>> THANK YOU. NELSON'S EXCUSE
UNTIL SHE ARRIVES. WE HAVE TWO
ITEMS ON THE AGENDA. A
DISCUSSION AND VOTE AND BRIEFING
ON THE FINANCIAL UPDATE FROM
COUNSEL FINANCIAL STAFF. BEFORE
WE BEGIN, THE AGENDA IS ADOPTED.
COUNCIL PRESIDENT HAS ARRIVED.
BEFORE WE GET INTO TODAY, LAST
TIME WE HAD AN EXTENSIVE
CONVERSATION ABOUT THE REVENUE
FORECAST. COUNCILMEMBER SAKA ,
YOU GIVE ME SOME FEEDBACK THAT I
WASN'T MANAGING TIME WELL SO I
AM GOING THROUGH THIS A LITTLE
BIT DIFFERENTLY. WE'VE GONE
THROUGH THE DATA WITH TOM AND
BEN. I ASK THAT YOU HOLD YOUR
QUESTIONS TO THE END OF THE
PRESENTATION. AND ALONG THE WAY
IF THERE IS SOMETHING THAT I
HAVE HEARD FROM BEN OR TOM IN
THE PAST BUT I DIDN'T HEAR IN
THE COMMITTEE I WILL ASK AS WE
ARE MOVING ALONG. SO FACILITATE
IN A SLIGHTLY DIFFERENT MATTER.
I'M GOING TO ASK FOLLOW-UP
QUESTIONS. IF THEY DO NOT SHARE
SOMETHING THAT THEY SHOULD
BEFORE. WE WILL NOW MOVE INTO
THE HYBRID PUBLIC COMMENT TO THE
ITEMS ON TODAY'S AGENDA. AND
WITHIN ME REVIEW OF THIS
COMMUNITY. HOW MANY FOLKS DO WE
HAVE SIGNED UP?
>> WE HAVE ZERO SPEAKERS SIGNED
UP IN PERSON AND ONE REMOTE
SPEAKER.
>> WE WILL START WITH THE ONLY
SPEAKER PRESENT. UP TO 20
MINUTES. SPEAKERS WILL BE CALLED
IN THE ORDER IN WHICH THEY
REGISTERED. YOU WILL HEAR A
CHIME 110 SECONDS ARE LEFT. TWO
SPEAKER. WE WILL BEGIN WITH OUR
MR. DAVID HAYNES. YOU ARE HERE.
UNMUTE AND TAKEN AWAY.
>> THANK YOU, COUNCIL. SINCE
THIS IS THE FINANCE COMMITTEE,
WHEN ARE WE GOING TO HAVE
LEGISLATION THAT PROTECTS THE
WORKERS FROM THE ABUSE OF
NONWORKING SHAREHOLDER MIDDLEMEN
FROM THE IMMORAL FINANCIAL
SYSTEM? IT SEEMS THAT THE
FINANCE COMMITTEE WOULD CREATE A
LAW REQUIRE THAT THE WORKERS GET
A SHARE OF THE UNFORESEEN
CAPITAL GAINS. IT'S THE ONLY
WAY TO RESCUE THE WORKERS KEPT
PAYCHECK TO PAYCHECK BY THE
SLAVE MASTER MISINTERPRETATION
OF NEOLIBERAL CONSERVATIVES THAT
SERVE THE POLICE STATE ECONOMY.
JUSTIFYING THE REVOLT AND
BOYCOTT AND RENEGOTIATION ON THE
PLAY PLAN-- PAY PLAN. THERE IS
REALLY AN EVIL, IMMORAL
MISINTERPRETATION OF OUR
FINANCIAL SYSTEM WHERE THE
WORKERS DO ALL THE WORK AND THE
SHAREHOLDER MIDDLEMEN GET MOST
OF THE MONEY. DRAINING THE
LIFEBLOOD OF THE MAINSTREAM
ECONOMY EVERY QUARTER THE
REPORT. STEALING ALL OF THE
UNFORESEEN CAPITAL GAINS. ACTING
LIKE IT HAS NOTHING TO DO WITH
THE WORKERS THAT GENERATED ALL
OF THE REVENUE WITH ALL THE
SMALL BUSINESSES THAT GET PITTED
AGAINST ONE ANOTHER SO THEY CAN
MAKE ENDS MEET. WE REALLY NEED
POLITICIANS TO WRITE LAWS TO
PROTECT THE WORKERS LIKE A 3.5
DAY WORK WEEK AND SEVEN DAY PAY.
DOUBLE THE SHIFT, BOOST MORALE
AND SIMPLY TAKE IT FROM THE
MIDDTO SEATTLE, THE COMPANY
STEALS 700,000 POUNDS AND THEN
CALLS UP THE SEATTLE POLICE
DEPARTMENT TO HAVE ME ARRESTED
FOR HOLDING. FOR WALL STREET
HEDGE FUNDS STEALING UP TO 70%
OF ALL COUNTS. CAUSING
HOMELESSNESS IN SEATTLE. THANK
YOU.
>> THANK YOU. THAT DOES CONCLUDE
OUR PUBLIC COMMENT PERIOD AS WE
HAVE NO ADDITIONAL SPEAKERS. THE
PUBLIC COMMENT PERIOD IS NOW
CLOSED. LET'S MOVE ON TO THE
FIRST ITEM OF BUSINESS.
>> COUNSEL BILL 120970.
ORDINANCE RELATING TO ACCEPTANCE
OF FUNDING FROM NON-CITY
SOURCES. AUTHORIZING THE HAD THE
VARIOUS DEPARTMENTS TO ACCEPT
AND AUTHORIZE THE EXPENDITURE OF
SPECIFIC RANTS, PRIVATE FUNDING
AND SUBSIDIZED LOANS AND TO
EXECUTE, DELIVER AND CORRESPOND.
DISCUSSION AND POSSIBLE VOTE AND
PRESENTERS WILL BE TOM MIKESELL
FROM STAFF.
>> THANK YOU TOM. I THINK THE
MEAT OF TODAY'S AGENDA IS THE
NEXT ITEM. WE WANT YOU TO BE
COMPLETELY COMFORTABLE VOTING ON
THIS PIECE OF LEGISLATION. OVER
TO YOU.
>> THANK YOU, CHAIR STRAUSS.
GOOD MORNING MEMBERS OF THE
COMMITTEE. AS CHAIR STRAUSS
MENTIONED, THIS IS THE SECOND
BRIEFING FOR THE FOURTH QUARTER
GRANT ACCEPTANCE AND
APPROPRIATIONS BILL. 120970. SO
GIVEN THAT THE NEXT PRESENTATION
IS FAIRLY LENGTHY, I HAVE
STREAMLINED THIS WHICH WAS
PREVIOUSLY THREE SLIDES INTO ONE
SLIDE. JUST TO RECAP WHAT WAS
COVERED LAST TIME. SO JUST
DIVING RIGHT IN, THIS IS THE
FIRST CONFERENCE OF GRANT
ACCEPTANCE AND APPROPRIATIONS.
WE HAVE A TWO-STEP PROCESS BY
WHICH COUNSEL ACCEPTS THE SOURCE
OF THE GRANTS FROM AN EXTERNAL
PARTNER AND THEN PUT AN
APPROPRIATION BILL IN PLACE TO
ACTUALLY ACCEPT AND SPEND THE
MONEY. THIS IN PARTICULAR WOULD
ACCEPT $4.7 MILLION AND IT WOULD
PROVIDE APPROPRIATIONS FOR 33.4
MILLION OF THOSE MONIES. A
REALLY LARGE CHUNK OF THAT IS
GRANTS FOR CIP PROJECTS AND WE
WILL COVER THAT IN MORE DETAIL.
ALSO 14.8 MILLION FOR THE
OPERATING BUDGET. ALL OF THESE
WILL CONTINUE UNTIL THEY ARE
SPENT OR THROUGH LEGISLATION.
UNLESS THERE ARE FURTHER
QUESTIONS THE NEXT STEP IS VOTE
AT THE CITY COUNCIL MAY 13th
MEETING.
>> WESTERNS ON THE GRANT
ACCEPTANCE AND APPROPRIATION
BILL? THIS IS STRAIGHTFORWARD.
WE WILL APPROPRIATE GRANTS
THROUGHOUT THE YEAR. SO THIS IS
NOT THE LAST TIME THAT WE WILL
SEE GRANT APPROPRIATION
LEGISLATION AS WE DISCUSSED
EARLIER. IF I AM NOT SEEING ANY
OTHER QUESTIONS, I WILL MOVE
THAT THE COMMITTEE RECOMMENDED
PASSAGE OF COUNSEL BILL 120970.
>> SECOND.
>> IT HAS BEEN MOVED AND
SECONDED. ARE THERE ANY FINAL
COMMENTS? WILL THE CLERK PLEASE
CALL THE RULE ON RECOMMENDATION
TO PASS?
>> COUNCILMEMBER KETTLE?
COUNCILMEMBER
PRESIDENT NELSON? VICE CHAIR
RIVERA? CHAIR STRAUSS? FIVE IN
FAVOR. ZERO POST.
>> THE COMMITTEE REPRESENTS
PASSAGE OF COUNSEL BILL 120970
AND WILL HAVE IT ON THE FULL
COUNCIL MEETING ON MAY 13th. WE
WILL MOVE ON TO OUR SECOND ITEM
OF BUSINESS, WE'VE GOT JUST
UNDER TWO HOURS, I DO ADJOURNED
BY 11:30 OR EARLIER.
>> GENERAL FUND BALANCE ANALYSIS
FOR BRIEFING AND DISCUSSION.
PRESENTERS INCLUDE THE NOBLE AND
TOM MIKESELL AND COUNCIL ST
QUESTIONS TO THE END AND IF
THERE IS ANYTHING TO CENTRAL
STAFF THAT FOLKS HAVE MISSED
FROM THESE CONVERSATIONS I MIGHT
ASK FURTHER QUESTIONS AS WE GO.
>> BEEN NOBLE, DIRECTOR.
>> COME MIKESELL. I WILL JUST
JUMP IN WITH THIS GENERAL FUND
BALANCING ANALYSIS. THIS IS A
REGULAR UPDATE ON THE BALANCING
STAFF GENERAL FUND. WHICH IS
ACTUALLY IN STATUTE FOR
TRANSPARENCY ORDINANCE. AND THIS
YEAR WE ARE INCLUDING THE
JUMPSTART FUND IN THE ANALYSIS.
FOR A FEW REASONS. ONE IS
BECAUSE THERE IS A VERY EXPLICIT
LINKAGE IN THE BUDGET BY WAY OF
TRANSFER FROM THE JUMPSTART TO
THE GENERAL FUND THAT IS
BUDGETED FOR REVENUE BACKFILL.
AND SECONDARY EQUALLY AS
IMPORTANT THERE WAS A CHANGE TO
THE POLICIES AROUND THE
JUMPSTART FUND LAST BUDGET
SESSION THAT FORMALLY STATED
THAT EXPENSE FELL SHORT OF THE
AMOUNT NECESSARY TO SUPPORT
APPROPRIATIONS. SO LOOK BACK AT
THE GENERAL FUND TO SEE IF THERE
IS RELIEF THAT COULD BE PROVIDED
IN THE OTHER DIRECTION. AT THIS
POINT, THE JUMPSTART FUND
PROVIDES SUPPORT TO THE GENERAL
FUND. THIS WOULD LOOK AT THAT AS
A TWO-WAY STREET IF YOU WILL.
AND THEN I AM GIVING SOME OF THE
OBSERVATIONS OF THE BALANCING
ANALYSIS, SOME OF THE
CONSIDERATIONS THAT THE
COMMITTEE AND FULL COUNCIL CAN
REVIEW AS THE YEAR EMERGES
TOWARD BUDGET SEASON. AND THEN
IN THAT PERSPECTIVE AS WELL,
LOOK AT OUR FISCAL RESERVES AND
REVENUE STABILIZATION. SO THIS
IS A FAMILIAR TABLE FOR YOU ALL.
IT IS NOT REALLY NECESSARY THAT
YOU GET TOO MUCH INTO DETAIL.
HAPPY TO ANSWER QUESTIONS ABOUT
IT AND FOLLOW UP LATER AS
NEEDED. BUT THE KEY POINT OF
THIS SLIDE WHICH SHOWS YOU THE
WHERE WE WERE, WHAT THE
FINANCIAL STATUS WAS IN '25 AT
THE TIME THE BUDGET WAS ADOPTED
LAST YEAR. IT SHOWS THAT THE
STARTING BALANCE AT THE
BEGINNING OF 2024 WAS $480
MILLION. AND THROUGH THIS THREE
YEAR FINANCIAL BALANCE SPENDS TO
ESSENTIALLY ZERO DOLLARS AT THE
END OF 2026. SO THAT INDICATES
FOR PURPOSES OF OUR PROCESS AND
FOR PURPOSES OF THE STATE BUDGET
ACT A BALANCED BUDGET. WHICH IS
A GOOD THING. THE ONE THING I
WILL NOTE WHICH KIND OF EMERGES
FROM THE PAGE IS THAT THIS PLAN
SPENDS $408 MILLION. THERE IS A
REASON FOR THAT. AND QUITE
SPECIFICALLY IN 2024 THERE WAS A
SIGNIFICANT APPROPRIATION MADE
FOR ANNUAL WAGE ADJUSTMENTS. SO
CONTRACT THAT HAD RECENTLY BEEN
SIGNED THERE WERE SOME PRIOR
YEARS THAT NEEDED TO BE
ACCOUNTED FOR IN THAT BALANCE.
AND WERE HELD IN RESERVE AND
MADE THEIR WAY INTO 2024
APPROPRIATIONS. HIGH. THERE IS
ALWAYS SOME STARTING BALANCE BUT
THIS ONE STANDS OUT BECAUSE OF
THOSE CONTRACTS. THAT HAD BEEN
RECENTLY SIGNED.
