Budget Chair Mosqueda presents balancing package

Sue.

Well, good morning, everyone.

Thank you very much for joining this.

conversation this morning.

This is an opportunity for members of the community and the press to tune in and hear some of the initial summary, high-level overview of the council's initial balancing package release for the biannual budget 2023 and 2024. I'm Teresa Mosqueda, and I have the honor of serving as chair of the Budget Committee for this biannual budget as well.

I served as chair over the last two years, as folks will note, in a time of unprecedented crisis as we dealt with the growing global pandemic, the call for budgets to invest in racial equity and community safety in the midst of the racial reckoning that our country was engulfed in over the last two years.

And now in 2022, as we look at the 23 and 24 biennial budget, we continue to have crisis, and opportunity.

As the Council President noted in the conversation that I had with her last week, I'm serving as budget chair in unprecedented times yet again.

Charged with crafting a biennial budget for the first time in three years after the previous mayor had reverted to one-year budgeting.

Responding to growing amounts of unprecedented revenue decline just days before we were about to release our budget.

On the heels of the ongoing global pandemic and with future uncertainty due to rising inflation and global turmoil.

All of this is compounding an already heightened level of hardship and stress in our community for working families, for our most vulnerable, for the smallest businesses, all of which demand resources and support.

Despite this uncertainty and looming hardship, this balancing package that we are releasing today rejects austerity budgeting.

It invests in a Seattle that is cared for and housed, healthy and safe, and connected and resilient.

There were not easy answers in this year's budgeting process, but there were core values to start from that I continue to go back to.

This includes transparency and accountability, investing in key and core government services from our city, to invest in services for working families and smallest businesses, as we also prevented cliffs and services for our most vulnerable populations and community members.

We avoided austerity throughout this budget to ensure a local economy, our local economy could recover more resiliently and more equitably.

This balancing package is coming to you less than two weeks after the city received the dire economic forecast in November.

It's coming to you as we saw just a few weeks ago, $64 million decrease in the real estate excise tax, a net decrease of $9.4 million in our general fund revenue, and a net $4.5 million decrease in the sugary sweetened beverage tax revenues over the biennium.

This was compounding the existing challenge that we walked into to create a balanced budget when we already had an over $141 operating deficit to adjust to.

Budgeting during an economic downturn is challenging.

But I am proud of what we've been able to accomplish in this year's balanced budget.

We invested in key government services like human service provider contracts.

We provided historical investments in affordable housing.

We invested in equity and infrastructure projects.

And we are increasing access to abortion access through this budget.

We're creating affordability for working families and our smallest businesses, and we're investing in our future by making sure that we are keeping our commitments to creating a green economy, green New Deal investments, and building community.

Over the past seven weeks, the council has engaged with community through dialogue about the mayor's proposed budget.

This includes convening two public hearings, eight public meetings.

We listened to hundreds of community members and members of this city council proposed 100 amendments to the mayor's proposed budget.

There has been consistent dialogue informing our budget action today.

And we will continue throughout the next two weeks to work with members of the community to move forward to create a budget that invests in core services and emerging needs.

And this is all only possible because of all of you who've made this budget package come together under these challenging circumstances.

So thanks to you, members of the committee, community, for your patience as we worked through an exceptionally challenging budget year, and we had to delay the budget calendar by one week.

Thank you for your patience as we've crafted this budget to share with you today.

Thank you to the staff in my office who spent endless hours and community roundtables and individual meetings with both community members and council members, along with members of the executive team to better understand the direction and to be able to take leadership from community members across our city so we could draft a budget to respond to those needs.

And thanks as well to the communications team who is bringing you this broadcast here today, as well as the tools to make sure that we could better understand the proposed budgets, the amendments, and the budgeting process throughout the last eight weeks.

And this proposed budget today, the balance package that you see is thanks to the brilliant work of the nonpartisan analysts from central staff under the leadership of director Esther Handy and deputy director Ali Panucci and budget lead as well for this upcoming budget.

These two have helped with long with their team to crunch numbers, compose amendments, work with the city budget office and all of the departments as we considered various amendments to the mayor's proposed budget.

The balancing package includes amendments from every single council member.

While not every priority was included, we made sure to include all of the council members in our deliberations and work to make sure that this budget was balanced and reflected those council priorities.

Importantly, it's important to note that this budget is also being brought to you under a new form of partnership.

Thanks to the collaboration and support that we've received from Mayor Harrell and his team in developing the final proposed budget that we have released today.

The partnership with the city budget office, Mayor Harrell's office, and our team and my staff, the central staff team, we very much appreciate and applaud this partnership in the midst of ongoing stress and ongoing hardship, declining revenues, We have looked at ways that we can come together to especially address the real estate excise tax shortfall and make sure that we close that gap together.

