Seattle City Council Budget Committee Session II 11/10/20

started again.

This is the Select Budget Committee meeting.

Today is November 10th, 2020. The time is 2.02 p.m.

I'm Teresa Mosqueda, Chair of the Select Budget Committee.

Can the clerk please call the roll?

Morris.

Here.

Lewis.

Present.

Morales.

Here.

Peterson.

Here.

Sawant.

Here.

Strauss.

Present.

Gonzalez.

Here.

Herbold.

Here.

Chair Mosqueda.

9 present.

You're on mute, Chair Mosqueda.

Thank you, Madam Vice Chair.

I appreciate it.

We are all here.

We are back.

This is the reconvened Select Budget Committee meeting, and we are going to continue with items on our agenda.

We were getting to the housed items.

We are on 3B.

For folks following along in the agenda, we are on page 17, item 82, and the corresponding Slide for our presentation is slide number 20. Turn it back over to Allie, and thank you again, our team from Central Staff.

Thank you, Chair Mosqueda.

I hope you all enjoyed lunch.

We are now on items 82 through 86 in the Homeless Prevention, oh, excuse me. and shelter category that includes about $5.6 million of proposed investments.

The first item, item 82, would add $2.8 million to the human services department to expand tiny home villages.

This is sponsored by council member Sawant.

Item 83 would add $1.4 million to the Human Services Department, also for Tiny Home Village in a temporary location, sponsored by Council Member Peterson.

Item 84 would add $655,000 to Human Services Department to support 24-hour operations at basic shelters, sponsored by Council Member Sawant.

Item 85, add $750,000 to Human Services Department to increase funding to maintain rapid rehousing caseloads and imposes a proviso on those funds, sponsored by Councilmember Herbold.

And the final item in this category is item 86. This would impose a proviso to restrict $400,000 in funds for homeless prevention services, specifically for families with school-age children and imposes a proviso.

And this is sponsored by Council President Gonzalez.

Thank you very much, Allie.

Council Colleagues, are there any comments or pieces you would like to lift up in this category here?

Shelter and Prevention 3B.

Councilmember Herbold, please go ahead.

I just have a question because I was so excited about it when it was proposed and had no idea that there was a move afoot to close City Hall shelter.

What is the status of that?

Is that included in one of these?

Thank you, Councilmember Herbold.

The short answer to your question is that item is not included here, but Jeff is on the line to provide us with additional information about what is still allowed and going to be funded at City Hall.

It's a little bit of a halfway there policy answer to the form that was proposed.

So, Jeff, please take it away.

And if I mischaracterize that, I'm happy to be corrected.

No, you had it exactly right, Madam Chair.

The Salvation Army currently operates the City Hall shelters, and the intention is that they will be moving their operations to a location in Soto.

I actually might even have the move underway at this point.

And then by moving that, all of those beds will become enhanced shelter beds rather than basic just overnight mats.

And so that's where the current provider would be moving to as well as maintaining those beds.

And then the location that is currently utilized will be used as a storm shelter or a surge shelter.

You'll recall that for the past couple of years, as we've had extreme weather situations or smoke recently, there's been expansions in places like Fisher Pavilion.

The plan is to utilize the city hall space for those purposes over the next year and not continue utilizing it as a overnight only basic floor, basic shelter, mats on the floor kind of location.

Thank you, I appreciate that understanding.

An explanation I.

We have a 20 year history of providing a shelter at this location and not just for.

for winter response.

So I just want to signal my interest in maybe next year with funds as they might become available to encourage the executive to continue contracting with the provider for this, what I think is an important service.

I think there is still a role for this in our continuum of emergency services funding.

In case there was ever the need to do emergency shelter Jeff mentioned.

And again, just confirming we are maintaining additional janitorial support in case the city hall structure is needed to be used for emergency shelters of any kind, but.

I agree with you.

We should be offering shelter in this place.

It should be additive to whatever is offered in Soto, especially since space is so limited in downtown Seattle, and we have quite a lot of space in that building right now, both in the main floor and downstairs where the shelter used to be.

Given the ongoing need, I think it's important for us to continue that commitment.

Given COVID, I think the question is, how do we also make it so that it is a safe place to be, but the commitment to making sure that it's a shelter in future years, I absolutely agree with you and look forward to working with you on that.

Any other items folks would like to lift up in this section here?

Okay, again, thank you so much, colleagues, for all of your work.

Three tiny house villages, not just proviso, but fully funded in this effort, one specifically in, Council Member Peterson, thank you very much for your support in the U District area, and also two additional around the city.

This is, correct me if I'm wrong, Central Staff, about twice the amount of investments that we made from the tiny house villages last year.

And I see Council Member Morales.

Council Member Morales, please go ahead.

Yes, thank you.

I just wanted to express my deep appreciation for having this.

It would be great if we could have more access to tiny home villages and to other shelters, but I actually just got a notice from that an outreach worker in the Georgetown neighborhood was just engaging with somebody who was living in their car.

And basically what she says is that SPD watched her engage and then came in and made the person get out of their car and then impounded the car.

So we will obviously be following up on this to see what's going on, but she can't find a place for this individual to go now and is now looking for a tent to help this person pitch somewhere because their car has been removed, has been taken from them.

I think, you know, especially as we are entering a cold, wet winter, We need to be really deliberate about how we provide better services for our houseless neighbors and that we are tracking very carefully what kind of engagement and contact is happening with our homeless neighbors so that their rights are protected as well.

So I just wanted to share that I literally just got noticed that this is happening in Georgetown right now.

Thank you, Council Member Morales for flagging that not acceptable.

So I appreciate you following up on that.

Okay.

I think we can go ahead and move on.

