Seattle City Council Select Budget Committee 10/13/21 Session I

Good morning, everyone.

The Select Budget Committee meeting will come to order.

Today is October 13th, 2021. I'm Teresa Mosqueda, chair of the committee.

Will the clerk please call the roll?

Juarez?

Here.

Lewis?

Present.

Morales?

Here.

Peterson?

Here.

Sawant?

Present.

Strauss?

Present.

Good morning.

Thank you very much, Madam Clerk.

Colleagues, thanks for joining us.

It has been less than 12 hours since I saw you, so thank you for all of your time.

Last night for our public hearing, we had about three and a half hours of public testimony leading into today's conversation.

Today is day one of three for issue identification from central staff.

Today we begin with an introduction of issues identification identified by central staff with an overview of the 2022 proposed budget.

We will have an overview of the general fund balancing analysis that will include an analysis of the revenue built into the mayor's proposed budget and how the mayor and their team have chosen to utilize various revenue streams.

We will then have an hour break at 1 p.m.

We will go to recess and come back from recess at 2 p.m.

and conclude today with the Department of Early Learning, excuse me, Department of Education and Early Learning and the Office of Economic Development.

Just a reminder about the department presentations, we're going to ask the departments to get through their initial We'll ask central staff to get through the presentation of the initial department overview.

Before we get into issue identification, we'll have the council member who has purview over that department be able to ask questions or say some comments at that point.

We'll open up for questions on the overall presentation before we get into issue identification and then allow for folks to ask questions as we go through that component.

should be fairly streamlined and look forward to your questions.

This is a chance for us to air questions, think about ideas out loud, have a chance to hear from your colleagues, and get some ideas out there for the community as we respond to some of the items that central staff will be identifying for us.

So if there's no objection, today's agenda is adopted.

We're going to move on to public comments.

We have committed to having public comment at the beginning of every meeting for at least up until 10 a.m.

Today we do have only a handful of folks signed up to testify, so thank you all for dialing in.

We have six people here to testify, so each person will be given two minutes to speak.

This is your chance to please speak to items on today's agenda, and you may speak to any item related to the 2022 budget and our deliberations.

You will hear a chime at the end of your two-minute allotment.

That's your 10-second notification to wrap up your comments so that you don't have your microphone shut off before you've concluded your thoughts.

After you've concluded your comments for today, please do hang up and come back to us and listen in on the listen-in options on today's agenda or at Seattle Channel.

And thank you again, Seattle Channel, for streaming us live here today.

I'm going to call the first two people that are on the list in the order in which they have signed up, and thank you very much, colleagues, for your opportunity to hear again from the community today.

When you hear the chime that you have been unmuted, that's your indication.

Hit star six.

Star six unmutes your line, and do double check that you're not muted on your own phone.

Good morning, Trevona.

I see you up already.

Here we go.

Trevona Thompson-Wiley is up first, followed by David Hines.

Good morning, Trevona.

Hi my name is Trey Vona.

I'm a resident of District 2. I'm calling in today to support the solidarity budget recommendations for child care.

This is really close to home for me.

I have a friend that makes $50,000 a year.

She's a first-time mom with a 1-year-old son.

Child care averages around $3,000 a month.

Child care folks are supposed to afford around $36,000 a year for child care when they only make $50,000.

Yes you can tell folks that there are programs to help with the cost.

That simply isn't true.

The programs that are out there have an extremely long wait list, and it is almost impossible to meet the qualifications.

This issue disproportionately impacts families of color, impacts families of color, but it really impacts black folks.

The pandemic made it clearer than ever, the universal need for childcare, which is a system of support that enables parents and caregivers to work and care for themselves and their communities.

The solidarity budget is recommended 153.7 million, investing in child care for all.

This will actually invest in the future of our young people and the well-being of families and children.

The mayor's proposed 2022 budget is about $2.5 million higher than the 2021 budget and this is in reference to the SPD budget.

Actually that simply isn't true because SPD's budget has not decreased in proportion to their decreased responsibilities and the number of FTEs in each department.

When these are taken into account, STD's budget should at least be $47.8 million lower.

City Council, this $47 million adjustment alone could create 2,000 units of permanent supportive housing for in-house people.

I'm going to end by simply saying support the solidarity budget because it supports our children and families.

Thank you.

Thank you for your testimony.

Good morning, David.

David will be followed by Latonya

Hi, good morning.

Thank you.

I'm afraid there's an additional issue I need to bring up after what happened this morning in my neighborhood.

But first, is the City Council investing and creating laws to incentivize banks and actually qualified developers, not politically connected, unqualified nonprofits, to create 21st century housing and commercial buildings for real economic development?

Or is this budget exclusively to buy off black and brown community organizers and activists, intimidating city council in a trade for election support?

While the Democrats get in the way of real progress, but race war, blame the white man for- David, please keep your comments directed to policy for the 2022 budget, David.

Please keep your comments directed.

Right, and I'm concerned that there's an immoral financial system that you all are attempting to alleviate within the oppressions in our community, and you're not exactly targeting it proper to alleviate it throughout the Commonwealth.

And, okay, I'll just get right to the point about the other aspect.

This morning at 7.45 a.m., roughly, there was another shooting, and I don't know if the guy was killed, but eventually the cops showed up.

But all night, every month since I've lived here, there's been an open drug market where crack meth and heroin have taken over the park between First Avenue and Cherry and Yesler.

and in front of my building, and they're constantly smoking there.

And I've asked them to leave, and they attack me regularly.

And if I call the cops, they're like, do they have any weapons?

If they ain't got no weapons, they don't show up.

And part of it is the sabotaging of the public safety from the perspective of the cops who were refusing to come down here and arrest these crackpots and heroin pushers because they're claiming that the city council exempted them.

them.

It's real concerning because we have a societal implosion and the downtown Seattle Association is not cleaning up around the building but their employees are sleeping in my building and they're not doing their job.

David thank you for calling in today and we will follow up with you as well about some of those health and safety concerns.

The next person is Latanya and then followed by Latanya is Sean Glaze.

Good morning Latanya.

Good morning.

My name is Leightania Sevier and I'm a renter in D2.

I want to start by saying that the solidarity budget should be your starting point for the budget negotiations this year.

Council needs to adjust the mayor's proposed budget to fully meet the community generated demands of solidarity budget.

I also want to focus on child care today.

The COVID-19 pandemic made more clear than ever that universal the universal need for child care.

The system of support that enables parents and caregivers to work and to care for themselves and their communities.

The high cost of child care in Seattle and the lack of available slots combine to render child care inaccessible for many with a disproportionate impact on families of color.

Families friends and neighbors are believed to be the primary source of child care for parents who work non-traditional hours or who are low wage who have low wage jobs with unpredictable work schedules.

requiring investments in both traditional and non-traditional child care infrastructure.

By investing in child care for all, we're investing in the future of young people and in the well-being of families with children.

While I was happy to see $3 million in the budget for child care workers, it's a one-time payment, and funds should be found to make sure all child care workers are making a prevailing wage.

As you continue to move funds out of the criminal legal system via SPD, the city municipal court and city attorney's office, child care is a place where ongoing funding is much needed.

Additionally, more funds are needed to expand culturally specific providers.

Solidarity budget is focused on creating incentives, hiring more and training more community connectors and family resource navigators.

expanding language access through hiring more providers.

And for $14.5 million, we can provide more culturally responsive specific childcare options for BIPOC communities.

Thank you very much.

Sean, it looks like you are not present, Sean Glaze.

So we want to acknowledge that you are on our list.

If you do dial in before the end of public comment, we'll come back to you.

And the last person on our list is Sabrina Villanueva.

Good morning Sabrina.

Good morning.

My name is Sabrina Villanueva District 2 resident.

I am here on behalf of hundreds of small businesses employees residents and everyday people that come into Seattle for work or leisure.

As a property manager of several buildings in downtown Seattle I know firsthand what my tenants and staff endure on a daily basis.

Random and non-provoked violence is at an all-time high, including deadly gun violence.

My company employs private security for our buildings.

Many of these security officers are going to school, just entering the workforce, or have recently moved to the U.S.

They are verbally harassed, physically assaulted, and threatened on a daily basis.

Picture going to work every day and having needles thrown at you, weapons displayed to intimidate and scare you, and people threatening to kill you.

When 911 is called for help wait times have been up to 45 minutes for an in-progress violent crime.

Recently there was an incident I shared with the council at Jazz Alley the music venue where an artist performed there and left to go to his car at night and was hit over the head knocked him to the ground because he didn't have a cigarette to give the person.

He said he will never return to Seattle.

Incidents like this are happening constantly.

People are not safe in our city.

I would like to advocate for any policy that will reduce the number of victims in Seattle and I urge the council to please prioritize budget dollars to quickly and effectively address our public safety crisis.

Thank you.

Thank you for dialing in today, Sabrina, and we will follow up with you on those incidences as well.

Sean, it says you're still not present, so we are going to go ahead and move to other items of business.

Thank you all for dialing in this morning.

That does conclude our public comment for today.

Thanks to everyone who called in.

Again, if you would like to provide public comment this week, you can sign up for public comment starting at 7.30 a.m.

on Thursday and Friday this week as well.

Let's move on to the first item on our list here.

Madam Clerk, can you please read item one into the record?

Agenda item one, introduction and issue identification overview.

Excellent.

Thank you so much.

We do have with us Central Staff Director Esther Handy.

We also have Ali Panucci from Central Staff, who is our lead Central Staffer on the budget.

I want to remind folks the purpose of this week is for issue identification from Central Staff so that we can have a robust discussion about issues that Central Staff have identified.

We can review, discuss, and ask questions about the proposed budget.

And this is an opportunity to provide direction to staff on maybe some specific issues or amendments that you'd like to consider.

You have until noon on October 18th to consider those amendments.

And I look forward to hearing how the questions today and the discussion today dovetail to some of the possible items that you may be interested in.

Today we are going to ask central staff to walk through.

their issue identification papers, and we will have a chance to ask questions and to consider questions from council members after they go through the first portion of their overview.

Then we will go into issue identification, as folks know, and for the viewing public, I'm sure you've seen as well.

Central staff identifies issues and provides a handful of options for council's consideration.

We are not voting on any of these options.

No decisions have to be made today.

It's just simply a way to transparently outline some of the possible options to address the issues that central staff has identified.

I want to thank central staff for all of the work they've done and I do hope that folks have the chance to read the memos that have been provided.

I want to thank Tom Mikesell who's not with us on screen but I know if needed we'll jump on here to provide an overview of the especially the revenue portion that we will get into this morning.

It has been a a heroic amount of work to to dive into the budget within the last week and then to provide us a clear analysis and explanation of the proposed budget in front of us.

So if we were in person we would give you a preemptive round of applause for all of the work that you have done and will continue to do with us over the next four to six weeks here.

Let's go ahead and move into the items here today and Director Handy I will turn it over to you first for some opening comments.

Thank you so much, Chair Mosqueda, members of the Council.

Good morning, Esther Handy, Director, Council Central Staff.

Welcome to Issue Identification.

As the Chair mentioned, for the next three days, our Central Staff team will present their analysis of the budget, including the issues they have identified and possible actions for you by the Council.

I will note that our issue ID work reflects our analyst's best understanding after two weeks of review of the budget.

Our team is mighty, and also this $7 billion budget is a large and complex document.

So discussions this week will focus on the issues most important to the council, and we will go as deep as we have been able to do in two short weeks.

I'll also remind you as we get going that your discussions, as I did last week, that your discussions are focused on a 2022 proposed budget.

None of the proposals before you right now represent money that has been allocated or spent in programs.

It is the executive's job to make a proposed budget for your review.