This relationship recognizes that each body, the executive branch, the legislative branch were separate, but equal branches of government.

But in these times, we also recognize we must come together to address these unprecedented crises and growing needs as a city family.

We have had honest, open, and transparent conversations.

And there are decisions in this budget that have been discussed openly, and we have worked to include feedback from both the mayor's office and council member offices.

But we needed to work swiftly, effectively, and thoughtfully to move our city forward.

I want to thank the city budget office director, Julie Dingley.

I want to thank the mayor and his team, and especially senior deputy mayor, Monisha Harold, as well as deputy mayor, Tiffany Washington.

I am proud to release this council's initial balancing package today because I believe that it invests in the following three categories, cared for and housed, which means that we're investing in homeless services and human service providers, as well as tenant protections.

Second, we're creating a connected and resilient Seattle by investing in economic revitalization and equitable growth, livable, clean, connected communities, and sustainability and environment in every turn of the budget to create a greener and more resilient local economy.

And finally, we're creating a healthier and safer Seattle by investing in community safety, public safety, investing in alternatives to community safety as well as in what the mayor's proposed budget included as many of the tenets of traditional public safety.

But we know that's not what's needed only for a safe community.

We need youth to be able to have opportunity for education, for our community to have access to arts and culture, and that we invest especially as we seek to recover from this ongoing pandemic in the health of our population.

Those are the three categories and the broad subcategories that we invested in this budget.

We had to make tough choices in this budget and invest in strategies that allowed for us to prevent cliffs, prevent austerity, prevent programs from ending before their need had diminished.

So in order for us to do that, we looked at right-sizing new investments, decreasing investments in new pilots or brand new programs or initiatives that did not yet provide direct services or care to the most vulnerable community.

We had to address the shortfall.

And so similarly, we looked at projects and spending categories that did not have dedicated projects already in development or already identified and fully planned for.

These are tough decisions, but in every way, I tried to help move us away from major policy decisions that departed from existing strategies that the council and the mayor had already agreed upon.

This includes making sure that we had major policy changes and policy decisions done outside of the budgeting process.

Especially given our economic uncertainty, we really need to stay focused on a balanced budget this year and take the temperature down, depoliticize policy choices, and be intentional about our actions tied to the budget.

If something was new or not fully developed, we're in a moment right now of needing to prioritize basic necessity versus nice to have or shifting from policies previously determined.

I applied the same lens across departments.

If there was a major shift in policy that would be a departure that required a longer discussion, I held back on those actions for future thoughtful deliberation in partnership with the mayor.

And we worked to really try to include a balance of, I think, council and executive priorities in this proposed budget.

We did have to say no to some ideas.

and as I noted, in particular, new programs.

But we have worked to find common ground, and I am hopeful that this sets the foundation for future dialogue to happen with community members, our council, and the executive to come.

In some ways, this is not a feel-good budget, and it cannot be in the midst of an economic downturn.

But overall, I feel good about the decisions we made to balance this budget and balance those priorities.

So I'd like to spend just a few minutes talking about some of the investments in these categories before I turn it to Director Handy, and Deputy Director Panucci.

Through these tough decisions that I just outlined, we free that funding to give us the ability to make critical investments in this unprecedented time.

And we're going to walk through cared and housed for investments, connected, resilient investments, and healthy and safe investments.

So to start with, for cared and housed, we were able to maintain and increase key investments into human service providers, the very folks who care for our most vulnerable, who are either on the street or on the verge of becoming houseless themselves, we need to make sure that we're investing in their wages and their sustainability for that workforce to care for our most vulnerable.

We maintain the unanimously passed inflationary adjustment and avoided falling further behind by making sure that we address those inflationary adjustments across the biennium.

We worked in partnership with the King County Regional Homelessness Authority to ensure that emergency shelter and services were invested in.

And together we closed the $9.4 million cliff that could have impacted 20 programs across 12 agencies due to a budgetary error.

We closed that gap and we fixed that issue so that there would be no reduction, austerity or cuts to those 12 organizations who are providing critical services to folks who are unsheltered.

Regarding the unified care team.

We have worked together with the mayor's office, members of the community and the regional homeless authority to create what we're calling solutions beyond removals.

Cleanings without clearings, working with folks year round to meet their needs, providing people's hygiene, cleaning and services need and helping people find stable housing and shelter that meets their unique needs as appropriate shelter beds become available.

We did this, again, in partnership with the mayor's office and the regional homelessness authority to define these dual roles for the city and the regional homeless outreach providers.

RHA, the Regional Homelessness Authority, will be able to expand the number of homeless outreach workers through the ongoing and existing relationships that they have to ensure that more folks have access to harm reduction strategies, make sure that more people are getting matched with the right and available bed, and to make sure that we are creating long-term systems that look at where shelter and housing is available, and also what individual needs are, solutions beyond removals.

