Seattle City Council Finance & Housing Committee 4/20/22

We are recording.

Good morning, everyone.

Thank you very much for joining the Finance and Housing Committee meeting of the Seattle City Council.

Today is April 20th, 2022, and the time is 9.30 a.m.

I am Teresa Mosqueda, Chair of the Finance and Housing Committee.

Madam Clerk, will you please call the roll?

Council Member Herbold?

Here.

Council Member Peterson?

Here.

Council Member Nelson?

Present.

Council Member Lewis.

Present.

Madam Chair Mosqueda.

Present.

Madam Chair, that is five present, none absent.

Thank you very much.

Thanks colleagues for joining us here today.

Again, we have another packed agenda.

Today is a focus on all things budget.

We'll have a resolution modifying the template for regular payments of claims and an ordinance for your consideration.

We'll have a discussion and possible vote.

Again, this is a carryover item from last We will then have a summary from the revenue forecast Council thanks to our new director of the economic and revenue forecast office, Dr. Ben Noble for being here with us.

The combination of those two reports will make up the fuller picture of the revenue forecast presented at this point in 2022 as we begin to think about the 2023-2024 budget.

Finally, on our agenda, we'll have a update on the Seattle Rescue Plan spending.

This is our quarterly update on the Seattle American Rescue Plan Act implementation and spending.

And I want to thank the city team for sending us quarterly, excuse me, sending us monthly updates and being present for these quarterly updates to report out, not just some items that have been spent or encumbered, but the detailed process for how to get the rest of the dollars out the door to address the crisis.

that continue to unfold given the COVID pandemic is still very much present here with us today and that's why we are meeting remotely.

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

Hearing no objection, today's agenda is adopted.

A very brief update from the chair's report.

As many folks know, today is April 20th, otherwise known as 4-20, and many people celebrate today and celebrate the role that cannabis products have had in their life.

I want to take a moment to remind us, though, of the deeper meaning and the deeper message behind days like 4-20.

First, no one should continue to be incarcerated for interactions and previous arrests related to cannabis.

And we send a message of solidarity across our nation as many people are still incarcerated for interactions and entanglement that they've had with law enforcement.

due to cannabis products.

We also want to take a moment to remind us of the deeper meaning as many people are still celebrating today and they're consuming cannabis products.

There are many people sitting in jail cells around this country.

So we are uniting for the call for these individuals to not only be freed from incarceration, but as we've talked about in this committee and in this state, continue our efforts to make sure that there are no cannabis-related charges on anybody's records.

According to a 2020 Forbes article, an estimated 40,000 people today are incarcerated nationally due to cannabis offenses, even as the overall legal cannabis industry is booming.

One state after another is legalizing, and cannabis companies are making healthy profits.

Again, that's from a 2020 Forbes article.

This year is actually the 10th year anniversary of cannabis becoming legal in Washington State, thanks to Initiative 502. And with an industry that is now 10 years old in Washington State, we still see the ramifications of the war on drugs in our city, in our communities, and in our state.

In our last committee meeting, the Washington State Liquor and Cannabis Board presented data that showed us that when we look at the demographics of the entire cannabis industry, from retail store owners to producers and processors of processor licenses, the data shows us that the majority of ownership is not by black, indigenous, and people of color communities, even though the war on drugs disproportionately targeted by BIPOC communities.

So today we send this message of solidarity for folks who are continuing to work to make sure that there are no people incarcerated due to cannabis, that we continue to expunge all records related to cannabis across our state and country.

And I will be out in community celebrating the workers, the frontline workers who are working in industries that are looking to continue to expand upon opportunities for workplace growth, for workforce training, for greater safety.

and for opportunities to have career ladders so that they too can be part of the growing industry in cannabis.

And for those who are partaking in 420 festivities, please remember that you can buy from union stores, similar to how Starbucks workers are unionizing across our country.

We continue to see cannabis workers in our city who have been successful in their organizing efforts as well.

So congratulations to them and I look forward to continuing to work with all of you and the mayor's office as we consider possible legislation in our committee.

I wanna thank the mayor's office, Mayor Harreld and the team who has been with us over the last three months as we've considered possible strategies to address the lingering effects and the disproportionate effects of the war on drugs and how we can create a more equity in this industry.

Colleagues, I look forward to continuing to work with the mayor's team provide you with updates on the drafting and we know that there will be many conversations to be had amongst council with the departments and with stakeholders broadly.

This is groundbreaking for us to be able to enhance our policies here and so we are going to take some time to make sure that we get that right with the mayor's office.

At this time, we're going to open up to public comment, and we do have two people signed up for public comment.

We're going to go ahead and allow for two minutes for public comment from each of the speakers so you have the full time.

Again, for folks who are dialing in, you are going to hear a chime that says you have been unmuted, and that is your indication to hit star six.

Close to the end of your two-minute allotment, you'll hear a bell.

That's your 10-second warning that you need to try to wrap it up.

And if you have not finished with your comments and you'd like to share more with us, of course, please do email us at council.

at Seattle.gov.

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

And if you plan to continue watching, please do so on Seattle channel or the other listening options presented on today's agenda.

With that, the public comment is open and the first two speakers are signed up are David Hines and Ellie Bondi.

Good morning, David.

David, you will have a full two minutes and you are welcome to start whenever you're ready.

Thank you, David Haynes, District 7. We need better oversight of tax dollars.

It's outrageous City Council redirected American Rescue Plan dollars to buy off votes, gift certain skin-color ethnic non-citizen businesses and residents, and nonprofits hiding George Floyd protesters all the money, while Council comes up short on helping create homeless shelter, causing unnecessary suffering a third winter of COVID.

and seventh year of the homeless crisis, used to buy off the management service providers who donate and finance the election apparatus for Democrats on council.

It's obvious there are racists on city council and their staff, endangering our community, public safety, and further causing homeless crisis.

All while a public health hazard continues to threaten well-being of residents and workers with customs-violating, spit-spraying, inconsiderate, disrespectful people who are a constant threat Yet in the celebration of 420, I need to remind you all that we only legalized proper grown marijuana, not improper grown.

We never legalized crack, meth, or heroin on any level, despite what the inept police chief and other liberals claim that has rooted our society in a third world implosion, running interference for BIPOC criminals conducting uncivil war.

The city council should reconsider what they did with the American Rescue Plan dollars, bring some of that money back away from their protesters and activists, and help alleviate the unnecessary oppressive suffering of innocent, houseless people who are being racially discriminated against and forsaken by the actual service providers who are only looking for certain skin colors to help to manipulate data percentages.

It's not fair that all this seven years of suffering, and the city council still comes up short.

When you had tens of millions of dollars, you squandered tens of millions of dollars buying a re-election apparatus.

You all should be FBI investigated.

The media is not going to keep you honest, that's for certain.

Thank you.

The next person that's signed up to speak is not present, and that is Ellie Bondi.

Ellie Bondi, are you present here with us?

I also want to make sure that I'm sending a message as well to David.

David, thanks again for dialing in to speak.

David Hines, this is going to be your first warning.

We are not going to tolerate folks having their character impugned and you repeatedly said that there were, you repeatedly impugned some of the council members and the staff.

I'm happy to take your public comment in the future, but please do not levy such accusations against council members or central staff.

I'm not seeing any additional public comment, so at this time, we're going to close public comment.

Please do send any additional comments to Seattle, excuse me, to council at Seattle.gov.

At this time, let's go ahead and move into item number one on the agenda.

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

agenda item number one, resolution 32049, a resolution modifying the template for regular payment of claims ordinances for briefing discussion and possible vote.

Thank you very much.

Colleagues, I want to thank you again for your flexibility in having this item moved to today.

This is a presentation from interim director Ali Panucci and Tom Mikesell of central staff.

This is a carry forward item that allows for us to create a new template for greater financial transparency.

And it actually folds in very nicely to the theme of today's deliberations for the Finance Committee.

We are going to be spending a lot of time focused on financial transparency today, so I hope you got your budget wonk on today and you're ready to pour some of that wonk sauce all over the conversation we're about to have.

Following our March 16th Committee meeting, We had a preview of the conversation we're about to have today.

We now have the resolution in front of us to consider updating the template from our regular payment of claims item.

You'll remember this is an item that routinely appears at the top of our full council agenda.

But as you heard, this template has not been updated in some time.

So the resolution attached here is for us to update the template for regular payments of claims and to make sure that we provide key strategies to ensure transparency since it's been 20 years since this document has been updated.

The document that we currently are using as well references a now defunct audit committee that reviewed the payment of claims.

So it's really, I think, both good practice, good transparency, and a good cleanup option for us to consider the legislation in front of us and the attached template to provide greater transparency, not only to members of the public, but also to make sure that we are working closely with the city budget's office and all council members so that we have a clearer sense of what is included in these payment of claims materials.

I'm going to hand it over to interim director Panucci.

Good morning chair Mosqueda and councilmembers.

I'm joined by my colleague Tom Mikesell.

So today we will just briefly describe resolution 32049, which would update the template used for the regular payment of claims bill.

Chair Mosqueda provided a good summary.

This is a relatively straightforward resolution that requests that the Department of Finance and Administrative Services updates the template for the payments of claims bill.

The update is the first since 1999, as the chair described.

It adds language stating that the payments and claims presented by the executive to the city council are consistent with current adopted budget authority, including any amendments to the annual budget.

It updates and makes explicit reference to state law related to expenditures and also removes references related to the outdated auditing committee referenced by the chair.

Since the last committee meeting, we on central staff did meet with the finance director to go over the proposed changes and their team who regularly produce the payment of claims bill.

And they did not have any concerns and are happy to start using this updated template requested by the council.

