-- GOOD AFTERNOON. THE. FRIDAY,
AUGUST 7th, 2020. TODAY IS
FRIDAY, AUGUST 7th, 2026 AND
THIS MEETING OF THE ECONOMIC AND
REVENUE FORECAST COUNCIL WILL
COME TO ORDER. I'M DAN STRAUSS,
CHAIR OF THE ECONOMIC AND
REVENUE FORECAST COUNCIL. I'M
HERE TODAY WITH MY COLLEAGUES
AND I'LL CALL ROLL HERE.
COUNCIL PRESIDENT HOLLINGSWORTH
PRESENT DEPUTY DIRECTOR OF CITY
OPERATIONS AND FORECAST COUNCIL
VICE PRESIDENT, VICE CHAIR MARK
ELLENBROOK HERE, CITY FINANCE
DIRECTOR DWIGHT DIVELY HERE.
COUNCILMEMBER STRAUSS HERE. UH,
WE HAVE FOUR PRESENT AND A
QUORUM HERE. SO WE ARE ALSO
JOINED TODAY BY STAFF FROM THE
ECONOMIC AND REVENUE FORECAST,
AS WELL AS REPRESENTATIVES FROM
THE CITY BUDGET OFFICE AND THE
CITY COUNCIL. CENTRAL STAFF IS
ALSO HERE SOMEWHERE. THEY'LL BE
HERE MOMENTARILY. THE MAIN
PURPOSE OF TODAY'S MEETING IS
THAT THE FORECAST IS FOR THE
FORECAST COUNCIL TO RECEIVE AND
REVIEW THE UPDATED ECONOMIC AND
REVENUE FORECASTS. THIS FORECAST
IS PARTICULARLY IMPORTANT
BECAUSE IT WILL SERVE AS THE
BASIS FOR THE MAYOR'S UPCOMING
PROPOSED BUDGET. CITY BUDGETS
ARE ALWAYS LEGALLY MUST BE
BALANCED, AND SO THE MAYOR'S
PROPOSED SPENDING WILL BE
DIRECTLY AFFECTED BY THE
FORECAST IN WHICH WE RECEIVE
TODAY. CITY COUNCIL WILL THEN
BEGIN ITS REVIEW OF THE PROPOSED
BUDGET, AND WE. THE FORECAST
COUNCIL ARE SCHEDULED TO RECEIVE
A FINAL REVENUE FORECAST FOR THE
YEAR ON FRIDAY, OCTOBER 16th.
THIS OCTOBER FORECAST WILL SET
THE STAGE FOR THE CITY'S CITY
COUNCIL'S BUDGET DELIBERATIONS
AND DETERMINE THE TOTAL
RESOURCES TO BE APPROPRIATED
THROUGH THAT PROCESS. BEFORE
MOVING ON TO THE FORECAST
PRESENTATION, LET'S BEGIN BY
FORMALLY ADOPTING THE AGENDA FOR
TODAY'S MEETING. A COPY OF THE
AGENDA HAS BEEN CIRCULATED TO
MEMBERS AND IS AVAILABLE ONLINE
AT THE FORECAST OFFICE WEBSITE.
I MOVE TO ADOPT THE AGENDA. IS
THERE A SECOND? SECOND.
-- SECOND?
-- THANK YOU. IT'S BEEN MOVED
AND SECONDED TO ADOPT THE
AGENDA. TODAY'S AGENDA IS BEFORE
THE FORECAST. COUNCIL. UH, THIS
IS THE OPPORTUNITY FOR MEMBERS
TO AMEND THE AGENDA TO ADD OR
REMOVE AN ITEM. ARE THERE ANY
PROPOSED AMENDMENTS OR REMOVALS?
THANK YOU. IF THERE ARE NO
OBJECTIONS, TODAY'S AGENDA WILL
BE ADOPTED. HEARING NO
OBJECTION, TODAY'S AGENDA IS
ADOPTED. MOVING ON TO ITEM ONE,
WHICH IS THE APPROVAL OF THE
MINUTES FROM THE APRIL 10th,
2026 MEETING. A COPY OF THE
MINUTES FROM THE APRIL 10th
MEETING OF THE FORECAST COUNCIL
HAVE BEEN CIRCULATED TO THE
MEMBERS AND POSTED ON THE
WEBSITE OF THE FORECAST OFFICE.
I MOVE TO. I MOVE AND SEEK A
SECOND FOR THE APPROVAL OF THE
MINUTES.
-- SECOND.
-- IT HAS BEEN MOVED AND
SECONDED TO APPROVE THE MINUTES
FROM OUR LAST MEETING. IF THERE
ARE NO OBJECTIONS, THE MINUTES
WILL BE APPROVED. HEARING NO
OBJECTIONS, THE MINUTES ARE
APPROVED. NOW LET'S JUMP RIGHT
INTO WHY WE'RE HERE. UH, WE'RE
GOING TO MOVE RIGHT INTO ITEM
TWO, WHICH IS THE PRESENTATION
OF THE AUGUST 2026 ECONOMIC AND
REVENUE FORECAST AND THE
RECOMMENDATIONS OF THE OFFICE OF
ECONOMIC AND REVENUE FORECAST
REGARDING 2026, 2027 AND 2028.
REVENUE FORECASTS MOVING INTO
THIS AGENDA ITEM, THE FORECAST
OFFICE WILL PRESENT THESE
REVISED FORECASTS FOR THIS YEAR,
NEXT YEAR, AND 2028. WHY THIS IS
IMPORTANT IS BECAUSE WE ARE AT
THE BEGINNING OF OUR BIENNIAL
BUDGET PROCESS. SO NOT ONLY DO
WE HAVE TO TRUE UP THIS YEAR, WE
ARE SETTING THE BUDGET FOR 27
AND 28. THIS FORECAST UPDATES
THOSE FORECASTS. TODAY'S
PRESENTATION WILL BE LED BY
STAFF FROM THE CITY'S
INDEPENDENT OFFICE OF ECONOMIC
AND REVENUE FORECASTS. AND AS A
REMINDER TO THE PUBLIC, THIS
OFFICE IS SIMILAR TO THE
INDEPENDENT FORECASTING OFFICES
OPERATING IN KING COUNTY AND AT
WASHINGTON STATE, WITH THE MAIN
PURPOSE TO INCREASE TRANSPARENCY
AND ACCOUNTABILITY AROUND THE
CITY'S REVENUE FORECASTING
PROCESS AND TO ENSURE THAT THERE
IS NO POLITICAL INFLUENCE ON THE
FORECASTS THEMSELVES. TO ENSURE
THE FORECAST, COUNCIL IS FULLY
INFORMED AND TO HAVE FULL RANGE
OF QUESTIONS ADDRESSED. STAFF
FROM CITY COUNCIL, CENTRAL STAFF
AND CITY BUDGET OFFICE ALSO
PARTICIPATE IN THIS BRIEFING.
THE STAFF FROM THE CITY BUDGET
OFFICE IS ALSO PRESENT TODAY TO
PROVIDE BRIEFING REGARDING THE
REVENUES STILL WITHIN THE
PURVIEW OF THE BUDGET OFFICE.
AND SO THIS THE FORECAST OFFICE
WILL NOW PRESENT THE BACKGROUND.
UH, DIRECTOR DURIS, I ALWAYS
APPRECIATE THAT THERE'S A LONG
LEAD IN WITH OUR CURRENT
ECONOMIC SITUATION. WHILE
EVERYONE'S ON PINS AND NEEDLES
TO KNOW HOW MUCH MONEY WE WANT,
WE WE RECEIVED OR LOST. UM, BUT
IT IS REALLY IMPORTANT THAT THAT
FIRST SECTION THAT YOU ALWAYS
PRESENT BECAUSE HAVING THIS
THREE TIMES A YEAR GIVES US A
GOOD SNAPSHOT OF WHAT'S, WHAT'S
CHANGED SINCE THE LAST TIME WE
MET. AND SO WE'LL TURN IT OVER
TO YOU TO RUN THROUGH YOUR
PRESENTATION. ALL I ASK IS THAT
BEFORE YOU MOVE FROM OUR
ECONOMIC ENVIRONMENT INTO THE
FORECAST OPTIONS THAT WE PAUSE,
ASK, AND ANSWER ANY QUESTIONS
THERE. UM, OVER TO YOU.
DIRECTOR. DR. ROSS AND THE
COMMITTEE TABLE WOULD LIKE TO
INTRODUCE THEMSELVES. JUST FOR
THE RECORD, WE ALL KNOW YOU. WE
ALL REALLY APPRECIATE ALL THE
WORK YOU DO, BUT MAYBE ROUND OF
INTRODUCTIONS AND THEN JUMP
RIGHT INTO THE PRESENTATION. AND
COLLEAGUES, IF YOU DO HAVE
QUESTIONS ALONG THE WAY, PLEASE
FEEL FREE TO ASK THEM. JUST
NOTING THAT WE ARE STARTING A
HALF AN HOUR LATE BECAUSE
COUNCIL CHAMBERS WERE
UNAVAILABLE. UM, YEAH
-- THANK YOU. CHAIR STRAUSS.
-- UH, GOOD AFTERNOON.
COUNCILMEMBERS. FOR THE RECORD,
MY NAME IS JAN DURAS. I'M
INTERIM DIRECTOR AND CHIEF
ECONOMIST AT THE OFFICE OF
ECONOMIC AND REVENUE FORECASTS.
-- GOOD AFTERNOON EVERYBODY.
THIS IS SEAN THOMPSON. I WORK
WITH THE ON WITH THE OFFICE OF
ECONOMIC& REVENUE FORECAST AS
WELL.
-- GOOD MORNING OR GOOD
AFTERNOON, JOE RUSSELL, CITY
BUDGET OFFICE
-- GOOD AFTERNOON. ALEXANDRIA IS
AN ECONOMIST WITH THE CITY
BUDGET OFFICE.
-- SO WHICH ONE IS IT AGAIN?
THERE WE GO. ALL RIGHT. SO
LET'S DIVE INTO IT. UM, SO, UM,
AS ALWAYS, WE ARE FIRST GOING TO
LOOK AT THE ECONOMIC DEVELOPMENT
SINCE THE LAST FORECAST. UM, THE
MAIN REASON WHY WE ARE SPENDING
CONSIDERABLE AMOUNT OF TIME ON
THAT IS THE WAY HOW THE REVENUE
FORECASTS ARE DEVELOPED. UM,
IT'S A TWO STEP PROCESS. UH, IN
THE FIRST STEP, WE ARE TAKING
THE US FORECAST. UM, AND AS A
MAIN INPUT AND USING IT TO
DEVELOP THE REGIONAL ECONOMIC
FORECAST. AND THEN THAT REGIONAL
ECONOMIC FORECAST IS USED AS A
MAIN INPUT TO DEVELOP THE
REVENUE FORECAST FOR THOSE
REVENUE STREAMS WHICH ARE DRIVEN
BY THE ECONOMY, BUSINESS AND
OCCUPATION, TAX, SALES TAX, UH,
PAYROLL EXPENSE TAX, UTILITY
TAXES, AND ALL SORTS OF OTHER
REVENUE STREAMS. UM, IN RECENT
MONTHS, THE IRAN CONFLICT HAS
BEEN SHAPING THE OUTLOOK QUITE
CONSIDERABLY. IT HAS CREATED
NOTABLE HEADWINDS ON THE CHART
HERE SHOWS THE IMPACT OF THAT
WAR ON OIL AND GAS PRICES IN
SEATTLE AREA. THERE WAS A LARGE
SPIKE IN MARCH. UM, LOTS OF UP
AND DOWNS, LOTS OF UNCERTAINTY.
OIL PRICES HAVE COME DOWN
RECENTLY, BUT THERE IS STILL
VERY HIGH UNCERTAINTY AROUND THE
OUTLOOK. UM, THINGS ARE VERY
HARD TO PREDICT. AND SO THAT
ADDS TO OVERALL UNCERTAINTY THAT
WAS ALREADY PRESENT. THERE.
DESPITE ALL THAT UNCERTAINTY,
FINANCIAL MARKETS HAVE IN
GENERAL PERFORMED QUITE
REMARKABLY. UM, THERE WAS A
ABOUT 9% DROP AFTER THE WAR
STARTED, BUT THEN S&P 500, AS
YOU CAN SEE IN THIS CHART,
RECOVERED. UM, THOSE RED DOTS
SHOW THE POINTS AT WHICH WE WERE
DELIVERING FORECASTS. SO YOU CAN
ALSO SEE THAT LAST YEAR THERE
WAS SIMILAR SORT OF SITUATION
WHERE THE APRIL FORECAST CAME
RIGHT AFTER TARIFFS WERE
ANNOUNCED. THINGS LOOKED BETTER
BY AUGUST, IMPROVED EVEN FURTHER
BY OCTOBER. THEN AGAIN, WITH THE
IRAN WAR, THINGS TURNED, UH,
DOWN. THE OUTLOOK WAS MORE
PESSIMISTIC IN APRIL. BUT SINCE
THEN, IN GENERAL, THE ECONOMY
HAS, UH, KIND OF MUDDLED
THROUGH. UM, AND IN DESPITE ALL
THOSE, THOSE TAILWINDS, UM, THE
ECONOMY CONTINUES TO GROW AT A
SOLID BASE. THAT SAID, THERE ARE
NOTABLE RISKS BECAUSE OF THE
HIGH CONCENTRATION OF GROWTH,
WHETHER IT'S LOOKING AT THE
INVESTMENT, LOOKING AT CONSUMER
SPENDING, LOOKING AT THE SP5
HUNDRED INDEX, THERE IS A LOT,
UH, ESSENTIALLY THAT'S HANGING
ON THE OUTCOME OF HOW THE AI
BUILD OUT AND THE INVESTMENT IN
AI, HOW THAT WILL AFFECT THE
ECONOMY UM, AND WE CAN TALK A
LITTLE BIT MORE.
-- BEFORE YOU MOVE ON TO THAT
NEXT SLIDE, I'LL JUST MAKE ONE
COMMENT THAT THE YOU NOTE HERE,
APRIL 10th AS BEING A DATA POINT
ON THIS CHART. I THINK THAT'S
IMPORTANT JUST BECAUSE WHEN YOU
ARE PULLING YOUR INFORMATION TO
PROVIDE US THESE FORECASTS,
YOU'RE YOU'RE DOING THIS THE
WEEKS AHEAD OF THIS MEETING AND
THIS GRAPH CLEARLY DESCRIBES
THAT WE WERE IN A STOCK MARKET
DOWNTURN WHILE YOU WERE CREATING
THOSE THOSE FORECASTS LAST TIME
AROUND. SO JUST FOR THE VIEWING
PUBLIC, ALL 150, 000 PEOPLE
WATCHING THIS PROGRAM RIGHT NOW.
I JUST WANTED TO NOTE THAT
BECAUSE IT'S IMPORTANT CONTEXT
FOR THIS WHOLE CONVERSATION.
