City of Seattle's Economic and Revenue Forecast Council meeting of 8822

Well, good morning, everyone.

Welcome to the Seattle Economic Revenue Forecast Council.

Today is August 28th, 2022. I am Teresa Mosqueda, Chair of this council, and joined here today with my other four colleagues and the presenters.

Folks, would you like to introduce yourself, starting with Senior Deputy Mayor?

Hi, my name is Senior Deputy Mayor Onesha Harrell.

Good morning.

Morning.

Brindel, would you like to introduce yourself?

Yes, I'm Brindel Swift.

I'm Chief of Staff to Deborah Juarez, who is serving as our Council President.

Excellent.

And Director Dingley?

Good morning.

Julie Dingley, Director of the City Budget Office.

Wonderful.

Anybody else want to jump off before we hand it to folks in the room?

This is Jamie Purnell, Interim City Finance Director.

Wonderful.

And it's wonderful to have you, Interim Director.

And we wish outgoing Director Glenn Lee the best.

Okay, wonderful.

Thanks all.

I'm going to turn it over to folks in the room for introductions as well.

And I'm going to start with Jan, and he's going to introduce himself.

Good morning.

My name is Jan Duras.

I'm Senior Economist at the Office of Economic and Revenue Forecasts.

And I'm Ben Noble.

I'm the Director of the Office of Economic and Revenue Forecasts.

He is the newest and final member of the Economic and Forecast Council Office.

We just brought him on board in June, and he is coming up to speed.

And we're really appreciative to have him on board.

Hello.

Good morning, everyone.

My name's Sean Thompson.

I'm an economic analyst with the Office of Economic Revenue and Forecast.

And this is my first big presentation, so it's nice to meet you all.

Good morning.

Dave Hess, City Budget Office, Manager of the Economic and Revenue Team.

Good morning, Alexandria Zhang, economist on the economics and revenue team at CDO.

Thank you.

Wonderful.

Thank you all very much and welcome to everyone.

As I mentioned, we are very excited to have with us acting city finance director Jamie Carnell.

Again, welcome.

Thank you, senior deputy mayor and to the mayor for that appointment.

I'm excited to be here with our forecast Council colleagues today, Senior Deputy Mayor and with us from the Council President's Office, Chief of Staff, Bryndell Swift, as you heard her introduce herself.

As you also heard, we have with us a series of presenters from the Office of Economic and Revenue Forecasts, and we will have presentations from Director Julie Dingley from the Budget Office, our City Council staff, as well as individual offices.

The main purpose of today's meeting is for the revenue forecast to receive the updated revenue projections from the office of the economic revenue forecast.

And for us as a council to review these recommended forecasts.

These forecasts are key element to the city's budget process.

This is a new process that we've introduced this year.

and it will help us define the financial resources that we as a city have available to allocate throughout the budget process.

I'm really excited about today's opportunity to hear the August revenue forecast.

As we know, the executive, the mayor's team, is deep in the throes of finalizing their proposed budget for 2023-2024.

and so today's process allows for us in real time both as the executive and the legislative branch to hear this information for the first time and it will allow for us as a collective city family to be able to begin in just a few weeks on September 27th to publicly have the discussion and deliberation with the community members when the City of Seattle Council receives the proposed budget from the Mayor's office.

Again, Mayor Harrell's proposed budget to the City of Seattle City Council will be transmitted on September 27th.

So this gives us near two months for us to hear what the economic revenue forecast is for 2023, 2024 and beyond.

And it allows for us to have a transparent conversation with the community as well about how these updated revenue projections can help inform our biennial budget process.

Let's go ahead and begin today by formally adopting today's proposed budget.

A copy of the agenda has been circulated.

Thank you very much to Director Ben Noble for circulating that and posting it publicly, I believe, midweek, late last week.

So that is available online at the Economic Revenue Forecast Council website.

Colleagues, I move to adopt the agenda for today.

Is there a second?

Second.

Thank you very much, senior deputy mayor.

It has been moved and seconded to adopt today's agenda.

Today's agenda is before council.

Are there any additional questions, comments, opportunity for members to move agenda items around if you so desire?

Hearing no adjustments to our agenda, if there's no objection, today's agenda will be adopted.

There's no objection.

The agenda is adopted.

We are going to move on into the first item of business in our agenda here which is approval of the minutes from April 8, 2022. That is the last time we had the chance to meet.

Those minutes have been circulated as well and posted online.

I move that the Council adopt the minutes and approve the minutes from April 8, 2022. Is there a second?

Any additional comments, questions?

Hearing none, if there's no objection, the minutes will be approved.

No objection, the minutes are approved.

Moving right along.

All right, item number two.

This is the review of the second quarter revenue report from the Office of Economic and Revenue Forecast.

I'm really excited, again, for us to have this substantive item on today's agenda, for us to have a transparent and public discussion about what the second quarter revenue monitoring reports reveal, and for us to have an opportunity to really walk through this in detail with the Office of Economic and Revenue Forecast.

One of the specific purposes of the Seattle City Council identified purpose in creating this new revenue forecast was to make sure that we're really enhancing transparency and improving the public's access and quite simply the City Council as a whole, their access as well to information about the city's revenue.

These new quarterly reports are really tangible example of how we are aiming to accomplish the goal of shared information in real time between the executive and the legislative branch and importantly with members of the public as well.

With the current report that we are about to review and going forward our city's leadership both in the executive branch and the legislative branch are inviting the public at large to have access to this information in a timely and comprehensive way.

This is a summary of the city's current revenue receipts, if you will.

This information is really important as well because the city's budget is balanced to a forecast of the current year revenues.

And thus monitoring those revenues is a critical part of the management and oversight role.

And it would not be possible for us to create a balanced budget over the next two years without having an accurate and timely reflection of what the expected revenues will be.

So with that introduction, I'm going to go ahead and turn it over to Director Noble from the Office of Economic and Revenue Forecasts.

Again, this is an independent department, independent agency within the city that reports, as you're hearing today, both of the executive branch and the legislative branch.

We're going to hear an overall report out on the structure of the quarterly report and to highlight any specific development in the second quarterly results.

And then I also want to make sure that folks know we have invited Director Julie Dingley, who is within the City's Office of City Budget, to be here with us to present as well so that we can round out the information.

But the City Budget Office is separate from the Office of Economic and Revenue Forecast, though we welcome the City Budget and Director Dingley to be here to present later on in the agenda as well.

So I just wanted to orient us to the two different roles that each of these agencies have.

And with that, Director Noble, I'll turn it over to you to walk us through the presentation on item number two.

Thank you very much, Councilmember and Council Chair, in this case, Ms. Gaeta.

So, what I'm going to do here briefly in a second is put up a slide deck, again, walk you through what we, this second quarter revenue monitoring report.

So, what the Revenue and Economic Forecast Office is doing now on a quarterly basis is At the end of the quarter, so at the end of March, and then again at the end of June, and then September, and then ultimately at the end of the year, and I'll talk more about the end of the year in a second, we take a look into the accounting system to see how much cash has been received.

And we total that up, and as you'll see, we're going to report it by category, so you can really see what's going on.

As I'll describe, there's a certain amount of delay when people are obligated to pay fees and taxes, and a little bit of delay in our processing of them.

So the snapshot we get is of the information And really, that's the focus today.

It's going to be less on the specific dollar values for what we saw in the second quarter.

I will point out a couple things there.

I really want to orient you towards the structure of the report and the substance of it.

And candidly, I don't want to take too long to do this today, because the second presentation, which is the August revenue forecast, is really probably, in terms of looking forward, a really important piece, and it will actually also include some additional information about But with that, let me put up this presentation and walk us through this report.

So, here we go.

Again, second quarter report.

Again, the goal is to talk about the the purpose, timing, and format.

And again, in terms of purpose, as Council Member Mosqueda has described, our goal is to update on the city's actual cash receipts, make that information available to you all, but also to the public.

So this presentation is up on the city's website, excuse me, the economic and revenue forecast part of the city's website.

link there.

Again, in terms of timing, sorry, Director Noble, just a quick suggestion as we're doing this virtually and wanting to make sure that we're broadcasting this out.

I want to thank Seattle Channel for their publishing of this.

Perfect.

I was going to suggest if they wanted to drop the extra box so that we could see your face, that's great.

And it looks like they've already done that.

So thanks so much.

You can go ahead and continue.

Great.

Thank you.

Again, in terms of timing, as I mentioned, following each of We'll be able to do that about two weeks after the end of the quarter.

So this document was online in the middle of July, following the end of the second quarter in June.

The fourth quarter report, though, will take some time.

And in fact, won't be completed until mid-March.

And the reason, and the technical reference here for the accruals process, the way the city works in terms of its finances is we balance the budget to the money that is owed to the city.

because of activity from January 1 to December 31. But there's, again, a four to potentially eight-week delay in when payments are made for taxes and fees that are obligated in that calendar year.

In some sense, we catch up in January and February.

We wait for all those dollars to flow in.

Again, there were obligations for activity in the previous calendar year, and we add them all up.

And that process winds down at the end of February.

And then we're able to complete the report in early March.

In terms of the format, and you'll see in a second, that's really, I didn't want to highlight that, we'll provide a detail about some of the larger revenue streams, and we'll track those and have tracked those individually.

And then some of the other ones we've grouped into categories, so it's more easy to read and to keep track.

And then we're comparing the payments that we received at the end of each quarter for what we generally expect to have at that time.

When I say generally, excuse me, generally expect to have, what we've done is gone and looked back at the last few years to see the timing of the flow of each of these revenue streams.

And we're looking to see whether we're matching that same, and we've done that in percentage terms.

So at the end of the first quarter, you might think that we'd have 25%.

I'll explain in a minute why not, but we'll check to see whether or not we're on pace to what we have seen in the past years.

So less work, what does that look like?

So this next slide.

is an example of what that looks like.

So this is actually taken right from the report.

And this is sort of a high level at the general fund as a whole.