So the next three slides, I'm not going to spend time really walking through line by line, but for the record, it provides a It provides details on the substantive changes included in the attachment for the template for reference and to memorialize it in the legislative record.

So today before the committee is the resolution that would formalize the request and then FAS is prepared to start using the revised template.

And unless Tom has anything to add, I will leave it there.

Happy to answer any questions.

All right, colleagues, thank you so much for your questions.

You can go ahead and take down the presentation unless council members would like to refer to a certain slide.

Council Member Peterson, thanks for jumping in.

Good morning.

Thank you, Chair Mosqueda, and thanks to our City Council Central staff for making these updates to this template.

Actually, when I first started in the position, I had a question about this transmittal legislation, so I appreciate the update.

The reference to PeopleSoft 9.2, is that something that would be updated if and when that's updated?

I'm assuming that would change over time.

Thank you, Councilmember, for the question.

Yes, so the template updates, it doesn't actually require legislation to update the template.

So we were really focused on the language that will always be included, you know, references to state law or the charter or that sort of thing.

But if and when the city updates its PeopleSoft system, FAS can just go ahead and make that change without requiring an update to this resolution.

We could memorialize it that way, but for that sort of technical correction, we probably would not and just feel okay about them updating the template for future use.

Thank you.

Thank you and thanks again for your interest in this update and greater transparency here.

I think it's a good point to say it's good for all of us, you know, council members as well as members of the public.

So thanks again for your question.

Colleagues, any additional questions or comments?

Tom, anything you'd like to chime in and add?

We will again applaud your work.

Thanks again to Tom and Ali.

I want to thank the chief of staff who has been working with central staff on this as well as the city budgets office and FAS as I mentioned.

Hearing no additional questions, I think this item is ready for a vote.

I look forward to I was gonna say getting in the weeds.

I will try to refrain from that all day today, but this allows for us to get into the weeds a little bit more.

And I really appreciate all the work that's been done to bring this resolution to us today and the collaboration with the executive team as well.

I move the committee recommends passage of resolution 32049. Is there a second?

Second.

Second.

Thank you.

It's been moved and seconded.

Any additional comments or questions?

Hearing none, Madam Clerk, will you please call the roll on the passage of Resolution 32049?

Council Member Herbold?

Yes.

Council Member Peterson?

Yes.

Council Member Nelson?

Aye.

Council Member Lewis?

Yes.

Madam Chair Mosqueda?

Aye.

Madam Chair, that is five in favor, none opposed.

Excellent.

Thank you very much, colleagues.

The motion carries.

The committee recommendation that the resolution pass will be sent to the April 26th Seattle City Council meeting for a final vote.

All right.

Thank you very much, Ali and Tom.

Sorry, we weren't able to get to this at the last meeting, but I think it's a good introduction to our budget related items for today.

So thanks for getting us started here today.

Madam Clerk, why don't we go ahead and read item number two into the record?

And item number two, April revenue forecast update for briefing and discussion.

Wonderful.

So today we have with us Director Ben Noble, Jan Duras from the Office of Revenue Forecast, and we'll continue to have Ali Panucci and Tom Meisel from central staff available for us as well and for some possible wrap-up comments.

Just to set the stage here for a quick second, as you'll recall on Friday, April 8th, I had the opportunity to chair the Economic and Revenue Forecast Council meeting.

This was the first council meeting where our new Office of Economic and Revenue Forecast Director and staff presented a revised forecast and recommendation to the council.

This is an update for not just the 2022 year, but we also had the opportunity to look at the out years as well and factor in how that revenue forecast may affect our ability to carry out desired implementation for items this year and also to help us plan for the 2023-2024 budget cycle.

By way of reminder, the Office of Economic and Revenue Forecast was championed by our former colleague, then Council President Lorena Gonzalez.

And the intent was to develop transparency between the branches of government and to also work with the public and greater accountability around our finance decisions.

I co-sponsored this legislation as well because I think that it's really critical for us to follow models, much like the state and the King County currently have.

We now have an independent office just like King County and just like the Washington State Legislature has an independent office that projects the portion of the city's revenue to look at the various revenue lines and CBO projects and other portions focused largely on city internal projects.

During our April 8th forecast council, we had the opportunity to hear revenue update projections and since it was televised on Seattle Channel, I don't think I'm giving away any surprises to say that the numbers gave us hope that Seattle's economy and our recovery, including our progressive revenue pass by JumpStart Progressive Seattle and payroll tax and the investments that we made, investments into, as Council Member Herbold talks about a lot, the shadow pandemic and investments directly into workers via cash assistance and directly into businesses to our smallest businesses.

All of those were showing positive signs for how we could recover from this pandemic.

There are caveats though.

And I know Director Noble will walk us through some of those caveats here in just a moment, like increased cost, inflation, instability in projects, and of course, the ongoing budget deficit that we are working hard to address.

I should say the budget gap that we're working to address because there's ongoing needs and some short-term revenue that has been used over the years.

I'm delighted to have the team here with us from the Office of Revenue and Economic Forecast and that Director Noble will be able to walk us through this along with Yanduras and along with our central staff's office.

Again, thank you to Ali Panucci and Tom Meisel for their close coordination with the new office.

We're going to have an update from the Director of the Economic and Revenue Forecast Office, and I want to thank Director Noble for the work that you've done to switch hats to be in this new role, and for the work that you've done with us on the Revenue Forecast Council to get us through that first revenue forecast projection on April 8th.

We'll then have a presentation in our next item on the city budget's office, from the city budget's office, and then you'll have a chance to hear from the city budget's director, Julie Dingley, on the revenues that they forecast.

Again, as a reminder, not all revenue lines go through the revenue forecast office, so it's important for us to have the independent office of economic revenue forecast present their information.

We will then have that followed by the city budget's office and the fuller picture we'll be able to see at the end of those two presentations.

And thanks to central staff for the work that they're doing to pull it all together to tell us what this means, not just for the rest of 2022 and not even just for 2023-24, but they will be providing us with an overall look over the next six years when we reconvene at our May 4th meeting.

So without further ado, let me turn it directly over to Director Ben Noble for our new independent Office of Economic and Revenue Forecasts.

Thank you, Director Noble.

Thank you, Chair Mosqueda, and thank you for the introduction.

Pleasure to be here, and a pleasure to be working in this new role as the Director of the Office of Revenue and, excuse me, of Economic and Revenue Forecasts.

The presentation I have for you today is essentially a slightly compressed version of the one that we provided to the Forecast Council on April 8th.

And given your timeline and how packed this agenda is, I am just going to dive in to that presentation included, and that is an overview and an outline.

Sorry.

Share a screen in the right way.

So I'll be able to walk you through what to expect.

There we go.

Well, and diving right in.

Presentation outline is where I was trying to get to.

This outline actually is useful to talk about in part because it describes the forecast process as well.

So our forecasting process is really a two-step one.

We first developed an economic forecast for the region, in particular looking to project fundamental variables like employment and income.

And having developed a multi-year forecast for the regional economy, we then use the outputs of that model to develop forecasts of revenue.

We have historical data that show how the city's revenues correlate to things like income and employment within the region.

To begin that process, though, we start with a national forecast.

So we have a national forecast company, IHS Market, from whom we purchase forecasting services.

And that becomes the basis for our regional forecast, and again, the regional forecast for our revenue forecast.

I'll talk, as we move through, that there are actually three different scenarios that we model out, and then we have made and will continue as things go forward to make a recommendation about which of those scenarios is most appropriate to base the city's budget process on in any given year.

So diving in and starting with the economic update, at a national level, well, it's really an international level that we need to look in order to understand what's happening in terms of even the regional economy.

We sort of anticipated that we'd be perhaps in the phase that we are now of COVID stepping back some and expected perhaps to be the economy would engage in robust recovery.

Significant other world events, however, have interrupted that process if that was what we had expected.

in particular, the war in Ukraine.

And I'm going to talk about it here in terms of its economic consequences.

Its human consequences are probably more important.

But in the context of this work, we really do need to think about its economic impacts.

And they are very significant.

So supply chain disruptions are constraining manufacturing, as noted here.

Food production, both in Ukraine and Russia, were major food commodity producers.

That's creating escalating prices, the disruption there in supply.

We only need to go to the local gas station to see how energy prices are hitting home for many and hitting personal budgets as well.

So those are all issues that are creating significant uncertainty.

And you'll see this highlighted in both the national forecast and our forecast, significant concern about where the war in Ukraine may be taking us in terms of its economic impact.

One thing that we definitely know has happened, and it started actually before the war, and that was an increase in inflation.

And it has rapidly accelerating.

Actually, since we developed this presentation, there was another month worth of inflation data recorded, and we hit another 40-plus year high in terms of the trends on inflation.

So clearly, there's a great deal of uncertainty around Ukraine, and we'll talk more about the various impacts.

That all said, As COVID was waning in the fall and really overall into this year, we had seen remarkable resiliency in the economy, both at the national and local level.

So this graphic here shows the change in employment starting just before COVID and measured in percentage term.

And it shows employment in the blue line at the national level and in the kind of orange-red line at the local level.

The darker lines are the most recent history.

The lighter lines are the previous, the Great Recession, again, tracking your loss of jobs and then the regaining of those jobs.

And put the historic one in there just to give you a sense of the trend.

But what you see here is a dramatic drop as things shut down with COVID, and then a very steep recovery.

Interestingly, on a local level, we had trailed somewhat.

So you can see that although our job rebound track national levels at first, over the second half of 2020, which is essentially year one here, and then into 2021, we were somewhat below.

I think the obvious explanation for that is that we had taken a more conservative public health approach in terms of social distancing and the like.

But what is good to see is we approached the end of last year, which again is year two on this chart.