The city remains focused on expanding cleaning, sanitation, trash removal services, pest abatement, hand washing, all of the things that a site needs, providing these geographically focused neighborhood approach, as the mayor had suggested, five different geographic focuses around our city.

Every city gets Every region of the city gets the attention it needs to support the hygiene and cleaning services needed.

That's year-round cleaning, not necessarily tied to clearing, and that allows for us to invest in the health and safety of everyone.

In this category as well of cared for in-house, we're working to prevent homelessness in the first place by investing in more eviction legal support and rental assistance.

Importantly, we have secured a record investment of affordable housing dollars yet again, with over $252 million for rental units, first-time home ownership opportunities, and supportive housing services.

The $50 million increase over last year's budget is only being made possible because of the jumpstart housing investments and the revenue made possible from that progressive revenue stream.

Secondly, in health and safety, We're investing in behavioral health and resources for underserved communities, such as restoring the reduction to the anti-Asian hate crimes grants and increasing funding for behavioral health outreach in the Chinatown International District.

We're increasing support for survivors of domestic violence, adding funding for crisis prevention and intervention services, adding funding for diversion programs through our partners at LEAD and CoLEAD through the Public Defenders Association.

And we're restoring investments in food access and food security wherever possible.

Investments that were slated for reductions due to the sugary sweetened beverage tax revenue hit that was going to reduce investments by 1.2 million.

We are stepping forward with funding that was unprogrammed, that we freed up in the administrative category from Jumpstart to make sure that we are following through with that investment.

A few more investments in this category.

During this time of crisis, we're investing in the crisis line to ensure that folks who need to call for assistance on the crisis prevention and intervention line have someone to respond.

to.

We're increasing funding for abortion care following the Dobbs decision to add $1.5 million total to ensure care for uninsured populations and access to reproductive justice.

We're allocating more funding towards therapeutic services for survivors of sexual exploitation, domestic violence, and sexual assault.

We're helping to maintain a nurse practitioner services as part of HealthONE for helping firefighters and the HealthONE team respond to behavioral health crises and social service needs.

We're investing in District 1, West Seattle, and South Park by making sure that the fire truck, ladder, and medic van are continued in this budget.

And with great appreciation and recognition that the mayor and the chief have decided that 80 of the 200 vacant but funded positions previously at Seattle Police Department, that 80 of those would be directed to the general fund.

In this budget, we've made that an ongoing action to create sustainability for the general fund.

recognizing the full hiring and retention plan is fully funded in this budget and the additional 120 positions on top of the hiring plan and the associated salary remain within the department.

Again, this is not a policy shift.

We're opining on the number of officers.

This continues the policy that the mayor's budget transmitted to ensure that that funding is available in the general fund and that the department retains the positions and salaries as they've defined.

I want to thank the mayor's office for our discussion about this and the nod that this approach would keep the numbers consistent with what was transmitted and within the department.

We also maintain the parking enforcement officers unit at the Seattle Department of Transportation while we launch an interdepartmental task force to determine the best long-term placement for the parking enforcement unit.

The report timeline has been shifted up in conversations that we've had with members of the community.

and with the mayor's office to have a report back in April.

And in the meantime, we are investing immediately in additional funding for administrating overtime.

We are bringing the numbers of full-time employees up to 90 total individuals.

We're investing in supplies and uniforms to immediately show action.

and intend to use those investments to help mitigate the current situation that the unit, the parking enforcement officers, and supervisors are facing within SDOT.

Again, we're taking the time and making an intentional decision to make these investments as we take the temperature down, depoliticize discussions, and ensure that the policy conversation happens outside of the budget.

Again, thanks to the mayor's office for their commitment to launch the interdepartmental team immediately after this budget session in December and working with us to ensure that the report date comes back swiftly to council for action.

And in the wake of the shooting at Ingraham High School, in the call for additional investments in mental health counselors, this budget invests in ongoing investments in gun violence reduction, as well as increased mental health counselors for youth.

And again, thanks to the mayor's office for their support for this investment as we seek as a city to help respond to the students' demands for additional investments and safety in schools.

And finally, connected and resilient.

We have invested in a connected and resilient Seattle by investing in childcare, by preserving the $500 million commitment for wages for childcare providers, investing in accessible art improvements through the AIDS Memorial Pathway, protecting and adding to the Equitable Development Initiative funds, and continuing to invest in union jobs and a hiring hall for high road employers, and supporting small business development, commercial affordability, and economic recovery, through our jumpstart economic resilience investments.

We have also created additional revenue to make sure that we continue to invest in safer cities and safer infrastructure.

We are, through this budget, investing in street safety and Vision Zero by doubling our school zone cameras across the city to ensure that we can help bring in additional revenue.

But also that those cameras are not just placed in communities of color, that we expand out across the city and we give folks a grace period before the ticketing starts.