>> JUST EMPHASIZED, WE WILL DO
THIS PRESENTATION BUT THIS IS
WHERE WE WERE IN THE FALL. WE
ARE GOING TO DO THIS WITH THE
GENERAL FUND AND FOR THE EXPENSE
TAX AND THE COMPANY PICTURE OF
WHERE WE ARE NOW. AGAIN, IT WAS
A PLAN. A PURPOSEFUL ONE TO
BALANCE THE BUDGET OVER THE
BIENNIUM. IT WAS PURPOSELY
ALLOCATED TO BE SPENT DOWN. THE
$400,000 WHICH IN THE CONTEXT OF
SEVERAL BILLION A YEAR IS
EFFECTIVELY ZERO. THAT WAS
RECOGNITION OF THE DEMAND FOR
SERVICES THAT YOU SAW FROM
CONSTITUENTS AND THE RESOURCES
THAT WE HAD. IT DIDN'T LEAVE A
WHOLE LOT OF MARGIN. BUT WE WILL
TALK ABOUT THAT RESERVE OUTSIDE
OF THIS SHEET THERE ARE
ESSENTIALLY SOME LOCAL FINANCIAL
MARGINS. YOU WILL SEE
CIRCUMSTANCES HAVE EVOLVED
SINCE.
>> JUST TO JUMP IN. TO HIGHLIGHT
WHAT YOU JUST SAID, WE HAVE
RESERVED FUNDS THAT ARE NOT
INCLUDED IN THIS ANALYSIS. I
WILL SHARE CONTEXT THAT IN THE
FALL OF LAST YEAR, ALL MARKET
PREDICTIONS WERE SHOWING THAT WE
WERE STARTING SLOW GROWTH OUT OF
A SLOWED ECONOMY FROM THE
PANDEMIC. WHAT WE HAVE FOUND IN
THE FIRST QUARTER OF THIS YEAR
IS A VERY DIFFERENT SITUATION
WHICH IS WHY THE APRIL FORECAST
WAS SUCH A BOMBSHELL. IF I CAN
USE THAT WORD. THEN THIS CHART,
I DON'T WANT TO USE THE WORD
NORMAL BUT IS THIS A STANDARD
APPROACH YEAR-OVER-YEAR EVEN IN
A TOUGH BUDGET YEAR?
>> THAT'S WHAT I WAS TRYING TO
EXPLAIN. WE SPENT THIS DOWN TO
ZERO BUT IT WOULD'VE BEEN THE
NORMAL PROCESS IN TERMS OF
BUILDING A BUDGET. THERE WERE
FINANCIAL RESERVES THAT WERE
BACKING US UP AS WE WILL SEE
THAT MAY OR MAY NOT NEED TO BE
INVOKED IF YOU WILL IN THE
SITUATION WE ARE NOW IN.
>> THANK YOU.
>> BEFORE WE MOVE TO THE NEXT
SLIDE, I WOULD POINT OUT THE
FOOTNOTE AT THE BOTTOM. THE
ADOPTED BUDGET PLAN DID INCLUDE
ESSENTIALLY COMMITMENTS FROM THE
EXECUTIVE TO SPEND LOWER THAN
THE AMOUNT. THOSE WERE 24
MILLION DOLLARS IN '24 AND EACH
OF '25 AND '26. SO THIS COVERS
WHAT HAPPENED, WHAT HAS HAPPENED
SINCE THE BUDGET WAS ADOPTED.
AND THIS IS A NORMAL OCCURRENCE.
THE ENDING BALANCE FOR 2024 WAS
$134 MILLION HIGHER THAN WAS
PROJECTED. INCREASING FROM 58
MILLION TO $192 MILLION. THAT
WAS FOR A COUPLE OF REASONS.
GENERAL FUND SPENDING WAS LOWER
THAN BUDGETED. EVEN AFTER
ACCOUNTING FOR THE UNDER SPENDS
THAT I MENTIONED. THE TOTAL
UNDERSTAND WAS $173 MILLION OR
8% LOWER THAN THE REVISED
BUDGET. ALSO, REVENUES AS NOTED
IN THE APRIL FORECAST UPDATE
WERE $38 MILLION BELOW FORECAST.
BUT THAT IS MAINLY BECAUSE OF
DELAYS IN GRANTS AND GRANT
ACCEPTANCES. SO THAT IS KIND OF
A TECHNICALITY. THOSE GRANTS ARE
ADDED BACK TO THE 2025 FORECAST.
SO THE $173 MILLION IS A LOT OF
EXTRA CASH BALANCE. BUT THERE IS
KIND OF AN OFFSET TO THAT. IN
THE FORM OF CARRYFORWARD
APPROPRIATIONS WHICH THIS MAY
SOUND FAMILIAR, BECAUSE IT IS
ALSO SIMILARLY A COMMON
OCCURRENCE IN OUR BUDGET
PROCESS. THESE TAKE TWO
DIFFERENT FORMS. SO THERE IS
BASICALLY APPROPRIATIONS FROM
THE PRIOR YEAR, IN THIS CASE
2024 THAT WERE NOT FULLY SPENT
FOR THEIR PURPOSE. EITHER DUE TO
SOME LEGAL OR POLICY REASON THEY
WILL CONTINUE INTO 2025. AND SO
WE NEED TO MAKE SURE THAT WE
RESERVE TO FUND THOSE
APPROPRIATIONS. SO AGAIN, A
COMMON OCCURRENCE. THEY TAKE TWO
DIFFERENT FORMS. WHAT IS CALLED
ENCUMBRANCE WHICH IS AN
ACCOUNTING TERM, ONCE YOU SEND
OUT YOUR INVOICE, YOU ARE
COMMITTED TO AN EXTERNAL AGENCY
THAT YOU ARE BUYING SOMETHING.
BUT YOU HAVEN'T SENT THE CASH
OUT THE DOOR. SO WE HAVE THE
APPROPRIATION AND WE NEED THAT
TO STILL BE IN THE SYSTEM FOR
WHEN WE CUT THE CHECK AND SEND
THE MONEY OUT THE DOOR. SO THOSE
ENCUMBRANCES ARE VERY TECHNICAL.
THAT IS WHAT IS TERMED AUTOMATIC
CARRYFORWARD. THERE'S ABOUT
$113 MILLION IN THE GENERAL FUND
THAT IS AUTOMATICALLY CARRIED
INTO 2025. AND AUTOMATIC BY WAY
OF THERE IS NO FURTHER
LEGISLATIVE ACTION WIRED. THERE
IS ANOTHER $20 MILLION THAT IS
UNDER REVIEW WITH THE EXECUTIVE.
GIVEN THAT THERE ARE FINANCIAL
CHALLENGES THAT WE HAVE BEEN
IDENTIFIED THAT CARRYFORWARD
REVIEW PROCESS THAT STARTED
BEFORE THE APRIL FORECAST
RECEIVED. WE HAVE NOW RECEIVED
THE APRIL FORECAST AND GIVEN
THOSE DOWNGRADES TO THE NUMBERS
THE EXTENT THAT CAN BE FUNDED IN
2025 IS UNDER REVIEW. WE ARE
WORKING WITH $20 MILLION AS AN
ESTIMATE. SO THAT IS ASSUMED.
AFTER YOU ACCOUNT FOR THOSE
AUTOMATIC AND LEGISLATIVE
CARRYFORWARDS DURING ABOUT $44
MILLION ADDITIONAL ONE-TIME
MONEY THAT CARRIES FROM '24
INTO 2025. THAT IS REALLY THE
KEY TAKE AWAY. THE TECHNICAL
BACKGROUND THAT I JUST PROVIDED
IS THAT THERE IS $44 MILLION OF
ONE-TIME MONEY COMING INTO 2025
AFTER COMPLETING THE BOOKS ON
2024.
>> ONE BIT OF GOOD NEWS IN THIS
PRESENTATION, THIS IS IT. THERE
WAS AND IS AVAILABLE $44 MILLION
MORE GENERAL FUND RESOURCE IN
2025. CARRIED INTO 2026. THERE
IS 44 MILLION MORE IN THE
GENERAL FUND THAN WE THOUGHT WE
WOULD HAVE AVAILABLE EVEN WITH
SOME ADJUSTMENTS IN THE GENERAL
FUND FORECAST. AND THE NEWS ON
THE GENERAL EXPENSE TAX IS NOT
AS GOOD.
>> WITH THE LAST BIT OF GOOD
NEWS FOR THIS MORNING'S
PRESENTATION, I WILL ALSO SHARE
AS PART OF OUR BUDGET REFORM IN
BOTH PROCESS AND CONTENT, ON THE
COMMITTEE SCHEDULE THAT WE
CREATED IN JANUARY FOR THIS
COMMITTEE, TODAY WOULD'VE BEEN
THE DAY THAT WE STARTED BRIEFING
AND APPEALING THE WORK TO PASS
THE CARRYFORWARD LEGISLATION. AT
THIS TIME INSTEAD WE ARE HAVING
THIS PRESENTATION AND TAKING A
DEEPER REVIEW OF THAT
CARRYFORWARD TO MAKE SURE WE ARE
SET FOR FALL.
>> THAT KIND OF COVERS CLOSING
THE BOOKS ON 2024. NOW WE ARE
GOING TO TALK A BIT ABOUT THE
CHANGES TO REVENUES THAT WERE
INCLUDED IN THE APRIL FORECAST
ADJUSTMENT. UNFORTUNATELY THE
CHANGES WERE NEGATIVE. THERE WAS
A $10 MILLION DECREASE IN 2025.
$40 MILLION INCREASE IN 2026 AND
DECREASE GROUP TO $57 MILLION IN
'27 AND ASSIST 65 IN '28.
USING THE PRESS THE MYSTIC
SCENARIO-- PESSIMISTIC SCENARIO,
GROWTH AND EXPENDITURES IS LOWER
AS WELL AND OTHER ADJUSTMENTS
THAT WERE MADE. THIS IS WITH
REGARDS TO CVO. THEY ADJUSTED
HOW MUCH THEY ARE HOLDING FOR
LABOR COSTS IN 2025 AND '26 BY
ABOUT $8 MILLION. AND ONE KIND
OF CAVEAT IS THIS DOESN'T
INCLUDE ANY OF THE EXPENDITURE
PRESSURES THAT COULD IMPACT THE
GENERAL FUND FROM THE LOSS OF
DIRECT OR INDIRECT EXTERNAL
FUNDING. OR ANY IMPACTS OF ANY
OTHER COST INCREASES. OR ANY
KIND OF AFFIRMATIVE MEASURES OF
THE GENERAL FUND TO BACKFILL
REVENUE LOSSES TO OTHER FUNDS.
AS A RESULT OF THE APRIL
FORECAST. SO THINGS LIKE
SHORT-TERM COMMERCIAL, THOSE ALL
RECEIVED REVENUE DOWNGRADES AS
WELL. WE WERE NOT IN THE GENERAL
FUND, THEY HAD THEIR OWN
SEPARATE FUND. BUT SINCE THE
GENERAL FUND IS THE MOST
FLEXIBLE SOURCE OF RESOURCES IN
THE CITY, SOMETIMES THOSE ARE
USED TO TALENT BALANCE.
>> JUST TO PUT A FINER POINT ON
THAT, KEY TAKE AWAY A $15
MILLION GENERAL FUND REVENUE
DECREASE IN THE CURRENT
BIENNIUM. THAT DOES NOT INCLUDE
ANY FEDERAL FUNDING LOSSES, IT
DOES NOT INCLUDE ANY BACKFILLING
OTHER REVENUE SOURCES WITHIN OUR
BUDGET AND DOES NOT INCLUDE ANY
NEW SPENDING FROM THE MAYOR OR
COUNCIL MEMBERS. IS THAT
CORRECT?
>> CORRECT.
>> THAT MEANS NO NEW SPENDING
GETS US TO $15 MILLION PROBLEM.
OVER TO YOU.
>> CORRECT. AND SO NEXT SLIDE IS
WHERE ARE WE NOW? THIS IS WITH
REGARDS TO BALANCING THE '25
AND '26. REALLY THE KEY TAKE
AWAY IS THE MOST IMPORTANT
SUMMARIZATION OF WHERE WE ARE.
BECAUSE WE HAD A $44 MILLION
HIGHER STARTING BALANCE OF
ONE-TIME MONEY PLUS A DECREASE
OF $8 MILLION IN PLANNING
RESERVES, THAT GIVES $52 MILLION
WORTH OF RESOURCES. AND THAT 52
MILLION OF ONE-TIME RESOURCE CAN
BALANCE OUT THE $50 MILLION LOSS
OF FORECASTED REVENUES IN '25
AND '26. IN THE BOTTOM ROW OF
THIS TABLE, THE UNRESERVED
BALANCE AT THE END OF '26 IS $2
MILLION. IT IS HIGHER THAN IT
WAS IN THE ADOPTED BUDGET
SLIGHTLY. SO THIS IS A BALANCED
BUDGET WITH REGARDS TO THE STATE
BUDGET ACT. WE WILL GET TWO
ADDITIONAL PRESSURES OUTSIDE THE
GENERAL FUND.
>> TO SUMMARIZE AND PUSH FORWARD
A LITTLE BIT, THE POINT WE ARE
MAKING THAT THERE WAS AN
UNDERSTAND IN 2024 WHICH IS GOOD
NEWS, AND OFFSET BY THE REVENUE
FORECAST REDUCTION FOR '25 AND
'26. WE WILL TALK ABOUT ASIC
THICKENED BUDGET PROBLEM FOR-- A
SIGNIFICANT BUDGET PROBLEM FOR
THE BIENNIUM. AND ON SOME OF THE
OTHER REVENUE STREAMS AS WELL. I
DO WANT TO EMPHASIZE THIS POINT,
WE ARE FINE ON THE GENERAL FUND
SIDE FOR '25 AND '26. WE GOT
LUCKY THAT THE UNDERSIGNED IS
MATCHING THE REVENUE DROP. BUT
FOR '27 AND BEYOND, A
LONGER-TERM GAP IS GROWING AGAIN
OR HAS GROWN BECAUSE THE GENERAL
FUND FORECAST DIDN'T JUST DROP
IN '25 AND 26 IT DROPPED FOR
THOSE OUT YEARS AS WELL. CHAIR
STRAUSS INDICATED THE FORECAST
HAD BEEN FOR A PERIOD OF SLOW
GROWTH, IT IS NOW FOR A PERIOD
OF SLOWER GROWTH AND A WIDENING
GAP. TOM IS GOING TO EXPLAIN IT
MORE.
