THAT'S WHAT'S
REFLECTED HERE WITH THE INCREASE
ABOVE
THE AUGUST FORECAST OF ABOUT
200,000.
AND THEN WE'RE STILL HOLDING,
AND, YOU KNOW, A LOT OF THE DATA
AND EVIDENCE WILL SUGGEST
THAT NEXT YEAR COULD POTENTIALLY
BE
A RELATIVELY GOOD YEAR FOR
THIS PARTICULAR REVENUE STREAM.
AND SO WE'RE STILL EXPECTING
ABOUT $22. 3 MILLION TOTAL
COLLECTION IN 2026, WHICH ALSO
IS AN UPWARD REVISION THAN
WHAT WE HAD PREVIOUSLY STATED
BACK
IN
AUGUST.
>> FOR SHORT- TERM RENTAL
TAX, THAT IS, OF COURSE,
DIRECTLY IMPACTED BY BOTH
DOMESTIC AND
INTERNATIONAL TOURISM.
IN 2026 THE OUTLOOK FOR
INTERNATIONAL VISITORS IS
A LITTLE BIT MORE PESSIMISTIC
THAN IN AUGUST IN LARGE PART
BECAUSE
VISITORS FROM CANADA HAVE REALLY
PRECIPITOUSLY DROPPED.
SO THAT'S -- THAT'S WHY WE
HAVE A SLIGHT DOWNWARD REVISION
IN
'26.
>> THANKS, ALEX.
FOR TRANSPORTATION BENEFIT
DISTRICT SALES TAX THE CHANGE IS
SMALL, AGAIN REFLECTING
MIRRORING WHAT WE HAVE SEEN
FOR GENERAL FUND SALES TAX
REVENUE.
TAKING INTO ACCOUNT, AGAIN,
THE GENERAL HAS ADDITIONAL
IMPACT
ON THE NEW 0. 1% PUBLIC SAFETY
TAX, WHICH IS NOT IMPACTING THIS
ONE.
AND THEN
FOR OUR --
>> THEN FOR THE LICENSE
FEES, YOU KNOW, THE MAIN FACTORS
WE CONSIDER THERE ARE
POPULATION BUT ALSO WE CONSIDER
THE VEHICLE
REGISTRATIONS SINCE
THAT'S WHERE MUCH OF THAT FEE
THAT'S BEING
COLLECTED IS
COMING FROM. WE'RE EXPECTING
THAT,
AND I THINK THAT IS A REFLECTION
OF
THE SEATTLE POPULATION
STILL GOING ALTHOUGH AT A
MARGINAL
RATE, SO WE'RE EXPECTING
AN UPWARD TICK FOR '25.
MUCH OF THAT IS ALSO
A REFLECTION OF THE ACTUALS
TAT ARE COMING IN AND THEN A
SLIGHT
DECLINE IN
'26.
>> AND FOR COMMERCIAL PARKING
TAX, THERE'S A SLIGHT UPWARD
REVISION IN 2026 FOR THE
MOST PART BECAUSE THE
EMPLOYMENT OUTLOOK FOR THE
REGION
IS SLIGHTLY BETTER AT
THIS POINT THAN PREVIOUSLY
THOUGHT, AND SO
HOPEFULLY THAT'S INDICATIVE OF
A
SLIGHTLY MORE ECONOMIC
ACTIVITY ESPECIALLY DOWNTOWN.
>> AND FINALLY, THE FINAL LINE
IN THIS TABLE
AUTOMATED SAFETY TRAFFIC CAMERAS
THAT A
RELABELING FROM PREVIOUS
PRESENTATIONS, WHICH THIS
FUND WAS CALLED SSTPI AND HAS
NOW
BEEN RENAMED ATSC.
THERE'S VERY LITTLE CHANGE
HERE,
A SMALL DOWNWARD REVISION IN
2025 OF 200,000, NO CHANGE
IN THE FORECAST
TO 226. THIS -- UNDERLYING THIS
IS
A SMALL DOWNWARD REVISION TO
SCHOOL ZONE SPEED CAMERAS,
WHICH CONTINUE TO SHOW A
DOWNWARD TREND.
THEN THIS WAS OFFSET BY THE
30% OF RED LIGHT CAMERA
REVENUES THAT NOW GO INTO THIS
FUND,
AND THAT IS UP FROM 80 -- EXCUSE
ME,
THAT IS UP FROM 20% IN
PREVIOUS FORECASTS.
AND AGAIN, THAT WAS RESPONSE TO
THE LEGISLATION PASSED
BY COUNCIL IN MAY OVERSEEING
THE CAMERA
PROGRAM.
>> THANK YOU.
AND JUST LIKE THE LAST REVENUE
FORECAST, I WILL GIVE YOU
THE GRACE OF THE UP AND DOWN
SWINGS OF BOTH PARKING FINES AND
AUTOMATED CAMERA ENFORCEMENT ALL
TO SAY WE MADE CHANGES TO
THE PARKING FINES FOR THE FIRST
TIME
IN, I BELIEVE, OVER A DECADE, AS
WELL AS WE MADE CHANGES TO
THE AUTOMATED
TRAFFIC CAMERA PROGRAM AND ARE
STILL AWAITING
THE CONTRACT TO BOW SIGNED FOR
THE EXPANSION WE THOUGHT WAS
COMING A LOT SOONER.
SO YOU CONTINUE TO DO A GREAT
JOB, WE CONTINUE TO
MOVE THE PUZZLE PIECES FOR YOU
IN
REALTIME, AND WE LOOK FORWARD
TO HAVING A REAL STABLE
SCENARIO FOR YOU TO BE ABLE TO
FORECAST AGAINST.
AND DIRECTOR DURAS, IF
YOU'VE GOT NOTHING ELSE, I'VE
GOT
A COUPLE
QUESTIONS HERE. FANTASTIC.
LOOKING AT THE REAL
ESTATE EXCISE TAX I KNOW OVER
THE COURSE OF THE LAST FEW
REVENUE FORECASTS EVEN THOUGH AT
TIMES WHEN SALES TAX OR PROPERTY
TAX WAS DOWN WAS STARTED TO
COME BACK UP, AS I'VE ANALYZED
BUDGETS OVER A NUMBER OF
YEARS I'VE ALWAYS FOUND
THE REAL ESTATE EXCISE TAX IS A
BIT OF A
TELLTALE, THE CANARY IN THE
COLE MINE, THINGS GETTING
BETTER, THINGS GETTING
WORSE. IT USUALLY IMPACTS THE
OTHER
REVENUE SOURCES.
I'VE BEEN HEARTENED
BECAUSE RATE HAS BEEN SLOWLY
INCREASING.
HERE I'M A LITTLE
NERVOUS BECAUSE IT SEEMS OVER
THE
COURSE OF TWO YEARS IT IS STILL
PLUS 0.3.
BUT THAT SAID, YOU MENTIONED
A COUPLE PROPERTIES BEING
SOLD, WHICH INCREASES IT FOR
THIS YEAR.
AND YOU'RE SEEING US START
TO TABLE OFF NEXT YEAR.
CAN YOU HELP US UNDERSTAND
ANY ADDITIONAL CONTEXT
HERE?
>> SURE.
YEAH, SO AS YOU
MENTIONED OVER THE LAST COUPLE
OF YEARS
THE RATE HAS BEEN RECOVERING
FROM THAT LARGE DROP THAT WE
HAVE
SEEN
IN 2023. AND THE EXPECTATIONS
ARE THAT
THE RATE IS GOING TO GROW.
