Finance, Native Communities and Tribal Governments Committee 4/16/2025

Good morning.

The April 16th, 2025 Finance Native Communities and Tribal Governments Committee will come to order.

It is 9.30 a.m.

I'm Dan Strauss, chair of the committee.

Will the clerk please call the roll, understanding that both Council President and Councilmember Rivera are excused for the time being.

Over to you.

Councilmember Kettle.

Here.

Council member Saka.

Here.

Chair Strauss.

Present.

Three present, two excused.

Thank you.

We have two items on today's agenda.

We had originally planned to hear more on the Here Here legislation with the revenue projections, what they are.

I made the decision to push that legislation to a future meeting.

On today's agenda, we will have a briefing and discussion on the April 2025 economic and revenue forecasts, followed by a briefing and discussion on the quarter one 2025 grant acceptance ordinance.

Before we begin, if there's no objection, the agenda will be adopted.

Hearing none, the agenda is adopted.

Do you wanna provide public comment today?

No, you're okay, sounds good.

We will have these two items.

I am not seeing anyone registered in person or virtually, double checking on the virtual.

We have David Haynes signed up, so if David Haynes becomes present, you're not present right now, by the time I end reading the instructions, we'll take your comments, otherwise we'll move on.

We will now open the hybrid public comment period.

Public comments should relate to items on today's agenda and within the purview of this committee.

Each speaker will have two minutes.

We will start with the in-person speakers first.

I'll now read the public comment instructions.

Public comment period will be moderated in the following manner, up to 20 minutes.

Speakers will be called in the order in which they registered will begin with the in-person speakers than remote.

Speakers will hear a chime when 10 seconds are left of their time.

Speakers' microphones will be muted if they do not end their comments within the allotted time.

The public comment period is now open.

We also have been joined by Council Member Rink here.

So we'll begin with the first and only speaker on today's list, David Haynes.

David, you've got two minutes.

I see your present star six to unmute.

David, you're off mute.

Take it away.

Thank you, David Haynes.

It seems this presentation belongs in that other new committee that wants to try and blame Trump for everything and distract from the fact that Democrats implode a society and made it unsafe to go downtown.

Ever notice how Seattle always blames white people and Trump trying to distract from the fact that the only reason we have a serious problem in our economy is because Seattle Democrats exempted drug pushers from jail defunded the police shifted the paradigm away from actually combating evil criminal drug pushers and then prioritize hiring people to run interference for repeat offenders using homeless money leaving innocent homeless forsaken taken subhuman mistreated and abused while the budget reflects the treasonous unconstitutional policy policies of progressives who are to blame for our lame economy maybe the farmers who can't sell their God-blessed foods in China and India can finally stop being the cane of cane and able greed and actually bring that farm food to the schools and to the grocery stores local so we can actually get some healthy foods instead of allowing people to die of starvation with a belly full of junk food.

So that instead of having farmers try and get rich, empowering our adversaries, giving them the healthy cherries, giving them the healthy apples, kids can't get access to a school.

all because Seattle wants to be an international city while they continue to implode with bad policy and untrustworthy leaders who want to judge skin color and not the content of the character.

We really need to purge the evil in our society and make the police chief start trespassing and questioning all these junkie thieves that make it impossible to enjoy yourself going out ever again.

You cannot let your guard down.

You can't even walk on the sidewalk.

You might as well just jaywalk and run in the street to avoid the evil that our police chief is refusing to combat because the mayor has been running interference for his criminal underwood police.

Thank you.

That is the end of public comment period for today.

Seeing as we have no additional speakers remotely or physically present, we will close the public comment period.

We're going to move on to item one.

And I also want to note Vice Chair Rivera and Council Member Moore were present before public comment started as well.

Moving on to the first item.

Will the clerk please read the short title into the record?

The April, the April 2025 economic and revenue forecast for briefing discussion and possible vote presenters include Yon Duras and Sean Thompson from the office of economic and revenue forecasts, David, Dave Hennis, Alex saying and Joseph Russell from the city budget office and Ben Noble and Tom Mikesell from council central staff.

Thank you.

Great to see everyone again.

I know that we met just this last week, and here we are about seven days later to talk about this more.

We do have about an hour for this agenda item.

Colleagues, we're gonna start with an uninterrupted presentation from the team.

I've given them about 20 minutes, so we'll spend a few minutes on the economic scenario, 2024 revenue actuals moving on to the forecast.

We'll then come back and go through slide by slide to ask any questions.

So I want to make sure that everyone gets the full information out there and then we'll come back to the beginning.

Overall, this is not the news we wanted and it could be much worse.

This is the first time in my memory and Director Durris, I'll be interested to hear when the last time we took up a pessimistic outlook was.

I think that there's good reason.

I think it was the prudent decision that we made last week and just understanding that the situation could be worse and that there will be two revenue forecasts between now and the final budget.

There will be an August forecast which will inform the mayor's proposal and then an October forecast made just before final action by the city council.

So also I wanna address some of the technical issues we were having at the forecast council.

Colleagues, just by way of reminder, the forecast council is an independent body that has two elected members from the city council and two from the CBO and the mayor's office.

And so we have Chief of Staff Jeremy Rocca and Director Jamie Carnell as the representatives, as well as myself and Council President.

And so it is an independent office to provide independence to these forecasts.

While again, this is not the news we wanted, I've always found the forecasts coming out of this office to be very accurate.

With that, I'm gonna turn it over to you, Director Duras, and if you wanna, everyone wanna introduce themselves just for the record, we can jump right on in.

Thank you, Chair Strauss.

Good morning, council members.

For the record, my name is Yandras.

I'm the interim director and chief economist of the Office of Economic and Revenue Forecasts.

Hello, council.

This is Sean Thompson, a regional economist with OERF.

I'm Dave Hennis with the city's budget office.

Good morning.

Alex Zhang, economist with the city budget office.

Joe Russell, economist, city budget office.

Ben Noble, central staff director.

So the presentation that we are going to go over today is a shortened version of the one that we gave to the forecast council.

It has been also updated to include some relevant information that became available since then.

The brief outline is in the first part we'll talk about recent economic developments and what they imply, what they mean for the economic forecast.

The reason is that the economic forecast is one of the major inputs for the revenue forecasts.

The second major input are the 2024 actuals.

So that's what we'll turn next to.

And then after that, after those 24 actuals, we'll move on to the 25-26 April revenue forecast update.

So there has been a lot of news around tariffs, and that's a big part of what's driving the forecast.

The direct and indirect implications of those tariff proposals are really, really massive.

The chart here on the right shows what the economists call an effective tariff rate.

Essentially, it's taking all the tariffs collected, dividing them by the imports to get essentially an effective tax rate.

The chart shows the history in red and then the assumptions from April in the purple line and then the recent developments since April 2nd in those higher, higher lines.

So there has been a lot of development in the very short period of time.

First of all, the April 2nd announcements of tariffs were much larger than what was anticipated in March and then There were additional developments.

There has been a pause, a 90-day pause on most of the tariffs, except for China.

For China, the tariff rate has been increased further to 145%.

So those top two lines, they show what the tariff rate would be if the 100% tariff rate stays in place.

And there are two scenarios in one of them.

Everything else reverts to 10%, that's the lower one.

And then if after the 90-day pause, those tariffs are really imposed, the tariff rate would climb to more than 30%.

So really a big jump from 3% was the tariff imposed last year.

So throughout this presentation, I'll be referring back to the March assumptions and March S&P global forecast for U.S. economy.

The reason is that that was the starting point for the regional economic forecast and for the revenue forecast.

When we were preparing the revenue forecast, the April U.S. forecast was not available yet, but it's going to be included in this chart, and I'll talk about that later.

So all those tariffs, all the recent developments have increased the uncertainty around the policy.

The chart on the top is an indicator that's used by economists to assess the overall amount of policy uncertainty.

As you can see, it has spiked quite considerably.

Since April 2nd, even before that, there has been a lot of uncertainty around what the tariffs eventually might be.

The amount of uncertainties on par with what we have seen in 2020 in early pandemic days.

And then the uncertainty has led to quite a lot of volatility in financial markets.

The chart at the bottom is, again, a single measure how the economies measure just how much volatility there is. technical definition doesn't really matter what's relevant here.

What's important is that That spike all the way at the end is similar, again, to what we have seen in 2020 or in the Great Depression in 2008, 2009, Great Recession, not Great Depression, Great Recession.

So a lot of uncertainty and all that uncertainty has led to downward revision in economic forecast.

It has led to increased fears regarding the possibility of a recession.

