Seattle City Council Select Budget Committee 4/22/20

Good morning, everyone.

Welcome to the Select Budget Committee.

It is April 22, 2020. The meeting will come to order.

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

Will the clerk please call the roll?

Gonzalez?

Here.

Gonzalez?

Here.

Herbold?

Here.

Juarez?

Here.

Lewis?

Present.

Morales?

Here.

Peterson?

Here.

DeWant?

Here.

Strauss?

Present.

Chair Mosqueda?

Here.

Nye present.

Thank you, Madam Clerk.

Council colleagues, thank you so much for joining this morning's Select Committee on the Budget.

I want to underscore the importance of this conversation and the importance of the dialogue we will have later today throughout the meeting.

We know the current COVID health crisis and resulting economic crisis have put into sharp focus the inequities our city is experiencing and has been created by past and current budget policies and decisions.

Many of us are searching for solutions to provide relief to the thousands who are already suffering and to the thousands more who will be impacted by the ongoing recession.

And as we search for solutions, our recovery efforts must be centered on communities experiencing the greatest health and economic impacts.

That includes workers, nonprofits, and small and medium-sized businesses alike.

The impact of COVID will be harsh and the recovery will be long, as we will hear from Director Noble later today.

Many of you may have already heard the news on NPR this morning, which articulated the fact that we expect the resurgence of the virus this winter to be even worse.

More people affected, more people falling sick, and more directives to stay home and stay healthy.

So this is not an exercise.

This crisis demands leadership and response.

And I believe that everyone on council agrees on this one thing.

We are facing a recession at the scale of an unprecedented level since the Great Depression.

Thousands of our neighbors in Seattle and across the state and country are suffering.

We need to address this crisis with urgency before the economic pain increases and we have an unmitigated pace that we can't recover from.

Unsurprisingly, we already are hearing calls for austerity budgeting at the national level and in states and in cities around this country, calls to respond to the crisis by making budget cuts or enacting no new spending, right when people need services from the public sector the most.

But if history tells us anything, it is that austerity budgeting is the wrong approach and will only perpetuate the crisis.

That is the conversation we are beginning today.

What will the impact of the recession be?

How will this affect our budget?

And what options exist to help those who are already hurting?

The families who are depending on us, the workers and small businesses and medium sized businesses.

We need to make sure that our response to this economic crisis does not exacerbate their existing reality of shrinking investments that will lead to decreased economic growth and further hurt more people.

We want to make sure that more people, small businesses and workers, can participate in the economy.

That is the opposite of an austerity budget.

When consumers have more money, when businesses have more customers, they can hire more workers and more economic activity is possible.

So we know already, before the end of this first quarter, we began to see the impacts of COVID on our budget.

and we know that we have to rebuild from the bottom up and not the top down.

Seattle small businesses and workers have been severely impacted by sudden job loss, income reductions, and loss of employer-sponsored health coverage and other forms of financial devastation.

And many were already struggling to make ends meet prior to the pandemic's onset.

In the face of these profound challenges, they've been struggling to pay for housing, put food on the table, and meet other basic needs.

So, council colleagues, today is a conversation for us to begin.

We know that we can't afford to make past, to pave the past roads that have led to austerity budgeting.

Past recessions have shown us that measures like throttling state and city investments have led to fewer people earning money and fewer customers and more laid off workers, which in turn leads to greater need for social services in the moment when cities and states are cutting.

So I want to put this in perspective.

Many of us have engaged in advocacy or potentially served in various roles as advocates or nonprofit leaders and worked with many who were struggling in the last recession.

One of the state legislators just told me a month ago as they closed the last legislative session that it was only this last legislative session that they felt that the budget finally plugged some key budget cuts that were made in the recession 10 years ago.

We cannot go this direction again.

As we will hear from Director Noble, the COVID recession or pending depression is hitting harder and faster than the past recession.

And I believe that bold investments that put money back in the pockets of workers and small businesses and medium businesses can help stimulate economic growth.

This is the crux of the conversation.

Essential to make sure that we right side up our upside down tax code so that government investments can ensure that gains and opportunities are shared broadly rather than just at the top.

Today, we'll have a conversation about the bills in front of us that will help initiate a conversation about how to potentially respond to the crisis.

We knew that this was a crisis that needed responding to prior to COVID and has only been underscored by the impacts of the health crisis on our local economy.

We have had, I have had multiple conversations with the sponsors of the legislation.

Again, I want to thank them for putting forward this legislation and they'll have ample opportunity for introductory comments prior to that item on the agenda.

I've also talked to many of our colleagues to underscore that this is exactly what the legislative process is for.

The bill sponsors are aware of the reality that these bills might not be in this final form when we leave, but we must have a conversation right now about investments, opportunity, our community, workers, small businesses, and the need to make sure we're not just sustaining or surviving in this crisis, but that we are able to thrive as we get to the end.

So while we're remote, this process will begin today with robust engagement from all of you council colleagues, all of the community members who have called in and individuals who've reached out to our individual offices and had collective meetings in community, which I know there's been many.

I wanna thank the folks at the City of Seattle, the IT technology folks, the clerk's office, central staff for making these presentations and today's conversation possible.

And we were gonna have a chance to hear from the public in just a second here with their high-tech opportunity for us to engage in public comment remotely.

We also know as we have these conversations and we hear the requests from community members that other cities are acting.

Austin, Texas just released $15 million in direct assistance.

And as the New York Time piece said yesterday in their opinion piece, this terrible suffering demands an exceptional response and policies that were controversial just months ago are common sense today or ought to be.

Entire sectors of our economy have closed or dramatically shrunk, and many of the folks who have jobs that are considered essential are making minimum wage or sub-minimum wage.

So, colleagues, I think this is an opportunity for us to talk about how we right-size our response to the economic crisis that is pending.

And while the federal stimulus bills have offered some components that will make it possible for families and some small businesses to recover, it is not enough.

Many families and workers will need longer-term financial assistance, and many small businesses might not make it long enough to see zero-interest loans be a possible option.

Additional federal stimulus dollars will not save Seattle's economy.

So the crisis is on us to listen to our community, listen to our colleagues, and adequately respond to make sure that we are seeking those federal dollars, working with the state and region to implement a response to the crisis, and acting locally within our city to respond to the public health crisis and create true economic recovery.

I want to thank you all for joining us today.

And we will initiate the next few minutes here to engage in a robust discussion with public comment.

Before we get there, I'd like to approve the agenda.

If there's no objection, the agenda will be adopted.

Hearing no objection, the agenda is adopted.

Council colleagues, we have a number of individuals who have called in for today's public comment.

And I want to, again, thank the folks from IT for making that possible.

We have offered people the ability to call in and then call back.

And I know that a number of people have initiated those calls this morning, starting just before 8 a.m.

So I want to thank the individuals who called in.

Many of them are small businesses.

Many of them are workers in healthcare and grocery stores.

And we wanted to bump up public comment to the beginning of the presentation today so that nobody had to wait excessively long on hold to present.

Colleagues, just by way of reminder, we will offer everyone the chance to speak for one minute.

For those who are on the phone, you will hear a timer at about 50 seconds.

And then after your one minute is complete, the line will cut off.

So please do monitor your time when you're on the phone.

for those who have called in for public comment.

If you are interested in speaking and have not signed up, you're able to do so at the council's website, which is linked on the agenda.

And if you would like to speak, please, as we unmute your microphone, your name will be called.

As we unmute your microphone, you will hear you have been unmuted.

Please use that as your opportunity to introduce yourself and begin speaking.

Please monitor your time so that your time does not get cut off and that you're able to complete your sentences.

During public comment, again, you will hear a 10-second reminder of that one minute coming up for your completion.

Once you've completed your public comment, we will ask you to disconnect from the line.

And if you plan to continue following this meeting, please do so via the Seattle Channel or other listening options listed on the agenda.

Again, thanks to Seattle Channel for making this hearing today public and for all the work you're doing during this time of COVID as well.

We also want to note that we are piloting the public comments still.

and ask everyone to be patient as we learn to operate this new system in real time and navigate through the inevitable growing pains.

As we move forward, we will continuously look for new ways to fine tune the process and hopefully add new features like being able to record your public testimony for those who need to tend to their small business or go to work if you're essential workers.

We also want to make sure that folks know you are still able to email us and call us at any point our council offices are still opening with our tremendous staff that is monitoring our phone lines and emails.

While it remains our strong intent to have public comment regularly included in future meetings, the city council reserves the right to end or terminate public comment periods at any point if we deem the system being abused or unsuitable or allowing our meetings to be, or is unsuitable for allowing our meetings to be conducted efficiently.

And when saying that, we want to also know that it is necessary for you all to be able to provide this public comment so that we can conduct our business in response to those concerns, ideas, and encouragement that we will hear on the line today.

Council colleagues, we have a number of people signed up today.

We have over 60 people signed up today.

So I'm going to get to as many people as possible.

And with that, I will ask for three people to be called at a time.

you will hear your name and then you will be unmuted.

So the first three people are Emily MacArthur, Gabe Peeley, and Luis Chernin.

Emily, you should be unmuted.

Please introduce yourself.

Thank you.

My name's Emily.

I'm a District 2 renter in Kami Morales' district, and I'm proud that my council member is co-sponsoring the Amazon Tax.

I'm a member of the Taxi Amazon Movement and a member of Social Alternatives.

Before the pandemic hit, there was already massive inequality in this city.

75% of Americans have less than $1,000 in savings, while Jeff Bezos has $140 billion.

While most people are facing layoffs or dangerous working conditions for minimum wage, Bezos has accumulated $26 million more from profiting off this crisis.

The record homelessness, the record displacement disproportionately of Black communities, what was already bad, will brutally escalate if you do not act to tax Amazon and big business.

I was very pleased to hear Mosqueda's introductory remarks that seem to indicate that she very much supports the necessary need for progressive funding.

The capitalist system has put profit over people, and the neoliberal system has eaten gaping holes in our meager social safety net.

You have a choice before you.

Decide to follow Peterson's plan to bribe big business into spending some of their hoarded wealth while gutting services or decide to stand up to the billionaire class to tax big business for housing and jobs when thousands of families are hanging off the cliff of homelessness starvation and destitution.

The choice is yours but if you won't make it working class people will be forced to step up and do it for you.

Across the country 30 million people didn't pay rent on April 1st.

May 1st is coming up quickly and that $1,200 federal stimulus check that Alex Peterson says was enough in his op-ed, won't even cover half of the average rent in the city.

Across the country, Amazon workers are getting organized and renters are also fighting back, fighting for basic demands like rent cancellation and hazard pay.

These movements will amplify the taxing Amazon struggle because the demand for housing goes far beyond just this month's rent being canceled.

Thank you so much.

Council Colleagues, I also want to note for folks, We are engaged in a conversation in the moment where many people are experiencing trauma.

So as we engage in trying to have this conversation, I appreciate everyone's respectful dialogue and thank you so much for all of the people who've called in.

We're gonna get through as many people as possible.

I wanna note that we're also gonna have a panel of some folks who've been affected from the grocery sector and healthcare sectors specifically in next week's meeting.

So please let me know if you have any follow up comments afterwards, but I appreciate everybody recognizing that this is a moment of crisis.

We don't want to further add to trauma, and that is exactly why we're hoping to act with expediency and care for as many people as possible.

Let's turn it to Gabe Peeley, and then Luis Trinan, if she's available, and then Alicia Lewis.

Thank you.

My name is Gabe Peeley.

I'm an immigration paralegal recently laid off due to the pandemic.

I'm also a renter in District 4 and a volunteer on the Tax Amazon campaign.

I first want to address other working and unemployed people who are listening.

It would be a mistake to rely on politicians to willingly pass this tax on big business.

In 2017, the majority of the council members caved under the thumb of big business.

In the Tax Amazon campaign, we're building for a ballot initiative to put to voters if the city council fails to act.

Go to taxamazon.net where you can join the thousands who've already signed the petition and sign up to volunteer and help gather more.

I want to thank council members Sawant and Morales for your leadership on this tax on big business.

And let's be perfectly clear, it's a tax of a 1% payroll tax on the richest 2% of corporations, not small businesses, nonprofits.

Thank you also Council Member Muscata for your vote against repeal in 2018 and for your supportive comments on Monday.

As you know, the bill will build up to 8,000 affordable social homes, creating countless good paying union jobs.

Surprisingly, I also want to thank Councilmember Peterson for his opinion piece in the Seattle Times, co-authored with the real estate executive.

Thank you so much.

Made it abundantly clear what side you're with in big business, that you'll side with big business over working people.

And to the remaining council members, I urge you to learn the lessons from this.

Thank you so much.

Your time is up.

All right.

Council colleagues, the next person that we have on our list is Louise Trennan.

Are you there, Louise?

Okay, if she calls back in, we'll get back to her.

Alicia Lewis, followed by David Gosling, and then Eva Mintz.

Hi, my name is Alicia Lewis, and I'm an activist with the Tax Amazon movement, and I'm also a renter in Andrew Lewis' district.

Clearly, as has already been said, this pandemic has created an emergency for working people.

We're already facing a housing crisis in Seattle, but now working people are facing unemployment, mounting bills and debts, and a public health crisis with no guaranteed health care.

Meanwhile, it is well documented that Amazon's profits have been skyrocketing during this pandemic.

An article in the Guardian last week reported that Amazon is making $11,000 a second off of home deliveries.

So clearly, these mega rich corporations, the top 2% of Seattle corporations, have the money to pay a modest 1.3% tax.

to fund immediate coronavirus relief and a massive expansion of affordable housing, in addition to a public investment in the creation of 7,000 good union jobs, which is really desperately needed at this moment and has become more crucial now than ever.

I want to highlight, as others have said, because of how crucial this funding is, our movement is preparing to take the Amazon tax directly to the ballot in November.

And in the context of medically necessary social distancing, we've really shown immense creativity and determination already, mobilizing hundreds of constituents virtually to do safe, systemic online outreach to Seattle voters.

And I hope that you are going to stand with our movement and pass this legislation now.

But working people know that there's too much at stake and are prepared to continue the fight if you fail to do so.

Council Member Lewis, as my city councilor, I want to end by speaking directly to you.

You would not have won this election without the strong support of the hotel workers.

And hotel workers really badly need this tax.

Well over 90% of them are without an income right now during the pandemic.

Many of them are immigrants and women who are among the most vulnerable.

And I hope that you'll stand with the union members who got you elected.

Thank you.

So much.

David Gosling, Ava Mintz, and Jordan Quinn.

My name is David Gosling.

I am a small business owner in Vancouver Washington.

I am definitely a supporter of this relief.

I have seen a massive decline in customers and also had some some big customers back out on me on jobs that were already scheduled.

I did apply for the COVID relief pack for small businesses but was denied due to the fact that In the eyes of the beholder, I am too small of a business for them to worry about.

So I wonder why we are funding these major corporations and giving them billions of dollars, companies that make $470 million in a year, and we are giving them the money instead of giving it to the people that need it.

I face losing my company.

and also not being able to pay my mortgage and possibly losing my home with a family of five.

And I just hope that we can get this this situation resolved.

Thank you very much for calling in.

Ava Mintz.

My name is Eva and I'm my name is Eva.

I'm a renter in District 2 and I've been involved in the tax Amazon campaign and I wanted to thank council members Sawant and Morales for standing with our movement.

I think their legislation to tax Amazon for housing, jobs, and coronavirus relief is exactly what we need in this time.

Big business is clearly afraid of our momentum, and I think it's really shameful but not shocking that Council Member Peterson is teaming up with real estate interests to write a hit piece in the Seattle Times that's full of lies and distortions.

We need to be clear that Our Amazon tax legislation calls on big business to give up just 1% or less of their income for the common good.

To contrast, according to a report from the Economic Opportunity Institute, a household that earns $25,000 in Seattle pays over $4,200 in state and local taxes each year, 17% of their income.

So anyone who opposes this tax is siding with big business against a 1% tax so working people can survive.

We're not all in this together, and we need to tax big business, not working people.

Thank you so much.

The next person is Jordan Quinn.

Yeah, hi.

I'm Jordan.

I'm a renter in District 2 in Council Member Morales' district, and I support the Amazon tax.

You know, we couldn't afford the rent before we all lost our jobs, And, you know, two years ago, the city council unanimously passed a much smaller version of the tax to start addressing exactly that issue.

Right.

But, you know, council members, Herbold and Morris and Gonzalez all voted along with former council members to repeal that tax partially to save jobs.

But, you know, what did Amazon do when when y'all repealed it?

They pulled out of their downtown office project and you lost those jobs anyways.

But we didn't have any money to build affordable housing coming out of that.

So if you pass this tax, we can get 7,000 jobs out of it.

We could build 10,000 new rent controlled homes that working people could actually afford, not a bunch of luxury apartments that no one can afford.

You'd have the chance to decide with workers and renters this time, not big business.

And correct your mistaken vote from two years ago.

So, definitely think that council members should vote for the Amazon tax, but if you don't, our movement is fighting to put it on the ballot.

Thank you so much.

The next three people are Logan Swan, Sabrina Villanueva, and Mark Brunson.

Logan?

Hi, thank you.

My name is Logan Swan.

I'm a rank-and-file union iron worker, currently on unemployment because of the pandemic.

But yeah, I mean, I support the taxed Amazon legislation, the taxed Amazon movement.

I think we can confidently say thousands of jobs are going to be created through this.

We know some information on direct construction jobs.

For instance, every 100-unit building will support 68 construction jobs.

So in the first five years of implementation, according to that spreadsheet in tomorrow's presentation, we would build 5,600 units.

The math of that would be almost 4,000 jobs supported.

And then on Green New Deal investments, the central staff is reporting that every one million in remodeling supports just over five construction jobs.

So in the first five years of the investment would be almost 3,500 construction jobs supported.

That doesn't include other jobs created, which would be architects, rafters, logistics, material, anything else that goes into it.

Thank you very much.

Sabrina Villanueva, followed by Mark Brunson.

Sabrina, are you there?

Sabrina, are you there?

Okay.