>> THANKS THEN. THIS IS THE
SWITCH BETWEEN SHORT-TERM
BALANCE AND LONGER-TERM
STRUCTURAL BALANCE. IN THE
LONGER-TERM STRUCTURAL BALANCE
SITUATION FOR GROWTH AND REVENUE
KEEPS UP WITH GROWTH AND EXPENSE
AND YOU ARE NOT RELYING ON
ONE-TIME FUNDING. AS YOU CAN SEE
STARTING IN 2027, THE STRUCTURAL
DEFICIT HAS GROWN TO $147
MILLION IN THE GENERAL FUND.
THAT IS COMPARED TO $89 MILLION
STRUCTURAL DEFICIT IN THOSE TWO
YEARS IN THE ADOPTED BUDGET. THE
BULK OF THAT IS BECAUSE THE LOSS
OF REVENUES IN THE APRIL
FORECAST.
>> JUST TO CLARIFY SOMETHING
THAT I HEARD YOU SAY THAT WHEN
WE RECEIVED THE DOWNGRADE
FORECAST, THIS GAP WIDENED. AT
THE END OF THE BUDGET SESSION
LAST YEAR WE SET OURSELVES UP IN
A PRETTY FINE, OKAY SITUATION.
THIS MADE IT WORSE. THE THREE
TIMES A YEAR THAT WE RECEIVED
THE FORECAST THE BLUE LINE WILL
ALTER EACH TIME WE DO THAT
BECAUSE THE FORECAST IS NOT JUST
FOR THIS YEAR.
>> VERY HIGH LIKELIHOOD THAT IT
WILL ALTER. IT COULD STAY THE
SAME BUT YEAH.
>> THANK YOU.
>> AFTER ACCOUNTING FOR ACTUAL
SPENDING AND REVENUES AND
AUTOMATIC IMPOSED CARRYFORWARD
SPENDING THE BALANCE AT THE END
OF 2025 WAS $44 MILLION. THERE
WAS A FORECASTED $50 MILLION
GENERAL FUND REVENUE LOSS IN THE
CURRENT MEDIUM AND THOSE GROW IN
THE FUTURE. THEY ARE MARGINALLY
OFFSET BY LOWER PROJECTED
EXPENDITURES. THIS DOESN'T
INCLUDE ANY ADDITIONAL SPENDING
PRESSURES OR REVENUE. IN TERMS
OF HOW THAT IMPACTS THE BALANCE
IN THE CURRENT BIENNIUM, $44
MILLION OF ONE-TIME BEGINNING
BALANCE PLUS $8 MILLION FUNDING
RESERVES OFFSETS THE FORECASTED
FUNDING LOSSES SO THE BUDGET IS
STILL BALANCED. DUE TO ONGOING
REVENUE DECREASES IN THE APRIL
FORECAST THE AVERAGE PROJECTED
DEFICIT IN '27 AND '28 GROSS
TO 127 MILLION WHICH IS HIGHER
THAN 89 MILLION IN THE ADOPTED
BUDGET LAST FALL. NOW I'M GOING
TO GO TO THE JUMPSTART FUND. THE
LARGEST OF THE ADJACENT FUNDS.
AND GO THROUGH THE SAME CADENCE
WITH WHERE WE WERE, WHAT
HAPPENED IN THE FORECAST AND
WHERE WE ARE NOW. AS YOU CAN SEE
IN THIS CHART, THE JUMPSTART
PLAN STARTED FROM $279 MILLION
BEGINNING BALANCE AT THE
BEGINNING OF 2024 AND BALANCED
TO ZERO IN BOTH YEARS. AGAIN
REFLECTING A BALANCED BUDGET.
SIMILAR REASONS THE ENDING
BALANCE WAS HIGHER THAN EXPECTED
REVENUES WERE 45 MILLION BELOW
FORECAST. THAT IS DUE TO A
COMBINATION OF EXPENSE TAX
REVENUES BEING $46 MILLION BELOW
FORECAST BUT THERE WAS NO
FORECAST FOR INTEREST EARNINGS
AND THEY CAME IN AT ABOUT $11
MILLION. THAT OFFSETS A LITTLE
BIT OF THAT REVENUE. OUR
EXPENDITURES WERE $296 MILLION
BELOW BUDGET. SO A SIGNIFICANT
UNDERSTAND ON APPROPRIATIONS.
GOING BACK TO THE NATURE OF THAT
UNDERSPEND, IT HAS A LEGAL
OBLIGATION ATTACHED TO IT. AND
SIMILAR TO THE GENERAL FUND, HOW
MUCH ADDITIONAL CARRYFORWARD IS
GOING TO BE ULTIMATELY REQUESTED
UNDER ANALYSIS WITH THE
EXECUTIVE. BUT THE INITIAL
PERSPECTIVE WAS ABOUT $104
MILLION. THAT WOULD USE UP THE
REST OF THE CASH FOR THOSE
CARRYFORWARD OBLIGATIONS. THAT
WAS ALL DETERMINED PRIOR TO
RECEIVING THE FORECAST. GIVEN
THE DOWNGRADE TO REVENUES IN
PARTICULAR THAT AMOUNT IS BEING
REVIEWED.
>> THE EXECUTIVE PREPARED A
CARRYFORWARD ORDINANCE BEFORE
THE FORECAST HAD BEEN DEVELOPED.
UNDER NORMAL EXPECTATIONS AND
THAT NO LONGER MAKE SENSE. AND
THE EXECUTIVE IS REVISITING IT.
SO WE ARE USING SOME OF THE
FIGURES BECAUSE WE WILL TALK
MORE ABOUT ADDITIONAL STEPS THE
EXECUTIVE HAS TAKEN. WE PULLED
BACK ON THE CARRYFORWARD AS WE
CONSIDERED WHERE WE ARE.
>> DISCOVERS THE ADJUSTMENTS
MADE TO '25 AND '28. THE
REVENUE DECREASE WAS CITED BY
THE FORECAST OFFICE IN APRIL IN
2025. $86 MILLION DECREASE IN
'26 AND SIMILAR IN THE OUT
YEARS AS WELL. SIMILARLY OUR
SLIGHTLY LOWER INFLATION IS A
BIT LOWER EXPENDITURE. AND NO
OTHER ADJUSTMENTS BY CEO TO
RESERVES OR ANYTHING OF THAT
NATURE. SO THERE WERE
ESSENTIALLY ABOUT $85 MILLION OR
SO OF LOWER REVENUES IN THE
FORECAST. SO THIS IS WHAT THE
WHAT HAPPENS TO THE ORIGINAL
PLAN GIVEN THESE NEW NUMBERS.
AND AGAIN, THE KEY TAKE AWAY IS
THE MAIN POINT OF THIS. 24 ENDED
WITH A HIGHER BALANCE. BUT
BECAUSE OF LOWER REVENUE
FORECAST THE JUMPSTART FUND IN
TOTAL IS OUT OF BALANCE IN THE
CURRENT BIENNIUM BY $73 MILLION
IN 2025 AND $152 MILLION IN
2026. AND YOU CAN SEE THOSE
NUMBERS.
>> BEFORE WE MOVE ON, I WANT TO
CLARIFY FOR YOU THIS SHOWS IN
2025 IT IS A $73 MILLION PROBLEM
AND IN '26 IT IS $152 MILLION
PROBLEM. BECAUSE YOU ARE LOOKING
TO DOUBLE THAT. SO WE MAKE
CHANGES THAT NUMBER WILL CHANGE.
SO IF WE FOUND $73 MILLION OF
UNDERSPEND SAVINGS OR
BACKFILLING WITH GENERAL FUND
THAT ZEROS OUT. HYPOTHETICALLY.
JUST TO UNDERSTAND.
>> I WOULD ADD THE QUALIFIER
THAT IT DEPENDS ON THE NATURE OF
THE NEW REVENUE OR EXPENDITURE.
IF IT IS ONGOING CUT OF $73
MILLION AND HOW MUCH IS SPENT
OUT OF THE GENERAL FUND YOU
WOULD GET THE BENEFIT IN 2025
AND 2026 AND THEN THAT WOULD BE
ESSENTIALLY ZERO. IF IT IS A
ONE-TIME PLUG OF MONEY FROM THE
GENERAL FUND OF $73 MILLION IN
2025, YOU STILL HAVE 76 OR ODD
NUMBER OF MILLION DOLLARS FOR
2026. IT'S A MATTER OF ONE-TIME
SOLUTION OR ONGOING.
>> ESSENTIALLY AN ANNUAL ROUGHLY
$75 MILLION SHORT FILM FORT--
SHORTFALL. IF YOU FIND
STRUCTURAL SOLUTIONS TO
ELIMINATE THE $75 MILLION
SHORTFALL THOSE SAME STRUCTURAL
SOLUTIONS WOULD SOLVE THAT
PROBLEM AND YOU COULD DO ALL OF
THIS. EACH YEAR YOU ARE $75
MILLION OFF TO FIND A PERMANENT
SOLUTION. YOU'RE GOING TO HAVE
TO FIND ANOTHER TEMPORARY
SOLUTION.
>> THIS IS HOW WE GOT INTO A
BUDGET THAT DOES NOT HAVE
STRUCTURAL SUSTAINABILITY.
BECAUSE WE SPENT ONE-TIME FUNDS
TO RESOURCE ONGOING PROBLEMS. I
SAID THAT THE BUDGET REFORM
PROCESS WAS NOT GOING TO BE A
ONE YEAR PROCESS. THE APRIL
FORECAST MEDEVACING WORSE. BACK
TO YOU.
>> WE HAVE MADE SOME PROGRESS ON
THAT PROBLEM AND THEN IT GOT
WORSE. CHALLENGES HAVE BEEN
RENEWED.
>> THIS PROJECTS THAT CHALLENGE
INTO THE FUTURE. IT IS THE SAME
STORY IN TERMS OF THE STRUCTURAL
OPERATING. ABOUT $85 MILLION
AVERAGE DEFICIT IN THE FUTURE.
AND SIMILAR TO THE DISCUSSION ON
THE LAST SLIDE. IF THERE IS A
STRUCTURAL CHANGE TO 2025 THAT
OCCURS, THAT HELPS. IN RISKY 26,
'27 AND '28. AS TO WHAT THE
IMPACT OF LONGER-TERM ARE.
>> THIS IS A NEW PROBLEM. THERE
WOULDN'T REALLY HAVE BEEN A
SIGNIFICANT GAP. BUT IT IS A
STRUCTURAL CHANGE IN REVENUES.
WE HAVE A GAP IN THE GENERAL
FUND AND WE NOW HAVE SIMILAR
GAPS, SMALLER BUT SIMILAR GAP ON
THE JUMPSTART SIDE.
>> SO NOW I'M GOING TO COMBINE
THE TWO. THE FIRST SIDE DENOTED
THE COMPATIBILITY OF THE GF AND
ASF. TO SHOW THE BALANCING
SITUATION FOR '25 AND '26.
ESSENTIALLY '25 WOULD REMAIN
BALANCED, HOWEVER 2026 WOULD BE
$150 MILLION OUT OF BALANCE.
THAT IS ESSENTIALLY THE
CHALLENGE AS OF NOW WITHOUT
ADDING ANY OTHER.
>> SINCE WE DEVELOPED THIS
PROPOSAL WE GOT THIS
COMMUNICATION AND EXECUTIVES
PROVIDED COMMUNICATION ABOUT THE
STEPS IT IS TAKING INITIALLY TO
TRY TO START ADDRESSING THE
ISSUE. IT IS ALL A 2026 PROBLEM,
$150 MILLION IN 2026. IF WE
START TO TAKE ON THIS PROBLEM IN
2025, WE REDUCE THE CHALLENGE
FOR 2026. WE WANT TO GET ON THIS
SOONER THAN LATER. SO WITH THAT,
THE EXECUTIVE PROVIDED DIRECTION
TO THE DEPARTMENTS ON FRIDAY
GIVING THEM TARGETS TO UNDER
SPEND THE GENERAL FUND AND
PAYROLL EXPENSE TAX THIS YEAR.
SO THEY ARE GOING TO BE BRINGING
PLANS BACK TO THE EXECUTIVE IN A
COUPLE WEEKS FROM NOW. I KNOW
TALK TO YOU ABOUT INDIVIDUALLY
BUT FOR EVERYBODY'S SAKE UNLIKE
THE FEDERAL SYSTEM OR HOW WE
THOUGHT THE FEDERAL SYSTEM
WORKED, THE MAYOR CAN CHOOSE TO
UNDERSPEND APPROPRIATIONS.
SIMILAR THAT THE EXECUTIVE HAS.
SO THOSE ARE DECISIONS THEY CAN
MAKE DO NOT FUND THIS. BUT IT IS
GOING TO HAPPEN IN 2025. SO THEY
HAVE HAD A HIRING FREEZE IN
PLACE AS FAR AS AN EXCEPTION
PROCESS THAT WILL REMAIN IN
PLACE AND CONTINUE. THEY ARE
FREEZING DISCRETIONARY SPENDING
FROM THE GENERAL FUND ON TRAVEL
TRAINING AND NONESSENTIAL
EQUIPMENT. THINGS THAT ARE
NECESSARY. SO NEW CONSULTANT
CONTRACTS AND NEW GRANTS ARE
ALSO SUBJECT TO REVIEW. SO TO
THE EXTENT THAT THERE WERE
DOLLARS IN THE BUDGET TO
CITIZENS GROUPS OR OTHERS, THOSE
ARE UNDER REVIEW TO DETERMINE
WHETHER OR NOT THERE IS
SUFFICIENT RESOURCES TO ASSIST
BLAINE-- SUSTAIN THEM. ESTABLISH
FUNDING FOR NEW PROJECTS AND NEW
PROGRAMS. THOSE HAVE NOT BEEN
INITIATED. THE EXECUTIVE IS
GOING TO REVIEW THOSE AS WELL.