Since we have presented the forecast for the Forecast Council last week, the Wall Street Journal has released their survey of roughly 60 economists.

They conduct it every quarter.

One of the things they ask is their assessment for the probability of a recession.

And in that recent survey that was conducted after the April 2nd tariff announcement, On average, those economies have put the probability of a recession at 45%.

That's again, a recession among those economies.

The range is quite large, but the reasonable range within those economies would be from 40 to 60%.

So significantly elevated compared to where that probability was just a couple of weeks ago.

One final chart here on the amount of turmoil that we have seen over the last two weeks.

The financial markets after there is have announcements have reacted quite negatively.

The SAP 500 index has dropped considerably.

It has recovered partially, and that red dot shows where it was at the close of day on April 11th.

It's roughly in the same spot right now.

So situation has stabilized, but what we expect is the uncertainty to linger on, and that uncertainty then leads to overall lower spending by consumers who might be worried about the future.

Lower business sentiment would lead to less investment less hiring It's hard to make longer-term plans since there is just an incredible amount of uncertainty regarding What the policy will look like a year two years from now?

Turning to the economic forecast for US and the regional economic forecast, we have proposed, we have recommended to adopt the pessimistic outlook from a March as the official April forecast the Recommendation has been approved by the Forecast Council.

So the revenue forecast that I will get to eventually is based on that pessimistic outlook based on the pessimistic economic forecast by S&P Global from mid-March.

Back in the middle of March, they assigned a 50% probability to the baseline and only 25% to the pessimistic scenario.

But again, those developments after that forecast has been released had led us to to recommend the pessimistic scenario even though it has been assigned a lower probability but we believed it to be the more likely outcome last time that we have recommended the pessimistic scenario was in 2020 in early pandemic days again There was a lot of uncertainty going on.

The update that we have provided back then was, again, was based on an economic forecast that was a little bit stale, and the recent developments back then, in addition to the fact that the Seattle economy was believed to be more strongly affected by the pandemic led us to recommend the pessimistic scenario.

So we are in very similar situation.

A lot of uncertainty.

We'll believe that Washington State and Seattle economies will be affected quite a lot by the tariffs, by the drop in tourism, and the high interest rates will in addition lead to further downturn and further slowdown in the construction sector.

So that was...

the rationale for choosing that March pessimistic scenario as a starting point for the revenue forecast.

The charts here compare the outlook for the U.S. going back to when the 25 adopted budget forecast was approved last year.

Back then, the economy was on very solid footing.

It was assumed to grow at roughly 2% over the next two years.

Employment growth was expected to slow down.

The economists did not expect any recession by any means.

The March pessimistic scenario still does not assume any recession.

It's just what the economists refer to as a gross recession.

So GDP is not declining.

There are some job losses, but overall the economy keeps on growing at a very, very slow pace.

That pessimistic scenario that we have recommended from March looks very similar to the April baseline forecast by S&P Global.

That yellow line now shows the assumption or the predictions about the economic growth, the real GDP growth in the left panel and the employment growth on the right side.

That forecast has been released last Friday, so after the forecast council meeting the assembly global released their latest update to the u.s forecast but we just don't have enough time to build it all in and again the the recommendation that that we made to adopt the pessimistic scenario was based on our belief that when the april forecast eventually comes out it will look very similar to the baseline scenario will look very similar to the previous pessimistic scenario and that is certainly the case for 2025 if you compare the red and the yellow lines they essentially overlap for 2025 the outlook for 26 is slightly better in the April baseline scenario but when we turn to What can potentially happen, the negative, more negative outlook, the pessimistic scenario from April is much worse and now features a recession.

So again, because of the recent developments, economies put now a much larger probability of an actual downturn where GDP will decline.

There will be more significant job losses.

And in this April forecast update, the S&P Global has put a higher chance, a 35% probability on the likelihood of the pessimistic scenario.

That would be on the lower side of what economists believe the chance of a recession is going forward.

There is a lot of uncertainty regarding what all that implies for the monetary policy, how Fed will react will depend on what they see, the risks to the inflation and the risks to the economic growth.

Certainly these tariffs will increase the inflation rate, at least in the near term.

The red line is again showing in the left panel the impact on the inflation and particular an increase in the inflation in the first half of 2025. The April baseline scenario, again, very similar to the March pessimistic scenario.

That's what we were kind of expecting to see.

The April 25 pessimistic scenario, not that much different.

So even in that pessimistic scenario, even in the recession, this current S&P global forecast doesn't really see a big impact on, much bigger impact of tariffs on inflation, but there is certainly a lot of disagreement about how the Fed's interest rate will increase We will move going forward and that will have significant implications for the economy as a whole and for Seattle area in particular.

Turning to the Seattle area.

First, a look back at 2024. The chart here compares the actual actuals for 2024 and our forecast from last October and then also October 23, which served as a starting point for the adopted budget for year 2024. The forecast for employment was slightly lower than what the actual growth was but just marginally lower employment grew about 0.8% year over year in 2024 compared to our forecast of 0.7 inflation came slightly higher at 3.7 versus our forecast of 3.6 but for those two indicators our forecast was quite accurate.

It was less accurate for taxable sales.

We have expected a decline in taxable sales and sales tax revenue in October 2024. It came in slightly higher, but was essentially flat year over year at only 0.1% increase.

I'll talk a little bit more about revenues when we get there.

Before that, some of the additional things that feed into the forecast.

The employment growth is one of the relevant indicators that we look at.

Overall, the regional economy has grown slower than the national one.

There was a...

Significant decline in number of jobs in the construction sector, significant decline in number of jobs in the information sector, and those two were weighing down on the growth that we have seen in education and health services and government sectors.

So what does all of that mean for the forecast?

Going forward, we expect the employment growth to be slow in 2025. That dark red line is the March pessimistic scenario that became the official forecast.

Just for comparison, the slightly Lighter red line shows the March baseline scenario.

Even there we were expecting very moderate, very modest employment growth.

We were expecting inflation to pick up in 2025 and then eventually gradually come down similar to the to the development of the inflation on the national level.

For the Employment grows, well, there's actually a decline in employment for 2025, again, as the impact of tariffs and the higher interest rates lead to less investment, less employment crows, that pessimistic scenario implies some job losses, but again, not the kind of job losses that we would see if this turns out to be a recession and if that April pessimistic scenario becomes the path that the economy is actually heading down.

So things can be potentially quite worse than what this forecast is presenting, and we'll come with the next update in August.

Turning to 2024 actuals, the actual revenues for the general fund When we exclude grants and transfers, the actuals are slightly higher than our October forecast, about 7.3 million or 0.5%.

That's a very bottom line.

In this table, those rows which are highlighted blue are the revenues that the Office of Economic and Revenue Forecast is responsible for.

The sales tax and business and occupation tax, two large economically driven revenues, came very close to our forecast.

The combined variance from the forecast for those two is about 1.6 million, so about a quarter of a percent variance only.

Sales tax came in slightly higher than expected due to some non-current revenues.

Business and occupation tax slightly lower than expected.

And again, not much of a difference combined.

For private utility taxes, Sean can provide some information on that.

Yeah, thank you, Jan.

For private utility taxes, compared to actuals and forecasts for last year were pretty accurate, say for natural gas and along with telephones.

For natural gas, it seems that there was a price increase right after the October forecast that wasn't properly accounted for.

Now it is.

Along with the telephone tax, we thought the tax base was actually weaker than initially thought.

But it turns out the payments that we thought were not there were actually coming in later and much larger than before expected.

So this is currently a new phenomenon but is now accounted for with our modeling.

And as a result, we have 40 million or variance.

Oh, sorry.

Small variance from forecast, but ultimately a pretty steady revenue for private utility taxes.

Then for the rows which are not highlighted blue, the Sydney Budget Office is overseeing the forecast for those, and Dave and his team can provide some additional information.

Sure, thank you.

So starting at the top, the property tax includes the Medic One levy, down about 3.9 million.

About two million of that is due to the Medic One levy.

The City of Seattle receives the rate times the City of Seattle's AV, but the rate is set based on King County AVs.

So when King County AVs increases, faster than the city's AV increases, you get a drop in the rate, and then we take that rate, multiply it by the city's AV, and we get the revenue.

So the relative levels of King County AV to city AV determines whether we see an increase or decrease relative to our forecast.

That's what happened here for about 2 million.

I think the next, public utilities?

For public utilities, the variance is pretty small.

It came in a little bit higher, about $2 million.

I think that's spread across all four of the utilities revenue streams, which is electric tax, sewage, water, and solid waste.