WHAT CHANGED IS THE SPEED,
HOW FAST WE ARE EXPECTING RATES
TO
GROW. SO THERE HAS BEEN A LITTLE
BIT OF A DOWNWARD REVISION IN
RATE
IN THE OUT YEARS AS WELL,
AGAIN, BECAUSE THAT'S MAYBE NOT
AS
FAST AS WE WERE EXPECTING BASED
ON
THE INFORMATION FOR S&P GLOBAL
AND FOR MOODY'S ANALYTICS
HOW THEY PREDICT HOME PRICES
AND SALES OF HOMES, THAT'S
AN IMPORTANT FACTOR THAT
INFORMS THESE FORECASTS IN THE
LONG
RUN TOGETHER WITH THE LONG-
TERM INTEREST RATES, WHICH KIND
OF ARE STUBBORNLY HIGH EVEN
THOUGH
SHORT- TERM INTEREST RATES
ARE COMING
DOWN.
>> THANK YOU.
LOOKING AT THE ADMISSION TAX,
I APPRECIATE YOU KEEPING IT
BASELINE AND ALSO BEING AWARE OF
FIFA WORLD CUP NEXT YEAR.
I'M JUST GOING TO SAY IF WE ARE
LUCKY ENOUGH TODAY TO EARN
THE PRIVILEGE TO BE IN THE WORLD
SERIES, I AM HOPING THAT NUMBER
IS GOING TO CHANGE FOR
THE POSITIVE.
MR. MEYERBERG, I
BELIEVE.
>> IF THERE ARE NO
OTHER
QUESTIONS --
>>
PLEASE.
>> LET'S MOVE ON.
SO ONE MORE ADDITIONAL SLIDE OF
CONTEXT FOR ONE OF THOSE
LARGEST REVENUE STREAMS ON THE
PREVIOUS SLIDE FOR PAYROLL
EXPENSE TAX,
AND KIND OF GOING
BACK TO THE FIRST OR SECOND
SLIDE
IN THIS PRESENTATION WHICH WAS
SHOWING THE STOCK PRICES
GROWING.
AS IN PAST WE EXPECT THAT
THE CHANGES IN THE STOCK PRICES
ARE GOING TO BE ONE
OF THE SIGNIFICANT FACTORS FOR
THE PERFORMANCE OF A PAYROLL
EXPENSE
TAX REVENUES. THE OUTLOOK AT
LEAST IN
BASELINE SCENARIO IS FOR THE
STOCK
PRICES TO CONTINUE TO
GROW. FOR SAP 500 FOLLOWED BY
GROWTH IN 2026.
STOCK MARKET OVERALL AS I
MENTIONED THOSE GAINS
ARE HEAVILY CONCENTRATED IN THE
TECH SECTOR, AND THAT'S WHAT
THIS CHART IS TRYING TO
ILLUSTRATE
HERE. THESE ARE SOME OF THE
LARGE TECH
COMPANIES THAT ARE -- WHERE
THE STOCK PRICES CLEARLY REFLECT
THE
HIGH EXPECTATIONS REGARDING
THE IMPACT OF A.I. AND THE
INCREASED INVESTMENT IN A.I.
INFRASTRUCTURE.
IF YOU LOOK AT HOW LARGE THE
GAINS WERE IN 2024, IT
WAS TRIPLING OF A STOCK PRICE
FOR
NVIDIA, THE BUILDING
FOR FACEBOOK, AMAZON STOCK
PRICE GREW 50%.
ORACLE STOCK PRICE GREW MORE
THAN 30% AND SO ON.
FOR 2025 THOSE STOCK PRICES
ARE, AGAIN, EXPECTED TO CONTINUE
TO
GROW, MAYBE A LITTLE
BIT LESS THAN IN THE PREVIOUS
YEAR.
AND THERE MIGHT BE, AGAIN,
A LITTLE BIT -- MAYBE OVERALL A
LITTLE BIT OF A SLOW DOWN IN
2026. ON AVERAGE THESE STOCK
PRICES HERE ARE EXPECTED TO GO
UP THEN
TO 30% IN -- IN NEXT YEAR BASED
ON EXPECTATIONS OF WALL STREET
ANALYSTS.
SO THAT WOULD CLEARLY AS THE
PAST WOULD SUGGEST HAVE A
POSITIVE IMPACT ON THE
PAYROLL EXPENSE TAX REVENUE.
BUT NOTE HERE THE UNCERTAINTY
IN THE LINE, THREAD LINES
STRETCH
FROM THE LOW TO THE HIGH
ESTIMATE. SO THERE IS QUITE A
LOT OF
UNCERTAINTY REGARDING JUST
HOW PRODUCTIVE A.I. IS, HOW BIG
THE PAY OFF TO ALL THOSE
INVESTMENTS IN A.I. WILL BE.
AND SO ON THE LOW SIDE WE
COULD SEE QUITE A NOTABLE
CORRECTION
IN SOME CASES
AND MUCH LESS OF
THE GROWTH. AND THAT'S ALSO
CLEARLY
REFLECTED HERE IN THE
PESSIMISTIC SCENARIO
FORECAST FOR PAYROLL EXPENSE TAX
REVENUE
WHERE SLOWER STOCK PRICES,
SLOWER GROWTH OF STOCK PRICES
TOGETHER WITH
SOME POTENTIAL NEGATIVE IMPACTS
IN THE CASEF A
RECESSION, ALL THAT WOULD
RESULT IN CLOSE TO 37 MILLION
LESS
IN PAYROLL EXPENSE TAX
REVENUE RELATIVE TO THE AUGUST
BASELINE SCENARIO FORECAST.
AND FOR INTEREST, AGAIN --
>> YEAH, FOR INTEREST, YOU
KNOW, THE FACT THESE ARE STAYING
POSITIVE IS PARTLY A
REFLECTION OF THE FACT THAT A
LOT OF THE
CITIES SORT OF CASH
INVESTMENTS ARE I BELIEVE LAST I
LOOKED
THE DURATION IS RIGHT AROUND
TWO
YEARS. AND SO MANY OF THESE
MONIES,
IF YOU WILL, ARE
ALREADY EXPOSED TO THE INTEREST
RATE ENVIRONMENT.
AND THEY'RE NOT JUST GOING TO
DISAPPEAR, RIGHT, IN ONE YEAR.
HOWEVER, IF WE LOOK FURTHER
OUT IN OUT YEARS, THEN WE
COULD EXPECT THOSE NUMBERS TO GO
DOWN
EVEN .
AND SO, YOU KNOW, THE INTEREST
RATES OR PESSIMISTIC VIEW
HERE, IF YOU WILL, WILL BE THAT
THOSE
COLLECTIONS WILL -- THOSE
INTEREST INCOME COLLECTIONS
WON'T BE AS HIGH.
BUT JUST NOTE A LOT OF THE
CITY'S INVESTMENTS ARE
TYPICALLY EXPOSED ABOUT 2, 2 1/2
YEARS
IN TERMS OF THE DURATION FOR
POTENTIALLY EARNING INTEREST.
>> THEN THE NEXT ONE IS, AGAIN,
RATE. SO HERE IN THE BASELINE
SCENARIO RATE WOULD ACTUALLY
DECLINE.
NEXT YEAR, AGAIN, IMPACT
OF RECESSION WOULD BE QUITE
NOTABLE FOR RATE.