On an employment level, local economy was as described in the title, catching up.

So we are still down in terms of total jobs in the area, but it's less than 2% as of February and has continued to close.

The other thing we're seeing is that the dynamic of labor shortages has created some bargaining power for workers, and we're seeing increasing wages as well.

Just to focus a little bit on the region and on this issue of employment, again, we are still down in terms of total jobs.

We are still down relative to the beginning of COVID.

And in fact, 30,000 jobs.

That's what the red bar here at the top shows.

But it is certainly true that there's been very uneven experience by sector.

So the leisure and hospitality sectors, so restaurants and hotels in particular, continue to suffer.

So they explain a lot of the job loss that we have experienced.

Manufacturing, which includes Boeing here, is another area.

But what you also see is that there are sectors that have been gaining employment, in particular professional and business services and the information sector, the technology sector within that, have been producing an actual growth of jobs.

And it's really the net impact of those is, again, this loss of about 30,000 jobs.

Without the growth in the technology sector, obviously the employment impacts would have been larger here.

Talking a little bit more about the national economy and the forecast and the range of forecasts that we have, I'm going to talk a little bit about these pictures just to explain them.

We have two graphics.

One is about GDP.

The other is about employment.

And again, they show the history through beginning of late last year, beginning of this, and then the projections.

The lighter orange line, or whatever color that is, reddish pink, is the previous baseline forecast.

But there is reference.

The other three lines show the range of the forecast.

In particular, again, this red and pink line, each is the baseline forecast.

The yellow line is the optimistic, and the darker one, the pessimistic.

Again, we get a range of forecasts from the national forecasters and they feed a range of forecasts that we develop.

The basic message here is twofold.

baseline remains roughly the same.

There's some slight change, but the general trajectory of the economy relative to last fall is about the same.

However, there is increasing concern and increasing risk on the pessimistic side in particular.

So the probability of the pessimistic outcome has increased, and its relative severity in terms of potential downturn has also increased.

The way I might describe this in the vernacular is that it's We're doing quite well.

It's sort of hard to imagine us doing a whole lot better, so the upside isn't a whole lot stronger than the baseline.

But it isn't hard to think about things that could go worse.

If the war in Ukraine were to expand or to continue ever longer, one can develop, you know, driving things like inflation and additional uncertainty and the like.

It's not hard to imagine things getting worse.

So that as we think about budgeting processes and allocation of resources, that's something to keep in mind.

I will preview that our recommendation is to stick with the baseline scenario, but we should do so with the awareness about other potential outcomes.

We then, as I described, take that national forecast and translate it into a regional forecast.

And this is graphics that are demonstrating that.

And again, you see that same pattern, that is that the upside isn't a whole lot better than the baseline, but there is significant risk in the pessimistic forecast.

And here we're showing employment on the left.

And again, you can see that we're expecting employment to continue to grow.

But if war in Ukraine and issues continuing around COVID were to drive us into a recession, we could see employment drop again.

Um, graphic on the right.

Yes.

So sorry, I didn't mean to interrupt you.

I just wanted to make sure that I added for our colleagues in case they didn't watch the Seattle Channel breaking, um, broadcast of the forecast Council.

Uh, the recommendation as Director Noble just noted for the council was the baseline forecast.

And then at the end of the presentation, we did accept the recommendation from the forecast council office.

So as you're looking at these charts, colleagues, just a quick reminder that at the end of the presentation at the council meeting, the revenue forecast council meeting, we did accept that baseline forecast.

So if you'd like to keep that in mind as you consider questions and look at these charts, that would be helpful.

Thank you for that.

Yes.

And on the right, we're showing per capita personal income.

And again, you see the same variation across the scenarios.

One point I wanted to make there, just to give you a sense of the challenges in forecasting, it might seem a little odd that there are two different lines for the historic data on personal income.

So if you look back for 2022, and what happened there is that there was a correction in the data that were provided to us from the state level.

And that's one of the challenges we have.

So we then had to rerun the models given this new data and update them accordingly.

Just a technical point, but one I thought I'd just briefly highlight.

So it was mentioned in the introduction, and I just want to highlight it again, that inflation is becoming an increasing issue of concern in terms of the overall economics, and also in terms of cities' revenues and city budget process expenditures as well.

We all, inflation has started to pick up last fall, and the expectation then, so this is when we were developing the forecast for November, The expectation, and it's actually shown in this lower, lighter pink line, was that inflation would peak in early 2022 and then begin to fade.

And again, that was the consensus forecast at the national level, and we had incorporated it essentially into our local model.

What you see above are now the current projections, again, and we've only received information that would suggest that these numbers might even be a little bit higher, is both that inflation is peaking to a higher level than had been originally anticipated, and that its duration is going to be longer, so it does not look as transitory as had been expected.

Again, the war in Ukraine is explaining at least some of that effect.

Locally, another significant driver, though, I just wanted to highlight this, and it's shown in the chart on the right, is housing costs.

The housing costs are, again, accelerating rapidly.

They had cooled somewhat in the early parts of the pandemic, but year-over-year increases in excess of 20% are what we saw last year.

And that's obviously a key component of overall cost of living.

I see there's a question from Council Member Nelson.

I defer to the Chair.

Thank you.

Please go ahead, Council Member Nelson.

Thank you.

So on the left of this slide, it talks about increasing inflation, but it does look as though it's decreasing going forward in the baseline and in the October baseline, so can you clarify?

excuse me, from the federal bank.

So the Fed is increasing interest rates specifically in response to inflation.

And so that then becomes a risk to the overall national economy because tightening, increasing interest rates tightens access to capital, which again can slow down both personal investment and commercial investment.

So what the bigger picture here one might consider is that through the pandemic, the government was involved in a federal government, a great deal of fiscal stimulus.

So the dollars that we had available to help mitigate the impact.

So that had this impact of priming the economy, but that won't be sustained.

I mean, so there aren't continued payments into 2023 and beyond.

So the The Federal Reserve is trying to manage the removal of that stimulus and how to land the economy into a period of steady self-sustained growth.

But now the impacts of inflation are complicating that for sure.

And a couple of things about that in terms of a revenue forecast.

Inflation will have the effect of increasing the nominal value of our forecast.

A lot of our revenues are percentage tax, so as the price of clothing goes up, the value of the sales tax on clothing increases.

So some of what will drive growth unanticipated previously, unforecast growth in our revenues is this inflation.

But the flip side of that is the city's cost, and Director Dingley will have more to say about this, the city's cost will be driven by those same inflationary factors.

So the cost of labor in particular for city workers as an example.

So it is both good news in terms of nominal value, but you need to consider the overall picture really to get to the bottom of things, if you will.

And thinking about time moving forward, as Chair Mosqueda mentioned, we at the forecast office recommended the baseline forecast And in particular, we definitely, you know, I've highlighted the downside risk you saw in the pessimistic scenario.

And there was a time early in COVID that we had actually recommended, a bunch of office had recommended, and we had followed the pessimistic scenario.

That was in principle because we thought that our local region was at a different level of risk than the national economy, again, at the time.

Because if you recall, we were on the cutting edge, if you will, of the impacts of COVID with the initial of specialized in Seattle in particular.

So we think we have the same risk, really, as at the national level.

So the consensus is to the baseline forecast, and that is what we've recommended.

And when I get to the final numbers here, they will be based on that scenario.

I will take a minute to show you some of the sensitivity to the different scenarios.

So moving forward, now to talk specifically about revenues.

As Chair Mosqueda mentioned, the forecast office is responsible for a share, but not all of the city's revenue.

In particular, we're involved in forecasting those that are the most economically dependent.

Again, if you will, we own the regional economic model.

Therefore, it makes sense for us to be forecasting the variables that are most dependent on those regional economic variables.

Other things like fees that individual departments charge or things that depend on the rates they charge make more sense for the budget office to do because those are much more policy-driven revenues, really.

So we're responsible for sales, B&O, the business license fees, private utility taxes, and then, importantly, the payroll tax and the real estate excise tax.

Those are not general fund sources, but they do support general government activities.

And then lastly, provide some of the inputs to the property tax forecast.

Overall, revenues here represent more than $1 billion.

So it's a very significant share of the city's revenue.

And again, you'll see those numbers shortly.

One thing I did want to talk a little bit about was the payroll expense tax and our approach here.

Just a little bit of background.

Recall that last year, 2021, was the first year that that tax was in effect.

The payments were all made at the end of the year.

They weren't due until the end of January, some nervous days for some of us in February as those payments were processed.

Ultimately, the actual revenues significantly exceeded our forecast, approximately 25%.

We had been forecasting about $200 million.

The final total was $248 million.

Again, not ideal to have been that far off in our defense, if you will.

This is a tax for which we had very little information going in.

We did not know the tax base.

We know something about the overall income that's paid to workers in Seattle, but we know less about who makes how much money.

And the tax is very specific in that it only applies to salaries paid that are more than $150,000.

So I add to that just very briefly, Dr. Noble.

I think that an important element of that explanation, though, is that information is known.

It's known by the state's Department of Revenue, but for proprietary reasons, they couldn't share the full.

So it's not as if the data didn't exist.

It exists so we could only make our assumptions based on the amount of information that Department of Revenue could share with us.

And I'm trying to hearken back to all of the work that we did now in 2020 when you were wearing a different hat.

But just wanted to ask if that is an accurate addition to what you just said as well.

They do have additional information, and they are constrained about how much they can share because of its proprietary nature.

We're actually currently, the Office of Forecast, engaged with the Deployment Security Department to develop a data sharing agreement to help refine these estimates going forward.

Another thing that will help us at least a little bit is that in 2022, payments will be made quarterly.