As for other city taxes, there's a rather high variance, mostly attributed to the fact that it's a fairly small revenue stream, but pretty much all of this variance can be tied to leasehold excise tax.

And simply that we, slightly changed the accrual method this year for leasehold excise, meaning that there were more revenues that came in in early 2025 that were accrued back to 2024 and tied to 2024 obligations.

And so we saw slightly higher revenues unexpected there.

I don't know that there's others that are of particular interest.

Just we wanted to explain grants though.

So for grants, so the very large expectation in grant revenue for 2024 of 67.9 million, most of that is grant carry forwards.

So when grants are accepted in the first year, they are fully appropriated, but a lot of grants are not spent down entirely in the first year.

They're spent across multiple years.

And so that appropriation is automatically carried forward um, year to year.

And so we assume a commensurate amount of revenue in order to, to balance those appropriations.

Um, however, or given that the under collection in revenue of 45 million, um, is mostly because spending has not occurred yet on a lot of those grants.

And so, um, revenue also has not been collected.

And so it's, um, just a matter of when we are gonna collect these revenues instead of if we're gonna collect these revenues, it's a timing issue.

And you'll see a large positive number reflected in 2025, capturing the carry forward from last year to this year as well.

Thanks.

Turning to non-general fund revenues, the table here summarizes the select other revenues.

Again, those rows highlighted blue are the ones that the Office of Economic and Revenue Forecast is responsible for.

The very top one, the payroll expense tax, is the one where the variance from the forecast is the largest.

There was about 46 million less collected for 2024 than we were expecting last year.

We have looked into the reasons for this variance, and we have built what we have learned from this into the forecast for 2025 and 2026, and we can certainly go more into details when we get to the forecast.

For the other ones, real estate excise tax came slightly higher than forecasted, admissions tax slightly lower.

Overall, those variances were in line with what we have seen in the past in general.

Now, the reason why we are looking at 2024 and spending more time looking back at what happened last year is that at this point in the year, there is very little revenue collected for the current year.

For 2025 revenue collection, we have only received one month's worth of sales tax revenue and one quarter's worth of rate we did not see any collection for business and occupation tax or payroll expense tax so the forecasts are primarily driven by the economic outlook and and the 2024 actuals um so now turning to the revenue forecast for 2025 and 2026 As I have mentioned before, we have recommended and the forecast council has adopted the pessimistic scenario forecast.

In that forecast, the revenue for general fund overall does not decline year over year in 25 or 2026. If you look at the very bottom row that summarizes total revenue, Excluding grants and transfers revenue is growing modestly about 1% in 25 about 2% in 2026 But it's a very modest growth and what's more relevant is that these revenue projections are have been revised down from What our forecast was back in October?

So the next two columns summarize those differences in 2025 and 26 revenues and the last column shows the overall change 25 plus 26 downward revision and in in total is about 50 million less revenues for these and next year for general fund as a whole The reasons are, again, lower economic outlook, driving main economically, main revenues which are dependent on the economic development.

Sales tax has been revised down by 9.3 million.

Business and occupation tax has been revised down by 10.4 million.

So that's about 20 out of the $50 million downward revision.

For private utility tax, Sean, again, can provide more information.

Yes.

Thank you, Jan.

As I mentioned earlier, we had some new information for both natural gas and telephone taxes.

This ultimately influenced the overall private utilities tax forecast.

from previous adopted budget by $4.6 million and $4.8 million in the out years, culminating to a 9.4 two-year difference total between this forecast and last forecast.

The rest of the private utility taxes continue to be accurate.

As a result, they were not much updated other than the new information that we have.

And overall, private utility taxes doesn't seem to be in any particular worried state.

Thank you, John.

Thanks.

And for the revenues that the city budget is overseeing, the largest difference is in grants.

Dave and his team can provide information on those.

Sure, there's a lot of red on this chart.

The essential thing is all the inputs that go into all these revenue streams are declining, right, for this forecast now with the pessimistic scenario.

In particular for property tax, this is almost entirely due to the Medic 1 levy.

We're up for a renewal of the Medic 1 levy voting this fall.

The rate proposed is 25 cents.

AV has been declining with the change in forecasts relative to the adopted.

And so the amount, 25 cents, times the lower AV yields less revenue to the tune of about $4.1 million.

Alex, would you like to say more about public utilities?

Sure.

For public utilities, this is just aligning with the worsening economic outlook and assuming less activity across all of the revenue streams.

Joe?

Sure.

I can speak to parking meters here.

We have revised that forecast downward based on essentially two factors, one being declining paid occupancy, which fell approximately 11% last year and continues to have some downward trend year to date in 2025. We've also seen a compounding effect of the rate changes that SDOT implements have moderated.

They used to be on net significant increases and now are sort of a mix, either neutral and the one that took effect in March actually was a net negative.

It was the first time we've seen that since the pandemic.

parking rates around the city went down about 3%.

So this is kind of reflecting both of those, obviously exaggerated by the pessimistic scenario, but those are the driving forces behind this downward revision for parking meters.

I can speak to court fines as well.

That is principally driven by a downward revision in the red light citations we are seeing.

Coming out of the pandemic, we are seeing quite a significant downward trend in citations issued for running red lights.

Those hit a peak in 2023 coming out of the pandemic, and in 2024 declined quite precipitously.

And so we are continuing to see that decline in 2025. And so that's what is being reflected in this revision here.

Great, thank you.

Licenses, permits, interest, income, and other, that's primarily due to interest income.

We're assuming a further drop in our cash pool balances that are attributable to the general fund.

Interest rates are expected to remain roughly where they are, about 3.6%, but we will have less cash to earn interest on.

I think the next one was service charges and reimbursements.

This reduction in service charges is actually not tied to the economic outlook.

It captures a really notable reduction in the internal service rates charged by SDHR, which was implemented last year, but unfortunately was not captured in the forecast.

And so it is being reflected here.

And those are the rates that SDHR charges other departments for their services.

And that was revised down.

And then going into grants, this again ties directly into what I talked about on the 2024 actual slide.

These appropriations are a lot of this, comprises grants that have not yet been spent down.

And so this appropriation has been carried forward from 2024. And again, we are assuming a one-to-one relationship between appropriation and revenue.

And this of course has to do really with the mechanics of how we handle grants and deal with them in the budget versus anything to do with revenue expectations.

Thanks.

Turning to the non-general fund revenues, the table here shows those selected other revenues.

The top one, the payroll expense tax, has been revised down the most significantly.

It has been revised down by about 81 million for 25, 86 million for 2026. So the combined revision is about 167 million.

The main reason here, and there's two of them.

The first one is the lower than expected revenue collection for 2024. That means we are going in to this year and the next one starting from a lower point.

And then the second factor is that turmoil in the financial market and the fact that the stock prices of main tech companies have declined and they are one of the important factors because of a large part of the compensation that's paid in the form of stock grants.

For REIT, the downward revision is the result of higher interest rate.

In the pessimistic scenario, admission tax has been revised down as a result of less tourism, wealth effect, which are those lower stock prices and lower wealth will essentially mean that people will be less inclined to travel, to spend money on recreation.

They'll cut on their discretionary spending, and so admissions tax revenue will suffer from those effects.

The last blue line, the transportation, Transportation-related sales tax revenue, the reason here is the same as for the regular and optional sales tax that goes into the general fund downward revision due to less economic activity, weaker outlook for the construction sector.

The other revenues not highlighted blue, again, those are the ones that the city budget office is overseeing.

Sure.

Going back up to the sweetened beverage tax, that's just assumptions about consumption, basically, and whether personal behavior will change in terms of the consumption of sweetened beverages, soft drinks, et cetera.

More people are coming into work, but they may be bringing their lunch instead, based on expectations for their family's income and so forth.

I think the next meaningful one is probably uh, maybe the commercial parking tax, unless you have questions, you can ask questions.

Uh, for commercial parking tax, um, some of this reduction is due to, um, a base effect.

And so, uh, in 2024 activity, um, the parking activity, uh, was, uh, lower than expected, especially in Q3 and Q4 of 2024. And so that, um, is affecting the later years as well.

The other part of it is, of course, again, a weakening economic outlook, the gross rates for 2025 and 2026 are a little bit lower.

And a lot of that has to do with the fact that leisure and hospitality exerts probably the most influence on commercial parking and that outlook has been revised down.

All right, so that's essentially it for the revenue forecast.

So overall download revision is about, when we combine the general fund and those non-general fund related revenues, the overall download revision is about 100 million for this year, about 141 million next year, so about 241 million for the two years combined.