THE THEORY THAT WE SHOULDN'T BE
STARTING SOMETHING NEW IF WE ARE
NOT SURE WE CAN SUSTAIN IT.
WORKING TO DETERMINE WHICH OF
THOSE THEY SEE AS PRIORITIES TO
SUSTAIN GIVEN THE RESOURCES THAT
WE HAVE. THAT IS AN ONGOING
PROCESS ON THEIR PART AND MORE
TO COME. BUT WORKING HARD TO
ADDRESS AND REDUCE SPENDING IN
'25 TO PROVIDE MORE OPTIONS TO
'26.
>> I'M GOING TO NOW TAKE THIS
TO THE GF AND JSF ACCOMMODATION
INTO THE FUTURE. BASICALLY JUST
ADDING THE DEFICITS TO THE
FUNDS. YOU GET $233 MILLION
ONGOING AVERAGE DEFICIT. THE
EMERGING BALANCE CONSIDERATIONS
THAT ARE OUT OF THE STATE
LEGISLATURE. AND SOMETHING FROM
COUNSEL BUDGET AND FINALIZING
PHYSICAL RESERVES. RECENTLY
PASSED STATE LEGISLATION. SO A
SUBSTITUTE HEALTH BILL 2015
AUTHORIZES A 0.1% SALES TAX FOR
PUBLIC SAFETY PURPOSES. THE
LATEST ESTIMATE FROM THE
FORECAST IS THAT THAT BILL IF
AUTHORIZED IN SEATTLE COULD
GENERATE $37 MILLION. SO THIS IS
NEW AUTHORITY FOR THE CITY .
SOMETHING TO NOTE GIVEN RESOURCE
CHALLENGES. ANOTHER BILL IS
SUBSTITUTE SENATE BILL 5814
WHICH ADDS SERVICES LARGELY TECH
TYPE SERVICES TO THE SALES TAX
BASE. THERE IS $116 MILLION OF
LOCAL REVENUE IN TACT IN 2026
AND ANOTHER 208 MILLION IN 2027.
THE FORECAST OFFICE IS LOOKING
AT THE SOURCE DATA BEHIND THOSE
ESTIMATES TO DETERMINE HOW MUCH
OF THAT IS DUE TO SEATTLE. BUT
GIVEN THE SIZE, IT IS PROBABLY
REASONABLE CONSIDERATION THAT WE
WILL GET A FAIRLY LARGE CHUNK OF
THAT ADDITIONAL REVENUE FROM
THAT. AS I ALSO NOTED, THERE
WERE SOME CHANGES IN SOME
PROPOSALS THAT WERE ADOPTED BY
COUNCIL LAST YEAR. STATEMENTS OF
LEGISLATIVE INTENT THAT REQUEST
INFORMATION THAT CAN BE
BENEFICIAL WHEN DEALING WITH A
BUDGET CHALLENGE. THE REQUEST
THAT COLLABORATE WITH THE
SEATTLE DEPARTMENT OF HUMAN
RESOURCES TO REPORT ON
DEVELOPING AND ENHANCING
PROGRAMS FOR CITY EMPLOYEES
SUBJECT TO LAYOFF. THERE IS A
SLIDE THAT REQUESTS CBO REPORT
ON PAST BUDGET UNDERSPENDS AND
DEVELOP A GRANT DATABASE TO
EXTERNAL PROVIDERS. AND A
REQUEST THAT CBO AND THE CITY
EMPLOYEE RETIREMENT SYSTEM STAFF
ANALYZE AN EARLY RETIREMENT
SYSTEM, EARLY RETIREMENT
INCENTIVE FOR CITY EMPLOYEES.
AND FINALLY, I PUT TOGETHER SOME
INFORMATION ON THE STATUS OF
PHYSICAL RESERVES. IT'S ALWAYS
GOOD TO KNOW HOW MUCH IS IN
RESERVES BUT PARTICULARLY WHEN
FACING A BUDGET CHALLENGE. WE
HAVE TWO TYPES OF RESERVES. WE
HAVE THE REVENUE STABILIZATION
FUND WHICH IS AVAILABLE TO
BACKFILL UNEXPECTED REVENUE
LOSSES. IT IS FUNDED EACH YEAR
BY A CONTRIBUTION OF THE GENERAL
FUND EQUAL TO HALF A PERCENT OF
GENERAL FUND TAX REVENUES. THE
TOTAL BALANCE IN THAT FUND CAN
EXCEED 5% OF THOSE EXTRA
REVENUES. ANOTHER FUNDING SOURCE
THAT IS INTIMATE IS--
INTERMITTENT IS 50% OF ANY
BALANCES CAN BE DEDICATED TO THE
FUND. SO YOU TOP OFF THE
BALANCE. I WILL SHOW YOU HOW
THIS LOOKS IN TERMS OF FUNDING.
BUT THERE IS ALSO THE EMERGENCY
FUND WHICH IS AVAILABLE FOR
UNANTICIPATED NEEDS. ANYTHING
THAT WAS NOT ENVISIONED WHEN THE
BUDGET WAS ADOPTED. THE
EXPENDITURES FROM THAT ARE
SUBJECT TO A THREE QUARTER VOTE
OF CITY COUNCIL TO USE THE MONEY
FROM THOSE FUNDS. SO THE
EMERGENCY FUND IS FUNDED BY
ANNUAL CONTRIBUTIONS AND THE
STIPULATION THAT THE BALANCE
DOES NOT EXCEED $60 MILLION IN
2016 DOLLARS. INCREASED ANNUALLY
BY. ONE POLICY CHANGE MADE
DURING THE COVID PANDEMIC GIVEN
THAT THERE WAS SUBSTANTIAL USE
OF THE FUND WAS AUTHORIZED TO DO
A PAYMENT PLAN TO RE-PRAY--
REPAY IT GRADUALLY. SO THE
POLICY CHANGE PROVIDES IN
RESOLUTION 32024 PROVIDES FOR A
SLOWER REPAYMENT. I WILL SHOW
YOU IN THE GRAPH THAT WE DID
JUST THAT.
>> BEFORE WE MOVE ON TO THAT, WE
ALSO HAVE A JUMPSTART RESERVE
FUND. IS THAT CORRECT?
>> THERE IS A PROVISION AND
POLICY THAT WE HAVE A JUMPSTART
RESERVE FUND. SIMILAR IN NATURE
TO THE REVENUE STABILIZATION
FUND. IN THE CURRENT BUDGET IS
ZERO BALANCE. BUT IT IS UNDER
THE SAME REPLENISHMENT AS THE
EMERGENCY FUND. SO KIND OF A
MIXTURE OF THE TWO IN TERMS OF
POLICY. BUT THAT IS CORRECT.
THERE IS A RESERVE WITHIN THE
JUMPSTART FUND FOR SIMILAR
PURPOSES.
>> AND THIS WAS ONLY CREATED
LAST YEAR FOR THE FIRST TIME BY
THE EXECUTIVE. THEY PUT MONEY IN
THE JUMPSTART RESERVE FUND.
COUNSEL USED SOME OF IT TO
PROVIDE FOR THINGS LIKE FOOD
BANKS AND ET CETERA. IN MY
PACKAGE WE DID HAVE MONEY LEFT
IN THE JUMPSTART RESERVE. AND
THROUGH THE COUNSEL BUDGET
AMENITY PROCESS WE USED THE
REMAINDER OF THAT FUNDING ON
RENTAL SYSTEMS. JUST FOR
CONTEXT. A COUPLE QUESTIONS
ABOUT THE REVENUE STABILIZATION
AND EMERGENCY FUND. THESE ARE
FULLY FUNDED AT THIS TIME. IS
THAT CORRECT?
>> YES.
>> THAT'S THE GOOD NEWS. LET'S
GET INTO HOW THESE ARE USED A
LITTLE MORE. THE REVENUE
STABILIZATION FUND IN THE
SITUATION WE ARE IN RIGHT NOW
WITH THE REVENUE FORECAST BEING
CHANGED AND EXTREME. THAT IS AN
INDICATOR FOR US TO, I AM NOT
SUGGESTING WE USE THIS MONEY, I
AM IN FACT SUGGESTING THAT WE
LEAVE THIS MONEY IN THESE
RESERVE FUNDS BUT I JUST WANT TO
TEASE INTO THIS. THE REVENUE
DOWNGRADE MIDSTREAM IS WHAT
GIVES US THE ABILITY TO USE THE
REVENUE STABILIZATION. IS THAT
CORRECT? ARE THERE ANY OTHER
SITUATIONS WHERE IT CAN BE USED?
>> BY POLICY IT IS UNEXPECTED
REVENUE LOSSES SUCH AS THE APRIL
FORECAST.
>> FOR THE EMERGENCY FUND, IT'S
NOT AN EARTHQUAKE FUND BECAUSE
THOSE ARE BILLIONS OF DOLLARS.
THIS IS MORE LIKE A WEST SEATTLE
BRIDGE FUND. AN EMERGENCY THAT
WAS UNFORESEEN THAT IS LIKELY
ONE TIME OR SHORT DURATION OF
TIME. RATHER THAN A LONG-TERM
CHANGE IN THE ECONOMY. IS THAT A
CORRECT UNDERSTANDING?
>> YEAH.
>> WE BUILD A BUDGET WITH A SET
OF EXPECTED EXPENDITURES AND
SOMETHING UNUSUAL HAPPENS. WE
CAN HAVE AS MUCH AS 60 MILLION.
I USED TO THINK OF IT AS THE
EARTHQUAKE FUND BUT 60 MILLION
WOULD GET YOU FAR IN EARTHQUAKE
RESTORATION. BUT A MAJOR PIECE
OF TRAFFIC INFRASTRUCTURE OR
SOMETHING FAILING, A BIG ENOUGH
WEATHER EVENT THAT COULD CAUSE
DAMAGE TO ASSETS.
>> OR SUBSET OF NEW EXPENDITURE
NEEDS BECAUSE OF SOCIAL OR
POLITICAL.
>> AN EMERGENCY COULD BE THE
ECONOMIC INSTABILITY BE SOUGHT
IN THE FORECAST THAT IS MORE OF
AN EMERGENCY. IT COULD BE
CHARACTERIZED AS AN EMERGENCY.
>> JUST TO CLARIFY, I WOULD INK
THE EMERGENCY FUND IS SPENDING
ON SOMETHING YOU DIDN'T EXPECT
TO BE SPENDING MONEY ON RATHER
THAN THIS WAS SOMETHING WE KNEW
WE WOULD WANT TO SPEND MONEY ON.
IT IS AN EVENT THAT HAPPENS THAT
YOU WANT WEREN'T EXPENDING.
WHETHER OR NOT A SIGNIFICANT
REDUCTION IN FEDERAL FUNDING IN
CERTAIN AREAS CONSTITUTES AN
EMERGENCY I THINK IS UP TO YOUR
INTERPRETATION. THAT IS NOTHING
WE ARE GOING TO SPEND MONEY ON
BUT THE FEDS ARE PROVIDING MONEY
TO SUPPORT SERVICES THAT WE ARE
ASSUMING ARE GOING TO BE THERE
AND ARE POTENTIALLY NOT GOING TO
BE THERE. DOES THAT CONSTITUTE
THIS KIND OF EMERGENCY INDEX? WE
WOULD BE STEPPING INTO SPEND ON
SOMETHING WE WEREN'T PLANNING
TO SPEND ON BUT NOT A NATURAL
DISASTER. I THINK THERE IS
GREATNESS ABOUT THAT.
>> WE GOT A COUPLE MORE SLIDES.
AND THEN VICE CHAIR RIVERA IS
BEFORE YOU IN LINE.
>> YOU TOLD US TO HOLD OUR
QUESTIONS. YOU HAVE BEEN ASKING
QUESTIONS AND CLARIFICATIONS.
>> IT DID. AS I SAID AT THE
BEGINNING, COUNCILMEMBER SAKA
PROVIDED FEEDBACK THAT I DIDN'T
MANAGE TIME WELL SO WE ARE
WALKING THROUGH THIS WITH
ADDITIONAL INFORMATION THAT I
HAVE HEARD IN OTHER BRIEFINGS
BUT NOT TODAY. AND WE WILL HAVE
ABOUT AN HOUR FOR ALL OTHER
QUESTIONS. SO TOM, LAST BIT ON
OUR REVENUE OPTIONS. YOU GLOSSED
OVER IT ON 16. THE SALES TAX FOR
THE BASE AS WELL AS SALES TAX
INCREASE. CAN YOU REMIND ME WHAT
SEATTLE SALES TAX IS RIGHT NOW?
10.8?
>> SORRY. DIDN'T PREP YOU FOR
THAT ONE. IT IS ALREADY HIGH AND
SALES TAX IS REGRESSIVE. THE
MOST REGRESSIVE OPTION WE HAVE.
AND THEN FOR SERVICES TO BE
ADDED TO THE SALES TAX. THIS
INCLUDES WHAT COUNCILMEMBER
MOREL IS HAD PROPOSED LAST YEAR
FOR THE DIGITAL ADS. THOSE
ALREADY CONTAINED WITHIN THIS.
>> I BELIEVE DIGITAL ADVERTISING
IS THE STATE HAS EXPANDED THE
SET OF ACTIVITIES OR GOODS THAT
THE SALES TAX APPLIES TO. OUR
SALES TAX THIS IS HAPPENING TO
OUR SALES TAX AS WELL. DIGITAL
ADVERTISING IS ON THAT LIST.
WHETHER THAT IS THE SAME SET
>> ESTATE ALSO MADE CHANGES AS
PART OF THE SALES TAX CHANGE
THAT MAY HAVE SOME EFFECT ON US
TO HIGHLIGHT THAT WE ARE WAITING
TO HEAR MORE FROM THE FORECAST
OFFICE ABOUT THAT. THE EFFECT OF
THOSE CHANGES IN STATE LAW.
>> THIS SLIDE AS PROMISED SHOWS
THE BALANCES OF THE REVENUE
STABILIZATION FUND. AND THE
BALANCES OVER THE LAST 20 YEARS.
AND ALSO IN ORANGE THE POLICY
LEVEL. THERE WAS A SIGNIFICANT
DRAWDOWN DURING THE COVID
PANDEMIC. THE GOOD NEWS WAS THAT
WAS REPLENISHED FULLY IN 2022.