OVERALL 6. 5 MILLION LESS
RELATIVE TO THE AUGUST BASELINE
SCENARIO.
SMALLER DOLLAR AMOUNT
DECREASE IN TAX BUT STILL
DOWNWARD
REVISIONS FOR THAT ONE IF,
AGAIN, THE PESSIMISTIC
SCENARIO TURNS OUT TO BE THE
BEST,
THAT THE ECONOMY GOES DOWN.
SWEET AND BEVERAGE,
RICHARD.
>> YEAH, AND THAT FURTHER
DOWNWARD SORT OF
ADJUSTMENT THERE OR REVISION
THERE,
AGAIN, IS JUST REFLECTING IF
THINGS
ARE NOT AS ROSY OR NOT AS
MUCH SUGARY DRINKS AND STUFF
ARE DISTRIBUTED IN SORT OF
RETAIL, THEN WE WOULD EXPECT
THOSE
NUMBERS TO GO DOWN.
BUT NOTE THAT IN '26 THAT 21. 7
MILLION WILL STILL BE ONE OF
THE HIGHEST COLLECTIONS FOR THE
TAX ON RECORD.
AND MUCH OF THAT HAS TO DO
WITH THE CAUTIOUS OPTIMISM AS
IT RELATES TO THE WORLD CUP
AND OTHER EVENTS THAT WILL
POTENTIALLY BRING PEOPLE TO
SEATTLE.
>> FOR SHORT- TERM RENTAL
SIMPLY JUST A MORE PESSIMISTIC
OUTLOOK ON TOURISM IN
2026. I THINK IT'S A LITTLE BIT
LESS
INTUITIVE COMPARING THIS TO
THE AUGUST FORECAST.
BUT IF YOU ALSO COMPARE THIS
TO THE BASELINE IT'S
OBVIOUSLY LOWER IN THE
PESSIMISTIC THAN
IN THE BASELINE.
AND LET ME SKIP REAL QUICK TO
COMMERCIAL PARKING TAX.
THIS IS THE SAME
STORY, ESSENTIALLY.
IT'S NOT AS PESSIMISTIC
AS AUGUST.
BUT, FOR EXAMPLE, FOR
2026 IT WOULD BE -- WE WOULD
EXPECT 2
MILLION LOWER THAN THE BASELINE.
>> SO THE
FINAL ONE THE TRANSPORTATION
OFFICE
RESPONSIBLE FOR SALES
TAX.
>> AND LIKE WISE FURTHER SORT OF
PESSIMISTIC OUTLOOK ON
THOSE VEHICLE LICENSE FEES,
WHICH
AGAIN ARE MOSTLY MODELED AND
DRIVEN BY VEHICLE REJ
GISTRATIONS, RIGHT, AND THE DATA
WE RECEIVE
FROM S&P RELATED TO
THAT.
>> AND FINALLY THE
TRAFFIC SAFETY CAMERAS.
UNDER A PESSIMISTIC
SCENARIO WE'D EXPECT TO SEE
SOME
DECLINE IN THE ON- TIME PAYMENT
RATES, PROBABLY AN INCREASE
IN TICKETS GOING TO
COLLECTIONS, WHICH MEANS CITY
DOESN'T SEE TOO
MUCH REVENUE FROM US.
SO IT'S MOSTLY A
PAYMENT BEHAVIORAL COMPONENT
HERE
UNDER A PESSIMISTIC
SCENARIO.
>> ALL RIGHT, SO HERE'S A
QUICK COMPARISON OF THE
ALTERNATIVE SCENARIOS RELATIVE
TO THE
BASELINE, WHAT A PESSIMISTIC
SCENARIO WOULD MEAN RELATIVE TO
THE CURRENT BASELINE, WHAT
AN OPTIMISTIC SCENARIO WOULD
MEAN RELATIVE TO THE
CURRENT BASELINE, FOCUSING ON
THOSE REVENUES WHERE THE IMPACT
IS
MOST NOTICEABLE AND THEN
SHOWING THE TOTAL.
SO OVERALL PESSIMISTIC
SCENARIO, AGAIN, RECESSION WOULD
HAVE
NOT A SURPRISINGLY SIGNIFICANT
IMPACT ON TOTAL REVENUES, MINUS
114. 4 MILLION LESS IN OVER
TWO YEARS.
ON THE UP SIDE 94 MILLION
MORE IN THE OPTIMISTIC SCENARIO,
SO PROBABLY A LITTLE BIT
MORE BALANCE IN TERMS OF HOW FAR
THE
DOWNSIDE VERSUS THE UP SIDE ARE
FROM A BASELINE COMPARED TO
WHAT WE HAVE SEEN IN THE
PAST.
>> PLEASE, YES, I THINK THAT
WE HAVE -- AT LEAST I'VE GOT A
FEW
QUESTIONS.
I DON'T KNOW IF MY OTHER
FORECAST COUNCILMEMBERS DO
AS WELL.
I'M JUST NOTING CAUTIOUS
OPTIMISM HERE WHEREWHERE
THE END OF THIS
PRESENTATION I'LL COME BACK AND
ASK A SERIES
OF QUESTIONS TO DEMONSTRATE
THE VOLATILITY -- THE LEVEL
OF VOLATILITY IN THE
ECONOMY WE'RE IN CURRENTLY.
I THINK THIS SLIDE ALSO
HELPS ILLUSTRATE THAT.
EITHER WE MAY HAVE $70 MILLION
MORE NEXT YEAR.
OR IF ONLY A FEW THINGS
GO WRONG WE COULD BE AT A $90
MILLION
DEFICIT.
THAT IS FUNCTIONALLY
THE DIFFERENCE BETWEEN
PEOPLE RECEIVING FOOD, SHELTER.
ACROSS THE BOARD THE
SOCIAL SERVICES THAT THE CITY
PROVIDES
ESPECIALLY AS
THE FEDERAL GOVERNMENT CONTINUES
TO
WITHHOLD, WITHDRAW, OR
CUT FUNDING FOR THE VERY
PROGRAMS THAT THEY SHOULD BE
RESPONSIBLE FOR THAT THEY ARE
PUTTING ON
THE PLATES OF MUNICIPAL
GOVERNMENTS NATIONWIDE HERE IN
THE CITY
OF SEATTLE.
I SEE US HAVING SOME CAUTIOUS --
THIS IS CAUTIOUS OPTIMISM
WHERE WE ALSO NEED TO BE SURE
NOT TO
SPEND THIS MONEY THAT
IS FORECASTED TO COME
IN NECESSARILY BUT TO HOLD IT SO
THAT WE ARE READY FOR THE THINGS
THAT WE CANNOT
ANTICIPATE TODAY THAT WILL COME
IN THESE NEXT
SIX MONTHS.
AND SO JUST AS I HAVE THIS
OUTLOOK, I USE THIS SLIDE AS
A NORTH STAR IN MANY WAYS TO
UNDERSTAND THAT IN SIX MONTHS, A
YEAR FROM NOW WE COULD BE AT
THAT $90 MILLIAN DEFICIT,
OR WE COULD STILL BE AT 70
MILLION
IN THE
PLUS. HOWEVER.
THE AMOUNT OF FUNDING
THE FEDERAL GOVERNMENT PROVIDES
TO THIS REGION IS MORE THAN $70
MILLION. AND THE NEED FOR US TO
BE READY
TO BE RESPONSIVE, TO STEP IN
IF THE FEDERAL GOVERNMENT FAILS
US.