The blue shows you how much we generally would expect to get, again, based on our most recent forecast, the April forecast.

This shows you the share of revenue, and then translated to dollar terms, that we would expect to see.

And those shares, again, are based on the historic pattern of payments.

One of the reasons that the first quarter is so low is that there are many tax payments, B and O tax is an example, that are paid quarterly, but they're not paid on March 31st, but rather taxpayers are obligated to pay them by the end of April.

So as we add up all the cash that the city has received at the end of March, we're not seeing any of those quarterly obligations.

So it's actually a relatively small percentage that we tend to see at the end of the first quarter.

slightly larger, you can see at the end of the second quarter, and so on.

But you'll also see that the fourth quarter, you get to the total, but it's also proportionately but the largest share, about 40% of the city's revenues in the end will be accounted for in that fourth quarter report.

What you can see here, that the orange is then the actual receipts, and then the math below is just the numbers from the chart, but very explicitly laid out.

So at the end of the first quarter, we were a little behind the pace that we might have expected, At the end of the second quarter, we were seemingly notably ahead, and I'm gonna come back and describe to you why that is.

It's less of a wonderful new story about increased revenues and more a timing question, although there are some revenues that have come to the city that we did not anticipate, and more of that could come both here and then also in the next presentation as well.

This next chart looks very similar.

You might not have been able to tell, but this is focusing on an individual revenue stream.

So I wanted to be clear that we are not just reporting the totals, but we're digging into some of the specific and particularly the more important revenue streams.

So there are charts comparable to this one for retail sales, for the B&O tax, and for several other major revenue streams.

So we're giving you that detailed level of information and providing some narrative description as to what's going on.

So again, here, our retail tax receipts were slightly ahead of pace, if you will, in the first quarter, and then further ahead in the second quarter.

And these results are part of, certainly feed into our revenue forecasting process, and are part of the information that we're collecting.

We do then, though, report at some level of gory detail.

So this is, again, a chart from the table.

The individual rows are either individual revenue streams or a category of revenue streams.

As you can see, even at this level of grouping things, it's a pretty detailed chart.

But if you look across, just starting as an example, property tax, what we're reporting is at the end of the second quarter, we had over $197 million in property tax payments received to the city.

We're reminding you, if you will, in the second column what the forecast, the most recent forecast, in this case, the April forecast, what that forecast is for the revenue.

The percentage is then how much of that total have we received to date.

The answer is 53%.

And then the next column is, well, how does that compare to the more recent history?

You might well ask, and I will anticipate that you might, why are we only focusing on 2018 and 2019 as a kind of historic comparison point?

And there are two dimensions to the answer.

One is that the city shifted its accounting system in 2018. So our historic record is really clean from 2018 on.

And the reason we don't have 2020 and 2021 is that the payment calendar was very different in these pandemic years.

We don't think that, and we're trying to sort of compare pace with which we're collecting revenues now, that those two years don't really tell the story as a point of comparison.

So you can, again, read down this chart.

Essentially, if we're on pace, then the percentages in those two columns should be about the same.

And you can see, we're usually working way down, that is the case for most of the revenue streams.

The property tax is on pace, sales tax, et cetera.

First one you might hit that looks notably different is court fines.

The court fines were trailing behind the pace.

Again, if we were going to achieve the annual revenue forecast of $18 million, you'd expect it to have closer to half that revenue.

And you'll see there's a revision in the forecast that's been partly informed by these results.

That'll be in the next presentation.

Grants, a little bit ahead of pace, and then grants, they can be lumpy and they can come at different times, so to be in a place with a historic pattern isn't necessarily as useful.

Fund balance transfers, the 22 budget is balanced against some very significant fund balance transfers, including use of resources from the payroll expense tax.

Those are transferred on an accounting basis late in the year, so that's why they're showing zero.

We have no concern about getting those revenues, so there's no issue there.

I've highlighted two rows, the service charges and reimbursements, and then also this one that we call payroll tax late 2021 payments, because those are different and worthy of note.

The service charges and reimbursements, are well ahead of pace on the face of it.

We've taken almost 80 million.

We were only expecting 100 for the year, essentially double, at 77%, double what we would expect.

The reason for that is that the mega block sale went through, and this city received a large chunk of money all at once.

Our model about the normal pace of revenue receipts doesn't anticipate one-time large payments like that very well.

So it's noted here, and the narrative report explains what I just did.

to explain to you that we're ahead of pace, but not really in the sense that that was this large one-time payment.

The other one that's, again, worthy of note is this payroll tax late 2021 payments.

So what's happened here is that the 2021 payroll expense tax payments were due essentially at the end of January.

They were a one-time annual payment due at the close of the year.

And we received those payments through the end of February, but since, and then we, The way the accounting system works, we close the books.

We ran the accrual process and the monies that were paid in for 2021, we added them to all the resources for 21 and closed those books.

But since then, multiple taxpayers who have come forward and say, hey, we're still just coming to understand how that payroll expense tax works.

And we should have paid him in 21, or certainly by the end of January and into February.

And we didn't, and we are coming clean, if you will, and here is our money.

That was not in our forecast, because we didn't have any understanding.

Because again, we don't, had not collected this tax before, we didn't know who was even going to be subject to the tax.

So we couldn't tell, but there were people who probably should pay, who hadn't paid.

So we couldn't see that coming, if you will.

So it wasn't in our forecast.

So that second column, or the third column over, second column of numbers, there was, it said NEA for not applicable, because we had no reason to expect that there would be payments in 2021. But they have arrived.

As an accounting matter, we can't put them into the 21 column, if you will, because we violate the accounting rules.

Per council ordinance, city ordinance, the payments for 2021 belong to the general fund.

and let me take it back, explain for just one second.

For 2022, for this year, all payments and all obligations for 2022 payroll expense tax are being deposited into a separate fund, distinct from the general fund.

But these 2021 payments, they're coming in and we sort of have to decide, well, where do they go?

And per city ordinance, as I said, obligations for 2021 go to the general fund.

So the accounts at the end of each month have been reviewing the payments from the payroll expense tax, identifying those for 2021 obligations, and shifting those into the general fund.

So that increase of $14 million is a net increase of revenues that we had in no way anticipated.

And as you'll see, this becomes an issue in terms of the overall forecast for 2022. It is a good news story in a couple of ways.

One, it is more money today.

It also implies that the payroll tax base, the overall amount of money that has been coming in for the payroll tax, is larger than we had anticipated with our initial forecast and with our revisions previously.

So that's a material change, and you'll see the numbers actually, this was at the end of June, the number is larger again, and you'll see that in the next presentation.

So those are the two things I did want to call out in terms of actual results.

This is a...we've been focusing on the general fund.

We are also, in the same report, providing updates on a number of other revenue streams, ones that have been of particular interest.

The payroll tax is clearly one of them.

So you can see that figure reported, and we were at about 22%.

You note that in the last column, where we're kind of judging the percentage, Insufficient data is the benchmark here, because we've never collected this tax on a quarterly basis before.

It was due once at the end of 2021, and we have no other information about what pattern to expect.

And that's a challenge for us, and we'll discuss that more again as we talk about the forecast update for this year.

You can see the admissions tax, the beverage tax.

These are generally coming in on pace.

The real estate excise tax, which is REIT 1 and REIT 2, They're well ahead of forecast here, as you can see, and we will revisit that point again in the next presentation, where we preview the overall forecast for 2022, where we will, in fact, increase, and it's largely because of these mid-year results.

There's then also a separate category here of transportation-specific revenues.

These are not all the transportation revenues.

These are particular ones of interest and ones that we've been tracking.

Again, you'll see we're generally on pace, a place where notable exceptions are in commercial parking tax and the parking infractions, and we'll revisit those again as well in the next presentation.

But again, I want to emphasize to you that the report covers both the general fund and its components, but then also these other key revenue streams of interest.

Let me say one other thing, too, that I forgot to mention, which is that the format of both this table and now I've backed up the previous one, this list of revenue sources, you will see this again when we do the revenue forecast.

We are working to provide a consistent set of categories for all of these revenues.

Over time, various presentations that had evolved into slightly different categories And we realize that's not very helpful for you nor the public.

So this is becoming a standard approach.

You'll see this in this report.

You'll see it in the revenue forecast.

And it's also the same approach in the six-year financial plan for the general fund as well.

So that consistency, we think, will help over time.

So again, information for non-general fund sources.

And then just to overwhelm you sort of intentionally with this one, There is yet even more detail in the appendix to the report.

So you can actually drill in.

For instance, you probably can't see this very well, but there are separate rows in this table for each of the utilities that compose the utility tax category.

And so you could look in harder to see whether there are individual utility streams that are on or off pace.

And I really only wanted to put this up so that you could see in general the level of information that's being provided in the report.

You can go to the report itself to get a sense of that.

So that's what I have for this.

Really just wanted to give you, again, an overall sense of the format and then a few comments on those specific results to date.

And then happy to take questions before we move on to the forecast itself.

Wonderful.

Thank you very much, Director Noble.

Just a few comments before I open it up to other questions and comments.

Thanks for highlighting the additional revenue coming in for 2021 receipts from the Jumpstart Progressive Payroll Tax.

I want to thank the companies, the payors, who have been continuing to reach out to finance and administrative services.

to make sure that they fully understood how to best comply with Jumpstart.

And I want to thank as well the team at FAS who under the leadership of Glenn Lee and the entire team working with payors at FAS, they have been working with folks who have questions on a firm by firm basis to help people better understand what their total is that they owe or how they can calculate what they owe under Jumpstart.

really appreciate the proactive work that many of these companies have done to reach out to FAS and say that they were still working on calculations.

And that FAS has been really bending over backwards to make sure that folks have a partner in helping to determine what the payment is.

There's a lot of interest in making sure everybody feels comfortable with understanding the details, but that everybody is really complying with Jump Start.

So that's been really appreciated.