So payments will be due very shortly.

They're due at the end of the month after the end of the quarter.

So the end of this month, payments are due.

get some information from that as well.

But one of the challenges and I described here on the slide as well is that remote work has an impact on the way the tax is applied.

We have every expectation that 2021 won't actually be representative of what we have going forward.

We'll be able to glean, obviously, some information from it, but generally expect this year to be one of transition.

But again, transition to what new world is still a question we all have at some level.

But we'll certainly be affecting this revenue stream significantly.

So that gives you a sense of, again, I just want to emphasize, there is going to be uncertainty going forward on this as well.

We don't have full information.

And the landscape is changing as the nature of work, if you will, is also changing.

Again, just sensitive time, I won't spend a whole lot of time here.

The point of this slide was to, in dollar terms, give you some sense of how things vary.

in terms of the different scenarios, at least for the three of the largest revenue streams, B&O tax, retail sales, payroll, you can see for 2023, just a single year, but forecast year, what the difference would be.

If you add that all up, you know, for, excuse me, my last bullet makes this point that for 2022 and 2023 together, the pessimistic scenario is, you know, for 2022 would be $30 million lower, and for 2023 would be $54 million lower.

So it is, in total, a significant variation.

But again, just to highlight some of the potential risks there.

Before I get to a summary of the revenues, just to say a few things about some of the other sources that we are forecasting.

Natural gas and steam, so again, these first couple are within the general fund revenues.

These are private utility taxes.

for both natural gas and steam, escalating energy prices against one of these inflationary effects could help increase our revenues.

And we're expecting that going forward.

They're not huge drivers of the overall revenue picture, but nonetheless, it gives you that background.

Cable and telephone, interestingly, have been in decline as a revenue stream for several years.

This has to do with consumer behavior separate from COVID.

In particular, people are cutting the cord and moving to online versus cable services for entertainment.

And on the telephone side, we only text and use the voice over the telephone, and people are texting and doing other things rather than communicating by voice.

So again, in total, there are about 15 million each.

So this is their decline isn't the end of the world, if you will, but it is a long standing and steady pattern at this point.

Some non general fund taxes that were also responsible for the admissions tax.

The story here you'll see is our forecast is essentially unchanged, and that's because we anticipated some of what we were seeing, which is that as COVID has waned, there's more activity in the sorts of places where the admissions tax is collected from.

So last year, particularly Climate Pledge Arena, we had anticipated its opening, but there are also, again, other sources listed there.

And then the real estate excise tax, only point to make there, that's a tax on real estate transactions.

And although there was a slight interruption at the very beginning of COVID, since then the local real estate markets, both commercial and residential, have been quite strong in terms of transactions.

We have seen good revenues for 2021, forecasting strong revenues for 2022. In the longer run, and this gets back to a point that was made about Federal Reserve policy behavior, as interest rates increase, there is expectation that level of transactions may decline and access to capital becomes more costly as interest rates go up.

This is also an area where we, as from the forecast side, want to spend more time to try to better understand what's going on here.

So I'm diving in now to actually show you the revenue forecast here.

Let me walk through this table of a lot of numbers here.

So the first column is showing you, and again, these are the revenues that we forecast.

The top part of the table is the general fund revenues.

The lower part of the table is non-general fund revenues, which are constrained or not in various ways.

I'll touch on them briefly.

This first column is the 2021 actuals shown really for reference more than anything else.

For 2022, we're showing you the November forecast, so that's the one to which this year's budget is balanced.

So again, sometimes people forget this, that when you approve the budget in the fall, you're balancing it to a forecast.

If those forecast revenues for 2022 don't emerge at the level that we anticipated, there's a potential need to reduce spending.

And you'll see this case here, if the revenue forecast is up as potentially additional resources in 2022. So the second column is now the current April forecast, that's the updated figures.

And then the next column, the fourth column over is the difference.

So this highlights how much things have changed since you approved the budget again for this 2022 year.

And then we have 2023 and 2024. So as the fall comes, the mayor will propose a biennial budget 2023 and 2024. So these are really the key numbers in terms of the revenue side that we're producing for your budget process.

Updated for 22 and then looking ahead for the upcoming biennium.

And just moving down here, top to bottom, B&O taxes.

Again, the overall sentiment is the economy has improved somewhat relative to our expectations in the fall, and also inflation is accelerating.

So we're showing a slight increase in the forecast revenues for B&O taxes, a slight decrease for the business license fee.

A business license fee is a fixed fee that's charged at the beginning of the year to operate a business in the Seattle.

It's scaled to how much revenue firms make.

So we've lost a few firms, and they're making a little bit less money, so it's not a surprise that that's down just slightly.

Retail sales tax up slightly.

That's our tax that's collected across the city.

The retail sales criminal justice is a share of a countywide tax that is awarded to us.

Again, it's up as well, slightly.

On the utility taxes side, I mentioned that overall there's a decline in the cable television revenue, showing an increase for April in part because Payments that should have been made in 2021 arrived late and are not going to be happening in 2022. It's really a technical issue.

So again, minor differences there in the various utility taxes.

The difference overall, again, from the general fund relative to our November forecast is just over $30 million, $30.25 million.

That's net increase for this set of revenues.

Director Dingley will give you a bit, a sense of the additional, all the other revenues, and also a sense of the expenditure side.

Looking quickly.

Just to correct that, 32.5.

Sorry, yes.

That's okay, 32.5 for general fund.

And then, go ahead and finish your sentence, and then I'll go to Council Member Herbold.

And then for 23 and 24, I'm not gonna go line by line, but just highlighting that we are seeing continued growth.

Well, again, it is modest growth.

We're, again, for all the reasons I described, There remains a good deal of economic uncertainty.

We're coming out of the period of COVID.

Employment growth and income is picking up, but there are a variety of factors that are constraining overall growth.

Vice Chair Herbold, please go ahead.

Thank you so much.

For this exercise, which I understand is an exercise of sort of preparing us for some decisions related to the 2022 budget in preparation for the 2023-24 budget.

Would it be useful to know the 2021 actuals against the council-endorsed budget because it would suggest Just I think that there's there will be some carryover funds for 2020 from 2021 that we should be considering.

Yeah, so totally fair point.

And in fact, the very first meeting of the forecast Council, which in March, so essentially a month ahead of the April, we did provide exactly that comparison of the 2021 actuals to the forecast and did show that the 2020 actuals were slightly ahead of our of the forecast.

As Director Dingley moves on to her presentation, I suspect you will see that, I'm certain you will see that accounted for as well.

The forecast council had seen that in a separate presentation, and I think you'll get that again as part of the overall picture, but absolutely relevant.

Interim Director Panucci, do you want to comment on the sort of the bifurcated revenue stream report outs and the overall picture that you're hoping to present that I think gets to Council Member Herbold's interest as well?

Yes, thank you, Chair Mosqueda.

That's exactly what I wanted to jump in on to just note that, you know, today we'll get an update of the sort of overall revenue forecast update for April for all the streams on.

And we will be using that to update the city's financial plan and to inform council's discussions of approval of proposed carry forward legislation for the 2021 appropriations.

And so, Sorry, that wasn't a very clear answer to get to Council Member Herbold's question.

The 2021 actuals, the amount of revenue that came in over forecast, will be part of the input into the updated financial plan and also will inform your decisions about the carry forward.

ordinance that the committee will be discussing later in May.

So first we'll do an updated financial plan that will give you an understanding of how those decisions impact 23 and 24, and then you'll be asked to consider that legislation later in May.

Thumbs up from the Vice Chair.

Council Member Nelson, did you have a question as well?

Yes, thank you very much.

So I think this is back to you, Director Noble.

Before COVID, which your graphs don't show, what is like an average over five years?

What's a normal general fund increase?

Is it around five, six, four, three?

So I'm just trying to get a sense of, do these numbers here, 5.6% increase on forecasts from November, or 32 million, is that,

I understood the question.

It's a fair one.

I think important to recognize that we had been in a period of 10 years of expansion, but and we and I'd have to go back and look at the actual numbers and again.

These are a subset of the overall general fund, and there were policy choices along the way that could have increased revenues.

But growth in the 5% to 6% range, again, with the healthy economy we had, were relatively consistent to what we had been seeing.

Maybe a little bit lower, because again, recall that we were in a period of inflation of barely 2%, so that real growth of 2% on top of inflation, and 2% gets you to like 4%, right?

So that 4% to 5% is are relatively consistent.

The thing to remember here, too, though, is that inflation, again, is driving the nominal value of some of these.

So part of the reason that the revenue forecast is up for 2022 is that the inflation forecast is up.

So that will bring in more nominal dollars, but depending on what happens with the city's costs, it may not buy you more services, if you will, whatever those services might be that the city is most interested in.

And similarly for 23 and 24, those kinds of growth rates, given what we're projecting for inflation, are more or less steady state kinds of expectations rather than net increase.

And again, correct me if I didn't give you a better sense of where things sit overall and what the projected shortfall is, as you compare expenditures to these revenues.

So what is the overall revenue gap then?

Well, that's exactly the perfect lead-in to the next presentation, actually.

So that's what I was going to suggest.

Both your question and Director Noble's comment about Director Dingley's presentation Again, is the fuller picture that will get to that entire line of questioning.

And it is important, though, colleagues, that we have separate presentations because the Office of Economic and Remedy Forecast is an independent office, you know, not under the purview of the executive or the We wanted to make sure to specifically have time carved out for this presentation.

Now we're going to see the city budget's office presentation, which I will also be walking through for the first time, because this is not part of the Revenue Forecast Council's presentation.

And then this will be the opportunity for us to ask questions of both bodies.