It is your actions in November that will formally allocate resources to programs next year.

This morning, we will start with a brief overview of the entire budget, and then we will take a close look at the general fund revenues.

As a reminder, the general fund is that $1.6 billion heart of the city budget.

As a baseline for that discussion, we know that even prior to the COVID-19 pandemic, the cost of ongoing general fund services have been growing and outpacing revenue growth.

Without the action by this council in 2020 to pass the jumpstart funding bill, and to provide new sources of progressive revenue, you would be looking at a cuts budget, reducing services in our communities.

In this 2022 proposed budget document, the mayor has proposed to apply those new revenues first to preserve a set of existing programs, essentially to stave off cuts in community.

And she has also proposed to underwrite a significant increase in new programs.

Some of those programs are shared priorities with the council.

And while you all spend the next couple of weeks debating the merits and the scale of those proposed investments, I want to underscore that we know it is possible to fund everything in the proposed budget this year.

And we also know there is not sustainable funding sources for all these priorities in future years.

And so as you head into discussion, there are a couple of policy questions that I'd like to tee up for you that you are going to be asked in your deliberation of the budget.

The first, which we'll begin tackling today, is do you agree with the way that the Jumpstart fund plan priorities have been met?

Do you understand and agree with the role that Jumpstart is playing in the general fund?

And do you agree with the way the executive has proposed to meet Jumpstart fund priorities across a variety of funding sources?

The second policy question is how sustainable should the 2022 budget be?

You will tackle this in choices about how far to replenish reserves, how much new ongoing general fund spending to authorize, and how to support the increasing costs of existing programs.

Your decisions on this will be informed by your take on the context of the moment in 2022. What are the community conditions at this point in the pandemic and the economic response, and what does that mean for ongoing spending and long-term sustainability?

And finally, the third policy question is, do the new programs proposed in this budget add up to a coherent policy strategy to address this moment?

We'll tackle these questions as we go throughout the week in department and cross-cutting issue papers, particularly on issues like homelessness, human services and community-led investments, alternatives to policing in the criminal legal system, and our transportation infrastructure, to name a few.

We'll be looking for where you see a coherent and effective strategy.

Are resources adequately and fully aligned behind that strategy so it has a chance of being successful?

And where in these departments or proposals is there not yet a clear strategy?

In those places, are there opportunities to slow down, to pause, or to scale back?

I really look forward to diving into these policy questions with you over the next three days.

Next, I will hand it to my colleague, Allie Panucci, central staff policy and budget manager, to share a few more details about the issue ID process.

Thank you, Director Handy.

Good morning, Chair Mosqueda, council members.

I'm Allie Panucci of your council central staff, and I am happy to be here today to kickoff issue identification discussions.

Today we're on step two in the budget process, so step two of six.

And just reiterate some of what Director Handy and Chair Mosqueda talked about.

These discussions are an opportunity for council members to ask questions about the proposed budget, provide direction to staff about the issues and options identified through our analysis.

the next three days, this will be an opportunity for all of us to better understand your priorities and interests as we prepare budget amendments and work with the chair and all of you to put together the Council's budget.

This slide outlines the departments and topics that will be covered over the next three days.

As Director Handy noted, the budget is a large document.

These discussions will not cover every detail that you'll find in the proposed budget, but this reflects a tremendous amount of work by our amazing central staff analysts.

to unpack a 700 plus page budget along with numerous technical documents to identify key issues.

So I just want to take a moment to really thank all of the central staff team for their work to unpack this.

this document to really work with council members and their teams to consider options and issues for consideration.

And just as a reminder, as we sort through all this, the executive has been working for eight months to develop the proposed budget.

We've all had just over two weeks to review and digest the document and write these detailed papers to inform your budget decisions.

So it is an impressive body of work, and we're looking forward to those discussions.

So that this is the plan for the rest of the week.

Following these discussions coming quickly on the heels will be issue ID discussions.

excuse me, will be discussion of council member proposed budget amendments.

The amendments will be discussed in committee on October 26th through 28th.

And just a reminder for everyone, any item, change, cut, proviso, statement of legislative intent, any idea you want considered for inclusion in the balancing package needs to have a budget amendment request submitted to central staff.

The deadline for submitting those requests is Monday, October 18th at noon and must meet all the requirements and feel free to contact me offline if you have any questions about that process.

So with that, I think we're ready to jump into the discussions unless council members have questions about the process.

Thank you very much, Director Handy.

Thank you very much, Ali, for all of the work you've done.

And again, extending our appreciation to central staff and the entire body for your department's work to provide this information here over the next three days.

I will also note for colleagues, this is our chance to hear information.

Maybe there will be issues surface for the first time.

you weren't aware of yet in an initial review of the budget as proposed by the mayor.

So you don't have to feel like all of your issues have to be verbally expressed here today.

You may sit with the information over the next two or three days and perhaps over the weekend as well.

And you'll realize, hey, that is an issue that I'd like to see addressed.

I do have an amendment to help tackle that issue to maybe bring programs to scale or add items back into the budget that you saw as potentially reduced or cut.

This is a chance for us to hear those items.

So if you don't get the chance to talk about something that's on your priority list, it's okay, because that might come to you before the deadline of noon on Monday.

But we do hope that it's been clearly communicated that all of the amendments to be submitted by noon on Monday.

That helps me as the budget chair along with central staff to be able to identify all of the issues for our consideration as we craft the draft proposed budget for council's consideration.

Every item that is included in our budget will have an associated city budget amendment to go with it.

So those do need to be submitted by noon on Monday, but this is also an opportunity over the next three days to sit and hear and listen, share ideas, really have dialogue, but no pressure.

If you have an idea that comes to you late on Thursday or Friday and you didn't get a chance to bring it up, you can still put forward a budget amendment.

that will help address those issues, and we are looking forward to having a more robust discussion about explicit amendments, specific amendments, when we have those discussions, as Allie noted, starting on October 26th, 27th, and 28th.

Okay, any additional questions?

Thank you for the overview, Director Eder and Ali Panucci.

It's great to see you again.

And I believe to move us into the official portion of the presentation, we're going to read item number two into the record.

Madam Clerk, do you mind reading item number two into the record?

Madam Clerk, you may be on mute.

Apologies, Council Member.

No problem.

Am I reading item two?

Yes, thank you so much, Madam Clerk.

I am so sorry.

Agenda item two, overview of the 2022 proposed budget.

Apologies.

No problem.

Thank you very much, Madam Clerk, and welcome back, Ali.

Thank you.

So this first discussion, this first paper will be relatively brief.

I will just really be providing a reader's guide for what information you can find in this paper.

So the overview of the 2022 proposed budget paper is meant to be a resource for council members and the public that provides just a concise overview.

We'll not cover all of the information in this paper today.

Instead, again, I'll just briefly describe what information you'll find in this paper.

But I do have my central staff colleagues on the line should you have any immediate questions.

While we don't develop a standalone issue ID paper for every office or department or issue area, we do review the budget in its entirety.

And this paper highlights those reviews.

The paper is broken into four sections described on this slide.

The first section just defines abbreviations that you'll find used throughout the paper.

So I'll not go into too much detail on that, but that is available.

And then I will walk through with what you will find in the other three sections of the paper.

So section two is sort of the heart of the paper.

This provides a high level summary of every department and office covered in the 2022 proposed budget.

And it follows the same organizational pattern as found in the departmental budget pages.

of the proposed budget book.

So it's arranged by the six main categories you'll find in the budget book and then alphabetically by department.

This overview is meant to be a resource for the council and the public to quickly review notable changes in the proposed budget.

offering a concise summary compared to the thorough descriptions that you'll find in the budget book on pages 89 through 588. This, I don't know, 30 or so page paper is much higher level, but it does just highlight the key changes of note in the paper or in for each department.

So for each department, we've included a summary table that provides just a glimpse into the overall changes in the proposed budget.

The table shows the changes to appropriations and total FTEs for the department's 2022 proposed budget compared to the 2021 adopted budget.

On this slide and the next one, there are just two examples of what you can find in those tables that just shows overall the amount of change in the department.

So this is an example of a table that only includes operating funds.

And then a second example, if the department includes a capital budget, so it shows how those specific portions of the budget change overall, total appropriation shifts, and then changes to total FTEs.

Following the tables in the paper, you'll find either For departments offices or cross cutting issue areas that are the subject of a central staff standalone issue identification paper, you'll just find a note.

I'm referring the reader to those standalone papers where there's a more detailed overview and analysis of the proposed budgets.

For those departments and offices that are not subject to a standalone paper, you'll find a description of any notable changes in the department's budget.

On the screen is just as even a more concise summary than you'll find in the paper of the notable changes you might find in Seattle Public Utilities 2022 proposed budget.

These are not issues identified by central staff, but just flagging for the council member changes in the proposed budget that are not merely technical.

For some departments or offices whose budget is not changing beyond technical amendments in the proposed budget, we'll just have noted that we didn't identify any changes.

Section three of the paper describes the 24 pieces of budget legislation that were transmitted with the mayor's 2022 proposed budget.

I'm not sure if that's the right way to put it.

Many pieces of this legislation will be discussed in more detail in the upcoming issue identification discussions.

Most of the budget legislation will be introduced in the next week or two.

But legislation where there are significant policy questions still to resolve before council may be making a decision will not be introduced until we better understand how or if certain policies or And the legislation is organized by categories to just highlight whether or not it's an amendment to adopt or endorse the budget related to property taxes, et cetera.

All of this legislation would be necessary to implement the budget as proposed by the mayor, but not all of it will be necessary to, some pieces of this legislation may not be necessary ultimately in order to implement the council's budget.

I would like to put a finer point on that.

Would it be fair to say some of the legislation that's been submitted are policy choices that the mayor and the executive team has embedded within their proposed budget to the degree that council has the chance now to draft our own budget response.

Our policy choices may not align.

So that's where there's a difference of potential need for the legislation.

for specific pieces of legislation.

That's correct, Chair Mosqueda.

And in the next presentation on the general fund balancing analysis, you'll see like at least two key examples of that.

There's proposed legislation to amend the jumpstart fund policies as well as the policies for the city's emergency fund.

And those are policy choices.

So it will depend on the direction that the council chooses to go with use of jumpstart funds as well as with contribution to reserves this year, whether or not changes to those fund policies are necessary, and whether or not the policies as transmitted by the mayor are the right policies.

You may, in fact, want to amend some of those policies, but in a different way than proposed by the mayor.

And in those cases, we're holding introductions so we can introduce a bill that reflects council's policy priorities.

And then finally, the paper includes four attachments.

Attachments 1 through 3 provide just a quick one-page description of some of the proposed new spending categories that we've been receiving a lot of questions and interest on.

That includes proposed new spending related to affordable housing, to implement Seattle's Green New Deal, and the proposed Duwamish Valley program investments.

The fourth attachment provides all in one table, the proposed changes to total appropriations for each department or office compared to 2021. Later in the process, we will be providing a comparison showing how the council's budget compares to the 2020 adopted and is reflected in the balancing package that you will all vote on towards the end of this process.

So again, this paper is meant to be a resource.

We're not going to walk through it in detail today because that could take the entire day.

But I am happy to answer questions.

And as I mentioned previously, I do have my central staff colleagues on the line if there are questions specific to any department that are urgent to ask now.

Thank you, Allie.

I'm not seeing any hands.

Thank you.

That's all I had for this piece of the presentation.

OK, wonderful.

So should we move on to the next item of business, or do you have other central staff available?

Any additional?

Other central staff analysts are available.

If council members wanted to ask a question specific to the overview paper.

We'll give folks a quick second to get oriented here.