We'll come back to you, Sabrina, if you're logged in.

Apologies for that.

I'm here.

Oh, hi.

We got you.

Go ahead, Sabrina.

Sorry, I had my phone on mute.

That's okay.

Can can everybody hear me.

Yes we can.

Your time started right.

Okay.

Good morning.

Sabrina Villanueva.

Today I'm speaking on behalf of the Denny Triangle Neighborhood Association.

Our neighborhood is home to many restaurants retailers and small businesses.

As you mentioned in the intro prior to this pandemic businesses and employees in downtown were already struggling with the negative impacts of public safety issues.

including the aftermath of the Third Avenue shooting just a few short months ago.

They are now facing additional challenges due to COVID-19.

Many of these companies have had to lay off staff, some of which they don't know if they will get back or not.

And some of these businesses aren't even sure they'll be able to reopen after the pandemic is over.

So now is really the time to provide incentives to maintain and increase jobs not tax jobs.

The quicker we're able to get our economy back up and running, that's going to help the overall budget and create, you know, more money for more help.

So basically.

Thank you, Sabrina.

Sorry, your time got cut off.

Mark Bronson.

Hi, Mark.

Hello.

My name is Mark Brunson.

Good morning.

I'm a renter in District 3. I'm calling today in strong support of the payroll expense tax package.

We are in the middle of both a climate crisis and a severe housing shortage.

Both of these require more housing production in the city of Seattle, and especially more affordable housing.

We need to lower housing prices and reduce climate-destroying suburban sprawl.

Most importantly, we need to stop forcing out low-income people who can least afford the transportation costs of car ownership and maintenance.

With the most regressive tax system in the country, we lack the tools to adequately address these issues.

Please pass this package to fund affordable housing in Seattle.

I want to thank those council members who are present to pass a resolution supporting a Seattle Green New Deal, and I hope you can put that plan to action.

Thank you for hearing from us today.

Thank you very much.

Before we go to the next dozen folks, I want to go back to see if Luis Chernin joined us.

And I'll give IT a second to search for her in the queue.

After that, we will have Barbara Finney, Rosie Daniels, and Justin Baer.

Is Luis with us?

I do not see Luis.

Okay.

Barbara Finney, you're up next.

Barbara, are you available?

Just queuing her up right now.

Hold on.

Hello?

Hi, please go ahead.

Okay.

Hi, my name's Barbara Finney.

I live in D5.

I'm a constituent of Council Member Juarez, a retired RN union member and a member of the tax Amazon movement.

Jeff Bezos has grown his fortune by $24 million during this pandemic per economist Robert Reich.

Amazon says it plans to hire 100,000 more workers.

And we have the most extreme regressive tax structure here.

So we are a tax haven for wealthy corporations.

Corona economic collapse is a triple emergency of public health, housing, and unemployment.

We desperately need tax revenues from the wealthiest businesses.

Council members choose to stand in solidarity with the majority of the people you represent.

The unemployed, people lacking wealth, the housing insecure and unhoused, and the elderly.

Support this legislation from council members Soemont and Morales for progressive tax.

Thank you so much.

The next person is Rosie Daniels.

Is Rosie Daniels available?

The next person after that will be Justin Baer.

Are Rosie or Justin available?

Hello?

Hi.

Is that Rosie?

Yes.

Hi.

Sorry.

That's very strange.

Yeah.

Okay.

I didn't do anything, but I guess it works now.

Hi.

My name is Rosie Daniels.

I'm a Seattle worker in Redfern D3 and a member of the tax Amazon movement.

I just want to address the council members to say that the tax Amazon movement has massive support from the Seattle community and from key groups that will be watching you as you decide how to vote for this.

I urge the council members to join and bear with me this is a long list and even then I had to pick and choose the Transit Riders Union the Seattle People's Party the Sunrise Movement the Working Families Party 350 Seattle UAW 4121 Wolfsby 1488 Nigglesville Share Wheel and the people of Seattle in support of this of this text.

We want and need immediate assistance.

We also have wanted and have needed public housing and green union jobs.

Someone said that's 7,000 jobs in Seattle that this tax could put forward.

That's incredible.

Council Member Roscada is right.

This crisis needs leadership, and we need our council members to fight for what's actually going to help us rather than pending editorials with real estate lobbyists.

Support the Amazon tax for immediate release from the...

Thank you so much.

The next person is Justin Baer.

Justin, you should be unmuted.

Hi, Justin.

Hi, my name is Justin Baer.

I'm a software engineer.

I'm a renter in Lake City, District 5, Councilmember Juarez's district.

I've been volunteering with the TaxAmazon movement.

We absolutely need to pass the fantastic proposal from Councilmember Suanza Morales.

This proposal would invest productively in social housing, creating a large number of high-quality public sector jobs after the huge wave of unemployment that we've seen.

We have to be honest about where the resources are to solve the crises we face in this city.

Regular workers, including some of my friends, are making GoFundMes and not paying rent to get by, while Jeff Bezos has increased his wealth by several billions of dollars, at the same time criminally not addressing the many cases of COVID breakouts in his warehouses.

I watched the majority of the city council vote to repeal the tax in 2018, and I've never been more disappointed in our local government.

I very much appreciate that Council Members Mosqueda voted with Sawant against the repeal at that time.

And yeah, I urge her to continue with that progressive vote this time.

Thank you so much, Justin.

The next three people will be Jim Sanders, the Reverend Angela Ying and Kathy Yassi.

As a reminder for folks, we're going to adjust the timer.

You will have a 50 second opportunity to speak and then you'll have a timer at 50 seconds.

That'll give you 10 seconds to summarize your comments if that's more helpful for folks.

We have been cutting off comment just about one minute and five seconds afterwards.

So we're hoping that everyone can wrap up their thought as you hear that timer.

Jim Sanders, please go ahead if you're unmuted.

Thank you, Council Member Mosqueda.

My name is Jim Sanders.

I'm a resident of Council Member Herbold's District, District 1, and I'm a union bus driver and been active in the tax Amazon movement.

I have to say, as someone who's working on the front lines of the COVID crisis and whose co-workers are dying or who are facing extreme economic hardship, I'm getting real sick and tired of this argument that the Chamber of Commerce Seattle Times editorial board, and shamefully, Councilmember Peterson, in his recent op-ed, have made that this Amazon tax is a tax on jobs.

You know, I think this is a new low that you're using the COVID-19 crisis as an excuse to parrot the exact same bad economic scare tactics that you used before the pandemic, the Amazon tax in 2018, and the fight for the 15-hour minimum wage.

So don't be fooled.

Working people at this tax would create thousands of jobs and provide cash assistance to working people to help us get out of this crisis.

And if we want to get out of this recession big business is going to need to pay this tax.

Thank you.

Thanks.

The Rev. Angela Ying.

I see death.

Please go ahead.

Thank you.

Thank you.

As senior pastor faith leader with my community we see death and suffering every day.

And we clearly need and urge you to lead and pass this triple emergency tax Amazon legislation as is.

To stand with the working people in your constituency and to vote yes on this legislation of COVID-19 relief affordable housing creating good green jobs yes jobs and the Green New Deal.

This legislation as written provides a progressive tax Amazon and the largest 800 companies with deep pockets and they can afford it.

Less than 1 percent for fund for funding.

With your leadership the tax would raise a much needed 500 million a year beginning June.

Our communities of all faiths and I depend on you to do so.

The situation is unprecedented and few if any city councils have an opportunity to use courage and do so much good.

Approve please this triple emergency COVID-19 relief tax Amazon legislation.

Thank you to council members Sawant and Morales.

Thank you to Chair Mosqueda.

We're standing with the unions and council members Herbold

Thank you so much.

Kathy Yassi?

Hello.

Okay, hi, good morning.

I'm Kathy Yassi, a member of SEIU 925, and I want to thank Tammy Morales and Shama Sawant for bringing this legislation forward.

I ask you to pass this tax Amazon and big business legislation without delay.

I guess there's something like 50 million workers across the country who have lost their jobs in this crisis.

In my neighborhood, in the Central District, that includes two childcare teachers, a dog walker, a public school paraeducator, a special needs middle school teacher, a self-employed plumber, a house painter, a window washer, and a school chef.

Cafes, hair salons, nail technicians, and landscapers are out of business.

My neighbors and friends have rents and mortgages.

We have families who must eat.

Unlike Amazon, who has made huge profits off this crisis, we have all the regular ongoing living expenses and no income.

Federal relief seems good, but it's not enough, and it's not forthcoming for these tiniest businesses.

Much more is needed.

This legislation could give 100,000 local high school, local house.

Thank you so much, Kathy.

The next three speakers will be Modi Krasmer, Carla Esquivel and Sarah Henshaw.

Is Modi available?

Yes, this is Modi.

My name is Modi Krauthamer.

The council has not been transparent in exactly how and where the funds are coming from for the first year.

The overview and the text are vague.

This is not enough for true transparency, and I would like to state for the record that I believe moving funds like this in the first year may be illegal and against the city's charter.

The council should table this proposal until it's certain that moving of the funds does not break the law.

If and when you do move forward with this proposal, I would like to add a change to the exemption category, namely that while governments are exempt, that the city council and council staff essential staff should not be exempt from this 1.3% tax.

Those two combined budgets are in the millions, and therefore it should not be a problem for you to use 1.3% of your payroll budgets toward combating homelessness.

Therefore, do not exempt your budget from the tax.

As the saying goes, you should be willing to eat your own dog food.

Thank you.

Thank you so much.

Council colleagues, I believe we have gone through 20 minutes of public testimony.

In order for us to get as many more individuals to speak as possible, I would like to extend the public comment period for another 20 minutes.

If there's no objection, the public comment period will be extended for 20 minutes.

And at that time, we will then need to move into our presenters.

Hearing no objection, the public comment is extended for another 20 minutes.

The next person is Carla, followed by Sarah.

Carla, are you available?

Yes.

My name is Carla Esquivel, and I live and own a business, Small Business in District 2, represented by Council Member Morales.

I'm also a supporter of the Amazon Tech, Amazon movement.

I've owned my small business for almost 16 years.

I solely rely on the revenue of my business to pay my bills and feed my family.

As a non-essential business, I have not received and don't know if I can expect to receive any help during this crisis.

Me and many of the small businesses in my community are very concerned.

It's scary and a place we never thought we'd be.

While the federal government can really bail out large corporations and big businesses that don't need it, tons of small businesses like mine all over the country and in the city are left out in the cold.

Many of us cannot even apply for unemployment.

Meanwhile, here in Seattle, we have some of the biggest companies in the world, like Amazon, making huge profits, the biggest profits off this pandemic.

I feel like the task for big businesses, which is less than 1% of their income, is a necessity.

Not only will it help the most vulnerable in our community, This money will be used to create jobs, which is what we're going to need as we see the biggest unemployment numbers of our lifetime.

If we choose not to.

Thank you so much.

The next person is going to be Richard Schwartz, followed by Campbell Thiebaud and Brendan McGovern.

Want to confirm that Sarah Henshaw is not with us?

Okay.

Richard Schwartz, please go ahead.

Richard Schwartz.

I've become increasingly disturbed in recent years by the tactics council member Sawant has adopted in attempts to pursue her legislative agenda, such as the Amazon tax.

Sadly, they mirror in many ways President Trump's bullying tactics.

For example, establish a hardcore base of rabid supporters, try to keep them wound up through the use of provocative rhetoric, attempt to drown out people with differing views by packing council chambers with their core supporters and encouraging their frequent disruptive, rowdy behavior.

Distract the public by creating stereotype boogeyman villains.

A few examples from her recent email blast.

Seattle Times publishes hit pieces.

Big business is going to tell lies to the council.

Landlords are greedy and heartless.

Rich people are evil.

In other words her strategy is to create a divisive them versus us atmosphere in the city.

This is not an approach that should be encouraged.

You represent all 750,000 people in the city.

Loud intimidating interest groups should not dominate council deliberations.

Thank you.

Thank you.

The next person is Campbell Thiebaud and then Brendan McGovern.

I'm here.

Thank you.

My name is Campbell Thiebaud.

I'm here to speak about the tax on some of the wealthiest 2 percent of businesses in Seattle.

I rent in District 3 and I want to thank Council Members Savant and Morales for proposing this.

I'm currently not able to work due to Corona.

Normally I manage a farm stand at Pike Place Market where I employ up to 10 people mostly in the 20s.

None of us are really eligible for unemployment except for one or two of us who are artists with the expanded benefits package.

I've been trying to give hours at the warehouse or wherever we can.

I'm also trying to get a small business off the ground in South Seattle in a shared art studio.

I canceled all programming for that and I'll be out of money once I pay my bills at the beginning of May.

In my opinion it is wise for us to pursue revenue from large especially profitable local businesses like Amazon.

which have historically paid the least amounts of tax.

There is no better time to act than now.

We need courage to tax businesses and get money in the hands of people.

Thank you.

Thank you very much.

Brendan McGovern.

Hello.

Can you hear me.

Yes.

Please go ahead.

Hello.

My name is Brendan McGovern.

I am a renter in District 4 Councilmember Pierson's District.

I work as a music teacher and a substitute teacher for Seattle Public Schools.

However I am not doing any substitute work at this time due to the schools being closed for the rest of the year.

I'm a rank-and-file member of the Seattle Education Association as well as a member of the Tax Amazon movement.

And I support Councilmember Sawant and Morales' legislation and am quite appalled that my representative Peterson in our District 4 has publish these shameful opinions in the Seattle Times.

If you are truly so concerned about businesses that are supposedly facing bankruptcy or bleeding jobs if they are targeted by this tax, then name them.

He hasn't named a single business that would supposedly be really suffering from this tax, and it's because they're all extremely profitable, multibillion-dollar companies that can easily afford this.

Thank you very much, Brendan.

Before we go on to the next three people, one of the earlier signers is on the line.

Louise Chernin, please go ahead.

Thank you.

Can you hear me?

Yes, please go ahead.

Thank you.

Okay, thank you.

Hi, my name is Louise Chernin.

Sorry, I had trouble getting through before.

I'm CEO of GSBA, Washington State's LGBTQ Chamber of Commerce, representing over 1,400 small businesses.

Thank you for Council Member Muscat of this opportunity.

By now, you should have received a letter signed by hundreds of business owners and a petition signed by over 5,000 business and community leaders imploring you not to adopt this payroll tax package.

When I first heard this was being introduced, I actually didn't believe it.

I could not imagine in the midst of the greatest health and economic crisis of our lifetime, anyone would introduce a payroll tax when there are unprecedented layoffs and business closures.

We need unity, not divisiveness.

The bill targets at least 800 businesses that employ over 300,000 workers.

These businesses need resources to retain and bring back laid-off workers.

Make no mistake, this is not a bill only targeting a few large businesses.

Thank you, Louise.

The next three people will be Megan Murphy, followed by Valencia Warner and Daniel Kavanaugh.

Megan?

Hi, I support this legislation.

It is very vital.

We have to decide, you know, the resources are being divided so unequally.

And it's time to share and choose if we're going to worship the free market and enabling the very few to have access to ungodly amounts of money, or if we're going to use the resources and to share in just way and move towards a green economy with many this legislation will create many jobs.

It will.

It's a good legislation and the Seattle Times was unfortunately bought and sold but I do appreciate the editorials that do support the just distribution of wealth.

Thanks.

Thank you very much.

Valencia Warner.

Hi, can you hear me?

Yes.

Hi, I'm a family practice doctor, Valentina Warner.

I work at a community clinic in Tammy Morales' district and I also live there.

I'm on the bargaining team of SEIU 1199 Neighbor Care Health.

And I'm seeing firsthand what the experiences of people who are not able to participate in whatever bailout has been given I have a patient who's a hairdresser who has no income.

She hasn't been able to participate in any kind of small business support.

She's talking about taking clients privately to be able to support herself and her two children.

In fact, ourselves as health care providers are being cut.

Our clinic cut back our hours by 20% across the board for all the providers because of the cutbacks on ability to see patients in person, which just seems insane to do that during a health care crisis.

So people who have student loan debt are not able to pay it, and they're going to have difficulty paying them.

Thank you very much, Valencia.

Daniel Kavanaugh?

Hi, my name's Dan.

I'm a nurse.

My name's Dan.

I'm a nursing student, and I'm also a renter in Central District.

And yeah, I think a lot of people have talked about how this will create thousands of jobs and how it's actually a big business, but if the job describer are just not accurate.

And I think one example is that one of the businesses that would be targeted under this pact, Nucor Steel, it's the largest steel company in the US.

Last year, the CEO made $19 million.

$19 million.

for one person.

And this is just one example.

A big business can absolutely afford to pay this tax.

A poll last year showed that over 70% of people in Seattle support taxing big business.

And in this new recession, we need to create thousands of jobs by building affordable housing.

So I urge you to pass this tax.

Thank you very much, Daniel.

Alexandru Nan, followed by Violet Levante.

and then Jessica Scoslo.

Alexandra?

Hello, my name is Alex Ngan.

I live in District 2 under Tammy Rales, a member of the Seattle Tenants Union, and I'm here in support today of the Tax Amazon Initiative.

We have been living even before the crisis in a time of massive income inequality where jobs and pay have not been in line with the living costs of Seattle.

COVID has only made this issue worse and it is completely unconscionable that a company as large as Amazon continues to make profits, hoard their wealth, and then continue to buy stock options like Boeing has been doing and other such companies while the common man suffers more and more and more.

It is our council people's responsibility to tax these people and to get money back into the working people's hands so that we can not just weather this crisis but continue to thrive in.

Thank you very much for your time.

Thank you.

Violet Levante.

Violet?

Hi.

Hi, thank you, Council Member Teresita Mosqueda.

I'm actually the Director of the Tenants Union of Washington, and I'm calling that this legislation right now is so important.

There has been many, many bailouts for the rich.

This legislation would help people, the working poor, communities of color, I also am a community member, and we're seeing the disparity of big businesses still getting away with not paying their fair share of taxes.

There are so many small businesses that won't get affected.

This is actually a win-win for all of us.