THAT THE MUNICIPALITIES OF
THIS REGION ARE THE LAST AND
FIRST DEFENSE FOR THE RESIDENTS
OF OUR
REGION TO CONTINUE TO
PROVIDE THE BASIC SERVICES
WHETHER
IT'S POTHOLES, STREETLIGHTS,
ELECTRICITY, WATER, AND ALSO
CLOTHING, FOOD,
SHELTER, INSURANCE THAT
SEATTLEITES, WORKING FAMILIES
ARE ABLE
TO THRIVE AND SURVIVE HERE IN
OUR
CITY. THAT'S NOT NECESSARILY
A QUESTION.
THIS SLIDE WAS ILLUSTRATIVE
OF THE CAUTIOUS OPTIMISM
THAT WE CAN SIT WITH TODAY.
IF YOU'VE GOT ADDITIONAL
CONTEXT OF THINGS I EITHER GOT
WRONG
OR THINGS YOU'D LIKE TO SHARE,
PLEASE,
DIRECTOR DURAS.
>> THAT'S A
GOOD POINT. SOME OF THE THINGS I
WILL TRY
TO ADDRESS, MAYBE NOT AS WELL
AS YOU DID.
YES, SOME OF THOSE POINTS
REGARDING HOW WIDE IT IS, HOW
MUCH UNCERTAINTY THERE IS
WILL BE PRESENTED NEXT AS PART
OF THE
OVERALL FORECAST
RATES ASSESSMENT AND
SCENARIO RECOMMENDATIONS.
HERE QUICK SUMMARY FIRST FOR
THE ECONOMIC OUTLOOK.
THERE HAS BEEN A
SLIGHT IMPROVEMENT IN THE
ECONOMIC
OUTLOOK, STRONGER REAL
GDP GROWTH BUT AT THE SAME TIME
WEAKER ECONOMIC GROWTH IN THE
FUTURE TO ADDRESS THAT
LABOR MARKET THAT FED IS
EXPECTED TO CONTINUE
THE MONETARY EASING. AND THEN
WHEN IT COMES
TO THE PROBABILITY OF A
RECESSION
IN THE NEXT 12 MONTHS, THERE
IS STILL QUITE A BIT OF
UNEASE REGARDING HOW LIKELY WE
ARE
TO GO DOWN THAT PESSIMISTIC
SCENARIO, THE PROBABLY OF
A RECESSION IS STILL
HIGHLY ELEVATED.
IT HAS NOT CHANGED
SINCE THE AUGUST FORECAST.
"THE WALL STREET JOURNAL"
OF SURVEY OF ECONOMIES STILL
PUTS
THAT PROBABILITY AT 33%.
SO LESS THAN 45 IN APRIL WILL
BE DOWN BUT STILL VERY
UNCOMFORTABLY HIGH GOING INTO A
RECESSION.
THE S&P GLOBAL ITSELF
IS SLIGHTLY MORE
OPTIMISTIC PROBABLY ABOUT THE
OVERALL
OUTLOOK. THEY PUT A 30% CHANCE
ON THE
OPTIMISTIC, ONLY 20% ON
THE PESSIMISTIC SCENARIO, AND
TO MITIGATE THAT RACE OF BEING
OVERLY OPTIMISTIC IN
OUR FORECAST WE TOOK THE
SAME APPROACH IN AUGUST AND USED
THE S&P GLOBAL FORECAST AND
MOODY'S FORECAST TO AVERAGE OUT
WHAT THEY BELIEVE.
AND THE ANALYTICS FORECAST IS
MORE CONSERVATIVE, MORE WORRIED
ABOUT THE IMPACT OF
INFLATION ON EMPLOYMENT AND THE
OVERALL
POTENTIAL DOWN SIDE
RISK. THEN, FINALLY, GOVERNMENT
SHUTDOWN HAS CONTINUED
FOR LONGER THAN WHAT THOSE TWO
FORECASTS ASSUMED.
THEY HAVE BUILT IN THE
ASSUMPTION OF A TWO-
WEEK GOVERNMENT SHUTDOWN, BUT
THE
DATE HAS EXCEEDED THAT, SO THAT
PRESENTS FURTHER RISK TO
THE FORECAST ITSELF.
AND MOVING ONTO THE REGIONAL
ECONOMY, I HAVE TALKED TO
MORE DETAIL ABOUT THE OVERALL
PICTURE WHEN IT COMES TO THE
EMPLOYMENT, WHEN IT COMES TO
CONSUMER SPENDING, AND THOSE
HAVE
IMPORTANT IMPLICATIONS FOR B AND
O AND SALES TAX.
AND THEN IN ADDITION TO THE
ECONOMIC SITUATION, THERE
ARE SOME POLICY CHANGES.
AND IN PARTICULAR SENATE BILL
5814, WHICH
WILL IMPACT THE CITY'S SALES
TAX AND
BUSINESS AND OCCUPATION TAX
COLLECTION.
WE BELIEVE THAT THE
OVERALL IMPACT OF THAT BILL IS
TO
THE POSITIVE SIDE, BUT THERE IS
A
LOT OF
UNCERTAINTY SURROUNDING THIS
ESTIMATE BECAUSE
THERE ISN'T ENOUGH DATA OR THE
RIGHT
KIND OF DATA AVAILABLE TO
ASSESS THE IMPACT.
AND WHAT THAT MEANS IS IS
THAT FOR 2026 THERE'S
ADDITIONAL SORTS OF UNCERTAINTY,
AND
THE POTENTIAL REASON WHY THE
ACTUAL 2026 REVENUES MIGHT
DIFFER MORE
NOTABLY THAN WHAT WAS TYPICAL IN
THE PAST FROM THE CURRENT
FORECAST. SO WITH ALL THESE
THINGS
IN MIND -- WITH ALL
THESE CONSIDERATIONS IN MIND WE
ARE RECOMMENDING TO USE THE
BASELINE
SCENARIO OF THE
PRESENTED FORECAST AS THE
OFFICIAL REVENUE
FORECAST.
BUT THEN THOSE FUNDING
DECISIONS WILL BE MADE -- SHOULD
TAKE
INTO ACCOUNT OVERALL LARGE
AMOUNT --
THE ELEVATED UNCERTAINTY --
THE LARGE AMOUNT OF
UNCERTAINTY THAT'S MORE THAN
TYPICAL OF WHAT
WE HAVE SEEN IN THE PAST
REGARDING OF WHERE WE MIGHT BE
A YEAR FROM NOW.
AND WITH THAT I'M HAPPY
TO ANSWER ANY
QUESTIONS.
>> THANK YOU,
DIRECTOR DURAS. COLLEAGUES,
MEMBERS OF THE
FORECAST COUNCIL I'LL ASK
FOR YOUR QUESTIONS FIRST, AND
THEN WE'LL MOVE TO CENTRAL
STAFF.
I GUESS YOU'RE THE
ONLY ONE THAT'S NOT BEEN A
FORECAST
MEMBER UP HERE. SO COLLEAGUES,
COUNCIL
PRESIDENT, IF YOU'VE GOT
QUESTIONS JUST SPEAK UP.
I SEE YOU'VE GOT A HAND,
COUNCIL
PRESIDENT.