-- YEAH, IT IS. YEAH. THERE IS
ALWAYS THAT ISSUE THAT BY THE
TIME THE FORECAST IS DELIVERED,
SOME OF THE INPUT DATA IS
ALREADY STALE. AND SO IT'S, UH,
ESPECIALLY CHALLENGING IN, IN A
SITUATION IN AN ENVIRONMENT
WHERE THINGS CHANGE WEEK TO
WEEK, DAY TO DAY UM, LOOKING A
LITTLE BIT AT THE MAIN ECONOMIC
DATA FOR THE REGION. UM, AND
THAT'S THE EMPLOYMENT DATA. UM,
THIS CHART HERE COMPARES HOW THE
REGIONAL ECONOMY FARED RELATIVE
TO, TO THE US. THE TOP TWO BARS
THAT ARE LABELED TOTAL NONFARM
ARE SHOWING THE CHANGE IN
OVERALL EMPLOYMENT IN THE FIRST
SIX MONTHS OF 2026. FOR THE US
THAT'S A BLUE BAR. UM, ROUGHLY
A SLIGHTLY LESS THAN 0.2% YEAR
OVER YEAR INCREASE IN THE JOB
NUMBERS FOR SEATTLE AREA, WE
HAVE SEEN A DECLINE, ALMOST HALF
A PERCENT DECLINE YEAR OVER YEAR
IN THE FIRST HALF OF 2026. THEN
THOSE BARS BELOW SHOW THE
DECOMPOSITION BY INDUSTRY. SO
ESSENTIALLY SHOW WHICH OF THE
INDUSTRIES HAVE UM, HAVE BEEN
BEHIND THE SIGNIFICANT DECLINE
IN THE SEATTLE METRO AREA. AND
HERE I WANT TO STRESS THAT THIS
IS REALLY SEATTLE METRO AREA,
NOT SEATTLE CITY, BUT, UH,
WHAT'S CALLED SEATTLE
METROPOLITAN DIVISION, WHICH
MEANS KING AND SNOHOMISH
COUNTIES. THAT'S THE DATA THAT
WE USE TO DEVELOP THAT ECONOMIC
FORECAST, BECAUSE THAT'S THE
DATA THAT'S RELEASED ON A
REGULAR BASIS WITH RELATIVELY
LITTLE DELAY. IT'S RELEASED
MONTHLY. UM, THERE IS SOME DATA
ON EMPLOYMENT BY CITY, BUT IT'S
COMING MUCH LESS OFTEN. UH, I'LL
TALK A LITTLE BIT ABOUT THAT IN
A COUPLE OF SLIDES. BUT HERE
AGAIN, THIS IS THE REGION AS A
WHOLE. AS YOU CAN SEE, UM,
LAYOFFS IN THE TECH SECTOR HAVE
LED TO A SIGNIFICANT AMOUNT OF
JOB LOSSES IN THE INFORMATION
SECTOR. THE HIGHER INTEREST
RATES, UH, HAVE ALSO CREATED
HEADWINDS FOR THE REAL ESTATE
INDUSTRY. THAT'S UNDER
FINANCIAL ACTIVITIES HERE. THERE
ARE ONGOING EFFECTS OF TARIFFS
WHICH ARE PULLING DOWN WHOLESALE
AND RETAIL TRADE. AND SO THOSE
ARE THE PRIMARY SECTORS BEHIND
THOSE DECLINES THAT WE ARE
SEEING YEAR OVER YEAR IN THE
REGION. TURNING TO THE OUTLOOK,
UH, FIRST, LOOKING AGAIN AT THE
US AS A WHOLE, THAT'S THE
FORECAST THAT WE GET FROM S&P
GLOBAL AND FROM MOODY'S
ANALYTICS. UH, THE CHARTS HERE
SHOW THE AVERAGE FORECAST FROM
THOSE TWO COMPANIES. THE MAIN
IDEA HERE IS TO HEDGE THE RISK
IN TERMS ONE OF THOSE FORECASTS
TURNS OUT TO BE EITHER TOO
OPTIMISTIC OR PESSIMISTIC. THE
AVERAGE IS AN ATTEMPT TO TO
BALANCE IT OUT. UM, SO THE LINE
FOCUSING HERE ON THAT PANEL ON
THE LEFT LABELED CPU THAT SHOWS
THE EXPECTED YEAR OVER YEAR
INFLATION BACK IN IN MARCH. IT
SHOWS THE BASELINE AND THE
PESSIMISTIC OUTLOOK. UH, SINCE
THEN. UM, THE OIL PRICES HAVE
GONE UP AND STAYED HIGHER FOR
LONGER THAN EXPECTED. AND SO THE
INFLATION HAS ACTUALLY, UM, HAS
ACTUALLY INCREASED MORE IN LINE
WITH THAT PESSIMISTIC SCENARIO.
SO WE HAVE SEEN A 4%, ROUGHLY 4%
YEAR OVER YEAR CHANGE IN THE US
INFLATION. UM, IT'S EXPECTED TO
STAY ELEVATED FOR THE REST OF
THE YEAR BEFORE IT COMES DOWN.
NOW UNDER THE PESSIMISTIC
FORECAST, AGAIN, LOTS OF
UNCERTAINTY AROUND WHERE THINGS
WILL GO AROUND THE ION CONFLICT
IN THE PESSIMISTIC, MORE
PESSIMISTIC SCENARIO. UM, THERE
IS A MORE PRONOUNCED EFFECT ON
INFLATION. AND IT WOULD PEAK
SOMEWHERE AROUND 4.5%, NOT
ANYWHERE AS HIGH AS IN 2022, BUT
SIGNIFICANT INCREASE COMPARED TO
WHERE THE INFLATION WAS LAST
YEAR AND WHERE IT WAS EXPECTED
TO HEAD WERE IT NOT FOR, AGAIN,
THE ION WAR. ON THE CHART ON
THAT PANEL ON THE RIGHT SIDE
LABELED FEDERAL FUNDS EFFECTIVE
RATE SHOWS, UH, THE INTEREST
RATE THAT THE FED IS USING AS
ITS PRIMARY TOOL FOR MONETARY
POLICY. AGAIN, REWINDING A
LITTLE BIT BACK TO WHAT THINGS
LOOKED LIKE, UM, IN, IN MARCH,
IT WAS IN THE GENERAL BELIEF WAS
THAT THE FED WILL CONTINUE WITH,
UH, WITH EASING TO SUPPORT THE
ECONOMY, LABOR MARKET WAS IN, IN
A WEAK SPOT AND IT LOOKED LIKE
THAT THE SIDE OF A DUAL MANDATE
THAT IT WILL HAVE TO FOCUS MORE
ON BECAUSE OF RISING INFLATION.
THE OUTLOOK HAS CHANGED
CONSIDERABLY. AND THAT THE RED
LINE LABELED JULY 2026 BASELINE,
SHOWS THAT THE INTEREST RATE ARE
NOW EXPECTED TO STAY HIGH NO
RATE CUTS THROUGHOUT THE YEAR.
IF ANYTHING, FINANCIAL MARKETS
ARE ACTUALLY PRICING IN, UM, AN
INCREASE. THERE IS A SIGNIFICANT
PROBABILITY OF AT LEAST ONE RATE
HIKE BY THE END OF THE YEAR. AS
OF THIS MORNING, IT'S 76%
CHANCE THAT WE ARE GOING TO SEE
AT LEAST 1.25 PERCENTAGE POINT
HIKE BY BY THE END OF THIS YEAR,
POTENTIALLY EVEN EVEN TO. AND
THAT HAS IMPLICATIONS FOR FOR
THE OUTLOOK FOR THE ECONOMIC
ACTIVITY, LONG TERM INTEREST
RATES, UH, MORTGAGE RATES, FOR
EXAMPLE, ARE NOT DIRECTLY LINKED
TO FEDERAL FUNDS, UH, RATE. BUT
THERE ARE SOME FACTORS THAT ARE
DRIVING THEM IN THE SAME
DIRECTION, HIGHER INFLATION,
HIGHER UNCERTAINTY IN GENERAL,
LOW INTEREST RATES UP, UM, THE
MORTGAGE RATE HAS GONE FROM
ROUGHLY 6% IN EARLY MARCH TO
6.7% RIGHT NOW. AND THAT HAS A
CONSIDERABLE IMPACT ON THINGS
LIKE RATE REVENUES THAT WE'LL
GET TO, UM, WHEN WE ARE TALKING
ABOUT THE UPDATED OUTLOOK FOR
THAT REVENUE STREAM. UM, SO THAT
THAT'S NOT SO GREAT NEWS ON THE
SLIGHTLY BETTER NEWS IS THAT
AGAIN, THE ECONOMY HAS KIND OF
MUDDLED THROUGH, UM, THE CHANGE
IN THE REAL GDP GROWTH IS
RELATIVELY MINOR. UM, BOTH S&P
GLOBAL AND MOODY'S ANALYTICS
EXPECT 2% YEAR OVER YEAR GROWTH
RATE THIS YEAR. AND THE NEXT
YEAR. IN ADDITION TO THAT, UM,
IN A MORE BROADER SURVEY OF
ECONOMISTS, THE WALL STREET
JOURNAL JULY SURVEY OF
ECONOMISTS, UM, CONDUCTED IN
JULY SHOWED THAT THE PERCEIVED
PROBABILITY OF A RECESSION IN
THE NEXT 12 MONTHS HAS COME
DOWN. SO FROM ROUGHLY 33% IN
APRIL DOWN TO ABOUT 25%, THAT
WAS SOMETIME IN MID-JULY BEFORE
ADDITIONAL FLARE UPS IN, UH, IN
IRAN, FLARE UPS OF HOSTILITIES
IN IRAN. NEVERTHELESS, IT'S
SOMEWHERE, LET'S SAY, AROUND 25
TO 30% CHANCE OF A RECESSION
NEXT YEAR. THAT'S WHERE MOST
ECONOMISTS WOULD PROBABLY PUT
IT. AND SO OVERALL, THE BASELINE
SCENARIO, BASELINE PATH, THAT 2%
GROWTH IS THE MORE LIKELY
OUTCOME. UM NEVERTHELESS, IN
THAT PANEL ON THE RIGHT SIDE
SHOWING THE EMPLOYMENT CHANGE,
SO YEAR OVER YEAR GROWTH IN US,
EMPLOYMENT SHOWS THAT THE
EXPECTATIONS ARE THAT VERY FEW
JOBS WILL BE CREATED. THERE HAS
BEEN A SLOWDOWN IN BOTH ON BOTH
THE SUPPLY AND THE DEMAND SIDE
IN THE LABOR MARKET. IN THE US.
UM, SLIGHTLY HARDER TO SEE, BUT
THAT CURRENT FORECAST IS A
LITTLE BIT ABOVE, UH, COMPARED
TO THE MARCH FORECAST. THE
DARKER RED LINE IS JUST A TINY
BIT ABOVE THE EMPLOYMENT
FORECAST FROM FROM MARCH. UM,
THAT'S THE RESULT OF A COUPLE
OF MONTHS OF GOOD NEWS. UM, UP
UNTIL THIS MORNING, WHERE THE
JOB NUMBERS CAME SIGNIFICANTLY
BELOW EXPECTATIONS AND TOTAL
PAYROLL ACTUALLY DECLINED MONTH
OVER MONTH. UM, FINANCIAL
MARKETS DID NOT REACT BY
DROPPING. THEY ACTUALLY WENT UP.
UM, SO, UH, AGAIN, MUDDLING
THROUGH. THAT'S HOW THIS WOULD
BE DESCRIBED. UM, THERE IS THAT
AI INVESTMENT THAT'S DRIVING
AGAIN, A LOT OF THE, UH, THE
GROWTH, UM, THE WEALTH EFFECTS,
UM, HIGHER STOCK PRICE
VALUATIONS ARE SUPPORTING THE
SPENDING, ESPECIALLY FROM THE
HIGHER INCOME FAMILIES. IN
ADDITION, THE TAX CUTS HAVE
PROVIDED SOME BUFFER AGAINST
THOSE PRICE INCREASES THAT WE
HAVE SEEN AS A RESULT OF HIGHER
OIL PRICES. UM, AGAIN, A LOT OF
RISK HERE BECAUSE OF HOW
CONCENTRATED THAT THAT GROWTH
IS, THE PESSIMISTIC SCENARIO,
THE CURRENT PESSIMISTIC
SCENARIO, ESSENTIALLY ASSUMES
THAT THOSE DISRUPTIONS TO THE
OIL PRICES AND, UM, THE
FOLLOWING IMPACT ON INFLATION
WILL LEAD TO CONSUMER AND
HOUSEHOLD AND BUSINESSES
SPENDING, MUCH LESS, UH, THAT
WILL LEAD TO LAYOFFS. UM,
POTENTIALLY COUPLED WITH THE
SALE OF, IN THE STOCK PRICE
STOCK MARKET SELL OFF, WHERE THE
INVESTMENT IN AI DOES NOT TURN
OUT TO BE AS PROFITABLE AS, UH,
AS THE INVESTORS ARE CURRENTLY
EXPECTING ALL THAT WOULD
CONTRIBUTE TO RECESSION STARTING
IN, UH, 2027, SECOND HALF OF 26
GOING INTO 2027, LASTING THROUGH
THE END OF NEXT YEAR. UM, SO
THAT'S THE PESSIMISTIC
SCENARIO. AND SO WE HAVE THOSE,
UH, BASELINE PESSIMISTIC
SCENARIOS. THERE IS AN
OPTIMISTIC ONE FOR, UM, IN THE
INTEREST OF TIME, WE'RE NOT
GOING THROUGH THAT, BUT WE ARE
DEVELOPING THREE FORECASTS FOR
REVENUES. THE BASELINE, THE
PESSIMISTIC AND THE OPTIMISTIC
ONE. THEY ARE AVAILABLE ON OUR
WEBSITE. AND WE HAVE SHARED THAT
WITH THE STAFF. UM, WE'LL BE
MAKING RECOMMENDATIONS AT THE
END REGARDING THE ADOPTIONS OF,
OF ONE OF THOSE. AND AGAIN,
THESE ARE THE MAIN INPUTS FOR
THE REGIONAL ECONOMIC FORECAST.
AND CONSEQUENTLY THOSE REVENUE
FORECASTS. SO TURNING TO THE
OUTLOOK FOR THE REGION AGAIN
LOOKING QUICKLY AT THE INFLATION
SIMILAR SORT OF, UH, CHANGES AS
IN THE US FORECAST, HIGHER OIL
PRICES THAN EXPECTED LED TO
HIGHER INFLATION THAN INITIALLY.
THAT WAS INITIALLY ANTICIPATED,
SOMEWHERE AROUND 4.5% THROUGHOUT
THIS YEAR, OVER 5% IN THE CASE
OF A CURRENT PESSIMISTIC
SCENARIO. SO AGAIN, MIRRORING
THOSE THOSE CHANGES IN THE
FORECAST FOR THE US WHEN IT
COMES TO THE EMPLOYMENT, UM.
THERE ARE SOME ADDITIONAL
FACTORS, SOME THAT WERE THAT
HAVE CONTRIBUTED TO THE CHANGES,
THE EMPLOYMENT SECURITY
DEPARTMENT REGULARLY REVISES
EMPLOYMENT NUMBERS AND DID THAT
THIS TIME GOING BACK TO 2023,
THE EMPLOYMENT NUMBERS WERE
REVISED DOWN FOR 23 AND 24 AND
SLIGHTLY UP FOR 2025. SO WHAT
THAT DID MECHANICALLY IS THAT
EVEN IF YOU ARE LOOKING BACK
FROM THE DOTTED LINE, SO THAT
THE HISTORICAL DATA, WE ARE
CURRENTLY WHERE THE DOTTED LINE
IS TO THE RIGHT, WE HAVE A
FORECAST TO THE LEFT, WE HAVE
THE HISTORICAL DATA, THE RED
LINE IS NOT ALIGNED WITH THE
PREVIOUS ONE. IT SHOWS LESS OF A
GROWTH IN 2024, LESS OF A
DECLINE IN 2025. SOME SMALL
DECLINES IN EMPLOYMENT NUMBERS
LAST YEAR, BUT NOT AS BIG AS WE
WERE PRESENTING IN MARCH. AGAIN,
THAT'S THE RESULT OF THOSE
REVISIONS TO THE HISTORICAL DATA
THAT THE ESD DOES REGULARLY. IN
THIS PARTICULAR CASE, IT WAS
KIND OF ASYMMETRIC EFFECT. UM,
BEYOND THAT, YOU CAN SEE THAT
GOING TO LOOKING AT THE
FORECAST, GOING TO THE RIGHT OF
THE DOTTED LINE, THE CHANGES ARE
REALLY MARGINAL. THERE IS
SLIGHTLY BETTER GROWTH AND
SLIGHTLY HIGHER GROWTH PREDICTED
IN THE EMPLOYMENT AS A RESULT
OF, UH, MORE OF A MOMENTUM, UM,
SO THOSE SLIGHTLY SMALLER
DECLINES IN 2025 MEANS THAT
THERE WILL BE SMALLER JOB LOSSES
THROUGHOUT 2026. NEVERTHELESS,
WE DO PREDICT THAT THE REGIONAL
ECONOMY WILL END THE CURRENT
YEAR WITH JOB LOSSES. UM, BEFORE
BEFORE IT STARTS TO GROW AGAIN.