And the second thing I wanted to highlight is what you noted around the past ordinance the jumpstart payroll tax as passed in statute did intentionally want to use the receipts from 2021 to go into general fund really to help with important aspects of recovery as well so you're correct for 2021 we wanted to make sure that there was recognition that much of these funds were being used to deal with the crisis of COVID, to help small businesses and frontline workers and our economy recover, and that was intentional.

So there's no change in how the original orientation of the vision of what Jumpstart could do is going into place.

And then as you noted, we codified into statute that going forward after 2022 that there would be a separate fund to make sure we really had greater transparency and accountability for those dollars to do things like this that we're doing today to make it easier to report out on what funds are coming in specific to Jumpstart and that the spend plan that we codified in statute is also being adhered to.

So it's It's a good reminder to folks that this is completely in alignment with the pieces of legislation that have already been passed and a important reminder of the balanced approach that we took in these first few years to help respond to COVID, to pay back our emergency funds or rainy day funds, if you will, and then also to build forward a separate jumpstart account to make sure that the spend plan was adhered to and that there was greater transparency around what was coming in the door.

So this is the two pieces I would lift up.

Is there any additional comments or questions on agenda item number two, which again is just the quarter two forecast update?

Okay, I'm not seeing any additional comments from the Office of Economic Revenue Forecast folks.

Let's go ahead and do that.

Okay, wonderful.

Thanks for that presentation.

And we will go ahead and move on to agenda item number 3. For the record, this is the presentation of the August 2022 economic and revenue forecast and recommendation from the Office of Economic and Revenue Forecasts regarding the revenue forecast for 2022-2023.

and 2024. I would say that this is probably the most exciting, most interesting part of the day.

This is a presentation that is going to forecast for us key parts of the city's budgeting process that we are going to use to then create a balanced budget in 2023 and 2024. The revenue forecast is really what defines what resources we have available to allocate over the next two years.

And so today, the Office of Revenue Forecasts will be presenting the revised forecast for this year, 2022, and for the upcoming years that the new budget will be developing in September, October, and November.

And that is how we use the projected forecast dollars to create our biennial budget for 2023 and 2024. The revised estimates for 2022 will help confirm whether the budget we approved last fall remains in balance for this year, and the revised forecast for 2023 and 2024 will specifically define the resources to be allocated in the proposed budget coming down from the mayor in September, as I noted, that will be coming to the Seattle City Council on September 27th.

So before the council completes its review and approval of the 2023 and 2024 biannual budget, right, we have a three-month process to review the proposed budget, make amendments, make sure it's in balance.

We are also going to be able to have a last revenue forecast that will help inform our final budget before the council passes that.

That will happen in November before the final proposed budget from the council is published.

The purpose of today's update will be to adjust the forecast for any significant economic developments that may occur over the next two to three months to help inform the mayor's proposed budget that gets transmitted to council.

And as we discussed in our I believe it was May 4th, because I may the 4th be with you, remember that day.

In our May 4th meeting, we talked a lot about how there was much influx.

And so we have economic conditions that are changing and evolving.

And as the rest of the nation and the globe seek to adjust and make sure that their economic revenue forecasts are matching what they anticipated coming in, We will be in a very similar situation here in Seattle, and we could continue to see variability in the revenue projections, but we want to make sure that there is an opportunity to transparently and publicly talk about how those values are potentially changing.

So today is an opportunity for us to build on the presentation that we had over the last few months.

Again, April was the revenue forecast, and then on May 4th, Both the city budget office and the office of economic and revenue forecast came to the finance and finance and housing committee where we received the presentation from the office of economic and revenue forecast.

So, today's presentation is slightly different than this council received in the April meeting.

Thank you.

After consulting with staff, thank you very much to our central staff, Ali Panucci, Tom Mikesell, my chief of staff with the mayor's team and senior deputy mayor and with Julie Dingley, the director of the economic, excuse me, the city budget's office as well as the team at the office of Office of economic and revenue forecast.

I thought it would be helpful for us to receive a comprehensive overview of the revenue streams in today's presentation.

As I noted, these are separate offices, independent office of economic and revenue forecast who is with us today and who just presented and then within the.

Executive team, the city budgets office led by Julie Dingley.

We had previously had a separate presentation in my May 4th meeting at the finance and housing committee, and only had the office of the economic and revenue forecast at our forecast council meeting today.

We've offered the opportunity to hear from the city budgets office as well.

And we've invited.

Julie Dingley to be with us so that we will get a separate presentation as we did last time and in April from the office of economic and revenue forecast and then Julie Dingley from the city budgets office will be here to present and address questions about their portion of the revenue that is not covered by the streams that the office of economic and revenue forecast is required to present to us on.

So I want to thank both teams, the independent office of the economic and remedy forecast Council, excuse me, office, and also to the city budgets office for being here with us to provide this single briefing and an overview of all available general fund resources.

As we know, this is going to be imperative for the mayor and their deliberations in creating the 2023 2024. Budget.

With that, Director Noble, I'll turn it over to you first to walk us through your portion.

And then I understand that you will be including an input and opportunity for the city budget's office to be presenting as well.

So why don't I turn it over to you, Director Noble?

Thank you.

That's exactly right.

And I think maybe the best way for me to lay this out is actually to share the screen with the presentation.

And then as I review the outline of the presentation, actually, work.

Give me one second.

You'll see the original...

the problem I just gave you first, but I will switch quickly to the other.

So,

Again, this is as described in the August revenue update.

This is generally the vernacular that we've used.

Lead agencies, the Office of Economic Revenue Forecast with support from the City Budget Office.

I think the agenda itself will describe a bunch.

One sec, sorry.

There we go.

So, in terms of the outline.

So, the first part, the first two parts, you will only be hearing from the Economic and Revenue Forecast Office.

So our first thing we want to do is give you an update on current conditions in the national, in some ways the world, the national and the regional economy.

Essentially, what's happened since we were last chatting back in April.

Then we want to update you on the economic forecast.

So the revenue forecasts rely on economic forecasts.

what employment growth will be, what income growth will be, and the like.

We take a national forecast as an input.

Actually, there are three national forecasts that come as inputs, a baseline, a pessimist, excuse me, a pessimistic, and an optimistic.

We then feed those into our regional economic model and develop forecasts for regional employment and the like.

So we want to show you what the forward-looking economic forecasts look like, and they have changed notably since April as well.

As part of that portion of the presentation, we will make a recommendation to the Economic and Revenue Forecast Office regarding which of those scenarios we believe you should use and should serve as the basis for the revenue forecast.

We will then shift to talk about the revenues, and we will highlight, again, from our office's perspective, the revenue streams that are most economically dependent, that collectively represent about 70% of the general fund.

The staff, including Dave Hennis and Al Chang from the Budget Office, will review the portions of the revenue forecast that still are within their purview.

their close connection to the departments makes them ideal for tracking things related to city revenues and fees and rates, including the city's utilities and the like.

So there's a logical division there, and you'll see it in the presentation.

We'll then give you, as part of that, an overall summary of the forecast for 22, for 23, and 24, and then finally also look at some non-general fund sources.

The most significant of those being the favorable expense tax.

So with that, I'm going to move on.

I'm going to do a lot of the talking, but Jan is a critical component, and Sean will be soon, but in terms of the economic and revenue forecast, and is available both to present and to answer questions.

So with that, let me begin.

So again, economic update.

What's happened since April?

Well, since April, overall conditions have deteriorated.

This isn't news to any of you.

And the banner headline has been inflation, and then also the Federal Reserve's response to that inflation.

And we just had information from about two weeks ago that the U.S. gross domestic product has actually shrunk for the first half of the year.

Traditionally, that might be labeled a recession.

Truth is, a definition of a recession is somewhat more complicated.

But it gives you a sense that the economy is in a somewhat fragile space at the moment.

So we're seeing inflation tick up.

But at the same time, we're also seeing strong employment growth.

The announcement just last week of over $500,000 added in June.

will.

So the Fed is currently responding to that signal with a very strong commitment about controlling inflation in particular.

They're doing that by increasing the federal funds rate.

And so that's certainly an element of the overall dynamic here.

It's not just inflation, it's actually the steps the Fed is taking to fight inflation are purposely going to have an economic impact.

Again, the key question on employment are strong.

The question is, can inflation be brought under control without cooling off or in any way driving the labor markets into a recessionary-type environment and a loss of jobs?

And we don't know the answer to that.

Before I move on, one thing I did want to say, and it will come back to this, is the forecasts you're seeing were developed from the national forecast that we got in July that predated the recent announcements both about GDP shrinking for two quarters in a row and also that second three-quarter percent rate increase from the Fed.

So those were not known when the forecast that we were using was developed.

However, and it's a really important point, the baseline forecast did actually anticipate both those things.

And they also expected that second three-quarter interest rate increase from the Fed.

So those things which are not great news in terms of implications for revenues were baked into that baseline forecast.

So that's going to be an important piece as we go forward.

So I wanted to emphasize it now.

I wanted to talk a little bit more about inflation and explain and emphasize again how quickly things have moved.

So this chart on the right, which I've tried to animate with these arrows, shows both the the November forecast, which was from October data, that was showing the pattern since then.

This lower line was what was projected for inflation back in October.

It was increasing rapidly, but the expectation was that it would be short-lived and not too high, so it would peak at just above 5% and then already be in decline at this point, actually well in decline.

By March, which again was information that fed the April forecast, that expectation had shifted notably.

So the inflation had already moved past 5%.

The expectation was that it would peak again now below 8%, but then would fall again quickly in part in response to the Fed's actions.

The most recent July forecast, which is again on the far right here, is acknowledging that inflation is now, at a national level, surpassed 8% time, headed towards 9%.

But there's still the expectation, and you can see that in all three of these, there's still the expectation that the Fed's actions will move quickly to bring inflation under control, even as high as it's gotten.

So that by the middle of next year, inflation will be back to notably more historic levels of closer to between 2% and 3%.

And that's a consistent forecast and a consistent expectation.

We don't have the graph up here, but just by way of information, the local economy has been the same, actually a little bit worse.