Again, item number we are at for our deliberations today before we move on to the presentation, I think, from Tom and Ali about revenue and allocation of the resources that the city has received from the general fund budget.

Okay.

I am not seeing any additional questions.

Let's pull up the central staff memo briefly, if we can, related to item number two.

I'm just having a technical issue.

That's OK.

One second, I'll get the memo on the screen.

Dang good memo.

Thank you, Councilmember Juarez.

Appreciate your because it is it's very detailed and I love it.

And I know I know you like me.

Have your highlighters and your flags are on this.

Gosh, I got four colors.

I got three.

Well, OK, so it's a competition now.

OK, I miss sitting by you so we can borrow highlighters.

I know.

OK.

Colleagues, is there any additional questions that folks have?

I have some sort of nuanced questions that I might throw out there if no one else is raising their hands.

You know, Allie, I think I will save the questions for the next presentation, if that's okay with you.

We do appreciate all of the work that central staff put into the memos and some of the questions that are going to relate to department revenue overall, I think we can also come back to at the end of Tom's presentation too.

So we can take questions related to both once we sort of get oriented here.

I'm going to turn it over to Tom.

Thank you very much.

I saw Tom pop on the screen.

Thank you for being here with us.

I appreciate it.

Could you please read item number three into the record?

General fund balancing analysis.

we've been able to uncover some really important opportunities for the council to write some areas and

Thank you for the introduction, Madam Chair.

Good morning, members of the Select Budget Committee.

I'm Tom Mixell with your central staff.

There is a, I believe, 20-some page paper that provides more detail on this analysis.

With today's presentation, I'll just provide an overview of the high points from that paper.

Topics we'll be covering this morning will be closing out the status of the 2021 general fund adjustments.

a review of the 2022 proposed budget for the general fund from the mayor, looking at revenues and expenditures and the impacts of various stages in the budget proposal on the tracking of the balance in the general fund.

Due to some policy changes, proposed policy changes that Allie mentioned in her overview of the budget, We're also going to focus on the implications of the mayor's general fund budget proposal on the jumpstart fund spending plan as adopted by council earlier in the year.

And then finally, offer up some issues that are identified through my analysis and some options that are identified for each of those issues.

So this first slide actually covers information up to page 5 in the memo that is on the agenda.

I'm not going to cover all the details given that the focus of this budget deliberation process is on the 2022 budget though I do want to to go through the various stages through the analysis because we there has been much action with regards to adjusting the budget and dealing with the COVID response that that bears mentioning and And this also provides a good launching point for the 2022 discussion.

So this first column of this table is the 2021 budget as adopted by council last November.

There have been a number of technical and supplemental changes that have been laid into the budget earlier in the year.

Some of those include some automatic carry forwards of amounts that were approved but not fully spent or received in the prior years of 2020. Those happened without need for further council authorization.

There was a comprehensive carry forward bill proposed to council and passed by council earlier in the year that provided legislative authority for those amounts that didn't automatically carry forward.

There was a mid-year supplemental and grant package that was deliberated in the Finance and Housing Committee and passed by council.

in the summer.

And then finally there, well actually this is the next layer, the COVID relief and recovery measures.

There were no fewer than seven pieces of standalone legislation, largely geared to COVID-19 relief and recovery measures that have been ongoing that have further modified the 2021 budget.

Also, there have been two adjustments to this city budget office's revenue forecast, one in April, and then the most recently, one in August.

Those increased revenues by approximately $71 million, or 4.5% over the 2021 adopted forecast.

And also, this accounts for Mercer Mega Block sales proceeds, which were originally proposed, intended to be received in 2020, totaling about $66.5 million.

However, the receipt of those proceeds has been delayed and they are instead received in 2021. And I just wanted to note that that is just recognizing a movement of cash between fiscal years doesn't represent any additional resources to spend because those monies have been fully allocated in the budget.

And then finally, the most salient piece for the current discussion is proposed measures for the year-end supplemental.

totaling a budget impact of $3.6 million, which I'll cover on the next slide.

So good news, the 2021 revised budget is balanced.

In prior years, council has received up to three different supplemental bills, with the final one taking the form of a fourth quarter supplemental.

which has been normally transmitted to the council in December of the budget year.

The cadence and the sequencing of that supplemental bill means that there are financial decisions that affect the budget that are not fully included in the more robust November budget process.

that the council engages in.

Under direction from the budget chair, the city budget office and the executive has instead taken a different approach to the supplemental budgeting for this fiscal year.

And by way of a process that rolls normally the fourth quarter supplemental adjustments into a year-end supplemental process that's included as part of the notable member budget process.

What we have, what has been transmitted from the executive at this point is a supplemental grants package that increases general fund revenues by $3.9 million.

Actually, I think these numbers are wrong, apologies.

Increases, oh no, that's correct.

Increases general fund revenues by $3.9 million, largely because of grants that are accepted and cuts general fund expenditures by $376,000, largely due to the close out of a few reserves and finance general.

But the memo that's included with the agenda item includes a full list of the grants that have been proposed for acceptance by council.

And then finally, given that we will not be transmitted a fourth quarter supplemental, the city budget office is intending to transmit an amendment or just an updated version of the year-end supplemental bill in early November that will then be introduced as the full year-end supplemental grants package.

Given that they don't know precisely what form that will take and what the implications may be for the general fund, they are reserving $2 million in non-appropriated reserves as a backstop for unforeseen items that may take form in that

in that update.

Let's pause here for a quick second.

Colleagues, because we went through the first two portions so quickly, I do want to encourage you, if you have questions as Tom is presenting, you can go ahead and raise your hand and we'll intersperse those questions throughout.

Given the time that we have, we do have about two hours, two and a half hours, so feel free to ask questions as we go along.

I have just a comment that I'll make here to lift up what Director Handy said.

And I think that Director Handy put it very clear.

I think it's fair to say that, but for the work that this council did last year, following the lead of what community had been calling for, and large coalition through the jump start progressive revenue, if it wasn't for that payroll progressive tax, we would see an all cuts budget.

I think it's fair to say that this balanced budget is brought to you because of the good work that community and you all did to pass jump start we are going to discuss later today.

I want to thank you for your work last year and the work that it took over years for the call for progressive revenue from community because today we have a balanced budget that has been transmitted and we have the I'm not seeing any hands.

OK, thank you, then, Chair.

Now we're going to launch into the discussion of the 2020 proposed general fund budget.

And so the first question is, why the general fund and not other funds?

And the reason for that is because most city departments have some funding from the general fund.

Some are completely funded from the general fund.

So it's a catch-all funding source for most general fund or most general governmental programs and services that the city of Seattle provides.

So the comments for the remainder of my presentation will follow this essential outline.

We'll look at the baseline general fund budget, what it costs to maintain services that have been approved in prior budgets and how much revenue is anticipated to support that.

It will look at a deposit to their fiscal reserves that is proposed in the budget.

As mentioned, there are implications for the Jump Start Spending Plan, which allows some level of support for the general fund if revenues haven't fully recovered to pre-COVID levels.

So we'll look at the implications of that.

Also, look at the Equitable Communities Initiative, which had had presence in the 2020 proposed budget and adopted budget, and has once again been re-proposed in somewhat different funding structure in the 2022 proposed budget.

Look at also other key spending items that have been proposed for funding in the 2022 budget.

And then finally, change the lens a bit to look at the implications of the general fund, largely because of the general fund backfill, but also because of I think it's important to understand how the mayor has proposed spending from the jumpstart fund, look at the proposed policy change and what the implications are for spending plan items in the jumpstart fund ordinance.

So going forward, we will be covering the information in the Central Staff Memo from page 7 to 25 here.

The previous slide was an overview of the information in the Central Staff Memo from page 1 to 7. So if you're following along with the memo, which is very detailed as well, we greatly appreciate the work you put into that Central Staff Memo.

Flip to page 7, and we will start walking through the materials that are in that Central Staff Memo.

and the data that Tom has pulled up for us.

Also, just to orient us, on item number 4 here, equitable communities initiative, this is the mayor's task force that she convened last year related to certain BIPOC investments.

I just wanted to make sure that if you're looking for shorthand, that is task force.

I just don't want folks to get equitable communities initiative confused with equitable development initiative and all of the acronyms that we use.

This is, shorthand would be the task force recommendations.

All right, no additional hands, let's keep going.

Thank you.

Okay, so now launching into some of the more technical items of the presentation.

This, just first as kind of a foundational purposes, just I'll explain how this slide works because There are several iterations of this slide as we track through the incremental ads to expenditures and revenues in the budget and how they impact the balance in the general fund.

So moving from top left, going clockwise, first you see what it is, the subject matter that we're talking about.

So in this case, the 2022 close budget general fund baseline.

Below that are the numbers that drive the chart.

Key number is the baseline balance, indicating whether the balance is positive or negative.

A bit of technical information is provided below that, just explaining the key details about the adjustment.

And then the graph, you know, a familiar-looking bar graph measuring the total running totals of expenditures and revenues based on those changes, and then in the yellow box at the bottom, just further explaining what it is, whether it's a shortfall, balance, or surplus based on that particular change.

And again, there will be a number of slides in this format, so hopefully that helps orient to how to understand and interpret the information.

So just by way of the detail about this particular slide and what the information that it contains, this is essentially the look at where the general fund stands after rolling the 2021 adopted budget programs that are slated to continue into future years, adjusting for technical costs such as inflation, health care changes, things like that, and then accounting for what the baseline revenue forecast is from the city budget office.

So you can see there is approximately $1.43 billion of revenue in the baseline forecast.

And that is in place to fund $1.48 billion of baseline expenditures in the general fund, which, as you can see, results in a $51 million shortfall to maintain ongoing services in the general fund.

So just going in order, one item that's proposed in the budget is a deposit to the fiscal reserves.

And before going into that specifics about that deposit, It's important to look at the track record since the start of the COVID-19 recession and impacts and how the city has deployed our two key reserves to address those emergencies, both on a public health needs basis and as well as a revenue loss basis.

We have two, at the City of Seattle, we have two primary general governmental reserves that can be used for various purposes.

First, there is the Revenue Stabilization Fund, which is in place for downturns in revenues, largely due to recessions or other impacts.

And then we have the Emergency Fund, which is a pool of money that is available to deal with natural disasters, public health emergencies things of that nature things that require a swift response and a pot of money available to to help deal with that response given you know there are always resource constraints.

Going into the 2020 fiscal year we had 60.7 60.8 million dollars in the Revenue Stabilization Fund and 66.9 million dollars in the Emergency Fund.

based on the policies that were in place at that time for a total balance in our reserves of $128 million.

And you can see the, I won't go into detail about the specific changes, but through 2020 revised budgets, so the budget adjustments that were taking place as council and mayor rebalanced the 2020 budget given the impacts of COVID-19 and the impact on revenues There were a number of measures adopted or passed in 2020 that deployed a total of about $40 million of reserves.

And then the 2021 adopted budget used another $39 million from CARES, which drew the reserves down to a level of approximately $6 million in the Revenue Stabilization Fund and approximately $33 million in the Emergency Fund.

The 2020 proposed 2022 proposed budget includes deposits to each fund which I will cover in the next slide.

I'm happy to hold my questions.

Are we going to get further into some of the issues that the central staff memo raised about the proposed contributions to the revenue stabilization fund and the emergency fund as compared to what current city policy is versus the proposed new policy?

Thank you, Vice Chair.

If I could just note for folks following along at home, as we were preparing Tom's talking points for the presentation, realized that this table made more sense before slide six.

So it's a couple of tables are going to show up slightly out of order from the presentation.

on the posted to the agenda.

So the numbers are still correct on the screen.