THE GROWTH IN 2027 IS HOWEVER,
MINOR. ONLY POINT 4% YEAR OVER
YEAR INCREASE FOLLOWING ROUGHLY
0.3% DECLINE THIS YEAR. UM,
PESSIMISTIC SCENARIO IS AGAIN
THE ONE WHERE RECESSION WOULD
OCCUR WOULD LEAD TO MEANINGFUL
JOB LOSSES. ABOUT 34,000 FEWER
JOBS BETWEEN END OF 25 AND MID
2027. THOSE JOB LOSSES WOULD BE
RECOVERED SOMETIME AT THE END OF
2028. SO AGAIN, JUST TO REMIND
THE PUBLIC, THIS IS KING AND
SNOHOMISH COUNTIES, THAT THE
MAIN INPUT THAT WE ARE USING IN
THE ECONOMIC REGIONAL FORECAST,
BECAUSE THAT'S THE DATA THAT WE
HAVE AND WE WE DON'T REALLY
RECEIVE. UM, UPDATES ON THE
ECONOMIC SITUATION ON THE CITY
LEVEL. THEY OCCUR VERY, UH, WITH
A SIGNIFICANT LAG AND ONLY ONCE
PER YEAR IN PARTICULAR, LAST
MONTH, THE PUGET SOUND REGIONAL
COUNCIL HAS RELEASED CITY LEVEL
EMPLOYMENT ESTIMATES FOR MARCH
2025. SO THEY DO IT ONCE A YEAR
IN JULY FOR MARCH OF A PREVIOUS
YEAR. THE MOST RECENT DATA IS
FOR MARCH 2025. UM, THAT DATA
SET WILL LOOKING AT INDIVIDUAL
CITIES WITHIN REGION, WITHIN
KING COUNTY, AND PROVIDES
ESTIMATES FOR TOTAL EMPLOYMENT.
UM, THE RECENT DATA SHOWS THAT
SEATTLE HAS LOST ABOUT 18,000
JOBS BETWEEN MARCH 24th AND
MARCH 2025. UM, ONE THING TO
NOTE HERE IS THAT THIS IS NOT
REALLY SHOWING THE IMPACT OF
THOSE LARGE LAYOFFS THAT HAVE
BEEN ANNOUNCED RECENTLY BY
AMAZON, MICROSOFT AND META
PLATFORMS, EVEN THOSE THAT WERE
ANNOUNCED IN 2025 WILL ONLY SHOW
UP, UH, SHOW UP NEXT YEAR. AND
THE ONE AFTER THAT. SO WE ARE
GOING TO SEE THE FULL IMPACT
ONLY IN SUMMER 2028, WHEN THE
DATA FOR MARCH 2027 IS RELEASED
BY THE PUGET SOUND REGIONAL
COUNCIL. AND SO SOME SOME REASON
TO BELIEVE THAT THOSE RED BARS
ARE GOING. AND THERE ARE SOME
SIGNIFICANT HEADWINDS THERE. AND
UNLESS SOME JOBS ARE CREATED
ELSEWHERE IN THE ECONOMY, WE ARE
GOING TO SEE ADDITIONAL YEAR
OVER YEAR DECLINES IN TOTAL
EMPLOYMENT.
-- THANK YOU. DIRECTOR, BEFORE
WE MOVE ON THERE, UH, AM I
READING THIS CORRECTLY WITH THE
EMPLOYMENT NUMBERS FROM 2020 AND
THEN 2021, LOOKS LIKE WE LOST A
LOT OF EMPLOYEES AND THEN WE
REHIRED THEM.
-- YEAH.
-- IS THAT WHAT HAPPENED?
-- OKAY, SO THE 2020 AND 2021,
AGAIN, THE TIMING HERE IS A
LITTLE BIT, UH, NOT NOT
INTUITIVE. UH, THE MARCH 2020 IS
ESSENTIALLY THE POINT RIGHT
BEFORE THE PANDEMIC. AND IF YOU
REMEMBER WHAT WAS HAPPENING BACK
IN MARCH, UM, THE LOCKDOWNS ONLY
OCCURRED SOMETIME LATER IN THE
MONTH, FIRST HALF OF A MONTH.
DID NOT SEE ANY IMPACT ON, ON
PANDEMIC YET. AND SO THE DATA
THAT, UH, RELEASED, THAT WAS
RELEASED FOR MARCH 2020 IS
SHOWING MINIMAL IMPACT OF COVID
ON EMPLOYMENT NUMBERS. THEN THE
FULL IMPACT OR THE BRUNT OF IT
WAS, UH, IN THE RELEASE FOR
MARCH 2021. SO THAT SHOWED WHAT
HAPPENED THROUGHOUT THE YEAR
2020 AND EARLY 2021. AND SO
THOSE TWO BIG DROPS, UH, THOSE
TWO BIG BARS, THEY ARE FOR MARCH
2021 AND SHOW THE CHANGE BETWEEN
MARCH 21st, MARCH 20th AND MARCH
21st. AND THOSE ARE THE THOSE
SIGNIFICANT JOB LOSSES THAT HAVE
THEN OVER TIME, UM, THE ECONOMY
HAS RECOVERED SLOWLY, BUT
OVERALL, THERE WASN'T, UM, ANY
MEANINGFUL GROWTH ON THE
REGIONAL LEVEL. WE ARE STILL
HOVERING SOMEWHERE SLIGHTLY
BELOW THE TOTAL PRE-PANDEMIC
NUMBERS. AND FOR CITY OF
SEATTLE, WE ARE ACTUALLY
SIGNIFICANTLY BELOW. THERE WAS A
SIGNIFICANT DECLINE IN TOTAL
EMPLOYMENT.
-- YEAH. THIS IS A REALLY
HELPFUL CHART BECAUSE IT TELLS
THE STORY OF THE 2008 RECESSION.
THEN THE TEN YEARS OF HIGHEST
WERE FASTEST GROWING CITY IN THE
NATION FOR THOSE TEN YEARS,
WHICH GAVE US A LOT OF ONE TIME
FUNDS THAT WE STARTED FUNDING
ONGOING PROGRAMS WITH, WHICH IS
PART OF HOW WE GOT TO A
STRUCTURAL BUDGET DEFICIT. THIS
IS JUST REALLY HELPFUL TO SHOW
THAT GROWTH. WE THEN LOST A LOT
OF JOBS IN THE PANDEMIC AND
REGAINED THEM. BUT THEN FROM
THERE, WE HAD A SHORT GROWTH.
LOOKS LIKE OTHER CITIES IN KING
COUNTY GREW FASTER, AND SINCE
THEN, OTHER CITIES IN KING
COUNTY ARE ABOUT FLAT. BUT WE
ARE LOSING JOBS. AND DID YOU SAY
WE'VE LOST 18,000 JOBS BETWEEN
25 AND 26.
-- 24 AND 25? SO AGAIN, LAST
YEAR, FOR WHICH WE HAVE THE DATE
MARCH 25th, AND 18,000, THAT RED
BAR AT THE VERY END, THAT SHOWS
ABOUT 3% DECLINE. THAT
REPRESENTS ABOUT 18,000 JOBS IN
SEATTLE, RIGHT.
-- THANK YOU. WAS MY SUMMARY.
ESSENTIALLY, WHAT YOU SEE AS
WELL? YEAH, YEAH. THANK YOU.
APPRECIATE. I MEAN, I THINK
IT'S JUST VERY DESCRIPTIVE OF
HOW DID WE GET TO WHERE WE ARE
TODAY AND WHAT ARE WE DOING
ABOUT IT?
-- RIGHT. UM, SO THERE IS A
LITTLE BIT MORE DETAIL IN THE
DATA THAT WAS RELEASED, UH,
ESSENTIALLY SHOWING AGAIN, THE
DECOMPOSITION BY INDUSTRY
SHOWING WHERE THOSE, UH, LOWER
JOB NUMBERS ARE COMING FROM, HOW
INDIVIDUAL INDUSTRIES FARED
BETWEEN MARCH 20th AND MARCH
25th. AGAIN, MARCH 20th IS RIGHT
BEFORE PANDEMIC. UH, AND MARCH
2025. THAT'S MORE THAN A YEAR
AGO, BUT THAT'S THE MOST RECENT
DATA THAT WE HAVE. THE TOTAL
CHANGE FOR SEATTLE IS, UH, IS
SOMEWHERE AROUND 25000 JOBS LOST
BETWEEN MARCH 20th AND MARCH
25th. UM, KING COUNTY AS A WHOLE
ADDED ABOUT 21,000 JOBS IN
DURING THE SAME PERIOD. UH, THE
LOSSES IN, IN SEATTLE ARE RATHER
BROAD BASED. AND WITH THE
EXCEPTION OF PRIVATE EDUCATION
AND HEALTH SERVICES AND
GOVERNMENT, MOST OTHER SECTORS
HAVE DECLINED, SOME MORE SO THAN
OTHERS. UM INFORMATION SECTOR UM
DECLINED NOTABLY. UM THAT'S
AGAIN NOT, NOT REALLY THOSE
RECENT LAYOFFS. UH, THERE WAS
ONE ROUND OF LAYOFFS SOMEWHERE
IN 2023, BUT THE IMPACT OF 25
AND 26 IS NOT HERE. TRADE AND
PROFESSIONAL BUSINESSES, SAME
SORT OF THING. THEY DECLINED,
UH, ABOUT AS MUCH AS INFORMATION
SECTOR. ONE MORE THING TO NOTE
HERE. THE DATA, THE WAY HOW, UH,
IT'S, UH, ASSEMBLED AND HOW
IT'S, HOW IT'S CONSTRUCTED
DOES NOT ALLOW TO SEPARATE OUT
THE TRADE SECTOR FROM
PROFESSIONAL AND BUSINESS
SERVICES. THERE WAS
RECLASSIFICATION OF SOME
ACTIVITIES. NON-STORE RETAILERS,
E-COMMERCE, UM, ESSENTIALLY WAS,
UH, MOVED AROUND AND THAT MOVED
A SIGNIFICANT NUMBER OF JOBS
BETWEEN THOSE TWO CATEGORIES. SO
THE CHART SHOWS THEM, SHOWS THEM
AS A COMBINED SINGLE TRADE PLUS
PROFESSIONAL AND BUSINESS
SERVICES CATEGORY. HERE UM,
CONSTRUCTION SECTOR, OBVIOUSLY
THERE'S SIGNIFICANTLY LESS
DEMAND FOR OFFICE SPACE, HIGHER
INTEREST RATE MAKE FINANCING,
UM, FINANCING HARDER.
MANUFACTURING HAS NOT REALLY
BENEFITED FROM HIGHER INTEREST
RATES. THERE WASN'T ANY SORT OF
CONSTRUCTION BOOM THAT THAT
WOULD FOLLOW THAT. SO WE ARE
AGAIN SEEING FEWER JOBS THAN IN
2020. SO THAT'S, UH, THE YEAH,
THAT THAT'S THE TIME FOR PAUSE
NOW. HAPPY TO TAKE ANY QUESTIONS
REGARDING ECONOMIC SITUATION AND
OUTLOOK.
-- THANK YOU COLLEAGUES.
QUESTIONS ON THE ECONOMIC
ENVIRONMENT IN WHICH WE ARE IN
SEEING NONE. I THINK WE'RE ALL
JUST PINS AND NEEDLES. WE LOSE.
DID WE WIN? WHAT ARE WE WHERE
ARE WE AT.
-- TODAY? RIGHT. SO THERE ARE A
LOT OF, UH, CROSSWINDS HERE.
BEFORE WE LOOK AT THE NUMBERS,
JUST TO, AGAIN, REMIND MEMBERS
OF THE PUBLIC THAT ARE MAYBE NOT
WATCHING IT EVERY TIME OR FORGOT
SINCE LAST TIME WE WERE
PRESENTING IT. UM, WE ARE NOW IN
THE MIDDLE OF 2026, BUT FOR SOME
REVENUE STREAMS, WE HAVE NOT
EVEN SEEN HALF OF ALL THE ANNUAL
REVENUES COMING IN. OVERALL,
IT'S ABOUT A THIRD OF GENERAL
FUND REVENUES THAT WE WOULD GET
BY THIS POINT. POINT IN THE
YEAR, BUT IT'S SIGNIFICANTLY
VARIES BY THE REVENUE STREAM.
AND THAT CHART ON THE RIGHT
SHOWS HOW BETWEEN THE APRIL AND
THE AUGUST FORECAST, WE RECEIVE
ADDITIONAL INFORMATION IN THE
FORM OF TAX RETURNS. BUT EVEN
WHEN WE GET TO THE OCTOBER
FORECAST, OVERALL AMOUNT OF FOR
SOME REVENUES, IT'S LESS THAN
HALF OF THE REVENUES RECEIVED
FOR BUSINESS AND OCCUPATION TAX
FOR PAYROLL EXPENSE TAX. IT'S
AGAIN, NOT NOT EVEN HALF THAT WE
GET FOR REAL ESTATE EXCISE TAX
THAT THOSE RETURNS ARE COMING.
UM WITH LESS OF A DELAY.
SIMILARLY FOR FOR UTILITY TAXES.
SO WHAT THAT MEANS IS THAT THE
CURRENT FORECAST IS ESSENTIALLY
BASED ON WHEN IT COMES TO MAIN
REVENUE STREAMS. IT'S BUILT ON
THE FIRST FIVE MONTHS OF SALES
TAX REVENUE DATA AND FULLY
INCORPORATES THE FIRST QUARTER
BUSINESS AND OCCUPATION RETURNS.
NOW, THE RESTRUCTURE HAS SHIFTED
SOME OF THOSE, UH, UM, SOME OF
THOSE PAYMENTS TOWARDS LATER OF
THE YEAR AND THE CHARTS
INCORPORATES THE IMPACT OF, OF
THAT, THE IMPACT OF THE 2
MILLION DEDUCTION, THAT KIND OF
POSTPONED SOME OF THE PAYMENTS
TOWARDS LATER PART OF THE YEAR.
AT THIS POINT, UH, THERE IS
ABOUT 90% OF Q2 FILINGS ALREADY
IN, BUT IT'S NOT FULLY
INCORPORATED IN THAT FORECAST.
AGAIN, GIVEN THE DELAY BETWEEN
WHEN WE HAVE THE DATA AVAILABLE,
HOW MUCH TIME IT TAKES TO UPDATE
THE FORECAST AND TO PRESENT IT.
UM, BUT WE SEEM TO BE TRENDING
ROUGHLY IN LINE WITH THE
BUSINESS AND OCCUPATION TAX
FORECAST. OVERALL. UM, AND I'LL
SPEAK TO THAT IN JUST A MINUTE.
OVERALL, WE HAVE SENT OUT A
SECOND QUARTER REVENUE REPORT
AND IT'S AVAILABLE ON OUR
WEBSITE. IT SHOWS THAT OVERALL
THE GENERAL FUND IS ONLY
SLIGHTLY BELOW WHERE WE WERE
EXPECTING IT TO BE BY THE END OF
SECOND QUARTER, LESS THAN A
MILLION, ABOUT 0.12%, EXCLUDING
GRANTS AND FUND BALANCE
TRANSFERS DUE TO TECHNICAL
REASONS. UH, THE GENERAL FUND IS
ACTUALLY SLIGHTLY ABOVE, UM, 7.5
MILLION OR 1.2% HIGHER THAN THAN
ANTICIPATED. AGAIN, VERY
SIGNIFICANTLY BY THE REVENUE
STREAM. AND WE ARE NOW GETTING
TO THOSE, UH, ADDITIONAL FACTORS
BEYOND CHANGES IN THE ECONOMIC
ENVIRONMENT. UM, THERE ARE A LOT
OF CROSSWINDS HERE. THE, THE
REVENUE HAS THE REVENUE
COLLECTION TO DATE HAS
SIGNIFICANTLY BENEFITED FROM THE
SB 5814, WHICH RECLASSIFIED SOME
ACTIVITIES FROM SERVICE TO
RETAIL AND ESSENTIALLY EXPANDING
THE TAX BASE FOR THE SALES TAX.