Folks, these investments, the combination of this investment is part of how we ensure that people are on the path to greater stability and making sure that they have the housing or shelter that they need in order to weather this COVID crisis.

But we also have to have an output out of shelters and temporary housing, and that gets us into our next category.

The next category items 87 through 92 on the agenda that include about $1.1 million of investments related to renter protections.

This includes item 87 that would add $34,000 to fully fund a landlord liaison program and imposes a proviso sponsored by Council Member Herbold.

Item 88, that adds $99,000 to the Seattle Department of Construction and Inspection for tenant outreach and property owner and tenant assistance group staffing, sponsored by Council Member Strauss.

Item 89, that would add $500,000 of general fund to SDCI for tenant outreach, education, organizing, and other services, sponsored by Council Member Strauss.

Item 90, that is a statement of legislative intent requesting a report from SDCI on transferable rental histories, sponsored by Council Member Sawant.

Item 91, that is also a statement of legislative intent requesting a report from SDCI on standard residential lease terms, sponsored by Council Member Sawant.

And then the final item in this category, item 92, adds $460,000 to SDCI for eviction legal defense services.

Sponsored by Council Member Swatt.

These are huge investments.

Thank you all for all of your work on this.

Does anybody want to speak to any item in this category?

Okay, I will.

note that I believe in the eviction defense legal assistance, we are doubling the investment that we made previous because we recognize as one of the speakers noted in public comment.

the potential cliff that is coming for renters when eviction prevention moratoriums, if they go away, is going to be massive, especially if the unemployment rates stay as high as they are and if those renters have a backlog of rent that they are not able to pay.

So I want to ensure that the folks that are renting have support and we've doubled what is essentially the program.

Okay, Council Member Hurdle, please go ahead.

I just want to say I really appreciate the support for the Landlord Liaison Program.

It's a small but important investment.

And this program is just incredible, the number of private landlords that they're working with and the number of households that they've been able to house, keep them stably housed with very, very few evictions.

And even though I'm not the prime sponsor for the eviction outreach, education and organizing, I really want to thank, I don't have it in front of me right now, but I believe it was Council Member Sawant that is the lead on this.

I really appreciate her championing this, as we saw in a recent article, I think maybe today or yesterday from Publicola.

there are evictions happening now despite the city and state moratorium on evictions.

And making sure that tenants know their rights is really key to avoiding these evictions because they don't always happen in court.

Sometimes they just happen because a landlord is telling a tenant that they have to go when they don't.

Thank you very much, Councilmember Herbold.

Okay, I'm seeing no additional comments or questions on this.

I think we can go ahead and move on to the next category.

The next category is items 93 through 100 on the agenda that includes $2.2 million to support housing development and policy efforts related to housing production.

The first item in this category is item 93 on the agenda.

This would add $200,000 to the Office of Housing to fund the Home and Hope Program, and that is sponsored by Council Member Lewis.

Item 94 would add $1.7 million to Office of Housing for property acquisition and feasibility study for the Aurora Commons redevelopment project, sponsored by Councilmember Juarez.

Item 95 would add $200,000 to the Office of Housing for the Home for Good program, sponsored by Council President Gonzalez.

Item 96 adds $100,000 to the office of housing for pre-development costs for property in the central area.

And this also includes affirming the council's intent to increase OH's authority to lend for acquisition costs or to provide funding for acquisition costs if it is necessary.

So updating the city's, policies related to the OH services and programs if it is needed in order to support this project.

This is sponsored by Council Member Sawant.

Item 97 would impose a proviso on $30,000 in the Office of Planning and Community Development's budget for the Comprehensive Plan Environmental Impact Statement.

Item 98, excuse me, sponsored by Chair Mosqueda.

Item 98 is also imposing a proviso on $100,000 in OPCD's budget for a comprehensive plan outreach and engagement in 2021, also sponsored by Chair Mosqueda.

Item 99 is a statement of legislative intent requesting a report from the Department of Construction and Inspections on permit processing times.

And the final item is item 100. which is a statement of legislative intent requesting a report from SDCI and the office of housing on the mandatory housing affordability program production sponsored by council member Peterson.

And the previous slide, item 99 is sponsored by council member Strauss.

I think I failed to say that.

Thank you very much, Ali.

Thank you all for your work on these efforts here.

Any additional comments or questions?

Concerns?

Okay.

Again, thanks very much to all of you, and especially the questions that we were asking about the development efforts.

I know the council members who sponsored these are not speaking up, so let me just chime in here very quickly on these first two bullets.

These are, I just don't want to underscore the importance of these.

I'm going to use the word historic.

These historic investments in the Africatown, Key Role Place, we are very appreciative of the Office of Housing and the executives.

comments and research that they are able to fully fund the efforts to make sure that QIRO is funded.

I'm sorry, I mentioned the wrong bullet in my discussion, but that's one that I really want to lift up from our discussions today.

This is in previous section.

This is going to allow for folks to have a stable place to stay housed and basically we're funding a pre-development cost.

That in combination with the second bullet here making sure that the Aurora Commons redevelopment project goes forward.

Thanks again Council Member Juarez.

You've been a long-standing champion on this and I appreciate that this is a part of a much bigger effort to secure the property.

and the concept is for housing, if it can't be included with housing, I think that there's a lot of other opportunities there for community space and making sure that we're reclaiming areas for our vulnerable community who's often been left out.

So thanks for all of the work that you have done, council members, to support those two, which cross over to the previous section as well.

But those two large investments are going to be very important from north to south.

Anything else?

Okay, let's keep going.

Okay.

This is the, uh, penultimate category.

Um, and this includes investments, uh, or excuse me, proposals in the balancing package that are freeing up resources to, to fund all of the new spending, um, in, in the balancing package.