Local inflation is actually somewhat ahead of the national figure, and that's true.

Again, everyone is noting increases in food and gas and energy prices, but even if you look beyond that, the local inflation rate has peaked up to 8.8%, so quite high.

So it gives you a sense, again, of how quickly inflation has become a significant force driving both the national and the local economy.

And again, the Fed's response to that is also part of the story, because the Fed, in an effort to bring down inflation, is raising interest rates.

And again, this shows you similar, the same time periods and the same benchmarks, what was forecast for what the Fed was going to be doing.

and what's now expected.

So, cursor, there it is.

As the pandemic hit, the Fed moved quickly to drop rates, you can see that there, essentially as part of the stimulus effort to make borrowing relatively cheaper so that folks would be spending money, to be frank.

They expected, again, back in October, which fed the November forecast, that as the economy began to recover from the pandemic, that they would slowly and modestly bring up interest rates, that's that lower line into the future, because the economy would be getting its own momentum and wouldn't require that kind of stimulus.

By March, which fed the April forecast, expectation was, well, inflation's increasing, the Fed's going to pay it, and the Fed had already moved to increase interest rates as well.

And now, again, you see further forecasts of increasing interest rates.

And that's another point that I want to make, is that the baseline forecast, which is what's illustrated here, not only anticipated that most recent three-quarter percent increase from the Fed, it's anticipating further increases.

And that is what the Fed is signaling.

So that's good in terms of the forecast being accurate.

But these actions themselves are going to cool the economy.

That is their goal.

And that's going to be reflected in our forecast as well, as you will see.

So that gives you a sense of what the Fed has been up to.

Sorry.

Just to talk a little bit more about employment, this is a chart that we've shown before and it's now a little bit outdated based on those most recent announcements.

here on the left are showing the job losses that occurred in percentage terms from the peak of the pandemic to, well, from the announcement of the pandemic to its worst point.

National level, that was more than 14% of jobs were lost.

And then you can see the recovery since then.

And actually the nation was outpacing us.

We discussed this before at different responses on a public health sense to the pandemic, different mixes of economy.

But we have been catching up.

Just so I say it, the fader lines show you the pattern of recovery from the Great Recession, just providing some context about how job recovery looks in a recession in general.

What was shown here is that, as of June, national employment, that blue line, was almost back to the pandemic levels, with the most recent job announcement, they're actually at or slightly above.

So, again, this graph is slightly out of date because of that significant piece of information that just arrived.

The region, which is the red line, we are still a little bit behind, but we're well on our way to, again, a job recovery consistent with the employment level of pre-pandemic magnitudes.

So job growth has been good.

Again, that's a good news piece of this, and the goal is, from the Fed perspective, is to control inflation without discouraging too much of that job market.

So there's been good news on that job front.

But one thing that's true is that, and we discussed this again, we just want to highlight it, the recovery has been different for different sectors.

And this information feeds that and gives you some additional background about what's going on locally.

So the graph on the right is using cell phones at an aggregate level to track the activity in the downtown area.

And the blue lines are visitors.

And you can tell they're visitors in a cell phone context because they come into downtown and don't spend eight hours during normal work hours and leave.

So you can really tell who's transient, if you will.

And then the red line is folks who are coming in and staying for that time.

And what you see in the blue line is that, and if you've been downtown and been to Pike Place Market or to the waterfront, you see this.

The tourist traffic is certainly not up to pre-pandemic levels.

On this chart, that would be up to the 100% level.

But there has been a good recovery and there's evidence of an upward slope.

So you'll see in a minute that employment in the hospitality and leisure sector is still not up to where it was.

But this is a promising sign about where it may well be headed.

The office worker side is more of a mixed message here.

We're not seeing significant return to office.

There is some positive trend there, if you look to the right.

Our folks are beginning to come back, but as yet, not in large numbers.

And that affects the amount of activity in downtown, including taxable activity.

It also affects things like the B&O tax and potentially the payroll expense tax, because affect those revenue streams as well.

So I wanted to give you a sense of where we are on both these fronts in terms of the recovery.

This graph is looking at actual job counts since, and they're measuring change since the pandemic, so taking February of 2020 as the baseline.

The red is the total, and we highlighted it differently, this is the total.

So what it shows is in total, again, this was as of June, we were down about 20,000 jobs in the region.

But what you can see again, and we've shown this before, but it's continuing to show this pattern, very different effects in different sectors.

So down to the right, transportation, trade, information, professional services, we have net job increases since the pandemic in those sectors.

And those are significantly compensating for the ongoing and continued job losses in leisure and hospitality, which is still more than 20,000, 25,000 jobs still down, again, relative to the pre-pandemic.

and manufacturing as well.

So we're still seeing this mixed pattern.

And I want to emphasize both that leisure and hospitality are still a trail.

Again, previous charts just maybe things are on the uptick.

But also just how dependent the health of the local economy has been for the past couple of years on that growth.

Again, illustrated at the bottom to the right there in trade, transportation.

Trade includes online retail, among other things.

information and professional services.

So they've really been the positive drivers.

And casting some concern about that is this graph.

And let me explain what's going on here.

So this is focusing again on those sectors at the bottom right of the previous chart that have really been the driver of job growth.

And this is measured in percentage terms of job growth, annual job growth over the past decade.

For the region, so the region is the blue line, right?

So the region as a whole, we've been adding jobs in this sector at better than between 2.5% and 5% on a consistent basis until just recently.

So the region has been benefiting, but the city has actually been leading that.

So the city number is a component of the blue line, but we wanted to show that we've been, of course, dragging that number off, if you will.

These jobs have been locating within the city, in particular, over the last 10 years.

And we've certainly seen that at South Lake Union in some ways.

And the development there speaks to exactly that point.

And the data here are from the PSRC, the Puget Sound Regional Council, which as part of its work to assist in regional planning, is actually trying to take regional employment level data and disaggregate it down to individual cities and smaller regions.

So this is a chance for us to get a look at the Seattle data.

It takes a little time to do that disaggregation, so we don't have it as current as we would like.

But in any case, the point about the chart is obviously the last data point, which indicates that the growth within the city in these sectors tailed off in 2021. The previous graph that I showed you, Let me just go to it.

This graph, this is for the region as a whole.

It's not just the city of Seattle, right?

So it's more consistent with that blue line, if you will.

And again, this is still, except that the blue line is above zero, there's still job growth here.

This is job growth, right?

Not number of jobs.

But what it does indicate is that for the city itself, And there's some evidence, and we're going to watch this trend, this was really just an initial data point, that job growth in these sectors is slowing within the city.

That does jive with anecdotal announcements from some of the major tech employers about, and the dollars they're investing, expanding facilities, office facilities in particular, on the east side of the lake.

So the east side of the lake would be captured in the blue line, but not in the red line.

Preliminary results, but something that we're watching, and something, again, along with that anecdotal information, is informing some of our estimates as well, in terms of the longer-term growth in this sector.

This is just echoing some of that demand for office space.

And what you can see is that these are vacancy rates.

And vacancy rates got spiked up as the pandemic hit.

haven't yet come down a great deal.

And in particular, in Seattle, we're still seeing high vacancy rates and seemingly vacancy rates climbing.

For the U.S., things are stabilized.

That's the blue line.

And for the Seattle region, the vacancy rate is notably lower.

So that is particularly downtown Seattle office space, where folks were seeing less demand.

Again, feeds into this question about what does the job growth for the city specifically look like going forward?

And candidly, it is a point of concern, but it's early in terms of reading what those results really are.

So that is, oh yeah, that's what we have in terms of an update for the national and regional economy since April.

We're going to shift now to talk about the forecast, what do we think of the regional national economy going forward.

Before we do that, I want to check if there are any questions on the updates itself.

And obviously, we can go back to any particular slide.

I'm not seeing anybody jump in with questions.

Director Noble, if you want to.

Great.

We will plow ahead.

So again, we're going to shift now and talk about the forecast.

We're really looking forward.

is cooling that outlook.

And again, I've tried to animate this, if you will, with these arrows.

So the very latest line here, so this is a, sorry, let me back up.

This is a forecast of national employment, where we're taking the number of jobs of pre-pandemic as a baseline.

So this is counting the number of jobs in percentage terms, all right?

So it's not growth in employment, it's total employment in percentage terms.

You can see the very steep drop in total employment as the pandemic hits.

And then there's a recovery.

And the very light line is the October forecast, again, which fed the November numbers.

And what you can see is, actually, if you look in the first part of this year, starting on my cursor again, the dark line then is the most recent baseline forecast.

And these are all compared to the baseline.

So what happened in the first part of this year We actually were outpacing in terms of, at a national level, in terms of the job recovery, the April, excuse me, the October forecast.

So there was more job growth, I guess this line is above, there were more jobs at the national level than had been expected back in October.

But looking forward, what's expected is a slower rate of recovery.

in principle because that is taking steps to bring down inflation and in doing that is going to be discouraging some levels of spending.

So we're expecting lower job growth at the national level going forward.

Again, this is the baseline scenario.

So actually a relatively stable levels of employment for 2023 and into 2024 and then starting again to get more job growth late in 24 and into 25. So that's, and compared to what we were forecasting above, excuse me, in the lines above, which is recently is March, expecting not robust job growth, but continued job growth throughout.

We're now expecting a much more slower period of growth for 23 and 24. starting to uptake more at the end of 24 and into 25. And these numbers, we picked employment to show you.

We could put up some of the other fundamental metrics.

You'd see a similar pattern.

I think employment is a nice summary measure.

So at the baseline overall, a cooler forecast, if you will.

Again, both inflation and the Fed's response being key drivers.

I do want to point out, as I indicated, we work with three different scenarios from the national forecasters, baseline, the pessimistic, and the optimistic.

One of the other things that's happened is that the risk of the pessimistic forecast has been increased.

The last bullet here notes that it is now 45%.

It was 35% back in the spring.

By the way, the probability of the baseline is 50%, so again, this is the sense that we're kind of teetering in the economy between a period of slow growth versus the risk of an actual recession and employment falling again.