We're actually now saying to big businesses, mostly Amazon, pay your fair share.

Thank you, Tyler.

Appreciate it.

Jessica Skoslo and then Summer Stinson.

Hi, my name is.

Oh, thank you.

Hi, my name is Jessica Skoslo.

I live in District 3 with council members to want.

I'm a renter and I have done some work with the tax Amazon movement.

I would actually be an essential worker right now at a grocery store, but I'm out on injury.

And I'm here to encourage all council members to vote in favor of Council Member Sawant and Council Member Morales' big business tax as is.

We know that the gap between rich and poor is continually dividing with less for the poor and more for the rich.

The money is with the major corporations and the billionaires.

So whether we believe this is a moral issue or not, it just seems like a no-brainer that we need to go where the money is and support this tax.

Please stand with the working people and support what I think is actually a very modest tax on big business.

Thank you.

Thank you.

Just to confirm, Jordan Royer, Lisa Sandoval, Margaret Carey, we have you listed, but we don't see you present.

If you are on Zoom, please call in so that you can speak.

Next person is Summer Stinson.

Hello I'm Summer Stinson a homeowner in D6 and I'm a board member of the Economic Opportunity Institute.

In this time of COVID crisis and income and wealth inequality I strongly support taxing the richest 2 percent of mega-businesses to help the most vulnerable in our community and create jobs.

This crisis has hit home how we live in two Americas and two Seattles.

The gap between those who have and have not has never been bigger.

Seattle depends on these workers.

who are needed and crucial but don't already receive the respect services or economic pay they deserve.

This tax is very modest very very modest on those megacorporations in order to help right our upside-down tax system.

We live in the most upside-down tax system in our city in the state with the most upside-down tax system in the country.

Already Washington State gives more tax breaks to those huge megacorporations than any other state other than.

Thank you Summer.

The next three people will be Christina Neelander, Jeanette Sufantes and John Scannell.

Christina.

Hello, my name is Christina Neelander, and I'm a renter in Councilmember Sawant's district, and I'm also with the MLK County Working Families Party.

I want to echo so many of the comments in support of this tax that I've heard from people on this call, and it's great to see so many people coming out in support today.

Not too long ago, I was part of a community of housing activists celebrating the passing of the Head Tax.

You all passed it because you knew how deeply that legislation was needed.

And then a month later, you turned around and retracted it because Amazon threw a fit.

And now, with the coronavirus, the housing crisis is even more dire, especially for those who would have been served by the head tax.

Some of that was preventable.

And this time around, I just ask you, please do not protect rich, white, big business CEOs.

They have enough protection already from the right wing.

Please pass this tax urgently to protect the low-income and working-class communities, and especially communities of color, queer folks, and people with disabilities.

You have an opportunity to be forward-thinking and take a stand to prevent the crises that will be exacerbated in the aftermath of COVID-19.

We need bold action from the public sector now.

Thank you for your time.

Thank you.

We also see Sarah Nelson, Ryan Simmet, and Addie Smith as listed next to speak, but they are not present.

If you're on Zoom, please do dial in.

Next person is Jeanette.

My name is Jeanette.

Hi, my name is Jeanette.

I'm a renter in District 3, a property manager for several apartment buildings in Seattle and a supporter of the Tax Amazon Initiative.

I have personally seen how 10% plus rent increases and lack of affordable housing has driven people to homelessness and how my renters continue to struggle paying rent and even more now during this pandemic.

Over the last 10 years, the only new major supply of apartments in the free supply and demand market in Seattle has been high-end and unaffordable to common workers.

Even older affordable apartment buildings have been flipped by investors and become unaffordable to the poor and working class in Seattle.

We need affordable public housing in this city.

My friend owns a hair salon in downtown and has more of a tax board than the large corporations in our city and has not been able to receive any of the grants for COVID-19 due to lack of funds.

Small business owners, especially the restaurants in my area, have been the glue holding our community together by serving food for free to those in need in our community.

If they can give big during a time when they are losing the most, big corporate executives in Seattle can afford 1.3% corporate pay.

Thank you so much.

The next three people will be our last three to speak.

John Scannell, Matthew Smith, and then Daniel Wang.

John, are you available?

Yes.

Can you hear me?

Yes, thank you.

My name is John Scannell.

I'm an attorney who runs a small business called ActionLaw.net, which represents employees in unemployment hearings, other citizens in administrative hearings, as well as others in the Ninth Circuit.

My office is in the International District.

Before I was an attorney, I was a city employee for 20 years, active in public service and industrial local 1239. I want to speak in favor of the tax, but only if there is total transparency and accountability on how the money is spent.

I'm skeptical that this will be done properly if the past procedures in the recent federal legislation are fault.

We all heard how the funds were to be targeted to small businesses as part of the relief, but we also heard how the money was actually spent.

Meanwhile, the state government has not been receptive to public disclosure during the COVID crisis, not calling it an essential business.

This council needs to publicize how the money is spent.

Public disclosure is an essential business.

Transparency in government is an essential business.

If this tax is passed, I urge this council to be fully accountable.

Thank you very much, John.

Matthew Smith?

Yeah, my name's Matt Smith.

I work for...

Hi, my name's Matt Smith.

I work for Amazon as a contracted cargo handler.

I live in District 2. I'm a renter here.

And I want to thank Tanya Morales and Shama Stilwant for sponsoring this legislation.

Now, because of the particularities of my job classification, Amazon has sent all of the cargo handlers home for several weeks, and they're only giving us 25 hours per week.

That's $400 per week for my paycheck, which means I'll be paying over 40 percent of my income just in rent this month.

Meanwhile, I continue to pay taxes.

And my company, Amazon, is making $11,000 a second during this crisis.

They're not using that money to support people like me who work for them.

They're leaving me in poverty.

And that money is being used to pad the pockets of Jeff Bezos, whose wealth has increased by $24 billion since this crisis began.

So we need to tax these huge companies like Amazon to fund affordable housing, to fund immediate relief for working people.

And I stood up on a stage with Council Members Gonzalez and Mosqueda last year to oppose Amazon's attempt to buy our city council, including politicians like Alex Peterson.

I think we need to stand up to those principles and tax them.

Thank you very much.

Daniel Wang, are you available?

Hi.

Hi, my name's Daniel.

I'm a student in District 4, Councilmember Peterson's district.

I wanted to comment on my councilmember's argument that a tax during recession is just bad economics and would hinder job creation.

I might be a little more receptive to this line of thinking if businesses like Amazon were providing safe working conditions, adequate PPE, fair compensation for this essential work in forms like hazard pay and paid sick leave.

But that just isn't happening.

Instead, Amazon is punishing workers who are speaking out and fighting for more fair working conditions, often by firing them.

So I think this pandemic really highlights the fact that, before we all itch for industry to get us back to work, we should be considering whether or not it's safe to work and whether or not the workers are being compensated fairly.

I hope the council will keep this in mind and, moving forward, support this tax that will fund the creation of thousands of well-paid, union-represented jobs.

Thank you.

Great, thank you.

Colleagues, that is our extension of the 20-minute time period.

We do have two people who called in that were not available, and we did call their names.

So I'm going to call on Sarah Nelson and Margaret Carey, and then we will wrap up.

And I'll have some comments for those who didn't get a chance to speak.

Sarah Nelson, please go ahead.

Hello, thanks for including me.

So I'm calling to oppose the worker wage tax and I'm just going to scrap my previously prepared remarks to respond to people that are claiming to support small businesses.

Seattle is an ecosystem and while it may feel good to say you're taxing Amazon and other big businesses, those big businesses contract with electricians and truckers and florists and their employees buy, eat, and drink at the businesses small that makes Seattle such a great place to live.

So council should be doing everything that is possible to support businesses of all sizes and focus on the recovery so that people stay employed and we can move on.

It's not the time for movement building.

That's it.

Thanks, Sarah.

And Margaret Carey, thanks for calling back in.

Thank you.

Thank you.

My name is Margaret Cary, and I am a member of the MLK County Working Families Party, and I also want to speak in support of the tax package that would levy a tax on big businesses.

We are definitely at a decision point of how we will, as a community, address this moment when thousands of people are losing their jobs, their health insurance, their homes.

Will we come together and everyone pay their fair share?

Seattle has the most regressive tax structure in the country.

According to the Economic Opportunity Institute, households making over half a million dollars in income pay less than 3 percent of their income in state and local taxes, while middle-class families pay 10 percent and low-income families pay 17 percent.

So this tax package would provide much needed assistance that many in Seattle so desperately need while asking Seattle's largest corporations to join as neighbors to pay their fair share.

Thank you.

Thank you very much Margaret.

Council colleagues I appreciate all of your attention to the public testimony and I really want to thank the communications staff the I.T.

staff and the clerk's office for engaging with us to make sure public comment was possible.

Thanks to the council president's office for testing this out and appreciate your feedback as we look to improve public testimony and the engagement opportunities in future meetings.

For the individuals who were not able to speak today, we're going to send out an email immediately to instruct folks how to send their public comments to our offices so that we don't miss a beat in getting your feedback.

With that, I want to thank everybody who dialed in and for engaging with us as we to make sure that public comment is available at these meetings.

Your feedback is tremendously important, and it will help shape our conversations and future legislation.

With that, moving on to item D, items of business.

Will the clerk please read into the record item number one under items of business?

Agenda item number one, spring economic and revenue forecast update.

Thank you so much.

And with us, we have Director Noble on the line.

Thank you for being available with us starting at 11 o'clock.

We appreciate your time.

Council colleagues, our next item is a presentation that will allow for us to go through the existing budgets, or sorry, the existing impact of the budget due to the coronavirus crisis.

I'm going to allow for folks to, I'm gonna allow for the presenters to get through their entire presentation first.

And then I will go through each council member and ask folks if they have one or two questions to please articulate those questions so that we can get through everybody's questions and then also make sure that we hear the entire presentation.

When I first saw the presentation, I had a number of questions that were then answered by the subsequent slides.

So I encourage folks to write down your questions.

And then I will go through the order of council members by the way in which we work.

We will have a chance to ask your questions before we move off of this agenda item.

With that, Director Noble, I will turn it over to you to walk us through the presentation.

Council colleagues, you should have a link to this in the agenda, and it has been shared by the Director's Office, and he will be sharing his presentation, I believe, with us via Zoom so that the viewing public can see it along with our council colleagues.

Director Noble, thank you for waiting and for walking through the numbers that you are about to share in terms of how our current economy and our current budget is being affected by coronavirus and some projections that you have for near and long-term revenue downturns so that we can be prepared and we can respond.

Thank you very much, and thank you for the opportunity to speak to you today and to provide this information.

I'm going to move quickly here to put my presentation up on the screen and then walk you through it.

And you will see that it is.

Sorry, I'm going to try to get here.

Looks like it's working.

Excellent.

Thank you.

So this is a pretty technical presentation.

Again, I will move through it, anticipating questions at the end.

This is the time when we normally would bring you a revenue forecast update.

Obviously, the circumstances are very unusual, nonetheless.

But the overall presentation is consistent with the way we provided this information previously.

Our revenue forecast is ultimately built from information that's provided from a, starts with information from a national forecast, which we then, national forecast of projected economic conditions.

We then put that, yes.

I apologize.

It's a little hard to hear you because of some static.

I'm just going to ask you that you angle your camera a little bit towards your face so that we can also read your lips while you do the presentation.

Thank you so much.

Absolutely.

So we have a national forecast that feeds our regional economic model, which in turn is the basis for our specific revenue forecast for the city.

So I'm going to start this presentation by giving you some information about that national forecast.

One thing that's going to be unusual about this presentation is that we usually provide a single forecast.

The information we get at the national level usually has a strong consensus figure that is their forecast.

They often acknowledge that there is some uncertainty there, but it's usually, again, they've sort of an agreed upon expectation.

Currently, things are so uncertain that they have developed actually three separate forecasts, a baseline forecast, a pessimistic forecast, and an optimistic forecast.

And what's unusual is that the relative probability that they've assigned to the baseline and the pessimistic forecast are almost the same.

So they're really, in some ways, equal weights.

We're not going to spend very much time talking about the optimistic forecast, because It has largely been surpassed by events on the ground, so this information was developed at least a little while ago.

And given the recent filings for unemployment insurance and the like, it appears that we are not anywhere near an optimistic forecast at this point.

So again, we'll focus more today on the baseline and the pessimistic forecast, and I'll describe how we've translated those into our regional forecast.

To give you a feel for this, these are both forecasts that anticipate a recession, and a relatively deep recession at that, a very deep recession.

The key assumption behind both the baseline and the pessimistic forecast is that by the beginning of the third quarter, so the beginning of July, there will be some loosening of the current social distancing standards.

and restrictions.

The difference between the forecast really has to do with the rate of recovery, well, two things, with the depth of the impacts and the rate of recovery afterwards.

The baseline scenario, again, a deep recession, GDP drop or size of the U.S. economy dropping by more than 5 percent, employment peaking at more than 10 percent.

The pessimistic scenario, which again is almost of equal weight, has GDP drop, or overall U.S. economy shrinking by almost 15 percent, and unemployment peaking at nearly 22 percent.

To put that in some historical context, depression-level employment rates were somewhere in the 25 or higher percent rate.

So we're talking about a really dramatic impact.

And I'll make a couple more comments about that when we move to the regional forecast.

Another important thing to recognize is that all of these scenarios have anticipated the first elements of the stimulus that has been provided by the federal government, as well as the monetary policies adopted by the Federal Reserve.

Additional stimulus investments might help mitigate some of these impacts.

But one of the overall messages is that the economic impacts are of a scale that they cannot be fully mitigated by stimulus overall.

So moving now to talk a little bit more about how we developed the regional forecast.

I thought it was important to give you a sense of that, given the importance of the forecast here.

So again, as I described, we have an econometric model that captures the overall economic activity for the Seattle area.

We've largely defined that to be the king in Sahomish counties together.

We take his inputs to this model, the forecasts that you just saw, and the fundamentals that they suggest, income growth, unemployment levels, inflation.

We've estimates for our local economy of things like overall productivity, so a version of GDP for the regional economy, personal income, employment levels, inflation, and the like.

So, and then we then take that model, and in turn, we have historical data about the correlation between those key elements of the local economy, again, at a sector level, and those impacts, and how they drive our actual revenues.

So, again, you will see that in just a second here.

For the sake of discussion moving forward, we've characterized and mapped the baseline scenario forecast at the national level to what we've called a rapid recovery scenario, and the pessimistic scenario to one that we call a slow recovery scenario.

So you'll hear that language going forward.

I want to emphasize that the slow recovery is both a deeper recession and a slower recovery.

So it's not just the pace of recovery that distinguishes them.

It is also the depth of the impacts.

And again, you'll see that as we move through here.

So this next slide highlights both graphically and with some bullets how the national forecast translates to our regional level.

And I want to take a moment to just point out that I'm going to talk about this in terms of these But what's described here is a true economic crisis, and one that has very real impacts throughout this region on those who have lost their jobs or who will lose their jobs, and those who are facing cuts in income and in pay and the like.

And that's not wasted on us who are working in the space, but I want to acknowledge that as we move forward here.

The darker red line in the graphics corresponds to the more pessimistic, the slow recovery scenario.

The orange line is the more rapid recovery and the less deep recession.

And the gray is essentially trying to track what would have otherwise been.

So a couple of things to note here.

One is just how large the impacts are in both scenarios, particularly in the slow recovery scenario.

Again, there's a high probability of that.

So this is not a far tail end forecast.

It is a core element of the overall forecast.

And again, in that slow recovery scenario, you see job losses of 170,000, unemployment peaking at 18 percent.

And I need to make a correction here.

There's a typo on this.

The income per capita in that slow recovery would drop by 22.5 percent, not 12.5 percent.

So very dramatic impacts.

Another thing that I want to highlight here is the length of the recovery.

This is not just a 2020 challenge.

The expectation is that it will be multiple years before we grow out of this, of these impacts.

Again, in the slow recovery well into 2024, before we see a full recovery.

To give you some context for this, in the Great Recession, job loss was about 100,000 jobs.

Unemployment was peaking at around 10% locally.

So the severe scenario, the slower recovery, is substantially more impactful than the Great Recession of 2008. So that gives you, I think, some scale and some context for what we're seeing here.

Moving forward.

I want to describe to you that one of the challenges in this is just how much uncertainty we are facing.

And a lot of that derives from the lag or the time between when taxes are accrued as being due and when they are actually paid.

So this graphic, and the biggest point about this is that we are only just now beginning to see actual tax receipt data from the period of the crisis.

What's listed here in this table are the four largest components of the general fund, property taxes, business and occupation tax, B&O tax.

sales tax and utility taxes.

I've also included real estate excise tax here for two reasons.

It's not technically in the general fund, but it's included for two reasons.

One, because it's a substantial revenue source in supporting some of the capital projects, so the major maintenance, I think roof replacement and heating and cooling system replacement for the facilities that we use to provide basic services, things like libraries and community centers.

So it's an important revenue source.

It was $100 million in revenue in 2019. But the other thing about it is that it comes in monthly, and it comes in with a relatively short lag.

So it's actually one of the few sources where we'll get relatively timely information, and it may help inform our sense of where the overall economy is.

But moving back just to review this, and again to emphasize the challenge we're going to have both right now in terms of the data we have, but also going forward in measuring and in tracking where we are.

Property taxes are paid twice a year, usually in April and October.

The April due date has been for some postponed till June to provide some relief.

In general, property taxes have been a solid and dependable revenue source even through recessions.

We saw a relatively small increase in delinquencies during the Great Recession.

I think you'll see our forecast isn't anticipating a big drop in property taxes, but clearly this is an element of concern given the potentially historic levels of unemployment and really a question about people's ability to make those tax payments.

Business and occupation tax is paid in most part on a quarterly basis, but the taxes aren't due until a month after the end of the quarter.

So business and occupation taxes for the first quarter through March are not due till the end of April, and then we take some time to compile that information.

So we're multiple, so it's three months delay from the beginning of the quarter and then another month plus from actually getting that information.