BECAUSE OF SIGNIFICANT BALANCES
AT THE END OF 2021 THAT WERE NOT
OBLIGATED THAT COULD BE USED TO
REPLENISH THE FUND. SO WE HAVE
BEEN MAKING MAINTENANCE
APPROPRIATIONS TO THE REVENUE
STABILIZATION FUND SINCE 2022.
AND THE BALANCE NOW STANDS AT
$67.9 MILLION AT THE END OF
2025. THAT REFLECTS FULLY
FUNDED. THERE WERE DRAWDOWNS OF
THE EMERGENCY FUND. AND AS YOU
CAN SEE THAT GIVEN GRADUAL
REPAYMENTS IN BUDGETS SINCE THE
LAST DRAWDOWN IN 2021 THAT THE
BALANCE IS FULLY REPLENISHED AS
OF 2025.
>> THANKS TO DIRECTOR, THE SALES
TAX IS 10.35% CURRENTLY.
>> THAT CONCLUDES THE
PRESENTATION. IN THE NEXT STEPS
WITH REGARDS TO BALANCING YOU
WILL GET THE SECOND FORECAST
OFFICE REVENUE PRESENTATION IN
AUGUST AND HEAD OF THE PROPOSED
BUDGET. WE WILL RECEIVE THE
PROPOSED BUDGET IN SEPTEMBER AND
GET THE FINAL AND THIRD FORECAST
UPDATE OF THE YEAR IN OCTOBER.
WHICH WILL THEN SET THE STAGE
FOR RESOURCES AVAILABLE FOR
COUNCIL AMENDMENTS TO THE
PROPOSAL. AND WE WILL COVER HOW
THAT IMPACTS THE BALANCE AND
LONG-TERM SUSTAINABILITY OF THE
GENERAL FUND.
>> THINK YOU GENTLEMEN. I WILL
SAY HERE AND THEN PASS IT TO
VICE CHAIR RIVERA AND COUNCIL
PRESIDENT NELSON. I HAVE
REQUESTED A NUMBER OF TIMES TO
HAVE BUDGET COMMITTEES IN JUNE
OR JULY, ACHING THAT REQUEST
ORGAN-- AGAIN. THE SITUATION IS
WORSE THAN WE EXPECTED. WE HAVE
A LOT OF WORK TO DO AND BUDGET
REFORM BOTH ON PROCESS AND HOW
WE CREATE THE BUDGET AND CONTENT
WITH WHAT IS IN THE BUDGET. WITH
THAT, I LOOK FORWARD TO HAVING
THOSE MEETINGS IN JUNE AND JULY
>> THANK YOU FOR APPROVING THAT.
WE MOVE FORWARD WITH QUESTIONS
AT THIS TIME. COUNCILMEMBER
RIVERA.
>> THANK YOU CHAIR, AND THANK
YOU TOM AND DIRECTOR NOBLE FOR
BEING HERE. I HAVE A LOT OF
QUESTIONS. AND I DON'T WANT TO
TAKE UP A LOT OF TIME. SO JUST
THE JUMPSTART RESERVE IS AT ZERO
BECAUSE COUNSEL USED IT LAST
YEAR TO BACKFILL. IT DIDN'T GO
TO ANY PARTICULAR ITEM BECAUSE
THAT'S NOT HOW THESE REVENUES
GO. IT JUST GOES TO BACKFILL FOR
WHATEVER. SO IT DOESN'T GO TO
PARTICULAR ITEMS. I WANTED TO
STATE THAT FOR THE RECORD. ALSO
DO YOU REMEMBER WHAT REVENUE
JUMPSTART RESERVE BALANCE WAS
THAT WE USED?
>> APPROXIMATELY $40 MILLION.
>> IT WAS CLOSER TO 35. IT WAS
GOING TO BE 40 AT THE END OF '25
BUT MORE LIKE 35 END OF '26.
>> WE USED THE FULL 35 TO
BACKFILL FOR THE BUDGET. I WILL
STATE FOR THE RECORD THAT I
VOTED NOT TO USE THE RESERVES
BECAUSE WE HAD GOTTEN A REVENUE
FORECAST LAST YEAR THAT SHOWED
HOW VOLATILE THE JUMPSTART FUND
WAS. BECAUSE IT IS PART OF THIS
PICTURE. AND THEN I WANT TO SAY
I KNOW WE HAVE SOME SLIDES OUT
AND THANK YOU FOR REVIEWING
THOSE BECAUSE I WOULD BE
INTERESTED IN STILL KNOWING
BECAUSE WE STILL DON'T KNOW
WHAT PERCENT OF UNENCUMBERED
UNDERSPEND WE HAVE. HOW MUCH
CARRYFORWARD WE HAVE EVERY YEAR.
JUST ON AVERAGE. AND THEN TO
THIS PARTICULAR UNDERSPEND THAT
WE ARE LOOKING AT NOW , WHAT
PROGRAMS ARE BEING FUNDED BY
THAT UNDERSPEND ? BECAUSE IT IS
IMPORTANT TO THIS CONVERSATION I
BELIEVE. AND I DON'T THINK YOU
HAVE THAT, TOM. SO IT'S FINE. I
JUST WANT TO SAY THAT IT'S
IMPORTANT TO LOOK AT THAT AND I
LOOK FORWARD TO CHATTING WITH
YOU TO GET THAT INFORMATION.
>> WE ARE EXPECTING A RESPONSE
FROM CBO JULY ON PAST
UNDERSPENDS SO THAT WILL HELP
INFORM SOME OF THESE QUESTIONS.
>> TOM, I KNOW THERE WAS A
SIGNIFICANT UNDERSPEND AND WE
NEED TO KNOW WHAT THESE THINGS
ARE. THAT ARE NOT MOVING FORWARD
NOW OR WHY SUCH HIGH UNDERSPEND
CARRYFORWARD. AND THE LIST OF
ITEMS WOULD BE IMPORTANT. AND
THEN AS OF TODAY THIS IS THE
BALANCE. YOU ACTUALLY ANSWERED
ONE OF MY QUESTIONS BUT I WILL
JUST NOTE IT BECAUSE I THINK
IT'S IMPORTANT. ALL OF THIS CAN
CHANGE WITH THE SECOND FORECAST
IN AUGUST. GIVEN WHAT IS
HAPPENING. AND THEN IN TERMS OF
THE RESERVES, WE HAVE RESERVE
FOR THINGS LIKE A GLOBAL
PANDEMIC FOR INSTANCE. AND SO IT
IS IMPORTANT THAT WHILE
ATTEMPTING TO UTILIZE THE
RESERVES FOR THINGS TODAY, THERE
IS ALWAYS TO KEEP IN MIND THAT
WE ARE EXPECTING THE BIG ONE AS
THEY CALL IT. A BIG EARTHQUAKE
AND IF THAT SHOULD HAPPEN, THERE
IS NOWHERE TO PULL MONEY FROM IF
WE DON'T PRESERVE A RESERVE. SO
I DO WANT TO NOTE THAT. UNLESS
YOU ARE AWARE OF SOMETHING I'M
NOT.
>> THEN I HAVE OTHER QUESTIONS
BUT OUT OF RESPECT FOR OTHER
COMMITTEE MEMBERS I WILL MEET
WITH TOM OFF-LINE. THANK YOU.
>> WE CAN ALSO COME BACK TO YOU
AS WELL.
>> COUNCIL PRESIDENT.
>> THINK YOU FOR BE
CLEAR ABOUT HOW WE GOT HERE IN
2025. SO WE STARTED THE MAYOR
PROPOSED BUDGET LAST FALL. HAD
ABOUT 100 MILLION IN JUMP START
REVENUE FOR GENERAL FUND
PURPOSES. IS THAT CORRECT?
>> COUNCIL PRESIDENT, THANK YOU
FOR THE QUESTION. I BELIEVE THE
TOTAL USE OF JUMPSTART WAS ABOUT
$280 MILLION.
>> WAS THAT IN THE PROPOSED
BUDGET? OKAY. AND THEN MY
RECOLLECTION WAS THERE WAS ABOUT
49 MILLION EXTRA JUMPSTART FUNDS
THAT WAS SORT OF JUST SITTING
THERE THAT WAS LOOKING LIKE THE
REVENUE STABILIZATION FOR
JUMPSTART BUT HADN'T BEEN PUT
IN A BOX.
>> WE HAD A FINANCIAL PLAN FROM
THE BUDGET OFFICE. THAT SHOWED
UNSPENT RESERVE JUMPSTART FUNDS
AROUND $40 MILLION IN 2025 AND
IT DECLINED $35 MILLION IN 2026.
>> AND THEN THE COUNCIL WENT
AHEAD AND SPENT, THIS IS ONE OF
THE THINGS I WAS UPSET ABOUT, WE
SPENT A LOT OF THAT DOWN LEAVING
ABOUT FIVE OR SIX OR 3 MILLION.
IT WAS IN THE SINGLE DIGITS. 30
MILLION WAS ADDED TO THE 2025
DEFICIT. 2027 DEFICIT I BELIEVE.
DO YOU UNDERSTAND WHERE MOST OF
THE ADDITIONAL 89 MILLION IS?
>> TO CLARIFY, ARE WE REFERRING
TO THE PROJECTED JUMP START FUND
DEFICIT IN '27 AND '28?
>> YES.
>> THE JUMPSTART FUND WAS
BALANCED TO ZERO. SO THAT DID
NOT LEAVE ANY EXCESS IN TERMS OF
RESERVE.
>> WHAT YOU SAY AT THE BOTTOM.
>> RIGHT. SO WHAT HAPPENED.
>> THAT LOOKS LIKE GENERAL FUND.
>> THE GENERAL FUND WAS
ESSENTIALLY A MATTER OF ONGOING
SPENDING. THE ADDITIONAL USAGE
OF 40 MILLION OR $35 MILLION IN
THE JUMPSTART FUND DIDN'T
IMPACT THE GENERAL FUND. THAT
WAS USING THAT ONE TIME RESOURCE
FOR JUMPSTART FUND PURPOSES. TO
GO A BIT DEEPER INTO SOME
BALANCING THAT HAPPENED POST THE
MAYOR PROPOSED BUDGET, THIS IS
THE OCTOBER FORECAST. WE
ACTUALLY RECEIVED AN UPGRADE IN
THE JUMPSTART FUND FORECAST AND
A DOWNGRADE IN THE GENERAL FUND
FORECAST. INCREASED THE SUPPORT
FROM THE JUMPSTART TO THE
GENERAL FUND. AND THEN
DOWNGRADED GENERAL FUND REVENUES
THAT WERE AVAILABLE. AND SO THE
END RESULT OF ALL OF THOSE
CHANGES ENDED WITH THE $89
MILLION PROJECTED DEFICIT.
>> THAT MAKE SENSE. THANK YOU
FOR THAT. THE REASON I'M ASKING
IS BECAUSE IT'S DIFFICULT FOR
ME TO UNDERSTAND WHERE SOME OF
THOSE NUMBERS THAT YOU PUT
TOGETHER, OUR NUMBERS SHOP USES
CERTAIN ASSUMPTIONS. AND
THROUGHOUT THIS PRESENTATION WE
HAVE USED THE WORD UNDERSPEND
QUITE A BIT. IN THAT SLIDE THAT
YOU ARE REFERRING TO IS THIS
WOULD REQUEST THAT THE CITY
BUDGET OFFICE PROVIDE A REPORT
ON HISTORICAL UNDERSPEND THROUGH
2018 THROUGH 2023 ORGANIZED BY
DEPARTMENT. THE REPORT SHOULD
ANALYZE AND IDENTIFY THE REASONS
FOR THE UNDERSPEND AND WHAT
APPROPRIATE INFORMS AND PROCESS
IMPROVEMENTS TO EXPEND MORE
EXPEDITIOUSLY. WITH THAT I WAS
LOOKING AT THE OFFICE OF HOUSING
WHERE THERE IS A $.5 BILLION,
ALMOST HALF 1 BILLION
UNDERSPEND. MORE LIKE 480. BUT
JUST SITTING IN RESERVES BECAUSE
THOSE PROJECTS TAKE A REALLY
LONG TIME TO GET OUT THE DOOR.
THE FACT THAT THERE IS THE
INDUSTRY STANDARD IF YOU WANT TO
TALK ABOUT MUNICIPALITIES AROUND
5% UNDERSPEND. SEATTLE HAS BEEN
CONSISTENTLY ABOVE THAT OF
UNDERSPEND IN THE RECENT PAST.
AND WHEN WE ARE ABLE TO PULL A
RABBIT OUT OF THE HAT BY
REDUCING A DEFICIT BY THE
MILLIONS OF DOLLARS BECAUSE OF
UNDERSTAND THAT MEANS THE
EXECUTIVE DEPARTMENTS ARE ASKING
FOR MORE THAN THEY NEED AND
BANKING ON HAVING THAT MONEY TO
LAY AROUND OR WE ARE GIVING THE
PROPER AMOUNT OF MONEY BUT THAT
WORK IS NOT GETTING DONE. SO
LIKE PROJECTED
UNDERSPEND ? THE NUMBER SHOULD
BE ZERO AT THE END OF THE YEAR.
AND SO UNENCUMBERED UNDERSPEND
IS ALSO THAT MAKES ME QUESTION
WHY WOULD SOMETHING BE
UNENCUMBERED? WE SAY WE ARE
GOING TO PAY FOR THINGS AND THEN
IF WE DECIDE NOT TO THAT IS A
POLICY CHOICE. BUT THAT SHOULD
ALSO THE COUNCIL NEEDS TO BE
PARTICIPATING. WE ARE SUPPOSED
TO BE APPROPRIATING MONEY AND IT
SEEMS AS THOUGH IT'S HARD TO
GET CONCERNED ABOUT A FUTURE
DEFICIT NUMBER IN OUT YEARS OR
EMERGENCIES. I DON'T LIKE TO
HAVE ANY BIG NUMBERS IN THE OUT
YEARS. BUT IT IS REALLY
IMPORTANT FOR US TO UNDERSTAND
THE ASSUMPTIONS ON BOTH SIDES.