This was slide 7, but it's coming before slide 6. Later in the presentation, we moved slides 11 and 12 before slide 10, because it provides the details.

So Tom will speak to that.

All three slides go together.

But I just want to note that for people following along at home, that this is slide 7, and then we're going to move to slide 6. And I don't want people to be confused.

The slide number will stay the same so that our notes will correspond with whatever slide you're projecting.

OK.

I know there's some other council members who are out there who have notes corresponding to the slide numbers.

So we will make a note that the slide numbers are the same.

You may see them in slightly different order.

Good question, Council Member Herbold.

Thank you so much.

We'll come back to you to make sure that we get that question fully addressed in a minute here.

Thank you for pointing that out, Ali, about the slide switch.

This slide encompasses information on the memo that's on page nine of the memo.

And as Council Member Herbold helpfully pointed out or led into, there is a proposed policy change that supports the mayor's planned deposits.

First, to provide information about what the current policy would require.

Current policy would require that the city that deposits 0.25% of general fund tax revenues into the Revenue Stabilization Fund in the first year that revenues begin growing, which would be about $3.1 million based on that current policy.

So a deposit into the Reserve Revenue Stabilization Fund of about $3.1 million.

From the perspective of the emergency fund, the policy does not allow for a a similar sequenced repayment structure.

It essentially says in the in the year following a use of the emergency fund the balance shall be replenished to the full policy level.

For the for the case of the emergency fund the policy level is $60,000 or $60 million inflated by growth in the CPI-U for the Seattle area.

which would be a higher amount.

It would require a total deposit to the emergency fund of $37.5 million in the 2022 budget.

So in essence, the current policies would require a $40.6 million deposit into our combined reserves, whereas the mayor's proposed budget deposits $25 million.

As far as the details, the emergency fund is the policy or the proposed policy change from the mayor would change the immediate replenishment at the beginning of the next fiscal year into a sequence process that allows for replenishment over five years.

So this year, our proposed 2020 year, 2022 year, plus four additional years.

And that is the $10 million that's included in the proposed budget.

The Revenue Stabilization Fund, the proposed budget is simply depositing more into that fund than is purely required by law and current city ordinance.

There is no policy change that is proposed, though there is nothing that prevents the city from depositing a higher amount in either of these reserves.

up to a current, a maximum balance amount that is allowed in the Revenue Stabilization Fund, but that is not, that does not pose any constraints under this current budget.

So when they, the $25 million from the policy, you know, assuming the policy change as proposed with the budget is in place, the mayor's budget would place $25 million from the general fund into the fiscal reserves.

which brings the running tally of the baseline balance to negative $75 million in 2022. I'm wondering whether or not central staff had a chance to check with

Director Noble, since he came and visited us a couple weeks ago to give the presentation on the mayor's proposed budget.

And the reason why I ask is particular to this question, when talking about the mayor's proposed budget's contribution to these two funds, the impression I received is that the mayor's budget was proposing to commit more than what was legally required under current policy.

And I'm just really curious as to what was intended by that particular message, if anybody had a chance to sort of fact check after that presentation.

Vice Chair Herbold.

I have had some conversations with CBO.

I would say this is just generally a different way that central staff versus the executive approaches discussion of the budget and why we unpack it using council's policy lens.

The proposed budget from the executive's position is assuming adoption of all the legislation that is transmitted with the budget.

So they are not required to submit to the council a current law budget.

Their proposed budget is assuming that council approves.

So that, you know, the language may not have been as precise in their response to the questions, but their proposal is, in fact, assuming council approves the proposed policy change depositing more money than would be required by law into the fiscal reserves.

Our perspective is we first need to represent what would be required today so you know whether or not you want to approve that policy change moving forward.

And so it's part of what we do here on central staff, which is present the proposed budget using that policy frame.

So that is the distinction, but I don't think there is disagreement about what current law would have required.

Thank you.

I thought I was asking the question about what would be required under current law because I didn't yet know about the new proposed law, but appreciate understanding that different perspective that we bring to unpacking the budget.

I think it's a really excellent question, Vice Chair Herbold.

Thank you for putting it out there.

And I think that it would be most folks understanding that a proposed budget would need to come down complying with current law.

As the memo outlined, and I think as was touched on in earlier presentations, but really exposed here in the memo from central staff, is that the legislation that has accompanied the proposed budget is a very different policy choice.

I want to lift up the language on the top of page 9 of the memo here that says the 2022 proposed budget package includes budget legislation that would change the jump start fund policies.

It goes on to say the proposed budget legislation would completely rescind the spending plan for the 2023 and beyond jumpstart spend plan allowing for ongoing use of the payroll expense tax revenues to support general fund for uses that are inconsistent with the spending plan established when the payroll expense tax was authorized by council.

And so that to me is really the crux of where we're seeing a difference of analysis on how this gap was closed.

And I want to ask a question that leads into that.

So I guess to be clear, what we're seeing here from your presentation thus far is that absent non-general fund sources, we would be $50 million short for next year's budget, correct?

And then on top of that, with the additional spending that has been proposed in this budget, we see that gap even grow further to $75 million.

Is that correct?

Yes, that's correct.

And you'll see with progressive slides that this is just one step in that analysis, but that is an accurate statement.

And I would just add in, this is our sort of reconstruction of the proposed budget.

So we always start with sort of baseline expenditures and revenues, layer in the sort of new spending or contributions to emergency funds, and then show how they're addressing the gap.

And in this case, you'll see, I don't think I'm stealing the punchline that the jumpstart fund comes in to fill that gap.

So that's sort of how we build it start to finish, just how big the gap would be, but for other supplements to the general fund.

So that's a good discussion to launch into, not to go in, full bore into discussion of the Jumpstart Fund, which is actually in later portions of this presentation, but because of the general fund's reliance on revenue from the Jumpstart Fund and a proposed policy change that would increase that reliance to a higher amount, thought it was useful to stop or to place this table in the presentation and in the memo to reposition what was adopted by the city council with ordinance 126393, which created the Jumpstart Fund and its spending plan.

A little bit of history, which is covered in the memo.

And I don't have much detailed slides, but other than to provide just a kind of a tracking back of how we got here.

In July of 2020, City Council passed a progressive payroll expense tax on businesses with business payrolls in the City of Seattle.

And accompanying that tax legislation, there was an ordinance and resolution that put in place a set of spending criteria with percentages for what those new revenues were to be used for.

In 20 in the 2021 budget given the revenue pressures caused by the COVID response and the recession that resulted there was some allowance for jumpstart fund payroll expense tax fund support of the general fund in that budget.

However that was not originally contemplated beyond 2021. The the ordinance resolution of the spending plans that were adopted in 2020 requested that the executive submit an implementation plan for how payroll expense tax revenues were going to be used in future budgets and how they were going to meet the spending plan that was put in place by council.

There was no implementation plan received.

It was expected in June of 21. No implementation plan was received.

And so subsequently, council passed ordinance 126393, which created the Jumpstart Fund and codified in ordinance the spending plan from the prior or the ordinance and resolutions in 2020. And so with the budget proposal, we now essentially have the de facto spending plan proposal from the executive, which there will be points in this presentation that will compare the proposal against this which is the taking the jumpstart fund revenue projection from CBO and running it through the ordinance requirements to determine how much would go to the general fund and how much would go for the various programmatic areas that are included in the jumpstart fund spending plan.

So at this point the key the key piece of information is in Section 2 of this table.

which compares from the jumpstart ordinance the pre-COVID revenue baseline.

So this is essentially the revenue projection for general fund resources for 2022 based on forecasts that were done prior to the COVID-19 emergency.

So that was how much revenue we expected to get pre-COVID.

And the line immediately below that, the $1,424,000 million number is the proposed revenue forecast from CBO from those same resources.

And that determines how much of the general fund can be backfilled from Jumpstart Fund based on the ordinance that was adopted.

And I just would pause a moment to say that as I mentioned the original ordinance and resolution from July of 2020 did not contemplate an additional backfill for the 2022 budget.

That was an allowance that was provided and that was added in the jumpstart fund ordinance that was adopted this year with the understanding that there may still be lingering effects from the economic impacts locally and nationally from the COVID recession and that the jumpstart fund original original plan was adjusted to accommodate that.

and to provide an $85 million backfill to the general fund.

The remaining components, we'll again, we'll talk about those in the context of the Jumpstart Fund later.

And so this slide just adds that $85 million backfill amount into our running calculation of the balance, the baseline balance in the general fund.

And as you can see very clearly, the I believe it was a $76 million or so deficit prior to the backfill with the jumpstart support provided in the spending plan in the jumpstart fund policy.

There was now and there would now be a $9.4 million surplus.

So in essence the the amount of backfill allowed in the jumpstart spending plan served its purpose of backfilling the the ongoing services adopted in the prior budget and replacing or supporting the revenues that have not yet fully recovered.

And so.

And Tom, as you go along, could you tell us which page in the memo your slides correspond with, just so folks can follow along with those?

Will do.

So I believe now we are on page 11. of the memo.

This, we're getting into more policy-focused spending.

The prior amounts of spending have been more technical and continuation of baseline.

With regards to the equitable communities initiative, again, a bit of a historical reference is important to offer.

The equitable communities initiative was originally proposed by the mayor in the 2020 proposed budget at a level of $100 million in a finance general reserve.

Given that the budget proposal submitted by the mayor in 2021 included not only support from the jumps to the payroll expense tax, but also significant contributions from the fiscal reserve that are only one time in nature.

and also other one-time federal assistance.

Council repurposed that original $100 million allocation in the budget that was proposed as ongoing into a set of one-time investments in the budget.

Notable amongst those, and these are all listed on page 11 of the memo, is participatory budgeting.

about $18 million of that original equitable communities initiative or I'll just call it ECI from now from now on.

$18 million was purposed with with cuts from the Seattle Police Department budget to provide a $30 million one-time allocation for participatory budgeting in 2021. There was a $30 million allocation for the strategic investment fund which was originally in the 2020 budget and as part of the mayor's proposal It cut that original $30 million to the strategic investment fund and then just rolled it into the $100 million ECI proposal in the mayor's budget.

So council basically replaced that strategic investment fund amount from 2020 and put it back in place in 2021 as a one-time investment.

There were $10 million of one-time investments for community-led safety.

projects in HSD, Human Services Department.

There was a transfer to the emergency fund of about $10.3 million that was also one time, paired with other general fund resources to gross it up to $33.7 million.

And then there were amounts for an OCR alternative, OCR, Office for Civil Rights alternatives, for fundings to organizations pursuing alternatives to addressing harms caused by the criminal legal system, and then money, about a half a million dollars for a restorative justice pilot.

And so the remainder after all those adjustments left about $29.9 million for ECI as a one-time investment in 2021. The city council placed a proviso on those funds, or a couple of provisos.

The critical one for this analysis is a proviso that requested that the task force created by ECI would come to council and present a plan for the use of those 2021 monies, and then the council could lift the proviso, allowing those monies to be spent from the city budget.

Coordinates 126401 as shown here.

was essentially the form of that council authorization to lift the proviso on those funds in the budget.

So what you see here compares now, so now kind of shifting gears and going into the 2020 proposed budget, shows the amounts of the one-time appropriations for ECI and then what the similar corollary amounts are in the proposed budget.

One key distinction, The 2021, the ordinance 126401, so the proviso lift, authorized the expenditure of those monies, and it also applied a non-lapse in provision.

So that's budget speak for, so meaning those monies will not go away until fully spent.

So if there's $30 million, that $30 million bucket will remain in place until it's fully spent from the budget or otherwise lapsed.

So the appropriations in one time in 2021 are now proposed as ongoing appropriations in the 2022 budget.