Sales tax, it comes in more frequently, but again, in a comparable delay.

Utility tax is, again, monthly, but on a delay.

So we're constantly in a backward-looking view in terms of the information we're gathering.

We are working to find some measures that are more timely so that we can keep track.

But again, I want to emphasize, we don't have a lot of information yet for what these impacts are going to be.

And we've got to continue to monitor this going forward.

That said, we also need a forecast, and I think it's a basis for acting now, so we've developed that, again, with this limited information.

The next two slides are designed to highlight the potential impacts on these key revenue sources to the general fund.

I'm going to talk particularly about sales tax and B&O tax.

Sales tax overall is a revenue source that provides more than $250 million to the city's general fund.

And again, what I'm emphasizing here in part is although we don't have detailed information yet of actual data, we know from the components that make up the sales tax that there's every reason to anticipate significant impacts here.

So I want to highlight, again, the key sectors that contribute to sales tax so you can see why we're anticipating significant impacts.

So I realize the text here is a little bit small, so I'll take some time to highlight the biggest components.

The largest single component for sales tax, which is the blue shaded area in this graphic, is from wholesale and retail trade.

So that is individuals out shopping for taxable goods and businesses purchasing goods from one another as well.

Obviously, under the current environment, much of that is not happening.

The gray share, just directly opposite in this circle diagram, is for construction.

It makes up, or had made up, 27% of sales tax, so a very significant component.

Currently, rules are being modified as we speak, but for some time now, construction was not designated an essential function, so many work sites, job sites, have been closed down.

And even when those restrictions are loosened, it'll be an open question how much resumes.

History suggests that many of the existing projects will be followed through to completion because they'll have been financed and there'll be a strong incentive to complete the project with some hope of generating revenue to help pay off loans and the like.

But whether new projects are initiated will become a very open question.

And we expect, obviously, a fall off in our overall level of construction activity.

But again, it's been a huge component of sales tax.

The orange piece of the pie, if you will, is food service, accommodation, and recreation.

So that is both local residents, eating out and engaging in entertainment, but also along with the components of the blue piece of the chart are tourism industry.

And there's every reason to think that, which is obviously strongest in the summer, and every reason to think that it will be dramatically smaller than it has been in the past.

So again, although we don't have data on hand, it is apparent that sales tax will be significantly affected.

Business and occupation tax, in total, it's a comparable share of the revenue stream into the general fund, well north of $250 million.

What you can see in looking at the pie chart here is that the B&O tax is somewhat broader based, so it's not as reliant on any single sector or group of sectors.

However, if you look around the chart, You'll see that virtually all of these sectors, so wholesale, retail, trade, construction that we've already talked about, but also professional services.

Doctors and dentists and the like, particularly lawyers, accountants, all of these industries have been dramatically affected.

So we're anticipating somewhat smaller impacts on B&O, because again, it's not as dependent on the industry sectors that have been most directly affected.

But ultimately, we're still anticipating significant impacts on B&O revenues as well.

Again, both sales and B&O are each about 20% of a little bit more of the general fund.

So overall, we're talking about a very significant share of those revenues.

The next graphic is an attempt both show the it focuses specifically on revenue.

So this is no longer talking about the broader economy, but actually the revenues to the city.

These are the general fund revenues reported you in billions of dollars.

We usually present them in millions.

Just in order to make this chart more legible, you see them here as billions of dollars.

And again, at least two things to note.

One is the depth of the decrease, the magnitude of the lost revenues.

And we'll show you those in specific in just a moment.

But also the duration of what we're talking about, again, emphasizing that this is not just a 2020 issue, but we'll see the gray line on this graph is essentially the trend that we had been on otherwise in terms of revenue growth and expenditures.

And you can see that even by the end of 2022, and we are now both engaged in the process of rebalancing the 2020 budget, and starting to build the biennial proposal for 21 and 22. And you'll see that there are significant revenue impacts for 21 and 22. So as we build those budgets, we're gonna have to make structural adjustments in the level of spending that the city undertakes, other things being equal.

And we won't be back to the levels of revenue that we would otherwise have taken in for multiple years after as well.

very large impacts and ones that endure for a fairly long period of time.

Now we get to the actual numbers.

I'm going to take a moment to describe what's on this chart so you can see it in detail.

So on the left-hand side is the list of the major revenue sources, so particularly into the general fund, the property tax, the sales tax, the B&O tax, utility taxes that we've all talked about, we've talked all about already to some degree, court fines and parking.

Not something we might normally call out, but you'll see the revenue impacts here are significant.

This is revenue that's associated with parking meters, and then also with parking tickets, so the fines associated with people who overpark, if you will.

That leads to a general fund total, and I'm going to come back in a moment and talk about some more detail there.

I wanted to note we have, although we don't usually report to you the proprietary revenues, if you will, that are earned by Seattle Center and Parks and Recreation, because they don't technically flow into the general fund.

So they're not usually part of this forecast.

They also don't usually change very much.

Typically, those are relatively steady revenue sources, and they change because of fee or rate increases.

Obviously, under the current conditions, as you can see in these forecast figures, we're expecting very dramatic impacts on those revenues.

And those revenues support the basic activities and services that are provided by Seattle Center and Parks and Recreation.

So I think we need, and if we're going to maintain those services, we're going to have to make up for these revenue shortfalls in some way.

They have no way to earn this revenue under the current conditions.

So again, I thought it was important to highlight those to be sure we weren't understating the impacts overall to the city's budget.

Going back up to talk about some of the specifics here, the first column of numbers is what we actually took in for 2019. The first column for 2020, the adopted budget, that is the budget to which we are balanced.

The 2020 figure revised is the forecast that we are presenting to you now.

And then you can see the change is highlighted in red because these are all decreases.

And then we have forecasts for 2021 and 2022. The reference to April in those column titles is that this is the April forecast.

We'll update them again when we bring you a forecast in the August, September timeframe.

So note, as I had mentioned previously, not anticipating significant drop-off in property taxes.

but we will need to monitor that to see whether that actually prevails.

This drop is consistent with increases, or actually really increases in delinquency that we saw during the Great Recession, but conditions here might actually be notably different.

Again, we'll need to watch that.

We'll get some information from the April payments and some additional information we expect in June, and then again in October if things stay on a normal schedule.

Sales tax, a drop of $65 million.

That's just about 20% of that revenue stream.

Actually a little bit more.

Business and occupation, comparable percentage.

Utility taxes, smaller decrease relative to forecast.

Demand for utilities has definitely declined, but not as substantially as the overall economy.

I mentioned court fines in parking.

Made a policy choice recently to stop collecting parking meters, fees.

This is to provide access to parking for essential workers who did not feel safe on the transit system or from whom transit service was no longer available as Metro has decreased overall levels of service.

Again, Seattle Center, so let me pause for a moment, overall total in this forecast, and I should have said this is the slow recovery, the more pessimistic forecast, Given the relatively high probability assigned to this forecast, from a budgetary perspective, we think we're ultimately going to need to develop a plan that could handle this situation.

And we'll talk more about our work in that area.

But again, overall impact to the general fund of more than $185 million.

And note, too, the relatively modest growth into 2021, so again, emphasizing that this will be a challenge for 2021, Stronger rebound into 2022, but again, given how far we have fallen, still not at the levels of spending that we had planned even for this year.

Seattle Center, again, their revenues rely on rental payments from arts and entertainment functions on campus, and they are not earning those revenues now and are unable to make those rental payments.

They also have some commercial activity.

Parks and Recreation, This is forecast of lost fee and event revenue for that department as well.

Moving to the next page, these are not, these revenue streams are ones that, again, do not technically flow into the general fund.

However, they do support general government activities and there are potentially, again, impacts that we'll need to address in terms of rebalancing the 2020 budget.

Probably the largest single percentage impact is to the admissions tax.

Admissions tax obviously relies on ticketed events, movies, sporting events, Space Needle, a few other key entertainment elements are the drivers there.

We're anticipating a very significant drop there.

That fund does have a bit of a reserve.

Anyway, the immediate impacts don't have to be as dramatic as that, and we'll talk about that, not today, but probably in the coming weeks.

The short-term rental tax, or the Airbnb tax, again, given activity or lack of activity, significant drop there.

The soda tax, the sweetened beverage tax, again, a very significant drop, almost 50 percent without the daytime working crowd.

Going out for meals and ordering soda, significant loss there.

Real estate excise tax, again, not technically a general fund, but supporting general fund departments.

Very significant decline there, 40% roughly of what had otherwise been anticipated.

STBD is the Seattle Transportation Benefit District.

A component of that is sales tax reliant.

So there's the .1 sales tax that supports the Transportation Benefit District, so significant impacts there.

commercial parking tax, school zone camera fund.

Again, those are dedicated revenue streams that support transportation activities and significant declines there.

So in those non-general fund components noted here, another $80 million of impact for a total of nearly $300 million in general fund and general fund related revenues that we do not expect to see that we had otherwise built the budget towards.

So obviously, we're going to need to address this to rebalance the 2020 budget and make some significant changes in the projected spending.

That said, we have a number of reserves and fund balances that will help mitigate these impacts.

So it doesn't have to be a $300 million reduction in spending, but we will need an overall strategy.

We are working on that now.

And expect to bring back to you a full plan shortly.

But I did want to give you a sense of the kind of resources we are looking at to achieve that rebalancing and to mitigate potential impacts in terms of reduced spending.

So the city has two significant reserves for the general fund expenditures, the rainy day fund.

It's technically called the Revenue Stabilization Account.

It has about $61 million in it.

It is intended most specifically to address revenue shortfalls, so the exact situation that we are in now.

We also have the emergency fund.

It has almost $67 million in it, so between the two, north of $125 million.

The emergency fund is technically focused on additional expenditures.

I'll talk here in just a moment about our experience on the expenditure side in terms of impacts and mitigation.

We do think there is flexibility in the emergency fund that it could also be used to address the revenue shortfalls of truly unprecedented levels that we are expecting now.

We do have a little bit of good news, if you will.

We finished 2019 a good deal ahead of where we had expected in terms of general fund resources, so more than $18 million, $18.5 million that we'll be able to apply to the current situation.

We're also taking a very, very hard look at requests to carry forward unspent resources from 2019. In general, departments make requests for the complete work that they had not managed to achieve in 2019. Again, given the revenue picture, we're taking a renewed look at those requests.

We'll bring something forward for you at some point, but of a relatively modest nature.

We've already taken some steps to reduce 2020 spending, so there's a hiring freeze for positions not related to COVID response.

There is a waiver process, so we're sure to make sure we have the individuals we need to provide essential services overall.

We've also taken steps to limit departments executing new consultant contracts that are not, again, COVID-related or providing essential service.

And we've asked departments for proposals that we are now reviewing about how to eliminate or at least curtail non-essential spending overall for the remainder of the year.

There are other fund balances and one-time resources.

I mentioned that we'd finished the year out for 2019 and the general fund side to the good.

It also finished to the good on the real estate excise tax side.

There was a change in state law that was going to increase, that has increased the real estate excise tax at the state level, which is different than the one that we collect.

That increased at the beginning of January.

So there was an incentive for transactions to be completed before year end.

So there was a significant bump in commercial transactions that led us to finish the year about $20 million ahead on real estate excise tax.

that will help mitigate the 35 million plus that we now expect not to receive in 2020. That's just one example of the fund balances that we're reviewing.

We're also looking for the potential use of levy funds and the Metropolitan Park District funds.

Those are voter approved dollars, they're property tax source revenues.

So per the presentation so far, we expect them to be hit relatively less The levies are generally designed to be additive to a base level of service that's provided from the general fund.

The challenge obviously now is that the general fund may not be able to reach that base level of service.

So reprioritizing the use of levy funds is something that will make sense to reconsider.

There are provisions in each of the levy authorizing legislation and in the MPD for an economic shock.

Certainly didn't anticipate one of this magnitude, but there was flexibility to deal with difficult situations.

had been informed by the experience in the Great Recession.

So it may be just the right opportunity to take advantage of that flexibility.

And then also there are federal and state resources, and I want to comment here a little bit.

To date, we believe we spent about $15 million directly on COVID response, not necessarily including, that includes overtime, but not regular time for city employees.

It also includes expenses for services that we've purchased, things like shelter, assistance we provide as a small business, rental assistance, food, at the actual protective equipment for first responders and the like.

Given the programs that we have standing and we anticipate standing up, the expense of the total response will be as much as $100 million.

Again, and that assumes that by summer, the social distancing and some of the responses will be tapering off.

So, we have those expenses are largely, we believe that that $15 million and what's to come can largely be addressed from state and federal reimbursement.

So, the risk to the budget are more on the revenue side, again, as highlighted in this presentation, and less on the expense side.

We've received some of those monies.

We've provided legislation to accept some of that federal and state money, and we're continuing work with the Office of Intergovernmental Relations to have some input at the federal and state level about the resources that are provided, and in particular, the flexibility that those resources are provided.

are provided, are made available to the city.

So how flexibly can we use the money is a key component in terms of the value of that state and federal support.

Again, we're working on a package of actions that will rebalance 2020, and it's the same time we're developing, beginning to develop the 21 and 22 biannual budget.

So that's the overall presentation.

I'm obviously happy to take questions at this point.

Thank you, Director Noble.

I really appreciate the walkthrough and the sobering reality that you have painted for us, not just in the near term, but in the long term, as we think about crafting a budget, avoiding an austerity approach and considering additional revenue to plug the holes that you've discussed, recognizing that any local action is also not going to be sufficient given the gap.

But how do we complement any federal or state efforts as well?

And to try to be as proactive as we can, given the quick that we find ourselves in and how fast this recession has snuck up on us compared to the previous one.

So thank you for painting this picture for us.

Colleagues, I'm going to take questions in the order in which you were read into roll call today.

And just by way of reminder, that is Council President Gonzalez, Councilmember Herbold, Councilmember Juarez, Councilmember Lewis, Councilmember Morales, Councilmember Peterson, Councilmember Swanton, Councilmember Strauss.

I felt that was the fairest way to take questions.

Again, if you have one or two questions, please put those out for Director Noble, and we will go through, if you don't have any questions, that's perfectly fine as well.

We will have more chances to engage with Director Noble and his entire team frequently over the next few weeks here.

Council President Gonzalez, you are first.

Do you have any questions?

Just really quickly wanted to say thank you to Ben for the thorough presentation and for, again, as Chair Mosqueda has articulated, giving us a sobering presentation on the state of financial affairs for the city.

Really quickly on page slide, now I'm looking for it, slide 10, in the general fund revenue slow recovery scenario, you gave us that sort of slow growth scenario.

And on the very bottom, it talks about how these 2020 totals do not include the Mercer mega block proceeds.

Can you just talk about that a little bit more?

Yeah, the reason we excluded those was just to make the year-to-year comparisons more insightful, if you will.

So there's a total of about $80 million to be paid to the city in 2020 for the sale of the Mercer block.

At the moment, that transaction, we expect it to still move forward.

We're actually just finalizing the development agreement.

But if we had put that total into 2020, there would have been would have overemphasized the growth from 2019 and the decline into 2021. So it's a one-time, kind of distorts a little bit of the overall picture.

And we thought in terms of doing year-to-year comparisons, it was more useful to exclude it.

But at the moment, the transaction is anticipated to move forward.

And the resources there, they had other intended purposes, but they could be an element of addressing the shortfall, depending on the policy priorities that you and the mayor overall set.

that has certainly occurred to me as a potential resource in this bigger picture.

I appreciate that.

I mean, I think it's important for colleagues in the public to understand that that is $80 million worth of revenue that is part of that.

I understand why it wasn't included in the general fund revenue slow recovery chart, largely because it's intended to show what the recovery trend is going to be as opposed to I appreciate that.

I don't know what hard dollars we expect to have in those respective columns.

I appreciate that.

I don't have any other questions at this time, but look forward to continuing to engage with the city budget office and with the mayor and with all of you colleagues as we continue to digest and further analyze the

Thank you.

I think it's going to be two questions, but the second question is a multi-part question, so please bear with me.

So on slide three, the national projections for the baseline end of the recession appears to be 2020 quarter three.

but the employment peaks a quarter later.

So I'd like to understand that, especially since we are basing some of our local projections on the national projections.

And then secondly, As it relates specifically to the process that we are going to be going through in identifying reductions, I know that the budget office asked departments for potential cuts in March.

So the budget office will be receiving those recommendations from the departments, and then the budget office will propose cuts based on what the department submitted.

I'd be interested to know, one, when you anticipate doing that, two, when the council can expect a supplemental budget bill, and three, if we can expect the same sort of transparency that we typically have during the budget process, where we can see the departmental submittals, sort of what they said, hey, we can live with these cuts or and then also see what the budget office is recommending to the mayor.

That adds a lot of value to the council's process to kind of see that back and forth.

So that would be really helpful as well.

And we'd like to know when we can expect a supplemental budget bill.

Thank you.

So to answer the first question on terms of the distinction between the time period for the recession and the peak unemployment, I wouldn't read too much into that.

Recession technically ends when growth begins again in output.

But the actual changes to employment can lag slightly on that, but that's the difference there.

It's only a slight difference in time, so not something I'd read too far into.

In terms of processing the reduction proposals from departments, we're doing that right now, working with the mayor's office and reaching some recommendations on those.

I don't see any particular barriers to being transparent about what was proposed and our work through that.

I'm going to be a little bit less than committal on the exact timing of a supplemental only because the situation continues to evolve, and we want to bring you changes that are as informed as possible.

Just to be very specific about this, your way of an example.

The stimulus three bill includes a formulaic allocation of as much as $130 million to the city.

the restrictions or the guidance on the use of that $130 million has evolved some, and it's actually potentially a point of political dialogue right now in D.C.

And that's a big difference.

So I think we are expecting that even with that money under all circumstances, there's some level of spending reduction that will need to occur.

So it may be that we'll bring you an initial set of recommendations, saying really under any scenario, there is some spending that we realistically are not going to be able to afford.

There's also some issues, I mentioned there's some carry-forward requests that we'll need to process, and we can bring you those as well.