And so I'll just note here that these are standalone actions necessary to support the proposed spending, but other actions included, you know, cuts within the proposal and then spent that money.

For example, some of the proposals related to the Seattle Police Department, where it was reducing appropriation in the police department to increase funding for participatory budgeting.

These are just the remaining items to support the balancing package.

So the first, and so this is items 101 through 108 on the agenda.

The first item is item 101, which it recommends amending and passing Council Bill 119910. This is the third quarter 2020 supplemental appropriations ordinance revising the 2020 budget.

I'm going to spend a little bit more time on this one than the other proposals because amending the third quarter supplemental, there's a number of proposals included here to provide resources or to ensure that money that won't be spent in 2020 is carried forward into the 2021 budget.

And because they're not each individual actions, I just want to describe in a little bit more detail what is included.

So, Patty, if you could for a moment go to the next slide.

The, so this is CBA BLG002B001.

And these are just a series of amendments to the third quarter supplemental bill that includes a number of technical corrections.

But I also just want to highlight a few additional more substantive changes proposed.

It is cutting $1.4 million originally appropriated to fund the community health engagement location.

And this is used to fund three items that we spoke to previously.

That includes 1.12 million for health services for drug users, 200,000 for harm reduction programs, and 80,000 for commercial sexual exploitation services.

It also cuts $500,000 for the mayor's community safety work group.

The balancing package includes funding to support the work group through the equitable communities initiative, similar to how the public participatory budgeting process is supported.

It cuts $1.7 million from the Seattle Police Department's 2020 salary savings due to greater than expected 2020 attrition.

And that's used in 2021 to support the participatory budgeting program.

Next slide, please.

It cuts $10 million from HSD and then adds it back in 2021. This is for the community-led public safety investments that was described earlier.

It also swaps $6.3 million between the Transportation Fund and the REIT-2 Capital Fund to address the, this is one of the strategies to address the anticipated 2020 commercial parking tax shortfall, as well as swapping $3 million between the Revenue Stabilization Fund and General Fund.

to support the ledge department's investments, to support the participatory budgeting and community-led research work, but is using general fund instead of the revenue stabilization fund to maintain at least a $6 million balance in that fund.

And then it adds about $1 million to address the anticipated revenue shortfall for the short-term rental fund that supports the city's equitable development initiative.

So I just wanted to highlight those actions within that one budget amendment.

So if you could go back two slides, Patty, thank you.

So the next item on the agenda, item 102, this eliminates the funding for the census strategic advisor position in the Department of Neighborhoods.

Item 103, which cuts $500,000 of sweetened beverage tax from the Department of Neighborhoods that the chair spoke to previously.

Item 104, that recognizes the city budget office's November 2020 forecast update.

Item 105, that cuts $2 million from the human services department for a joint community safety interdepartmental team.

recommendations.

This was included in the budget somewhat in error.

It was part of the potential replacement bill before the council acted on the 2020 budget revision ordinance and overturned the veto.

And so this is being used to fund other council priorities.

Item 106, which cuts $164,000 from the Office of Economic Development for the funding for the Creative Industry Policy Advisor position.

Item 107, that imposes a proviso on $200,000 of general fund in the police department for 2020 recruit signing bonuses.

This funding was cut in the budget revision ordinance adopted this this fall when you voted to overturn the veto.

That funding is needed to pay the second half of recruit signing bonuses for offices who are already hired.

However, instead of adding money back, it is imposing a proviso on 2021 funds to ensure there's funding for that purpose.

And then the final item would cut $50,000 in refunding from the Parks Department for Magnuson Park pool feasibility study.

Thank you very much, council members.

Thank you.

Council colleagues, I want to note that Councilmember Peterson, you have been a strong champion of the Magnuson Park pool feasibility study.

Thank you for your work on that and early concerns that you raised about the potential of that going away.

I'm happy to have central staff talk a little bit more about those concerns.

I would like to consider removing this reduction from our proposed package here with the understanding, and I want to double check with central staff, that that means that the CBO and parks will be able to work out a swap for something else within their budget so that we can make sure that REIT is used for something and general fund for the feasibility study.

a accurate summary of the desire both Councilmember Peterson and then I'll turn to central staff to make sure that that all calculates.

Thank you, Chair Mosqueda.

Yes, Magnuson Park is very special.

I mean, most people think of it as a regional asset for parks, but it's also home to 850 residents, 100% are low income, 70% identify as BIPOC.

And so this item, I think we have an easy solution.

What I've been told by central staff is that there was initially a question about Like you said, the source of funds using REIT, but central staff should be able to structure a technical swap of funding sources so we can preserve this item for Magnuson Park.

Excellent, and thanks again for drawing our attention to this.

Given the sort of late breaking news about the potential for CBO and parks to be able to figure out a swap, is there any concern there, Allie, about pulling this out from the package today?

Chair Mosqueda, you had about 50, just over $50,000 of unprogrammed REIT still left after we reconciled all the actions.

And so removing this from your package shouldn't offend the balancing.

And my understanding is consistent with what both you and Council Member Peterson just described, which is parks will figure out the technical ways to ensure that there's funding available for this purpose and that REIT is used for a eligible.

I think that is a very important part of this.

Thank you very much.

Okay, any additional comments on the overall effort here?

Council Member Strauss already spoke to the third bullet item here and we will continue to work with our CAB friends and figure out some eloquent solutions between now and hopefully Thursday and conversations to maybe round out the discussion a little bit more and understanding of what we're trying to accomplish here.

And then, is there any other items here?

So we just have the final category, which is items 109 through 141 on the agenda, which sounds like a lot of items, but it reflects the majority of the legislation necessary to adopt the budget.

All of this budget legislation was summarized in the miscellaneous issue identification paper that was presented to the committee on October 16th and is listed here for reference, but this is really a package of legislation that is necessary to implement the proposed budget, the action, the changes through the balancing package.