However, the original allocation for 21 was completely 100% general fund.

As you'll see in this table, now the proposed budget includes approximately $12.8 million in the general fund.

and approximately $17.2 million in the Jumpstart Fund.

And the so this is this is the ECI look at at how Jumpstart Fund monies are used.

You'll see similar programs in the Jumpstart Fund spending plan because they are duly purposed to be meet ECI task task force recommendations as well as jumpstart fund spending priorities.

I think it's just important to to note here and we'll keep coming back to this point and the sort of high level questions that Director Handy raised in her introductory remarks today that while the proposed task force investments are split in the proposed budget between general fund and the jumpstart fund, based on our analysis to date, these proposed ongoing expenditures will require ongoing reliance on use of the jumpstart fund moving forward.

So if council agrees with this proposal, and approves this ongoing spending absent another revenue source or reductions in other areas of the city budget, there will be continued reliance on the Jumpstart Fund.

And we're going to just keep, you're going to hear us saying that over and over again over the course of the three days.

And thank you, Allie.

That's a good reminder.

Originally as proposed and as indicated in the CBO presentation on the ECI item, It was proposed that there would be, that the task force would identify a new progressive revenue source to fund these investments.

And as of now, there has not been an additional revenue source identified and hence the additional reliance on the Jumpstart Fund in the 2022 budget.

Thank you.

Council Member Harville.

Thanks.

Just to try to dial down a little bit on the expectations.

Tom, I heard you say that the expectation was that the task force would make a recommendation for an ongoing revenue source.

The central staff memo quotes that the mayor discussed proposing an equity fund or another new progressive revenue to sustain funding for ECI commitments in future years.

So I recognize that the intention was that there would be an ongoing revenues of some sort, source of some sort, so that we could sustain these investments.

I've met with the ECI task force, and I'm sure other council members have as well.

they have declined to identify an ongoing revenue source.

And my understanding from reading the memo is it was the mayor who had intended to propose an ongoing revenue source.

Just want to clarify.

I want to ask that you clarify that if you could.

Thanks.

Yeah, thank you.

Thank you, Vice Chair.

That is accurate.

The quote from the slide is is the record on the item.

It's perhaps informal commentary that informs my comments, though for the record, that I believe was placed on the executive branch to come up with the revenue backstop.

And do we have any information about why that never occurred?

Why there was never a proposal for an ongoing revenue source to fund this ongoing commitment?

rather than using Jump Start that already had a spend plan and legislated objectives?

No, Vice Chair, I have not heard any further information on that.

Yeah, I would just chime in to say I'm also not aware of that choice by the executive.

Thank you very much, Vice Chair.

I appreciate the slides here and I would note on page 14 of the memo, you can see the two slides that Tom showed.

from the chart that shows the investments in the task force recommendations side by side to see the totaling up of $30 million from how the recommendations that we received from the task force do get to 30 million.

And I'll just put out there colleagues, I too have had conversations with folks from task force members along with members from participatory budgeting work.

I think that there is ongoing interest in making sure that we're maintaining $30 million so that the identified priorities get the funding needed.

I want to make sure, though, that I fully understand what the underspend is from this year, given what Tom noted in his memo and just now as well.

there is the ability for those dollars to carry forward if they have not been used.

And given how late some of those contracts went out this year, we know that there's a significant amount of the 30 million that was underspent in 2021. I'd like to see that reflected in the 2022 budget so that we can true up the investments to the 30 million as committed.

That said, I also think it is important for there to be sustained revenue for these important investments.

I think that in some ways there is crossover with I think that is an important conversation for us to have.

I think that is an important conversation for us to encourage on the policy side.

But keeping the task force and the participatory budgeting Councilmember Juarez, I see your hand as well.

And I was going to start with a thank you for being the council representative on the task force.

But thanks for your work and for the work of the task force.

So I'll turn it over to you for your next comment.

Thank you.

I just want to note, just so we can remember what happened back in July and how this got passed.

All the credit goes to Black leaders for ECI.

And originally, ECI was, as you remember, was $100 million.

and we cut 70 and made it 30. And I just want to state as a policy perspective that we can do participatory budgeting and ECI together.

It makes the Black community stronger, leadership stronger.

It empowers them to do the things that they need.

You don't just have to have one program.

We can do two.

They're not competing.

They've overlapped.

they've dovetailed quite nicely, thank you.

I'm really happy to hear that.

And I know that they have met, the ECI task force members have met with the council members individually.

So it's good that Jumpstart can fund the ECI at 30 million for now and hold onto that money until they can spend it.

And I guess this time next year, we'll be looking at whether or not it's sustainable.

And that's probably for next year, if that's a fair statement to make.

So thank you.

Thank you.

I do need to make sure, though, that I orient us to the conversation around the $100 million because it wasn't a $70 million cut.

And I do think it's important for us to look at the information in slide 12. I think it gets to your point that there's page 12 of the memo.

I think that there is a way to show exactly what you just mentioned, Council Member Juarez, which is that these investments can coexist.

And so it was not a reduction or a cut to the task force.

If the task force was brand new and proposed last year what we did was we maintained our commitment to the Mercer mega investments that were for the strategic investment fund specifically for BIPOC communities.

We allocated 30 million to you know create We increased funding for community safety investments to the tune of $10 million.

to make sure that there was funding for emergency funds so that our communities who are BIPOC are specifically supported.

So I want to make sure that folks don't take away that there was a cut to the task force universal dollars, but instead it was exactly what you mentioned, which was showing that these investments can exist simultaneous and that they're all needed to create a more stable and healthy and safe community.

I think that's a great point.

And so for folks who want to see the bullets there, that is also on page 12 of the memo.

I just want to respond a little bit as well to Councilmember Juarez's statement in terms of the decision this year versus the decision next year.

Council accepted the Mayor's proposal as transmitted.

It's going to be very difficult to make a different decision next year to reduce the spending in these areas if it's approved as an ongoing expenditure now.

So or put another way, if the council adopt the budget as proposed, absent another revenue source, it will continue to rely on the Jumpstart Fund.

So I do think it is important that we're thinking about those future year issues as we're making decisions this year, because it will limit resources and choices for use of Jumpstart Fund and other general fund revenues in future years.

Great.

And just for anybody watching along and for our colleagues here, I want to make sure to underscore the importance of I think what has been teed up here from central staff is identifying that fund source and So we will continue this conversation to make sure that we have stability both for the jumpstart priorities and for the task force and for the ongoing commitments that we've made.

I think we can do both by making sure that there's a more stable funding source, but the investments I think for 2022 are not what's at risk.

I think the fund source is the biggest question that we need to identify.

And just again, to be very clear, I am committed to that $30 million amount.

That doesn't mean carrying over last year's amount plus adding another $30 million.

I think that that would not set up our community well for success to have half of that funding then ripped away at the end of the year or half of the projects have their contracts in.

We want to maintain an investment at $30 million, as had been committed, and I think we can do that.

I think we can do the both-hand approach that has been discussed today.

So more to come on that piece, but the $30 million recommendations from the task force are not what's in question.

The funding source to make sure that we can do that in future years is what we're discussing.

we're going to be looking at how we reflect in this year's budget any of the carry forward dollars that have not been spent in this year so that we can true that amount up to $30 million and maintain those commitments.

Let's continue.

The ECI investments at 12, which would be $12.8 million in the general fund.

So that changes the running total of the deficit in the general fund from $9 million surplus to a $3.4 million shortfall after adding in the 12.75 million for ECI on an ongoing basis.

And then if we could look at the slide.

Those so so far we've talked about the the baseline of the budget and I you know I triggers a synapse that I missed in my earlier in the other parts of the presentation but it bears mention because it's important that the that the adjustments that we've discussed for so far particularly with regards to those technical adjustments adds back in general fund support for the library Seattle Parks which had been reduced given economic circumstances in 2020-21 budgets.

So I just wanted to point that out that that the spending we've talked about so far includes baseline technical changes adding back general fund support for library and parks funding a deposit to the fiscal reserves funding ECI at a $12.8 million base from the general fund.

And now we're going to talk about the remainder of the new spending proposed in the general fund budget, which is, on the net basis, $62.4 million.

It's actually 60. The total amount of spending proposed is $65.1 million.

However, there is about $1.6 million of new revenue that is tied to some of the new spending.

And then also, there's about $4.5 million of Coronavirus Local Recovery Fund money that is added to the budget to support some economic and Green New Deal investments.

And it's important that that money is added using revenue replacement provisions from the America Rescue Plan Act.

Just a little bit of history, we were provided through that federal legislation two different tranches of funding totaling about $116 million.

One of the adjustments that I covered earlier in the presentation was supplemental legislation discussed this year, and that was part of the Seattle Rescue Plan, which deployed the first tranche of the Coronavirus Local Recovery Act, or CLFR monies, I'll refer to it in that way from henceforth.

It deployed that first tranche of CLFR money We are receiving a second tranche of $116 million of Clifford money in 2022. And it shows up in various places, more so in the Jumpstart Fund discussion that we'll have in a bit.

But there is about $4.5 million of Clifford money that is being used to support general fund programs in 2022. It's important to point out that that money is one time, so we get one installment of $116 million, and that's the full amount.

It's not something that we get, unfortunately, each and every year.

But it's important to have that as the economy continues to recover.

One point, it's just important to know, it doesn't have necessarily bearings at this point in the budget, is that we could under the federal guidance, use a fuller amount under the basis of revenue replacement.

So this is basically saying if the city's revenues have been impacted by COVID at an amount that means substantial support is needed to support the recovery as those revenue sources recover, you can use a higher amount based on calculations from the city budget office.

In fact, the full $116 million the tranche two of Clifford monies could actually be going towards revenue replacement.

That's not how this budget is built.

I'm just pointing that out because it does provide some flexible use for council of how those funds are ultimately deployed in the budget that is adopted.

Tom, could you repeat the summary message from that?

And then I have a question about some of those investments as well.

Sure.

So I guess the high-level snapshot is there is $116 million that has not yet been fully deployed from the tranche 2. And the proposed budget fully deploys that amount.

Some of it is directly spent out of the Clifford Fund that has been created.

But $4.5 million is going to the general fund.

and about $65 million.

Again, I don't wanna give away the punchline, but you'll see later about $65 million is being used to support on a one-time basis in 2022, some Jumpstart Fund investments.

But the key takeaway is that the full $116 million could be used in a different way.

Most importantly, as revenue replacement, which would provide the utmost of flexibility for how those monies are used.

Thank you very much, colleagues.

I think that's an important note.

It's in the memo as well, but I wanted to make sure to lift that piece up because we saw our good chair of parks wanted to also just confirm here on the memo.

We talk about how.

The backfill provision of jump start fund already made sure that we were preventing general fund service cuts when revenues continue to recover slower than anticipated.

So while we're providing resources to restore, while we're also providing resources to restore contributions to Seattle Parks and Seattle Public Library, so that we can rebuild our fiscal reserves.

Jumpstart accounted for that, would have accounted for both rebuilding the cuts to the reductions that we had made from parks and libraries, which were not cuts, but they were a recognition that some of the services during COVID could not happen.

And so some of that funding was shifted over.

We know how important that funding is now, especially as a community.

is coming back out.

People are wanting to engage and go to community centers and parks and libraries.

And so I just want to confirm the funds from Jump Start going to parks and public libraries are A, to restore previous COVID-related reductions made in these departments and B, are one time for 2022 only.

Just a few other key points.

And just as an aside, the memo includes an attachment that shows by line item all the components of the $65 million of new spending that is covered by this slide.

So council members of the committee can see exactly where that money is going.