So I'd expect in the next couple of months, but I don't have a specific date, only because the situation is as fluid as I've just described.

Thank you, Dr. Noble.

Thank you, Council Member Herbold.

Council Member Juarez, do you have any questions?

She may be on mute.

Here I am.

I'm here.

Can you hear me?

Yes.

Thank you, Council Member Juarez.

Sorry, you caught me off guard.

I do.

First of all, would you mind, Dr. Noble, to just quickly look at slide 10 and 12, mainly 12. My main concern, of course, is chair of the Metropolitan Park District.

is on page 12, bullet one, two, three, four, is it bullet six, under levy funds.

So this is gonna be a question I'm sure will come up during the Interfund Loan Agreement as well.

I have real concerns about when you say to pursue the flexibility allowed under authorizing legislation.

As you know, we have the 2014 levy part funds, and when you say flexibility, as a lawyer, what I'm thinking you're saying is whether we can use taxpayer money for a specific purpose, i.e. parks, for another purpose, hoping that it's going to be paid back.

Is that what you're getting at there, that there's some wiggle room in there to use levy funds like the park levy funds to either rebalance the budget or for any other purpose?

That's all I have.

Thank you for the opportunity to clarify.

The levies would only be used...

for the overall purposes in which they were intended.

So the Parks District isn't technically a levy.

It's a separate taxing authority, but it operates not unlike one.

It's a voter approved property tax measure.

So Park District resources would be used for parks.

Library levy resources would be used for libraries.

The question is that if the base level of funding for which the levies were intended to be additive are no longer feasible, Would it make sense potentially to use some of the levy resources to support some basic operational activities?

As just a tangible example, if there are some capital projects that had been intended to be completed with levy resources, and there are operational activities that might be cut, and there are higher priorities in those capital measures, there could be a shift in funding in that way.

But it would be parks to parks, if you will, transportation to transportation, library to library, not across.

That would not be, I don't believe that'd be legal given the restrictions on the voter approved measures.

Correct.

Thank you.

Thank you, Council Member Juarez.

Council Member Lewis, one or two questions from you?

Thank you, Madam Chair and Director Noble.

Thank you for your presentation.

You know, it's taken me, it takes me back a little bit to when I was at the University of Washington Student Government during the Great Recession, sitting through a HEC board meeting, Higher Education Coordinating Board.

committee meeting that was making similarly so over forecast that's not um it's it wasn't a good feeling then it's not a good feeling now but i appreciate getting the uh the unvarnished um information even if it is bad news and getting it early so i appreciate the presentation i did just want to ask I have a couple of questions.

The first one sort of related to comments that Councilmember Herbold made earlier.

I know that there was some quick action by the executive to get directives out to departments on looking for ways to potentially mitigate some of the harm by looking at a citywide hiring freeze, looking at certain funds that could be offset.

Do you have any estimate at this point on how much protective measures like that, how much of a difference it would make in these forecasts for the 2020 spending?

Or is that still too speculative and too early?

I mean, it's a couple tens of millions kind of flavor, but not dramatically more than that necessarily.

So, but again, I don't have, I really want to bring you a more complete and full picture, which is what we're working on now, rather than pieces of information.

I appreciate that.

And this is sort of related to that.

There were certain budget commitments that were put forward by the council but provisoed in the last budget.

I'm curious if, in terms of the measures coming back from the departments, if commitments that the council has made and funded but that were under proviso, pending a little bit more looking into it, if those are currently considered by the executive as things that are potentially subject to a savings a department could realize, or if they're afforded a different status since they're, while they're still in sort of the investigatory phase of looking into whether the, you know, based on information that comes back from the proviso process if we want to fund it, I wonder if those are considered in the same bucket as like, you know, a contractor who, uh, you might, you, the department was gonna maybe hire to do a project, but, um, it wasn't essential and maybe they, they aren't, I guess I'm just curious where things that have been specifically provisioned by the council as a priority might fit into this.

And, um, I just want to make sure that, uh, we're going forward with the assumption that those are, Those are budgeted in and should be in there, barring some kind of decision from the council when it comes back from the recent process.

But I just wanted to throw that out there and ask.

Yeah, what I'd say is that we're not We're not targeting proviso resources as something that would be cut if you, nor are we necessarily exempting them from the discussion about what kind of investments we can realistically make under the current conditions and what we can't.

But we will be transparent about our plans on those and the opportunity for dialogue with you about those.

Again, I'm not trying to in any way minimize or indicate that we're not interested in the priorities that you had identified.

I do want to be transparent that there is a lot that we had all hoped to do that we will not be able to do, but we're looking at it from an overall perspective and recognizing the policy priorities of the city's elected leadership overall.

Appreciate that.

Thank you.

Thank you, Council Member Lewis.

Council Member Morales, do you have one or two questions?

Yes, thank you.

I appreciate the information here.

I don't think it's any surprise to any of us that we are facing a serious recession.

And budget shortfall is clearly something we're all anticipating needing to deal with.

I'm curious about, I do feel like Dr. Noble just made a pretty strong case for why this bill is so important.

give a point to explain that, which is that, for example, Section 35 of RCW requires that our pension funds be diversified so that we minimize risk of losses.

So we are all benefiting from investing in several index funds so that we provide stability to our retirement.

And so I'm curious why, you know, if as a city, we exercise so much caution with our pension funds, but when it comes to how we fund the services that we need in the city to protect health and safety of 700,000 people, we're so reliant on three revenue sources.

The charts that you just showed demonstrate, you know, sales tax, B&O tax, property tax make up over 60% of our general fund revenue.

And if you take out the all else category, it's 77%.

So I just, I'm wondering why we are not attempting to minimize our risk to the city budget and find a better way to manage the things that we know we have to fund in the city.

I can only say that from the perspective of the budget office, this forecast is developed around the taxes that are now in place.

And at a broader level, the tax authority of the city is, we are a creature of the state.

So the tools that we have available in terms of raising revenue are largely defined under state law and the state constitution.

But it is certainly true that some of the larger streams into the general fund heavily influenced by economic conditions.

At some level, local revenues are inherently related to the local economic conditions.

We're forecasting a significant drop in employment and in income, so that's gonna have an impact on any tax source, but diversified, and we do have a relatively diversified tax base, can generally help mitigate those kinds of economic swings.

Thank you, Council Member Morales for that question.

Council Member Peterson, do you have one or two questions?

Yes, thank you, Budget Chair Mosqueda, and thank you, Director Noble, for being here today.

I want to echo some of the questions from my colleagues.

Thanks for the information about the Mercer Mega Block.

Also, the question about levy funds, that's also a concern of mine.

You and I, Director Noble, were both here when we were working our way out of the Great Recession.

And I know one of the things that we did at that time is we protected public safety and human services.

It was very important for the council at that time to protect our most vulnerable populations.

How would you compare this situation today with the situation in the Great Recession in terms of what you're potentially going to recommend with a supplemental budget?

The impacts here are likely significantly larger than during the Great Recession.

I think that I know that the mayor shares your sense of priority about basic public safety.

to the extent feasible, anticipate that we will preserve funding in those areas, but there may be opportunities for efficiencies.

There may be, in some ways, lower demand for some of those services as well, and that can be reflected in the funding that's provided.

this year and potentially beyond.

So, again, police and fire overall constitute, so that kind of basic, that notion of public safety, which is not necessarily the broadest one, are almost half the general fund expenditures, so they're a very significant component of the resources.

that are expended from the general fund.

Fully protecting them is not likely to be possible, but at the same time, being thoughtful about the way reductions are taken so that there are not significant impacts on the actual services provided is something that we're looking hard at.

Yeah, so just to clarify my comments, yeah, preserving the human services investments that we have is the personal priority of mine, so thank you.

Yeah, no, and that as well.

So again, given how much of the COVID response is targeting our most vulnerable populations, I'm not anticipating a significant reduction in it.

In fact, just the opposite, given the resources that are available to the state and federal government, and you're seeing that on the ground, significant investments to address the needs, for instance, of those who are living without housing and their very specific needs in the current crisis.

Thank you.

Thank you, Chair.

Thank you.

Councilmember Sawant, do you have one or two questions?

Thank you, Councilmember Mosqueda.

As an elected representative of working people, I don't have one or two questions, but I want to note a few things that I agree with from Ms. Noble's presentation, which was extremely well made.

I appreciate the seriousness with which it was made.

And the economic forecast in general is non-controversial and was well laid out, but there are other aspects that are, in my view, not merely economic facts or it's not a neutral economic forecast, but what actually happens will depend on policies that will be put forward by the city's government in the coming months.

I wanted to draw those points out from the presentation because they are really relevant for the majority who are struggling right now and also relevant for the topic of today's committee meeting.

The I appreciate Dr. Noble, you mentioning that, you know, not just mentioning, but really making a clear point that previous levels of the economy won't be reattained anytime soon.

That is going to be that, you know, there isn't actually at this moment no room for an optimistic scenario, given where things are.

But I would also add to one point that is, I mean, just from an economic standpoint, that resuming pre-pandemic economic levels is not a given by any means.

I think you'll agree with that.

And as you said, the depth of the crisis, the length of recovery, all of that is a little bit uncertain right now.

And it will obviously be a function of the pandemic itself.

And if epidemiologists' projections are examined, it's not going to be a straightforward resuming of the economy without some or considerable loss of life, uncertainty with vaccine development.

And I just wanted to say that, I mean, when you said assuming social distancing will taper off by summer, I assume that too.

But I also want to add a cautionary note that, for example, in Singapore, there's been a resurgence of the virus.

So I just wanted to be cautious in what we are painting as a picture for the near future.

Also, you mentioned the stimulus checks are simply not going to be able to compete with the cratering of the financial situation that tens of millions throughout the country are facing.

I think that's a very important point you made.

I just wanted to underscore that by also quoting Nobel Prize economist, winning economist Joseph Stiglitz, who said, this is a quote from him.

He said the very term stimulus that's being used by U.S.

Congress is indicative that the members of the U.S.

Congress don't understand the nature of this downturn.

There's no awareness of this on Capitol Hill at all.

In 2008, we were worried about the potential consequences of a credit freeze.

Then it was top-down, a freeze of the banking system.

But this time it's bottom-up, and that has not been adequately talked about.

If workers don't have wages, they can't pay bills.

They'll be buying food with stimulus money, but their balance sheet is still going to be ruined.

Just wanted to add that quote to underscore the point you made.

The other point that should be drawn out in a tremendous way, I think, is also the nature of the crisis that Seattle will face, that Washington State will face.

Again, it's not simply a product of the pandemic.

It's also very much a product of the deeply regressive nature of the tax system.

As Councilwoman Morales said, the dependence on sales tax which is the most regressive tax policy, it's no surprise that it's having such a tremendous impact and that it won't be revived unless people have money to spend and also just overall there's not going to be a recovery if we keep relying on regressive sources of taxes.

That is a cold, hard fact.

Whether the wealthy like it or not, they need to be taxed if we're going to recover the budget shortfall, let alone expand public revenues to build housing, create jobs, and all that.

The last point is on the last slide, where you discuss the reserves and other sources for making up the shortfall.

I wanted to note a very important thing that does not exist on that slide, and I'm not faulting you, Mr. Noble, in any way, but I just wanted to note this is where the city council's legislative work and the opportunity to show courage and leadership comes in, because what's missing in that slide is any new progressive revenues.

I mean, if we don't talk about that, we're really not having a serious enough conversation as elected officials.

I mean, we should not put this burden on the economists who are serving the city, but the burden is on us as elected officials to add one more thing there, which is the most important thing, which is new progressive revenues.

And then the other point I wanted to note in that last slide, which is very important, also goes to your point, Chair Mosqueda, that austerity budgets are unjust in general, but austerity budgets are not going to work in addressing the recession.

And so reducing 2020 funding, I think, That's a very generic title.

What does it actually entail?

I think austerity and social service funding, social needs, absolutely cannot be accepted because that will be an example of austerity.

Also, one specific example to include in that is, for example – Sorry, we're going to need to move on.

It's the last question.

Yeah, I just have one last point.

But these are important.

I would appreciate time to make these points because These are points that are relevant to the economic discussion and for working people.

Just to give you an example, if there's a hiring freeze at the Office of Labor Standards, this would mean that any worker in the city who files a complaint with the Office of Labor Standards will not get their issues taken up in a timely manner.

It will go on a wait list and may get handled in six months.

We're seeing a ramping up of the need for oversight from the city on wage and other discrepancies.

So I would just, you know, put a real caution over there that reducing 2020 spending cannot mean austerity in any way.

Thank you, Council Member Swat.

Council Member Strauss, one or two questions for you for Director Noble.

Yes, thank you chair and good afternoon director noble.

My questions are on slide 7 and 5. 1st question is the wholesale.

And retail trade make up 34% of.

Our tax revenue composition in 2019, looking at construction and food service industry.

food service accommodation and recreation.

Do we have an understanding of what the wholesale breakout into construction and food service is?

My question is, a restaurant that uses wholesale, do we understand what their impact to our revenue sources are on both levels?

I had to do some more research to get you a complete answer on that one.

I think further into how much information we have in the subcomponents of the wholesale sector, but we'll get back to you on that.

Thank you.

I just note that with the wholesale food service and construction that makes up 77% of our revenue sources, which is significant.

And then looking at construction being 27% of our revenue composition in 2019, and then sliding back to slide five with our wrong with our.

different models of recovery not currently having a system to create building permits for construction to come online at this time for the city.

Do we have an understanding of what that impact would be on our long-term recovery?

I don't believe that There's no permit activity going on.

I don't have a good sense of how services are being provided.

I've had my attention elsewhere.

I think it'll less be a question of, I believe, of our ability to permit, and more about the question of whether there are capital resources, money, willing to invest in the commercial and residential sectors going forward.

Again, history will suggest that projects that are underway will be completed, and there are a good number of those.

But whether there's a sense that in the end, the kind of construction of both the commercial and residential sectors is the bet that there will be a demand for the buildings once they're completed.

where that demand will come from is going to be the question going forward.

And as Council Member Sawant indicated, I mean, the situation we're in, I mean, we've talked about comparisons to the Great Recession, but this is not the Great Recession.

The economic shock here is one that is completely different.

And actually, it's one of the things that's made the forecasting at the national and other levels really challenging.

We're not forecasting in a situation that we understood or have ever seen really before.

So, but particularly on construction, I think it's really more a question of ultimately where the economy goes.

Very helpful.

Thank you very much, Director Newell.

Thank you.

Colleagues, I want to thank you all for your questions and extend a request that if you have additional questions that Director Noble didn't get a chance to ask, if you could send those to Kirsten and myself, I think we'd be happy to work to get all those additional questions answered.

Again, this will not be the last time, and I really appreciate the request that was made of Councilmember Herbold to have a robust, transparent, and fully engaged council as we talk about any supplemental discussions.

Director Noble, thank you for walking through this with us.

I think your presentation really underscores the threats to our city, our region, and our state.

That underscores this is not just a public health crisis, but it's an economic catastrophe on the horizon, and it's not just because of the pandemic.

It's decades of neoliberal capitalism that have also led us into this position of being so fragile.

So we are very excited to work with you.

I wish it was under different circumstances as we craft a responsive budget, but we, I think, ready and appreciate all of the extensions you've offered to engage with you as you consider a supplemental or future budget.

Director Noble, thank you so much for that, and we are going to move on, Council colleagues, to item number two.

And thank you.

Thank you.

Madam Clerk, will you please read item two into the record?

Council Bill 119774 establishing a funding plan for the proceeds generated from the payroll expense tax authorized by the ordinance introduces Council Bill 119772 to fund immediate cash assistance for low-income households impacted by the COVID-19 crisis in 2020 and the development of social housing.

Council Bill 119772 relating to taxation imposing a payroll expense tax on persons engaging in business in Seattle.

Council Bill 119773 relating to the financing of responses to the Civil Emergency Ordinance, authorizing the loan of funds from the Low Income Housing Fund to the General Fund, authorizing loan of funds, Housing Incentive Fund to the General Fund.

Thank you, Council Colleagues.

As we get set up here, I want to note that Kirsten Arnesad, the Executive Director of Central Staff and Central Staff colleagues will be joining us as well.

As they join us, I want to note for the Clerk and Central Staff, We are only seeing about half of the presentation on the slide in case that can be adjusted.

Council colleagues, we do have three pieces of legislation that have been introduced and we're considering them a package, a payroll expense tax package, as you've just heard, both in response to the crisis that's been created by COVID on our local economy and also in recognition of the funding deficiencies that were present even prior to COVID.

I'm going to have our co-sponsors of the legislation make a few comments here, but I want to note for our colleagues' reference that these three pieces of legislation are robust and they are dense.

Today, we are going to start with the spending plan.

I think it's an important way to complement the conversation we just had with Director Noble about the potential deficits in revenue that we are experiencing and in light of the conversation around possible cuts or a supplemental package or future budgets, it's important to talk about what the current need is created by COVID and also what the future needs will be given the potential revenue deficit with the status quo revenue streams that we have.

Before we turn that over to our colleagues to walk through the proposal as they've introduced it, Council Member Sawant and Council Member Morales have teed up to make some introductory comments.

I'll note that I believe we will have at this time today really a chance to get into the details on the spending proposal itself.

And then we'll spend next Wednesday, if we don't get to it today, we'll spend next Wednesday going in depth in our full committee presentation on the tax proposal and the Interfund Loan Agreement.

I think that there's going to be a robust conversation, and I want to note for folks that we are going to pause at three different points, even in this first part of the presentation, to take questions from all of you.

There's a slide that you will see that notes out that we're going to have an opportunity to pause at three different places, an overview of the bill itself, what the spending plan entails in terms of two major funding components, and then the implementation plan.

at three different places and ask if there's questions.

I'm gonna ask the co-sponsors to use their time today for their introductory remarks because we probably won't do that at the next meeting.

We'll just dive right into the legislation as introduced so that we can really get into it.

And I'll make some comments as we get started as well.