UM, THAT'S CLEARLY VISIBLE IN
THOSE LAST FIVE SET OF BARS
STARTING JANUARY 2026, THE YEAR
OVER YEAR GROWTH RATE FOR SALES
TAX IS ON AVERAGE ABOUT 10%.
THERE IS A SIGNIFICANT SPIKE IN
MARCH, BUT AVERAGING THOSE
COUPLE OF MONTHS, IT'S ABOUT 10%
YEAR OVER YEAR INCREASE. UM
IT'S PRIMARILY INFORMATION AND
PROFESSIONAL AND BUSINESS
SERVICES SECTORS. THEY HAVE
CONTRIBUTED ABOUT 5% 5.6% TO THE
OVERALL GROWTH. SO THOSE ARE THE
ACTIVITIES THAT WERE AGAIN
RECLASSIFIED FROM FROM SERVICE
TO RETAIL. THOSE ARE UNDER
WHAT'S LABELED IN THE CHART AS
REST OF INDUSTRIES. UH, THOSE
PURPLE BARS THAT ARE SHOWING
SIGNIFICANT YEAR OVER YEAR
GROWTH, TRADE HAS CONTRIBUTED
ABOUT 2.5%. LEISURE AND
HOSPITALITY, MINOR POSITIVE
CONTRIBUTION, 0.7 FOR
CONSTRUCTION SECTOR. WE ARE
CONTINUING TO SEE DECLINES, BUT
MUCH SMALLER. IF YOU LOOK AT
THOSE YELLOW BARS, UM, THE
DECLINES HAVE KIND OF FLATTENED
OUT COMPARED TO WHAT WE WERE
SEEING TWO YEARS, THREE YEARS
AGO. SO THAT'S ESSENTIALLY
THOSE LARGE INCREASE IN THE
SALES TAX ARE ESSENTIALLY
WHAT'S DRIVING THE MAJORITY OF
THE REVISION IN THE IN THE
FORECAST HERE. AND IT'S A LARGE
TABLE WITH LOTS OF NUMBERS
LOOKING FIRST AT THE VERY BOTTOM
ROW, THE TOTAL GENERAL FUND
WITHOUT GRANTS AND TRANSFERS AND
SPECIFICALLY LOOKING AT THE
CHANGE FOR 2026 REVENUES, IT'S A
24.5 MILLION TO THE PLUS SIDE.
UM, AND LOOKING UP AT THOSE
INDIVIDUAL STREAMS, 19.9 SO
ALMOST 20 MILLION IS COMING FROM
ADDITIONAL SALES TAX REVENUES.
AGAIN, WE HAVE SEEN SIGNIFICANT
INCREASE YEAR OVER YEAR. IT WAS,
UH, MORE IT WAS ACTUALLY HIGHER
GROWTH THAN WE WERE PREDICTING.
UH, OUR FORECAST BY CONSTRUCTION
IS IN GENERAL TENDS TO BE
CONSERVATIVE. AND SO WE ARE
SEEING MORE REVENUES FROM SALES
TAX THAN THAN PREDICTED. UM, IT
WAS ABOUT 4.5 MILLION FOR THE
FIRST HALF OF THE
-- YOUR EXTENDING IT TO THE REST
OF THE YEAR, THAT WOULD
ESSENTIALLY BRING IT SOMEWHERE
TO TEN FOR REGULAR AND OPTIONAL
SALES TAX. IN ADDITION, WE HAVE
SEEN SOME NONCURRENT PAYMENTS.
ABOUT 5 MILLION OF THOSE. SO
THAT ALSO EXPLAINS WHY THERE IS
LESS OF AN INCREASE PREDICTED
FOR 2027 FOR SALES TAX REVENUES,
AND ALSO LESS OF AN INCREASE
PREDICTED FOR 2028 REVENUES SO
SALES TAX OVERALL ADDED ABOUT 48
BILLION OVER THE THREE YEARS.
THAT'S ABOUT 5%. THE OVERALL
YEAR OVER YEAR GROWTH HERE
BETWEEN 2025 AND 2026 IS QUITE
SIGNIFICANT. THAT'S PRIMARILY
AGAIN, THOSE LEGISLATIVE
CHANGES. UM, SB 5814 AND THEN
THE NEW UM PUBLIC SAFETY SALES
TAX, THE 0.1 PERCENT NEW TAX
THAT'S ADDING ABOUT 4 MILLION.
THEY COMBINED ADD TO A
SIGNIFICANT GROWTH. AND SO FOR
TOTAL GENERAL FUND WITHOUT
GRANTS AND TRANSFERS, IT'S A
10.6 YEAR OVER YEAR GROWTH THIS
YEAR FOLLOWED BY UM FOLLOWED BY
3.6% NEXT YEAR. AND THEN 4.3 THE
YEAR AFTER THAT. AGAIN, A LOT OF
IT COMING FROM SALES TAX,
SMALLER REVISIONS TO THE
BUSINESS AND OCCUPATION TAX TO
THE DOWNSIDE. THAT HAS TO DO
WITH THE CHANGES IN THE
COMPOSITION OF EMPLOYMENT, THE
INCORPORATION INCORPORATING THE
IMPACT OF OF THE LAYOFFS,
INCORPORATING THE HIGHER
INTEREST RATE THAT ARE EXPECTED
TO SLOW DOWN THE ECONOMIC
ACTIVITY. UM, AND THERE IS THAT
ASYMMETRIC EFFECT OF 5814 ON
SALES TAX AND BUSINESS
OCCUPATION TAX. THE
RECLASSIFICATION, UM LEADS TO
LOWER BUSINESS AND OCCUPATION
TAX REVENUE. SO AS A RESULT OF
HIGHER PREDICTED REVENUES FOR
SALES TAX AND MECHANICALLY HAVE
ACTUALLY SMALLER BUSINESS AND
OCCUPATION TAX REVENUES. THAT
SAID, OVERALL, THE FORECAST, AS
I SAID, AS THE THE THE CHANGES
ARE SMALLER HERE BECAUSE WE HAVE
BEEN MORE MORE SUCCESSFUL. IT
APPEARS AT THIS POINT WE HAVE
BEEN MORE SUCCESSFUL PREDICTING
THE IMPACT ON BUSINESS AND
OCCUPATION TAX RATHER THAN SALES
TAX. THE CAVEAT HERE IS THAT WE
ONLY HAVE FIRST QUARTER IN AND
ABOUT 90% OF THE SECOND QUARTER
IN. SO THERE IS SOME, UH, SOME
UNDERLYING UNCERTAINTY ABOUT HOW
THINGS ARE GOING TO LOOK A
COUPLE OF MONTHS FROM NOW. AND
I'LL HAND IT OVER TO, TO SEAN
TO TALK ABOUT PRIVATE UTILITY
TAXES.
-- THANK YOU, JOHN. YES. SO
PRIVATE UTILITY TAXES, WHICH IS
COMPOSED OF CABLE, TELEPHONE,
NATURAL GAS, STEAM, AND I
BELIEVE SOLID WASTE AS WELL,
THAT HAS BEEN GIVEN A SLIGHT
REVISION DOWNWARD, PRIMARILY
CAUSED BY CABLE, TELEPHONE AND
STEAM REVENUES FOR THE MOST
RECENT YEAR OR MOST RECENT
QUARTER. UM, AS A RESULT, OR I
SHOULD SAY THAT THOSE TAX
REVENUE STREAMS HAVE VERY
CONCENTRATED TAX BASES. SO THEY
CAN BE QUITE VOLATILE. FOR
EXAMPLE, STEAM IS PRIMARILY
THEIR CUSTOMER BASE IS MOST
BUILDINGS WITHIN DOWNTOWN. SO IT
CAN BE REALLY SENSITIVE TO EVEN
ONE BUILDING GOING OFF OF STEAM,
FOR EXAMPLE. UM, THERE WERE SOME
UPWARD REVISIONS IN NATURAL GAS.
UM, IT WAS DUE TO AN APPROVED
RATE INCREASE FOR THE STATE, AND
IT WAS ROUGHLY ABOUT 14%
INCREASE. THAT RAISES THE BASE
FOR NEXT YEAR AND RAISES OVERALL
THE FORECAST UM, SOME UPSIDE
RISK WITH THAT AS WELL. IS THAT
UM THERE IS ANOTHER PLANNED RATE
INCREASE ABOUT THE SAME AMOUNT,
BUT IT MIGHT BE REVISED DOWNWARD
WHEN IT'S APPROVED. UM BUT
OVERALL PRIVATE UTILITIES ARE
SLIGHTLY DAMPENED FROM THE APRIL
FORECAST MOSTLY DRIVEN BY SMALL
REVISIONS. AND THESE SMALL TAX
REVENUE STREAMS THAT RESULTS IN
A 5.8 MILLION REDUCTION ACROSS
THE LAST THREE YEARS COMPARED TO
APRIL. BACK TO CBO.
-- THANKS, JOHN. UM, I'LL TAKE
PROPERTY TAX. PROPERTY TAX IN
THIS TABLE INCLUDES BOTH THE
CITY'S GENERAL EXPENSE PROPERTY
TAX AS WELL AS THE CITY'S SHARE
OF THE EMS. MEDIC ONE LEVY, UM,
WE SEE QUITE A BIT OF A BUMP IN
2027 AND 2028. UM, A SMALL SHARE
OF THAT IS DUE TO, UM, UPWARD
REVISIONS OF NEW CONSTRUCTION IN
SEATTLE, UH, WHICH IS, UM,
GARNERING US A BIT MORE
COLLECTIONS ON OUR GENERAL
EXPENSE PROPERTY TAX. BUT MOST
OF IT IS ACTUALLY DRIVEN BY THE
EMS LEVY. AND SO, UM, JUST TO
BRIEFLY EXPLAIN WHAT'S GOING ON
BEHIND THE SCENES THERE. UH, SO
THE RATE ON THE COUNTY LEVY, THE
TAX RATE ON THE COUNTY LEVEL
LEVY IS DETERMINED BY TOTAL
COUNTY COLLECTION SPREAD OVER,
UM, THE TAX BASE, WHICH IS THE,
WHICH IS TOTAL KING COUNTY
ASSESSED VALUE. UM, THE
COUNTY'S EXPECTATION OF THEIR A
V UM, IN THEIR MOST RECENT
FORECAST, WHICH IS JULY WAS
ACTUALLY REVISED PRETTY
SIGNIFICANTLY DOWNWARD, UM FROM,
COMPARED TO MARCH. UM, THAT
MEANS THAT THAT ACTUALLY PUSHES
THE TAX RATE UP, WHICH ENDS UP
BENEFITING THE CITY. UM, ON TOP
OF THAT, GIVEN THE HIGH, SO THE
CITY SHARE IS CALCULATED USING
THE OVERALL TAX RATE AND THE
CITY'S EXPECTATION OF OUR
ASSESSED VALUE. AND SO OUR
EXPECTATION OF ASSESSED VALUE
ACTUALLY WENT UP. SO BOTH UM SO
THE MOVEMENT IN RAV AND THE KING
COUNTY EXPECTATIONS ARE BOTH
BENEFITING HOW MUCH WE'RE
COLLECTING FROM THE EMS LEVY UH,
UTILITY TAX PUBLIC. SO THIS
INCLUDES UM, TAX ON UTILITY
REVENUES FROM ELECTRICITY, WATER
DRAINAGE, WASTEWATER, SOLID
WASTE AND TONNAGE. UM, SO OFTEN
THERE'S THOSE PIECES MOVE UP
AND DOWN WITHIN THIS CATEGORY ON
NET, WE CAN SEE THAT IT'S
PRETTY STABLE. UH, IN 27, 28, 26
WAS REVISED A LITTLE BIT UPWARD,
UM, DUE TO ACTUALS PERFORMING
BETTER THAN EXPECTATIONS. UM,
PARTICULARLY WITH WATER AND
ELECTRICITY AND THEN OTHER CITY
TAXES COMPRISES SEVERAL SMALL,
FAIRLY SMALL CITY TAXES THAT SUM
UP TO ABOUT 16 MILLION PER YEAR.
UM, THIS WAS REVISED DOWN A
LITTLE BIT FOR 26 DUE TO ACTUALS
ACTUALLY PERFORMING A LITTLE BIT
WORSE FOR LEASEHOLD EXCISE TAX,
AS WELL AS TNC TAX. UM, WHICH
HAS NOT BEEN FARING TOO WELL,
UM, EVER SINCE THE PANDEMIC
ACTUALLY GIVEN, UM, NOT ONLY LOW
DEMAND, BUT ALSO LOW SUPPLY OF
DRIVERS AND I WILL PASS IT TO
JOE.
-- I'LL SPEAK TO THE PARKING
METERS LINE HERE IN THIS TABLE.
UM, THIS LINE IS COMPOSED
ESSENTIALLY OF TWO REVENUE
STREAMS. ONE IS UM THE, WHAT YOU
PAY IN THE PARKING METERS ON THE
STREET. THE OTHER IS WHAT WE
CALL METER HOODING REVENUES. AND
THAT'S KIND OF AN ANTIQUATED
TERM FOR WHEN YOU, UH, RESERVE A
PAID PARK, WHEN YOU PAY TO
RESERVE SPOTS THAT ARE NORMALLY
PAID PARKING. SO THE PARKING
METERS FORECAST IS DOWN A BIT.
UM, WE DID SEE A RATE
ADJUSTMENT, ONE OF THE NORMAL
RATE ADJUSTMENTS DURING THE YEAR
BACK IN THE SECOND WEEK OF MAY,
THE RATES WERE ADJUSTED A LITTLE
HIGHER THAN PREVIOUSLY EXPECTED
IN THE APRIL FORECAST. BUT WE
CONTINUE TO SEE TRANSACTIONS
UNDER PERFORMING. UM, SO
SOMETHING OF A WASH THERE IN
TERMS OF THE UM PARKING METER
FORECAST. UM THE METER HOODING
FEES HAVE BEEN UM ADJUSTED
UPWARDS SLIGHTLY. THEY OF THE
FIRST HALF OF THE YEAR. THOSE
REVENUES HAVE COME IN STRONGER
THAN WE HAD PREVIOUSLY
ANTICIPATED. UM SO THAT FORECAST
IS UM IS RESPONSIBLE FOR SOME OF
THE BUMP YOU SEE IN THOSE IN 27,
28 UM, LOOKING AT THE, THE NEXT
ROW, WHICH IS LABELED COURT
FINES HERE, UH, THIS IS COMPOSED
OF QUITE A FEW DIFFERENT SMALL
FINES THAT THE CITY IMPOSES. UM,
THE VAST MAJORITY OF WHAT WE SEE
IN THIS LINE IS ACTUALLY PARKING
CITATIONS. UM, WE IN THE APRIL
FORECAST, THERE WAS QUITE A BIT
OF CHANGE TO THIS REVENUE
STREAM. UM, THERE HAVE BEEN
SOME, THERE HAVE BEEN DEPRESSED,
UH, CITATIONS FROM PARKING
ENFORCEMENT STARTING IN LATE
NOVEMBER. UM, A LOT OF THAT IS
DUE TO VARIOUS LABOR ISSUES.
SOME OF THAT IS INTO 26. WE'VE
SEEN LOWER CITATIONS DUE TO SOME
CHANGES IN STATE LAW THAT LIMIT
LICENSE PLATE READERS. THE USE
OF THAT TECHNOLOGY. UM, SO, UH,
THAT WAS INCORPORATED INTO THE
APRIL FORECAST, BUT IT SEEMS NOW
THAT REVENUES IN 26 ARE THE
CITATION VOLUMES, RATHER IN 26
ARE OVERPERFORMING. WHAT WE, THE
RELATIVELY CONSERVATIVE FORECAST
WE HAD IN APRIL. UM, SO THAT'S
RESPONSIBLE FOR THE UPWARD
ADJUSTMENT THERE. AND UM, AND
THAT FLOWS THROUGH INTO THE OUT
YEARS AS WELL. UM, SO WE'RE
SEEING A RECOVERY IN THOSE
CITATIONS THAT'S CLOSER TO WHAT
WE EXPERIENCED EARLIER IN 2025.