So with that, we are happy to take any questions.

Thank you, Director Duras.

Thank you to the whole team.

Just noting that we spent about an extra 15 minutes already than planned.

I wanted that to occur especially because of how important this news is.

It's not what we wanted.

As you said, this was the first time that we've had a pessimistic scenario adopted since the 2020 recession.

Am I correct in understanding that the only time before that would have been the 2008 recession?

Is that correct?

Yeah, that's correct.

That has been the only other time.

And so these are, this is bad news and it's something that we need to take some time on.

I'm gonna bring us back, if you wanna go back to the beginning, we're just gonna tick through all of these slides one by one.

So council members, if you have questions on any of these slides, just raise your hand.

If we get to 11 a.m.

and we're still having conversation, I am gonna move us on to the next agenda item.

because we do need to have that briefed so that we can vote on it in the next committee.

So with that, Director Duras, if you want to tick back to slide two, this is just the general outline.

See if anyone has any questions.

If not, we can move on to the next.

Seeing as we have no questions here, we can move on to the next slide.

I'll just share with you my reflections even just since this last week is even this slide was created for last week's presentation.

It was based off of information that was coming out the week after April 2nd.

Even today, this slide feels out of date and that's what I want to share is that with things changing so rapidly, it is hard for us to know exactly and the slides about volatility demonstrate just that.

So this is one of the important reasons why we took the pessimistic outlook because the volatility is so high.

I will share some of those other comments for later.

Colleagues, any questions on this slide?

I see Council Member Rink.

Thank you, Chair Strauss.

And if I may say, welcome back.

Happy first day back.

Thank you for allowing me to join for today's really important discussion.

This question pertains to this slide, but also the following couple of slides relating to tariffs.

I'm wondering about how your discussions and if you're factoring in any information from our partners at the port about shipping volume coming in through the port and how that may be factoring into some of the projections here.

So the way how the forecasts are developed is, again, we take the national U.S. forecast for the national economy.

That itself is based on the assumptions for various policies.

It would take into account the impact of, potentially, the impact of tariffs.

Then, starting with that national...

you forecast for national economy.

We developed regional economic forecast where we are trying to factor in the relevant things for the region.

We are looking at the employment by industry.

We are looking at construction permits, for example, those sort of things.

And so to the extent that there are differences in the industry composition of regional economy versus the national one, and if one particular sector plays a much larger role in the regional economy than in the national one, then that regional forecast will reflect that particular sector will be hit by a particular shock.

So, yeah.

Thank you.

Thank you, Council Member Rink.

Council Member Kettle.

Thank you, Chair.

You know, one of the things looking at this, I've been following along, you know, the news, that comes out each day.

And I think part of this is how we reframe it.

And I think it's good for public discussion to say, basically, the president has levied essentially a minimum of 10 percent national sales tax on us, which is going to have a detrimental effect on our local economy, our regional economy, and our national economy.

You know, granted, he will say, you know, there's revenue coming in.

It's good for the deficit and the debt overall, but we should be framing this as a national sales tax, which will have impacts on our local economy.

And it's really not a question probably for you, but if you want to speak to that impact of having, you know, essentially what is a tax further, I appreciate it.

I just wanted to highlight that tariffs are, I understand them, but a lot of folks, they just see this, they see the oscillation, and it just gets confusing, but everybody understands what a sales tax is, and this is essentially a national sales tax.

Thanks, Chair.

Thank you, Council Member Kettle.

Director Duras, anything that you'd like to add there?

No, that's accurate.

Economists believe that these tariffs are essentially passed on to the consumers and the businesses, so they will be the ones facing the higher prices, and it's in some sense similar to a sales tax imposed on tariffs in particular.

Yeah, thank you.

And I have to say, we are a port economy here in the city of Seattle.

On slide 25 in the appendix to this, you'll see under the sales and use tax revenue by industry, trade accounts for one third of total revenue within the general fund for the sales and use tax of trade.

So that's a pretty significant reliance here.

And so if we were to undercut our ability to have port activities here, we could be really putting that one-third of all the sales and use tax revenue is from port activities.

We don't need to go there.

I've got questions for you later.

Let's just keep on moving on to slide five, the volatility.

I'll just ask you, what has changed since last week?

I know this was a slide, this was a chart that was created for last week's presentation.

Has that Has the economic policy uncertainty index EPU gone up?

Has that volatility index gone up, or are we starting to come back down?

The volatility has gone down slightly.

That 90-day pause helped to stabilize the situation, kind of postpone things, 90 days.

We'll see what happens then.

So it's not great.

It has not come down significantly there.

It's very hard to tell, but we are coming down that spike here.

We're coming down for 90 days, maybe.

Yeah, but the uncertainty and the volatility are still incredibly higher than what we are used to see.

Okay, thank you.

Colleagues, any questions on this slide?

I'm going to keep us moving on to the stock market.

I know this is a little hard to see.

I believe the April 11th dot is what looks to be halfway down the line, and that's because within one day it dropped so low and came back up and then dropped a little bit more.

Is that a correct understanding of this slide?

Yeah.

I was looking at it this morning.

It was somewhere around 53...

53.35 as of today, so slightly lower than the red dot.

It's about 13% down from a peak.

And when we're talking, and last year we had a pretty open and frank conversation about how reliant our jumpstart revenues are, the projections of that are on the stock market.

What are you seeing here?

Do you think that the stock market is gonna be stabilizing or is this another, we have to wait until we're past 90 days out from here?

So it's really hard to tell where the financial market might be heading.

The S&P global forecasts for the year as a whole, about 1.5% increase compared to the average in the previous year.

but that would essentially mean that the stock prices would not reach the peak.

Again, it would just, again, stabilize and move more sideways than reaching new record highs.

Understood.

Council Member Kettle, I see you have a hand.

Thank you, Chair Strauss.

I got a question.

And I note that there's no slide that says bond market.

And what's incredible with today's self-inflicted economic crisis is that often when there's economic crisis around the world or touching us, we are the safe haven and the bond market responds.

But in this case, it doesn't seem to be responding that way.

And it's creating problematic issues circumstances with the bond market which then have impact on and interest rates and the like can you speak to the the fact that we apparently no longer safe haven in an economic crisis and then um and how that impacts the bond market how that impacts interest rates would then impacts you know the housing market you know it you know everything um can you draw a line since there's no um slide on the bond market it's just the stock market

Sure, yeah, so that's a very good point.

The slides do not include anything on the bond market.

What we have seen in Last two weeks is turmoil, not just in the equity markets, but also the bond markets.

As you have said, usually when there is volatility in stock market, investors would go and try to buy more bonds that would increase the prices of bonds and lower the interest rates.

Prices of bonds and interest rates are inversely related to each other.

In this recent episode, What was particularly worrying is that there was a sale of not just in the stock market, but also in the bond market.

And there was also a sale of in dollars.

The value of dollar has declined as well.

So for bond markets in particular, again, that lower demand for U.S. government bond has lowered their price and has led to higher Long-term interest rates, and they are inversely related to each other, the price of a bond and the interest rate on the bond.

And so higher long-term interest rate will then imply less economic activity, less investment, less construction.

Those are the kind of things that pessimistic scenario also assumes to some degree.

Thank you.

Thank you, Council Member Kettle.

Colleagues, any other questions on this slide?

I'll ask one last.

Council Member Moore.

Thank you very much.

You just had a question.

Could you explain a little bit more the point about any persistent decline will have a direct impact on the payroll expense tax?

Can you explain why that is and kind of what that impact you anticipate being?

Sure.

This chart here shows only S&P 500 index, so stock market as a whole.

But if we were to look at the individual prices for main businesses that have large employment in the area, The story would be similar.

There have been significant decline in the stock price values for the companies that pay the payroll expense tax.

And again, what we have seen in the past is the strong link between the stock prices and the payroll expense tax revenues.

The link is coming from the fact that the companies that pay a large share of payroll expense tax pay part and a large part of the compensation to their employees in the form of restricted stock units or stock grants, which are essentially at the time when they vest their valued at the current stock price range.

and so essentially lower stock prices then lead to the overall lower values of compensation that these companies pay, which will then directly turn into less payroll expense tax revenues collected.

Thank you.

Thank you, Council Member Moore.

Vice Chair Rivera.

Thank you, Chair Strauss.

Jan, I'm wondering on this jumpstart piece also, if companies are not doing as well as you described with the stock market, does that also impact whether companies lay off employees, they shrink their footprint in order to compensate?

Do you see those things as well?

in response to?