So Council Member Morales and Council Member Sawant, co-sponsors of the legislation.

I'll turn it over to you for some introductory remarks before we go to central staff.

Thank you, Chair Mosqueda.

I agree that, you know, this is, because we're starting the discussion, this is where myself and Jacqueline Morales should lay out the framework, and I have some prepared comments, and I will appreciate the time to from the city council to listen to these comments.

I want to start by wishing everybody good morning, council members, staff, and members of the community who are listening in and watching today's proceedings on our taxed Amazon legislation at this historic moment.

Thank you to all the staff who have helped.

Thank you, Council Member Morales, for co-sponsoring this.

I'm happy to fight for this alongside you and your office and the community that we share.

We're here to fight to pass a totally common sense legislation for urgent funding by taxing just the top 2% of the largest corporations at a 1.3% tax rate, and I want to talk about that in a bit, nonprofits, grocery stores, public employers, and basically 98% of the businesses by definition will not be taxed.

Workers will not be taxed.

This is not a tax on jobs, as big business representatives love to say every single time.

Just because they say it a million times does not make it true.

This is not going to be a tax on jobs.

The owners of the corporations that are going to be taxed will pay this tax.

That is those who are the wealthiest and those who have enormous cash reserves.

If this very modest tax is passed in May, then starting in June, we can have $200 million to give up to $500 of monthly cash assistance for four months for up to 100,000 households who are needing this assistance the most.

Starting in 2021, $500 million can be available for social housing and a Green New Deal-based programs, which will create thousands of good-paying union jobs, as you've heard in public testimony.

When my office and our movement first started formulating the specifics of the legislation way back in November, we knew we had to confront the emergency in Seattle.

And I'm not referring to the coronavirus pandemic.

Rather, I'm speaking of the stunning and unprecedented affordable housing and homelessness crisis that has been devastating working families in Seattle for years now and has been getting worse.

The term emergency is not exclusively my characterization.

As you know, four and a half years ago, the King County executive and the Seattle mayor, both representatives of a political and corporate establishment that I do not represent, also at that time declared a homelessness state of the emergency.

So that's an agreed upon statement, that official state of emergency continues to this day in Seattle.

And even before the COVID crisis, Seattle had the third highest number of people experiencing homelessness in the country.

This past January, the McKinsey & Company report admitted that the private housing market has utterly failed us and that in addition to the rise in rents from corporate developers and landlords, along with the wholly inadequate scale of new affordable housing construction, all of that has added up to a loss of more than 112,000 units of affordable housing in King County.

That's a loss of, over the last decade, that's a loss of 40% of housing stock affordable to those living below 80% of the area median income, which for a family of four is $87,000.

This is so stunning that it bears repetition.

over the last decade, our region has seen the destruction of 40% of our affordable housing.

Then in January, also the report estimated that the region needed at the time between $450 million and $1.1 billion each year for the next 10 years.

Then the coronavirus pandemic struck.

What was an overwhelming crisis of housing affordability transformed overnight into an absolutely staggering triple emergency.

Public health emergency, a jobs and income emergency, and a housing affordability emergency.

Aside from the tragic, absolutely tragic loss of lives, hundreds of thousands of Washington workers have lost their jobs.

In just the last four weeks, 624,000 Washingtonians, including more than 169,000 in King County, have filed first-time unemployment claims and we know that's an underestimate of the job loss because it fails to take into account gig economy workers, workers in the informal economy, self-employed people, many part-time workers and workers who have not yet filed claims.

At the same time, essential and frontline workers are risking their lives.

And indeed, we learned just days ago of a metro bus driver who died from coronavirus, the second bus driver in our region to die.

I think about these sacrifices that ordinary working people have made and continue to make every day.

when I read some of the emails coming in from big corporate interests protesting our tax Amazon legislation.

Workers have given up 100% of their incomes in many cases, have risked their lives and are continuing to risk their lives for our community, have made countless sacrifices in the face of this pandemic.

Our legislation calls on big business to give up a measly 1% of their income for the common good.

And in fact, the tax that Council Member Morales and I have proposed would be just 1.3% of the corporate payroll of the largest 2% of the companies in our city, which means that is just a tax on the payroll portion of the company's budget.

Unless payroll is more than three quarters of a company's overall budget, the overall tax burden, the net tax burden for the company is less than 1% of their budget, less than 1%.

Compare that to the 17% tax rate that working class households face, even households making $25,000 a year.

That is why I am stunned and disgusted, though not surprised, at how big business owners are crying foul.

Seattle Times has published no fewer than four hit pieces in the last four weeks.

For these big business representatives, sacrifice is something other people do.

You know, since the pandemic began, we've heard from the rich, we're in this together.

We heard today, we need unity.

Well, at a time when workers are giving their all, their incomes, their safety and security, and even their lives, and at a time when small businesses are wiped out or barely hanging on, these business executives and millionaires aren't even willing to part with a tiny sliver of their wealth.

Clearly, we're not in this together.

I wish we were, but we're not.

Our legislation calls on these major corporations to give up 1% or less than 1% of their money to address the COVID-19 emergency, and they are refusing.

This is beyond shameful.

We need to reject outright the ridiculous argument that these companies are so financially fragile, as you said, Council Member Mosqueda, that a modest tax of 1% will cause them to flee Seattle, incurring moving expenses along the way.

This is just good old-fashioned extortion, pure and simple.

And the logical extension of this argument is that we can never ask companies It's never a good time to ask big companies to take any social responsibility for paying taxes because they are liable to keel over at any moment, or they will pick up and leave in a vengeful act to punish ordinary people who have the courage to fight for their rights.

Well, we cannot accept that extortion, and certainly not in a pandemic.

But this is also about – I'm sorry, Chair Mosqueda, I need to finish my comments.

Okay, please do wrap up and go so we can get to Council Member Morales as well.

Thank you.

This is also about economics.

Big business saying that this is not a good time, this is not supported by economics.

I would suggest that they do some basic economic reading just on the media.

Harvard economist Kenneth Rogoff, who studies recessions, has said that we might see the mother of all financial crises going forward.

Even the corporate opponents of our Amazon tax, while they oppose the tax, agree that this emergency will last well beyond 2020. And until there's a universal vaccine program, we're going to have a public health emergency.

Big business and Council Member Alex Peterson have claimed that a tax on big business that will create jobs is bad during an emergency.

They say they can't believe that we're doing this, but they need to study history and they need to pay attention to basic economics because what we are trying to do is not only social justice oriented, but this is the only thing that is going to help economic recovery.

There is no economic recovery without progressive revenues fueling a public sector expansion.

This is classic Keynesianism 101. And I am in good company here.

And it's not just because I'm a socialist, but because I'm an economist.

And there are other economists, as I mentioned, Joseph Stiglitz, but also many other prominent economists like Danny Roderick, who are saying that we need jobs for people and we need money in the pockets of working people.

And that is when actually local economies will start surviving, you know, let alone thriving.

We heard from David Gosling, who's a small business owner from Vancouver in the public comment.

We heard from Carla Esquivel, who's a business owner in District 3, who are both supporting this tax for the same reason, that actually small businesses will experience a revival if working people get money to spend in their local economies.

I mean, as a socialist, I think we need to go beyond Keynesianism.

But today, we're only talking about classic Keynesianism.

This was the only thing that brought the economy, American economy, out of the Great Depression.

But at that time, It took the politicians at least three years to learn the lesson and actually carry out the public sector expansion.

So the question for this council is, are we ready to repeat the fatal mistakes of the Hoover administration through inaction, or will we recognize that committing to build affordable housing right now is part and parcel of addressing the COVID emergency.

I've also heard from people that this is not a city-only crisis.

Of course.

In fact, this is a global crisis.

But we have to start somewhere, and we cannot wait for the Inslee administration or someone else to act on it.

You know, that's how we won $15 an hour, and then we won a wage increase statewide.

We have won tenants' rights in Seattle, and then they went statewide.

I think we have to start here.

And the last thing I'll note is There have been claims, false claims, that there was somehow a narrow stakeholder group that developed this legislation.

Absolutely, that is false.

These are not rabid Trump supporters.

These are ordinary working people, union members, union leaders, non-unionized workers, faith leaders and activists, community members, housing justice advocates, people of color and immigrant advocates.

thousands of people who have been involved and hundreds who were involved directly in drafting the legislation through detailed discussion, debates, and voting on every aspect of the policy.

So I would urge that people who speak that way pay some respect to ordinary people who are getting together with a lot of courage.

And so now the question is, will the council show that kind of leadership and courage and not water this legislation down, take advantage of this historic moment, to show the way to stand with ordinary people, not with the greed of the rich.

Thank you.

Council Member Morales, do you have any comments that you'd like to include for the record?

Sure.

Thank you.

Thank you, everybody.

I know that we are going to have some robust conversation over the next few weeks.

So I appreciate your Engagement in this discussion.

We are two months into a pandemic that has upended all of our lives and we are all concerned about the future, our family and friends and neighbors have been laid off or furloughed.

Some have even had to say goodbye to loved ones.

And we all know that this public health crisis is having a grossly disproportionate impact on black and brown people.

those who can't stay home because their essential work puts them in harm's way.

So while there's a great deal of uncertainty about this moment, what's obvious is that an economic crisis isn't looming, it's here.

And our current system of taxation is a large part of what put us in the position of not being nimble enough to be able to respond quickly to the crisis.

So we know we'll be grappling with the effects of this crisis for years.

As Director Noble said today, we will be in the thick of it for quite some time, and that's exactly why we have to do something to provide support to our neighbors who are suffering.

I think this will really be a chapter of our nation's history, and it will either be remembered as a moment of ingenuity and courage, or as a series of failures.

So we have a choice to make.

And I do want to fully acknowledge that we need massive federal assistance to get through this emergency.

But the truth is that the one-time checks the Feds are sending won't begin to help keep families afloat.

And meanwhile, the financial sector in this country just got a $2 trillion bailout.

So the legislation that Council Member Sawant and I are sponsoring will accomplish three really important goals.

It will provide cash assistance to families who are suffering.

And we know that this is a critical tool for limiting the impact of the crisis until we can begin to emerge from the stay at home order.

We can support our constituents with the resources to address their immediate needs, especially since so many have been laid off and this can really provide a backstop for the families whose budgets are in free fall right now.

As a city, we've already acknowledged the need to expand the safety net.

That's why we've been providing free vouchers.

We've all been working on renter protections and eviction protection.

And this package of bills can help families pay for the bare necessities that can keep them going, whether it's groceries or diapers or prescriptions.

The second thing this will do is address the homelessness and housing emergency.

The cover article of the Seattle Times today tells how only people left on downtown streets, the only people left are our homeless neighbors.

And they are at risk of exposure to COVID-19 every day because they lack the housing and hygiene resources they need to stay safe.

We know that our homeless response needs to change for the safety and security of our unhoused neighbors.

We're already starting to experience the devastating effects of not having proper sheltering with increased cases of people infected with coronavirus and now also dealing with the need to manage a hepatitis a outbreak in addition to the global pandemic.

But we also know that we need massive structural change.

on how we fund public services here in Seattle.

We need to build a more resilient economy so that next time we aren't caught flat-footed.

We know, as many folks have already said, that we have an upside-down tax system in this city and in this state, where those with the least pay the most, while the wealthiest in our community get a special deal.

And after hearing Mr. Noble's account of the revenue shortfall we're facing, it's really clear that if the corporations, largest corporations in the city don't contribute to our coffers, we're leaving money on the table that could be used to invest in excellent services in the city.

So the questions I've been asking myself are who benefits if we do this?

It is our constituents.

Like DeAndre, who worries that his kids are going to go to bed hungry.

Like Jamil here in District 2, whose business hasn't received the grants or loans that are being offered to small businesses.

And Carla, whose business here in Columbia City we heard about earlier this morning already, who doesn't qualify for unemployment insurance because she's a small business owner.

But I think an equally important question to ask is who benefits if we don't do this, it will be powerful special interests with the resources and influence to manipulate our tax policy who come out ahead and who avoid paying their fair share.

This bill requires 2% of the wealthiest corporations in our city to pay, 2%.

That's all it takes to allow the city to craft a system that can deliver the resources to our communities that they need to weather the storm that's coming.

So the last thing I'll say is that we need to provide lasting economic security for our neighbors.

We can't go back to what we had before because what we had before was not serving the most vulnerable in our community.

Our system has been based on giving some folks shortcuts to wealth and power, and we have to move in a different direction with investments in housing and services and diversifying our budget options.

This is a time to transform how we think about ourselves and our community and how we rebuild our community so that it's rooted in opportunity.

We should learn at least one thing from the sacrifices that we're all making during this crisis.

And that's that the legacy of this pandemic should be that it was both a great leveler and a community builder.

And I'm urging you colleagues to support this legislation.

And I urge the mayor to reconsider her position and to sign these bills once we've passed them.

Thank you, Councilmember Morales and Councilmember Sawant for your introductory comments.

Again, Council colleagues, when we have our conversation next Wednesday, we're going to dive right into the policies that we don't get a chance to discuss today.

We do have with us Director Arnstad, we have Tracy and Ali from central staff as well who are prepared.

to walk us through this first bill as requested on this spend plan.

Council colleagues, as budget chair, I'm asking that if you have any questions on either of the bills, the ones that we covered today or ones that we will cover next week, I'm asking that you send an email to my office, to Sejal Parikh and Pearson Arnistad.

by Friday at noon, so we can try and get some of those questions teed up for next Wednesday.

As the budget chair, there's three principles that I'm really using to guide our conversation, and my hope is that we can use these three I's as we evaluate the policy in front of us.

Immediate, the ability to take immediate and urgent action to address the economic impacts for businesses, workers, and the families, and the crisis that they're facing.

that we identify something impactful, that the solutions that we discuss can be scaled to the size of the problem, and that it's inclusive, noting that past policies have left thousands of workers and communities in the margins, and we need to be inclusive as we both create the policy and inclusive in creating solutions so that everyone benefits.

I would also encourage you to identify questions or issues that you would like to bring to central staff's attention.

I know that they are eager to get issue identification pulled together.

And so please, as we ask questions or chime in, please highlight some things that you're interested in getting feedback on.

For example, I'm interested in making sure that the businesses who are gaining profits, even in this recession, are the ones that we are assessing, so we can have those entities step up and have the resources that we need to recover.

I'm interested in exploring possible exemptions or deferrals for certain struggling industries.

I'm interested in front-loading funding for food securities, such as food banks, local grocery stores, farmers markets, to make sure that there's food assistance for those across our region.

and our city specifically.

I'm interested in more small business support, child care assistance, partial wage replacements, and rental assistance.

Simply, I'm interested in the proposals as we discuss them in more detail to make sure we get money and relief to workers, families, and small businesses to promote economic relief and ensure everyone can participate in this economy.

We have a robust discussion ahead of us.

This is just the beginning, and I will note that our meeting next week, we will again have public testimony, but we're going to reserve the large portion of the meeting at that time to get into details on any bills we don't discuss today.

With that, thank you to our central staff for getting us kicked off.

This is the legislative process, a time for us to unite across any differences that we have and hopefully make tough and smart policy choices that truly help everyone.

By the time we get through this discussion, I'm looking forward to working with all of you to make sure we have an inclusive conversation about the policies in front of us and any other strategies that folks are interested in highlighting.

Director Arnistad, I'll turn it over to you to make some introductory remarks and then turn it over to your central staff.

Thank you so much for being with us on the line.

Director Arnistad, you are on mute.

Mute myself?

Thank you, Madam Chair, members of the committee.

I'm Kirsten Aristad, Director of Council Central Staff, and I would like to spend two minutes on two items.

First is the context or how we got here.

And second, the order of the Central Staff's presentation in that it differs from the published agenda.

So by way of context, you may recall that council members Sawant and Morales held a press conference in February of this year.

The annual revenue goal for that proposal, which is referred to as the tax on corporate payrolls, was $300 million annually beginning in 2021. Shortly after their press conference, the mayor declared a civil emergency related to the COVID-19 outbreak on March 3rd.

And on March 5th, the council modified the mayor's proclamation by resolution 31937. Council members Sawant and Morales, in response to the economic impacts of the crisis, requested that central staff amend their original tax proposal.

The new payroll expense tax proposal would raise an additional $200 million per year, bringing the total annual revenue to 500 million.

This new package includes three separate but interconnected bills as shown on slide one of the PowerPoint, including the names of the lead central staff.

Here we go.

So the normal order of central staff's presentations in discussions with many of you have followed today's agenda.

We would have first discussed the tax bill that outlines the revenue goal, the tax structure, and the exemptions.

Secondly, we would have discussed the Interfund Loan Bill that supports the borrowing of monies from various targeted city accounts to fund the sponsors' immediate spending priorities.

And third and last, we would have discussed the spending plan bill that describes how the tax revenues would be spent.

However, at the request of the chair, we are reversing this order today.

Central staff will speak first to the spending plan bill, followed by a discussion on the tax and the inter-fund loan bills.

But before moving to the spending plan discussion, the goal, again, is to withhold questions until the conclusion of each bill's presentation.

And I would just like to note that central staff will endeavor to answer questions about what each bill does.

That is to say, answer the technical details or questions.

However, central staff will look to the bill sponsors to answer questions regarding the why of each bill as these are policy choices.

So with that, I will turn it over to Tracy Ratzliff and Ali Panucci of council central staff.

Thank you.

Councilmembers, good morning.

Tracy Ratzlaff, Council Central Staff.

Good morning, Councilmembers.

Allie Panucci, Council Central Staff.

So as Director Aristad has indicated, Allie and I will provide a summary of the proposed spending plan legislation.

Moving to slide three, our presentation will cover the following key elements of that legislation.

The emergency cash assistance, spending by category in year 2021 through 2025, and then implementation.

This presentation will track with the memo that was emailed to you on Friday and is attached to today's agenda.

Moving to slide number four, this describes the very first category of spending, which is the emergency cash assistance.

$200 million will be provided in 2020 to assist up to 100,000 low-income households, including seniors, immigrants and refugees, people experiencing homelessness, and others impacted by the COVID-19 crisis.