The optimistic scenario is only 5%, so it's not on the graph because we just didn't want to clutter the image, and we don't really think it's worth a lot of attention, candidly, at this point.

It would be great if it were to happen, but it's not realistically a high probability event.

an update would indicate job losses again.

So having just recovered, or soon to recover, right now at this point, just recovered employment levels to their pre-pandemic levels, if this scenario were to play out, we'd expect job losses again.

As the economy entered a recession, overall demand would cool, that would include demand ultimately for employment as well.

So we'd see, job reductions again into the middle part of 2024 before job growth could start again and we begin to move out of the recession.

So, and we'll show you as we move into the revenue portion of this, what that kind of scenario would imply for our revenues as well.

The shift again, just to talk about the regional forecast, the pictures we've shown you today, there's the national forecast.

The regional forecast echoes them The dynamics are a little bit different because our economy has a different mix of jobs and sectors.

So again, with the arrows indicating the direction of the forecast since October and March, anticipation now from our model is that employment growth will continue in the baseline, but at a slower pace than we expected.

and the job growth will, we expect to get to 2% above where we were in the national economy, excuse me, in the regional economy before the pandemic, in the middle of 24. In the past, that might've happened as early as the middle of 2023. So there's a delay here.

It's gonna be a slower period of job recovery even in the baseline scenario.

And again, that's, What we're hearing anecdotally about slowdowns in hiring is consistent with that kind of a forecast.

I do want to emphasize as well that if the pessimistic scenario plays out, so we run the national pessimistic scenario through our model, and this shows you the difference between the baseline and the current baseline and the current pessimistic, again, looking at jobs.

So the baseline, as we indicated, it's the same line as this one.

anchored herself.

Instead of getting a steady but slow job growth, if a pessimistic scenario would play out, we would shift into a recessionary mode.

We would actually face job declines again relative to the pre-pandemic levels.

And that would extend for an extended period of time.

So we would begin to see job losses could continue well into 24 and then not shift back into growth until mid of the second part of 24. and can't see on the graph, but we wouldn't get back to current kind of levels until 2026. So that's, again, if that pessimistic scenario is what were to play out, that's what it would look like.

And you can see in April, and it's a deeper recession scenario than had been anticipated previously.

The previous pessimistic scenario would have been a 14,000 job loss regionally.

This one could be as much as 48,000.

So it is a more concerning sort of scenario for it to play out.

So the next slide is going to talk about our recommendation about which of the scenarios to shift to, excuse me, to base the forecast on.

Before I go there, are there any questions about the overall patterns of economic growth in these different scenarios that we're anticipating either nationally or regionally?

I had one question.

Do these, do the job, projections take into account those who may voluntarily leave the market or be eligible for pensions or retirement, since we have kind of the difference in raw numbers from, say, baby boomers and younger generations?

They do.

Essentially, the employment data both voluntary and involuntary.

So this is a total number of jobs that are filled, if you will, in the local economy, filled by somebody.

Yeah, best way to describe that.

I was just hoping perhaps the numbers were a little more rosy because some of these folks, though there might be fewer jobs, there'd be some people who would be on retirements or pensions and or You know right now it seems like there's a lot of job availability and so this is not the best news but I'll I see Julie's hand.

I was wondering if Director Noble you could give us a sense of how does how does this potential and the pessimistic scenario on this job loss how does this compare to prior dips in employment.

So either under COVID or the Great Recession, how would that 48K loss of jobs compare?

You can see some of that actually on this picture right here.

So the job losses associated with the peak of the pandemic are that dip down to past 10%, so about an 11% drop in total number of jobs that we experienced as the pandemic hit.

What we're showing here is that Again, relative to that pre-pandemic level, the bottom of that darker line is short of 4%, probably about 3.5% on the data right in front of me.

So it'd be notably less dramatic than the pandemic.

losses, but also know that they're potentially for a longer period of time.

We wouldn't expect the kind of stimulus that brought the economy quickly back from its troubled levels.

So it would be much shallower than what we experienced in the pandemic, but potentially, and you can see potential for a somewhat extended period.

Director Daley, did you have a follow-up question on that or any additional?

And then, so yeah, see that in the chart, that's very helpful.

I'm wondering about Great Recession as well.

It could also be an unfair question if you don't have that at your fingertips.

It wouldn't be as bad as the Great Recession.

The Great Recession, regional employment dropped by more than 6%.

So this would be notably less than that.

Thank you, Jan.

All right, so I'm going to move to the next slide because it advances some of this discussion notably, I think.

So we owe you, and we are now making you a recommendation.

And again, the next agenda item is actually for you to discuss this and improve it.

So we'll get to the overall revenue forecast.

But I do want to present.

It's important for me that we present to you and that you understand that we reached our recommendation about this we ran the regional forecast through the revenue models, but we were trying to make a determination from a professional judgment perspective on which scenario is appropriate without thinking about what the financial implications were, because we don't want that the cloud really should be a decision about what do we understand and what do we think, if you will.

So let me just walk through before I get to the punchline.

So again, we've already made this point, but the economy is at a delicate balance point.

And it's behaving very strangely in the sense that we saw GDP fall for two quarters in a row, and we also saw 500,000 jobs added in a month.

So those are mixed signals.

And they likely result from coming out of a pandemic that has had really important impacts on the economy.

One that strikes me as kind of an overwhelming point is that during the pandemic, people shifted away from spending money on services to purchasing goods.

So we couldn't go out to restaurants and we couldn't travel.

That led companies to start producing stuff, and there's some evidence that they've overproduced.

They've built up their inventories.

Walmart just recently announced that they have large inventories such that they're going to cut prices on some things to bring them down.

At the same time, we're now shifting back towards services, which may explain some of the demand for jobs as people shift back into those sectors.

So it's an odd situation we are finding ourselves.

That said, the Fed has made it clear that inflation is the number one target.

They're going to bring inflation under control, essentially, much as they've spoken these words, even if that costs jobs, or in the full knowledge that it will.

To their credit or not, what they think is that that's worth the short-term pain to bring down the inflation rate to guarantee a longer-term period of expansion.

It's a trade-off, short-term versus long-term, rather than to paint it unkindly, if you will.

I made a point at the very beginning of the presentation that is made in the next bullet, and I just wanted to emphasize again, this baseline forecast already includes some of the bad news we've seen.

So it's not like a rosy scenario itself in any way.

It fully anticipated the second quarter GDP fall.

It actually thought it would be a little bit worse, as the slide indicates.

It fully anticipated that second three-quarter rate increase, and it actually anticipated some further increases.

As I just mentioned, we've got 500,000 jobs as the economy, so demonstrating that continued strength in the labor market.

So given that full mix of things, this baseline forecast anticipated much of the bad news we have had.

There's actually some good news as well.

Our recommendation is that we based forecast, and the slides that follow, in terms of finances, are based on that baseline scenario.

I think that makes the most sense.

We also think that we need to watch this very closely.

There'll actually be a revised economic forecast from the national firm today, if I recall.

So we will check on that.

There'll be another one in September.

The plan is currently to use the October updates, not this month's, not September's, but to use the October national forecast update to feed the November revision.

If things start to move quickly, particularly in a downward direction, I think we might come back at you and talk about whether it would make sense to provide some numbers earlier so there could be time to process through that.

We're not there yet, but we definitely owe you an update by November.

The only question about whether it could make sense to provide some information ahead of that.

And that's something we will continue to consult with you and staff about as we go forward.

Yeah, are there any additional questions on this component?

And Director Noble, remind me, Are you going to also turn it over to Director Dingley to share additional context at some point as well, or is that integrated into the presentation fully?

It's integrated.

The next portion of the presentation where we start talking about revenues themselves, there's a portion of the revenues that really remain the responsibility of the budget office, and I think they'll be well positioned to talk about those and the implications of some of those changes.

Okay, great.

So let's pause again to see if there's any questions on this so far.

I just, no questions, but I just want to comment that The materials were extremely well presented.

Ben, thank you.

Director Noble, thank you and your team.

Extremely well presented, extremely clear.

I know everybody would love to just provide the rosiest of outlooks, but I think that you've provided a, it looks like a really fair and representation and that's, and that the public can really benefit from what we're seeing and how that might impact us.

And so I just wanna thank you and your team.

I know that it's always better to say like everything looks 100% perfect, but I think the balance for what you've presented is outstanding and also very clear.

So I just wanted to say thank you.

Much appreciated.

Give credit to John in particular, John's comment, even John has a workhorse in all of this.

And also folks at the budget office and central staff, we've been reaching out along the way to consult them, provide them some updates as we've gone.

So, but that's much appreciated.

And that is the perspective that we take.

Again, I described, it's why we internally, try to reach a recommendation on the scenario to base revenues on.

Before we look at the revenues, we don't want that to cloud our judgment.

We need to give you as sort of fair and as even-handed a forecast as we can.

And with that, I'm actually going to move on to the numbers sensitive to time as well.

So let's talk money.

Let's talk about the revenues.

So before we do that, a minor detour inflation does to city revenues.

It's kind of a complicated chart.

I won't take long to do this, but there's an important point here that I want to make.

You might generally think that, well, if the price of everything is going up, which is sort of what inflation says, then all of our revenues will go up, too.

And the problem is it's not true.

And in particular, just following this graph on the right is a pie chart of the city's general fund revenues in terms of broad categories.

And oops, sorry.

The yellow and the light yellow and the dark yellow, these are in fact revenue streams that generally do grow with prices.

Now inflation may cool the economy generally and that can shrink those things, but in terms of their nominal value overall, if prices go up and we're collecting a percentage sales tax, our revenues go up.

And if people are charging, we know it's essentially a corporate tax on the services and goods they sell.

is going up, our B&O tax goes up proportionally.

Private utility taxes, they're generally passing on their own expenses, so they have to get rates approved, in this case, at the state level often, but generally they're also growing with inflation at least over time.