Yeah, so the overall stock price volatility, the economic uncertainty that has been elevated, that just leads to declining business sentiment and there has been some surveys on that and it's in general the case that when there is more uncertainty The companies will be more cautious in investing.

They might pause some of the projects, delay hiring decisions.

If things go really bad and the economy goes into recessions, we'll see layoffs.

And there is no reason to believe why the main regional employers would be different in any way from the economy as a whole.

So that this is all part of this of the it's all fair game for this purposes of the forecast, meaning, you know, we we could see companies laying folks off and shrinking their footprints in cities, including Seattle.

The current forecast, we are not assuming major layoffs.

We are, again, not assuming a recession in this April pessimistic scenario.

It's just a very slow economy grows, not particularly dramatic changes one way or the other.

But there are, we have access now to the Washington State employment security data, that gives us access to data on compensation and employment in the region, so we can keep track of that.

Currently, the data runs through the end of 2024, so in summer, we'll have a first glimpse on what 2025 is shaping like, and we'll be paying close attention to that and factoring in any changes in employment in the region, and to the extent possible within the region itself as well.

including whether jobs moved to other cities within the state.

Right, and that's one of the things that we started to carefully look at.

Given the weak performance of payroll expense tax in 2024, we have tried to understand to what extent that has been driven by the employment changes in the city versus outside of a city in King County as a whole.

Do you have anything you can report on that?

now or as you're looking at that or is that something we'll get later so there's a couple of slides on payroll expense tax revenues 2020 for actuals versus a forecast in in the appendix its particular slides 28, which summarizes the forecast and actuals over the last couple of years.

In general, it's a very hard source of revenues to forecast.

There's only about 500 employers.

It's largely concentrated, heavily concentrated.

So top 10 account for about three quarters of the overall revenues.

In 2024, we, as I have said, We have over-forecasted revenues for payroll expense tax by 46 million, which is about 11.5%.

In relative terms, that forecast error is comparable to what we have seen in the past years, 17.3% forecast error year-based.

before, 9.5 in 2022. What's more worrying is that the actuals came close to that pessimistic forecast from October, about 1.2 million from the pessimistic scenario.

And it was not because the stock prices did not performed well as well as expected overall 2024 was a very strong year for stock prices and so that has led us to believe that it will be a very good year for payroll expense tax overall that has not material that gross has not materialized in fact the obligations for 2024 payroll expense tax revenues grow only 4.5 percent so The part of the growth that we have seen last year, that 11.3% growth is in part due to the fact that there were higher tax rates imposed on businesses last year.

Accounting for that, adjusting for that increase, it's only 4.5% increase in the tax base.

What we would try to do is compare the growth of that Seattle tax base for payroll expense tax revenues with the growth of the compensations, the total compensations paid by the companies in King County as a whole.

the chart here and i'm now coming back to that that question the chart here that blue line that that shows the year over year increases in the total compensation paid by the top 15 payroll expense tax taxpayers and so In 2020, 2021, compensations have grown significantly, 30%, 20%, essentially, as the stock prices have gone up in the pandemic early post pandemic period those compensations have grown again we have seen similar sort of thing in 2023 and we were expecting to see that that strong growth in 2024 and it did occur again for the compensations as a whole in King County what did not happen what the The thing that surprised us was the very low growth in actual PET revenues and that's what the red line is showing.

It's showing how fast the tax base for payroll expense tax is growing.

And you can see that significant gap in 2024 between what PET has grown at 11.5% overall and what the compensation in King County have grown in excess of 30%, close to 35% for top 15 taxpayers.

So that's the reason why we are looking at those changes in the employment numbers in city versus outside of the city.

Thank you, Jan.

So in essence, you're trying to account for it wasn't the stock market that made changes.

So you're looking at whether it was employees that got moved out of the city.

Am I getting that right?

Right.

Yeah.

So it did not occur that it was a stock market pointing in the other direction.

Yeah.

Thank you, Jan.

Thank you, Chair.

Thank you.

And, Jan, before we go back to where we were, if you could just tick back to slide 28, the one just before what you were, or two before you were talking about there.

Sorry, maybe?

28. The payroll expense tax actual baseline pessimistic.

This one, thank you.

Just understanding that you made a statement that we had a weaker 2024 than projection, and I think that it's not news we wanted to hear, but I also want to provide a little bit of stability here.

We have not even collected this tax for five years at this point.

Jan, correct me if I'm wrong.

Our first tax collection was in 2021. Is that correct?

That's correct.

That's $296 million in that table there.

That was the first year.

Yeah, so there has been only four years, correct.

And original projections for this tax revenue was $200 million.

And so we have exceeded that original projection, and it's only gone up year over year with a strong stock market, with an unknown risk.

working situation.

And what I mean by that is over the last number of years, work from home has been a very prevalent place to work from.

And what we're seeing is that people are coming back to work from home.

In the 2024 actuals versus forecasts, none of this took into account large employers requiring their employees to be in the office five days a week.

These are all known unknowns.

The information that we're seeing is just about last year.

We haven't taken into account what does actually coming into your office five days a week look like.

Is that going to hurt us?

Is that gonna help us?

These are known unknowns at this time.

But what we do know is that having a correction within the first five years of collecting any type of tax helps us predict with more accuracy the future.

because this was something that I was saying this last year of we've only seen this tax revenue go up and up and up with forecasts.

At some point there's a top.

I'd rather reach that sooner than later so that we know what we're working with moving forward.

Anything to share there, Jan?

I guess there wasn't a question, more of a long statement.

Yeah, that was a good overall summary.

Yes, it's very new text, very few things that we know about it, and we are trying to improve our forecast with each new piece of information that we have.

Like I said, the employment data from employment security department and The stock prices are the two significant inputs.

The third one is the one that you are referring to.

We are keeping track of the return to the office and the workplace presence by the employees that assert input into the forecast.

So we'll be closer looking at what's happening in 25 as there is that five day to the office return by Amazon.

Yep.

And David, I did bring, I was supposed to bring my lunch today and I forgot.

So we'll have a little bit more sales tax revenue in the buckets for today.

But moving, let's move back to slide six and hopefully be able to tick right on to the slide eight.

Unless I'm seeing any other questions, seeing none at this time.

Council Member Rink.

Amazing.

Thank you, Chair Strauss.

My question on this slide, just looking around towards the bottom of the slide around notable forecast risks, you note about federal, state, and local policies in here around job growth in Seattle.

And I'm wondering if you can speak to a little bit more about how you're also measuring decline as it relates to some of the recent changes or projected changes in federal workforce.

within Seattle in our region, as well as any losses in federally funded research grants and the positions that may be attached to those.

Sure.

So the March pessimistic scenario by S&P Global has already incorporated lower employment for federal government employees.

So similar with the regional economic forecast, we do have that employment by industry data and we can essentially model the regional pass for federal government employment based what the assumptions are at the federal level, at the national level, accounting for, again, differences in how important of a sector that particular federal government employment is.

So the regional forecast assumes some declines in federal employment.

And kind of building on that and more of a holistic question about our whole forecast, where, if anywhere within this forecast, are we taking into account some of the cuts in federal funding that are showing up across our city?

That's not going to be something that's explicitly modeled here.

It's, again, built in in terms of the changes in employment, the assumptions, how the employment for different industries might look like a year ahead, depending on some of the things that they are assuming for, let's say, how much funding there is for let's say, the healthcare-related research.

Certainly appreciate that.

And Chair, if you'll allow me, I think this is, for us, and with great respect to the work in preparing this forecast, for me, that feels like the missing piece.

This other missing piece is we're coming into budget deliberations for this year and trying to discern what could be coming our way in terms of the broader losses in federal funding and how that'll be impacting our region.

And so knowing that that'll be the part that we colleagues need to be figuring out in the months to come just to really understand further what's coming our way.

Thank you, Chair.

Thank you, Council Member Rink.

Council Member Kettle.

Thank you, Chair.

I just wanted to, similar to what Council Member Rink noted, the one-fifth bullet I can tell you at DOTA Lead there's many instances where it's quite clear that the federal employment in our city is dropping dramatically.

You can just look at GSA at the Jackson Building, never mind NOAA and the various other departments and agencies that are being impacted right now.

My question, though, is, you know, The conduct of international relations, foreign affairs by the administration, is having an impact related to immigration, related to tourists.

Basically, we're suffering from an international boycott, and I think this is real.

And I wanted to ask about Canada.

Obviously, you know, the talk about the 51st state, I don't think Greenland discussions are helpful either.