And then just as a reminder, as Interim Director Panucci just noted, This information is going to lead to the fuller conversation on May 4th that will really get at some of the questions about the remainder of 2022 and how we plan for 2023-24 and beyond, which Councilmember Herbold so appropriately teed up.

So just wanted to make sure folks understood the sequencing of it because Um, it is.

It is, uh, two presentations today and then a final overall picture presented at our next committee meeting.

With that, Council Member Herbold, anything else on this before I turn it over to Director Dingley?

Please.

Thank you.

I did have a couple questions about the previous slides.

Um, I know I've asked this question before, and I forget what the answer as it relates to the hospitality, um, the leisure and hospitality category.

Do we know if arts and cultural workers are included in that category?

I ask because we are constantly and consistently seeing data that the hardest hit sectors are those that are expected to take the longest to recover, and arts and culture is often lumped in with hospitality when you hear that talking point.

So I just want to understand whether or not arts and cultural workers are included in that particular category.

And then related to that, I guess I'd be interested to know that since the areas that are picking up the most jobs appear to be the highest paid, do we have an analysis that specifically looks at recovery in jobs for people who are paid the lowest wages.

I think that information, as it relates to what our projections are about the likely recovery of employment in those jobs, will help us in some of our budgeting decisions focused on trying to help people who continue to struggle in certain sectors.

So that's one set of questions.

And then the other set of questions, the other one question is related to slide eight, but I can just wait on that if you wanna.

Let's get it out there Council Member Herbold, cause I really wanna get us to the other presentation.

Yeah, just on slide eight, and you may have addressed this and I'm sorry.

The brown line, the March pessimistic line on the left side.

is significantly different from the October and March baselines and the March optimistic scenario.

The three of them seem to be very closely grouped, while the pessimistic scenario is significantly different.

Yeah, let me ask that one first, since we're having to be here.

If I had to put a finger on it, that is most related to the uncertainties around Ukraine and the potential for that to ripple across the global economy and then the national economy.

So again, I think none of us know how that will obviously don't know how that will play out, but the impacts have been significant again on economic grounds and could grow.

could grow quickly.

Also related to how the Fed, the Federal Reserve responds to increasing inflation.

And again, this is a lot of history, but back to the early 80s, the recession, the Volckel recession, where in order to control inflation, the Fed increased interest rates to very high levels and really forced the economy into a period of contraction.

So those are scenarios that sort of get layered into that possible alternative.

So again, just to highlight, If things turn bad, they could go very bad, if you will.

In terms of the employment questions, I'm actually going to put my colleague, Yandere, on the spot a little bit in terms of the data.

We may not be able to answer both your questions today, but a question about whether essentially the entertainment and cultural sectors are part of the leisure and hospitality employment figures, and then also what information we have about job losses essentially by income or wage levels.

So in terms of leisure and hospitality, yes, arts are part of the leisure and hospitality sector.

The employment of accommodation and food services is about 80% and the arts and recreation is about 20% of that leisure and hospitality sector.

In terms of information regarding recovery of low versus higher paying job there unfortunately isn't anything particularly useful that we could use for Seattle, city of Seattle area.

Overall employment for city of Seattle comes with a very large delay for regional employment slightly better but those are still just overall employment figures by industry, not separated by income levels, so very little information or things that would be very worthwhile to know.

Thank you.

Great.

Okay, colleagues, so hold any other questions you have.

I'm hoping that Director Noble and Yang can be with us at the end of the CBO presentation.

Thank you.

And we'll come back if there's any additional questions that tie into this first presentation.

But with that, let's do sort of part two and shift back into the executive departments.

And we're going to ask the clerk to read in item number We're going to move on to item number three.

We're going to put item number three into the record and have this segment presented so that we can see a fuller picture.

And item number three, city budget office revenue update April 2020 for 2022 for briefing discussion.

Wonderful.

And thank you for being here with us.

Director Dingley from the city budgets office.

Also Dave Hines, Joseph Russell, and Alexandria Zhang from the city budget office.

And I want to thank you all for the work that you've done.

We haven't yet had a chance to see this portion of the presentation.

And per our commitment to council and the community at large, we're all receiving the information in real time in terms of the council members, myself included, are receiving those at the same time as the other council.

We want to make sure that this is presented in a timely manner that ties in with the quarterly updates that we'll be getting from the Revenue Forecast Council.

And I understand today that, Director Dingley, you'll be presenting the revenues that are not projected by the Office of Economic and Revenue Forecasts, as we've discussed.

And we really appreciate your commitment to collaboration and transparency.

especially as we look at the deep need and community right now and the initial worry that we had about revenue projections for the remainder of this year.

I know that this is something that all of us are committed to working on collaboratively so that we can address the revenue gap that we discussed.

And we also know that there will be an opportunity for us to ask questions at the end of your presentation.

So with that, I will go ahead and turn it over to Director Dingley to walk us through the presentation.

And at the end of the presentation, there's a merged spreadsheet to show us the fuller revenue picture, which of course is only part of the conversation as we continue to look to collaborating with central staff at the May 4th meeting to really do a final analysis of these two presentations and a six-year outlook.

or how the city is projected to recover from this pandemic.

So, thank you, Director Dingley.

I'll turn it over to you, and please do walk us through any materials you have.

Great.

Thank you, Chair Mosqueda, and good morning, Council Members.

As the Chair mentioned...

I just want to tee up.

Also, we can have the clerk tee up the presentation.

That'd be great as well.

Thank you.

As they're pulling that up, I'll just give a little bit of context to set the table here.

So thank you for having us.

As the chair mentioned, we're here today to present you with the updated April revenue forecast for those general fund and non-general fund revenues for which CBO produces the forecast, as well as provide you with the full picture of revenue incorporating the forecast office's revenues that you just saw from Director Noble.

I'm joined today by Dave Hennis, who's CBO's revenue lead.

Dave will be presenting the bulk of the update to you this morning.

We also have CBO analysts Alex Zhang and Joe Russell here to help answer questions.

I will pick up toward the end to show the summary table for all the revenues, as well as talk through these revenues in context.

So what do these mean?

And what do we not know yet?

Because we don't have the information here.

So speaking of that context, as was raised under Director Noble's presentation and by the chair just now, with this presentation, you'll have the full revenue picture.

But keep in mind, I am not going to give you updates about the expenditure side of the equation today.

That's not the subject of this presentation.

It's going to be the subject of the May 4th presentation, so you will hear much more about that overall balancing picture in two weeks.

So with that, everything else that I was going to cover has already been said, so I'll turn it over to Dave and team to walk through the presentation.

OK, great and apologies that the presentation is not up on the screen.

Just want to double check to see if we can get that up, Madam Clerk.

OK, I'm not hearing from the clerk, so let me see if.

Okay, Ali, thank you for sharing that.

Sorry about that.

Please go ahead, David.

Okay, thank you, Director Dingley.

Chair Mosqueda and council members, I look forward to this next 20 minutes or so to present the general fund revenues and some other fund revenues as forecasted by CBO.

And I thought it might be helpful to begin by talking about which revenues we're talking about that are forecasted by CBO relative to the Office of Economic and Revenue Forecasts.

We have general fund revenues and we have other fund revenues, non-general fund revenues that we are forecasting and projecting.

And I think it's important to reiterate the notion that a lot of these revenues are revenues that the departments themselves perhaps forecast and that CBO is actually compiling them and and at times working with the department to project revenues.

And that's sort of why they're in CBO, as Director Noble mentioned.

So we have property taxes, and as you can see, that we rely on the inputs from the Office of Economic and Revenue Forecasts for the new construction forecast and the assessed value forecast, which is largely the basis of the property tax forecast.

After that, it's sort of a computational effort of determining the remount.

The public utility taxes, that's Seattle City Light and Seattle Public Utilities, water, sewer, solid waste, those are forecasted by those departments and we compile them.

And then there's a series of other minor taxes such as I've listed out here, leasehold excise, gambling, gun and ammo, and transportation network company taxes as well as a few others.

Licenses and permits are largely departmental.

projected revenue streams that we compile, although we do a few of them.

Court fines from the municipal courts, on-street parking fees, that's otherwise known as parking meters.

Then there's grants, which come from federal, state, interlocal sources, and transfers, which have two components, really.

And over the past couple of years, we've had a lot of federal government transfers that have been counted in that category, as well as the sort of cost allocations and other interdepartmental, interfund transfers that go on as a regular course of business in the city, transfers to the general fund from other departments to pay for services rendered by departments.

And then there's a bullet that's not here, I suppose, which is miscellaneous category of all else, which could include things like interest earnings on the city's cash pool, that goes with the general fund, and state shared revenues, things like liquor excise taxes or criminal justice transfers that we get from the state government.

And then there's a set of other fund revenues, as you can see here, short-term rental tax, sweetened beverage tax, commercial parking tax, the school zone, the automated speed enforcement camera fines are in a separate fund.

And then a component of the Seattle Transportation Benefit District funds is the vehicle license fees.

Next slide, please.

So this is a sort of a visual representation of what we talked about.

On the left-hand side in the gray pie slices, you see the Office of Economic and Revenue Forecast general fund revenues.

Notice the payroll expense tax is not in this pie.

And that, and then, Up above, you see in the upper right, the property taxes.

We've sort of pulled that out to signify that that's really a revenue that's driven by the forecast office's inputs.

But it's in terms of who's responsible for producing that final number, that's on the CBO side.

Altogether, the gray side, so to speak, the forecast office side is about 64% of the 2022 revised revenues.

And then you see in the colored slices down below, those are the city budget office elements, the public utility taxes, the grants and transfers, and then really all else is that 13% there.

So about 36% covered by CBO.

Thank you.

And so a little bit of context about the forecast we're about to talk about.