WHEN WE ARE GOING INTO A BUDGET
PROCESS. AND IF THERE ARE HARD
TIMES THAT FORCED THAT
CONVERSATION THAT'S GOOD. BUT I
THINK THIS DOES ERODE PUBLIC
TRUST WHEN WE END UP ABLE TO
FIND MONEY THAT WASN'T THERE
AND THEN BALANCE OUR BUDGET OR
GET CLOSER TO WHAT BALANCING
LOOKS LIKE. OR WITH THE LAST
FORECAST. AM I WRONG IN ALL
THAT? IN MY UNDERSTANDING?
>> FROM A FINANCIAL PLANNING
PERSPECTIVE YOU RAISE SOME VERY
GOOD POINTS. THERE IS THE
ASSUMPTIONS THAT ARE MADE AND
THE ENTIRE BUDGET IS BASED ON A
SET OF ASSUMPTIONS. THAT WE HAVE
ALL THE DEPARTMENT FINANCE
MANAGERS AND DEPARTMENT HEADS
CONCERNED WITH NOT EXCEEDING THE
BUDGET. YOU DON'T WANT TO
OVERSPEND YOUR BUDGET. BUT IT'S
REALLY A BALANCING ACT OF NOT
EXCEEDING THE BUDGET AND MEETING
THE OBLIGATIONS AND SPENDING THE
MONEY THAT YOU HAVE. SO YOU
RARELY ARE GOING TO GET 0%
COUNCIL UNDERSPEND. HE WILL HAVE
THINGS THAT DON'T GET COMPLETE
IN THE YEAR THAT NEED TO BE
COMPLETED NEXT YEAR. IT'S GOING
TO DIFFER BY THE HIRING CADENCES
AT THE DEPARTMENTS AND THINGS
LIKE THAT. WHAT IS USEFUL FROM A
FINANCIAL PLANNING PERSPECTIVE
IS TO DO THE WORK OF LOOKING AT
THE PAST UNDERSPEND AND SEEING
IF THERE IS ANYTHING STRUCTURAL
THAT YOU CAN THEN USE TO CHANGE
APPROPRIATIONS FOR THE FUTURE SO
THAT THEY ARE MORE ACCURATE
REPRESENT WHAT YOU ARE PLANNING
TO SPEND. I'VE NEVER SEEN IT BE
PERFECTLY ZERO. WHEN YOU ARE
CAUTIOUS AND TRYING TO NOT
OVERSPEND YOUR BUDGET YOU ARE
IMPLICITLY GOING TO HAVE SOME
LEVEL OF UNDERSPEND. AND WITH
REGARDS TO LOOKING AT THE
FUTURE, THE FUTURE IS GOING TO
BE WRONG. WE ARE MAKING
PROJECTIONS. IT'S AN ORDER OF
MAGNITUDE EXERCISE. IN PAST
PRESENTATIONS, THE KEY IS
BALANCING THE CURRENT BUDGET.
THAT IS WHAT THE STATE BUDGET
ACT REQUIRES. THE SUSTAINABILITY
IS MORE OF AS DECISIONS ARE
BEING MADE THIS YEAR. GIVEN
ASSUMPTIONS THAT WE CAN MAKE
TRANSPARENT THIS IS HOW THE
FUTURE LOOKS. YOU CAN WEIGH THAT
WITH THE UNDERSTANDING THAT
IT'S NOT GOING TO BE A PERFECT
ESTIMATE. BUT IT WILL BE A
GENERAL INDICATOR OF WHETHER OR
NOT YOU ARE IN GOOD SHAPE OR
LESS GOOD SHAPE STRUCTURALLY. SO
HOPEFULLY THAT HELPS. IT IS NOT
A SCIENCE. IT'S VERY MUCH ART.
BUT UNDERSPEND IS A NORMAL
THING. WHETHER OR NOT IT IS TOO
MUCH OR TOO LITTLE IS A POLICY
ASSESSMENT.
>> IF IT'S AN ART, I BELONG TO
THAT SCHOOL OF ART. I WOULD MUCH
RATHER UNDERSPEND AND I WOULD
RATHER BE CONSERVATIVE AND END
UP HAVING EXTRA MONEY INSTEAD OF
A DEFICIT. SO THAT IS THE BEST
APPROACH.
>> AS TOM DESCRIBED, EVERY
DEPARTMENT WILL UNDERSTAND BY A
LITTLE BIT EVERY YEAR. WE SET UP
THE SYSTEM COME IF THEY GO OVER
IT'S AN EXCEPTION. YOU WILL
HAVE AN EXCEPTIONS ORDINANCE AT
SOME POINT TO ACKNOWLEDGE. SO
THE SYSTEMS ARE BUILT . FROM
STAFF PERSPECTIVE WE SUGGESTED
YOU SHOULD BE COMFORTABLE. THERE
IS THE ASSUMPTION THAT IT WOULD
BE $20 MILLION OF GENERAL FUND
UNDERSPEND. WE WEREN'T WORRIED
FROM YOUR PERSPECTIVE THAT THAT
WOULD AFFECT THE PROGRAMS AND
SERVICES THAT YOU EXPECTED TO
RECEIVE. JUST UNDERSPEND. AND
THERE ARE OTHER THINGS FOR GOOD
REASONS, PROJECTS OR PROGRAMS
THAT YOU AND/OR THE MAYOR WANTED
TO GET OFF THE GROUND AND YOU
DON'T. SO SOME INDEPENDENT
ENTITY FUNDED AND GET IT GOING
AND THE CONTRACT DOESN'T GET
SIGNED BY THE END OF THE YEAR.
FOR WHATEVER CIRCUMSTANCES. AND
EVERYBODY WANTS THAT TO BE
FUNDED, AND SO THAT'S GOING TO
BE A UNDERSPEND AND THEY'RE
GOING TO SAY WE DIDN'T GET THE
CONTRACT SIGNED, BUT WE WANTED
THIS. AND UNDERSTANDING WHICH
BUCKET WE ARE IN. IN THE BUDGET
OFFICE, IT TENDS NOT TO BE
CONSISTENT. BUT UNDERSTANDING
WHO AND HOW COULD IN FACT BE
HELPFUL. I DON'T THINK IT'S A
PENNY SHUT-- PANACEA. WE HAVE
BEEN VERY CALM IN THIS. WE ARE
FACING A VERY SIGNIFICANT BUDGET
PROBLEM. I DON'T WANT YOU TO
LEAVE WITHOUT THE SENSE OF THAT.
HAVING BEEN BUDGET DIRECTOR I
WOULD NOT WANT TO BE LOOKING AT
THIS PROBLEM AT ALL. THE LEVEL
OF REDUCTIONS WILL AFFECT
SERVICES AND IN THE CONTEXT OF
WHAT IS HAPPENING ON THE FEDERAL
SIDE IT'S GOING TO BE EVEN MORE
COMP LOCATED. THIS IS A VERY
REAL CHALLENGE. THAT DOES NOT
DESCRIBE HOW IT SHOULD BE MET
THAT I DON'T WANT
MISUNDERSTANDING ABOUT THAT.
IT'S A BILLION-DOLLAR BUDGET
BUT THE SERVICES WE PROVIDE AND
INEVITABLY HAVE FOLKS RELYING
UPON THEM AND COUNTING ON THEM
IN ONE WAY OR ANOTHER. TO CONVEY
THAT SENSE OF REAL CONCERN ABOUT
WHERE WE SIT.
>> ANYTHING FURTHER? THANK YOU.
COUNCILMEMBER CATTLE.
>> THANK YOU, CHAIR STRAUSS AND
MR. MIKESELL FOR BEING HERE
TODAY. IT'S AN INTERESTING
DYNAMIC TO WALK THROUGH THESE
PIECES AND THERE'S A LOT OF
VARIOUS PIECES AT PLAY. AND A
LOT OF PRESSURES FROM DIFFERENT
ANGLES. AND I THINK IT'S
IMPORTANT THIS IS WHERE HAVING A
NORTHSTAR REALLY COMES INTO
PLAY. I JUST WANT TO START FIRST
BY SUPPORTING CHAIR STRAUSS. I
THINK THIS IS REALLY SOMETHING
WE SHOULD BE DOING STRUCTURAL
FIXES. I BELIEVE WE SHOULD BE
LOOKING FOR STRUCTURAL FIXES.
EVEN IF WE ARE ENTERING TERM
LIMIT TIMES. I THINK WE REALLY
NEED TO DO THIS NOW BECAUSE
THERE WILL ALWAYS BE TURBULENT
TIMES. OTHER AREAS LIKE
INFRASTRUCTURE AND PREVIOUS
COUNCILS. I AM TALKING LIKE A
DECADE. WE ARE DOING
INFRASTRUCTURE WORK THAT THEY
NEEDED TO DO. AND GUESS WHAT? IT
IS LETTING OUR LAPSE RIGHT NOW.
THAT'S BECAUSE WE DIDN'T TAKE
ACTION BEFORE. WE DIDN'T TAKE
THAT STRUCTURAL REFORM PIECE.
AND WE SHOULDN'T HAVE A BUDGET
VERSION OF THAT HITTING US IN
THE NEAR TERM, MIDDLE OR
LONG-TERM. SO I BELIEVE THAT WE
SHOULD TAKE THOSE KINDS OF
ACTIONS. TWO ENSURE WE ARE IN
GOOD STEAD LONG-TERM. AND
UNDERSTANDING THAT WE ARE IN
TURBULENT TIMES. I RECOGNIZE
THAT FORD MOTOR COMPANY HAS JUST
HALTED ITS FINANCIAL GUIDANCE
RELEASE BECAUSE OF THE
VOLATILITY OF GLOBAL TRADE
POLICIES. WHICH ARE DUE TO THE
ADMINISTRATION. THE
ADMINISTRATION IS GOING TO BE
HITTING IN DIFFERENT AREAS. PUT
PRESSURES ON WHAT WE ARE DOING
EFFECTIVELY. AND I THINK WE
SHOULD PRESS FORWARD ON THESE
STRUCTURAL FIXES AND ANOTHER
NORTHSTAR FOR ME AND SOMETHING
THAT CAME UP LAST YEAR IS
ENSURING THAT THE REVENUE
STABILIZATION FUND IS WHERE THEY
ARE. BECAUSE TO YOUR POINT WE
NEVER KNOW, THE EARTHQUAKE WAS A
NAMI, ALL THESE DIFFERENT
PIECES. OR OTHER TYPE OF
DISASTERS MAY BE THERE. AND WE
NEED TO. I DO SUPPORT HAVING A
JUMPSTART RESERVE FUND FOR THAT.
SO I THINK THAT'S IMPORTANT.
ALONG THOSE LINES, I UNDERSTAND
YOUR POINT REGARDING UNDER
SPEND. GENERALLY IN THE PUBLIC
SAFETY AREA, WE ARE SPENDING.
THE UNDERSPEND THAT IC USUALLY
FALLS IN SOMETHING THAT HAS NOT
BEEN FILLED BECAUSE OF THE
MORATORIUM IN TERMS OF HIRING
FREEZE. SO I DON'T THINK WE
HAVE THAT. WE MAY HAVE ONE OF
THOSE EXCEPTIONS THAT DIRECTOR
NOBLE WAS TALKING ABOUT. AND I
THINK THAT WE SHOULD BE BEING
SMART ON THE UNDERSPEND. I AGREE
WITH COUNCIL PRESIDENT THAT
IT'S LIKE AN ENGINE. MOTOR OIL.
YOU HAVE TO HAVE THAT INTAKE.
THE QUESTION IS IS IT FLOODING
OR JUST ENOUGH TO ENSURE THE
SMOOTH MOVEMENT OF THE BUDGET
PROCESS? MY CONCERN IS WHEN IT
BECOMES TOO MUCH. BUT I THINK
WITH THE IDEA THAT WE WANT TO
GET AHEAD OF THE BUDGET
CHALLENGES. SO IF IT IS TO THAT,
I'M OKAY WITH IT. IF IT IS JUST
FOR INTERESTING UNRELATED ISSUES
THAT BECOMES AN ISSUE FOR ME IN
TERMS OF OUR OVERSIGHT AND
RESPONSIBILITIES RELATED TO
THAT. I JUST HAVE TWO QUESTIONS.
AND I RECOGNIZE THE NUMBERS AND
DIFFERENT PIECES, I RECOGNIZE
THIS IS CUSTOM AND ALL THESE
DIFFERENT FACTORS ONE POINT
QUESTION OUT OF CURIOSITY MORE
THAN ANYTHING ELSE. I'M JUST
TRYING TO UNDERSTAND HOW WE CAN
HAVE 11 MILLION IN INTEREST NOT
BUDGETED? HOW DOES THAT HAPPEN?
>> THE MOST OBVIOUS WAY THAT
THERE WAS SOME PROJECTION OF
INTEREST EARNINGS BUT THAT IT
WAS UNDER ESTIMATE BECAUSE
INTEREST RATES HAVE BEEN GOING
UP AS A PART OF ALL THAT HAS
BEEN GOING ON. SO THE MONEY WE
WERE GOING TO EARN WAS HIGHER
THAN WE THOUGHT. BUT IT ALSO
MADE OVERSIGHT AND THAT REALLY
CONSIDERING HOW MUCH THAT FUND
BALANCE WAS GOING TO CONTRIBUTE.
>> HOPEFULLY YOUR FIRST ANSWER
IS CORRECT AND NOT THE SECOND.
>> WE ARE WITH THE BUDGET OFFICE
TO GET TO THE BOTTOM OF THAT.
>> MY NEXT QUESTION IS EAGER
RICHER AND MORE STRATEGIC.
RECOGNIZING ALL THESE POINTS
THAT ARE IN THE BUDGET WE FOR
EVERY ACTION THERE IS A
REACTION. PART OF OUR REACTION
HAS BEEN PRESSING ON THINGS LIKE
SUSPENDING DESIGN REVIEW.
DEMOTING COMMERCIAL AND
RESIDENTIAL. PUBLIC SAFETY TO
INCREASE OUR BNL AND THE LIKE.