But I think we are seeing and will continue to see a major decline in Canadian visits, tourism, you know, when the Blue Jays come to town, you know, ferry trips, you know, Victoria, BC, all the above.

And essentially, we're under a boycott.

And I think this is also being impacted from Europe based on what's happened to German nationals, UK nationals and the like.

And so I'm concerned about the impact on the cruise ship estimates, too.

Can you speak to essentially the international boycott of America and specifically how it impacts us here, like using the Blue Jay, you know, the Canadian example or potential impacts on as we start up cruise ship season?

yep so the we do we were trying to see what sort of data they would be available for a number of visitors coming specifically from Canada to Seattle and data that's a little bit hard to obtain there aren't anything any data sources that would specifically keep track of that but what we can do is look at the overall amount of visitors in city of Seattle so again we have that data set that allows us to essentially keep track of Not just the presence at the workplace, but also the number of visitors coming to Seattle as a whole hard to tell where they are coming from but the overall number of visitors is certainly something that We are keeping track of just like downtown Seattle Association for example has a dashboard on that and so we have seen year over year declines in the number of visitors in the first couple of months in 2025 part of that is likely lower number of visitors coming from Canada that are already showing up in in those numbers so it's certainly a large risk then to things like admission tax revenues sales tax revenues then In addition to that food traffic data, we'll be closely keeping track of the reservations for hotels and the forecast for leisure and hospitality sector overall.

We're relying on some inputs from CoStar for that.

We're taking into account those risks and trying to update their forecast based on what they are seeing.

based on the kind of data they have access to that we are not, we don't have resources to directly incorporate ourselves, but we are indirectly incorporating them through things like hotel occupancy rates, the revenue per available room in hotels, that food traffic data, number of visitors to Seattle, things like that.

Thank you.

Thank you, Council Member Kettle.

Council Member Saka.

Thank you, Mr. Chair.

This is more of a flag for you, Mr. Chair, on timing.

So you noted that 11 a.m.

is when we're going to pivot to the next agenda item, which is something I would generally support.

I note that we are doing essentially a page turn right now of a 21-page slide deck, which At this point, if there's no flexibility in the 11 a.m.

agenda shift, it's not the most efficient thing.

I do have some questions pertaining to that don't fit neatly within any one particular slide or the other.

If to the extent they do, it's more some of the latter slide.

So I say all that to say, you know, if there's a more efficient way to do this or maybe I could just pivot momentarily to my questions.

Take it away.

Awesome.

Thank you.

So appreciate the presentation here.

Can you start by, again, my line of questions don't necessarily fit neatly within any one particular slide or the other, but I suppose slide 19 is a good sort of jump off point.

And thank you for some of the earlier clarifications about the declining grant revenues that basically ties to what was spent versus, which generally occurs over multiple years.

And also note that the declining revenues for red light cameras, I heard that was a factor.

And yesterday in my transportation committee meeting, we heard and discussed a proposal to expand in red light cameras, non-red light cameras, speed cameras, non-school speed zone cameras, speed school, all the above.

And council authorized during our budget last year to double the number of school zone cameras.

And then in partnership with budget chair Strauss, I also, and this council also allocated $1.18 million for non-school speed zone cameras So that's gonna represent a significant expansion in the program.

Under the current proposal, there's a split in revenue allocation scheme internally within the city.

And for like the general fund versus pure road safety projects, I'm not convinced that the proposed allocation is correct.

That's more of an aside.

And I wanna be crystal clear that the city that any revenues for these new cameras that would be deployed, there's no longer, under recent changes to state law, there's no longer a state revenue sharing portion where we're required and obligated to share a certain amount with the state.

We just want to be very crystal clear on that.

All that is to say, Seattle will be expanding our automated enforcement camera program.

And based off of the proposed legislation, what are the projected and anticipated new revenues that we could expect as a city based off the current proposal that allocates a specified amount towards a general fund and a specified amount towards road safety repairs.

And if you don't have the answer today, I understand that.

I do wanna follow up, would really appreciate that.

But if you have any initial remarks, on what the city's strategic rollout and expansion of our automated enforcement program would look like for the city's revenues?

Yeah, thank you for that question.

I think we need to get back to you on that with a more fulsome answer.

I think there's a question of what's in the forecast, what's not in the forecast of those proposed changes.

So we wanna make sure we get you the right information without just

going off here now that that's fair thank you would look forward to seeing that and again we are this council has authorized the doubling of school zone cameras so that's going to have an impact and also allocated 1.18 million dollars for non-school zone speed cameras have an impact so love to you know, learn more about the anticipated impact on that on our financials going forward.

So we'll stay tuned accordingly.

So on one of the earlier slides, like slide 16, you talked about the grants, forecasts and the action versus the actuals and that the variance and why and the spending is the underlying or in some cases lack thereof or or like spent over time.

What about future grants?

What are some of the assumptions that we're making with respect to future grants going forward?

It's no secret that our own city is, here we are, we're in a budget opportunity, huge budget deficit.

The county is not much better off, King County.

The state, same thing.

They're feverishly working hard right now to try and figure out how they're gonna solve budget challenges.

Federal government, to the extent there's any expansion of any spending, under criteria that I'm aware of, at least with respect to transportation policy, cities like Seattle and the state of Washington aren't gonna benefit from any federal revised guidelines and for future grants.

Putting aside the fact that on the transportation policy aspect, they're talking about clawing back and already promised, already committed funding.

So here we are in this limited resource environment across the board.

in terms of grants.

What kind of assumptions are we making?

So kind of look back at some of the grant already committed to, already allocated or whatever, but how about on a going forward basis?

What kind of assumptions are we making as a city for grant funding, leverage funding?

So as far as the forecast goes, we only include what departments and those working on those projects, applying, receiving, contracting, et cetera.

And Ben, maybe you can say more.

I don't know if you have more to say about this, but we only include those that are known.

If someone in a department says, well, I hope I can get a grant for this or that purpose, whether from the feds or the state or whatever, we wait for some sense of reality of a, you know, of an approval on the grant before we include it.

For what it's worth, my understanding is there's somewhat of a change in CBO policy about that, in part as a result of some dialogue with the council about at what stage should we be assuming that we have revenues.

Just to sort of get you started thinking about grants, though, in a particular way, or in my mind the right way with respect to the budget, we have balanced a budget for 2025 on an assumed level of grants.

And those grants are, in fact, used to pay for a variety of things, up to and including city salaries.

So we know that we can sustain what's in the budget, our existing workforce, on the assumption of the grants that we have.

To the extent that departments are actually able to go out and be more more entrepreneurial and bring in new grants.

They then come and ask for additional appropriation authority.

You're actually gonna hear about that with the next bill, as a matter of fact.

And that then expands the budget and potentially leads us to potentially hire new temporary employees to extend employees whose terms might otherwise be ending and the like.

But just to emphasize the point that an increase in grant revenue doesn't generally offset a loss in other revenues because that grant revenue is being given to us to do a very specific thing while the other revenues are available in programs.

So to answer your question, we've tried to be conservative in the assumption about grants in a budgeting context, knowing that we can add them later.

But one of the things that has been assumed, again, consistent with this revised policy, is that to the extent that there are predictable formulaic grants, so for instance, community development block grants, CDBG.

The city gets an allocation.

We've reliably gotten an allocation for years.

I don't know it specifically, but I think it's a fair assumption that there is built into the budget for 25 is an assumption about those revenues.

What we are seeing now is that all that past behavior is changing and whether or not those grants come through in the formulaic ways is literally in the moment TBD, right?

And to a degree being played out in courtrooms.

So that part is different.

And as we move forward over the next few months and thinking about what the August forecast looks like, I think we will start to learn a lot more about how to understand the flow of those federal dollars and how reliable they will be.

Thank you.

Next question pertains to World Cup.

So little early premature to start accurately forecasting the economic impact of World Cup in 2026. But this year, there's a road show to World Cup, if you will.

It's a World Cup light.

It is going to have an impact.

Query the impact, how profound that impact will be.

And that is the 2025. FIFA Club World Cup.

And so just curious to better hear your perspective on the impact that that is anticipated to have on our local economy and associated revenues, Club World Cup.

Yeah, so we started looking at that and Sean can.

Yes, thank you.

We here at OERF is excited for FIFA along with the club, Sean.

We've begun trying to collect information from other reports about what is the economic impact from FIFA shows, including revenues as well.

We've seen that the headline economic impact number for cities that are similar to Seattle is between $500 million to $700 million based on scheduling.

How that translates to both the city's regional economy and then also the impact on revenues, that's the part that we're still trying to understand now.