I'll just highlight two pieces because they have relevance to the prior discussion about the original $100 million proposal from ECI.

It proposed in the new budget for 2022 as ongoing.

Adds are $30 million for participatory budgeting and $10 million for community safety capacity building, which were one time in 2021. They're proposed ongoing in 2022. Those two items alone represent about close to two-thirds of the total new spending covered by this slide.

Just before we go to the next piece, this adjustment, all the other, all the spending and revenue adjustments thus far bring the baseline balance to $62.4 million in the general fund.

And so this next slide should cover- Just before you move on, Ali,

Chair Mosqueda, I just want to clarify to make sure that we addressed the question that you were just asking about the general fund, putting back the general fund into the parks and other budgets from last year.

I think your question was whether, or I'm not clear if you were asking whether or not that replenishment of sort of the parks general fund is part of the $62 million.

And I believe, and Tom, correct me if I'm wrong here, There are technical adjustments, sort of baseline adjustments that are made to the budget.

I'm not, and I believe that the money that was used to restore the general fund contribution to the parks fund is not included in the $62 million.

That was my oversight.

You know, to go back to the kind of the starting slide that was the baseline plus technical adjustments, I failed to mention that that includes the ADVACs for parks and libraries.

So this stage right here included those critical pieces.

So put another way, Chair Mosqueda, at this point, that restoration of parks funding is included here.

And so when we get to this point where the authorized contribution from the general fund is to support ongoing base city services is deposited into the general fund, that was adequate to restore that funding.

And so this, what we are talking about here in this $62 million is new spending, not sort of baseline adjustments.

And as Tom pointed out, the largest items are participatory budgeting and then the community safety capacity building.

that were provided in the 2021 adopted budget as one-time expenditures, and this sort of is getting, again, at the points you and Director Handy raised earlier in the discussions that, like, there are shared priorities included in this new spending.

The Council has choices to make about sort of the ongoing source of funds or whether or not to keep these in the budget as ongoing investments.

or identify an additional revenue source.

So if we can go to the next slide, we'll wrap up the discussion of the general fund.

So as mentioned, the mayor's budget includes a proposed change to the jumpstart fund policy.

One key piece of that is that a higher level of support is allowed for the general fund in 2022. Also key to note that the policy change would would eliminate or delete the spending plan for future years.

So it would it would instead just be governed by some from some very broad spending parameters without any of the discrete details by by program area included in the Jumpstart Fund current policy.

The additional support.

from the jumpstart fund to the general fund is about $62.4 million that then resolves the deficit from the prior slide.

So what you see now is in fact the entire, the general fund revenues and expenditures of $1.587 million of which, of which, $147 million would be from a transfer in from the Jumpstart Fund versus the $85 million that's allowed in policy.

So it's not to say that Jumpstart Fund money is specifically support any individual add in the general fund, though the way I would say it is that if not, that the additional deposit from the Jumpstart Fund to the General Fund makes these ads possible.

So that leads us into some of the issues that we've already have been identified and started a discussion about the proposed policy change to the Jumpstart Fund and the implications for both the Jumpstart Fund and the General Fund this year and in future years.

And so just to state issue issue 1 due to ongoing budget proposals in 2022 the proposed general fund budget requires $148 million of revenue from the Jumpstart Fund to balance which is $62.3 million higher than the amount allowed in the current policy which then reduces the capacity of the Jumpstart Fund to fund its programs as specified in the spending plan by a like amount in 2023 and beyond.

I'm going to pause you real quick before we get to issue identification in detail here.

Colleagues, before we go on to issue identification, as you all take a look at the pages that have been reviewed by Tom in the memo, are there any questions before we go to issue identification?

Okay.

Tom, I think everyone is well briefed.

Please continue.

So some options to consider for that issue.

One is to reduce spending the 2022 proposed budget and reduce the transfer from the Jumpstart Fund by the same amount and then reallocate those resources from within the Jumpstart Fund in the 2022 budget for purposes in the fund policy.

A second option would be to change some amount of general fund budget as programmed as ongoing to switch them instead to one time in 2022. which then reduces the assumed ongoing reliance on the jumpstart fund after the next but after 2022. Of course it should be noted that that ads that are really ongoing in nature those that establish investments in new programs that hire new staff in particular may not be workable as as one-time investments.

So that's just something to consider and to carefully consider and just purely switching things from ongoing to one-time fund.

Next, this kind of goes to the conversation earlier about revenue sourcing.

An option would be to identify a new revenue source to support some or all of the proposed new general fund budget ads, and then be able to program a higher level of spending from the Jumpstart Fund for Jumpstart Fund purposes.

And then finally, it's always viable to consider no action for this item.

Thank you again.

I know this will be one of the biggest issues that we address going forward.

Colleagues, I do want to make space for folks to ask questions or weigh in with ideas.

I will just note on this first issue identification, the ways in which we can make sure to support some of the areas where there are shared priorities, for example, in the equitable communities initiative task force recommendations in participatory budgeting, for example.

I think that it is going to be important for us to make sure that the city is able to maintain the Jump Start Coalition spend plan.

The spend plan was unanimously passed by this council.

I'm going to be looking for ways to make sure that we can and 30 million for the equitable task force, having that 30 million reflected in this budget, using carry forward dollars from this year that are unspent.

And I think that there's a real interest in helping to identify ongoing sources of revenue in future years, so having a directive or conversation.

we can do some of that through policy conversations in 2022 to make sure there is stable revenue going forward.

I think we can do some of that by also changing the fund source as Tom has talked about to identify one-time revenue sources so we can keep those investments at 30 million each.

And then work to create more I would like to make a couple of comments.

One, and I think future work, collaborative work on identifying a revenue source going forward with outlined as an option C, A and C.

But know that there is still a huge amount of commitment to the task force I'm putting funding in that would lead to a cliff in the future or a fund source that would lead to cuts in other areas.

We have spent a lot of time awarding off any efforts to pit Peter against Paul.

And I think we have some good ways in which we can keep those commitments and identify fund sources in the future if we look at one-time funding.

So more to come from me on that, but I just wanted to signal my interest in A and C.

Okay.

So the second issue that Central Staff analysis identified with regards to fiscal reserves, so the prior discussion about the proposed balance levels and how they contrast with the current policy.

Proposed fiscal reserves policy change would bring 2022 ending reserves to a combined level that is $15.6 million lower than what would be required by the current policy.

and would provide four additional years to replenish the reserves to the amount defined in current policy.

So the options for this some options to address that issue would be to reject the proposed fiscal policy change and then identify an additional $15 million from within the budget through through any combination of reductions or new revenues to add an additional $15.6 million to reserves in 2022 or the council could revise the policy to allow for a shorter or longer payment period for the emergency fund.

And then finally, no action is also a viable option.

Thank you, Tom.

Any comments or questions on this?

OK.

Some of the comments that we talked about earlier note that the I think it's important for us to be clear on where to place the additional 25 million in our emergency fund and our We are looking forward to hearing from councilmembers in early November and hearing more about the priorities that councilmembers may be identifying in the next week or so before we choose an option specific to this.

Some of that I think we will be, we will need to remain a little bit flexible before the budget is finalized to see how those I appreciate the call that, or the note that the Jump Start Progressive Proposal not only included funding for the priorities that we had identified in the spend plan, but included flexibility to build back our reserves and to make sure that investments were made in, for example, parks and libraries.

And I think the question in front of us will be how do those priorities of council, specific council members that you will identify in the next few weeks align with any additional revenue changes that we see from the Revenue Forecast Council and any priorities that you all have with how items are shifted around in the proposed budget year.

So I'm looking forward to hearing more, but I don't have a specific recommendation for options here today because I think it will be dependent on how those conversations shake out over the next two weeks and the revenue forecast.

So there's a third issue that was identified, and this is within the general fund.

This regards the equitable communities initiative support from new revenue.

The mayor's proposed budget includes $30 million for ongoing ECI investments but does not include a new progressive revenue source to support that.

So the options to address that if desired would include change the appropriations to one time and engage the ECI task force to identify an ongoing progressive revenue source.

Reduce some or all of the proposed appropriations in 2022 recognizing that much of the 2021 appropriations for ECI recommendations We'll carry forward in the 2022 and engage the ECI task force to identify an ongoing progressive revenue source for the investments on an ongoing basis basis in 2023 and beyond.

And then again no no action is also a viable option.

Colleagues, any thoughts or reflections on this?

Council Member Juarez, please go ahead.

I may have missed it quickly, but didn't the mayor, didn't we get a revision this morning from Dr. Noble, a modification on A this morning that doesn't read the same as your memo?

At least I got that email.

I don't know if the rest of y'all did.

You may have access from your task force participation that you can inform us on.

I'm seeing a council member.

Thank you for flagging that council member.

I'm seeing Allie come on screen and Tom's still off mute.

So if you do have any updates, have her to receive those central staff.

I have not heard any updates.

Chair Mosqueda, we have not received any response from the Budget Office on this memo.

OK.

Well, you know what?

I got an email this morning from the executive or from my staff saying, go to page 18. A has been modified.

Here's the new modification.

So maybe I'm special.

I don't know.

Double check here.

The email was from my staff dean, but apparently it was changed, not Ben.

Maybe I'm wrong on this.

I apologize if I spoke incorrectly.

I would just note that these issues and options and the analysis in these memos is not the work of the budget office.

So they may have shared a different perspective, or we may have modified it.

I'm not sure what the modification is referring to, but this work would not reflect other options that may, that other executive staff may have identified.

But I do think that this is the perfect opportunity for staff in our offices and in the conversations that we are able to have here today with council members.

to identify potential modifications to some of the options that have been outlined in the presentation from central staff.

These are some examples of options and so your team may have been doing some a great work thinking about how to modify option A, and I am all ears on that.

I have a similar modification that I was going to offer for B.

So if you, council member, want to share any of that, of course, you're welcome to if you need some extra time to think through what that modification would be.

I think this is exactly the opportunity for us to flag, hey, I may have a modification on A, and we'll come back and let you know at a later date.

That's no problem.

Okay, I'll double check this.

And I can filibuster for you if you'd like.

Well, okay.

Yeah, I do see that.

Yeah, I am correct.

I'll get right back to you, I promise.

Yeah, no worries.

I've got my staff blowing up my phone.

Thank you.

No worries, and thank you, because I think this is exactly what this is for.

If your staff have ideas on how to modify option A, that's fantastic, because we need all ideas on the table at this point in crafting the budget.

I would offer this in terms of I'm leaning towards a B as listed on this chart here.

I think that we can maintain our commitment at $30 million, recognizing that there is significant amount of funding that was allocated in this year's budget up to $30 million.

A large portion of that has not yet been spent.

So I am very interested in carrying forward into 2022, as we have already authorized any of that unspent money and then to true up the amount, if you will, to make sure that we're maintaining a $30 million investment for the calendar year 2022 to continue those priorities.

And I say continue because I do believe that we working together.

investment in the future.

We are looking at how we can in future years in 2023 and beyond identify investment resource so there is stable funding for that so there is not conflict again with other progressive revenue sources and that allows for us to be able to maintain jumpstart investments and to be able to maintain the investment and recommendations from the task force and by truing up any difference per delta.

So that is what I will be looking forward to working with you on.

And that difference is what would be reflected in this budget to keep them at $30 million.

and appreciate this issue has been discussed so in depth this year, but one of the things, this year, today, but one of the things that is still to be identified is the true amount of unspent dollars by the end of 2021. We're going to be doing some analysis on that to see if we can accurately reflect that in next year's budget so that $30 million is maintained.

Any additional comments or questions on that?

Okay, just early signaling on what we're doing in my office in terms of thinking about how to maintain that 30 million commitment.