>> SO MY MIND IS STILL
STUCK ON PAGE 8, AND YOU DID
TOUCH ON
IT IN YOUR VERY LAST PAGE ABOUT
THE REGIONAL ECONOMY.
BUT COULD YOU GO TO THAT PAGE,
PLEASE?
>>
YEAH, THAT ONE. IT'S STUNNING TO
ME THAT WE
ARE WORSE THAN THE NATIONAL
AVERAGE IN SO MANY OF THESE
CATEGORIES.
YEAH, IN ALL OF THEM IT LOOKS
LIKE.
WHY IS
THAT?
>> SO THERE ARE A COUPLE OF
FACTORS HERE.
ONE THING THAT I SHOULD
MENTION WHEN IT COMES TO
THE NATIONAL EMPLOYMENT NUMBERS,
THERE IS
AN EXPECTED DOWNWARD REVISION
THAT WILL TAKE PLACE ONCE THE
BLS
INCORPORATES THE
ADMINISTRATIVE
DATA. THEY DO WHAT'S CALLED
BENCHMARKING TO THE
ADMINISTRATIVE DATA ONLY ONCE
PER YEAR IN SPRING.
THEY DO SOME
PRELIMINARY ANNOUNCEMENTS AND
PRELIMINARY ESTIMATES IN FALL
AND THEY
HAVE SUGGESTED THERE WILL BE A
SIGNIFICANT DOWNWARD REVISION
IN THEIR NATIONAL EMPLOYMENT
DATA AS WELL, SO THAT 1. 1%
GROWTH WILL BE REVISED DOWN.
TO WHAT EXTENT IT'S A LITTLE
BIT
HARDER TO TELL.
IN ADDITION TO THAT, THE
REGIONAL ECONOMY IN PARTICULAR
THE MANUFACTURING SECTOR
HAS BEEN AFFECTED BY LAYOFFS,
AND THAT'S ONE THING THAT SHOWS
UP IN MANUFACTURING HERE.
THE CONSTRUCTION SECTOR,
WHILE SEATTLE HAS BEEN GROWING
VERY FAST IN A DECADE LEADING TO
THE
PANDEMIC, NOW WE ARE SEEING
THE SLOW DOWN, SO THAT'S
SOMETHING
THAT'S NOT HAPPENING IN THE
NATIONAL ECONOMY OVERALL.
AND THE DECLINE IN
THE CONSTRUCTION SECTOR
EMPLOYMENT IS REFLECTING THAT.
WHEN IT COMES TO THINGS LIKE
INFORMATION SECTOR,
PROFESSIONAL AND BUSINESS
SERVICES,
THAT MIGHT HAVE MORE TO DO WITH
THE
A.I., THE INVESTMENTS IN A.I.
AND POTENTIAL IMPACTS WHERE
SOME EMPLOYERS MIGHT SEE
THE ABILITY TO -- TO EITHER SLOW
DOWN THE
HIRING OR WAIT WITH
HIRING AND THEN THE ATTRITION
WOULD LEAD
THEM TO HAVE LOWER HEAD COUNTS.
AGAIN, WE JUST HAVE TO WAIT AND
SEE.
OCCASIONALLY THESE
EMPLOYMENT NUMBERS FOR THE
REGIONAL
ECONOMY AND THOSE REVISIONS ARE
REVERSED, SO THE PICTURE MIGHT
BE SIGNIFICANTLY DIFFERENT
WHEN WE ARE PRESENTING IN APRIL.
>> YEAH.
THAT'S WHAT I WANTED TO KNOW.
ARE WE EVER
BETTER ACROSS THE BOARD OR
MOSTLY ACROSS THE
BOARD IN TERMS OF EMPLOYMENT
VERSUS -- YOU KNOW, COMPARED TO
THE
NATIONAL ECONOMY?
WHEN IS THE LAST TIME YOU
REMEMBER THAT IN
GENERAL?
>> WHEN WAS THE LAST
TIME WHEN -- CAN YOU
REPEAT?
>> WHEN WE WERE BETTER.
I'M THINKING ABOUT
JOBS BECAUSE,
YOU KNOW, AS ECONOMIC
DEVELOPMENT CARE, THAT
MEANS EVERYTHING TO ME.
SO IF WE ARE LOSING
JOBS COMPARED TO EVERYWHERE ELSE
IN
THE COUNTRY,
THAT'S CONCERNING. GO
AHEAD.
>> YEAH.
SO RECENTLY WHEN THE REGIONAL
ECONOMY WAS HIT BY THE
PANDEMIC WE HAVE SEEN A MORE
SIGNIFICANT IMPACT ON THE
REGIONAL
ECONOMY. THERE WAS AN EXTENDED
PERIOD DURING WHICH THE DECLINES
IN --
IN EMPLOYMENT NUMBERS
IN REGIONAL ECONOMY WERE
LARGER THAN IN THE NATIONAL
ECONOMY.
SEATTLE AREA IS
HEAVILY DEPENDENT ON TOURISM.
AGAIN, CONSTRUCTION SECTOR --
CONSTRUCTION SLOWED
DOWN SIGNIFICANTLY DURING
PANDEMIC,
AND THEN THE RESTRICTIONS
THAT WERE IMPOSED HERE IN THE
REGIONAL ECONOMY WERE
STRICTER THAN IN THE NATIONAL
ECONOMY.
SO THERE HAS BEEN A PERIOD IN
RECENT PAST WHERE SEATTLE
HAS GROWN SLOWER.
KIND OF LINGERING OUT
FOR VARIOUS REASONS THAT I SAID.
BUT, AGAIN, THIS SHOULD BE
TAKEN WITH A LITTLE BIT OF GRAIN
OF SALT BECAUSE OF THE DATA FOR
THE
REGION IS JUST MORE NOISY
AND COULD BE REVISED
SIGNIFICANTLY.
SO IT'S CERTAINLY WORRYING.
WHAT WE ARE SEEING IS CERTAINLY
WORRYING.
>> THANK YOU.
>> THANK YOU,
COUNCIL PRESIDENT. ANY FURTHER
QUESTIONS?
>> ONE LAST THING.
ON THE LAST PAGE THE -- THE
CONCLUSIONS FOR THE REGIONAL
ECONOMY, YOU INDICATED THAT
WHEN IT CAME TO B AND O TAX,
I THINK -- I NOTICE THAT --
IS THAT GOOD NEWS OR BAD NEWS
THAT YOU WERE REFERRING TO?
YOU SAID SOMETHING LIKE WE COULD
BE GETTING MORE MONEY WITH --
WITH ALL THESE CONSIDERATIONS
IN MIND, LET'S SEE, IN
PARTICULAR THE B AND O AND SALES
TAX.
SO WE WILL BE GENERATING MORE
MONEY, ABOUT 81 OR 86 MILLION
MORE IF VOTERS APPROVE THAT, BUT
IT'S -- WERE YOU ALSO
INDICATING
IT WAS A CONCERN TO THE OVERALL
THAT IT COULD HAVE A NEGATIVE
IMPACT? IT SEEMED YOUR POINT WAS
NUANCED, SO COULD YOU PLEASE
REFRESH?
>> SO IF I UNDERSTAND
CORRECTLY YOU ARE ASKING ABOUT
THE
IMPACT OF THE B AND O
RESTRUCTURE?
>>
YEAH.
>> YES.
SO IT'S, AGAIN, SOMETHING
THAT WE'LL HAVE TO WAIT AND SEE
HOW
IT AFFECTS THE
OVERALL ECONOMY AND THE REVENUE
COLLECTION.