That will help bring in additional revenue to create safety around those schools.

We're increasing the vehicle license fee by just 10 dollars to invest in bike lanes, Vision Zero projects, bridge maintenance, and this will be only for 2 years, but will help make sure that there's critical investments in transportation infrastructure due to the REIT revenue decline.

This budget includes language to further s thoughts ability to promote pedestrian uses through designs such as the Capitol Hill superblock in the upcoming transportation plan and support community engagement planning and visioning efforts and transforming our right of ways into vibrant public spaces.

And importantly, we are using REIT debt service dollars to keep our commitments to build the Memorial Stadium.

This is a commitment that we've made with community and Seattle Public Schools, and our partners should be able to see that this investment in this budget signals our ongoing support for this investment and continued partnership with those regional partners.

At the waterfront, we've committed to maintaining the welcoming center.

Previously had relied on 13 million in REIT funds, but given the REIT situation, we wanted to make sure that we continued our commitment to the community and specifically the Muckleshoot tribe and make sure that we continued investing in that waterfront welcoming center.

So we're using debt service capacity as well.

And finally, we've invested in greener future by aligning Jumpstart Spending with the jumpstart Green New Deal oversight recommendations, redirecting funding to community-identified climate resilience hubs, added over a million for environmental justice funds, included unprogrammed millions to support Indigenous-led sustainability projects, and invested in trees.

invested in tree canopies with a focus on underserved communities most impacted by environmental injustice, including the Chief Arborist position to oversee implementation of the Tree Equity and Resilience Plan and tree planting in the city's right-of-ways for underserved communities.

Those are some of the highlights which have each council member names associated with it, which we will go through at our Select Budget Committee meeting that begins at 11. I'm excited now to turn it over to Director Handy of the central staff team and Deputy Director Panucci, who will provide some additional technical details about what is in the proposed balancing package to flush out some of these areas that I've just noted, the fund shifts that made it possible for us to make these investments, and the ways in which there's consistent policy applied across departments and across this package.

I'll wrap up with some additional comments at the end before we adjourn, so members of the press can join a technical briefing after this.

But again, I just want to thank the entire team of the central staff for your heroic work to make sure that we could continue making investments in these really challenging times.

and to do so in a way that was not only creating a balanced budget, but a budget that I believe our council can be proud of.

Thank you, Director Handy.

I'll hand it over to you.

Thank you, Budget Chair Mosqueda.

I am Esther Handy.

I'm the Director of the Council Central Staff.

I'm joined by our Deputy Director, Ali Panucci.

Ali is going to go ahead and pull up a few slides that we will walk through the balancing package in further detail and show you some of the tables and the numbers.

Next slide.

I'll show that, a reminder, we are at step four of the City Council's budget process.

On September 28th, Budget Director Julie Dingley provided an overview of the executive's budget.

The Council then hosted a week of department by department hearings in early October, followed by discussion of possible amendments to the proposed budget.

The balancing package released today is a compilation of those amendments proposed by all nine Council members and put together by Chair Vizqueda.

and there will be an opportunity to amend this package next Monday, November 21st, before final adoption of the city budget on November 29th after the Thanksgiving holiday.

Great.

We'll skip forward to, let's start with the key issues that we're facing the council when this budget was transmitted.

The first relates to human service contracts issued by the city.

human service department contracts with over 170 organizations to provide social services to residents in Seattle.

These are food banks.

Outreach work to people experiencing homelessness social workers.

Current law requires the human services department to inflate service provider contracts annually based on the consumer price index for urban urban wage earners and clerical workers that is called CPI W this required CPI W inflationary rate for 2023 is 6 is 7.6%.

And the forecasted inflation for 2024 is 6.7%.

The executive had proposed to change this law, placing a cap on annual inflationary increases for those contracts at 4%.

The balance sheet package released today follows current law and provides inflationary increase on human service provider contracts of 7.6% in 2023 and 6.7 in 2024. Second, there were proposed fund policy changes to a variety of funds, including the short-term rental tax fund and the transportation network companies fund to reflect changes in state law and to provide needed flexibility to balance the budget.

The most significant policy changes were the jumpstart fund that would change the current formula for spending and allow more jumpstart to be used in the general fund to address the operating deficit in perpetuity.

I'll pull up a table later in our presentation, but we'll give you the highlights now.

The payroll expense tax was adopted by the Council in 2020. In its first full year of implementation, it raised about $250 million.

It's currently projected to raise $294 million in 2023 and $311 million in 2024. The balance sheet package recommends passage of an ordinance that would allow a transfer from the Jump Start Fund of about $30 million higher than anticipated revenues this year, $71 million of projected revenue from next year, and $84 million of projected jumpstart revenues in 2024 to support the general fund over this biennium.