UM, THOUGH WE'RE NOT QUITE
THERE YET CERTAINLY, BUT BEATING
OUR APRIL FORECAST, UM, ALEX,
YOU SPEAK TO THE NEXT ROW THERE.
-- YEAH. SO LICENSES, PERMITS,
INTEREST INCOME AND OTHER.
THAT'S A MOUTHFUL. UM, MOST OF
THAT IS FEE REVENUE FROM
LICENSES AND PERMITS. UM SOME OF
IT IS INTEREST INCOME, WHICH IS,
UH, INTEREST EARNINGS ON THE
GENERAL FUND FUND BALANCE. AND
SO IN 2026, UM, THERE'S ABOUT A
$2 MILLION REVISION UPWARD, UM,
DUE TO, UM, BOTH ACTUALLY A,
SOME FEE FOR FUNDING AS WELL AS,
UM, AS WELL AS THE NETWORK
COMPANY FEE ACTUALLY ON APP
BASED DELIVERY. THAT WAS
EFFECTIVE LAST YEAR, BUT TAX
COLLECTIONS ONLY STARTED THIS
YEAR. AND SO WE WILL ESSENTIALLY
COLLECT ABOUT TWO YEARS WORTH OF
REVENUE THIS YEAR FROM THAT FEE
IN THE OUT YEARS FOR 2728, WE
SEE A BIT OF A BUMP UPWARD, UM,
ACTUALLY DUE TO INTEREST INCOME.
UM, THE EXPECTATION FOR SHORT
TERM TREASURY YIELDS HAS GONE
UP. UM, MOSTLY GIVEN THE
EXPECTATION THAT THE FED WILL
NOT MOVE TO CUT RATES AND MIGHT
EVEN HIKE THEM THIS YEAR. UH,
REVENUE.,
-- REVENUE FROM OTHER PUBLIC
ENTITIES IS COMPOSED MAINLY OF
TRANSFERS THAT THE CITY RECEIVES
FROM THE STATE. UNDER STATE LAW,
CERTAIN STATE REVENUES ARE
SHARED WITH COUNTIES AND
MUNICIPALITIES. UM, THE CHANGE
WE SEE HERE IS DRIVEN BY UM, TWO
DIFFERENT, UH, STATE SHARED
REVENUES, MAINLY FROM THE LIQUOR
EXCISE TAX AND SOMEWHAT FROM THE
MARIJUANA EXCISE TAX. UM, THE
STATE PUBLISHES GROWTH FACTORS
FOR THE OUTLOOK FOR THESE SHARED
REVENUES. AND THERE HAS BEEN AN
UPDATE SUBSEQUENT TO THE APRIL
FORECAST AND THE OUTLOOK FOR THE
LIQUOR EXCISE TAX PROFIT, UH,
REVENUES AS WELL AS THE
MARIJUANA EXCISE TAX REVENUES
WERE UM WERE DOWNGRADED SINCE
THE APRIL FORECAST. SO THAT IS
RESPONSIBLE FOR THE DOWNGRADE OF
ABOUT 1.2 MILLION OVER THE THREE
YEAR PERIOD IN THIS TABLE.
-- AND THEN SERVICE CHARGES AND
REIMBURSEMENTS. UM, A LOT OF THE
REVENUES THAT GO INTO THIS
CATEGORY ARE INTERNAL SERVICE
CHARGES. SO CHARGE CHARGES THAT
ARE, UM, REVENUES THAT
DEPARTMENT GET DEPARTMENTS GET
FOR THEIR SERVICES TO OTHER
DEPARTMENTS, UM, THE, IN 2026,
THE 1.7 MILLION ACTUALLY POINTS
TO SOME REVENUE TO THE LAW
DEPARTMENT THAT ACTUALLY WAS
SHIFTED FROM 25 TO 26. UM, AND
27 AND 28. UM, SO AGAIN, THESE
ARE, UM, VARIOUS
INTER-DEPARTMENTAL CHARGES THAT
HAVE BEEN MOVING UP AND DOWN.
UM, THIS, UH, SO ON NET, WE ARE
ASSUMING, UM, AN INCREASE TO
THOSE CHARGES OVERALL. UH, AND
THEN GRANTS IN 2026, THE 18.3
MILLION IS, UM, COMPLETELY,
ENTIRELY FROM THE MIDYEAR
SUPPLEMENTAL AS WELL AS MORE FEE
FOR FUNDING, UM, SEVERAL MILLION
IN FEE FOR FUNDING IN 2728.
THESE ARE REVISED EXPECTATIONS
FOR GRANTS THAT ARE NOW ASSUMED
TO BE ONGOING INTO THE BIENNIUM
AND THEN FINALLY FUND BALANCE
TRANSFERS. UH, THIS -1 MILLION,
UM, IS SIMPLY A CORRECTION OF AN
ERROR TO THE PAYROLL EXPENSE TAX
TRANSFER, WHICH IS THE BULK OF
THIS CATEGORY
-- ALL RIGHT. SO OVERALL IT'S
59.4 MILLION MORE OVER THREE
YEARS. THAT'S ROUGHLY 1.1% MORE
IN REVENUES PREDICTED FOR THOSE
THREE YEARS FOR THE GENERAL
FUND. MOVING TO THE NON-GENERAL
FUND REVENUES. UH, YEAH.
-- YEAH. DIRECTOR. JUST BEFORE
WE MOVE ON, I WANTED TO NOTE IN
THE EARLIER PART OF THE
PRESENTATION, YOU NOTED THAT WE
WERE MUDDLING THROUGH OUR
ECONOMY. WE'VE SEEN THIS FOR
THE LAST SEVERAL YEARS OF SLOW
OR THERE WAS ONE MOMENT,
NEGATIVE GROWTH THAT WE WERE
CONCERNED WITH IN HERE, WE HAVE
$59 MILLION OVER THREE YEARS,
WHICH IS A LOT OF MONEY. BUT IN
THE CONTEXT OF OUR CITY'S BUDGET
AND OUR GENERAL, WHEN WE RECEIVE
THESE REPORTS EVERY, YOU KNOW,
THREE TIMES A YEAR IN THE PAST
WHEN WE'VE BEEN IN OUR HIGH
GROWTH PERIOD, WHAT WERE OUR
CHANGES AT THAT POINT? WAS IT
TWICE THIS THREE TIMES THIS A
HALF OF THIS? WHAT ARE WE SEEING
GENERALLY OVER THE COURSE OF
TIME HERE?
-- YEAH. SO AGAIN, 59 MILLION IS
A LOT, BUT NOT OUT OF IF YOU ADD
UP THE THREE YEARS, UH, 1.8,
1.8, 1.9 BILLION. SO IT'S OUT
OF ROUGHLY 6 BILLION. UM, SO
AGAIN, JUST 1.1%. SO THAT THE
SMALL SORT OF REVISIONS IN THE
GRAND SCALE, THEY WERE
DEFINITELY MUCH LARGER REVISIONS
DURING COVID. UM, BEFORE THAT,
FOR THE TEN YEARS BEFORE THAT,
WHAT WAS USUALLY HAPPENING IS
THAT THE GROWTH WAS EXCEEDING
EXPECTATIONS DURING THE
CONSTRUCTION BOOM. THE TECH
SECTOR, BOOM BETWEEN 2010 AND
2019, THE FORECAST REVISIONS
WERE UP BECAUSE OF THOSE CHANGES
IN BETTER OUTLOOK HERE. A LOT OF
IT IS AGAIN, DRIVEN BY CHANGES
DUE TO THE LEGISLATION, NOT
REALLY BIG CHANGES IN THE
ECONOMIC OUTLOOK, WHICH AGAIN
DID NOT CHANGE MUCH. KIND OF
STILL ROLLING THROUGH THERE.
-- SO IF WE HAD NOT HAD THESE
LEGISLATIVE CHANGES, WE MIGHT BE
AT A 0% INCREASE RATHER THAN A.
-- YEAH. SO IT WOULD BE TOUGH
WITHOUT THOSE ADDITIONAL
REVENUES IN SALES TAX,
ADDITIONAL REVENUES IN BUSINESS
OCCUPATION TAX. YES.
-- AND JUST HIGHLIGHTING AGAIN
THAT THESE THIS THIS POSITIVE
NEWS IS NOT NECESSARILY FROM
ECONOMIC GROWTH, RATHER FROM
CHANGES IN LAW.
-- YEAH. AND THE WAY HOW HOW WE
WERE ASSUMING A MORE
CONSERVATIVE, WE WERE TAKING A
MORE CONSERVATIVE APPROACH AND
ADDING THOSE REVENUES. WELL, THE
ACTUAL REVENUES EXCEEDED OUR
EXPECTATIONS WITH ADDITIONAL
REVENUES FROM NEW SALES TAX HAS
EXCEEDED OUR EXPECTATIONS. AND
THAT'S.
-- THANK YOU. AND MY LAST
COMPLIMENTS TO JOE. WE HAVE
GOTTEN OVER THE BOW WAKE OF OUR
PARK, OUR PARKING METER CHANGES
WHERE WE WEREN'T CHARGING
ENOUGH, WHERE OUR FINES WERE
ACTUALLY, UM, LESS EXPENSIVE
THAN NOT PAYING FOR PARKING. WE
NOW HAVE A MORE APPROPRIATE
FINES AND WE ARE ROLLING OUT
PAID PARKING OUT IN MORE PLACES.
UM, JUST WANTED TO NOTE, THIS IS
THE FIRST TIME WE'VE BEEN ABLE
TO SEE US GETTING BACK INTO THE
BLACK. AND THAT'S NOT BECAUSE OF
THE ANALYSIS YOU PROVIDE, BUT
RATHER THE POLICY THAT WE MAKE
HERE. AND SO IT'S GOOD TO SEE
THAT THAT IS STABILIZING. SO
THINK THIS IS THE LAST TIME I'LL
BRING UP PARKING METERS. JOE,
THANK YOU FOR ALL YOUR WORK.
-- VERY WELCOME. THANK YOU.
-- ALL RIGHT. MOVING ON TO THE
NON GENERAL FUND REVENUES. UH,
THE LARGEST REVISIONS ARE AS
USUALLY TO THE PAYROLL EXPENSE
TAX THAT UH, HAS TO DO A LOT
WITH THE UNDERLYING TAX BASE AND
THE FACTORS DRIVING IT. UH,
WHENEVER THERE IS A CHANGE IN
THE OUTLOOK FOR STOCK PRICES,
UM, THERE IS A SIGNIFICANT,
USUALLY SIGNIFICANT CHANGE IN
THE OUTLOOK FOR THIS REVENUE
STREAM. THIS YEAR. WE ALSO HAVE
THE IMPACT OF THOSE LAYOFFS IN
THE TECH SECTOR AFFECTING THE
OUTLOOK FOR PAYROLL EXPENSE TAX.
YOU CAN SEE THERE IS A YEAR OVER
YEAR DECLINE BETWEEN 25 AND 26.
UH, AGAIN, LAYOFFS, BUT LARGELY
OFFSET BY THE IMPROVED OUTLOOK.
UH, SINCE SINCE APRIL THAT THAT
ADDED ABOUT 18 MILLION THIS
YEAR. SIMILAR AMOUNTS IN NEXT TO
FOR A TOTAL CHANGE OF 57.7
MILLION OVER THE THREE YEARS,
UM, HANDING IT OVER TO INTEREST
INCOME FOR THIS FUND.
-- YEAH. UH, SO AGAIN, THIS
TABLE IS A MIX OF FORECASTS THAT
ARE FORECASTED BY THE FORECAST
OFFICE AND BY CITY BUDGET
OFFICE. SO WE'RE GOING TO PING
PONG A LITTLE BIT HERE. BUT THE
INTERESTING COME ON THE PAYROLL
EXPENSE TAX FOLLOWS SIMILAR
UNDERLYING TRENDS TO THE
INTEREST INCOME ON THE GENERAL
FUND IN THAT UM THE, UH, THE
FORECAST IS UP FOR THESE FOR,
FOR INTEREST ON EARNINGS ON THIS
FUND, GENERALLY BECAUSE OF, UM,
THE HIGHER EXPECTED YIELDS TO
TREASURY BONDS, WHICH IS THE
MAIN INVESTMENT VEHICLE FOR, FOR
THESE FUND BALANCES.
-- UM, WHEN IT COMES TO THE
IMPACT OF THE HIGHER INTEREST
RATE IS THE OPPOSITE. UH, AS I
MENTIONED EARLIER, UM, THE
EXPECTATIONS ARE NOW THAT THE
FEDERAL, THE, THE FED WILL NOT
CUT THE INTEREST RATES. MORTGAGE
RATES HAVE GONE UP. SO THERE WAS
ALSO A CHANGE AT THE LOWER END
OF THE YIELD CURVE. UM, THERE IS
UH, AN IMMEDIATE IMPACT ON THE
NUMBER OF HOMES THAT ARE SOLD.
THEY ARE BECOMING LESS
AFFORDABLE WITH HIGHER MORTGAGE
RATES. IN ADDITION, WE HAVE THAT
EFFECT OF HIGHER UNCERTAINTY AND
LAYOFFS IN THE TECH SECTOR,
WHICH ARE MAKING SOME BUYERS
MOST LIKELY VERY HESITANT ABOUT
MAKING A BIGGER PURCHASE. UM, SO
THAT HAS RESULTED IN, UH, A
REVISION DOWN FOR RATE, UM,
OVERALL, ABOUT 23 MILLION OVER
THREE YEARS. UM, AND, UH, UM,
THEN FOR THE ADMISSIONS TAX,
SLIGHTLY SMALLER REVENUES THIS
YEAR, SLIGHTLY LARGER REVENUES
IN THE NEXT TWO OVERALL, VERY
MINOR CHANGE OVER THREE YEARS.
UH, I'LL HEAD.
-- OVER THE SWEETENED BEVERAGE
TAX. WE HAVE REVISED DOWNWARD A
TOTAL OF 3.8 MILLION ACROSS THE
THREE YEAR PERIOD. WE HAVE SEEN
ACTUAL REVENUES COMING IN LOWER
IN THE FIRST QUARTER OF THIS
YEAR, WHICH IS AN ADJUSTMENT
THAT, UM, THAT BLEEDS THROUGH
INTO THE OTHER YEARS OF THIS
MODEL AND EXPECTED REVENUES, UM,
UH, WE ALSO, THERE WAS ALSO A
DOWNWARD REVISION TO POPULATION
GROWTH ESTIMATES FOR THE REGION.
AND THE REASON FOR IN THIS
FORECAST. AND SO THAT IS ONE OF
THE INPUTS THAT WE USE TO
FORECAST THIS REVENUE STREAM. SO
THAT ALSO COMPOSES A DOWNWARD,
UM, IMPACT ON THIS REVENUE
STREAM. AND I WILL ALSO ADD THAT
IN 26, WE HAD ASSUMED A BUMP
FROM WORLD CUP ACTIVITY. UM, WE
STILL ASSUME SOME BUMP. WE HAVE,
UH, SOFTENED THAT INCREASE IN
THIS REVENUE FORECAST BASED ON
VERY EARLY DATA ON TOURIST
ACTIVITY. UM, WE DON'T HAVE
SALES TAX INFORMATION FOR THE
WORLD CUP PERIOD AS YET, BUT,
UM, BUT SOME JUST, UM, SORT OF
PERIPHERAL DATA SOURCES SUGGEST
MAYBE SOFTENING THAT, UM, THAT
ASSUMPTION. SO WE HAVE IN 26.
-- UM, AS FOR SHORT TERM RENTAL
TAX, THE STORY IS SIMILAR IN
2026. THAT REDUCTION CASCADES
THROUGH 27 TO 28 A LITTLE BIT.