ONE THING THAT WE CAN SAY
FOR SURE IS THAT THE TAX BASE
WILL BE NARROWER WITH FEWER
TAXPAYERS
PAYING THE BUSINESS
AND OCCUPATION TAX.
SO THAT WOULD IN GENERAL
IMPLY MORE VOLATILITY KIND OF
WHAT WE
ARE SEEING WITH
PAYROLL EXPENSE TAX WHERE
DECISION OF INDIVIDUAL
COMPANIES MATTER TO
LARGER DEGREE FOR BUSINESS
AND OCCUPATION TAX.
AND THEN IN ADDITION WE
HAVE WHEN WE ARE PREPARING THE
ESTIMATE FOR THE B AND O
RESTRUCTURE, THERE IS
THAT UNDERLYING ASSUMPTION OF
BILL
8514 AND THE IMPACT ON
BUSINESS OCCUPATION REVENUE
BECAUSE THAT'S A STARTING POINT
NOW.
AND BECAUSE WE HAVE A LESS
UNCERTAINTY ABOUT WHAT 5814,
WHAT THE IMPLICATIONS OF
THAT ARE FOR THE BUSINESS
OCCUPATION
TAX, BY THAT EXTENSION
FIGURING OUT HOW BUSINESS
OCCUPATION
RESTUCKTURE WILL CHANGE
THE ACTUAL COLLECTION IS HARDER
TO
TELL. THERE'S MORE UNCERTAINTY
BECAUSE
OF THAT.
I DON'T KNOW IF THAT
ANSWERS YOUR QUESTIONS, COUNCIL
PRESIDENT.
>> I'LL JUST ASK QUESTIONS
OFF-LINE.
THANK
YOU.
>> THANK YOU,
COUNCIL PRESIDENT. ANY FURTHER
QUESTIONS?
>>
NO.
>> THANK YOU.
AND, JAN, OR DIRECTOR DURAS,
IF YOU COULD SHARE THE SCREEN
AGAIN BUT KEEP THE TILES UP ON
THE
ZOOM, THAT'LL HELP US DO BOTH.
CHIEF OF STAFF
MEYERBERG, DIRECTOR CARNEL,
QUESTIONS,
COMMENTS?
>> JUST A COMMENT.
THANK YOU AGAIN FOR
THIS
FORECAST. I ECHO THE CONCERNS ON
THE REGIONAL ECONOMY AND THE
LABOR
DATA. I'M HOPING WE GET THE
U.S.
DATA SOON AND WE
CAN SEE THE TROUBLE AND IT'S NOT
AS BAD.
JUST HARKENING BACK TO
LAST OCTOBER WHEN WE WERE HERE
AND
WE WERE CONSIDERING BASELINE
VERSUS PESSIMISTIC, REALIZING
THIS
PESSIMISTIC IS
VERY DIFFERENT THAN LAST.
I JUST WANT TO VOICE JUST AN
APPRECIATION FOR YOUR
LAST PARAGRAPH TO JUST MAKE SURE
THAT WE'RE CONSIDERING A BIT
MORE
CONSERVATIVE APPROACH JUST
GIVEN THE WEAK LABOR MARKET
AND CONTINUED VOLATILITY.
AND ALWAYS AN ENTERTAINING
NEWS DAY AROUND ECONOMICS AND
FEDERAL
ISSUES.
SO I JUST -- FOR ME
IT'S IMPORTANT THAT WE KEEP
THAT CONSERVATIVE SIDE IN MIND
AS WE'RE GOING THROUGH
THOSE.
>> THANK YOU, DIRECTOR
CARNEL, SOMETHING I SHARE AS
WELL.
AND DIRECTOR DURAS, IF YOU
COULD TICK BACK TO SLIDE 4 OF
THE
ORIGINAL --
OF THE FIRST
PRESENTATION. I KNOW YOU'VE GOT
THE YEARS
SHARED OUT, EVERY OTHER YEAR.
AM I CORRECT IN
UNDERSTANDING THAT THE 2025
STARTED AT
ABOUT THE BOTTOM OF THETHE
TROUGH
BEFORE THIS INCREASED
VOLATILITY?
>>
YES.
>> AND THIS -- AND I
APPRECIATE YOU HIGHLIGHTING
2020,
THAT THOSE FIRST COUPLE OF
MONTHS BECAUSE WHAT WE SAW IN
THE
BEGINNING OF THIS YEAR
WAS VOLATILITY THAT WAS HIGHER
THAN
THE PANDEMIC.
IS THAT YOUR ASSESSMENT OR AM I
READING THIS
WRONG?
>> THAT'S WHAT THIS PARTICULAR
MEASURE OF UNCERTAINTY
IS TELLING US ABOUT.
THE AMOUNT OF POLICY
UNCERTAINTY, WHAT
WILL HAPPEN WHEN IT COMES TO
FEDERAL
UNCERTAINTY AND THAT
UNCERTAINTY WAS HIGHER IN APRIL
THAN
IN EARLY
PANDEMIC.
>> WHICH IS REALLY -- AND I
HAVE TO GIVE CREDIT TO THE CITY
BUDGET OFFICE THIS YEAR FOR
MANAGING A BUDGET THROUGH
SUCH LARGE AMOUNT OF UNCERTAINTY
AND
DECREASED REVENUES AT TIMES.
IT IS ONLY PARALLEL TO 2020.
AND THE NEED FOR THE
PAYROLL EXPENSE -- THE JUMP
START
TAX
AND THE JUMP START REVENUES TO
BE ABLE TO STABILIZE
OUR GOVERNMENT OVER THESE LAST
FIVE YEARS HAS BEEN THE
DIFFERENCE BETWEEN SUCCESS AND
FAILURE --
BETWEEN THE DIFFERENCE OF
US HAVING TO LAYOFF MANY STAFF
AND NOT PROVIDE BASIC SERVICES
TO EVERYDAY WORKING FAMILIES
IN SEATTLE.
SO UNDERSTANDING THIS LAST
APRIL WE
HAD VOLATILITY THAT WAS HIGHER
OR AT LEAST AKIN TO THE
PANDEMIC. IF YOU WANT TO MOVE
ONTO SLIDE
5 BECAUSE I THINK THIS ALSO
HELPS US UNDERSTAND WHERE
WE WERE TO DIRECTOR CARNEL'S
POINT A YEAR
AGO.
AM I CORRECT THAT 2025
STARTED AT THE HIGH POINT FOR
THAT DROP
OFF?
WHEN I READING THAT CORRECTLY?
>> YES.
STOCK MARKET WAS AT RECORD HIGHS
BEFORE FEBRUARY -- WELL, IN
FEBRUARY.
>> AND BRINGING US BACK TO
12 MONTHS AGO WHERE WE SAT
NOT NECESSARILY AROUND THIS
PHYSICAL
TABLE, BUT WE SAT TOGETHER.
IT WAS OUR
UNDERSTANDING THAT WE WOULD
ENGAGE IN SLOW GROWTH OVER
2025, THINGS WERE NOT GOING
TO IMPROVE DRASTICALLY, BUT WE
HAD
GOTTEN OUT OF THE WORST OF THAT
DOWNTURN NATIONAL
ECONOMIC
SITUATION. YET FOR WHAT WE
DIDN'T SEE
COMING WAS THE VOLATILITY THAT
WAS AKIN TO THE PANDEMIC,
WHICH DROPPED US OFF A CLIFF.