The rest of the pie, though, is not necessarily the case, and in particular, the blue part of the chart, which is property tax, so that's More than 25% of our city's general fund revenues come from property tax.

And per state law, that can only grow at 1% plus the value of new construction.

And new construction has been adding 1, 1.5%, maybe 2% some year.

So we've had our property tax growing in the neighborhood of 2% to 3% per year, and inflation has been running at 2% to 3% per year.

sort of by coincidence almost, that part of this pie has also been keeping up with inflation.

But it's not inherently so.

And in fact, now as inflation is spiking up, we're going to suffer from the fact that 25% of our revenues categorically will not keep up with this higher rate of inflation.

If the spell for inflation is short-lived, that effect won't go away because the base doesn't change, but it won't continue to magnify.

High inflation persists for a long time.

It's become a bigger and bigger issue.

What it's worth, this is the dynamic that plagues the county's budget.

A much larger share of their money comes from property tax, and inflation eats away at the purchasing power of their revenues.

The green stuff I put in, it's purply colored because there are policy choices here, policy choices for the council.

So the dark green, 12% of our revenues come from the taxes on city light and SPU, essentially sales tax-like things that are applied to public utility rates.

For good policy reasons, you may try to contain the rate increases that are passed on to rate payers, and you should be making that choice accordingly and appropriately.

It could have an impact if, again, we are taxing that service for the purpose of the general fund.

So rate revenues go directly to the utilities.

The tax on the service comes to the general fund.

And it may or may not keep up with inflation, depending on what happens with those rates and also with demand.

Similarly, the light green is fees and services and other things, other charges.

And in an inflationary environment, it may well be a public policy choice to try to keep down the fee increases that we, the city, are passing on to residents.

But that will have the effect of constraining our own revenues to grow at less than inflation.

So there is a systematic, essentially negative impact that high inflationary environments can have on the city's general fund revenues.

And that's an overall big picture thing you want to be aware of as we go forward.

So I want to get to the actual forecast numbers.

I do want to highlight how we're recommending the baseline forecast.

And we did that before we looked at these numbers.

But I do want to give you a sense that that pessimistic forecast, if it were to play out, would be a significant hit to city revenues.

And these are the two biggest revenue streams outside of property tax.

retail sales and B&O, the dark lines are the pessimistic, the baseline is in the, I don't know what color that is.

And what you see is that, not surprisingly, the pessimistic would generate less revenue, but that that magnitude grows over time, going back to those charts, as the overall economy were to slow over the next two years.

If you add up the numbers, Forecast difference over the three years is $100 million, so a notable difference and significant one between those two forecasts.

Wanted to give you that as context as well.

So this, we're now moving into the numbers, absolute numbers.

So this is the general fund revenue update for 2022. We're going to do this in two pieces.

There are enough numbers on the page that there's too many to give you the 2022 and 2023 and 2024 together.

So we're going to start with 22 on this page, again, just the general fund, and we will move next to talk about the two years of the biennium.

The shading here.

is purposeful.

It indicates the revenue streams that are the primary responsibility of the Economic and Revenue Forecast Office.

Although it's fewer rows, if you add up the dollars, it's mostly money, getting well above 70%.

And I would add too that for some of the other revenue streams, the economic forecast that we prepare, which we give to the Budget Office, feeds their updates as well.

And they do really have an appropriate space here because the relationship between the departments around things like parking meters and court finds that they're really well-positioned and better positioned than we to query those departments and get a sense of what's changing here.

So the intent, again, let me review the structure of the table, and then we're going to focus a lot on the right-hand side, and in particular, the very last column.

So we've included 2021 actuals here just as a point of comparison, so you kind of get a sense.

It lets us compute growth rates as well.

As you see at the bottom, you get a sense of how general fund revenues have been growing.

The next column over is the adopted budget.

Again, it really is a reference point.

So you can see how things have evolved since you approved the budget.

The April forecast.

So again, this is the numbers that we showed you back in April.

And then the August forecast, which is an update on that.

And then the last column is really the difference.

So what's changing in this forecast?

What's the good news?

What's the bad news?

Good news is in black.

Bad news is in red.

Negative changes.

One thing I do want to draw you to, there was a piece here that we, one of the things we're doing this year, again, in consultation, particularly with the budget office and central staff, is keeping track of some of the carry-forwards that you approve.

So revenues from 2021 that are carried into 2022. We could have done a better job in April really fully accounting for those.

So in order to do a proper August to April comparison, we've added a line here that's shown in the purpose of changing the text color so you can see.

Those were, again, changes that had happened in April that we didn't fully capture when we were adding up the resources.

So we want to do a good comparison to August.

To do that, we need the totals to be correct.

So we're adding that so that we have true apples to apples.

It's really a distraction to the bigger point about what's going on.

So let's talk about that.

So I'm going to move down this right-hand column and talk about what's changed since our equal forecast.

Property tax doesn't change much because we know what the assessment rates are.

We know that's a very predictable revenue stream.

Again, these are thousands of dollars, but again, a very small change.

The economic forecast is a key driver around the change in the retail sales and also in the B&O.

On the retail sales, That increment of more than $7.5 million is very much related to inflation, but not exclusively.

There is some additional activity.

The business and occupation tax, the change, and the fact that it's different than the sales tax is a little bit unusual.

It has actually to do with the way that the base for being OTAC has been reported.

And I'm going to turn it over to Jan to talk a little bit more about what's happened there.

That's not all the change in the economic forecast.

It's also an understanding about 21 versus 22 payments.

Right.

So a lot of it is really accounting for the actuals for first six months.

Right now, we're actually in the first quarter for which we have received revenue.

So the previous thus the different direction of the forecast tradition for sales tax and B&O.

So in addition to the accounting forecast, we are using the actual that we receive to inform this updated forecast.

And occasionally, there is a situation where these two forces are driving it in opposite direction, different impacts on the revenue streams.

One particular challenge this year is that, coinciding with the pandemic, the timing of when certain annual B&O payments were due So they're coming in a little bit later and figuring out when they're coming in, how much they're going to be.

It's a new wrinkle for us.

And that's part of what's going on there.

We were over forecasting what that base was.

So we've adjusted the base in some sense and then applied the impact of the revenue forecast.

It generally has a smaller impact on B&O taxes than on retail sales in terms of the increment.

So that's again, so that the net ends up being negative.

I can also talk about private utility taxes.

So again, those are our purview.

That's phone and cable and natural gas.

There are small changes in each of those, natural gas up.

The increment is a small positive change, but there's not a whole lot going on there.

I would note that the telephone tax I revised downward again, it continues to fall off.

to the earth.

We only text voice activity, and people are just not talking on their phones the way they used to.

So the next few revenue streams are per view of the budget office.

So I was going to turn this over to Alex and Dave to give you an update on the changes that you see there.

Great.

Thank you, Ben.

So the ones that are not shaded are forecasted and monitored, more projected, more I would say, by the city's budget office.

And starting at the top, the utility, the public utility taxes, that drop is primarily, there's ups and downs in all of the revenues, you know, electricity and sewer and solid waste and federal.

The big difference there is related to water, however, is that we had a cooler spring, less water usage overall, and so that but the main driver there is that we had included an estimate for the heating oil tax, but the start date for that tax was moved back by council to Moving forward, parking meters up.

Generally, the story there is that we are moving forward with increasing rates at a gradual pace to reflect just the timing of changes.

So it's not a large change.

And so you see a slight increase there.

But parking demand is as high as pre-pandemic levels, more or less, just slightly below.

It's the rates that are going up.

fines is a big story.

There's a lot of emotion there.

Underlying all of it is just citation volume.

So parking citations are largely at pre-pandemic levels, but all the other citations written by patrol and so forth, those are down considerably.

And so that's one of the stories.

The other story, as you've all read in the press and are aware, is that we had to void 200,000 tickets and issue refunds.

And so that is captured in this as well.

And then the largest change, well, it's not the largest, but a large change was that it became apparent that there's an accounting adjustment being made in the book as a revenue.

And it turns out that is a non-cash revenue.

And so it's something that's necessary for financial reporting, balance sheet reporting, et cetera.

But it's a non-cash revenue.

So we've removed that as well.

And so that leads to that entire, all those changes lead to that entire $5.6 million difference downward revision in court fines.

I think grants are, has been was describing fund balance transfers.

These are still involving the federal monies that are coming through the coronavirus relief funds and what happened there is that something we assumed was going to be a general fund revenue was moved to the human services And that is primarily a reduction in business licenses, about 1.4 million of that.

About 1.3 million is a reduction in emergency services, which is a change in how much of the emergency 911 revenues that is held by the county.

And then remits to us how much of that the city is going to 1.3 million.

Then there's some lesser ones that add up in there as well, but those are the two main drivers.

And then the last item is in some ways the biggest news on this column, and it's to revisit something we mentioned previously.

Again, late payments from 2021 obligations for the payroll expense tax.

At the end of June, in that second quarter report, which was the first presentation, we had about $14 million of these late payments that we had received.

Since then, significantly more has been remitted to the city.

So there is now almost $42 million in late payroll tax payments that are revenues for 2022, general fund revenue for 2022. I would note that from a general fund perspective, those are one-time revenues because going forward, the base, and this does indicate a potential increase in the base of the Payroll Expense Tax, but those base revenues go into the new Payroll Expense Tax Fund.

But it's obviously a very significant increase for 2022. It actually helps make up for what would otherwise be a net loss among the other categories.

And the bottom line is that with this revenue forecast, there's an additional 24 million this slide.

I'm going to move on to look at the next slide, which is 22-23, but I'm very conscious of time as well.

So same basic structure here.

The column on the left, the 22 August forecast, that's the same numbers as on the previous slide.

Included in here as a reference point, again, that's to see what the growth rates are.

You can see the middle group of numbers is the 23 forecasts, same categories.

The April forecast compared to the August, And then similarly on the right for 2024, the April and the August forecast and the difference.