There'll be a few additional pieces, but for the sake of time, I wasn't intending to read all of these.

through as all of your amendments will be reflected in the package of legislation that will ultimately get acted on to implement and adopt a balanced budget.

Okay, thank you very much.

So, council members, is there anything else that you would like to speak about here today?

Okay.

I am not seeing any hands.

Let's just give a quick round of applause to our central staff for all of this incredible work.

Yay!

If you were in person, we would all get a chance to see you.

And standing O for the incredible efforts that you've put into not only making sure that we have rebalanced the emergency reserves, but that the vast majority of council members' priorities, vast majority were included in this package, and that we made substantial investments into the here and now for immediate investments that are predominantly going to serve our BIPOC communities, small businesses, and our most vulnerable residents.

But we're also planning for future efforts through community-led strategies like the participatory budgeting process, and we've still maintained We have a lot of work to do.

We have a lot of funding for some of the task force.

You all have done heroes work.

This has been an honor to work with you and see all of the sausage making behind the scenes.

colleagues for all of your work.

This is truly a reflection of all of your efforts.

We put a nice little summary video.

on our social medias today, just highlighting some of the incredible efforts that you all have put forward.

And I want to thank Joseph Pia specifically for their work on creating this video graphic that shows just a few of these 150 efforts that you all have worked on addressing over the course of the last two months.

So thank you and thank you to central staff.

I think we're going to transition to the next item.

And Madam Clerk, do you mind reading into the record the next item on our agenda?

The next item on the agenda is item of business.

Number 142 revenue forecast update.

Thank you very much.

I want to welcome the folks from the city's budget office.

I know that you have been listening in to our deliberations today and appreciate all of the revenue forecast information.

We are.

the revenue forecast information.

We know there is overlap with the executive's office.

We have already discussed some of the messages we have received from the executive on the proposed budget here.

Today's presentation is specific to the revenue forecast so we can ask some questions and answers and really peel back the information in front of us.

I really appreciate all of your work.

The long year we noted that at the beginning of this meeting, we're only from one item to the next.

So thanks for your team and your work on this presentation here today as well.

Thank you.

I just want to offer a few brief words of introduction and then turn it over to Dave Hennis and the revenue forecast team to walk you through some more of the details.

But consistent with our overall approach year to year, we do an in-depth revenue forecast in April, another in-depth revenue forecast in August, and then provide you an update here in late October, first of November.

Excuse me.

We sent you a memo about a week ago giving you the kind of the underlying financials of that update.

But the goal today was to give you some more of the background about what was driving the change in the revenue forecast, which was a notable increase.

Then it's also to highlight some of the risks that remain.

So that's the purpose of the presentation.

And with that, I was going to turn this over to Dave, who I believe is available to walk you through.

Can you hear me?

We can hear you.

Thank you very much, Dave.

We can't see you.

If you did want to be on video, that's fine too, but I think we can hear you well.

Sure.

Thanks.

If we go to the first slide.

So as Ben said, we were watching a number of things that are explained in 4K, but also looking ahead.

The time we were before you was the end of September.

which was the basis of the proposed budget, the mayor's proposed budget that you're now working through.

This fork is based on data through the third quarter of the year.

And that's important for a couple of reasons.

One in this very first slide is what we're seeing now are rising COVID-19 cases in King County.

And this is the chart you're seeing here is a measure of test positivity.

So of those who take the test, how many are positive?

What is positive?

And as you can see on the right-hand side of this chart, there's a significant increase in the last month, six weeks or so.

And what's interesting about this is that the net forecast that we base our regional forecast and revenue forecast on didn't really capture this increase that was done before that.

We were watching this closely, and that affected our decision in terms of what we are presenting to you today.

As you can see from the bullets, the test positivity rate has more than doubled in the last month or so to 5.7% positive.

And that this is important as King County remains in phase two, but I suppose it's not inconceivable that the governor, if this were to continue, might move some backwards along the reopening safe start plan.

And so we will be watching that closely.

This also just points out how unique this particular situation is.

If we go to the slide, we showed you this before.

As you can see, the red line on the left-hand side of this chart, you see the precipitous drop-off and then the precipitous increase all in the first year of this most recent situation, this most recent recession.

Atypical, that is, or untypical relative to previous recessions, where it's a gradual descent into and rise out of the recessionary period in terms of losses, which is what this chart is showing.

I think with our new forecast, we expect a faster recovery, but we don't quite know that red line is going at this point, which is our concern, is that you see it starting to turn to the right a little bit.

It's flattening and job recovery has not been, has been slowing.

And so about that as well.

Next slide.

This is another view of just the uniqueness of this recession in our situation is what this chart is showing is, is that how passion is affecting, and this is affecting different sectors of the economy.

The total unemployment, which is the top line of this, and if we look at the blue dots, if you will, you see they're currently at about a minus six, minus 7%.

That's total employment in the Seattle MSA.

And then you can see the other areas, construction, manufacturing, retail, trade.

Many of these blue dots were farther to the left, were more negative last time.

That was through July.

We're now showing some of the dots to the right.

And as you can see, construction's recovered a bit more.

Retail trade is at zero.

Information, financial activities, increasing growth.

But as you can see, some of them, manufacturing actually has gotten worse since the year before in September.

and leisure and hospitality, although it's improved minus three to about minus 26%, it's still not, and these are limited by how the economy can respond to this virus, how we as a society can respond to the virus and what's gonna open and what's not.

So we continue to watch this closely.

The right hand side of the chart is employment share and you can see, In some respects, for leisure and hospital, we have a very large drop-off in employment, and they represent about 10% of the economy, so, of labor.