And finally, as the chair mentioned, per the policy adopted by the council in 2021, earlier this year, the city's 120-member parking enforcement unit was moved from the police department to the transportation department.

And after less than a year of implementing this model, the executive proposed transferring that unit back to the police department in this budget.

This balancing package retains the parking enforcement unit at the Department of Transportation.

It makes some immediate investments to support parking enforcement officers, such as funding to allow full use of overtime, 77,000 for good uniforms, and some additional funding for non-labor direct cost for supplies and technology.

It also asks an interdepartmental team that includes representatives of the council, of the executive, and of the parking enforcement unit itself to make a recommendation by April 15 about the permanent home for the parking enforcement unit at the city.

As the council grappled with these policy changes and reviewed the budget, midway through our process, we received the November revenue forecast.

This is developed by the city's Office of Economic and Revenue Forecast.

The next couple of slides I'm going to show are their slides.

and it's adopted by the Forecast Council.

Overall, it reduced the forecasted revenues over the biennium by $80 million, changing the funding level that the council is required by law to balance to.

A quick couple of words about what is driving this.

This first chart shows conditions nationally.

The forecast projection this summer anticipated that we would be in modest economic growth in 2023. 0.9% growth.

And that has changed to projecting that we will enter a mild recession beginning now and into next year.

On this chart, you see employment levels projected.

We start in that you see the dip at the beginning of the pandemic 2020 employment levels dropped significantly.

They have climbed to pre-pandemic levels at the end of this year.

The light pink level shows that earlier this year, we expected employment levels to be growing in 23 and 24. And the bright red line shows a dip in employment levels starting in 2023. The next slide is a snapshot of that regionally.

Similarly, so you see the dip during the pandemic, employment levels, recovering to pre-pandemic levels by the end of 2022. And that bright red line is our current regional projection for employment levels, employment expecting to drop in 2023 and begin climbing in 2024. Next slide shows what this means for city revenues.

Overall, it projects a 9.4 million reduction in general fund revenues over the biennium.

This is driven by a drop in property tax driven by new construction, a decrease in sales and B&O tax driven by a loss of employment and overall consumer demand.

I'll note that on its own, a $9 million decrease on a $1.6 billion general fund is tough, especially given the existing operating deficit, but solvable.

The larger challenge is this next line, which is the real estate excise tax.

The proposed budget was built on assumptions of about a 100 million dollars of real estate excise tax in 22 and 95 million dollars in 2324. Those forecasts drop by almost 25% for a total loss of 64 million dollars over the biennium this is a tax on real estate transactions and the drop is driven both by projected drop in prices and anticipating fewer real estate transactions to be happening.

We fund capital projects, largely transportation and parks, some libraries, and we'll show a slide of how the council did this balancing in the balancing package in a moment.

And finally, just highlighting an additional decrease of $4.5 million from the sweetened beverage tax and $3.5 million from the commercial parking tax.

So when you hear the budget chair or us talk about an $80 million decrease in revenues over the biennium, it is a total of these funds.

Next, we'll talk about what is in the package.

This table shows what is in the balancing package as compared to the proposed budget, the ads and reductions by year and by category.

Again, these changes are a compilation of amendments proposed by all nine council members.

To see specific changes with the sponsor names attached, you can see the agenda published to the Select Budget Committee agenda this morning for a full list and description of each of these changes.

I'll talk about just a few of those highlights by category.

The first is in that cared for and housed.

I'll note that there are not many amendments related to affordable housing.

You don't see a lot of up and down there, but there is a very significant increase in affordable housing resources in the proposed budget.

There's over $250 million to support the Office of Housing, Of that $250 million budget, $139 million is from the Jump Start Fund, $50 million more than was available last year from the Jump Start Fund.

The increase in homelessness and human services includes that inflationary adjustment for human service provider contracts.

It also includes approximately $7 million in additional investments in homelessness services and approximately $1.5 million in tenant protections.

There's a million dollars of that for rental assistance to be administered with eviction protection support and 450,000 a year for eviction legal defense.

In the connected and resilient category, first is about economic revitalization and equitable growth.

This includes a half a million dollars a year to the Office of Labor Standards to implement the pay up at base worker minimum payment ordinance that provides minimum payments for app-based delivery workers adopted by the council earlier this year.

It includes $250,000 to continue the city's support for the creation of community investment trusts to help finance community-led development projects, and $350,000 to support workforce development for youth experiencing homelessness.

In the livable, clean, and connected category, We see funds to staff the planning and community engagement for Sound Transit 3's Ballard to West Seattle realignment.

There is small revenue generating proposals mentioned by the chair, expands the number of school zone cameras and reinvest that revenue in safe routes to school and an increase in the vehicle license fee by $10 from $40 to $50 a year and invest that revenue in structures and major maintenance.

and Vision Zero safety infrastructure.