UM ACTUALS HAVE BEEN A LITTLE
BIT WEAKER THAN UM THAN
FORECASTED. AND THEN ON TOP OF
THAT, RELATED TO THE WORLD CUP
EFFECT, UM, HOTEL REVENUE AND
OCCUPANCY, UM, HAVE BEEN
REVISED, NOTABLY DOWN, OR AT
LEAST THE OUTLOOK FOR THAT FOR
THE REST OF 2026. AND SO, UM, WE
DON'T HAVE, WE ACTUALLY DON'T
HAVE JUNE OR JULY ACTUALS FOR
SHORT TERM RENTAL TAX. UM, BUT
THERE ARE DEFINITELY SOME
INDICATIONS THAT WE NEED TO
TEMPER OUR EXPECTATIONS. UM,
ABOUT WORLD CUP
-- ALL RIGHT. THE NEXT LINE IS A
NEW ONE. OUR OFFICE TOOK OVER
FORECASTING FOR AFFORDABLE
HOUSING SALES TAX. UH, THAT
REVENUE IS KEPT, UH, BY, BY
STATE, ESSENTIALLY, UH, TRANSFER
OF SOME SHARE OF A SALES TAX
THAT WOULD OTHERWISE GO TO THE
STATE AND, UH, HOVERS AROUND
4.4. THAT'S WHERE WE ARE SEEING
IT IN THE NEXT COUPLE OF YEARS
DUE TO THOSE, UM, DUE TO
ESSENTIALLY THAT, THAT CAP AND
THE, THE MECHANICS FOR THIS TAX
WORK. UM, THE LINE BELOW, UH,
TRANSPORTATION BENEFIT DISTRICT
SALES TAX, UM, THAT ONE, UNLESS
IT'S RENEWED, UM, IT ENDS IN,
UH, FIRST QUARTER OF 2027. SO
THAT'S WHY THERE IS A BIG DROP
IN 2027. IT'S ONLY ONE QUARTER
OF REVENUES. AND THEN NOTHING
FOR 2028. THERE IS A PROPOSAL
TO, FOR THIS TO BE RENEWED AT
0.3% RATE. THAT WOULD GENERATE
AN ADDITIONAL 96.3 MILLION IN 27
AND ABOUT 125.3 IN 2028. UM,
I'LL HAND IT OVER AGAIN TO JOE.
-- YEAH. UM, ALSO PART OF THE
SEATTLE TRANSIT BENEFIT DISTRICT
FUND IS A VEHICLE LICENSE FEE.
THAT IS THE $50 FEE YOU PAY WHEN
YOU RENEW YOUR CAR TABS. UM, WE
HAVE REVISED THIS FORECAST DOWN
BY 5.5 MILLION ACROSS THE THREE
YEAR PERIOD. UM, REVENUE SO FAR
IN 26 ARE LOWER THAN EXPECTED.
AND SO THAT IS, UM, PART OF
WHAT'S DEPRESSING THE, THE
OUTLOOK FOR THESE REVENUES, THE
REASONS FOR THAT ARE FRANKLY A
LITTLE BIT DIFFICULT TO DISCERN
AT THIS MOMENT. THERE, UM, 25th
MAY HAVE BEEN SLIGHTLY ANOMALOUS
IN THAT THERE WERE FEDERAL TAX
CREDITS EXPIRING FOR VEHICLE
PURCHASES. THERE WERE, UM, THERE
MAY HAVE BEEN SOME VEHICLE
PURCHASING TO GET AHEAD OF
TARIFF EFFECTS. UM, THERE, BUT,
BUT UM, THERE MAY ALSO BE SOME
IMPACT OF HOW THE DEPARTMENT OF
LICENSING REMINDS YOU TO RENEW
YOUR TABS. UM, THAT CHANGED IN
ABOUT A YEAR AGO, IN AUGUST OF
2025. UM, AND SO WE, UM, ARE
THEORIZING THAT POTENTIALLY
THERE IS SOME IMPACT IN FOLKS
DELAYING OR MAYBE EVEN FORGOING
RENEWING TABS. AND SO, UM,
THERE'S A BEHAVIORAL COMPONENT
HERE THAT THAT IS POSSIBLY AT
PLAY. UM, YOU'LL ALSO SEE A
LARGER DOWNWARD REVISION IN 2027
OF 3.2 MILLION. AND FRANKLY,
THAT IS DUE TO A RECALIBRATION
OF THE MODEL THAT HAD PREVIOUSLY
BEEN PICKING UP QUITE A LARGE
BUMP IN THIS REVENUE STREAM IN
2027. UM, WE HAVE BEEN IN
CONVERSATION WITH THE STATE'S
FORECASTING OFFICE AND THEIR
OUTLOOK FOR VEHICLE
REGISTRATIONS OVER THIS TIME
PERIOD, AND HAVE MOSTLY
ELIMINATED THAT BUMP IN 27 IN
ORDER TO, UH, BRING OURSELVES
OUR MODELING INTO ALIGNMENT WITH
THEIR OUTLOOK. UM, AND, UH, AND
SO THAT LEADS TO QUITE A
REVISION IN THE 27 FORECAST.
-- GOOD UH, FOR COMMERCIAL
PARKING TAX. UM, THERE'S A BIT
OF A DOWNWARD REVISION IN 2026.
UM, THE REASONS ARE TWOFOLD. ONE
IS ACTUALS ARE LAGGING FORECAST
JUST A LITTLE BIT. UH, THE OTHER
IS THAT THE OUTLOOK FOR LEISURE
AND HOSPITALITY, WHICH IS, UM,
TRYING TO CAPTURE ECONOMIC
ACTIVITY, ESPECIALLY DOWNTOWN,
UM, IS WEAKER IN 2026,
PRESUMABLY IN PART, AT LEAST IN
PART BECAUSE OF HIGHER INFLATION
EXPECTATIONS. BUT THAT OUTLOOK
DOES BOUNCE BACK IN 27 TO 28. SO
ON NET UM, THERE'S A $1.5
MILLION GAIN OVER THE THREE
YEARS
-- AND THEN THE FINAL ROW OF
THIS TABLE IS LABELED AUTOMATIC
TRAFFIC SAFETY CAMERAS. THIS,
UH, IS A ROW THAT ALIGNS TO THE,
TO THE A T C FUND. AND IT IS
COMPOSED OF ESSENTIALLY FIVE
DIFFERENT TRAFFIC CAMERA TYPES.
UM, THERE I WILL SPEAK TO EACH
YEAR INDIVIDUALLY OVERALL,
ACROSS THE THREE YEARS, WE HAVE
A FORECAST, AN INCREASE TO THE
FORECAST OF $21.1 MILLION. THAT
SEEMS LARGE. I'LL EXPLAIN THE
LOGIC THERE. UH, IN 2026 THAT
THE DROP OF $3.3 MILLION IN THE
FORECAST IS RELATED TO THE NEW
CROP OF SCHOOL ZONE CAMERAS THAT
ARE BEING INSTALLED THAT BEGAN
TO BE INSTALLED IN LATE 25 AND
ARE STILL BEING INSTALLED NOW
INTO 2026. THE EARLY RETURNS
FROM THAT NEW CROP OF CAMERAS,
WHICH ESSENTIALLY DOUBLED THE
SIZE OF THIS CAMERA PROGRAM,
WENT, UH, ESSENTIALLY A NEW 37
CAMERAS WENT IN TO COMPLEMENT
THE THE PREVIOUS STOCK OF 37. SO
AN EXACT DOUBLING, UM, AND THE
NEW CAMERAS, THE, THE CITATION
VOLUMES ARE UNDERPERFORMING
EXPECTATIONS SOMEWHAT. WE HAD
ANTICIPATED THEM PERFORMING
ABOUT AT THE AVERAGE OF THE OLD
STOCK. AND THEY ARE
UNDERPERFORMING THAT. SO SOME OF
THIS IS UM FORECASTING FORWARD
THAT LOWER REVENUE OR LOWER
CITATION VOLUMES. UM THE
INSTALLATION SCHEDULE HAS ALSO
BEEN PUSHED BACK A LITTLE
FURTHER INTO 26 RELATIVE TO WHAT
WE'D ANTICIPATED IN, IN THE
APRIL FORECAST. AND THAT ALSO
LEADS TO A DOWNWARD REVISION IN
THE 26 OUTLOOK. UM, FOR 2027 AND
2028, THE LARGE BUMPS WE SEE
HERE, UH, ARE DUE TO NEW CAMERAS
COMING ON THAT ARE ANTICIPATED
FOR ACTIVATION IN THE MIDDLE OF
2027. THESE CAMERAS WOULD BE 24
HOUR SPEED CAMERAS. UH, AND SO
THAT IS A NEW CAMERA TYPE FOR
THE CITY. UM, SO, UH, THE
FORECASTING IS ADMITTEDLY
CHALLENGING, BUT WE BELIEVE
THAT, UM, THOSE WILL, UM, DRIVE
ABOUT $9 MILLION IN REVENUE IN
2027. UH, AND THEN SO THE,
THAT'S 2027 IS ABOUT HALF A
YEAR OF THESE NEW SPEED CAMERAS.
28 IS A FULL YEAR OF THOSE SPEED
CAMERAS. AND THAT'S WHAT'S
DRIVING THESE REVISIONS UPWARD
IN THOSE YEARS.
-- ALL RIGHT. AND THEN THERE'S
THAT ROW ALMOST ALL THE WAY AT
THE BOTTOM, ESSENTIALLY ADDING
UP ALL THE REVENUES FROM THE
GENERAL FUND, PLUS ALL THE NON
GENERAL FUND REVENUES AND
SHOWING THE CHANGE, OVERALL
CHANGE IN THE FORECAST BETWEEN
APRIL AND AUGUST, THE THREE YEAR
DIFFERENCE IS 116 MILLION.
AGAIN, QUITE A LOT OF MONEY. BUT
RELATIVE TO THE OVERALL SIZE UH
IT'S LESS THAN 1.5%. SO NOT NOT
PARTICULARLY BIG REVISION HERE.
UM, AGAIN, THE MAIN, UH, CHANGE,
THE BIGGEST JUMP HERE IS IN
2026, WHERE THE YEAR OVER YEAR
GROWTH IS 7.3%. IT DROPS TO 2.2
IN THE FOLLOWING YEAR AND 4.1
THE ONE AFTER
-- UH, BEFORE YOU MOVE ON, IF
YOU COULD, UH, COLLEAGUES, DO
YOU HAVE QUESTIONS ON THIS SLIDE
I HAVE A FEW. SO I'LL JUST AS WE
WERE TALKING A LITTLE BIT MORE
ABOUT MUDDLING THROUGH WHAT I'M
GOING TO CALL A STAGNANT ECONOMY
HERE IN THE CITY OF SEATTLE OVER
THE LAST YEAR OR TWO, WE'VE BEEN
HAVING THIS CONVERSATION OF, ARE
WE GROWING? ARE WE RECEDING? ARE
WE STAGNANT? I KNOW THAT
RECESSIONS ARE A TECHNICAL TERM
THAT ARE LARGER THAN ANY ONE
CITY, WHICH IS WHY WE SAW IN THE
1980s, ABERDEEN HAD A LOCAL
RECESSION WITHIN THEIR
COMMUNITY, WHILE THE REST OF THE
STATE AND THE REST OF THE NATION
DID VERY WELL ECONOMICALLY. AS
ONE OF MY TELLTALES. AND THANK
YOU, DWIGHT, FOR TALKING TO ME
ABOUT THIS YESTERDAY, ABOUT OUR
REIT FUNDING RATE IS ALWAYS A
TELLTALE OF HOW IS OUR ECONOMY
GOING. AND SO I'M SEEING IN OUR
PAST YEARS IN THESE
CONVERSATIONS, A SITTING,
STAGNANT LAST REVENUE FORECAST,
REACH STARTED DIPPING FOR THE
FIRST TIME SINCE 2020. AND NOW
WE'RE SEEING THE JOBS LEAVING
THE CITY. AND OUR REACH SLOWING.
THE ONLY SALES TAX THAT WE'RE
GAINING IS FROM LAW CHANGES, NOT
ACTIVITY. IS THIS WHAT YOU'RE
SEEING, OR SHOULD WE BE MORE
CONCERNED ABOUT A LOCALIZED. I
DON'T THINK WE'RE ALLOWED TO
TECHNICALLY CALL IT A RECESSION,
BUT A LOCALIZED STAGNATION IN
OUR ECONOMY, MORE SO TODAY THAN
WE HAVE IN THE PAST
-- UM, SO WHEN IT COMES TO THE
REVISIONS TO THE RATE, LET ME
ADDRESS THAT. AND THERE WAS
ESSENTIALLY A ROW OF DOWNWARD
REVISIONS IN RATE. UH, LOOKING
BACK AT LAST YEAR, ESSENTIALLY
IT'S UH, EVERY FORECAST HAS
BEEN DOWNWARD REVISION. UM, NOT
JUST IN SEATTLE, SIMILAR SORT OF
THINGS HAVE, UM, OCCURRED AT
KING COUNTY LEVEL. THE RATE
FORECASTS HAVE, HAVE BEEN
ESSENTIALLY REVISED DOWN, UM,
STARTING FROM, FROM APRIL 2025.
AND THERE WERE ALL THESE CHANGES
THAT INCREASED THE UNCERTAINTY
COUPLED WITH THE CHANGES IN THE
TECH SECTOR AND THE LOCAL
ECONOMY. UM, IS NOT IN A
PARTICULARLY STRONG PLACE THERE
RECESSION IS AGAIN, TECHNICAL
TERMS, AS YOU SAID, WE WOULD
REQUIRE, UM, A BROAD SET OF
INDICATORS, NOT JUST EMPLOYMENT,
BUT ALSO LOOKING AT INCOMES,
LOOKING AT WAGE GROWTH, AND THEN
OBSERVING THOSE, UH, CLOSELY,
HOW MUCH OF A DECLINE THERE IS
IN INDIVIDUAL ONES, HOW BROAD
BASED THOSE DECLINES ARE WHEN IT
COMES TO EMPLOYMENT, HOW LONG
THEY ARE LASTING. AND SO THE
YEAR OVER YEAR CHANGE IN THE AT
THE REGIONAL LEVEL FOR
EMPLOYMENT IS RELATIVELY SMALL.
IT'S LESS THAN A HALF PERCENT.
BUT THE CONCERNING THING IS
DEFINITELY THAT, UH, RECENT
RELEASE BY PUGET SOUND REGIONAL
COUNCIL, WHICH IS DATED FOR
MARCH 2025. BUT THERE ARE
REASONS TO BELIEVE THAT THE TECH
SECTOR, WITH THOSE ADDITIONAL
LAYOFFS THAT HAVE BEEN
ANNOUNCED, THAT SECTOR IS GOING
TO HAVE A TOUGH TIMES IN IN THE
COMING YEARS. AND SO THAT'S
DRAGGING THE LOCAL ECONOMY.
-- SO WE'LL STAY TUNED, WE'LL
STAY ATTENTIVE, AND WE WANT TO
MAKE SURE THAT WE'RE AHEAD OF
ANY. AND THIS IS THE IMPORTANCE
OF. LAST YEAR, WE ADDED MORE
FUNDS TO OUR RESERVE ACCOUNTS.
WE ADDED, UM, YOU KNOW, MORE
FUNDS TO HOLDING BACK FOR
CONTINUUM OF CARE PROBLEMS THAT
WE MIGHT SEE. WE HELD FUNDS BACK
FOR FEDERAL RESPONSE. LAST
YEAR'S BUDGET WAS IN FACT, MORE
PRUDENT THAN IN PAST YEARS IN
THE SENSE THAT WE WERE HOLDING
MONEY BACK IN A WAY THAT WE
HADN'T BEFORE. AND PART OF THAT
WAS THE WORK THAT YOU PRESENT TO
US, DIRECTOR. SO I APPRECIATE
THAT. ONE OF THE QUESTIONS I
HAVE AND ADDITIONAL QUESTIONS
YOU'RE NOTING THAT EMPLOYMENT
FIGURES ARE DOWN, BUT JUMP START
IS UP.
-- MHM.
-- HOW'D THAT HAPPEN?
-- YEAH. SO I'LL THAT'S WHAT
THIS SLIDE.