So, you can start to see the relative effects of this change and affecting.

Next slide.

So, when we make our forecasts, as we've said, we begin with a national forecast from IHS and they do a U.S. forecast, and then we take that and we convert it and work regional for, and we then use that to make our revenue forecast.

And so what this is showing is essentially that since our last, we've had significant change in various measures that we, and what we've chosen here are unemployment rate and personal outlays.

And unemployment rate has dropped significantly, as you can see, from 11.7%, which was the basis of the proposed budget, down to 8.8% for quarter three and quarter four, it's dropped down to about the same 8.3.

And so we're, we're, we're experiencing your growth.

But again, we don't know going to taper out going into personal outlays, which is the right hand side of this chart is important because although you see by 95%, so about 5% below what we expect a pride from

I'm sorry to interrupt you.

There's just a little bit of a glitch in your audio, so I want to make sure.

Can folks hear Dave okay?

Okay.

We're getting the gist of it, but there is a little hiccup.

Dave, why don't you drop the video and see if that improves audio.

That sometimes works.

Okay.

Thank you, Dave, for making yourself available.

Sometimes it's helpful to be able to read lips if there is a little glitch, but this is sometimes a great solution.

So thanks for letting me interrupt you, and you were at 5%.

Sorry, you can't hear me very well.

I'm in a desert of internet or something.

Don't worry, we have a slide that we included for Internet for All that we just discussed today.

Working on it.

So anyway, the bottom line here is that we're seeing improvement of 5% below where we would have been in 2019 Q4, or where we were in 2019 Q4.

And that's up from previous budget.

proposed budget.

Outlays are important because that's expenditure, right?

And so this is having money in their pockets and being able to make money.

So that's what's driving our recovery, which, as we say, significantly improves the outlook for the second half of 2020 and then carries forward into 2021. Thank you.

Next slide.

and pictures of the same two, unemployment rate and personal outlays.

And what this does is the difference in, you know, sort of a more visual display of how much it's moved up from the proposed budget-based forecast to what we're showing you currently in the current update.

One of the important things to recognize here is that unlike our July 2020 for the forecast, This in October includes a $300 per week emergency unemployment fit that was assumed to be paid out from October through this year.

And so that's in IHS's bay for use of cask in parts we believe that, well, they're not gonna make that.

And although we may get a stimulus at some point, we don't know when that'll be, I think it'll be on the timeline, the baseline forecast.

Personal income is expected to rise quite significantly.

But again, looking at delays, we believe that delays will be a little more than actual rise in income.

So that affects the forecast and how the future.

So now in regional economic forecast, and these charts look roughly the same, and so we're not expecting significant difference between our local area, the Seattle district and the national forecast, but it is slightly different, and we won't belabor that, but it just shows the connection between our regional forecast and the national forecast, and our economy, our regional and national economy.

You can see some statistics on the left-hand side about how much improved between the July and the October forecast.

Can we move to the next slide, please?

We wanted to bring, I've been speaking to some of these, but we wanted to bring to your attention some of the risks that we wanted to raise.

Coronavirus cases are serious, and that's different than forecast assumptions.

A lot of this is an explanation of why we are using a slower growth scenario relative to what gas is assuming.

Again, the stimulus, we don't believe it'll be available until later, which will push back growth.

It will have a significant effect if and when it, but we believe it'll come later, which just delays our own economic activity.

Further, Boeing, announced additional layoffs, which I think you've all probably seen.

And it's worse than before, and about twice as many jobs are planned to be removed.

And they haven't come out and said exactly how much of those will be local to our area, but it's believed that the majority will be here in this area because of the commercial activity.

And so that was not part of their forecast.

now part of ours to the extent we were aware of this.

Work from home is creating some uncertainty relatively high for us about our B&O and our payroll tax revenues.

The basis for these taxes is where the work is getting done.

And because people are from home, we're uncertain how that's going to affect people's tax payments.

Next slide.

I'm going to ask a few questions.

In terms of the uncertainty, is there something we'll be doing to try to increase certainty?

So the last bullet, working from home creates high uncertainty regarding payroll tax revenue.

One of my form A's was about having OED survey businesses to see what their 2022 lease plans are.

Are they going to renew their leases downtown or are they going to keep working from home?

And I'm just hoping that there's a The executive is thinking of a plan for how to increase certainty around these questions, because I know a lot of cities or more expensive cities are having to deal with this issue.

And we included that report request.

Is that correct?

Councilmember Peterson.

I, I don't think that that made it through, but it's something we can always revisit next year as we see how things start to settle.

Okay.

Um, good question.

I'm just going to pile on to your question because I also had a question on this line and then maybe Dave, if you could take both of our questions related to the last bullet here.

Can you talk about the work that's gone into analyzing the data to clear up this uncertainty similar to Council Member Peterson's question?

And is this a clear negative risk or is this also a possibility that it could result in something that is positive?

So we are looking at all the data that we can to resolve the uncertainty.

We are only receiving, at this time, third quarter B&O payments.

We may not be able to see much evidence in that those payments, any of this kind of change in what people are paying.

We may have to wait for the fourth quarter B&O payments, which will not come in until January.

We won't have a good understanding of that until the end of February.

We're looking at other data as much as possible.

The leasing information would be very valuable.

We can get our hands on that.

What we're doing, as I mentioned, we're trying to look at the tax payments and the reporting that is done with a tax and But as I said, so I'm not sure we're going to be able to answer this question with much certainty until next year, unfortunately.

One of the challenges we have is that For the B&O tax, one of the factors that determines what resources are taxable is where employment occurs.

But it's a calculation that takes into account the full year of an employee's activities.

So until we see the final B&O payments for the year, which we receive by the middle of February, they're technically due at the end of January, a month after the end of the quarter, and then we take a little bit of time to process.