THOSE BASED PIECES OF REVENUE.
WE'VE BEEN DOING A LOT IN THESE
AREAS AND I BELIEVE THAT CLOSE
TO STRUCTURAL FUNDS. WE SHOULD
BE LOOKING TO SUPPORT THOSE
PIECES WHETHER IT IS BNO, THE
PORT AND THE LIKE TO ENSURE THAT
OUR TRADITIONAL CONTRIBUTORS
THAT HAVE BEEN THERE YEAR IN AND
YEAR OUT ARE THERE FOR US AND TO
MAKE SURE THEY ARE STRONG.
JUMPSTART AND THE OTHERS ARE
FLEXIBLE. BUT WHAT'S BEEN THE
RESULT? ALL THESE DIFFERENT
ACTIONS THE COUNCIL IS TAKING I
KNOW THERE IS A TIME DELAY BUT
SEPARATELY WE AS A CITY
SUPPORTING SOCIAL HOUSING. THAT
IS GOING TO BE ONLINE. HOW DO WE
ACCOUNT FOR THAT. WHICH HAS
DIRECT IMPACT. IN TERMS OF THE
MIX OF HOUSING. HOW DOES THAT
PLAY? HAVE YOU SEEN ANYTHING
FROM THE ACTIONS WE HAVE TAKEN
AS A COUNCIL HAVING ANY POSITIVE
OR EVEN HINT TO GET POSITIVE
IMPACTS ON OUR BUDGET?
>> IT IS VERY MUCH AN EXERCISE,
I DON'T MEAN THIS IN A TRIVIAL
WAY. WE DON'T KNOW WHAT THE
STATE OF THE LOCAL ECONOMY WOULD
HAVE BEEN IF STEPS HAVE BEEN
TAKEN TO MAKE DOWNTOWN MORE
ATTRACTIVE FOR DAILY ACTIVITY
AND IF BUSINESSES HADN'T
BROUGHT WORKERS BACK. TO
EMPHASIZE THE POINT YOU ARE
MAKING, THE CITY REVENUE COME
FROM THE ECONOMIC ACTIVITY THAT
OCCURS IN THE CITY IN ONE FORM
OR ANOTHER. WHETHER IT IS SALES
TAX, PROPERTY TAX, THOSE ALL
RELATE TO THE ECONOMIC ACTIVITY
OF THE CITY. AND ANYTHING TO
GROW THAT ACTIVITY IS ULTIMATELY
HELPING THE CITY FINANCIAL
PICTURE. AND THAT CUTS THE OTHER
WAY. WE MAY OR MAY NOT BE DOING
THAT COULD DETERMINE SOME OF
THAT AS WELL. SO BOTH OF THOSE
ON BALANCE.
>> I'LL JUST CLOSE BY SAYING
WHAT I SAID LAST YEAR. OUR FIRST
FOCUS SHOULD BE STABILIZING, TO
USE THAT TERM. OUR TRADITIONAL
FORMS OF REVENUE ENSURING THEY
ARE AS STRONG AS THEY CAN BE.
LOOKING AT WHERE WE CAN CUT. I
WILL ADMIT I AM ALSO LOOKING
MORE TO THE OH AND HST BECAUSE
OF THE OVERLAP. PUBLIC SAFETY,
PUBLIC HEALTH AND HOMELESSNESS.
SO EXTENDING INTO THAT. SO I
THINK WE SHOULD BE DOING THOSE
PIECES. OTHER OPPORTUNITIES AND
OPTIONS IN TERMS OF WORKING
THESE DEFICITS. SO THANK YOU.
>> THANK YOU COUNCILMEMBER
KETTLE . TO YOUR POINT AND
BEN'S POINT , IT IS DIFFICULT
TO SEE EACH YEAR THE INCREMENTAL
CHANGE THAT THE COUNCIL OR THE
MAYOR HAS ON THE LONG-RANGE
PICTURE OF OUR BUDGET AND THAT
IS ONE OF THE REASONS WHY WE
BEGAN WITH ONLY BECAUSE OF THE
GOOD WORK OF CENTRAL STAFF, A
FIVE-YEAR LOOK BACK SO WE WERE
ABLE TO SEE THESE TRENDS.
>> QUICK FOLLOW-UP. STRUCTURAL
CHANGES. WE STILL NEED THE
FIVE-YEAR LOOK BACK. MY POINT TO
THE EXECUTIVE UPSTAIRS IS I KNOW
IT MIGHT BE HARD BUT WE STILL
NEED THAT. THAT'S A VERY
HELPFUL TOOL. IT IS NECESSARY. I
KNOW PEOPLE UPSTAIRS, I JUST
WANT TO MAKE THIS POINT.
>> TO THE POINT THAT THE
DIRECTOR WAS ABLE TO PROVIDE AN
ACCURATE REPORT ON THE SALES TAX
NUMBER. THANK YOU. AND THAT OVER
THE LAST DECADE WE HAD TO THE
ECONOMIC SITUATION WE CAN HAVE
INCREASED SALES TAX IF WE HAVE
INCREASED CONSTRUCTION. WE HAD A
LOT OF CONSTRUCTION OVER THE
LAST DECADE THAT HAS SLOWED. I
WILL ALSO POINT OUT WE ARE
RELYING ON ONE THIRD OF OUR
SALES AND USE TAX FROM PORT
ACTIVITY. WE KNOW THAT THIS IS
IN A PERIOD OF FLUCTUATION
BECAUSE OF TARIFFS. A REPORT OUT
OF LONG BEACH THEY ARE ALREADY
SEEING LESS CARGO FROM CHINA. SO
WE ARE DEFINITELY IN THE THICK
OF THESE RIGHT NOW. I SEE YOUR
HAND UP BUT WANT TO CHECK IN
WITH COUNCILMEMBER SAKA. DO YOU
HAVE ANY QUESTIONS TODAY?
>> NO. I JUST WANTED TO THANK
DIRECTOR NOBLE AND MR. MIKESELL
FOR JOINING US TODAY. THIS
PRESENTATION NOT AT ALL GOOD
NEWS BUT I APPRECIATE THE
INSIGHTS SHARED. I TOO HAVE MORE
QUESTIONS AND WILL BE FOLLOWING
IN THE INTEREST OF TIME. WILL BE
FOLLOWING UP OFF-LINE AND ALSO
BE MEETING WITH THE MAYOR'S
OFFICE BUDGET DIRECTOR AND
OTHERS. SO THANK YOU FOR SHARING
THE BAD NEWS.
>> THANK YOU. WE DO HAVE ABOUT
40 MORE MINUTES IF THERE IS
ANYTHING YOU WOULD LIKE TO ASK
AT THIS TIME.
>> NO. THANK YOU.
>> COUNCIL PRESIDENT.
>> I WANT TO MAKE SURE I
UNDERSTAND WHAT IS MEANT BY
STRUCTURAL FIXES. COUNCILMEMBER
KETTLE. YOU MENTIONED THAT
SEVERAL TIMES THAT WE SHOULD
HAVE STRUCTURAL FIXES. I AM
WONDERING WHAT IS MEANT BY THAT.
REITERATING SOME OF THE CHAIR
STRAUSS SAID. ARE WE THINKING
ABOUT THINGS LIKE REVENUE
STABILIZATION FUND THAT WE
ESTABLISHED FOR THE JUMPSTART
REVENUE? I THINK THAT WE HAD THE
MAYOR'S AND DOWN PRETTY MUCH
10% CUSHION, LET'S JUST CALL IT
THAT. AND THAT WAS ABOUT 40
MILLION OF 400 MILLION JUMPSTART
REVENUES. THAT IS ABOUT 10%. THE
ONE THAT WE DECIDED ON WAS
SUPPOSED TO GET TO 10% AT THE
END OF THREE YEARS WITH 2% THE
FIRST YEAR. I CAN'T REMEMBER
EXACTLY. BUT THERE WERE SOME
GOALS. IT WASN'T IN ONE LUMP
SUM. SO THAT IS WHAT WE ARE
TALKING ABOUT. OR ARE WE TALKING
ABOUT ESTABLISHING A CEILING TO
UNDERSTAND? OR CENTRAL STAFF OR
SOMEBODY. AM I MISSING
SOMETHING?
>> I'LL DEFER TO MR. MIKESELL.
EVERYBODY NEEDS TO KNOW THEIR
ROLE.
>> FOR THE STRUCTURAL CHANGES
CAN TAKE A FEW DIFFERENT FORMS.
CHANGES TO POLICIES LIKE YOU
REFERRED TO WITH THE JUMPSTART
FUND RESERVE POLICY IS KIND OF A
CHANGE TO THE STRUCTURE OF HOW
WE PUT TOGETHER BUDGETS. FROM A
MORE DEAL WITH THE GAP IN THE
LINES IN THE FUTURE THE
STRUCTURAL CHANGES WOULD BE
CHANGES TO SPENDING THAT ARE
RECURRING AND OCCUR IN FUTURE
YEARS AS WELL. SO REDUCTION IN
THE PROGRAM OR SOMETHING LIKE
THAT PERSISTS. AND ISN'T JUST
ONE TIME IN NATURE. OR FROM THE
OTHER DIRECTION A REVENUE CHANGE
THAT IS PERSISTENT, THAT OCCURS
IN NOT JUST 2025 BUT EVERY YEAR.
SO IN THE BUDGET DOLLARS AND
CONSIDERATION WHICH HAPPENS TO
BE ADVANTAGEOUS UP RIGHT NOW.
THE GAIN FROM SUBSTITUTE SENATE
BILL 5814 WOULD BE STRUCTURAL
REVENUE CHANGE. THAT WOULD BE A
CHANGE TO THE SALES TAX BASE
THAT WILL GIVE US REVENUE IN
'25, IN '26 AND FUTURE YEARS.
SO THAT WILL HELP THE STRUCTURAL
DEFICIT. THINGS THAT ARE NOT
STRUCTURAL CHANGES ARE ONE-TIME
BALANCES TO SUPPORT ONGOING
SPENDING. THINGS LIKE THAT. OR
ONE TIME PRIOR YEAR BALANCE THAT
CARRIES. THAT IS HELPFUL TO
BALANCE THE CURRENT YEAR BUT NOT
HELPFUL WITH FUTURE CHALLENGES.
>> SO SPEND LESS. TAX MORE. OR
POLICY CHANGES.
>> I THINK OF PERMANENT. SO THIS
IS A CHANGE THAT YOU EXPECT TO
PERSIST RATHER THAN ONE TIME. IT
IS PERMANENT CHANGES IN SPENDING
PATTERNS OR REVENUE THAT WILL
CLOSE THE GAP. RAISE ONE OR
BRING DOWN THE OTHER.
>> COUNCILMEMBER KETTLE NOTED
HOW CAN WE HAVE A UNDERSPEND OF
11 MILLION OF INTEREST EARNINGS
FOR JUMPSTART. THE NEXT BULLET
POINT. HOW CAN WE HAVE AN
UNDERSTAND OF 296 MILLION IN
JUMPSTART WHEN IT WAS
ANTICIPATED WE WERE GOING TO
SPEND OR HAD 400 MILLION
JUMPSTART REVENUE? THAT IS ON
PAGE 10.
>> THAT'S THE QUESTION I WANT
TO FOLLOW UP WITH THE WHY. A LOT
OF THAT IS LEGALLY OBLIGATED SO
A LOT OF JUMPSTART GOES FOR
HOUSING WHICH IS CAPITAL DOLLARS
THAT TAKE TIME TO GET OUT THE
DOOR. IT'S GOING TO BE THINGS
OF THAT. AND THERE IS DETAIL
BEHIND IT.
>> THE PHRASE UNDERSPEND . MONEY
THAT DIDN'T GET SPENT. THERE
CAN BE VERY DIFFERENT REASONS.
THE HOUSING IS PERSISTENT. IT
BECOMES A STRUCTURAL COMPONENT
OF THE WAY WE SPEND THE MONEY.
THE WAY THAT YOU DESCRIBED. THAT
IS THAT WE GIVE HOUSING
APPROPRIATIONS FOR PROJECTS AND
ONCE THEY KNOW THEY HAVE THAT
MONEY THEY START LOOKING FOR
THOSE PROJECTS. BUT THEY DON'T
LEGALLY OBLIGATE THE MONEY UNTIL
THEY FIND A DEVELOPMENT
AGREEMENT. THAT WON'T HAPPEN
WITHIN THE FIRST YEAR OF THAT.
SO THERE IS ALREADY EXPECTATION
ON SOME LEVEL THAT THEY ARE
GOING TO CARRY THIS MONEY
FORWARD. SOME OF THIS MAY BE A
NAMING PROBLEM. THAT WE ARE
CALLING THIS UNEXPECTED
UNDERSPEND. AND REALLY IT WAS
ENTIRELY EXPECTED. WE UNDERSTOOD
THAT THEY DON'T SPEND THIS
MONEY THAT QUICKLY. AND AND TALK
ABOUT GETTING THEM TO BE ABLE TO
MOVE FASTER. THEY DEVELOPED A
STRAIGHTFORWARD PATTERN OF
GETTING THE MONEY, LOOKING FOR
OPTIONS TO AWARD IT OVER SEVERAL
YEARS. IN THE CONTEXT OF THE
HOUSING, WHERE THEY DON'T
REALLY KNOW THAT THEY HAVE
ONGOING MONEY BECAUSE IT COULD
END IN A FEW YEARS ISN'T NEW.
THEY CAN'T REALLY BE MAKING
EXCEPT WITH THE MONEY THEY HAVE
IN HAND. ONE DAY IT COULD GO
AWAY. CHANGING THE FUNDING
STRUCTURES FOR HOUSING, MAYBE WE
CAN CHANGE THE WAY WE ALLOCATE
SOME OF THAT MONEY ACROSS TIME.
BEING ABLE TO COUNT ON FUTURE
APPROPRIATIONS FROM THE PAYROLL
EXPENSE TAX. SOME OF THAT IS AN
ACCOUNTING ISSUE. BUT THAT IS
WHY WE WANT TO BETTER
UNDERSTAND. AND IF IT IS NOT
REALLY A UNDERSPEND IN THE SENSE
OF WE ARE SURPRISED BY THIS
OUTCOME, WE SHOULD BE LABELING
IT SOMETHING ELSE AND THINKING
ABOUT IT DIFFERENTLY. WE CAN
WORK WITH IN RESPONSE TO THAT.