All right, let's continue, Tom.

Okay, thank you, Madam Chair.

So to just calibrate with where we are in the more detailed memo, this now we're jumping into discussion about the Jumpstart Fund Spending Plan, and it's in section four of the memo that begins on page 16. This table in essence encapsulates what the Jumpstart Fund policies in Ordinance 126393 would would seek for different spending categories as codified in that ordinance including the general fund transfer, amounts allowed for administration, housing, equitable development initiative, economic revitalization and the Green New Deal.

It then compares in the second column moving to the right those amounts from the jumpstart fund that are proposed in the budget and then shows the differences.

So there are a few things to highlight within this item, within this table.

First and foremost, and we've already touched on it in earlier slides, is that the proposed budget relies on a $147 million deposit in the general fund versus $85 million as allowed in policy, which means that The Jumpstart Fund is supporting the general fund to the tune of $62 million more than would be envisioned in the policy ordinance.

The administration piece is slightly different.

And I'll just stop for a second and explain that the original Jumpstart Fund ordinance allowed for a 5% of total Jumpstart Fund resources to go towards administration, which is on the order of $7 million.

The proposed budget and the way I've shown the spending plan here, instead of showing administration as its own discrete amount, in fact overlays the 5% into each of the spending categories, which is probably a more accurate way to account for the administrative piece.

So what remains in the administrative line is just the total $7 million that's allowed for admin.

after reflecting that a lot of those administrative costs are included in other below-the-line categories such as housing, EDI, Equitable Development Initiative, economic revitalization, Green New Deal.

So just with that little side note, moving to housing, you'll see that actually- Can we pause real quick?

I'm so sorry.

Thanks.

It might be on the previous slide.

Council Member Solano, did you have a question?

I do, but it's on this slide, so I'm fine if Tom finishes the explanation and then I ask.

No problem, thanks.

Please go ahead, Tom.

Thank you, Madam Chair.

So as this shows, the investment from the Jumpstart Fund for housing, it's $52.4 million lower than what's envisioned in the Jumpstart Fund ordinance.

Similarly, economic revitalization is receiving $12.8 million fewer funds, and the Green New Deal is about 800,000 short of what would be contemplated in the ordinance for Jumpstart Fund.

And then also at the bottom of the table, there was about $3.7 million, which is mostly shown in the proposed budget and in the way the executive attempts to demonstrate compliance with Jumpstart Fund policies.

There's about $3.7 million for services aiding people experiencing homelessness.

that are not actually part of the allowed spending for the Jumpstart Fund in this year and in future years.

And so you've likely heard that the proposed budget meets the spirit of the Jumpstart Fund.

And so the next slide will show how that is achieved within the proposed budget.

given the use of some one-time Clifford money.

So if we go to the next slide.

Great.

Council Member Swatt, did you want to wait until the next slide or should we go ahead and ask your question now?

Yeah, it might make sense for me to go ahead and ask right now.

So I just wanted to make sure I understand this slide accurately.

There's no column in this table that shows, and this is slide 21 I'm referring to, there is no column in this table that I want to make sure I get this right.

It shows how the payroll tax which is the big business tax revenues should have been available for housing and the green new deal based on the initial spending plan the Council approved when the tax was approved last year.

That is one thing I want to confirm.

which would be over 145 million in 2022, and $21 million going to Green New Deal investments.

But as I said, I don't see there is a column with those figures on this table.

Instead, the first column of this table, I think, shows how the tax revenues would be distributed if 85 million of those funds are used to prevent budget cuts backfilling the general fund, as recommended by the ordinance that Chair Mosqueda sponsored over the summer.

In other words, this table shows that the mayor's proposed budget is using more payroll expense tax funds to backfill the general fund that is proposed by that council bill over the summer.

Both options use more to backfill a general fund deficit than was recommended by the initial spending plan.

So, you know, we just have to keep all of those things clear.

So, first, I want to confirm that my understanding is accurate there.

I also wanted to raise that there is, of course, another option and we should refrain from thinking about raising progressive revenues as something that needs more ideas to come to the fore.

It's very clear what we need to do.

Obviously, we want to prevent budget cuts in the departments that serve necessary social functions.

And I'm saying it deliberately that way because, of course, my views on The bloated police budget are completely different than the need to make sure that there are no cuts in other departments, departments that serve renters, our marginalized communities, our essential road and infrastructure service, our utilities.

All of that is necessary, and we have to prevent any budget cuts, let alone any draconian budget cuts.

It is crucial that the tax Amazon movement fought for this last year.

And as has been noted by others, this big business tax is what has held the budget afloat.

But we also at the same time have to prevent from Prevent the undermining of the original spending plan that the council had approved and to make sure that the intent that the council expressed through the ordinances passed last year are fully funded.

That mandate is fully funded.

And again, I just wanted to say that there's no big mystique around how that can be done.

It's obvious how that can be done.

It can be done by increasing the big business tax rate of the payroll expense tax that already exists in the law books.

And so I just wanted to remind members of the public who are watching that a bill to do just that, which is increase the tax rate on these, and we're talking about the largest and the most profitable corporations, that a bill to increase the tax rate, to do just that, did come from my office.

It was introduced and I referred to the Budget Committee, I believe, last November.

And it was something that I tried to bring forward in the budget deliberations last fall.

And I also wanted to indicate that I intend to propose that again in this year's budget deliberations.

And it does, needless to say, figure in the list of proposed ideas for budget amendments that I sent out yesterday, my staff sent out yesterday.

to all councilmembers and the chair to look at when we start talking about the amendments.

Thank you.

Thank you, Councilmember Swan.

I want to just jump in real quick.

I think there is an important distinction in that first line there regarding general fund.

I think that the expenses that we anticipated coming down with the proposed budget as Tom outlined in the first few slides, were to the tune of about $50 million.

It was policy decisions and choices in the proposed budget that brings that number from $50 million to $85 million.

to make sure that we're not engaging in austerity budgeting.

help to prevent any deep cuts to public services, especially in making sure that good living wage jobs through our city were still provided in this moment of crisis so that our most vulnerable could have access to services in community housing.

and other vulnerable services like making sure folks had access to shelter, showers, and food services.

So I do think that that line for general fund, if we could go back real quickly.

Oh, thank you, Allie, for showing that.

And I'll stop there if you had more to add about the 50 million.

And then I have one more comment that emphasizes one of the points that Council Member Sawant brought up, because I think it raised an important question.

So to the question on the 50 million versus the 85 million that was shown on the last table and I'll flip back in a minute, but I don't want to.

I'm not going to do too much flipping because it gets confusing on the screen.

So this $50 million is sort of looking at base general fund resources and the current revenue forecast and base expenditures that we would anticipate to maintain sort of base city services.

So that's the amount of money after the budget office goes through the exercise of adjusting all sort of ongoing services annual increases, that sort of thing, and backing out any one-time expenditures that were included in the 2021 adopted budget.

But then you go to the contribution into the emergency reserves, which in order to be consistent with current policy or the, you know, proposed policy, one could argue whether or not this is or isn't a baseline expenditure.

So you could, one could argue that the the executive needed at least $75 million of jumpstart revenue to present a budget and really to be consistent.

If she was to present a budget that was consistent with the current policies for the emergency fund, probably would have used all of the 85 million.

So I think the important thing to note is the jumpstart policies that were adopted this year did allow for 85 million dollars to be deposited into the general fund and there wasn't a nuance to say that and that was just a calculation of pre-pandemic forecasts to current general fund forecasts and there wasn't really a but if you don't need it all to maintain base services you have to put the other money back in the jumpstart fund so I will say that using about you know 85 or 86 million of jumpstart Is consistent with the policy to support general fund expenditures is consistent with the policy direction.

from the from the council.

I will and then just quickly I'll just note in response to Council Member Swann's question she is correct we're not presenting the spending plan as it was originally adopted because that's not current law.

So based on current adopted policy in the City of Seattle this is what we would expect to see in the proposed budget to be compliant with current policies and then what we're pointing out is that the proposed budget isn't consistent with even with that adjusted policy and requires a change to the jumpstart fund policies should you accept the proposal.

And what remains constant?

is the percentage allocation into the spend categories.

So the percentage allocation for affordable housing, green new deal, economic resilience, economic development, equitable development initiative, all of those percentages remain the whole with the intent to say if we needed some flexibility as we responded from this crisis, we would of course want to ward off against I do want to underscore an important policy choice that I think that the mayor has made in the way in which jumpstart is used, not adhering to the spend plan.

And the point was made about the allocation specifically, for example, into housing.

Jumpstart spend plan had always and continues to maintain a requirement that two-thirds of the funding from Jumpstart goes into building affordable housing to address the most pressing crisis in our city.

What we see instead with this proposal is about two-thirds of Jumpstart's funding going into other investments.

Some of that is going into the general fund for the revenue stabilization for that $50 million that we talked about.

Some is going in for the closing of the gap for some policy decisions that were made I think that that is the big policy question.

I just wanted us to be clear about the numbers.

I mean, we're talking about different numbers where the percentages are not the same.

It has not stayed 62% because 85 million was subtracted first, so it is 62% of what was left.

That is not the 62% that was originally intended.

I just don't want conflation between the two things.

Yeah, I would I'll acknowledge that there was a change in that original spend plan through the adoption of the jumpstart fund.

And then I also want to confirm the points council members want was making in terms of options to sort of identify additional revenue or new revenue and just confirming that there is the option of a new revenue source as council members want noted, there is the option of modifying existing rates for certain revenue sources to increase the amount of anticipated revenue as well as reductions to other city spending to free up funds to support some of these other priorities.

So I also just wanted to acknowledge that no disagreement on the sort of range of options available and that there was a bill prepared last year.

the request of council members who want to adjust the rate of the payroll tax to increase the amount of revenue that would be anticipated.

And I think that there's a lot of agreement, well I will just own that there's agreement between a lot of us on council that there is a need for additional revenue to respond to the growing need that we see for example from the McKinstry study that says that we need somewhere between to address affordable housing.

to work especially to address the needed funds in affordable housing.

But the amount coming in from JumpStart will continue to hopefully go up year over year.

For example, we saw $214 million was the anticipated amount for this year.

We're at $235 million actually, right?

And so as we see greater stability in revenue that comes in the door, it will not be $50 million every year going to create stability for the revenue sources.

Hopefully that will go away and the full percentage that we anticipate for each of those allotments will go back into place.

So 62% of what we had anticipated going into affordable housing should have been around $136 million and slightly upwards of that given the increase in the payroll tax expenditures coming in the door.

And that alone obviously is not enough, so more work to come here.

But $136 million even scaled down to 97 in terms of our expectations.

for this year was an important marker to be able to build affordable housing.

My concern, and I'll put it out there, related to not having all of the Jump Start funding going into affordable housing right now, is that when we use federal dollars, and it's one time in nature, we create a cliff for those dollars in future years.

Affordable housing developers, folks especially coming from the BIPOC community that are trying to build affordable housing for communities at highest risk of displacement.

If we don't have the full $97 million, that creates instability and unpredictability for affordable housing developers.

So colleagues, part of my interest here is flagging, changing that fund source so that we don't have 52 million dollars coming from a one-time investment from the feds, when what we need to be showing is year-over-year investments, and to Council Member Sawant's point, and I agree, increases in those dollar amounts going into housing.

But right now, when we have half of the amount of money going into affordable housing from a one-time source that goes away at the end of next year, that does not create the stability that we need in our community and in the affordable housing development world to show stability year over year so that people know that this is a stable financial source for building that affordable housing.