-- IF YOU'VE GOT SLIDES THERE,
LET ME LET ME JUST ASK LAST
QUESTION FOR JOE. WE'VE RETIRED
PARKING METERS. BUT NOW BEGUN
OUR AUTOMATIC TRAFFIC SAFETY
CAMERAS. SO WITH ONE WITH ONE
BEING COMPLETE, LET'S START A
NEW JOURNEY. I APPRECIATE, UH,
YOUR ANALYSIS HERE BECAUSE IT
TRACKS WITH WHAT I'VE
EXPERIENCED WITH THE SEATTLE
DEPARTMENT OF TRANSPORTATION,
WHERE IT WAS, I BELIEVE TWO
YEARS AGO THAT WE STARTED
FUNDING NOT ONLY SCHOOL ZONE
CAMERAS, BUT ALSO THE ABILITY TO
DO SPEED CAMERAS. IT HAS BEEN,
UM, THE MOST POLITE WAY I CAN
PUT IT IS DIFFICULT TO GET THEM
TO DEPLOY THESE CAMERAS. THERE
ARE A NUMBER OF PLACES, AT LEAST
IN MY DISTRICT, WHERE RESIDENTS
HAVE HAD CARS HITTING BUILDINGS
BECAUSE OF THEIR EXCESSIVE
SPEED. UM, WE HAVE, I MEAN,
IT'S JUST IT IS A DANGEROUS
SITUATION OUT THERE. OFTENTIMES,
SDOT RESPONSE IS SPEED HUMPS.
UM, BUT WHAT WE FIND IS THAT A
AUTOMATIC TRAFFIC SAFETY CAMERA,
NINE OUT OF TEN PEOPLE NEVER GET
A SECOND TICKET. AND SO IT IS A
MORE EFFECTIVE TOOL TO REDUCE
SPEEDING THAN SPEED HUMPS.
BECAUSE IF YOU HAVE A BIG TRUCK,
YOU CAN JUST DRIVE FAST. BUT
THAT CAMERA IS NEVER GOING TO
YOU CAN'T DRIVE, CAN'T ELUDE
THAT CAMERA. SO I JUST I'M
NOTING THIS. I DON'T NEED A
RESPONSE FROM YOU TODAY, BUT IT
ALIGNS WITH THE POLICY PROBLEMS
THAT I'VE BEEN SEEING WITHIN THE
DEPARTMENT OF GETTING THESE
CAMERAS DEPLOYED ON THE SCHEDULE
IN WHICH WE ASKED THEM TO. AND
SO I JUST APPRECIATE THE FACT
THAT YOU ARE PROVIDING US AN
ACCURATE ANALYSIS OF WHAT THOSE
POLICY CHOICES HAVE HAD AN
IMPACT ON OUR BUDGET. THANK YOU.
SO NOW WE'LL JUST START TALKING
ABOUT THIS EVERY TIME WE MEET.
-- YEAH, YEAH. TO BE CLEAR TO
THE PUBLIC PARKING METERS STILL
EXIST. UH, YES. YES. A NEW
CHALLENGE IN FORECASTING FOR
SURE.
-- THANK YOU COLLEAGUES. ANY
OTHER QUESTIONS ON THIS SLIDE,
DIRECTOR DORIS, DO YOU WANT TO
COME BACK TO TELLING US HOW JOBS
ARE DOWN. BUT JUMP STARTS UP.
HOW'D THAT HAPPEN?
-- YEAH. UM, SO SOME OF THOSE
LAYOFFS WERE ALREADY ANNOUNCED
BEFORE THE APRIL FORECAST WAS
PREPARED AND THEY WERE BUILT
INTO THE APRIL FORECAST. UM,
THERE HAVE BEEN SOME ADDITIONAL
LAYOFF ANNOUNCEMENTS SINCE THEN,
BUT THE BRUNT WAS ALREADY BAKED
IN IN APRIL. THE MAIN DRIVER FOR
THE REVISION HERE IS THE CHANGE
IN THE OUTLOOK FOR STOCK PRICES.
AGAIN, WE HAVE REASONS TO
BELIEVE BASED ON OUR ANALYSIS OF
PAST COLLECTION DATA. UM THAT
THAT'S AN IMPORTANT FACTOR
HERE. THE CHART HERE SHOWS UH,
FOR ILLUSTRATIVE PURPOSES A SET
SET OF COMPANIES, NOT
NECESSARILY OPERATING IN
SEATTLE, BUT SOME OF THEM ARE IN
THE BROADER REGION. SOME OF THEM
ARE JUST MAJOR COMPANIES IN THE
TECH SECTOR. AND AGAIN, IT'S A
TECH SECTOR, AN AI BUILD OUT
THAT'S DRIVING A LOT OF THAT
GROWTH THAT WE ARE SEEING IN IN
STOCK MARKET. UM, SO THE CHART
SHOWS THE ANTICIPATED YEAR OVER
YEAR CHANGE IN THE STOCK PRICE
OF, OF THOSE OF STOCK PRICE OF
THOSE INDIVIDUAL COMPANIES. THE
GRAY DOTS, UM, ARE THE ESTIMATE
BACK IN, IN APRIL, THE BLUE DOTS
ARE THE CURRENT ESTIMATES AND
THEY ARE COMING FROM WALL STREET
ANALYSTS. WE'RE COMPILING THEM
ON AND USING THEM AS AN INPUT IN
THE FORECAST. UM, AND IF YOU
COMPARE WHERE THOSE GRAY DOTS
ARE AND WHERE THE BLUE DOTS ARE
IN GENERAL, THE OUTLOOK IS MORE
POSITIVE. THOSE BLUE DOTS ARE TO
THE RIGHT IN GENERAL FROM FROM
THE GRAY DOTS. SO AS A FIRST
CHART SHOW, THE FINANCIAL
MARKET, UH, HAS ESSENTIALLY
RECOVERED SINCE SINCE APRIL.
AFTER THAT INITIAL DOWNWARD, UH,
UM, AND AFTER THAT INITIAL DROP
IN STOCK PRICES AND THE INITIAL
MORE NEGATIVE OUTLOOK DUE TO THE
IRAQ WAR, THERE IS STILL A
CONSIDERABLE AMOUNT OF
UNCERTAINTY. SO THAT THE SECOND
THING THIS CHART SHOWS THE LINE
FROM THE LEFT TO THE RIGHT. THEY
SPREAD FROM THE LOW TO THE HIGH
ESTIMATE FOR THE STOCK PRICE
CHANGE. IN THAT SURVEY OF OF
THOSE ANALYSTS, UM, NOW AGAIN WE
ARE USING THAT AS, AS A MAIN ONE
OF THE MAIN INPUTS INTO THE
FORECAST. IN ADDITION TO THE
CHANGES IN THE EMPLOYMENT. SO
THOSE ARE TWO MAIN COMPONENTS
NOW. BUT AGAIN, THE CHANGES IN
THE LAYOFF ANNOUNCEMENTS ARE
RELATIVELY SMALL. THEY ARE
EXPECTED. THEY WERE ALREADY
EXPECTED IN THE APRIL FORECAST.
UH, THE FINAL THING THAT WE
COULD, UH, USE, BUT IT'S LESS
INFORMATIVE ARE THE YEAR TO DATE
COLLECTION IN PAYROLL EXPENSE
TAX REVENUES. GIVEN THE WAY HOW
THIS TAX IS IMPOSED, IT'S BASED
ON ANNUAL COMPENSATIONS, ANNUAL
PAYROLLS. UM, THOSE QUARTERLY
PAYMENTS ARE ONLY ESTIMATES AND
IN GENERAL TEND TO BE 25% OF THE
PREVIOUS YEAR'S TOTAL
OBLIGATION. SO THEY DON'T REALLY
PROVIDE MUCH OF AN INSIGHT. UH,
COMPANIES IN, IN GENERAL FOLLOW
THAT RULE UNLESS THEY HAVE
STRONG REASONS TO BELIEVE THAT
THAT WOULD LEAD THEM TO OVERPAY.
AND THEN THEY, THEY WOULD PAY
LESS FOR, FOR PARTICULAR, UM,
FOR PARTICULAR QUARTER. UM, SO
YEAH, THERE ARE THESE TWO
EFFECTS LAYOFFS IN TECH SECTOR
OVERALL. UM, UM, MORE NEGATIVE
OUTLOOK FOR, FOR EMPLOYMENT, BUT
A BETTER OUTLOOK FOR
COMPENSATION PER EMPLOYEE
AVERAGE COMPENSATION PER
EMPLOYEE BASED ON, UH, THE
RESTRICTED STOCK UNITS AND THEIR
IMPACT ON, ON WAGES. SO, UM,
THAT'S ALSO DRIVING THE CHANGES
IN 2027, EVEN MORE GROWTH IS
EXPECTED IN, IN THE STOCK
PRICES. UH, THE RED DOTS NOW ARE
SHOWING THE AVERAGE, UH, FOR THE
STOCK PRICE CHANGE FOR THOSE
COMPANIES. AND THE LINE AGAIN,
SPREADS FROM THE LOW ESTIMATE TO
THE HIGH ESTIMATE. AND YOU CAN
SEE THAT THE AMOUNT OF
UNCERTAINTY IS REALLY JUST VAST.
UH, SO THAT MEANS THAT
INHERENTLY THAT, UH, THAT
REVENUE STREAM, UH, IS QUITE
HARD TO, TO PREDICT. UH, WE HAVE
SEEN YEARS WHERE IT HAS
OVERPERFORMED OUR EXPECTATIONS.
WE HAVE SEEN A YEAR WHERE IT HAS
SIGNIFICANTLY UNDERPERFORMED OUR
EXPECTATION. UM, THAT, UH, ALSO
TIES BACK TO THAT CHART SHOWING
THE YEAR OVER CHANGES, YEAR OVER
YEAR CHANGES IN TOTAL
EMPLOYMENT. UM, BACK IN 2024 OR
THE PAYROLL EXPENSE TAX REVENUES
FOR YEAR 2024 GREW YEAR OVER
YEAR, BUT CAME IN SIGNIFICANTLY
BELOW OUR EXPECTATIONS AND OUR
INITIAL ASSESSMENT WAS THAT THAT
WAS BECAUSE THE JOB GROWTH, UH,
HAS OCCURRED IN KING COUNTY, BUT
NOT REALLY IN SEATTLE. AND
THAT'S CONSISTENT WITH WHAT WE
ARE SEEING IN THIS RECENT
RELEASE OF EMPLOYMENT DATA BY
PUGET SOUND REGIONAL COUNCIL. SO
THAT'S THE EMPLOYMENT DATA IS
NOW A NEW SOURCE THAT WE ARE WE
HAVE STARTED INCORPORATING INTO
INTO THE FORECAST TO ACCOUNT FOR
THE IMPACT OF LAYOFFS AND
OVERALL CHANGES IN IN EMPLOYMENT
AMONG THOSE TAXPAYERS THAT ARE
PAYING THIS TAX. UM, AGAIN, THE
THERE, THERE IS INHERENTLY A LOT
OF UNCERTAINTY GIVEN LOTS OF
LIMITATIONS REGARDING THE DATA
AND THE UNDERLYING FACTORS
DRIVING THAT REVENUE STREAM UM,
SO UNLESS THERE IS ANY OTHER
QUESTIONS, WE CAN MOVE TO THE
PESSIMISTIC FORECAST. UH,
-- SORRY JOHN. SO I GUESS THE
QUESTION THERE IS WE HAVE FEWER
EMPLOYEES, BUT THEY HAVE A
HIGHER NET WORTH. IS THAT THE
ANSWER TO THE QUESTION ABOUT.
-- THE CHANGES? SO THERE IS A
YEAR OVER YEAR DECLINE FOR
PAYROLL EXPENSE TAX FROM 406 TO
394 YEAR OVER YEAR. UM, THAT,
UH, AGAIN, BECAUSE THERE ARE
LAYOFFS EXPECTED AND THEY ARE
EXPECTED TO HAVE AN IMPACT ON
PAYROLL EXPENSE, TAX REVENUES,
THE REVISIONS, THOSE UPWARD
REVISIONS HAVE TO DO WITH THE
CHANGE IN THE OUTLOOK FOR, FOR
STOCK PRICES, WHICH HAS IMPROVED
SINCE APRIL. AND SO GOING INTO
THE FUTURE, AGAIN, STOCK PRICES
ARE EXPECTED TO GROW. AND
THAT'S OFFSETTING THOSE THOSE
LOSSES.
-- HELPFUL CLARIFICATION NOT NET
WORTH BUT COMPENSATION.
-- YEAH.
-- THANK YOU.
-- SO TURNING TO THE PESSIMISTIC
SCENARIO AGAIN THAT'S THE SECOND
OF THE THREE SCENARIOS. WE ARE
DEVELOPING A BASELINE REVENUE
FORECAST. THE PESSIMISTIC
SCENARIO AND THEN AN OPTIMISTIC
SCENARIO FORECAST IN THE
INTEREST OF TIME, I'LL NOT SHOW
THE OPTIMISTIC SCENARIO HERE,
BUT IT'S AVAILABLE. UH WE HAVE
DISTRIBUTED IT AND WILL BE
AVAILABLE ON OUR WEBSITE. WE DO
HAVE REASONS TO BELIEVE THAT THE
PESSIMISTIC SCENARIO IS MORE
RELEVANT. ONE AGAIN, GIVEN THAT
THERE IS 25 TO 30% PROBABILITY
OF A RECESSION, THE DOWNSIDE
RISK, UH, IS QUITE, QUITE
RELEVANT. IT'S CERTAINLY
POSSIBLE THAT INDIVIDUAL REVENUE
STREAMS WILL OUTPERFORM OUR
EXPECTATIONS. UM, BUT AGAIN, IN,
IN THE INTEREST OF BEING FINE,
UH, FINANCIALLY PRUDENT AND, UH,
CONSIDERING THE DOWNSIDE, THIS
IS WHERE WE WANT TO SPEND OUR
ATTENTION DURING THIS, THIS
PRESENTATION. SO THE DOWNTURN IN
THE ECONOMY WOULD, UH, DRAW
DOWN, WILL DRAG DOWN THOSE
REVENUES, WHICH ARE DRIVEN BY
THE ECONOMY. SO SALES TAX,
BUSINESS AND OCCUPATION TAX ARE
THE TWO PRIMARY ONES WHERE THE
REVISION, UM, OR THE CHANGE FROM
THE APRIL FORECAST, UH, WOULD BE
SIGNIFICANT AND TO THE DOWNSIDE
BACK IN APRIL, THE FORECAST
COUNCIL HAS, UH, BASED ON OUR
RECOMMENDATIONS, ADOPTED THE
BASELINE SCENARIO. SO THE
COMPARISON HERE IS BETWEEN THE
BASELINE SCENARIO IN APRIL AND
THE PESSIMISTIC SCENARIO IN
JULY. SO AGAIN, SHOULD A
RECESSION OCCUR, IT WOULD HAVE A
MEANINGFUL IMPACT ON LARGE
REVENUE STREAMS. UM THERE IS
ALSO SOME, UH, ASSUMPTIONS
AROUND THE OTHER REVENUE
STREAMS. AND I'LL LET CBO STAFF
TALK.
-- YEAH, I WOULD SAY JUST, UH,
BY AND LARGE, THE REVENUE
STREAMS THAT THE CITY BUDGET
OFFICE FORECASTS ARE A LITTLE
LESS DEPENDENT ON ECONOMIC
CONDITIONS. UH, SO WE GENERALLY
DON'T SEE QUITE THE OUTSIZED
IMPACT OF PESSIMISTIC SCENARIO
ON THESE REVENUE STREAMS. UH,
ONE EXCEPTION TO NOTE WOULD BE
PROPERTY TAXES, PARTICULARLY,
UH, THAT THAT STREAM IS
RELATIVELY STABLE GIVEN HOW
STATE LAW DICTATES WE, UH,
INCREASE OUR REVENUE COLLECTIONS
FOR PROPERTY TAXES, IT IS PRETTY
MUCH GUARANTEED AT 1% PLUS THE
VALUE OF NEW CONSTRUCTION. SO WE
DO SEE GROWTH SLOW IN A
PESSIMISTIC SCENARIO,
PARTICULARLY BECAUSE OF THAT NEW
CONSTRUCTION PIECE BEING
DEPRESSED. UM, BUT OVERALL,
THOSE REVENUES WOULD STILL
INCREASE THOUGH AT A LOWER SPEED
OR LOWER RATE. IN THE
PESSIMISTIC SCENARIO.