Conscious of time, the pattern of retail sales, what we see here is that where inflation has a positive impact on total revenues into 2023, then kind of the overall effect of a cooling economy sets in again, We're still seeing revenues grow between the two years, but the relative level of growth is less than we had expected in April because, again, the overall forecast is for a cooler economy.

That same effect ripples into B&O as well.

Again, the adjustment we made to the base, based on what we saw in the first two quarters of this year, is reflected here again as well.

That's why you get that difference between retail sales being positive and B&O being negative.

That's, in no small part, us adjusting the base for 2022. And then, again, you'll see it continues, it grows.

In the August forecast, we're still seeing growth between 23 and 24, and we looked at this growth from 2022, you can see as well.

But it is the overall economy implies that we're expecting lower revenues than we had in April from that source.

Utility tax, private utilities, again, similar stories.

There are individual increments around some of the revenue streams.

that are shifting dollars into these years as well.

Looking at the CBO-focused ones, and you see relatively modest changes for most of these categories.

The court fines that Dave described are the largest ones that continues.

Again, those are the same dynamics and playing out for the next two years, Dave's confirming.

And that's true of these other categories as well.

But the net effect overall, which you can read at the bottom line, is a reduction of just over $6.5 million in expected general fund revenues for 2023, and just over $11 million for 2024. Again, consistent with this generalized cooling of the economy, and then some of the specific city revenue streams, particularly court fines, falling relative to our April expectations.

Questions on those, the next thing would be to shift to non-general fund sources, including particularly the PET.

So I'm going to move ahead, not seeing questions.

We see the effect of the somewhat more pessimistic, not the pessimistic forecast, but an overall less robust forecast of the economy rippling into our forecast for 2023 and 2024. So shift now, I'm not going to go through this slide.

This is documents in written form with the narrative we just provided for you.

Put it here so if somebody opens this in the future, they'll get those explanations.

Just to highlight the difference between, and this is still general fund, the difference between the two, the baseline, the pessimistic forecast, take all the revenue streams together, the net effect over the biennium would be a reduction of 150 million, but we are again recommending the baseline forecast.

This is really just to provide you some context.

So shifting to the selected non-general fund, but general government, And again, the same format, we're going to look at 2022 here, and then the next slide looks at 22 and 23. And this right-hand column that is the changes that is really the major story here.

I actually don't wanna talk about, we have a couple more slides on payroll itself, there's a whole narrative there.

There is a small increment in the forecast for the payroll tax, and you'll see that play out as well in the next couple of years.

Minor adjustment in admissions tax, minor adjustments in sweetened beverage and short-term rental.

Short-term rental side, tourist activities recovering a little higher, a little faster than expected.

The REAP forecast up because we got, we had good results for the first half of the year.

The most recent month was a little, was not as rosy as the previous five.

So it's not necessarily, we're not just straight lining the first half and doubling that to create a forecast.

Expect a little slower activity in the second half.

and you'll see that that ripples forward as well.

The transportation benefit sales tax, this is just a tenth of a percent.

So the pattern here mirrors that of the overall revenue forecast for sales.

Commercial parking activity down a little bit, and then parking fractions down a little bit, but not a whole lot there.

Next slide is again, same structure, but we're looking at 23 and 24. The columns with the red and the black are showing you the change in the forecast.

between April and August.

So here, you'll see, again, we talk about payroll tax separately here, a slight decline relative to our previous forecast, but we'll talk about that.

Everything else, small changes.

You see, again, the REIT forecast, we are raising to 22 and then also raising for 23 and 24. We do, overall, we're expecting less REIT revenue in 23 and 24 than we are now forecasting for 22. 22, you can see that relative to that first column.

And that's because interest rates going up and overall cooling in the real estate market don't have confidence that the current Greek numbers will persist.

Dave, you might want to say a little more about the commercial parking tax forecast, which are down some.

Yeah, I'll quickly say it's essentially mirroring what's happening with the regional economy going forward.

The outlook for the regional economy is slightly downward from April, and so we're seeing commercial parking tax recovering, but just at a slower pace.

So let me talk about payroll in a few slides.

There's a significant story here, and this is documenting the verbal narrative I just provided, so it's written down for the record.

Payroll expense tax.

We've ended up with a forecast which is not Largely different than the one that we had in April.

But it's- I have to stop you.

Director Noble, PET, we cannot have another acronym.

That's the first time I saw that in the presentation.

I was like, PET, what is that again?

So I think we should either just stick with Jumpstart or Jumpstart Payroll or something like that.

But just for the record, I object to another acronym.

Yeah, well, it may appear elsewhere in this presentation, it won't again.

I'm hearing objection duly noted.

Okay, great.

Let's go ahead.

Thank you.

Yeah, so we've ended up a comparable forecast, but that is really a coincidence.

We've come around things to the same place in kind of a different way.

So what do we know?

And we mentioned some of this before.

The vast majority of the revenues are coming from three primary sectors, trade, information, and professional services.

those sectors.

Just to remind you, the structure of the tax is summarized in the second bullet.

Just to remind you, the thresholds are indexed to inflation, so they're going to go up.

They've gone up for 2022. They will now go up significantly for 2023 as well.

And another thing just to know is that it's The measure of the tax is payroll for employees who work in the city, right?

And that could mean that you're living in your house, or you're working from your house, rather, and working for somebody located outside the city, or your employer is in the city.

But if you were someone who lived in Shoreline and used to work in a downtown office building and now working at home, excuse me, you're not subject to the tax.

So this work from home is a dynamic in that.

So what do we know about the payments to date?

Well, it's pretty starting.

We just showed you that increment of 41 million that is in late 2021 payments that have been added this year.

That means that the total payment for 2021 are about $290 million.

Last time we reported this figure in April, it was 248. So we received, so call it 250, we received about 40 million more.

So that's very significant.

But, and this is really just driving our forecast, the year-to-date payments, because we now get quarterly payments.

Last year, they were annual.

We've got two quarters worth of payments, and we're seeing a slowdown relative to the pace that would be needed to make that 290 total.

In fact, if you extrapolate the current pace to be about 260, you'll see our final forecast is above 260. We have some data from the Employment Securities Department which suggests payments will be somewhat higher.

So that's underlying part of our forecast here.

And then looking forward, again, we saw some indication about slowing of job growth within the city in these key sectors.

So our forecast for growth of this revenue stream is somewhat more modest for 23 and 24. Just to say a little more, What's going on here?

Why are these payments slowing down in 2022?

Why are we now, you'll see, we're going to project, we are projecting less overall revenue in 2022 than we took in in 2021. And we think this is a big explanation.

This is a graph of the value of stock in the major tech firms that are operating in the city.

potentially subject to this tax.

What we know is that the folks who are working for these businesses, a significant share of their compensation is coming in stock grants.

They've been hired on an agreement that a certain number of shares will be distributed to them at certain frequency over the years of their employment.

But it's the number of shares.

And so the value of the shares is then having a big influence on their taxable compensation.

And what you can see is that really all these major employers since the end of last year and the first part of this year, their stock values have been decreasing and decreasing notably.

So we think what's going on here in no small part is that total expected compensation for the year is lower.

Again, firms are making estimated payments at this point based on what they expect will be the payments for the year.

So we think this decline in stock value is the explanation for, a significant part of the explanation the lower payments that we're seeing in this year.

And it is, again, primary reason why we're bringing down the relative to 21 receipts.

We're going to have to forecast that it's lower than that, because we think that the total amount paid will be lower, and thus the taxable payments will be lower.

Another dynamic about this is this work-from-home thing.

So these are looking at cell phone data.

Again, it's looking at specific neighborhoods in the city where these sectors have a lot of their headquarter activities, many of them.

And what we're seeing is that folks are not working in the office.

So that has the potential as well.

So folks who are living outside the city, the extent that they're working for these firms, if they're not in the office, their pay may not be subject, may not be part of the measure of the tax.

And so it may not be part of that.

So that may also explain part of why the payments to date are lower than they would otherwise have been.

So all that together, I'm gonna back up here, is leading us to a revenue forecast, sorry, we're moving here, for the payroll tax that for 2022, we had previously been forecasting 277, 10 million, this number right here.

We're raising the forecast modestly to just under 280 million.

That is still less than the 290 that we have taken in for 21. But again, the reason why we set on this lower number is the reduced payments we've seen to date.

That is the information we have through the first half of the year.

We're actually adding a little bit, because we think second half payments, history suggests that second half payments will be larger.

But the net effect is a higher forecast in April, but actually less total dollars than we took in in 21. Shifting again to 23 and 24 forecast, you can see here, they are actually slightly lower than the April forecast.

And this is consistent with the sense that the job growth and wage growth in these sectors, within the city specifically, not necessarily within the region, but within the city, is probably going to be a little slower than we had thought when we did the forecast back in April.

So on that, between the 22 is up 2 million, these are 23, 24 down a little bit.

The net effect over the biennium is relatively small.

But we got there from a completely different perspective, just to be clear.

We're now looking at real revenues, complete revenues, we think, for 21, and the partial revenues for 22 that aren't quite on pace.

So that's the nature of the payroll forecast.

And that's actually the end of our overall presentation, because we've now covered the general fund piece, shown you those changes, and now the non-general fund pieces, and the remaining component is for you to concur or not with the conclusion regarding the baseline as being the appropriate, and that's all these numbers, the baseline being the appropriate forecast basis.

Great.

Thank you very much, Director Noble.

And before we open it up for questions, or comments since the city budget's office and under the leadership of Julie Dingley was included in this forecast for the first time.

Thanks again for the shading of the materials so that we knew what information was coming from CBO versus from the Office of Economic and Revenue Forecast.

Director Dingley, is there anything else that you would like to add for context?

And feel free to let us know if you want to go back to certain slides.

No, thank you, Chair Mosqueda.

It was great to be with you, Director Noble, Dave, and Alex.

Great presentation, everyone.

I thought these materials, again, to echo Senior Deputy Mayor's comments, were incredibly thorough and thoughtful.