So that's something that I'll continue to be looking at, is a way for us to right that I think it's important for us to make sure that we have a consistent fund source so that the color of money going into affordable housing is truly consistent and shows predictability year over year.

that the numbers that I had said, $145 million for housing and $21 million for Green New Deal, if the original spending plan was followed, if you can just confirm that.

And also, just on the points you were making, Chair Mosqueda, I really agree that we cannot have social housing and Green New Deal projects, which are absolutely essential, you know, just critical for our communities, for those to be dependent on any one-time funds.

And it is important to note that Mayor Durkin's proposed budget has an unusually large housing budget, precisely because of those federal funds, but we need I am happy to hear the comments that you just made about how this is what the Council as a whole is thinking about.

And I hope that when my office brings that amendment forward, that there will be yes votes on it and that we actually do increase the tax rate because that is a legally viable and economically viable avenue for us to make sure that we don't rob Peter to pay Paul, as you were saying, which I totally agree with.

Thank you.

Council Member Swann, yes, I agree with the numbers.

If this, based on the original spend plan and the amount of revenues projected, that those numbers are correct.

I think about 21 million.

I have the previous forecast, but it's about 21 million, about 136 million for housing.

And that would be about the amount we would have expected this year had general fund revenues rebounded.

So agree with those calculations.

Okay, thank you.

I'm not seeing any additional hands at this point.

Thank you for toggling between those slides there.

And we're going to let you continue.

Thank you, Madam Chair.

So this slide actually is a helpful for the context of the discussion between committee members, because it does show, indeed, the amount of one-time federal CLFR money that's deployed in the mayor's proposed budget for JumpStart spending plan purposes.

So about $15.5 million is in housing, $13.5 is in economic revitalization, and then $1 million is in green mutual investments.

And so this is the 2022 proposed budget look for how JumpStart priorities can be met or are met using a mix of ongoing and one-time resources.

And then the prior slide is actually a sneak peek at what 2023 and beyond would look like, you know, understanding that there may, will hopefully be a higher level of recovering the general fund leading to a reduced amount, but it would show the kind of shortfalls in the various spending plan categories that are just propped up on a one-time basis from federal funds this year or next year, I should say.

I would just add on this slide, this presentation sort of reflects what Director Noble and others from the executive have presented as sort of how the proposed budget meets the intent of the jumpstart spending plan in terms of the amount of total dollars going to the categories.

This table is slightly different in that it represents central staff sort of slight different take on that, which is to say included in the original calculations presented in department presentations.

was about $3.7 million that was, that is proposed to be spent on homeless services and some mental health services that are not found anywhere in the jumpstart spend policy.

So we've sort of included that, that number, but have dropped it, dropped it below, below the line to just reflect that that would not be a consistent spending area based on current policy.

Thank you very much.

I think that this slide is really illuminating.

I think it gets to the earlier conversation we just had about the concern about which source of revenue is going towards these investments.

And for example, with $50 million coming from the federal COVID relief funds, $13.5 million for economic revitalization coming from COVID relief funds, and $1 million going into the priorities for Green New Deal from COVID relief fund, it seems like that total of about $65 million would mean that when those one-time funds go away, they would not be built into next year's base budget.

So is that a valid takeaway and concern from your memo, that by swapping the use of Jumpstart for these one-time federal investments, we risk that in future years, it would create a reduction of Jumpstart investments to the tune of $65 million?

Yeah, that is entirely accurate.

And more so than risk, it almost emplaces these spending lines going forward in the in the base budgets in the future so it would it would essentially moving into 2023 and beyond there would be $65.5 million less for jumpstart fund purposes than originally would be would be required in the jumpstart fund ordinance because of the use of one-time funds.

Thank you for that clarification.

Colleagues, for me, this is a really important point for us to ruminate on as we develop our proposed budget as a council.

I think the question is broader than for this one time, would you be able to use a different source of funding to meet the spirit of Jump Start?

And I think the consequence of doing that is that it doesn't get built into base budgets going forward.

I think especially as you look at the affordable housing requests, as folks know, there was a large contingent of affordable housing and those who are living housing unstable who had asked for investments into building affordable housing from our Jump Start progressive proposal.

And the reason is we have asked community members, nonprofit community members, BIPOC-led organizations to step up and help us fill this housing gap.

And they have responded.

They responded with over $100 million in project asks to the Office of Housing through their NOFA request.

Our NOFA pot of funding right now for investing in affordable housing is only $35 million.

And we know there's a huge pipeline of affordable housing projects that are ready to go.

They just need we are not creating affordable housing.

We are not creating financial assistance in order to get there.

The city provides a critical component of that.

If we end up in a situation where our commitment to affordable housing is halved and we are not creating affordable housing financial resources for these developers going forward, we risk the ability to build the I'm going to be continuing to look to see how we can potentially move some of those revenue sources to create stability.

that we are going to be able to identify shared priorities and identify maybe more appropriate ways to use one-time resources from the feds versus areas of investment where we know ongoing resources are going to be critical and that ongoing resources can lead to greater projects in the future.

That's something I'm going to be really diving into hopefully with you all over the next few weeks as we try to craft stability in the budget and identify shared

Just very briefly, I do want to address that the fact that I have heard the proposed 2022 budget as being described as being consistent with the spirit of the jumpstart funding plan.

And I appreciate that perspective, but for me, a central commitment of Jump Start was an ongoing revenue source to double our annual investment in housing.

And so for that reason, I do not find the proposed 2022 budget to be consistent with the spirit of the Jump Start spend plan.

Thank you.

Well said, Vice Chair.

Thank you very much.

Let's continue.

Thank you, Madam Chair.

So this is the last slide for review of Jumpstart.

Again, now we'll move into issue identification.

There are three issues which will be familiar because those are the concepts that committee has been discussing around this area.

First is with regards to Jumpstart fund policy change.

Proposed budget legislation would change the spending allocations governing the use of JumpStart payroll expense tax revenues in 2022 and would eliminate the spending plan in future years.

So options to consider in light of that issue.

One is option A to do not pass the budget legislation that would change the JumpStart fund policies and amend the proposed budget accordingly to align the spending allocations to be consistent with the existing policy in Ordinance 126393. Second option, option B, would be to amend the legislation to allow different uses for 2022, however, but to retain the spending plan for the future years.

Option C would be to amend the spending plan to change the uses in 2022 and continue them at that new revised level in future years.

And then, again, the final option would be to take no action.

Thank you very much.

I'm not seeing any hands go up right now.

I will just build off of what Councilmember Herbold just noted as well.

I think option A for me at this point is staying in line with the commitments that we made to community when we passed progressive jumpstart payroll tax.

We had committed that this funding would be additive.

We had talked about ways in which the commitment would wear off austerity budgeting, but we wanted transparency around making sure that the investments that we had put forward were maintained.

This was never intended to be a way to fund checks that had been written, but no fund source to make it possible to cash those checks.

I want to make sure that what we're doing through Jump Start is truly additive.

At this point, I think that there's a lot of interest in also making sure that we're rebuilding the reserves and not having We need to rebuild our reserves as well.

The way in which the mayor has both invested in different priorities and is proposing to change the way in which we build back our reserves creates a great concern for me. and the spend plan that the council unanimously passed.

Unanimously passed twice as it relates to our fund policy investments.

And we'll be looking forward to working with all of you to make sure that we have the ability to invest and share priorities, but I'm very interested in, at this point, leaning towards option A.

Okay.

We can go on.

I don't see you to show my hand.

The second issue identified for the Jumpstart Fund is in regard to Jumpstart Fund spending plan sustainability.

And so this is due to the use of the one-time federal Clifford Fund monies to meet the Jumpstart Fund spending plan housing investments in 2022, coupled with an assumed higher level of Jumpstart Fund support for the general fund in 2022. In future years, the Jumpstart Fund will have about $65 million less for its spending plan priorities in 2023 and beyond.

And then options to to address that would include using up to $65 million of one-time CLFR monies to support one-time 2022 general fund proposals using the revenue replacement provisions in the American Rescue Plan Act and then reduce the amount of jumpstart funds that are deposited into the general fund in 2022. This would swap $65 million of CLFR funds described as meeting the spirit of the Jumpstart Fund priorities with Jumpstart Funds which would bring 2022 Jumpstart Fund appropriations closer to compliance with the existing fund policy.

And this will reduce the amount of assumed general fund available for general use in 2023 and beyond.

Option B would be to cut up to $65 million of ongoing general fund proposals.

Reduce the general fund transfer from the Jumpstart Fund to the general fund by a similar amount and then fund the same amount from the Jumpstart Fund for housing, local economic recovery, plan items, similar additive.

So this is the incremental and additive to the Clifford Fund allocations.

And then the final option would be to take no action.

Thanks so much.

I'm not seeing additional hands.

I just will reiterate what I said before.

I think that to the extent that we can find one-time funding that our federal partners have allocated to us to be oriented towards more appropriate one-time funding investments, that's what I'll be looking forward to, and to repurposing those JumpStart dollars back to the original spend plan so that we can do our due diligence to stay true to the spend plan as passed, again, unanimously by Council twice.

And then the final option, this regards the use of JumpStart money for homelessness and mental health purposes as opposed to Jumpstart Spending Plan purposes.

And so they're described as deviations from the Jumpstart Spending Plan.

So approximately $3.7 million of funding for services for people experiencing homelessness and mental health services is allocated from the Jumpstart Fund.

And so the options that have been identified would include cutting or reducing those items from the budget Identifying a new source of revenue for these items, and then amend the spending plan to change the uses in 2022 and continue them at a similar level in future years, and then finally to take no action.

I think that's a great point.

Thank you.

Colleagues, if you want some more examples of what the $3.7 million total to, they are bulleted on page 21 of the memo that's in front of you.

I think there is probably agreement that there is need for investments in creating stability in terms of personnel at the regional home assist authority, maintaining traditional housing, services for non-congregate shelter.

for some of these things is where I think we should be headed so that we can maintain the integrity of Jumpstart.

I also think that there's conversations that I know Councilmember Lewis and Councilmember Gonzalez as members of the Regional Homelessness Authority will be weighing in with us in the future as we talk about homelessness in the upcoming days.

to talk about how that transition looks and where the city's priority investments go as we hand over responsibility to the regional homelessness authority.

So I'll be looking to you all to help fill in questions about the stability and the source for those investments as we have policy discussions coming, I think, I look forward to having those discussions with you, but again, as it relates to deviations from the jump start spend plan, very much core to our conversations over the next month and a half will be to maintain the integrity of that spend plan as the council unanimously passes.

Unless there are further questions, just thank you for the opportunity to present this information this morning.

And I'll be happy to provide assistance in future weeks if council members have questions about information contained within the memo attached to the agenda.

Okay, Tom, thank you for the presentation today and the thorough walkthrough of the revenue sources.

I am not seeing any additional hands at this point, though I know that council members will probably have some follow-up questions.

A lot of this conversation today was orienting us to what is in the proposed budget and identifying the revenue sources for the proposed uses and priorities as the mayor has outlined.

As we get into the conversation this afternoon and over the next two days, This is a helpful foundation for us to be able to ask questions about priority investments and where revenue is being used so that we can craft our amendments and draft our own councilmatic budget document that then will be the final product for consideration for our 2022 calendar year budget.

With that, I'm not seeing any additional hands.

It's wonderful to see all of your faces this morning, and we're adjourning a little bit early.

So you will have almost a two-hour recess.

We will plan to come back at 2 p.m., colleagues, so that we can wrap up today's discussion.

If there's no objection, today's Select Budget Committee meeting will be in recess until 2 p.m.

Hearing no objection, thank you so much.

Looking forward to the deal presentation, along with economic development.

See you at 2 p.m.

Thanks all.