-- ALL RIGHT. UM, SO YEAH, AS
YOU CAN SEE, ESPECIALLY THE 27
AND 28, THOSE TWO YEARS WOULD BE
THE ONES WHERE THE RECESSION
WOULD HAVE A MEANINGFUL IMPACT
ON REVENUES FOR THE FIRST YEAR,
THE 2026. WE STILL HAVE THAT
POSITIVE EFFECT OF HIGHER SALES
TAX, SINCE WE ALREADY HAVE, UH,
YEAR IN WITH WITH SALES TAX
COLLECTION, THE IMPACT THERE IS
COMING AGAIN FROM THAT HIGHER
COLLECTION DUE TO 5814. UM, SO
THAT THAT DOMINATES WHEN IT
COMES TO THE NON-GENERAL FUND
REVENUES. UM, A RECESSION WOULD
ALSO, UM, MEAN SIGNIFICANTLY
LOWER STOCK PRICES AND
POTENTIALLY ADDITIONAL LAYOFFS.
BOTH OF THOSE WOULD DRIVE DOWN
THE PAYROLL EXPENSE TAX
REVENUES. THE OVERALL IMPACT IS
QUITE SIGNIFICANT, 63 MILLION
LESS COMPARED TO THE APRIL, UM,
BASELINE FORECAST UM, FOR RATE
AGAIN, THAT'S, UH, QUITE A
SIGNIFICANT DROP THERE BECAUSE
OF THE OVERALL DOWNTURN THAT WE
TEND TO SEE WHENEVER THERE IS A
RECESSION RATE FALLS
SIGNIFICANTLY. AND THAT'S
EXACTLY THE KIND OF, UH, IMPACT
THIS, THIS FORECAST HAS, HAS
BUILT INTO IT. UM SO OVERALL,
WHEN IT COMES TO THE THREE YEAR
DIFFERENCE, IT'S A 233 MILLION
LESS COMPARED TO THE APRIL
BASELINE. THE DIFFERENCE BETWEEN
THE PESSIMISTIC SCENARIO IN JULY
AND THE BASELINE SCENARIO IN
JULY IS EVEN LARGER BECAUSE THE
THE JULY BASELINE IS HIGHER THAN
THAN THE APRIL BASELINE. SO THE
OVERALL CHANGE WOULD BE THE 232
SHOWN HERE, PLUS THE 116. SO
THAT'S THE OVERALL SPREAD
BETWEEN THE BASELINE AND THE
PESSIMISTIC. AGAIN THERE IS AN
OPTIMISTIC SCENARIO WHICH ADDS,
UH, SOME REVENUES. THERE IS
POTENTIAL TO THE UPSIDE. BUT UM,
WE DO BELIEVE THAT, UH, THAT THE
DOWNSIDE RISKS ARE THE RISKS ARE
PROBABLY SKEWED MORE TO THE
DOWNSIDE THAN TO THE UPSIDE.
THAT SAID, THIS TABLE HERE
COMPARES, UM, EVEN THE
OPTIMISTIC SCENARIO TO THE
BASELINE. AND YOU CAN SEE THAT,
YEAH, IT WOULD RESULT IN
POTENTIALLY MEANINGFUL
ADDITIONAL REVENUES THERE.
-- THANK YOU DIRECTOR. I SEE WE
HAVE THE ABILITY WE MIGHT BE
ABLE TO STAY ON TIME. SO I WOULD
SAY IF WE COULD JUMP AHEAD TO
THE SOCIAL HOUSING AND THE
FORECAST RISK AND RISKS AND
SCENARIOS, THAT WOULD BE GREAT.
-- YEAH, WE ARE CLOSE TO THE
END. YES. UH, THE SOCIAL HOUSING
TAX FORECAST HAS HAS BEEN
UPDATED. OUR OFFICE HAS BEEN
ASKED TO PROVIDE FORECASTS FOR
THE DEVELOPER. UM, SO WE HAVE
LOOKED AT THE COLLECTION FOR
2025 OBLIGATIONS AND THE YEAR TO
DATE COLLECTION FOR 2026. UH,
UM, THERE'S A FIRST QUARTER
THAT'S COMPLETELY IN, UM,
POTENTIALLY SOME LATE, UH,
RETURNS MIGHT SHOW UP, BUT MOST
OF IT SHOULD BE IN THE SECOND
QUARTER IS STILL, UM, STILL
BEING, BEING FILED AND BEING
PROCESSED. SO UM, THAT, THAT WAS
USED TOGETHER WITH THE DATA THAT
WE HAVE ON, UH, ON THE
EMPLOYMENT, UM, COMING FROM
EMPLOYMENT SECURITY DEPARTMENT.
SO SIMILAR SORT OF AN APPROACH,
UH, UM, TO PAYROLL EXPENSE TAX
WITH THE CAVEAT THAT WE HAVE
ONLY ONE ONE YEAR, UM, OF, OF
COLLECTION. SO WE CANNOT REALLY
DO A FULL ANALYSIS OF, LET'S
SAY, WHAT THE IMPACT OF HIGHER
STOCK PRICES WOULD BE. BUT, UM,
THAT'S, THAT'S WHERE THIS IS
GOING TO BE HEADING IN THE
FUTURE. UM, THE REASON IS THAT
THOSE TWO ARE IMPOSED ON SIMILAR
BASE, NOT EXACTLY THE SAME, BUT
THEY SHARE SOME, SOME
SIMILARITIES. THE TAX BASE IS
NARROW FOR SOCIAL HOUSING TAX
JUST LIKE IT IS FOR PAYROLL
EXPENSE TAX. EVEN NARROWER.
THERE IS ONLY ABOUT 220 TAX
PAYERS FOR 2025. ABOUT HALF OF
THAT HAVE FILED Q1 AND Q2
OBLIGATIONS. MORE ARE EXPECTED
LATER ON BECAUSE OF THE WAY HOW
THIS TAX IS IMPOSED ONLY ON
EXCESS COMPENSATION ABOVE A
MILLION. AND SO COMPANIES ARE
NOT ALL OF THEM ARE ARE NOT ALL
THE EMPLOYEES THAT THEY PAY ARE
HITTING IT AT THE SAME TIME? UM,
IT'S ALSO SIMILARLY
CONCENTRATED TO PARALLEL EXPENSE
TAX TOP TEN TAXPAYERS PAY ABOUT
TWO THIRDS OF THE OVERALL UM TAX
TOP 50, ABOUT 90%. UM, SO THAT
MEANS THAT THERE IS AGAIN,
INHERENTLY A LOT OF UNCERTAINTY
REGARDING THE FORECAST. UM, THE
THREE SCENARIOS THAT ARE HERE
ARE NOT NECESSARILY SHOWING THE
WHOLE UNCERTAINTY WHEN IT COMES
TO, UH, COMES TO THE POSSIBLE
OUTCOMES. EVEN THIS YEAR, JUST
LIKE FOR, FOR PAYROLL EXPENSE
TAX, THOSE FIRST COUPLE OF YEARS
THEY HAVE SEEN, UM, SIGNIFICANT
VARIANCE FROM BETWEEN THE
FORECAST AND THE ACTUALS. AND
THAT'S, UH, POSSIBLY GOING TO
OCCUR HERE AS WELL. ALL RIGHT.
AND SO FINALLY WRAPPING IT UP
WITH THE FORECAST RISK SCENARIO
RECOMMENDATION. UM, AGAIN ARE IN
CONFLICT IS DRIVING A LOT OF,
UH, CHANGES IN THE ECONOMIC
OUTLOOK, UH, THE OVERALL OUTLOOK
IS NOT THAT DIFFERENT COMPARED
TO WHAT, WHAT, WHAT WAS IN
APRIL, THE PROBABILITY OF A
RECESSION HAS COME DOWN. UM, THE
ECONOMY IS KIND OF GOING THROUGH
A TOUGH TIME, BUT IT'S NOT
BREAKING YET. THERE ARE
CERTAINLY ELEVATED RISKS. UH,
THE, THE GROWTH IS VERY
CONCENTRATED. UM, AND SO THE
RISKS ARE THERE. THE BASELINE
SCENARIO IS HOWEVER CONSIDERED
BY THE US FORECASTERS AS THE
MOST LIKELY OUTCOME. UM, FOR THE
REGIONAL ECONOMY. AGAIN THE DATA
THAT WE HAVE RECEIVED, UM,
PAINTS A PICTURE OF A WEAKER
ECONOMY COMPARED TO THE NATIONAL
ONE. UM, ON THE MORE POSITIVE
SIDE, WE HAVE SEEN COLLECTION,
WHICH IS NOT SIGNIFICANTLY LOWER
THAN WHAT WE WERE EXPECTING. AND
IN SOME CASES FOR SALES TAX IN
PARTICULAR IS ACTUALLY, UM,
NOTABLY ABOVE THE APRIL
FORECAST. AND SO TAKING ALL OF
THAT INTO ACCOUNT, WE CONTINUE
WITH OUR RECOMMENDATION OF A
BASELINE SCENARIO. THE OUTLOOK
IS NOT SIGNIFICANTLY WORSE.
THERE ISN'T ANY SORT OF
COMPELLING ARGUMENT WHY WE
SHOULD BE UH, ADOPTING A
SCENARIO THAT ASSUMES THAT THE
ECONOMY IS HEADING INTO A
RECESSION. AND SO THE BASELINE
IS THE RECOMMENDATION WITH THE
SAME CAVEAT AS LAST TIME, THAT
THERE IS HIGH UNCERTAINTY
BECAUSE OF THE POLICY CHANGES AT
THE FEDERAL LEVEL. UM, THAT ARE
JUST REALLY HARD, HARD TO
PREDICT. AND BECAUSE OF THOSE
LEGISLATIVE CHANGES THAT MAKE IT
TRICKIER TO FORECAST SALES TAX
AND BUSINESS AND OCCUPATION TAX.
SO THE VARIANCE MIGHT BE LARGER
WHEN WE SEE THE 2026 ACTUALS. SO
WITH THAT, I'M HAPPY TO ANSWER
ANY QUESTIONS.
-- THANK YOU DIRECTOR. THANK YOU
SEAN. JOE. ALEXANDRA ALWAYS
FANTASTIC AND AMAZING WORK. JUST
NOTING. DIRECTOR, SINCE YOUR
TIME HERE AT THE CITY, YOU'VE
BEEN WITH US THROUGH THE
PANDEMIC WHEN WE HAD MORE
ACCURATE FORECASTS IN THE STATE
AND THROUGH ALL OF THESE
DIFFERENT UPS AND DOWNS, YOU'VE
ALWAYS LED US THROUGH A AN
INCREDIBLE AN IMPRESSIVELY
ACCURATE FORECAST. AND SO JUST
GREATLY APPRECIATE IT,
ESPECIALLY NOTING THAT WE DID
HAVE TO ADOPT A PESSIMISTIC
FORECAST. I THINK JUST TWO YEARS
AGO. AND SO, UM, JUST GREATLY
APPRECIATE ALL YOUR WORK
COLLEAGUES AT THIS TIME. ARE
THERE ANY QUESTIONS ABOUT THE
FORECAST THAT WE'VE RECEIVED
-- NO QUESTIONS. I APPRECIATE
ALL THE INFORMATION. UH THANKS
FOR ALL THE INFORMATION.
CERTAINLY VERY DETAILED. I
THINK, UM, I'VE HAD AN
OPPORTUNITY TO TALK TO A COUPLE
OF FOLKS ABOUT THEIR OWN
BRIEFINGS ON IT, SO I DON'T HAVE
ANY ADDITIONAL QUESTIONS. THANK
YOU. AND I WOULD JUST NOTE,
OTHER THAN THREE REVENUE SOURCES
FOR WHICH THERE ALWAYS IS GREAT
UNCERTAINTY. EVERYTHING ELSE IS
LIKE EXACTLY RIGHT. ON THE APRIL
FORECAST, WHICH IS REMARKABLY
GOOD WORK.
-- NOW, IF ONLY WE WILL GET
THOSE RED LIGHT TRAFFIC CAMERAS
OUT THERE. AM I AM I RIGHT?
COUNCIL PRESIDENT, ANY OTHER
COMMENTS AT THIS TIME?
-- NO, I DON'T HAVE ANY. THANK
YOU FOR THE PRESENTATION. VERY
DETAILED. SO THANK YOU.
-- FANTASTIC. PER THE ORDINANCE
THAT CREATED THE FORECAST OFFICE
IN THIS FORECAST COUNCIL IS THE
ROLE THE FORECAST COUNCIL TO
REVIEW AND APPROVE THE FORECAST
IN TERMS OF APPROVING THE
FORECAST. IF WE CONCUR WITH THE
RECOMMENDATION, THERE'S NO
FORMAL VOTE REQUIRED. THE GOAL
OF THE LEGISLATION IS TO REMOVE
THE RISK OF POLITICAL INFLUENCE
AND CREATE A LITTLE BIT MORE
COLLABORATION HERE AT CITY HALL.
SO WE ARE IN CITY COUNCIL
CHAMBERS, BUT WE ARE NOT A CITY
COUNCIL COMMITTEE. WE ARE A
JOINT FORECAST COUNCIL. THAT
SAID, WE DO REPRESENT THE
ELECTED LEADERSHIP OF BOTH THE
LEGISLATIVE AND EXECUTIVE
BRANCHES. IT IS THUS APPROPRIATE
THAT WE HAVE THE AUTHORITY
TOGETHER TO OVERRIDE THE
RECOMMENDATION SHOULD WE CHOOSE
TO, BUT WITH ALL THE COMPLIMENTS
THAT WE JUST PROVIDED THE TEAM,
I DOUBT WE'RE GOING TO OVERRIDE
YOU TODAY. UH, JUST WITH YOUR
GREAT ACCURACY, WE ALL GREATLY
APPRECIATE YOUR WORK. AS YOU'VE
HEARD, OUR DIRECTOR HAS
RECOMMENDED THE BASELINE
SCENARIO OF THE AUGUST 2026
FORECAST IN THE CASE THAT THERE
ARE NO OBJECTIONS, WE CAN MOVE
FORWARD. SO I'M GOING TO JUST
ASK FORMALLY, ARE THERE ANY
OBJECTIONS TO, UH, LET ME SEE
HOW THIS IS THIS IS NOT ARE
THERE ANY OBJECTIONS TO ADOPTING
THE RECOMMENDED FORECAST? BY THE
BY THE FORECAST OFFICE.
-- NO OBJECTION.
-- SEEING NO OBJECTIONS. AND SO
THAT MEANS HEARING NO
OBJECTIONS. I DIRECT THE
FORECAST OFFICE TO RECORD OUR
CONCURRENCE WITH THE
RECOMMENDATION RECOMMENDED
FORECAST IN THE MEETING MINUTES.
AND WITH THAT, IS THERE ANY
FURTHER BUSINESS, ANY GOOD OF
THE ORDER? SEEING NONE, WE HAVE
REACHED THE END OF OUR FORMAL
AGENDA. BEFORE ADJOURNING, I
WANT TO REMIND EVERYONE THAT THE
NEXT MEETING WILL TAKE PLACE ON
FRIDAY, OCTOBER 16th AT 9:30
A.M., SO WE'LL GET CHAMBERS
INSTEAD OF EVERYONE ELSE WHEN WE
WILL RECEIVE THAT FINAL FORECAST
UPDATE OF THIS YEAR. UH,
DIRECTOR DR. S, THE ENTIRE TEAM.
I GREATLY APPRECIATE YOU. WE
STARTED A HALF AN HOUR LATE AND
WE'RE ENDING FOUR MINUTES
EARLY. APPRECIATE YOU SO MUCH.
UM, AND SO NO FURTHER QUESTIONS.
WE