So we've been looking for this signal, if you will, in the data to date, but it's a year calculation in terms of, you know, where employees have spent their time overall.

So it's critical to get the year-end data online.

And we will know that within a couple months here, about three, but that will be a key data point that we will share once we have that information.

Are there follow-up questions?

Okay, I'm going to move on to my next question, Dave.

The national IHS market data used for this forecast gives us this forecast at a 30% chance of being corrected and a 70% chance of revenues being better.

Has IHS issued any supplemental guidance that changed those probabilities?

No, they produced that with each forecast.

they will be coming out with another forecast, you know, every month, they come up with a forecast.

It may shift those probabilities.

The baseline was at 50% and the pessimistic was at 30%, as you were noting.

But...

Since May, has the actual revenue collection data been closer to the baseline forecast or the pessimistic forecast?

Well, longest time it was tracking well to the pessimistic.

And as it turned, as the economy has turned up a little bit, It's started to rise a bit above the pessimistic towards the baseline.

But it depends on which revenue stream we're talking about as well.

Yeah, and I get that there's, you know, this unknown surgeon coven.

We don't know how this will impact the economy and upcoming year but.

I'm interested to know if there is any additional general fund revenue, how much additional general fund revenue would be generated in 2020 and in 2021 if revenues actually came in closer to the baseline forecast as they've been trending towards, and whether or not the baseline or the pessimistic forecast has more of a chance, more of a probability of being correct.

With respect to local economy, we firmly believe that the slow growth pessimistic forecast is a higher probability at this stage for the reasons that we've described here.

The national forecast captures information at a national level.

We think there are factors locally that influence how we should project it onto the local economy.

In terms of its potential impacts, the difference is very significant.

The baseline forecast would generate tens of millions of more if it were to be realized.

Again, off a base of 1.5 billion, so it's a very large base.

But the indications we have are that we are closer to this slower growth still.

And again, the issues are identified here in the slide in terms of the risks going forward.

But in terms of acceptable levels of risk, is it the role of the budget office to determine the acceptable level of risk for the revenue forecast?

Or is that the council's job to do, given that we have the power of the legislative branch and creating the final budget and the power of the purse?

Historically, the revenue forecast has been a task of the city's revenue team in consultation with folks from throughout the city.

We shared all the detail and all the underlying assumptions and modeling with central staff, done that throughout the year.

So I think that's the answer.

Just one follow-up question.

This does go back to a few slides where we were looking at the possibility of federal stimulus dollars.

I guess a question about, you know, how does the national coronavirus infection rate change the local forecast?

And...

Well, the data we show you on infection rates are the local numbers.

Okay.

So, I mean, we're seeing a spike here.

relative to where we have been.

But I'm not a public health expert.

I can tell you from conference calls, it is concerning to them.

Can you let us know as well, though, if we continue to see coronavirus continue to spike here in the Pacific Northwest and at higher rates across the nation, is it I mean, we want to be optimistic about what the federal government can potentially offer to us.

We know there is still a divided government at the national level.

Is it possible that the federal stimulus dollars is not going to be given in 2020, but is given in 2021?

Wouldn't this just shift the revenue impact from 2020 to 2021?

It will delay the, so that shift will have an impact though.

So it will end up being less money in 20 than less total money in 2021 in terms of revenues, because the overall recovery will have been slowed in all likelihood.

And that's, again, we fully, the forecast fully anticipate that there will be some federal stimulus, both the slow growth and the baseline are expected.

anticipate that.

It's now a question of timing, and the timing that underlies the national forecast was that that stimulus would actually be available, if I recall, in October, because, again, this is a forecast that was done, a national forecast that itself is more than a month old.

We know that's not the case at this point.

Again, I think every expectation that there will be additional federal support, I think unclear whether that happens by year-end or first thing next year, but we fully anticipate that.

But that delay will ultimately decreased the resources available in 20 and in 21.

Do you, Patty, do you mind going back two slides?

I would like to take a look at slide number six here.

So as we look at these trends here, is it possible that much of the proposed fiscal stimulus would be saved though and not translate into economic activity for this year?

Dave can speak to this too.

I think the key is to whom is the stimulus provided.

So the folks who are saving are folks who kept their jobs, right?

are earning money, but don't have necessarily outlets.

The stimulus, for instance, the previous unemployment insurance stimulus was really targeting those who had lost income.

So the expectation is that stimulus of that form will largely be spent.

Again, maybe not all of it, but the notion is in the expectation is that stimulus targeted towards those who have suffered job losses will translate into spending.

But there is this dynamic in there, though, that the uncertainty created overall by the virus has people being thoughtful about the way they spend.

Okay, any additional questions?

Yes, please go ahead, Dave.

No, I was gonna say there is evidence that even those at the lower ends of the income spectrum who received stimulus checks saved some of it.

Doesn't mean they didn't spend it later when they needed it, you know, at a later date, but they were part of the savings increase.

Personal savings has gone up quite significantly.

We're normally at about 7%, you know, on a regular basis, and it's jumped up to about 14% this year.

Okay.

No additional questions on this.

Do you mind, since we are taking a quick pause, can we go back one slide as well?

So, The data that was shared with central staff showed that since May, there have been steady monthly improvements in all major economic variables, including unemployment, personal outlays, and GDP.

And in light of the continuing trend in this positive data, I guess, you know, let me ask this one more time in a different way.

Why is the city budget's office decrease in revenues in the August forecast reflected, especially when it appears from the research that we've done with our peers, that they were increasing their forecasts?

I believe that was largely a timing issue.

So they were making forecasts after we were making forecasts.

So what we were seeing was a different time period, which resulted in a decrease.