There's about $225,000 a year for internet for all investments, including for the technology matching fund and digital navigators.

Some of the larger reductions on this line relate to rebalancing, which I'll cover shortly.

The sustainability environment investments, these create the new urban forester position and add $250,000 to plant trees in the right-of-way There are increases to environmental justice investments, including $1.2 million a year increase to the city's environmental justice fund and $2 million for indigenous-led sustainability projects.

There is a repeal, one of the decreases, of the regressive heating oil tax that was passed but never implemented.

And investments in the proposed budget will help low-income households transition off heating oil.

And finally, there is a reduction investments to decarbonize parks and library facilities and instead, a $3.5 million investment for community-led climate resilience hub plans and $455,000 for a climate resilience hub on Beacon Hill.

The last big bucket is about healthy and safe.

In that community safety, public safety and alternatives, Ads here retain key fire investments in West Seattle to maintain current emergency response capacity with a ladder truck and medic car.

Ads advance alternative 911 response.

There is funding to stand up a civilian mental and behavioral response unit that is dual dispatched with the Seattle Police Department, whereby a mental health responder engages first at a scene while SPD is on call nearby.

provides those existing funding to sustain their services on health one unit and retains the parking enforcement unit at the Department of Transportation.

In addition, there is $300,000 to expand the scope of the regional peacekeepers gun violence reduction program and a million dollars a year to expand mental health services in school based health centers.

In the Seattle Police Department, the balancing package fully funds the SPD staffing plan for the biennium.

That assumes there will be 1,115 officers in 2023 and 1,131 in 2024, an expected net gain of 30 officers as proposed by the executive.

The executive budget then included a cut in funding for an additional 200 vacant police officer positions and it did so in 2 ways.

The first it made an 11 million dollar reduction in salary resources in 2023 2024 equal to 80 police officers.

This policy and package abrogates those 80 positions and makes the reduction on going.

The proposed budget also made a 17 million dollar ongoing reduction in salary equivalent to about 120 police officer salaries.

The proposed budget then includes 17 million in new investments as a reinvestment of those salary savings back to the department.

This balancing package retains the position authority for these 120 vacant and unfunded positions.

So should hiring greatly pick up at the end of the biennium, the police department will retain the position authority to make these hires in 25 and 26. Of the 17 million dollars in new investments from salary savings.

This budget makes about 2 and a half million dollars of reductions to investments in police equipment recruitment and retention and advocates one vacant legal HR position that was being transferred between law and the Police Department.

And finally it removes proposed investment in gunfire detection technology.

The changes in recruitment and retention retain the core elements of the recruitment and retention bill adopted by the Council this summer.

That means it includes the hiring bonuses and new recruiting staff.

The changes in the balancing package scale the media outreach plan in half from the proposed $3 million of the biennium to about $1.5 million, scales down a leadership program from $800,000 to $400,000.

And finally, on police accountability, this budget adds 1.5 FTEs for police accountability to the Office of the Investigator General for surveillance technology review, audit capacity, and public disclosure.

I'm going to go to the next table, which demonstrates some of the resources that were used to balance those added investments.

I'm sorry, first the jumpstart spending and then balancing.

Thank you.

So this is a snapshot of jumpstart funding in the proposed budget.

As you see in the column for 2023, there is $320 million of jumpstart resources in this budget, a combination of the carry forward from 2022 and what is projected to be raised in 23. Of that, $100 million is used to balance the general fund and address the operating deficit, and the rest is invested per policy.

62% in housing and services, 9% for the Green New Deal, 9% for the Equitable Development Initiative, 15% for economic revitalization, and 5% for administration.

Next, let's go to the table that looks at other resources.

So this table shows other resources used to pay for the investments described earlier.

There are some changes to underspend in 2022. There's about $8 million of technical adjustments and fund swaps.

There is $7 million in reductions of expanded new programs.

This includes reduced proposed new programs for community health workers, It scales back the expansion of Affordable Seattle, an online portal to apply for multiple city programs.

It retains funding for this, but focuses on the build out of the technology in 2023 before a larger community engagement in future years.

This line item also includes the reductions to the Seattle Police Department that I described earlier.

That fourth line reduces new and vacant proposed positions by about a million dollars.

Many of these are internal facing positions.

So it reduced two proposed ads to the Human Resources Department, two to the City Budget Office, one to the Civil Service Commission, and it reduces three FTE in a proposed expansion of graffiti cleanup.

The balance sheet package retains $2 million in existing staff at Seattle Public Utilities for graffiti cleaning.

And finally, There's a revisit of reserve.

So the proposed budget includes a 10 million dollar contribution to the emergency reserve fund both in 2324 that emergency reserve is being rebuilt over a five-year period post pandemic.