It's also important to note for council and the public as well that the direct emissions taxes for FIFA will be going to the county instead of the city as per a deal between Lumen Field and King County.

So all of the economic impact on tax revenues is going to be indirect, and that's the portion specifically that we are working on now, we're trying to understand.

We will learn more as the economy evolves as well, and we will update the tax revenue forecast on a case-by-case basis and when it is relevant and necessary, but still excited.

Thank you, and just for clarification, does that $500 to $700 million figure, I think you quoted, does that pertain to 26 FIFA World Cup, or is that 25 Club World Cup, which is what I was most interested in the near term?

I believe that is a combination of both.

It's close to what's FIFA estimates, and it's really dependent on what other cities are making their assumptions on.

For Seattle specifically, we'll have to look closer.

Every whole city is really unique in their structure and what's FIFA on part of it.

For Seattle, we have to really take time to compare.

But we'll make sure to reflect both for the World Cup and then this current year as well.

Thank you.

That would be very helpful.

And I would add that the Club World Cup, we might see some data that will be useful for the August forecast, right?

Those are June matches.

So there's just three though, right?

And so it's smaller than the FIFA games when they get here in 2026. But they will be, these are major clubs coming, and so we'll see what kind of draw that has on tourism, on sales, you know, what people buy.

There won't be all the hoopla.

that's going to come with the World Cup in 2026. So some of those ancillary revenues probably won't show up for the Club World Cup games.

A couple additional observations.

As an Inter Milan fan, I would know there are a good number of tickets available for the Club World Cup.

I'm not advertising.

You asked the question about impact.

It would be bigger if there were more tickets sold.

The other thing, and I think this is a really important point, that all of these numbers you hear about $500 million, $800 million, $900 million of impact, almost all of them are quoted as the total impact, not the net impact.

I think it's important to recognize that the Occupancy in Seattle hotels in the summer with or without the World Cup is 99% or close to it.

So how much more, I'm not suggesting for a moment that we're not gonna get more out of this.

I think we'll see more international travelers.

I think we'll see folks with fatter wallets spending more money and the like.

But those numbers are gross.

They are not net of what otherwise would be going on.

So we're gonna see less of a bump than you might otherwise imagine because we're plenty busy in the summer all the time.

And that's a good thing, again.

I see those numbers as an economist, they bother me a little bit because they're usually quoted out of that important context.

Thank you.

And final question.

Thank you, Mr. Chair.

Pertaining to tourism, so we talked about high levels, some drivers of tourism and and Council Member Kettle, for example, talked about what is essentially amounts to an economic boycott by the part of some countries impacted by the counterproductive discussion at the federal level By the way, as an aside, Councilmember Kettle, I can absolutely assure you that the Canadians will show up in force en masse for the Blue Jays game and turn those Blue Jays versus Mariners games into effectively home games for the Toronto Blue Jays.

I can't guarantee anything else or assure, you know, we say with any higher confidence that they'll show up in other areas, but that is almost certain.

But talking about other tourism drivers, This is, I note that my understanding is this season, this cruise season that just kicked off last week or two weeks ago is anticipated, the port anticipates this to be the busiest cruise season ever in Seattle history by two or three sailings or something like that.

And who knows what next year looks like, but hopefully more success to build upon on the tourism sector with respect to the cruise industry next year.

What other kind of signature marquee events or opportunities could help drive tourism here in Seattle, all the tomfoolery outside of Seattle notwithstanding?

And I say that because getting people here in the city and booking hotels, is a necessary condition, getting these seats sold and these tickets sold is a necessary condition, not a sufficient condition to help generate revenue and we need to get them to spend, buy things.

And so just curious to better understand some of the other kind of broader macro tourism drivers here for the city.

So when it comes to that record-breaking cruise season, that was, again, the prediction that was made more than two weeks ago before the recent turmoil in the financial markets, before all the potential impacts on cancellation that the Canadian citizen might consider.

There are, in general, I would say a lot of downside risk to the tourism because of the wealth effects.

Again, if people see their savings shrink, if they are worried about future, they're probably less likely to book a cruise ship.

vacation, they are less likely to travel.

They might reconsider their plans.

And so we'll have possibly more clarity how the season, how the cruise ship season looks like in the next three months.

But again, I would be more worried about the downside here, given all that has transpired in the last months.

Thank you.

No further questions, Mr. Chair.

Thank you, Council Member Saka.

Seeing as we're now at 1103, I did see a couple other hands.

Excuse me.

So we'll, Council Member Rivera, I'll give you about five minutes, and then I see, I saw Council Member Rink wanted to make a closing statement.

So you'll have a little less, each little less than five minutes, and then we'll jump right into our grant acceptance.

Council Member Rivera.

Thank you, Chair.

I just wanted to, if I may, try to level set.

You know, the Forecast Office is not going to be giving us an accounting on our federal funding that we're losing.

That's not what they do, obviously.

It is implied the actions that, you know, the federal actions are having an impact on the stock market, obviously.

That's what...

Jan and his team are talking about here.

And we also know that city actions, our actions are also impacting revenues.

I do want to say, excuse me, Director Noble, I did talk to your team.

I communicated with your team about CBO's responsibility is to track the federal impacts and to let us know what those federal impacts are.

And my understanding, Director Noble, from your team is that there right now are no changes to the grant revenue and expenditure and that So in other words, the federal grants we've been awarded are being drawn down and they're they're being paid on time by the feds.

As of now, we don't know what's going to happen in the future.

But I just it was important, I think I was important to me to know that information.

So I'm sharing it with you all colleagues.

And I also wanted to make sure that You know, Chair, you might be in future having a different panel to talk about some of this information, but also to level set that the forecast office isn't going to tell us about, you know, how much funding we're losing from the feds and where.

But that more the conversation is the impact that the federal actions are having overall on the economy is obviously impacting our revenue forecast as well.

So thank you for letting me make that comment.

I thought it was an important one.

Very well said, Vice Chair.

That's why you have the position.

We think alike there.

And Council Member Saka, the only response I have to anything that you said today is that while red light camera revenue is down, that's good for the city.

It's bad for the budget.

That's about it.

If we could go to slide 21, I'll pass the floor over to Council Member Rink and then I'll have just a few closing statements.

So after Council Member Rink, Director Duras, if you've got anything, we'll close it out there.

So Council Member Rink.

Thank you, Chair Strauss, and thank you to the entire team that came before us today to present on this.

It is greatly appreciated, and thank you for fielding all of our questions as it has become very clear we're grappling with a major challenge facing this city.

And as was stated today, the news that we've received in this most recent forecast is not great, but as we've adopted the pessimistic scenario in anticipation that our upcoming forecast will likely be worse.

And in recognition of that, I think it's important to be very clear to the public and be clear with ourselves that we are heading into an incoming emergency as a city.

We know that the state is continuing to grapple with budget challenges.

The county is grappling with budget challenges.

And as was stated, there's a lot of uncertainty about what kind of federal cuts our region will continue to see.

There's a tremendous amount of uncertainty right now.

And even with the indicators today, it's not looking great.

And to that end, we as a body are going to be responsible for crafting a budget in what might be the worst economic storm in our lifetime.

And we will need to be working with our partners, coordinating with King County, examining all of our available local funding sources, because these partnerships will be essential as we face shared regional challenges that are transcending our city boundaries.

But we also need to be honest that tightening the belt and coordinating with our regional partners isn't going to close a gap this big.

And that seems to be growing.

In my opinion, we can't balance our budget on the backs of working families or cutting essential services or laying off dedicated servants who make our city function.

And so looking forward, looking at our options for being able to raise progressive revenue and raise revenue to protect our investments.

in critical city services so we can really have a continuation of our city services and deliver on that for the public will be important.

And with that chair, thank you for allowing me to provide those comments.

Thank you very much, Council Member Rink.

Council Member Duras, I'll just share my final set of comments and I'll give you the last word today.

For me, I always like to share, colleagues, things that are different this year than in past years.

How are we changing the practices here at City Council?

One of the things that is different is that we have invited the Forecast Office and the City Budget Office folks that are working on the forecast to this committee.

In the past, before I was chair, that did not necessarily happen.

And so this is a way for us to engage, especially with turmoil occurring into the understanding of the economic situation.

We were focused today mostly on the national.

When we were looking at the S&P 500, that was a national economic situation.

When we look here in the city of Seattle, our economy here in the city of Seattle has been stagnating for about four years.

And so that's something that we can get into in a future discussion.

But I just highlight that because while the national, we were looking at these national data trends here locally across the board, we've been stagnating and that's, I didn't want to get into asking what is the definition of recession?