FROM HERE IT -- WHAT I'M
READING TODAY IS WE ARE FINALLY
AT
A PLACE WHERE IT SEEMS THAT WE
HAVE MAYBE NOT GOTTEN BACK TO
WHERE IF WE HAD SAID A YEAR
AGO IN OCTOBER 2024 WHERE WE
WOULD BE IN
OCTOBER 2025. BUT LOOKING
AT THIS GRAPH IT SEEMS LIKE WE
ARE MORE BACK
ON TRACK TODAY THAN WE HAVE AT
ANY
OTHER POINT IN THIS YEAR. AM I
READING ALL THIS
INFORMATION CORRECTLY?
>> FINAL POINT THAT'S CORRECT.
IF WE
ARE TO COMPARE THIS REVENUE
FORECAST WITH
THE FORECAST FROM LAST OCTOBER
IT
WILL BE VERY SIMILAR, AND
VERY LITTLE DIFFERENCE, AGAIN
TAKING INTO ACCOUNT 5814 AND
OTHER POLICY CHANGES.
>> AND USING WEATHER
METAPHORS IT FELT LIKE APRIL WE
ARE
IN FRONT OF THE STORM.
WELL, MAYBE BY THE TIME
WE'D GOTTEN TO AUGUST OR
SOMEWHERE
IN THERE WE WERE IN
THE EYE OF THE STORM, THINGS
WERE FEELING
MORE
CALM. IT FEELS LIKE
TODAY THAT WE WERE AT LEAST
GETTING THE LAST
WHIPS OF THIS STORM THAT WAS
CREATED IN APRIL BY THE TARIFFS
AND THAT
ECONOMIC VOLATILITY.
DO YOU FEEL THAT WAY?
DO YOU FEEL THAT
THERE'S POTENTIALLY ANOTHER
STORM
FRONT ON THE HORIZON, RED SKIES
AT NIGHT SAILORS DELIGHT.
RED SAILS AT MORNING
SAILORS TAKE MOURNING.
HOW ARE WE TODAY IN.
>> IT'S HARDER TO TELL WHAT
MIGHT BE COMING FROM
WASHINGTON, THE OTHER WASHINGTON
WHEN
IT COMES TO TRADE POLICIES.
I DON'T THINK WE HAVE SEEN THE
LAST OF TARIFF ANNOUNCEMENTS.
THE MARKETS HAVE -- AT LEAST
IT APPEARS THEY HAVE FIGURED OUT
A WAY TO DEAL WITH THOSE
ANNOUNCEMENTS AND CERTAINLY
ARE REACTING LESS TO THESE NEW
ANNOUNCEMENTS.
TRADING PARTNERS, AGAIN, ARE NOT
REALLY LIATING AND TRYING
TO FIGURE OUT A WAY TO DEAL
WITH THOSE TARIFFS THAT ARE
BEING ANNOUNCED IN AN
UNPREDICTABLE
WAY. SO UNCERTAINTY IS HIGH.
AS YOU MENTIONED, IN EARLY
APRIL IT WAS SIMILAR TO PANDEMIC
DAYS, AND SO THE APRIL CHANGE IN
THE FORECAST WAS RATHER
DRAMATIC, KIND OF LIKE WHAT WE
HAVE SEEN
IN 2020 EARLY REVENUE FORECAST
UPDATES. AND AGAIN, CBO DID A
REALLY GREAT JOB ON THAT
ECONOMIC DATA.
>> THANK YOU.
SO I'M GLAD TO
SEE WE ARE BACK
ON TRACK. BUT AS MY EARLIER
COMMENTS
MENTIONED, I HAVE A LOT OF
FEAR ABOUT WHAT MAY COME IN THE
LAST SIX MONTHS AFTER THE
EXPERIENCE
OVER THE LAST 12 AS WELL AS
THE FEDERAL GOVERNMENT, THE
AMOUNT OF MONEY THAT THEY PUT
INTO
ANY ECONOMY IN THIS COUNTRY THAT
MAY BE IN
JEOPARDY. IF WE CAN TICK FORWARD
TO SLIDE
8, I ALSO HAVE A QUESTION
ABOUT THE DIFFERENCE BETWEEN
REGIONAL AND FEDERAL PAYROLL
EMPLOYMENT
LEVELS. HERE IN THE
PAST WE'VE SEEN MANUFACTURING
AND TRADE
OUTPERFORMING NATIONAL
AVERAGES, AND TODAY WE'RE
SEEING
THAT IT IS UNDERPERFORMING
NATIONAL
AVERAGES.
WAS THERE SOMETHING
THAT CHANGED HERE LOCALLY, OR IS
THIS ALL
BASED ON FEDERAL VOLATILITY?
>> SO IT'S A LITTLE BIT
HARDER TO SAY WHAT EXACTLY
CAUSED
THE EMPLOYMENT SECURITY
DEPARTMENT TO REVISE DOWN THE
TRADE
EMPLOYMENT IN PARTICULAR.
WE CAN CERTAINLY TRY
TO FOLLOW UP WITH THEM, TRY TO
SEE
WHAT SORT OF FACTORS LED THEM TO
SIGNIFICANT DOWNWARD REVISION
FOR TRADE SECTOR, BUT THAT'S
THE REASON.
IT'S JUST BEEN REVISED DOWN.
THE EMPLOYMENT ESTIMATES ARE
OCCASIONALLY REVISED DOWN, SO
THAT CAN CHANGE THINGS QUITE
SIGNIFICANTLY.
>> THANK YOU.
WE'LL MOVE ONTO THE
NEXT QUESTION HERE JUST TO NOTE
THAT MANUFACTURING AND TRADE
MAKES
UP ONE-THIRD OF THE CITY'S USE
IN SALES TAX.
IF YOU CAN MOVE ONTO SLIDE 13 TO
GET TO NOW SLIDE 8 WHERE WE WERE
DOWNTURN IN TRADE MANUFACTURING.
HERE ON SLIDE 13 IN THE
FINAL COLUMN THERE'S STILL A
PLUS
AMOUNT FOR TRADE SALES TAX
REVENUES. IS THAT SAYING THAT
EVEN
THOUGH WE MAY NOT BE EMPLOYING
MORE PEOPLE IN TRADE
INDUSTRIES HERE IN THE CITY OF
SEATTLE, TRADE
IS STILL OCCURRING AND WE'RE
STILL RECEIVING MORE SALES AND
USE TAX
THAN WE EXPECTED?
HELP ME UNDERSTAND THE
CONNECTION BETWEEN THOSE TWO
GRAPHS.
>> IN THIS PARTICULAR CHART
TRADE -- SALES TAX REVENUES
ARE REVENUES COMING FROM
ANY PURCHASE MADE, FOR EXAMPLE,
BY
THE HOUSEHOLDS OR BUSINESSES.
SO EVEN WITH FEWER EMPLOYEES
IN THE TRADE SECTOR AS LONG
AS HOUSEHOLDS AND BUSINESSES ARE
SPENDING MORE, WE CAN SEE
AN INCREASE IN SALES TAX
REVENUES.
AND THAT UPTICK IN APRIL, FOR
EXAMPLE, MOST LIKELY
REPRESENTS THE FRONT LOADING OF
EXPENDITURES WHEN TARIFFS WERE
ANNOUNCED. CONSUMERS TO THE
EXTENT
WHERE POSSIBLE WERE BRINGING
FORWARD SOME OF THE PURCHASES
THEY MIGHT HAVE DONE LATER.