The bounty package suspends the 10 million dollar contribution in 2023. It makes a 1 million dollar contribution in 24. There's initially 9 million dollars used for planning reserves.

and about $2 million each year from some SDOT, Department of Transportation Emergency Reserves.

The next slide shows the REIT balancing.

We're getting to the home stretch here, I promise.

Thank you.

We talked about the $65 million reduction in REIT over the biennium.

The first way to address that gap was to use revenue stabilization reserves.

This takes $15 million from that REIT reserve and retains $10 million per the city's current financial policies.

There was a revisit of major new capital projects.

First, for Memorial Stadium, there was proposed $40 million investments in the budget.

This scales that down.

It reduces $20 million in cash and retains $20 million in debt financing for the Memorial Stadium project.

And the second is the Waterfront Operation Tribal Interpretive Center, known as the Bakken Building, which the city is poised to purchase in 2023 This was proposed to be cash financed with REIT, and this changes that to debt financing over a longer time period, but still enables the project to move forward.

And apologies, just for technical correction, I think I said welcoming center, so my apologies for that, just to make sure folks knew we were talking about the same building.

Thank you.

There are some swaps to address the REIT revenue decrease.

In the Office of Housing, $15 million of REIT funding is swapped with mandatory housing affordability dollars.

And then there are several reductions to the CIP program in transportation in parks where there were not direct programs tied to the dollars.

So thank you.

This slide breaks out.

what some of those reductions are.

So in parks, we see reduced funding for major maintenance and asset preservation and a reduction to the Green Seattle Partnership.

The city had suspended its contribution to the Green Seattle Partnership during the pandemic and this delays our reinvestment in that program.

In transportation, there are reductions to bridge painting and sidewalk safety repair.

and in libraries, several seismic retrofit projects that are still in design.

Again, these CIP items were chosen where there are not programs directly tied to these dollars.

All of these changes may result in future maintenance costs in out years.

Next slide.

The two other funds we mentioned with significant reductions, the sweetened beverage tax forecast reduction of 4.5 million dollars.

This is backfilled in 2 ways one by reducing reserves for sweetened beverage tax and using jumpstart funds to temporarily backfill the reductions in critical programs and services.

The sweetened beverage tax funds things like prenatal to 3 grant program.

Fresh bucks at farmers markets and community and senior meals.

And the commercial parking tax forecast reduction of $3.5 million is addressed through a mix of REIT and general fund kind of swapping and backfilling.

Finally, I want to close by just a quick look at the budget sustainability over the long term, which is a conversation the Council has been very serious about this year.

So on this chart, the blue line shows you projected expenditures.

The red line is projected revenues.

The first slide we are looking at is the executive proposed budget.

As you can see, there is a projected ongoing average operating gap of $193 million in our general fund.

This is the $1.6 million general fund part of our $7 billion budget where the city has the greatest flexibility in funding.

And the next slide shows the balancing package.

The sustainability gets about $57 million worse due to two things.

You can see that that $193 million average gap becomes $250 million.

That's driven, half of this is driven by the revenue forecast.

As general fund revenues have decreased, this gap increases.

Rescinding the heating oil tax has an impact on this.

And then there are about $24 million of new ongoing spending.

And finally, suspending the transfer to the emergency fund.

All of those strategies together reflect this change.

And our final slide is about, so what are some strategies that the council is doing to address that long-term issue?

The first is the temporary provisions including in this package that allows the council to balance the general fund budget over the biennium without significant reductions in critical programs and services.

including the suspending of payment to emergency reserves and higher reliance on the jumpstart fund.

These temporary measures give some time to continue to seek efficiencies and right size budgets.

There is a statement of legislative intent in this budget that asks central staff and the city budget office to work together to update policies around budget development and financial planning to ensure we are using best practices to identify vacancy savings and get real-time information about spending on budget to actuals.

Finally, create time for the Revenue Stabilization Workgroup to make recommendations on new progressive revenues the city could implement to ensure that general fund revenues keep pace with both inflation and expenditure growth.

Those are our remarks for today.

Today, the Select Budget Committee will be briefed on the balancing package.

We will do an overview presentation and our central staff team will read in all the amendments and council members will have a chance to ask questions.

So tune in.

My understanding is scheduled to start at 11 a.m.

but will immediately recess and begin presentation at 1 p.m.

There will be a public hearing tomorrow evening and council members will be working with our team to draft proposed amendments to the balancing package that will be debated and voted on next Monday, November 21. Thank you.

Thank you very much, Director Handy.

Thank you again to Deputy Director Pannucci and the entire team at Central Staff.

I want to just offer a few closing comments and then we will make sure to turn to questions from members of the press so that they can get a technical answer from Central Staff before we wrap up today.

We have a lot to celebrate in this budget.