And they had an additional month and I don't know if two, but probably just one, that where things started to turn up.

And so I think it's down to mostly timing.

And the other issue is when they made their prior forecasts against which they were comparing.

And so if they were particularly low in their original forecast, then their growth or lack thereof would show up just based on the timing of the base and the new forecast.

Okay, we had our initial forecast actually weren't as dire as as some versions of the state at the state level.

So as we adjusted ours, we were adjusting from a different base as well as well as this timing issue.

We are capturing the same similar growth to what they're they're showing.

It's just we're doing it at a different time period.

Okay, that's helpful to know.

Let's go on to slide number nine.

Right, so given large revisions to the national forecast and therefore our regional, we are seeing large increases in B&O revenues, real estate excise tax and sales tax.

And then, but even as those are going up, we're seeing some of our other revenues we've been discussing all morning about, you know, commercial parking tax and sweetened beverage tax and so forth.

Some of those are still declining because they're limited by the ability of people to move around and travel and so forth.

So we're seeing kind of a mixed picture here.

As you can see from the bullet points, you can see some of the changes going up in B&O sales.

And as we just said, we're making similar adjustments to the export retail sales.

It's King County and the other, the state, and then For example, Western Washington University, they took over the Puget Sound economic forecast.

They're also showing improvements from their prior forecasts.

Next slide.

Just pausing here real quick.

Is there any confidentiality around the data or models.

I know that our team has been asking for the models and the data that support the forecast and just checking in to see what the timeframe is.

Is there any confidentiality concerns that we should be aware of?

Because we would definitely like to see that background information too.

Not in terms of the model or the input data.

We've met with central staff and standing offer to do so and deliver whatever.

There's no secrets here on the modeling whatsoever.

Never have been.

Okay, great.

So I'll follow up.

Director Noble, thank you so much just for the purposes of transparency.

This is important information as we look at rounding out what risks and assumptions we're making in the forecast.

So appreciate that offer and we look forward to taking up on that.

Any other questions?

Okay.

Next slide.

So this is a summary of just showing the change.

So what this is showing is this is our, you know, November forecast.

This forecast to the previous, the August forecast, the basis of the 2021 proposal.

And so the left-hand side column is for 2020, and the right column is 2021. And then we're just summing it in the two-year total column.

And as you can see, the general fund, we're adding $36 million in the 2020 budget.

And 2021 budget, we're adding $32.5 million for a total over the two years of 68.6 million.

And again, as you've discussed earlier today, there are other general government revenues that have been dropping.

And so we're showing those in the red.

And then when you net those out, you end up with a two-year total of about $41.6 million of no resources, sort of from a budgetary perspective.

Real estate excise tax, we continue to have a strong year.

And so that forecast was increased up 12.7 million.

And for 2021, we're assuming a more conservative growth of 2.9 million.

So that's $15.7 million of additional resources over the two year period.

And then we've separated out the transportation benefit district.

And you can see there that the current, which is what this is showing, we're up about 2.3 million.

And that's really from the increases in the sales tax in 2020.

And then since we prepared the forecast, the vote last week, approved the STDB funding for 2021 and beyond.

So those are then the now current law, if you will, as those resources.

My understanding is that council plans to appropriate those, which makes sense because they are now on the books.

Right.

And we have a footnote to that effect on the next slide, which is the table.

And as you can see that we're expecting, nope, please, the next slide.

Yeah, thank you.

In the footnote number one about the sales tax, we expect about $33.4 million in 2021. And that's the quarter's estimate because we will not begin collecting the tax until April 1st.

So there's a lot of numbers on this and a lot of columns.

The left-hand side, the 2020 adopted budget from last year That's the November forecast from 2019. And that can be compared.

The columns in the center, 2020 change and far side, 2021 November minus 2021 post are showing exactly that, the difference between the November forecast and the August forecast.

Or as it said in 2021, the post there.

A few property taxes in 2021, because construction was higher than anticipated.

See the low that we discussed a moment ago in sales and B&O taxes.

No change really expected in utility taxes, payroll tax, we've left constant.

Parking is an interesting story in 21. The plan was, you know, prior to understanding fully what's going on out there in the economy and with the parking behavior, I think the plan was to have a, to increase parking rates back to sort of a pre-COVID level more rapidly.

And what this reduction of $14.3 million acknowledges is that we won't be getting there as quickly as firsthand, and that SDOT will be undertaking various occupancy studies and raising rates in a more measured fashion as we go along, I believe.

That's the top panel.

The general fund total you can see there above the line showing the 36 million in 20 change in the center and 32.5 million in the far right-hand column.

And then in the other general government revenues section, which is the second set on, you see the admin tax and rental tax, sweetened beverage tax.

We have revenues from the Mercer Mega Block Sale, commercial parking tax, zone camera fund.

And as you've seen this morning and earlier this afternoon, some of the reductions there, and this is entirely due to just economy and activity in these areas not responding, as quickly as perhaps originally we anticipated.

Schools on camera fund.

Oh, so sorry.

I thought that you were taking a pause for any questions.

It might have just been a glitch.

Yeah, no, I sort of wasn't.

I realized I didn't make on camera fund.

2020 you see it of 9.2 million approximately, and that was a decision to to acknowledge that not open in person until the fall of 2021. So that's where that drop comes from.

Back to my point earlier colleagues about my ongoing questions about how much school programming or alternatives to traditional schooling is still happening at our schools and Recognizing families are still accessing playgrounds and open spaces there.

I'm still looking into this issue area as well because we want traffic to be responsible around those schools.

Questions so far.

I know it's a it's a dense slide here.

Okay.

No questions so far Dave.

Okay.

So the next line Grand Total General Government Resources.

I just timed out there.

as you can see is the sum of the general fund and the other general government resources total.