As Director Noble noted, this is a challenging time to be in the forecasting game, as we're seeing all of the different indicators go many different directions.

And so, Just want to remind anyone watching that this is but one side of the ledger.

So this is just the revenue side.

And so we're going to be hearing more about the expenditure side in the weeks to come and the pressures therein.

So thank you very much for having me.

Appreciate it.

Great and I think that that will serve as a good transition then to receiving the information and then as a council discussing and possibly voting on the adoption of the revenue forecast which is agenda item number four.

So I'm just going to tee this up so that folks have an orientation given this is our inaugural year of the forecast council.

Every quarter we receive the presentation and then the council the forecast council It is up to us whether or not we want to accept the recommendation to continue on the path that the Office of Economic Revenue Forecast has suggested.

If we agree, for example, as presented today, that we should continue with the recommendation of the medium forecast, not the optimistic, not the pessimistic forecast, but stay right in the middle with the forecast that has been suggested here, then we do not have to have a vote today.

We're, in essence, just receiving the information.

And we would make sure to make sure that the notes reflected that we are receiving and concurring with the recommendation.

If there is a desire to change our forecast and to go with an alternative scenario, other than what the office of economic revenue forecast is suggesting.

then we would have a vote.

And in order to change that revenue forecast, we would need three votes affirming a change to an alternative path.

So just to orient us, that is the task of the forecast.

Obviously, we are made up of two individuals from the legislative branch, myself and Council President Morris's office, and two individuals from the executive branch, the Senior Deputy Mayor, Deputy Mayor Monisha Harrell, and our current FAS interim director.

So that is the voting members of the forecast council here with us today.

And colleagues, I will open it up for additional questions, additional comments regarding the forecast and recommendation from the forecast office.

I'll note, just to sort of set the tone here, that given the information that we've received, and again, we are receiving this information in real time with the executive branch, with the legislative branch, and members of the public intentionally modeled after what we see in Olympia when their forecast office presents out to members of the public what the revenue looks like.

And for us, I think that this is an opportunity for us to receive what is sort of a mixed bag of information, good news in terms of what we are seeing come in from 2021 from the payments of Jumpstart Progressive Payroll Tax, which Director Noble, we're just going to keep calling it Jumpstart.

for an easy acronym there, and Ditch Pet.

But we all know that it's the same thing.

Good news in terms of additional payments coming in to reflect 2021 compliance.

Obviously, a mixed bag for 2022 current status and how we use that information to project out for 2023 and 2024. Today, I am prepared to follow the office of economic and revenue forecast recommendations, so I'm not going to be suggesting to our colleagues a different alternative path for perhaps a pessimistic forecast.

I will say, though, that given the increased likelihood of a pessimistic forecast, and as you noted, Director Newell, the delicate balance, that's the word you use, the delicate balance that the Office of Economic and Revenue Forecasts use to describe our current economic conditions.

I'm very much interested in working with the executive branch, and I know that we'll be in close coordination with the senior deputy mayor, Harold, and Director Dingley as they work on preparing their 2023-2024 proposed budgets to make sure that we're including some contingencies that account for the potential decrease in revenue that we may see in an updated forecast.

Nobody wants to be surprised in November when the revenue forecast comes down before a final budget is transmitted from council back to the executive.

And I think having some contingencies in place makes sense.

But again, at this point, I will open it up for questions from my colleagues.

And I I think want to underscore the delicate balance that Office of Economic and Remedy Forecast Council highlighted but would suggest.

I personally would be following the recommendations today.

What say you, colleagues?

Any additional comments or questions?

Dead air, dead air.

Anybody?

I will just say again, I think that the information is extremely well presented and that, you know, as you stated, council member, the baseline is the right way to go.

And just, it's good to have this information in mind as we build, as we build the budget, because it does give us a little bit more, I think having the right mindset is always good and being prepared and having multiple plans in place are valuable.

Agreed, agreed.

Any additional comments?

Council Member Mosqueda, we're in challenging times, and I'm with you all the way.

Thank you very much, Chief of Staff.

And please pass on our appreciation to the Council President as well.

Anything, Interim Director, that you'd like to add?

I know the video is not working today, but you're welcome to chime in.

Now, thank you.

This is fascinating for me as my first real foray into this.

I just want to thank Ben and his team for tracking the ins and outs of this forecast.

It changes every day and they're doing a great job.

And I also want to really thank the business license tax group who's tracking the jumpstart tax for us.

They do an amazing job, so I just want to put that out there.

I am in agreement with you.

I really think that the Medium forecast is the way to go.

Just because it gives us a little bit of a less risk scenario, and I know that the forecast team will be watching this very closely for us.

Thank you very much, and I echo your appreciation for the FAS team as well.

That's tracking compliance with Jumpstart and working hand in glove with the payors.

Deputy Director Panucci, anything?

Thank you, Chair Mosqueda and thanks for the presentation today.

I concur with everything that was said and just wanted to highlight the and appreciate the offer from the forecast offer to office to give us updates along the way so that we are not getting a surprise right as we are putting the balancing package together for the council's budget.

So just wanted to encourage ongoing coordination.

and discussions with the forecast office along with the executive so we can plan accordingly.

So thank you for that.

Excellent.

Thank you.

Okay, well, folks on the council, I'm not hearing any objections to the recommendation before us.

And thanks again to the Office of Economic and Revenue Forecasts.

I am also interested in making sure that we lift this up as a good example of where When we created the office of economic remedy forecast, we provided deference to the office for the recommendation to the council and in doing so, our goal was to remove any political influence over the forecast.

And we recognize that receiving recommendations for.

from a staff of independent professional expert was the best way to achieve this.

And today I think we saw some tough news that was hard to deliver and it was delivered I think appropriately so to both branches so that we could both receive this in real time and in a transparent way work together to begin addressing how this could affect our future budgets.

As the elected leadership of both the legislative and the executive branches, it's really appropriate and I think a good example for us in terms of how we are providing oversight on this process, but are also being deferential to the independent analysis from the Office of Revenue Forecasts.

in making no motion today I think we are establishing that the city forecast is doing the city forecast process is doing exactly what we intended to make sure that the council is receiving information in real time from the experts looking at the ever evolving scenario from the revenue streams and I want to again thank the team under Director Noble at the Office of Economic Remedy Forecast and also today since we heard from the City Budget's Office and their information was also integrated into today's presentation.

I want to thank Julie Bingley as well from CBO.

So again, hearing no objections in front of us, and we will have the notes reflect that we are concurring with the recommendation from the Office of Revenue Forecasts.

And that is the formal step that we need to take according to our bylaws to make sure that we are approving the forecast and moving forward.

So that, as of today, will concretize the receipt of the August forecast.

I'll also note that I think we have gone about a half an hour over in our last 2 meetings, so we may want to give ourselves an extra half an hour in the next meeting.

This is dense information and greatly appreciated.

And since we're all receiving it in real time.

along with members of the public when it is posted.

We do appreciate the detailed walkthrough of the information because we haven't had weeks to sit with the information.

That is the opposite of what we had intended, right?

We wanted to receive it in real time.

So I think giving us additional time during these meetings to make sure the presentations can be as thorough as they are is important.

And so that people, if they have questions, they can ask them.

So we'll go ahead and ask you, everyone on this team, if we can add an additional half an hour to our next presentation.

Is there anything else for the good of the order from our colleagues before I turn it back over to Ben to review the next steps in terms of meetings that we can anticipate as a council?

Okay, thanks again for your participation.

Director Noble, would you like to remind us of the upcoming meetings and the timeframe on those?

And let's add an extra half an hour as we think about that next meeting.

Yeah, no, thank you, Blackberry.

I appreciate the idea of extending the meeting because I do think that there's a lot of value in what we presented and it would be hard to squeeze it in tighter.

So I appreciate your time and the forecast council as well, and we will do exactly that.

As of now, we are scheduled, the forecast council is scheduled to meet, and I was just checking my calendar to confirm the date, on November 2nd, which we will then be providing the last update, 1230 meeting as scheduled.

We will extend that.

It may be that we have to move to start time in order to accommodate we'll work on that piece.

And again, we will continue to consult with you to determine if there's a reason to provide a revenue update in advance of that particular date.

For what it's worth, the ordinance that created the office requires that we deliver a revenue update by that date, but it couldn't happen before.

So there's no legal question about being able to give you an update sooner if that makes the most sense.

So otherwise, though, we will see you in November, and we'll certainly be in ongoing contact who help provide the underlying data.

We've been working very closely on the payroll expense tax, the jumpstart, progressive jumpstart tax, so that we can better understand what payments are coming and all that.

So that partnership across the city.

So look forward to seeing you in November.

Excellent.

Thanks so much.

We look forward to seeing you as well.

And I think in terms of You know, when the information is posted, let's continue as you currently have with posting it sort of in real time as the meeting is getting scheduled.

I believe a day or so before, or maybe that morning of I can't quite remember.

But I think that the intention was to make sure that then members of the public executive branch legislative branch had a full week to sit with it.

And then as described in our earlier meeting.

We then give ourselves a week to digest the information and then we have a short report back out in the next finance and housing committee meeting so that if other council colleagues or other members of the public have questions, they can always come to that next meeting.

So, the next meeting of the finance and housing committee on the legislative branch side in city council will be on the 17th.

August 17th, that was our regularly scheduled meeting and that meeting will give us a chance to hear sort of an analysis as well from central staff that puts into context this revenue forecast with also some of the expenditures that we've seen from things like the American rescue plan.

We do have a Finance and Housing Committee meeting, for those who are interested, on August 11th, but that was just a rescheduled meeting from last week as I was at Local Progress.

So we look forward to seeing many of the presenters at the August 17th meeting at 9.30 a.m., where we will then have a chance to sit with this information for the next week and a half, and perhaps ask a few additional questions, but to share it out more broadly with the Council and members of the public as well.

Okay with that it's 12 31. Thanks for your generous time today and we will see you on November 2nd.

Take care everyone.

The meeting is adjourned.