Just trying to set the table a little bit more.

The main thing that's happened over these past couple of years is there's just been extreme volatility.

And that volatility is due to a variety of sources, not just economic factors.

And I think Director Noble referenced this as well.

And just want to make that clear to everybody that over the past few years, but also going forward, there's no reason to believe this might not continue.

And so we want to just forewarn everybody that we're still in a period of pretty dramatic changes going on.

And some examples of that are that some of these changes are behavioral and some of the things that drive the revenues are behavioral and largely related to COVID health concerns.

And so for example, commercial parking tax or short-term rental taxes, sweetened beverage taxes, they're all highly dependent on people's behavior.

And so the return to office work or policies of private sector employees and the city itself, the recovery of hospitality that Council Member Herbold was mentioning, the travel sectors for the short-term rental, those will come back when they come back.

And they're very hard to predict when all that will happen.

And as we go forward, we keep trying to do our best, but these are volatile issues to project.

And then there's also the policy decisions that we as the city are making.

For example, in court fines, they're significantly down and largely due to we've suspended collections activity.

We're no longer charging credit card fees and that regardless of where you stand on the policy choices being made, they affect the revenue stream.

And so just trying to capture and predict all these effects are difficult.

as well as we have some of the citations are down, and that's due to traffic enforcement, traffic officers, you know, and their patrol hours devoted to that body of work, and those were decisions made, you know, about what's the priority at this time, given all the other demands on their time.

On street parking revenues, we are at our rate our rates are still lower than they were pre-pandemic.

And I have a talking point about that in a minute.

But those are the kinds of things that make it volatile and difficult to forecast in this time.

And then I wanted to say that this forecast, the April forecast does benefit from having the impact of the actual 2021 revenues.

And so that's led to some rebasing of base amounts.

Even if we assume growth rates may be comparable to what we did in previous forecasts, We're starting from a lower base amount in certain cases.

And so there's some negative numbers ahead of on a future slide that may explain.

And then I wanted to say to be consistent with and in concert with the recommendations of the forecast office and the forecast council, we have used the baseline scenario and forecast in those revenues where that's a factor.

Next slide.

So here's the revenue table.

These are just the general fund revenue tables that CBO forecasts.

And I want to talk through a few of the issues.

The next slide, slide six, has some talking points, basically, that I will try and go through now.

But just for the record and those following at home, if you move back and forth across the two, you can track but I think we should stay on the table.

So first off is the column with the red numbers, red and black numbers labeled revised minus adopted is that's the 22 April revised forecast relative to the 2022 adopted forecast.

And so you'll see the differences there.

And then off to the right, you see the 2023 and 2024 forecasts.

Now we'd like to say at this point, that we, thanks to the sharp eyes of Council Central staff member Tom Mike Sell, we realized we have an error in our 2021 actuals.

And so please disregard the 2021 actuals in both this table and the following table that Director Dingley will be talking from, as those numbers are not quite right in all cases.

And so we will be working with the clerk's office to get a corrected a version of this presentation with the corrected 2021 actuals numbers.

Just echo the appreciation for Tom Mikesall in that.

I know that he has played a critical role in this analysis in years past as well.

So thanks for flagging that and want to make sure that we also get the chance to circulate the revised materials to our council members.

So we will make sure to do that as well.

And to the degree that this needs to be discussed again at the next committee meeting, we'll make sure that those revised 2021 actuals are presented as well on May 4th.

Yes, thank you.

Yeah, we want the right version of the numbers out there.

Yeah, excuse me.

Sorry, Dave.

Chair Mosqueda, I will also ask the clerks to post a revised, an update after committee for the public as well, but it is, it doesn't impact overall the out years, but we will provide the update both to council members and then update for the record as well.

Correct, and I apologize for the error.

Timely thing to discover.

So, focusing first on 2022, the variances between 2022 revised, April revised, and 2022 adopted, the first number that I want to bring to your attention is the property tax, the Medic One EMS levy.

You see a fairly large adjustment there.

The basis of that is that between the previous forecast, the 2022 adopted forecast, and now we've received the final rates from the King County Assessor.

And what's happened is that the 2022 rate has dropped from 26.5 cents in 2021 to a rate of 24.8 cents.

And that's about a 6.3% drop.

And the way Seattle receives its revenue is that it takes that rate, the tax rate from the King County Assessor, multiplied times Seattle's assessed value.

and that generates Seattle's revenue number.

And what's happened is that that rate decrease is greater than the rate increase in Seattle's AV, so that we've resulted, when you multiply those out, we're getting a smaller revenue amount.

And this phenomenon could go on for a little while longer because what drives the rate change is total King County assessed value.

And so as long as King County assessed value in total is increasing faster than Seattle's assessed value, we're going to see the rate decline.

And depending on Seattle's AV growth, we may see another year or so, which I forecasted out there in 23 and 24, of decline in the Medic One EMS levy.

Moving on.

Next one, public utility taxes.

Just some positive news based on rate and usage assumptions.

Other taxes.

Sorry, shifting my note page here.

Other taxes, this includes the transportation network company taxes.

And I wanted to bring to your attention that there's new state legislation which reduces the tax rate from 57 cents to 42 cents.

This is the city's tax rate.

So it's a 15 cent decrease.

But the tax rate to the user and the drivers won't change because that 15 cents will now be collected by the state.

And so we don't expect to see any change in behavior of usage, but the city will receive less revenue.

And you can see that going out into 2023 and 2024 as well.

But that's really what's driving the other taxes drop there is, and then plus the rebasing of, well, what really happened in 2021 was a bit lower.

So we've rebased the forecasts and applied our growth rates.

Court fines.

Court fines is largely a base reduction in citations and revenues for most of the citation categories.

The citation volumes, as I mentioned a little bit earlier, the citation volumes for parking have returned to nearly what they were pre-pandemic.

But the other categories, other non-traffic, non-parking infractions have dropped.

And so that's pulling that revenue down a little bit.

Parking meters is down 3.2 million.

That's largely due to the planned rate increases that got shifted from December to April of 2022. So they're going into effect soon, if not already happening.

And so that just drops that revenue stream.

The rates currently are about 58% of what they were pre-pandemic.

And so, as I mentioned earlier, that's what's really driving decreases in that revenue stream, or a slower rate of increase.

And that's something we can keep track of as we go through time.

Licenses and permits, that difference is largely due to a street use change that Not much to say there.

It's just a lower amount of volume.

Grants, fairly stable.

Transfers, the transfers are important here because as you look into the out years, you see large drops in transfers.

And that has to do with the one-time transfers occurring that occurred in 21 and 2022. That includes the $64.2 million of grants coronavirus local fiscal recovery funds, that's CLFR for those following along.

And then the transfer of Jumpstart payroll expense tax monies into the general fund to the tune of about $85.4 million that increase the 2022 amount relative to what's gonna happen in 2023 and 2024. All else is a big category.

It's got a lot of ups and downs, but nothing overly significant.

I would point out that the 2022 numbers include $65 million of the Mercer property sales proceeds.

But some other categories in their interest earnings, they're up perhaps about $800,000 due to expected increases in interest rates.

and modest increase perhaps in the balance in the general fund.

And then liquor excise taxes are up about 1.1 million.

So that gives you a total change for the general fund of about $4.1 million to the negative, which Director Dingley will show you in the combined table how that all adds up.

I think then going out to 23 and 24, you see the changes and there are significant, 23 and 24 relative to 2022, largely because of those transfers and the one-time issues.

So that brings us to the non-general fund items, and it's a fairly short list.

Short-term rental tax.

is down, sorry, I'm going to...

My apologies.

Short-term rental tax is essentially a base reduction to reflect the actuals of what happened in 2021. Sweetened beverage tax, what we've seen is that the ready-to-drink bottled drinks, sweetened beverage drinks, have returned to largely pre-pandemic levels.

But the fountain drinks, which you would expect, right?

Fountain drinks are things you get at restaurants, the McDonald's, for example, or what have you.

And those have not returned nearly at all.

They're at about 59% of 2019 levels.

And so while we're seeing this revenue stream sort of hold, it's got a ways to go as people shift their behavior.

Commercial parking tax, again, driven by what we expect to see in terms of return to office, it's critical here, but we are projecting an increase there, about 1.9 million.

Schools on camera funds, we now have 31 cameras in operation.

Five of those are new since October, November, 2021, so as of adopted budget.

And four additional cameras are expected, but have been delayed somewhat because of the concrete strike, but it's just a construction issue of getting those cameras put in place.

And so we're seeing a drop in revenues there as we lose the revenues from about four cameras.

And then the vehicle license fee is just a small adjustment based on actuals from 2021. So with that, I think that concludes my section.

If there are any questions love to answer them.

I see a question from Vice.

Yeah thanks so much Dave.

I see a question from Vice Chair Herbold.

Please go ahead.

Thank you.

I just want to flag on this slide here that on the automated camera enforcement I I notice that this is limited to school zone camera funds.

I'm wondering do we handle our other automated camera revenue differently, and where is that accounted for?

We also have red light cameras, block the box cameras, and transit lane cameras, which are new.

And then I want to also flag that there's authorizing legislation this year to allow both an expansion, I think, of the overall cameras, automated cameras that jurisdictions are allowed, to have according to their population.

And there are different types of cameras.

They're not going to allow them in, again, for speeding, but in park zones and a couple other expanded areas.

So both expanded the geographic areas and the total number of cameras.

So flagging that, but also interested to understand why this is restricted only to school zone cameras and doesn't include the other types of camera revenue.

Right.

So yes, so the school zone cameras are tracked in a fund.

So that's why they're here on this list.

The red light cameras are part of the general fund.