What is the definition of recession locally versus nationally?

I just need us to all be very aware that again, this is another time where we have had a downturn in the revenue forecast.

Council Member Sockeye, I see a hand popping up and down.

Thank you, my friend.

I will say in closing, we have another forecast in August before the mayor's budget proposal.

We have another forecast in October before the final city budget action.

Pestimistic scenarios to the best of their ability will set us up to succeed if the economy improves and set us as well prepared as possible for a downturn should it occur.

However, none of these scenarios take into an account a recession.

And so if we do move into a recession, that is a different position than we are today, even in a pessimistic scenario.

Looking at this slide before us, we've got $240 million to plug for this fall.

We're gonna have to look at what's scalable.

We're gonna have to look at what cost savings did we achieve by not spending money unnecessarily.

The mayor in the last seven business days, seven days period has already put forward different advisements to departments to start this work and finally what will the economy and future forecasts hold for us when we look at these forecasts should the stock market become a bear market or a bull market excuse me if we become a bull market we're gonna be in a very different position if we see real estate transactions occurring at a greater rate, that'll be putting us in a different position.

If we are seeing sales tax come in because we all forgot our lunch too many times this week, these are all variables that will play out.

What is occurring right now in this moment on April 16th, 2025 is that there is so much volatility.

from even three weeks ago to last week to today that we don't, many of the questions were answered today of, well, we will have to see in 90 days.

So I think we are in a period, an eye of the storm.

The sea is calm today.

We just went through rough seas and we'll have more rough seas in a few weeks.

But I just put that all into context that we need to be very careful as we move forward.

I believe we will be prepared for that.

and we just have to see how things shake out.

With that, Director Durst, I'm going to give you and your team the last word.

Sorry we didn't get into the parking questions, but I'm sure we'll meet later about that.

Thank you, Chair Strauss.

So we are going to work our best to support your work in any way we can.

In addition to working on those forecasts, our office is always available to work on any requests that are related either to making sense of a data or conducting some some studies and that's something that we can allocate more time to in between these forecasts wonderful thank you team very much I'm gonna switch up into the next presentation pretty rapidly because we have got just a few minutes before the 1130

completion of this committee.

So we will now move on to the second item of business.

Clerk, will you read the short title?

You don't have to read every word, the short title into the record.

An ordinance relating to the acceptance of funding from non-city sources authorizing the heads of various departments to accept and authorize the expenditure for specific grants, private funding, and subsidized loans, and to execute, deliver, and perform corresponding agreements.

This item is for briefing discussion and Ed and Sisic of Council Central Staff will be presenting.

Okay, and I'm seeing that Council Member Rivera is leaving the committee, which means that we will lose quorum if Council Member Kettle, Sokka, or myself leave.

So just giving you all that warning.

Thank you for that.

Thank you for staying with us through the majority of this committee meeting today, Vice Chair.

As Eden is pulling this up, I will share just a few.

Council Member Rivera, you got something?

No, thank you chair.

Sorry about having to leave a few minutes early.

Okay.

Thank you.

Just as Eden is pulling this up, I'll use my final comments now.

Councilmember Kettle and I share Magnolia.

We also share love for grunge music and the band Temple of the Dog.

Today, Temple of the Dog, the album, was released in 1991. I'm not going to do the math here to say how many years, just to say some things never go stale.

With that, over to you, Eden.

I see you're ready to provide us this presentation.

Good morning, council members.

My name is Eden Sissich with council central staff.

Well, unlike the grim news you've heard, I've got some good news with us receiving some funding.

So let's get right into it.

And due to the time constraints, I am going to have Eden take us through this entire presentation.

We can come back page by page to see how far we can go.

And if you've got more questions between now and the next meeting.

But remind me, Eden, will you be with us at the next meeting?

I believe that you will be on well-deserved leave.

Yes, I will be on paternity leave.

So Tom will be presenting the second version of this.

Fantastic, congratulations to you.

Most likely.

And I keep extending it, but yes.

Good, good.

Thank you.

All right, so I'll be, we'll get out on time with this.

This won't take long.

So Council Bill 120970 is the first comprehensive grant bill that was submitted by the executive in 2025. And then we can expect two more of these coming in this year as was established by the fiscal transparency ordinance.

And so this bill authorizes city departments to accept a total of $47 million and appropriate $34 million in external funding sources.

And if you're wondering why these numbers are different, it's because some projects, especially capital projects and grants, span multiple years.

So while, for budgeting purposes, while the department wants to accept the full amount, they only appropriate what they need so that the expenditures equal the revenues.

And so of the total amounts, of the total acceptance amounts, over half of it is funding for transportation-related capital projects within SDOT.

This includes $23.2 million from the Federal Highway Administration.

for a number of projects.

And so that includes $8.2 million for future South Lake Union light rail station and transit corridor construction, $5.5 million for Westlake light rail stations, non-motorized access improvements, $5.8 million for traffic signals and Vision Zero related work.

and 3.8 million for Graham Street Station and new bus stop amenities due to the light rail stop that was added there.

So in addition to CIP-related grants, there's also $14.8 million of operating grants.

This includes three separate grants totaling $2.7 million from the Department of Justice to Seattle Police Department, This funding would address the sexual assault case backlog, allow for the continuance of the human trafficking task force, and deploy a citywide intelligent risk management system, which leverages natural language processing and advanced statistical models to classify call severity in real time.

This does come with an FTE, so it's a temporary position.

As long as the funding remains, this position will expire unless new funding is secured.

I also highlighted a few more of these grants in the memo that's attached to the agenda, and then all of the grants are described in summary attachment A.

And some of the grants do require a grant match.

And the last column on the table in the memo provides that information.

It's a total of $3.5 million, and it's primarily tied to the SDOT projects.

And.

So if the committee votes to make a recommendation on Council Bill 120970 at the May 7th meeting, the legislation will be considered for final action at the full City Council meeting on May 13th.

And if there are any amendments, those amendment requests are due by April 30th to Tom Micasol, and you can include me as well.

Please.

Very good.

Yeah.

Thank you.

That's it.

Colleagues, do you have questions on this?

And maybe we'll tick back to that first slide where you provide some of the summary.

Councilmember Sacke, I know a lot of this is SDOT and a lot of this is work within the SDOT budget.

Any thoughts, questions?

I mean, it's all very straightforward to me as I'm looking through attachment A here that lists each of these grants one by one, but anything here, colleagues?

All right, let's move on to the next slide just to double check, see if there's any questions here.

I see Council Member Rank.

Council Member Rank.

Just a very minor question.

This final bullet point on energy efficiency improvements, is this from the LIHEAP program?

It's from Puget Sound Energy.

Understood.

Thank you.

Thank you, Chair.

Thank you.

Wonderful.

Well, we will have this back before us in the next committee.

So if you have questions about any of these grants, the accepting of them that this first quarter or the appropriations, just let Tom Mikesell know because we're going to give Edna a big congratulations.

We'll see you in a couple months before budget comes back and looking forward that you can take this time with your new family member.

Thank you.

Appreciate it.

Colleagues.

I'll be back.

Good, we rely on you so much here.

Colleagues, is there any other further business to come before this grant acceptance and appropriation?

Council Member Sokka.

Thank you, Mr. Chair.

No, I just want to thank you for all you do and Enjoy your well-earned paternity leave.

We have a very generous policy here in the city for a reason.

Take it.

Don't delay it anymore.

You'll never get back that time.

And as a proud parent of three young kids, I took every last bit of my paternity leave time.

And when I try to split it up and split it out for the benefit of my employer, it's time you'll never get back.

go enjoy.

I promise you the world will keep on spinning despite your hard contributions being missed here.

So we'll figure it out.

Congratulations.

Enjoy.

Enjoy.

Thank you.

Well said.

Councilmember Kettle.

Thank you, Chair.

Just two things really quick.

I just wanted to thank Mr. Susie for the central staff memo on the topic.

And it's really helpful to see the breakout and like with my public safety hat on, see those like with OEM and SPD and the like.

And it's a great snapshot.

So I really appreciate the insight.

and as a and just to close as a father of a elementary school-aged daughter i echo all your points and and also wish a best of luck and congratulations to you eden

Wonderful.

Very well said.

Well, if there's no further business to come before this committee, this concludes the April 16th, 2025 Finance Native Communities and Tribal Governments Committee.

Our next Finance Native Communities and Tribal Governments Committee is Wednesday, May 7th, 2025. Is there any further business to come before we adjourn the meeting?

Hearing no further business to come before the committee, we are adjourned.

Thank you.