And again, I want to thank my team, Chief of Staff, Sejal Parikh, Policy Director, Erin House, Policy Analyst, Melanie Cray, and our Operating Office Manager, Farideh Cuevas, along with the impressive guidance, analysis, and steady commitment to making sure that we not only balance, but we checked every word in the amendments with both the sponsors and the I tried to take the integrity of what had been submitted in a large number of those amendments and include those in the budget before us and make some tradeoffs that I still think this council can be proud of that allow for us to work with the executive and work with members of the community to ensure a healthy, stable, and resilient Seattle.

I definitely know that there will be additional conversations to come.

I look forward to working with my colleagues, the mayor's office, and members of the community to tackle these growing challenges in a thoughtful and careful way.

I hope that we can continue to steer clear of these larger policy shifts during a budget deliberation time.

find the common ground amongst each other and with the executive branch and to allow for us to get through this tough budget year and preserve larger policy questions for future deliberation.

I hope we continue to take the temperature down and keep our city focused on investments that yield care and services directly in these challenging times.

And none of this work would be possible, as you heard in the closing slides, without the short-term flexibility that is being provided for the higher-than-anticipated revenue from JumpStart Progressive Payroll Tax.

I have to underscore that the use of the higher-than-anticipated revenue and the flexibility that we are showing within JumpStart is only short-term, two-year, time-limited.

It cannot be for longer.

In order for us to create a sustainable revenue forecast, in order for us to create sustainability for working families and our local economy, we must have progressive revenue streams to help ensure that future biannual budgets do not rely on these short-term strategies.

I want to thank members of the community who offered support for using the higher than anticipated Jumpstart Progressive Revenue Tax in an effort to prevent austerity, prevent cuts, invest in core government services, while also maintaining our initial investments that we codified two years ago as we built the Jump Start Progressive Payroll Tax Spending Plan.

And that letter, as I've noted before, is signed by We support the request made by Councilmember Mosqueda to look temporarily at addressing Seattle's budget shortfall in 2023 and 2024 with excess jump start revenue only to continue to ensure that we are investing equitably in core city services.

Let us be clear, the full promise and full funding of commitments need to be adhered to and we recognize that jump start is higher than anticipated revenues and this success is a way to support existing programs as well.

We call on the City Council to support existing programs, remain true to the promise of Jump Start Seattle, prevent austerity, and explore new progressive revenue approaches to meet all of our city needs.

I hope that the folks who signed on to this letter and the community at large see our commitment to doing all of those things in this proposed budget.

Thanks to members of 350 Seattle Civic Ventures, Chief Seattle Club, Downtown Emergency Services Center, Housing Development Consortium, Low Income Housing Institute, MLK Labor, ProTax 17, SCIPTA PDA, the Seattle King County Coalition on Homelessness, SDIU 775-925-1199 Northwest, Statewide Poverty Action Network, Solid Ground, Teamsters 117, UAW 4121, UFCW 3000, Unite Here Local 8, Washington State Budget and Policy Center, Washington Low Income Housing Alliance, and Working Washington for sending that message of support for making sure that our budget was not only balanced, but that we remain true to the integrity and intent of Jump Start.

And while the staff's work is now done with this initial balancing baggage, and again, it deserves immense respect and applause for the way in which we've been able to create investments in these challenging times, we must include new progressive revenue for the next biennial budget.

We cannot continue with these short-term solutions We are committed to working hard throughout 2023, first quarter and second quarter, myself and senior deputy mayor, we are serving as co-chairs of the Seattle revenue stabilization work group along with members who have been appointed from the community and my colleagues, we must ensure that the city has new What was true last year when we created the statement of legislative intent in the previous budget is truer today that statement of legislative intent requested progressive revenue task force to be convened to ensure that we have more.

progressive revenue options at our disposal.

And I want to thank the Revenue Stabilization Task Force that has begun their conversations already last month for the upcoming conversations we will have to ensure that we never have to use stopgap measures like this for critical core government services in the near future again, so that we can continue to build a Seattle that is housed and cared for, healthy and safe, resilient and more equitable.

I'm excited about the conversations that we've begun today and that we'll have over the next two weeks with our council colleagues and members of the public as well as the executive.

We will continue those deliberations in a transparent way and accountable way and greatly again thank the mayor's office and the city budget office and the departments for working swiftly with central staff and my office as we work to close that revenue gap, especially created worse by the November forecast.

It's been a really impressive partnership that is continuing to grow and strengthen and not just on the revenue side, but also on the policy aspects, as I noted in my comments.

I want to thank members of the press for being here with us today.

And at this time, we are going to ask you to hold on the line so that we can admit folks and you can ask questions of central staff.

As a reminder, as director Handy noted, we will have a committee meeting at 11am, but I will immediately go into recess so that individuals of this council can join the students who are gathering on the plaza in their call and demand for action in response to gun violence and school shootings.

Thank you so much.