>> I WANT TO MAKE SURE THAT
WHATEVER EXECUTIVE DEPARTMENT IS
LISTENING I AM NOT PICKING ON
INDIVIDUAL DEPARTMENT HEADS.
WHAT IS MOTIVATING ME IS OUR
OVERSIGHT RULE. WE ARE SORT OF
ASSUMING THAT IT'S GOING TO BE
SPENT ON THAT. AND IF THESE
UNDERSPENDS INDICATE THAT IT'S
MAYBE NOT HAPPENING. FOR
EXAMPLE, I HAVE ALLOCATED ABOUT
400,000 FOR A NEW MOBILE
MEDICATION VAN FOR TREATMENT
SERVICES. IT HASN'T GOTTEN OUT
THE DOOR YET. I AM CONCERNED
ABOUT THAT GETTING SOMEHOW SWEPT
UP IN A CARRYFORWARD THAT IS
USED FOR GENERAL FUND BACKFILL
OF A DEFICIT ET CETERA. THAT IS
THE SORT OF THING, AN EXAMPLE OF
WHY I AM ASKING THESE QUESTIONS.
THANK YOU.
>> VICE CHAIR RIVERA.
>> BEN, YOU HIT ON SOMETHING OF
CONCERN TO ME. HAVING HELPED
ASSISTED IN OVERSEEING
DEPARTMENTS IN THE PAST AND
ACTUALLY WORKING AT A
DEPARTMENT. IF DEPARTMENTS ARE
NOT ABLE TO GET THE MONEY OUT
THE DOOR FOR WHATEVER REASON,
THEN WE ARE JUST HOLDING ONTO
MONEY KNOW I CAN USE. AND SO YOU
GAVE THE EXAMPLE OF A WAGE.
THERE HAS TO BE A BETTER WAY SO
WE ARE NOT JUST SITTING ON A LOT
OF MONEY BECAUSE WE DON'T HAVE
THE ABILITY TO GET OUT THE DOOR
THAT YEAR. SO I WOULD LOVE TO
SEE WHETHER IT IS CBO OR WHOEVER
IS WORKING WITH CBO PROFFER SOME
KIND OF POLICY WHERE WE DON'T
HAVE TO JUST HOLD ON TO A PILE
OF MONEY. SO THAT WE CAN USE IT
WHERE IT IS NEEDED AT THAT
MOMENT. BECAUSE I ALSO AM
MINDFUL THAT THERE ARE OTHER
NEEDS AT THE MOMENT WE ARE NOT
ABLE TO MEET. BECAUSE WE ARE
SITTING ON SOME UNDERSPEND AND
WE DON'T KNOW WHEN THAT MONEY
WILL BE NEEDED IN SOME CASES.
AND NOT JUST THE WAGE. THIS IS
ACROSS THE CITY IN MANY
DEPARTMENTS. AND OF COURSE WE
HAVE PRACTICES FROM DEPARTMENTS
WHERE THEY WANT TO HOLD ONTO THE
MONEY BECAUSE THEY ARE AFRAID TO
NOT USE IT. AND I WAS IN A
SITUATION WHERE THE DEPARTMENT
WAS WORRIED ABOUT NOT GIVING
BACK SOME MONEY IN CASE THEY
NEEDED IT BUT THEY WEREN'T
GOING TO USE IT. SO IF YOU ARE
NOT GOING TO USE IT YOU HAVE TO
GIVE IT UP SO SOMEONE ELSE CAN
USE IT THAT NEEDS IT. SO I WANT
TO GET AWAY FROM THAT SITUATION
WE ARE IN THIS CYCLE OF
CONSTANTLY HOLDING ONTO FUNDS
THAT WE ARE NOT ABLE TO UTILIZE
THAT YEAR. WHICH THEN REALLY
THROWS OFF OUR ACCOUNTING REALLY
BECAUSE WE ARE CONSTANTLY HAVING
TO CARRYFORWARD THIS MONEY
WITHOUT THE WHEN ARE WE GOING TO
USE IT? WE JUST NEED TO BE
AVAILABLE IF WE HAVE ENCUMBERED
IT OR PROMISED IT TO SOMEONE FOR
WHEN THEY NEED IT. BUT DO WE
NEED TO CONTINUE TO CARRY IT
YEAR AFTER YEAR WHEN WE KNOW WE
CAN'T USE IT AND THEN WE HAVE
THESE DEFICITS?
>> THE QUESTION IS UNDERSTOOD.
IT IS A NUANCE ANSWER ULTIMATELY
THAT WILL DEPEND ON
CIRCUMSTANCE. BUT THE KEY
CONCERN IS THAT THEY CAN SPEND
THE MONEY NOW, IF YOU USE THAT
FOR SOMETHING ELSE YOU WANT TO
BE DARN SURE THAT TWO YEARS
LATER WHEN THEY ARE READY FOR
THAT THAT YOU ACTUALLY HAVE THE
MONEY AND ARE NOT IN A FINANCIAL
SITUATION THAT IS GETTING EVEN
WORSE. THERE IS A BALANCE ABOUT
THOSE THINGS. BUT I DO THINK
THAT THERE IS IT'S PART OF THE
SOLUTION. THAT DOES NOT MEAN IT
DOESN'T NEED TO GET CHASED
DOWN.
>> IF I MAY, I THINK WE JUST
IDENTIFIED SOMETHING THAT IS
THERE A POSSIBLE SOLUTION. I
DON'T THINK I WANT TO MINIMIZE
THE AMOUNT OF TAUGHT MONEY WE
ARE TALKING ABOUT. IF WE CAN
FIND A SOLUTION FOR THAT I THINK
IT WOULD BE ADVANTAGEOUS IN THE
LONG TERM.
>> THAT IN ITSELF WON'T CHANGE
THE SPENDING.
>> I UNDERSTAND THAT.
>> WE HAVE A PERMANENT GAP. IT
MAY BE SLIGHTLY OVERSTATED
BECAUSE OF THE WAY WE DESCRIBED
IT. BUT IN THAT SENSE THE GAP IS
SLIGHTLY OVERSTATED. BUT I
DON'T THINK IT IS MORE THAN
THAT. BUT HOW DO YOU KNOW THAT?
I THINK THAT I DO BUT WE WANT TO
GET TO THE DATA.
>> IF I COULD JUST ADD, THERE
ARE DIFFERENT FLAVORS OF HOW THE
UNDER SPEND IS TREATED. ONE THAT
IS CASH BALANCE THAT COULD BE
USED FOR ANYTHING THE NEXT YEAR.
THERE IS THE SECOND WHICH IS
AUTOMATIC CARRYFORWARDS. THE
LEGAL OBLIGATION AND IN FACT OUR
CAPITAL BUDGET IS THE LARGEST
PLACE WHERE THERE IS UNDER
SPEND. IT IS AUTOMATICALLY
CARRIED FORWARD. AND THEN THERE
IS THE MIDDLE GROUND STUFF THAT
DOESN'T HAVE LEGAL OBLIGATION
BUT IT HAS SOME COMMITMENT THAT
HAS BEEN MADE THAT IS NOT GIVEN
THAT SAME AUTOMATIC. THAT GETS
REQUESTED. SO THAT IS KIND OF
WHERE WE ARE RIGHT NOW WITH THE
'25 CARRYFORWARDS. GIVEN THAT
THERE IS A BUDGET CHALLENGE,
ASSESSING HOW MUCH OF THOSE
GREAT AREA COMMITMENTS CAN
ACTUALLY BE MET. BECAUSE WE
DON'T HAVE ENOUGH RESOURCES TO
DO 25 COMMITMENTS AND THOSE
CARRYFORWARD COMMITMENTS. SO IF
SOMETHING IS NOT AUTOMATICALLY
GIVEN APPROVAL IT HAS TO GET
REAPPROPRIATED. THE QUESTION HAS
TO BE ASKED DO WE WANT TO
CONTINUE DOING THIS WORK OR
SHOULD WE BE DOING SOMETHING
DIFFERENT WITH THAT MONEY? SO
THAT IS KIND OF THE OVERSIGHT
FOR THAT PIECE OF THE CARRYOVER.
IT IS NOT AUTOMATIC IN NATURE.
>> DO WE PAUSE THE PROGRAM UNTIL
IT CATCHES UP? THAT IS YET
ANOTHER WAY TO DO IT.
>> WITH RESPECT TO THIS YEAR AND
THE LAST PERIOD OF THIS YEAR, WE
ARE ASKING THOSE QUESTIONS RIGHT
NOW BECAUSE THE CARRYFORWARD IS
NO LONGER FIT FINANCIALLY AND WE
DON'T HAVE THAT MUCH MONEY. SO
THAT IS PART OF THIS.
>> THANK YOU.
>> COUNCIL MEMBER SAKA.
>> THANK YOU CHAIR. BASED ON THE
CONVERSATION RIGHT NOW,
APPRECIATE THE CENTRAL STAFF
GUIDANCE BEING SHARED. ONE THING
THAT HAS BEEN SWIRLING IN MY
MIND THROUGHOUT THIS IS SO, THIS
IS OBVIOUSLY ILLUMINATING A HUGE
CHALLENGE, STRUCTURAL CHALLENGE
THAT WE FACE. A SERIES OF
CASCADING STRUCTURAL CHALLENGES
THAT WE FACE IN OUR BUDGET. BUT
ULTIMATELY THESE ISSUES AND
CHALLENGES IN MY MIND RAISED THE
QUESTION OF OKAY, WHAT IS THE
SOLVE? AND THERE'S BEEN A LOT
OF TALK POINTED OUT ABOUT
ADDRESSING HOW DO WE ADDRESS
SOME OF THE STRUCTURAL
CHALLENGES, WHAT ARE SOME OF THE
SOLUTIONS THAT WE CAN
POTENTIALLY EMPLOY? AND WHAT
DOES THAT MEAN? RELATIVE TO
OTHER INVESTMENTS. I THINK WE
HAVE DONE A GOOD JOB INITIALLY
UNDER CHAIR STRAUSS. LAST YEAR
ADDRESSING SOME OF THOSE BUDGET
CHALLENGES. WITH RESPECT TO
THOSE ISSUES THAT WERE DIRECTLY
WITHIN OUR CONTROL. A NUMBER OF
OTHER ISSUES WORSENED OR FACTORS
WORSENED. BROADER PICTURE
INCLUDING THE MACROECONOMIC
SITUATION AND FEDERAL CHANGE.
WHAT THAT LOOKS LIKE. AMONG
OTHER FACTORS. AND SO HERE WE
ARE, HUGE CHALLENGE AND NOW WE
NEED TO SOLVE IT. THAT IS GOING
TO BE THE FOCUS OF MY FUTURE
QUESTIONS. I'D LOVE TO CHAT
FURTHER ABOUT OFF-LINE WITH OUR
CENTRAL STAFF AND THE MAYOR'S
OFFICE WHO WILL BE PROPOSING ANY
NUMBER OF THINGS. FROM MY
PERSPECTIVE, IN TERMS OF
ADDRESSING WHAT IS THE SOLUTION,
ADDRESSING THE UNDER SPEND,
PRIORITIZING, ALIGNING AND BEING
CLEAR ABOUT WHAT OUR PRIORITIES
ARE. IN MY MIND, THAT STARTS
WITH OUR HIGHEST CHARTER
RESPONSIBILITY TO KEEP PEOPLE
SAFE. IMMUNITY IN PUBLIC SAFETY.
THAT IS FIRST-TIER. AND THE NEXT
IS THOSE TYPES OF INVESTMENTS
THAT TAXPAYERS EXPECT. LOCAL
GOVERNMENTS LIKE OURS TO FUND.
INFRASTRUCTURE AND PARKS. A
MIXTURE OF CONSOLIDATIONS AND
CUTS. KNOW THE STATE LEGISLATURE
IS NOTED GRANTED US NEW
AUTHORITY IN THAT CAPACITY AS
WELL. BUT IN ANY EVENT, THIS
BRINGS US MORE QUESTIONS THAN
ANSWERS. LOOK FORWARD TO
ENGAGING WITH YOU ALL AND
COLLEAGUES INDIVIDUALLY OFF-LINE
AS WELL. THANK YOU.
>> COLLEAGUES, ANY OTHER
QUESTIONS AT THIS TIME? BEN,
TOM, ANY FINAL THOUGHTS YOU'D
LIKE TO SHARE? I WILL SHARE MY
FINAL THOUGHT. THAT WE NEED TO
SAVE MONEY TODAY AND FIND WAYS
TO DO THAT. COLLEAGUES, I
ORIGINALLY ASKED FOR THE UPDATED
FIVE-YEAR LOOK BACK TO BE
PRESENTED DURING THIS SELECT
BUDGET COMMITTEES IN JUNE AND
JULY. WE ARE HAVING DIFFICULTY
WITH THAT BECAUSE WE'VE HAD A
NUMBER OF DEPARTURES IN CENTRAL
STAFF AND CAPACITY HAS CHANGED.
I WAS FOCUSED ON READING THE
FALL SECTION AND WE HAVEN'T
SPOKEN DIRECTLY ABOUT THIS. NOT
SURE THE LAST TIME HE SPOKE TO
ME DIRECTLY. I FEEL LIKE
CHOOSING NOT TO SPEAK TO ME
DIRECTLY UNDERMINES MY AGENCY AS
A COUNCIL DIRECTOR AND BUDGET
CHAIR. IS THERE ANY FURTHER
BUSINESS? SEEING NONE, THIS
CONCLUDES THE WEDNESDAY, MAY 7th
2025 FINANCE AND NATIVE
COMMUNITIES AND TRIBAL
GOVERNMENT COMMITTEE MEETING.
THE NEXT FINANCE AND NATIVE
COMMUNITY AND TRIBAL GOVERNMENT
COMMITTEE IS ON WEDNESDAY, MAY
21st 2025. WE ARE ADJOURNED.