The cash assistance will be funded with an Interfund loan in 2020 and repaid with future revenues from the tax on corporate payroll collected in 2022. You will hear more about these fund sources when the two bills authorizing such are discussed by Tom McSell and Dan Eater next week.

Payments of $500 per month over a four-month period will be provided to households for a total of $2,000 per household.

distributions of funds could, in part, be based on the model that's been used for the emergency grocery voucher program.

The goal of this program, just to remind folks, was to get the dollars out as quickly as possible and to target it to those most in immediate need, including families with children and, in particular, communities of color who may not have ready access to normal governmental assistance programs.

The first $100 million will be distributed to low-income households enrolled in existing city assistance programs or state assistance programs administered by the city.

These programs include Utility Discount Program, Fresh Bucks, Early Childhood Education and Assistance Program, Child Care Assistance Program, Seattle Preschool Program, and Pathway to Seattle Preschool Program.

The remaining $100 million would be distributed to those impacted by the COVID-19 crisis, but not enrolled in an existing city assistance program or state assistance program.

These funds would be prioritized for low-income households who are unemployed or had work hours severely reduced, seniors, immigrants and refugees, those at risk of deportation, those experiencing homelessness or who lack a permanent address, those households with language barriers, or those experiencing domestic violence.

The legislation directs the executive to develop eligibility criteria for distributing this second tranche of funding and to provide a written report or brief the council prior to distribution.

Once distribution begins, the executive will be required to give monthly reports on the allocations that are made.

Ali will now go over the spending plan for 2021 to 2025.

Thank you, Tracy.

And when I said good morning, I meant good afternoon before.

Moving to slide five, this table outlines the proposed spending by category for years 2021 through 2025. The spending plan assumes that the annual tax revenue for 2020 is $286 million, assuming a June 1 effective date, and $500 million for 2021. and then increases annually for inflation on all future years.

Payment of taxes owed for 2020 and 2021 will not be remitted until February of 2022, but those payments get accrued back to 2021. Therefore, the spending for 2021 includes the estimated tax revenue for both years.

In 2021, about $205 million would be used to repay the principal and interest owed on the Interfund loan for emergency cash assisted that Tracy just described.

Then after paying back that loan in 2021 and for 2021 and all future years after funding the admin costs to implement and administer the programs, 75% of the tax revenue would be used to develop and acquire affordable social housing and to provide ongoing operating and service costs for permanent supportive housing units.

The remaining 25% would be used to support implementation of select housing-related strategies identified in Resolution 31895 related to Seattle's Green New Deal.

And I'll just note on this slide in the title for the Interfund Loan Repayment, it says Interfund Loan Repayment.

It is intended to be loan.

So moving to the next slide, slide six, I'll go into a bit more detail on the proposed spending for social housing investments and Green New Deal investments.

And kept calling so sorry Allie just a quick reminder.

I'm going to pause after each one of these buckets so that you can ask questions specific to those buckets.

So as I just noted 75 percent or about one point nine billion would be used to fund the development or acquisition of about 5,600 housing units affordable to households with incomes between zero and 100 percent of area median income by the end of 2025. There is an error on this slide that says it would serve households with income 0 to 80% of AMI.

It is, as noted in the legislation, that is meant to be 0 to 100% of AMI or area median income.

The unit estimates of 5600 is based on a number of assumptions that are listed on page 4 of the central staff memo.

I won't go into those details now, but it's worth noting that depending on what assumptions you use, that would change the estimate coming out of the model.

Further, the actual number of units built could vary significantly depending on the type of units, location of the development, construction costs, et cetera.

More details on the specific investments will be included in the implementation plan that Tracy will describe shortly.

And that could include things like specifying how the investments are broken up between acquisition or building new units, as well as targeting specific income levels.

The proposal also requires that all new housing will be built to meet green building standards and that the projects include priority hire requirements, prevailing wages, apprenticeship utilization, and other labor standards to be included in a community workforce agreement.

Depending on the range of labor standards included, that could also change the assumptions around the per unit cost estimates, which would also impact the number of units we would estimate could be built.

That's the summary of the social housing investments.

Chair Mosqueda, would you like me to pause there?

You know, why don't you go ahead since we seem to be going relatively fast for this first portion of the presentation.

to go ahead with the cash assistance and green new deal investments and then we can see if there's questions.

Great.

Thank you.

And Councilmembers and Chair Mosqueda, we intentionally tried to keep our presentation relatively brief so we have time to answer some questions today and collect questions that need to be addressed in the future.

The after spending on social housing, 25% of remaining funding or about $648 million in years 2021 through 2025 would be used for investments in housing related strategies identified in the Green New Deal resolution.

Funding would be prioritized for investments to convert residential housing units from natural gas and heating oil to an electric heat source, weatherization of existing residences with a priority for multifamily rental housing, solar installations, and investing in job training programs to help workers transition from jobs that are dependent on the fossil fuel industry to the green economy.

Ultimately, the investment decisions will be detailed in the implementation plan with input and recommendations from the yet-to-be-established Green New Deal Oversight Board.

Unless there are questions here, Tracy will now walk through the other provisions of the legislation related to implementation.

Great, let's do implementation and then we'll take some questions.

Okay, moving to slide seven.

The executive is directed to submit an implementation plan to the council for the new tax.

that would be specifically, the legislation currently says it's supposed to be sometime in 2020. We will need to actually probably insert a specific date and depending on when, if this legislation is adopted, may need to think about the timing of that plan based on when the two boards that I will discuss, the Social Housing Board and Green New Deal Board are actually able to be stood up so that they could provide some input The plan, the legislation does require that the executive work with the Social Housing Board and the Green New Deal Oversight Board to develop that implementation plan.

This implementation plan would include specific spending proposals for the housing and services and Green New Deal investments for years 2021 through 2025, consistent with those that are included in the legislation.

The proposed outcomes for each fund Funded program or service would also be included in the plan.

How the programs or services will be implemented, such as the responsible department and the funding processes.

Proposed policies for implementing funded programs or services that prioritize investments in communities historically most harmed by economic, racial, and environmental injustice, and those at risk of displacement.

How the Social Housing Board and Green New Deal Board will coordinate to provide ongoing program and policy review, oversight, and monitoring.

of expenditures and reviewing performance of the programs and services implemented.

Also any necessary changes to the city's housing funding policies, including an annual reporting requirement for expenditures under the spending plan.

Moving on to the oversight boards, a new social housing board supported by the office of housing would be created to guide and oversee all housing and housing related services investments.

This would be a 23 member board, including three representatives from each council district, plus two or more get engaged members.

Members of the board would include renters and homeowners, individuals from historically underrepresented groups, as well as individuals with housing development and finance experience.

Initial membership would be established through a council appointment process.

Before the expiration of the initial appointments, estimated to be 2023, an amendment to the city charter would occur to allow for members of the social housing board to be elected by the people.

If the charter is not amended, the council would continue to appoint members to the board.

This board would provide ongoing monitoring of housing and services expenditures and make a recommendation on any future changes to the implementation plan or housing funding policies, changes to the Office of Housing's annual funding request proposals, and changes to the annual housing budget priorities funded with revenues from the tax on corporate payroll.

The Green New Deal Oversight Board, established by Ordinance 125926, would guide and oversee the proposed investments in the Green New Deal housing related strategies.

It would also be required to meet annually with the social housing board and to coordinate their activities and to make recommendations to the city council and the mayor on renew deal housing related strategies, as well as other funding strategies.

As it relates to appropriations, the legislation includes a $200 million appropriation for the direct cash assistance spending that will take place in 2020. The legislation does not currently identify a specific city department to direct the appropriation to, so we would need to amend the legislation prior to enactment to include which department that appropriation would be targeted to.

And then finally, the spending plan legislation is proposed to provide a response to the public needs that have resulted from the COVID-19 crisis and the homelessness civil emergency, and thus includes an emergency clause.

Therefore, it would become effective immediately if passed by three quarters of the council members and signed by the mayor.

Allie and I would be happy to answer any questions that you have about the legislation.

Ali and Tracy, thank you so much for your time and your presentation.

Can we go back up to slide five and just keep that on the screen for folks to take a look at?

Council colleagues, my intent was to take questions from you on the four buckets that you see here.

The first, the Interfund loan repayment for emergency cash assistance bucket.

The second, the housing, the affordable housing bucket.

and services.

The third, the Green New Deal implementation.

And fourth, the start of an ongoing administrative cost.

Feel free to ask questions about any of those in lieu of us pausing, given the expediency of presentation.

And we appreciate that and your staff memos that you sent on Friday evening as well.

A lot of hard work has gone into helping to explain the legislation in front of us.

And again, this is just the one bill on the spending plan.

Council colleagues, I'll go through the order to see if anyone has any questions and feel free to pass if you do not.

Council Member Gonzalez, do you have any questions for us?

I don't have any questions at this point.

Thank you, Council Member Gonzalez.

Council Member Herbold, any questions from you?

Council Member Herbold may be on mute.

I will come back to her if she is available.

Councilmember Juarez, I received a note that she does not have any questions, but please do let me know if you do have questions later.

Councilmember Lewis, any questions from you?

Yes, thank you.

Just a brief clarification.

So looking at the $205 million for the Interfund loan to be repaid in 2021, Is that $205 million number inclusive of interest or is that before interest?

If so, how much interest would accrue and how does that factor into the overall loan to be repaid in 2021?

Thank you, Council Member Lewis.

So that $205 million does assume both the principal, paying back the $200 million principal plus interest.

The exact interest that will be owed isn't certain right now.

And so we were looking at about 1.5% interest, but we conservatively rounded up a bit so that there is enough there to both repay the principal and any interest owed.

So we don't expect it to be.

more than $205 million to repay back that loan.

And the way the legislation is structured is that if it is less than $205 million, anything left over would be split 75-25 between the affordable housing and Green New Deal investments.

All right, thank you for clarifying.

Thank you, Council Member Lewis.

And I do think that we have someone who might not I want to be unmuted.

If there is any other questions, Council Member Lewis, I'll move on.

Any other questions from you?

No, thank you.

Okay, thanks.

I'll come back to the bill sponsors.

I assume there's not any questions, but let me go to the non-sponsors first, and then I'll come back to you all.

Council Member Peterson, any questions from you?

Thank you, Budget Chair Mosqueda.

I don't have any questions at this time.

I do have concerns about the legislation, but I can talk about those at our next committee meeting.

Absolutely, that sounds fine.

Thank you, Councilmember Peterson.

Councilmember Strauss, any questions from you?

No questions at this time.

Thank you, Chair.

Okay, great.

I have a few questions.

Councilmember Morales and Sawant, did you have any questions that you would like thrown before I ask my questions?

I do not.

Thank you.

Thank you, Councilmember Morales.

Oh, sorry, Councilmember Sawant, you're on mute.

I was going to say, you should go ahead, Chair Mosqueda, and then after you, I have a couple of questions.

Okay, thank you, Council Member Sawant.

We'll come back to you.

I have a question here on the breakdown of the AMI as it relates to the housing funding.

Can you talk about how the AMI breakdown compares with the need based on the numbers of rent burdened households by AMI?

Sure, so the most recent information that we have, which is from the American community survey in depth data from 2012 through 2020 through 2016 shows that.

for so that there's a total of about, I want to say 67,000 renters from the renter households from zero to 100% or over 100% of AMI who are rent burdened.

When you look at who is, where the numbers break down in terms of AMI by those who are most significantly rent burdened, you see that from zero to 80% of AMI, we have 60,000 of those 67,000 people who are rent burdened.

And that the remaining number from 80% to 100%, actually, yeah, that's right, 67. So you're looking at about 7,000 from 80% and above who are rent burdened.

So when you look at the total households that are rent burdened of 67,000 approximately, 60,000 of those households are from 0 to 80% of AMI and obviously that leaves the remainder of about 7,000 that are from 80% of AMI above 100% of AMI.

And we have a chart that we can send to all of you that shows that breakdown.

Thank you so much, that would be very helpful.

And having had you walk me through housing proposals in the past, I guess I have a question about whether or not the spending plan here that assumes spending on housing from 80 to 100% AMI precludes the city from leveraging other sources for housing to make our dollars go further.

So typically the available sources to leverage the city's dollars are the tax credit funding and housing trust fund funding.

And those all are limited to up to 80% of AMI and frankly, most of them skew down.

towards 60% and lower.

And that's because of the needs data that shows that the greatest need is at those lower incomes.

So going above 80% of AMI, we are certainly going to take ourselves out of the ability to leverage things like the tax credit program because that actually won't accept any projects that have units above 80% of AMI and even actually at 80% of AMI for tax credit purposes, we're probably going to lose competition for those tax credits because you get more points for serving people at lower incomes.

And I think it's also worth noting here that, and it's sort of expressed in the assumptions included in the staff memo, but there are we assumed conservatively that in most cases the city is paying the full cost per unit for permanent supportive housing units as well as those units serving households between 30 and 100% of AMI and that is for the reasons that Tracy just explained because of how those funding sources typically prioritize Um deeper levels of affordability, but also because there are limitations to how much How many projects can be leveraged through those funding sources?

So, um, for example permanent supportive housing units are often leveraged using nine percent tax credits We think that it is likely that those sources are are likely to be to be tapped out with other investments the housing levy and that sort of thing so we assumed for all permanent supportive housing units that the city is paying the full per unit cost.

And then we assumed that 80% of all other units funded would be fully paid for by the city and not leveraged.

So it's both how those projects can compete and what we are conservatively assuming will be available.

If those assumptions are wrong, obviously the unit count estimates would change.

Well, thank you so much for that.

And Tracy, I'll look forward to that chart.

Ali, if there's, if that information is also folded into the chart that you just shared, that would be very helpful.

I know we're coming up on our three hour mark here.

I just have two other questions and then I know Council Member Swatt has a comment or a question as well.

On the Housing Oversight Board, can you tell me Central Staff, has there been any similar oversight board that has held elected, had elected positions in the past?

Is there a precedent for that or would this be a new kind of structure that we're enacting?

We're not aware of another city oversight board that has been elected by the people.

Okay.

Council Member Mosqueda, just to jump in for a second, I believe that historically the library board was elected like 50 years ago.

I'm not completely sure but just throwing that out there.

We'll look into that Council Member Lewis.

Thank you.

Yeah and actually I guess I would just flag that for for Council Central staff maybe look into why we don't do that anymore but um but but I believe the library board used to be elected um but that's the old anyway.

That's so thank you so much Council Member Lewis.

Um and then my last question here um On the cash assistance, can we estimate how many people qualify for the city program that we're looking for to give cash assistance to?

And I guess, given the scale of the need that we've seen, if it's less than 50,000 people, how are we prioritizing people to send that cash assistance to?

Is there that directive in the legislation already?

We have some numbers on the number of enrollees, for example, in the UDP, the utility discount program.

I think the current number is somewhere north of 33,000 people.

I think the Fresh Bucks program has 6,000 enrollees, but we believe that there are many more people who would be eligible.

We don't, so the bottom line is that we think that there's way more folks who would be potentially eligible for the cash assistance than what we will be able to fund with the $200 million.

And that some thought would have to be, would probably want to be given to how do you best prioritize that cash assistance then.

And again, we use the emergency grocery voucher program as just one potential model for how you might target those resources.

One other model that we could look at that would actually have people applying and then going through a process of there being some assessment is the rental assistance program that United Wages stood up, where they have an online application process that's followed up with a connection to community-based organizations that help to determine what the need is and then decide allocation based on need.

That's another potential model.

But I think that is one of the things that would need to be considered is how, how do you want to and do you want to prioritize to folks with the greatest need versus just so the grocery voucher program just send out, you know, the certificates to people who were on the list, who had gotten fresh bucks, for example, and some of the child care programs.

without knowing were those folks really in need of that grocery assistance.

Again, with the idea of them wanting to get, the intention was try to get the money out quickly, but it didn't really do that first cut assessment of is this where the greatest need is.

And I would just add in there, I think, like, with the utility discount program, as an example, Tracy just mentioned, I think current enrollment is somewhere above 33,000, but eligibility is our understanding of potential households that are eligible is close to 100,000.

So there's no doubt that the the magnitude of the need, the number of households who might need this cash assistance is greater than the resources available.

And so working with the sponsors, we were trying to come up with a proposal that tries to balance getting the money out quickly with trying to figure out a way to identify those most in need.

So that's what is currently in the bill as drafted, but we'll continue to work with the sponsors and all of you to see as we're watching the executive implement other programs and other agencies and those sorts of things to provide assistance to communities if there is a better way.

I believe, I don't want to speak for the sponsors, but my understanding from the direction from them was to try to get it out quickly, but also get it to the people in need.

And there is somewhat of a rub there in terms of standing up a really great, perfect program that always prioritize those most in need will take more time.

Absolutely, we'll appreciate the intent in that direction.

As you look at the various models for getting cash assistance out the door, I hate to spring this on you, but I'll flag early for central staff, I would love for us to do a quick analysis of how Austin, Texas allocated the 15 million that they just appropriated from their rainy day fund.

I think it's very similar in intent, wanting to get cash assistance out the door to low lowest income families and also recognizing that there's a number of folks who aren't in existing assistance programs and how they got those dollars out through various nonprofits.

So that would be very helpful as we look at models for allocating.

I will turn it over to Council Member Morales and Sawant, I think have comments.

So Council Member Sawant and then Morales.

And then we're getting closer.

Can I just respond to this question about cash assistance?

Is that all right, Council Member Sawant, if I just Chiming into this piece.

Yeah, absolutely.

So, um, so I appreciate your help.

Ali and Tracy helping us figure out this cash assistance piece.

You're right.

The intent here was to try to get Assistance out to as many people as we can, who as quickly as possible.

And we did look through those criteria, who is already eligible for some of the assistance programs that we have in the city, whether it's grocery or the utility discount program.

And as Council Member Mosqueda mentioned, I've also been talking with some of the council members in Austin who have been able to support you know, with their cash assistance, up to 60, they're estimating being able to help 60,000 households in the city.