And so with about 29.4 million in resources coming out of 2020 and about 12.2 coming out of 2021. And then we have the separate line for real size tax and you can see the increases there.

And then the Seattle Transportation Benefit District rounds out the slide And again, that showed current law as of prior to the election.

So as you know, the vehicle license, the $60 portion expired, as did 1% sales tax portion of the sales benefit district revenues.

With the election, we've added a 1.5% or 0.15% tax rate for the sales tax.

should generate 33.4 million in 2021. But we get to continue with $20 vehicle license fee, which was council provided.

And that's about 7.2 million.

And with that, I think.

Thank you.

I'm not seeing any questions, Dave.

I'm sorry, Dave, there's a little bit of a delay, so let me pause.

Did you have anything else to add, Dave?

No.

Okay.

Thank you both.

Director Noble, thank you very much, Dave, for walking us through this presentation today.

I appreciate you answering my questions as we try to sort through the various options that council still has as the legislative branch considers its responsibility to both hold the purse and allocate funding in a responsible way.

I want to also note that I had asked Ali at the very beginning to clarify as well, we continue to see references to $57 million in net new funding and we did offer some clarification about the way in which the REIT dollars have parameters around them, which we've discussed a few times today as we've talked about investments.

So again, thanks to Ali and CentralSAC for offering that clarification so that we can see how that bucket is actually split up and it's not 57 in general fund new net revenue.

So just wanted you all to be aware in case you weren't catching the beginning of this meeting, we have that discussion as well.

Council members, are there additional questions on these items?

Okay, I'm seeing no additional questions.

I will thank you in advance for all of the work that is to come still.

As we think about the upcoming two weeks, I know we will probably be back in touch with you, Director Noble and Dave, with any additional follow-up questions.

So I appreciate you being on the line today and hope you didn't have to wait too long to provide your presentation.

So thanks so much.

Thank you for your time.

Yeah, happy to address questions from whoever, whenever as they come in and look forward to the proper coordination.

Thank you.

Thank you for that.

And thanks as always.

And it's better to be ending at 310 versus 510. So glad we didn't go to the end of the day.

Are there any additional questions or comments for the good of the order?

Okay, I am not seeing or hearing anything right now.

We'll offer a reminder.

We are going to be requesting that you submit your form C's.

These are our amendment forms that must be self-balancing by 5 p.m.

So clarification that it's the end of the day on Thursday.

That makes it possible for you all to have a day off tomorrow for our holiday and to come back and have a full day to work on those form Cs.

Though, if you have ideas, I think central staff would appreciate hearing about those as soon as possible so they can provide you with some feedback if that is desired to make sure that on Thursday, there's no questions about what is being submitted at that 5 p.m.

period.

We have sent you a Monday memo, our budget Monday memos that we send every week.

That includes the link to how to fill out those form Cs.

And I just want to remind the viewing public, if you have amendment ideas, you should work through a council member to get those in.

We did have a question before from some stakeholder about whether or not they received our form Cs, and I want to make sure, or form Bs, and I want to make sure those go through council members.

and really appreciate all the work that you're doing to lift up those stakeholder priorities and community priorities into your forums.

We have reached the end of our agenda.

I'm not seeing any additional comments.

So a huge round of applause was already shared with everyone.

Council President Gonzalez, huge round of applause was already shared with our central staff.

Just wanted to get that one point back in.

Council President, please go ahead.

Yeah, just really quickly.

I know, colleagues, we saw the slide from Allie Panucci from our council central staff related to all of the various budget legislation that will need to appear eventually on the introduction and referral calendar.

I think the intent is for many of those pieces of budget related legislation to appear on the introduction and referral calendar for this Monday in order for us to be able to take action on budget related legislation on the Um, let's see.

Sorry, I'm pulling on my calendar here in order for us to be able to consider budget related legislation on the 23rd of November, which is when we take final action, both in budget committee.

And then eventually at full council, I do want to strongly encourage all of our colleagues to.

Coordinate heavily with council central staff on any budget related legislation.

I would like to avoid having to do last minute amendments to the introduction and referral calendar on Monday the 16th.

So I think just for transparency purposes and for making sure that council central staff knows what's coming and also to make sure that we and our staff know what is going to be before us for I'm asking you colleagues to work closely with Council Central staff who will be working closely with my office to queue up legislation for placement on the introduction and referral calendar this Monday.

And so for those of you who haven't identified budget-related legislation for Council Central staff, I'd ask that you please work diligently to do so, so that we can add those to the introduction and referral calendar as a matter of course, as opposed to going through an amendment process on Monday.

Just wanted to sort of highlight that as part of my council president office role in sort of this overarching budget process that you have been leading, Chair Mosqueda.

Thank you.

Thank you very much, Council President.

I appreciate the reminder for us and all of our colleagues.

We look forward to the discussion coming up.

Our next meeting will be November...

That's not the right date here.

Let's just double check here.

The next meeting will be Wednesday, November 18th at 9.30 a.m.

We will have two meetings backed back on the 18th and the 19th.

Both of those meetings will start with at least an hour of public testimony at the very beginning.

So if you're interested in providing any feedback on anything that you've heard so far today, please do plan to provide public testimony those two days.

We're going to be over the next week taking your comments and feedback over not just what we heard today and in this public testimony here, but over the last six weeks, you all have had town hall meetings had many in in district opportunities for folks to provide feedback and across the city for Council President Gonzalez and myself.

We really appreciate all of the feedback from both districts and across the city.

We look forward to having the conversation with you all about those priorities and thanks to central staff in advance for helping to make sure that these are self-balancing.

Hearing nothing else for the good of the order, today's meeting is adjourned.

Enjoy the rest of the afternoon, everybody.

Thank you so much.

you