SO
THAT BIT OF A BLUE BAR IN APRIL
SIGNIFICANTLY
CONTRIBUTED TO THE SALES TAX
REVENUE
GROWTH IN APRIL.
THAT WILL BE AN EXAMPLE OF,
AGAIN, JUST CHANGES IN THE
BEHAVIOR.
NOT NECESSARILY RELATED TO THE
EMPLOYMENT CHANGES.
>> THANK YOU.
THOSE ARE THE QUESTIONS THAT
I HAD FOR THIS PRESENTATION
TODAY.
COLLEAGUES, ONE LAST CHECK
FOR OTHER QUESTIONS.
IF NOT, I WILL MOVE US ONTO ITEM
3 OF THE AGENDA. SO SEEING WE
HAVE NO
FURTHER QUESTIONS WE'LL MOVE
ONTO ITEM 3
OF THE AGENDA WHICH IS THE
FORECAST -- THE ADOPTION OF THE
FORECAST.
LET'S READ THIS A
DIFFERENT WAY. THE FORECAST
COUNCIL ADOPTION
OF THE OCTOBER 2025 REVENUE
FORECAST.
SO PER THE ORDINANCE -- AND
I'D LIKE TO ALSO PROVIDE THIS
CLARIFICATION, WE ARE TODAY
MEETING IN COUNCIL CHAMBERS FOR
THE FIRST TIME.
THIS IS NOT INDICATIVE THAT
THE CITY COUNCIL IS TAKING OUT
-- IS
OUTWEIGHING THE
EXECUTIVE'S OFFICE HERE.
ALL THAT TO SAY IS THE COUNCIL
CHAMBERS IS SET UP FOR THE
TECHNOLOGY AND ADMINISTRATION
OF MEETINGS SUCH AS THIS IN A
WAY THAT OTHER ROOMS IN OUR CITY
ARE NOT.
AND SO I THINK -- SO THAT IS
WHY WE ARE HERE AT THE
COMMITTEE TABLE EVEN THOUGH NOT
ALL COUNCILMEMBERS ARE MEMBERS
OF THE FORECAST COUNCIL.
SO WITH THAT PER THE ORDINANCE
THAT CREATED THE FORECAST
OFFICE AND THIS FORECAST
COUNCIL, IT
IS THE ROLE OF THE FORECAST
COUNCIL TO REVIEW AND APPROVE
THE FORECAST TOGETHER.
IN
TERM OF APPROVING THE FORECAST,
IF WE ALL CONCUR
WITH THE RECOMMENDATION OF THE
FORECAST SCENARIO, THEN
NO FORMAL VOTE IS REQUIRE.
THE GOAL OF THE LEGISLATION
THAT ADOPTED -- THAT CREATED
THIS COUNCIL WAS TO REMOVE THE
RISK OF POLITICAL INFLUENCE OVER
THE FORECAST AND
RECEIVING RECOMMENDATIONS FROM
STAFF --
THE STAFF OF AN INDEPENDENT
EXPERTS, THE PUBLIC RECEIVING
THAT INFORMATION IN A
PUBLIC FORM IS THE BEST WAY TO
ACHIEVE
THIS AIM.
THAT SAID WE REPRESENT THE
ELECTED LEADERSHIP OF
THE LEGISLATIVE
BRANCH THROUGH MYSELF AND
COUNCIL PRESIDENT
AND THE EXECUTIVE BRANCH
THROUGH CHIEF OF STAFF ANDREW
MEYERBERG AND FINANCE DIRECTOR
JAMIE
CARNEL.
IT'S
ALSO APPROPRIATE THAT TOGETHER
AS THE JOINT
BODY OF THE EXECUTIVE AND E
WE HAVE THE AUTHORITY TO
OVERRIDE THE FORECAST OFFICE
SHOULD
WE JUDGE THAT DECISION
MAKES SENSE. PER THE
ESTABLISHING
ORDINANCE SUCH A DECISION WOULD
REQUIRE A
THREE-MEMBER VOTE APPROVING
AN
ALTERNATIVE÷÷ SCENARIO. AS
YOU'VE HEARD INTERIM
DIRECTOR DURAS RECOMMENDS THAT
THE
BASELINE SCENARIO OF THE OCTOBER
2025 FORECAST IS -- SHOULD BE
USED AS THE OFFICIAL FORECAST.
IN THE CASE THERE ARE
NO OBJECTIONS OF THIS
RECOMMENDATION, I'M SIMPLY
GOING TO REQUEST THAT THE
MEETING MINUTES REFLECT OUR
CONCURRENCE
REGARDING THE RECOMMENDED
FORECAST.
THIS IS THE
FORMAL STEP CALLED FOR UNDER THE
BYLAWS AS THE WAY
WE ADOPT COURTS TO IMPROVE
OUR FORECASTS.
SO I'LL TAKE -- ALL OF THAT
SAID
I'LL TAKE THIS MOMENT TO
TAKE A LONG PAUSE TO ENSURE AND
ASK
THE QUESTIONS.
ARE THERE ANY OBJECTIONS TO
UTILIZING THE
RECOMMENDED FORECAST AS THE
BASELINE
FORECAST FOR OUR -- FOR THE
FORECAST? I'M HEARING NO
OBJECTIONS, SO I WILL
DIRECT THE FORECAST OFFICE TO
RECORD OUR CONCURRENCE
WITH THE RECOMMENDATION IN
THE FORECAST WITH THE
RECOMMENDED
FORECAST IN THE MEETING MINUTES.
THANK YOU.
COLLEAGUES, SEEING AS WE --
THERE ARE NO OTHER ITEMS ON
TODAY'S AGENDA AND THAT WE
HAVE REACHED THE END OF OUR
FORMAL
AGENDA, I WILL ALSO PAUSE HERE
TO SEE IF THERE ARE
OTHER QUESTIONS OR ANY ITEMS FOR
THE GOOD OF THE ORDER?
I'M NOT SEEING
ANY TODAY. DIRECTOR DURAS,
ANYTHING YOU'D
LIKE TO LEAVE US
WITH TODAY?
>> NO, I'LL JUST SAY THANK
YOU VERY MUCH.
WELL, I THINK ONE THING THAT I
WOULD LIKE TO SAY, I WOULD
LIKE TO ANNOUNCE THE TEAM OF
DIRECTOR CARNEL'S TEAM IN THE
OFFICE OF
CITY FINANCE WE REALLY
APPRECIATE THEIR
COLLABORATION, THEIR PARTNERSHIP
PROVIDING
US THE RIGHT KIND OF INSIGHTS
WHICH ARE IN PARTICULAR
IMPORTANT
IN THESE UNCERTAIN TIMES.
AGAIN, WE ARE HAPPY TO HELP
IN ANY SORT OF WAY THAT WE CAN
TO ALL FORECAST COUNCIL.
THANKS.
>> THANK YOU.
VERY WELL-SAID.
HEARING NO FURTHER QUESTIONS
THE ECONOMIC AND REVENUE
FORECAST COUNCIL IS ADJOURNED
TODAY.
AND TODAY BEING THE GREATEST DAY
IN MARINERS FRANCHISE, IF
WE'RE LUCKY ENOUGH TOMORROW
WE'LL
BE AS WELL.
WITH THAT, WE ARE ADJOURNED.