So I think the point here is that we know the need is there.

We know that we have the beginnings of the infrastructure to be able to manage this.

And we really as a city need to think about how we build out this infrastructure because as we've all been talking about today, this crisis isn't going away anytime soon.

And if we don't have the infrastructure in place now to be really nimble and being able to provide support to our neighbors, it's time for us to figure out how we do that.

So my hope is that as we work through the right mechanisms for doing this that we are able to put in place and build on existing infrastructure so that when we have to do this again we're ready to go and can get money out the door quickly.

Thank you.

Council Member Salant.

Thank you.

Just a few points before my question.

One is I Chair Muscato, you mentioned Austin.

I haven't looked at that, but if I'm remembering correctly from what you said, it's $15 million of some sort of low-income assistance or food assistance, which is, of course, every dollar of that is important, but I just wanted to point out from a math standpoint, Austin is a comparable city to Seattle in a similar size in terms of population.

I don't know exactly how much, but it's a comparable size city.

And I would say 15 million, while, as I said, every dollar counts, it's a drop in the bucket of what we need.

So I would really urge us to look at the legislation in front of us in light of the the magnitude of the need in our society and that we pass a tax that raises revenues that are commensurate with the needs that our community members are experiencing.

As for what should be funded, I think that discussion has come up, which is a very important discussion, of course, and I welcome that.

I would echo Council Member Morales' points about why we went in this direction.

I would also say, you know, we are spoiled for choices because so much in our city is underfunded or not funded at all.

And then programs are in now deeper crisis because of the pandemic.

that there's a lot of directions we could go into.

The reason we talked about we went in the cash assistance direction is precisely the reasons that I quoted a prominent economist talking about how providing cash assistance immediately will have an immediate impact on the economic question, you know, the macroeconomic question.

Obviously, not pretending in any way – again, this is a math question – not pretending in any way that this will be enough, but we need as every dollar that's possible that can go into the pockets of the ordinary people who are facing the crisis and who will immediately – you know, if that is done in a big enough way, then that's when the economy will experience a revival.

And then on the other points that have come up, again, very important questions about which section of our community in terms of area median income, you know, in terms of income level is most in need.

Tracy is absolutely correct that the most need in terms of magnitude, again, and proportion of the population is experienced in the lowest income category which is again no surprising this is the vulnerable most vulnerable section of our society and we the intention of course is to absolutely prioritize the permit supportive housing units and as you can see the number that we're looking at is around 5,600 units of permanent supportive housing you know with the attached services and so on but the idea of course is that the office of housing should, and as it always does, prioritize the neediest sections of our society and front-load permanent supportive housing.

That's the intent.

But I would also note in addition to that, that when you look at the 80 to 100% area median income section, we are also at this moment now, when you look at that income category, we're talking about teachers, firefighters, City of Seattle employees, many of whom can't afford to live here, or our rent burden, paying close to 40, 50% of their income in rent.

So in other words, we also have to address the pipeline to homelessness and provide working class housing.

So I just wanted to make sure we don't lose sight of that.

And then I'll end with a couple of questions, hoping that staff will draw out some of the things that I know that they have researched.

And they've done excellent research.

And I also wanted to, again, express how grateful I am to all the work that was done.

But one question is, as far as the permanent supportive housing, you know, the magnitude they're talking about is 5,600 units.

How much will this investment, you know, what's our estimate of how much this investment in permanent supportive housing will be able to address the problem of homelessness?

Do we have some idea of that?

And also if staff could give estimates on the jobs that could be created and then the number of homes that could be improved through the Green New Deal dollars, you know, stuff like that.

I think that will be helpful for the discussion as well.

Sorry, I was on mute there.

So in terms of the permanent supportive housing units, I don't have those numbers in front of me, Tracy.

I don't know if you do in terms of the sort of estimates of the magnitude of the problem and what this will address, but that's something we could follow up on.

You've got people, you probably have well over 10,000 people who are either literally homeless on the streets or in shelter.

So arguably all of those folks are in need of housing today.

We are waiting for the latest point in time numbers for this year, but that's kind of a ballpark of what we know is the need for the population.

And I think, Allie, are we not proposing that only about 1,400 permanent supportive housing units would be built in that first five years?

Yes, and about $84 million to support the ongoing operation and service costs for those units.

Will that give you a sense about, for those specific units, how much of the need we can meet just with what we know in terms of the old numbers, what I consider to be the old numbers, our latest numbers that we have on homeless?

And we are actually already had gotten the question about job creation or job.

In many cases, it's actually supporting jobs that already exist.

And hopefully that's still going to be the case for the construction industry that we won't have lost jobs.

But so we can get that information to you, Council Member Sawant, in terms of the jobs for the housing production, as well as the jobs related to the development of permanent supportive housing units in particular, I think you'd asked about.

Yeah, and then in terms of your other question related to the Green New Deal investments, as an example, if all of the money was used to invest in the conversion from oil or gas heat to an electric heat source, we estimated that this investment could convert somewhere between 35,000 and 40,000 homes.

to electric heat.

And that would be assuming about $16,000 per unit cost and not having any other sources of funds to do those conversions.

So that's one way to consider sort of the impact of that investment.

Thank you so much for those questions, Councilmember Sawant, and for the quick math that you shared with us, and we'll look forward to any additional details that you're able to share with us before next Wednesday.

Councilmember, or Council President Gonzalez has the last word, and just before that, just to clarify, my reference to Austin was using the model in which they were considering getting the funding to community organizations and directly to individuals.

So thank you for looking at that model, not necessarily the dollar figure.

Council President Gonzalez, to wrap us up with questions, please go ahead.

Thank you.

And I'm sorry that the questions came to my mind as the conversation progressed.

Actually, if Council Central staff can go back to the slide, the spending package slide.

Thank you.

Thank you so much.

So my questions are really going to focus on the dollars proposed for 2020 expenditures as a result of the COVID-19 crisis.

So I really want to focus on the emergency cash assistance proposal for 2020 in the proposed spending plan on this council bill.

A couple of quick questions.

So on memo, on page two of Ural's memo, it goes through different types of income, varying income requirements that could qualify for or could be qualifying criteria for those who might want to receive cash assistance.

One of the bullet points, the third one, says early childhood education and assistance program, um, you know, based on my work as the chair of the council's education committee, um, we do not currently at the city, uh, provide ECAP, uh, that's a state run program.

So how do we purport to, um, or what does the legislation propose in terms of, um, being able to verify that information?

Is there going to be a data sharing agreement?

What is, what is the, the, plan there?

Sure.

Thanks for the question.

So it was building off of the grocery voucher program.

So what's included in that list are city programs or programs that the city works with the state to administer.

And so we have that information.

So like the grocery store voucher program was able to distribute funds to families enrolled in ECAP up that are below 350% of the federal poverty line.

So we're assuming since they were able to identify those households that that data is available, but those are meant to be examples, not necessarily what the choices would be, but the city plays a role in administering that program.

So we have, our understanding is we have access to that data.

Okay, can you confirm your- Yeah, yes, absolutely.

The next question that I have is with regard to the Seattle Preschool Program and Pathway to Seattle Preschool Program.

So our SPP programs are specifically designed to be mixed income classrooms and a mixed income program.

So the last line in that bullet point talks about how families who qualify for tuition assistance could also qualify for the direct emergency cash assistance made available under this bill.

So my recollection of how that program is structured is that every single person who participates in SPP receives some level of tuition assistance.

What language in this current proposal takes into account that there's a mixed income reality as it relates to our SPP participants?

So currently the legislation is drafted doesn't have that level of detail either in identifying specific programs that they will use to distribute the funds or setting those thresholds for the grocery store voucher program.

They did identify families enrolled in the Seattle preschool program.

and provided those grocery store voucher assistance to those enrolled that are at or below 350 percent of the federal poverty line.

So you could leave it as as drafted, which is provides flexibility to the executive to determine that.

But it is important that it is, you know, making some threshold to be a low income family.

or the bill could be amended to provide more specific details to ensure that households served by this cash assistance don't exceed X percent of area median income or federal poverty line or whichever policy choice you wanted to include.

Yeah, and Allie or Tracy, my understanding on these various programs is that they all have slightly different AMI Exactly, exactly.

Have you have you all done a comprehensive chart on the varying AMI thresholds for each of these suggested programs?

Not a comprehensive chart in the memo on pages two and three.

We include examples of a couple of the programs, but we can look to put together sort of a broader comparison or so you sort of understand the.

You know, the differences are similarities and where their specials are that might help inform a decision if you wanted to be more precise or specific in the legislation about household serve.

So we can work on putting something together.

Yeah, I would I would I think that would be a helpful piece of information.

I would appreciate that.

So on page three, it talks about how these funds would be these funds referring to the hundred million dollars proposed to be distributed to those impacted by COVID-19 crisis, but are not enrolled in an existing city assistance program or state assistance program administered by the city.

The memo goes on to say that these funds would be prioritized for low-income households, including but not limited to those who are, and then it goes through a list.

So there's two bullet points that I want a little bit more information about.

The first bullet point is immigrants and refugees, and the second is at risk of deportation.

I'm not sure if that was intentional to put those in two different bullet points.

I don't, I don't think so.

Yeah, those are, uh, yeah, that was, that's just a extra return there.

Okay.

So, um, so here's, here's, here's my question as it relates to immigrants and refugees that may be at risk of deportation.

Um, so what, what language in the ordinance accounts for our, in the ordinance.

And what in the ordinance talks about privacy protections and concerns as it relates to obtaining the

So currently the legislation doesn't contain that language.

The list of priority populations that could be served is based on input from the bill sponsors.

At the time of drafting it was in the early stages of the grocery voucher program.

And so we were sort of looking at, they had a first round using existing programs and a second round that they were still sort of developing which is still a work in process, but their process for sort of working with a variety of communities.

who might be in need is working with community-based organizations.

So arguably this could be, language could be added to be more precise.

The intent was not to, I believe anyways, was not to inquire or make people disclose their status or in any way, but to work with organizations that typically serve those populations and can provide that cash assistance.

The idea here is that there are likely people who, for a variety of reasons, don't access state or city assistance programs, are not comfortable or eligible to apply, and so just trying to flag that the idea is to try to reach people who are not already receiving assistance through the city.

But we can work with you to identify ways to incorporate language to ensure that those privacy concerns and the legislation is consistent with city policy about not inquiring on a person's.

Chair Mosqueda, can I just quickly do this as well in response to the question?

Sure.

Thank you.

And thank you, President Gonzalez for that important question.

And I just wanted to echo what Ali said, what Ali described in terms of our intent is completely accurate.

Obviously, needless to say, the intent is not in any way to open the door to any kind of vulnerability to an already vulnerable section of our community members, but to work with you and Chair Mosqueda and other council members to come up with more specific language.

So I'm happy you brought this up and I'm happy for my office to discuss with you and other council members as to how to make sure that this is implemented.

And just very specifically in terms of what Ali said, yes, using the help of community-based organizations that will ensure that the cash assistance will reach these community members, because they also are the ones most in need, among the most in need, but also in a way that keeps them safe.

Thank you.

Council President, do you have additional questions?

I do, sorry.

So I I also am a little confused by sort of what is being proposed to be spent in 2020 and what is being proposed to be spent in the out years.

So in terms of the cash assistance, is the proposed 2020 expenditure $100 million?

It's a $200 million appropriation.

So the hope is that all of that $200 million would go out in 2020.

Okay, because that's not what this chart says.

This chart says 2021, 205. So that's an additional 205 million?

No, so the spending plan is reflecting actual spending of the tax revenue.

So in 2020, the tax goes into effect in 2020, and right now it's proposed it would go into effect in June 1st.

But those tax payments would not actually be remitted until February of 2022. and that gets accrued back to the 2021 books.

So, um, essentially you can't spend, there won't be any tax revenue collected to be spent in 2020. So that cash assistance, um, would be able to go out the door in 2020 through the inner fund loan.

Um, that is one of the three pieces of legislation that are part of the package.

Then the spending of the actual tax revenue would be paying back that, that loan.

So it is a, um, We were borrowing in 2020 in order to get the money out the door.

And then we will pay it back when we start collecting, when we actually start receiving payments.

And Tom on central staff may be able to explain this more.

precisely or eloquently, but in general, the way our tax collections work is it's like our B&O taxes.

The final quarter tax payment for a year is actually paid a couple months after the end of the year.

So for the fourth quarter of 2020, that payment doesn't come in the door until January or February of the next year, but it gets accrued back.

So it is part of the 2021 budget and closing of the books.

Okay, so that's helpful.

Thank you for clarifying that.

So I think this chart is a little confusing because it's trying to show two things.

One, it's trying to show expenditures, and two, it's trying to show how we book the dollars to use in accounting.

I'm not sure that it's appropriate to conflate those two things on one chart.

So I think just for the interest of public transparency and so that it's easier for us as council members to follow along and have a conversation.

I think it would be helpful to make sure that this chart is retooled in a way that shows actual proposed expenditures for each of the years that the tax would be in place.

And I recognize that you all are operating under a five to six year plan here, it looks like.

So this chart doesn't have anything for 2020, which signals to the public and to us in this conversation that there are no expenditures in 2020, but there are some proposed expenditures for 2020. So setting aside the issue of how we move these buckets of money around, what is the proposed amount of programmatic activity that is being proposed to be funded in 2020 should this tax revenue package be passed and signed by the mayor?

So if you all could sort of work on something like that, that would be super helpful to me.

So again, for 2020, the proposed expenditure is a total of $205 million.

It's a total of $200 million.

The $5 million is the assumed interest payment that would be due when paying back the loan.

So we will work on a way to parse out that showing $200 million spent in 2020 and then how to show the interest payment that would be paid in 2021. So yeah, we'll work on clarifying that.

That would be cool.

And then so that this tax, if passed, is proposed to go into effect on June 1st of 2020. Okay.

And How soon after June 1st of 2020 can households anticipate receiving a cash assistance payment?

I think that's going to be dependent on how quickly we can work with the executive to come up with a way to distribute that cash.

So that work has not yet been done?

No.

OK.

So I just, I want to really sort of echo Chair Mosqueda's comments about looking a little bit closer at the Austin model in this space that really, I think, smartly looks at a model that talks about talks about this in the context of what is the urgent need now.

In their model, they talk about how 50% of the $15 million will go to improving food access, providing rental or mortgage assistance, providing assistance with necessary bills, including utility bills.

enabling children to attend school remotely, assistance with medical expenses, purchase of diapers, baby formula, other childcare expenses, assistance to survivors of domestic violence, case management, and other direct relief services provided by community-based organizations that help people and families in meeting their basic needs, including hygiene and other hardships.

And then there's, you know, they've created an opportunity for the rest of the dollars to be available for cash assistance to those, to particular families that meet certain criteria, including families that have an income at or below 200% of the federal poverty income levels, households that have experienced a significant hardship or loss of household income related to COVID-19 pandemic, and they also included a sort of catch-all category folks who would be ineligible for other forms of significant governmental relief, such as the CARES Act, or are receiving such relief in a limited or delayed manner that does not meet their needs.

And so I just think that, you know, what seems to be motivating that model was, one, making sure that we're able to provide safely cash assistance and other programmatic relief to folks who may have a sensitive immigration status or otherwise are uncomfortable disclosing their private personal information.

And then secondly, you know, really sort of making sure that whatever the spending plan is that we are using these limited dollars for, that it is being complementary to and extending the life of what other benefits might be currently getting accessed by individuals.

And I'm not sure that the spending plan as proposed currently accomplishes that.

Thank you, Council President.

Council Member Chair Mosqueda, I just wanted to add a point there because I think it's important

Okay, then we are gonna wrap up.

Council Member Sawant, very briefly, please.

Thank you.

As I said, I'm very open to talking to city council members on specific things that they would like to see funded, and I'm all for being very specific about how this money goes to households and what it funds.

I have no opposition to that, but I do wanna raise one thing, is that the reason I'm just looking at the Austin program a little bit more in detail because I didn't know about it, but I'm looking at it now, and I will look at it offline as well.

But the reason it has been funded this way and structured this way to augment the existing programs is because it's so small.

It's a $15 million program, and it is doing the bare minimum.

And I'm all for that, but the word smart was used.

I don't think that's smart.

Limiting ourselves to that is not smart.

to do something on the scale of what we are talking about, $500 million, and as part of that, if we wanted to have a more detailed structure as is being discussed, I am all for that, but I wanted to make the point that the smart thing to do here is to use a bare minimum kind of revenue-raising mechanism that will begin to address the massive crisis.

Thank you, Council Member Sawant.

I want to reiterate the point that I made earlier, and I believe this is the same point that Council President Gonzalez is making.

When we're talking about looking at the model, it's about the model of getting funds out.

It's not about the dollar amount.

I think it's really important that we build off of the proposal that has been provided here.

I think we all are on the same page.

The intent is to look at various models.

I do want to underscore the council president's request that somehow that concept also get folded into the chart that you provided on slide five.

And I saw you nodding along and I think you are already thinking of strategies to highlight that.

But I think that this has been a very helpful conversation.

We have gone our full three hours because we started about five minutes late.

So I am very appreciative of the sponsors for their walking through the intent of the legislation at the beginning of this meeting.

for the public comment that was made available by IT and communication staff and central staff and the clerk's office.

It's been very helpful for understanding how we're juxtaposing the potential threat to our existing revenue stream with what we ideally would like to see shored up for working families, our local economy, and our community at large to sustain the crisis.

So I want to thank all of you for your robust participation.

As I've noted before, we will have public testimony.

We will have a small community panel, and we will also have an opportunity for at least a one-hour discussion on each of the bills.

As has been noted earlier, that would be the Interfund Loan Agreement and the proposal for generating revenue.

With that, council colleagues, thank you so much for your robust engagement again.

We've reached the end of our agenda.

Our next meeting is Wednesday, April 29th at 10 a.m.

If there's no further questions, hearing no further questions, we are adjourned.

Thank you again for everybody and your robust participation.

How many times have I said that?

Thank you.