And so that amount is up in the general fund, except for the 20% that council designated should go to the fund that the school zone cameras are in.

And so this is not a revenue, total revenues to the fund presentation, but rather what are the school zone cameras providing?

But up in court fines are the red light cameras.

Fantastic.

Thank you for that.

And then we are tracking the others.

But the other camera revenues go into other funds as well.

And then we'll see what happens with that new authority.

Perfect.

Thank you.

I had a question on slide six.

If we could go back one slide.

Thanks again, Ellie, for sharing your screen.

The $85 million that JumpStart Seattle Progressive Payroll Tax transferred over to goes into our fiscal reserves, right?

Council Member Mosqueda, the $85.4 million from the JumpStart fund to the general fund for the 2022 budget was into the general fund to support general general funding.

expenditures.

That was a lot of generals.

And that was per the policy that allowed for some reliance on the jumpstart fund if revenues were projected to be below a specific amount, about $1.5 billion.

It was tagged to, I think, the 2022 adopted budget.

And so that was the authorized amount per policy when the council was adopting the budget.

Right now, based on this forecast update, that policy in the Jumpstart Fund would not authorize any transfer from the Jumpstart Fund to the general fund in 23 and beyond.

Great, OK, so this is showing the amount that went into the general fund.

And then the other portion of that went into the reserves, which is not shown here.

This is for the 2022 allocations, not the 21 actuals, which we'll talk more about at the next meeting.

But some of the 21 actuals were used to replenish fiscal reserves.

per policy because the 21 revenues go into the general fund, a portion of those would also go back to help, excuse me, rebuild our fiscal reserves.

Yes.

Great.

So to remind myself and others, today is part one.

Part two will be discussed on May 4th when we see the fuller picture.

All right, so it is just after 11 and I am thankful for all of the questions.

We have another section here, so we're going to turn it back over to Director Dingley to walk us through the rest of the presentation.

And I really appreciate that there is some flexibility as well.

Thank you very much, William, for letting us know.

If we don't get to the ARPA We can include that on our May 4th meeting, and it might be a nice tie into expenses where money is currently going overall picture for from Ali and Tom.

as well.

So just wanted to make sure that colleagues didn't feel like they had to rush through their questions or hold back on questions on revenue because this is a lot of new information that we're currently getting from CBO and then we'll have time for discussion as well.

So I just wanted to flag if we need additional time to ask questions and go through the remainder of the presentation here today, we're flexible on moving that presentation over and thanks again to William and CBO for that.

All right, Julie, Director Dingley, I'm going to turn it over to you to keep us going in the presentation here.

Great.

Thank you so much, Chair Mosqueda.

This is what you have been waiting for, I believe.

This is the full picture, the full April revenue update that includes revenues forecast by Director Noble's team that you heard in the first presentation.

Those are here represented in the gray shaded lines and as well as the ones that Dave just walked you through, which great job, Dave.

on all of the CBO forecasted revenues.

Those are indicated here in blue.

So I want to draw your attention to this fourth column here, this revised minus adopted.

And as you can see, the combined change in 2022 revenues in the general fund is an increase of $25.5 million relative to the 2022 adopted budget.

The other thing I wanted to mention with this table is, as Dave mentioned previously, it's worth highlighting that there is a significant drop from 2022 revised to the 2023 forecast.

And that's driven by large changes in those one-time transfers in the all else category from the loss of the proceeds from the Mercer Mega Block Sale and other one-time significant transfers that were a part of that 2022 forecast overall.

So adjusting for those one-time sources, 23 GF general fund revenues are projected to increase 5.5% over 2022. And growth in 2024 is projected to slow to approximately 2.8% considering all sources.

I'm not going to walk through the line items because you have already heard about each of those lines.

But of course, we can take additional questions.

I do want to get into now a little bit of context around what these numbers are.

And again, we've heard all this, but sort of indulge me in the built-in suspenders approach here if we can go to the next slide.

So this revenue forecast provides the basis for us working to develop a balanced 2023 and 2024 proposed budget.

The proposed budget will also be informed by an updated forecast in August, and the ultimate adopted budget informed by an updated forecast in November.

And as was mentioned at the top, revenues are only half of the picture here.

Expenditures also matter.

And as you heard from Director Noble, inflation is now at a 30-year high, and it affects both revenues and expenditures.

Rising prices boosts inflation-based taxes such as sales tax, so it drives up those numbers, but it also puts pressure on the buying power for wages and commodities.

Said another way, we have more money, but everything costs more.

So it's sort of cautious, guarded optimism as we go into the future into planning.

So this also affects the city's labor contracts, many of which are open and negotiations are ongoing.

So all of the city's costs.

are expected to increase.

Our revenues continue to recover from the pandemic.

However, the expense growth is outpacing the revenue growth.

So that leads to structural deficits or gaps in the general fund.

And with the one-time sources already mentioned that are no longer available in 2023, that leads us to the conversation we've been having about how to move forward.

And that's going to be the subject of that May 4th conversation the next finance meeting when we give a more wholesome, or fulsome rather, general fund balancing update with central staff and CPO.

So much.

Do you mind pausing here for a second, Julie?

Of course, of course.

That's the end of mine, so happy to take it away.

Well, thank you very much for walking us through this.

And I know there's a lot of anticipation for that May 4th meeting.

I was going to make a Star Wars joke.

I don't know.

But I know that there's a lot of anticipation for that conversation.

We did want to make sure that central staff and the team had a chance to hear both of these presentations.

really crunch the numbers and then come back to us two weeks from now with that fuller picture for what this means for current expenses and also for a six-year lookout.

So that is why it's a part one today, part two on May 4th.

I know there's probably a lot of eagerness though to see how those expenses factor in and I'm going to also ask Allie and Tom to add to that comment before turning it over to Councilmember Peterson and Councilmember Herbold.

Director, Interim Director Panucci or Tom, did you have anything else you'd like to add about sort of what is going to be presented on May 4th before we turn it over to our colleagues?

Thank you, Chair Mosqueda.

As Director Dingley noted, we are working with CBO to update the six-year financial plan, making sure that we on both in the legislative branch and the executive branch understand the assumptions, agree on the assumption used to inform that six-year financial plans of both the revenue side and the expenditure side, also factoring in potential decisions around the carry forward ordinance.

And so that will indicate on May 4th, it will give you a update on what we are projecting in terms of the gap between general fund revenues and general fund expenditures.

But I'll just note, you've all heard me say this before, but I'll say it again.

I encourage you not to fixate too much on specific numbers.

This is the first of three forecast updates that the council will receive prior to adopting a budget this fall.

some of the uncertainty, these numbers may continue to fluctuate.

So what we will be discussing on May 4th is both the updated number, we will also likely present some scenarios like what if certain assumptions or certain factors change.

and begin to highlight some of the strategies that the council and the mayor may want to consider to inform the budget deliberations this fall, but also spending decisions that will come up during 2022. In June, we expect to receive the mid-year supplemental budget.

ordinance, for example.

And so we are sort of charting new territory by really starting public discussions of the six-year financial plan that we hope to continue on a regular basis as we're receiving these revenue forecasts and in the context of the council's budget decisions.

So hopefully in the long term, we will avoid continuing these structural budget challenges, but it's going to be a little I would say bumpy along the way, but we look forward to engaging in those conversations with all of you.

So on the 4th, we hope to present jointly with Director Dingley.

And I'll just turn it over to my colleague, Tom, to see if he has any comments to add before turning it over to questions.

Thank you, Allie.

Good morning.

Are we still in the morning?

Good morning, members of the Finance and Housing Committee.

Tom Ixell, central staff.

Not too much to add to what Ali mentioned.

Looking forward to the exercise on May 4th.

I just did want to acknowledge and appreciate the detailed information sharing from the Office of Economic and Revenue Forecasts and the City Budget Office, because that is crucial in such an endeavor that we're embarking upon.

And I just wanted to lift that up because it's much appreciated.

Also, just one additional comment.

In looking at these financial plans, I would just mention that revenues for some of our major revenue categories that have been covered today, property taxes, sales taxes, and B&O taxes specifically, are actually projected to be higher in 2023 than they were projected to be in the fall of 2019. So there is a divergence in the economy that has not quite converged, largely due to work from home and things of that nature.

and certainly some of the differences due to higher inflation as well.

But we look forward to exploring these and many other topics on the board.

Thank you so much.

I'll underscore my appreciation for CBO and the new Revenue Forecast Office and central staff who've been really leading the way in the last two years as we've talked with Director Dingley and others about how we can move to a true biennial budgeting process.

We talk about biennial budgeting, but in all actuality, we have a 12-month calendar budget.

So I think having true biennial budgets will be a good step that we can all work towards I think the presentation on the fourth that will do a real public presentation on what the six-year outlook looks like will help us create a greater stability in terms of our budgeting processes for not just the next two years, but looking over the course of the six years to come and how we can create greater stability in revenue streams for key government investments.

And finally, I just want to note our appreciation for the a hard work that folks are doing collectively on the executive and the legislative branch sides to try to make sure that we are being transparent in these discussions and that we as a council and the executive are really getting information in real time with all of the council members to make collective decisions.

I think this is going to lead to a more accountable budgeting process and a lot of stability in the years to come.

So I see a number of hands and I'm glad that we have William with us.

I want to thank William again for the opportunity to look at the American Rescue Plan Act implementation efforts.

We are going to hold that last item for our next committee meeting and we will spend the next 20 minutes here going through questions that council members have.

So Council Member Peterson, you are up first, followed by Council Member Herbold.

Thank you, Chair Mosqueda, and thank you for your comments sort of setting the table for the next meeting as well, where we will talk about expenditures so we have the full picture.

Are we able to pull up the slide 9 from the presentation?

That's the one that has all of the revenues.

Thank you very much.

So on this, in the middle of the slide, the 2022 revised number, the 1.671 million, I was interested in Council Member Nelson's question about, you know, what would be a typical budget, uh, you know, if we take out the externalities of the COVID pandemic, for example, um, and so I dug up the 2019 actuals, uh, which you can get from the, I think I had to go to the budget archives and then there's an appendix.

I think it's page 705 of the appendix.

Um, but it's showing, um, total revenues of about 1.4 million.

And so, This is pre-COVID, $1.4 million, 2019 actual revenues.

So we are in a good position with revenues, it appears, where we're up to $1.6 million revised for 2022, and then we have the forecast of $1.5 million.

Again, that's higher than the $1.4 million that we had pre-COVID.

And so, and this is even before including the new payroll tax.

So I guess what I'm seeing here is that Seattle does not have a revenue problem, but we potentially have an expenditure problem because of all the great needs that we have.

So May 4th will be vital in terms of how we're going to How are we going to live within our means, spend within our means with our budget?

I did want to try to unpack a couple of line items here.

And I know it's hard to fit everything into a PowerPoint and to compare apples to apples, but the two line items, one is called transfers and the other is called all else.

And when we see the revenue, those line items going down from 2022 to 2023, I'm just curious how we're getting from $187 million going down to $27 million, and then $156 million going down to $95 million.

If that could be explained today, that'd be great.

Otherwise, you could get back to us.

I guess it's for Director Dingley.

Yeah, I could add to that Dave.

Actually, you probably have the specifics.

Do you want to answer that or I can?

Sure, so in the 187 million of transfers in the 2022 revised column are about $150 million worth of one time transfers of the Clifford funds.

The coronavirus local fiscal recovery funds from the federal government as well as the jumpstart payroll expense tax transfer.

And so those are $64.2 million for the Clifford funds and $85.4 million for the Jumpstart payroll expense tax funds.

And those simply go away in 2023. They're one-time sources that just won't be available.

As well as the $65 million from the Mercer Mega Block sale that shows up in 2022. So those one-time transfers and all else are really buoying the 22 revenues, Council Member.

artificially high, if you will, because they are one time and they're not a part of the base revenue forecast that we would expect that we could apply inflation or the other economic factors to develop the following year's forecast.

Madam Chair, if I may follow up.

When you say the jump start will not be available, it's an ongoing revenue source.

So why would it not be available as a revenue as a as a revenue to the general fund?

So in starting in 2023, to jumpstart, Ali, check me here, is its own fund.

And there is a transfer, a one-time transfer going in to help balance 2022 for $85 million.

In 2023, that transfer is no longer in place.

It is fully its own fund and is programmed by current law to be spent among the four spending categories of the spending resolution, or spending ordinance, rather.

Councilmember Peterson, this is part of the codified implementation plan, the spend plan that we all worked on to ensure that the percentages that were allocated in the original spending plan, the detailed spend plan that we all put together were codified into statute.

And then just very briefly, because I know we have other hands up, Ali, if you could also remind folks of the valve that we put in, the release valve, if revenue projections come in lower than anticipated.

That's part of our spend plan as well.

Thank you, Chair Mosqueda.

So as Julie described, in 2022, the payroll tax revenues go into their own fund, and there are policies codified in law that dictates how those revenues can be spent, consistent with the spending plan adopted when the council is passing the payroll tax in 2020. But one modification to the original spending plan was this release bell that said, if general fund revenues drop below a specific amount, it's like 1.51 billion, I believe, then the difference between the current forecast and that number can be transferred into the general fund.

So for the 2022 budget, when the council was considering that budget this past fall, that allowed $85 million of jumpstart funds to be transferred to the general fund consistent with the fund policies.

Now with this updated forecast, general fund revenue projections are above that amount.

And so the current policy would not allow for any transfer from the jumpstart fund to the general fund for 23 and beyond.

And a caveat on that.

in this initial revenue projection.

Correct.

As you notice, we have two more coming.

Thank you.

Okay, I'm going to keep us going because I do have a pretty hard stop at 1130, 1135. So let's try to get all the council members' questions in here.

Council Member Herbold, please go ahead.

Thank you.

Just one point to make and one question.

As it relates to the question of sort of fixating on numbers and the advice that we don't do so because we are going to be getting future forecasts.

I just want to clarify, there's also, as I alluded to earlier, my fixation on numbers is really related to what's happening this year with the council's adopted budget.

And my concern that there are there is sort of this ongoing conversation about where we need to do spending pauses.

And so when I'm when I'm trying to get at those specific numbers, it's part of it is about my interest in advocating for spending on the council priorities in our budget.

So I may continue to zone in on some of those questions with the full understanding that the 2023 picture is going to be informed by future forecasts.

My question is going back to the what does it all mean slide and the recognition that inflation affects both revenues and expenditures.

I'm assuming they don't impact both equally or else it would just be a wash and I don't think it is a wash.

So I'm just wondering how do you account for the impact of inflation and how should we, what are sort of the principles going into that suggestion that we need to be considering how inflation impacts revenues and expenditures.

It's a great question.

Council member.

It's the question that I think is at the top of all of our minds.

So when we are pulling in more dollars in a nominal sense because of inflation, right, everything is costing more.

So the sales tax percentage is generating more revenue.

So that comes in.

It costs more for people to go about their lives.

And when those costs reach a certain point, it could change consumer behavior and how they choose to consume products if they are now more expensive, if they are now outside of their budget.

And so what we don't know is how that will impact everything.

That's one of the considerations, Dave.

I don't know if you have other things that you would add.

No, just that the expenditures that go into the budget are distinct to the city, right?

And so the wages, the costs that we're paying.

And so while there is the general notion of inflation, the actual costs that are going to be captured over the course of the summer and into the fall of what actual costs are going to be projected by departments will be different.

And so I don't know if there are principles of how you manage that other than to keep your information as updated as possible along the way.

And one other thing that I would add is that the increase in costs is not just limited to inflation.

It's also with our supply chain.

issues as well.

So although we might see inflation at 7%, we might have in a supply chain situation where it's difficult to get certain raw materials for our capital projects, the cost there because of that supply chain decrease in supply might have significantly higher costs to acquire those materials.

So it can be also a bit lumpy.

So I understand that you're saying We don't know.

But you're making some assumptions for purposes of this projection.

So I just want to understand, is the assumption that the impacts are awash?

Or is there an assumption that the cost to purchase goods is a greater increment than the the increase in the value of our revenues.

Or the other way, I'm asking what the projections are based on.

I also see Interim Director Dingley, excuse me, Interim Director Panucci has her hand is raised as well.

Just wondering if you wanted to chime in.

Oh, please, Ali, I can go after you.

No, you're, you're free to answer that.

Welcome to it.

I invite you to answer that specific question.

What I was going to know is and Director noble may be able to speak to the work that their office did on providing some inputs in terms of the inflation assumptions for the for the revenue forecast side of the equation that will also inform expenditure discussions.

But the financial plan includes assumptions.

And so we will do our best to highlight those assumptions when we are presenting the forecast in a couple of, excuse me, the financial plan in a couple of weeks, including where that, where it's not just a wash between assumptions around the revenues and the expenditures to highlight sort of how that is, maybe a bigger impact for the city that it's impacting expenditures, for example, in our assumptions, more than revenues, if that is the case.

Let's do that.

Let's make sure that this is a key piece that we come back to in the presentation on 5-4.

Okay, thank you very much, Vice Chair Herbold.

Council Member Lewis, please go ahead.

Thank you so much, Madam Chair.

So I have less, of questions about this presentation.

I do appreciate the thoroughness of this and the conversation about all of the external factors that are impacting the uncertainty in the current economic climate.

My comments go somewhat to the same place as Council Member Peterson's comments earlier and really look forward to the conversation we're going to have, not only in the fall, but also coming up here in the late spring, early summer around a supplemental budget.

And I really just want to make sure that given all these external factors around revenue and also given potential crunches around expenditures, that we're also taking the time to build a strategic supplemental and long-term budget that is designed to really disproportionately tackle and reflect the current challenges the city is facing.

I want to, you know, if that requires a certain amount of consolidation in other lines of city business that aren't related to public safety and homelessness.

I think that that's a sacrifice that the council and the city should be willing to explore.

I think a really credible case can be made that Seattle's fundamentals economically that are reflected in how we bring revenue in could be expanding even more and we could have a decade of really great growth in our general fund that allows us to tackle other exigent challenges like climate change, like public infrastructure for, you know, for bridges and such that I think are sort of in the public view at the level just below the public safety and homelessness crisis that we can't really get to until we build a budget that tackles those challenges.

And I really think fundamentally, compared to a lot of other cities, particularly on the West Coast, Seattle is very well positioned for a recovery if we can execute.

I mean, we know the things that work.

We know the things that we can fund that will make progress on those issues.

And I just want to make sure that if there is some level of consolidation on the expenditure side, that we make sure we are also taking the opportunity to protect, expand, and double down on investments that are gonna make progress on the homelessness crisis and restore public confidence, and in turn, boost our revenues going forward to allow us to get back on our feet.

I would wanna make sure we don't craft a budget that, in a sense, equally distributes the potential consolidation or the potential programmatic pulling back to balance priorities in a way that does not emphasize investments in tackling the homelessness crisis and the public safety crisis.

Those things really need to be at the forefront of how we are designing a strategy to go after those challenges.

And I would just hope that we could put forward a bold budget that is a roadmap to doing, to taking care of those challenges.

Because the sooner we do, I think the sooner we're gonna see bigger investment in the city, bigger recovery, and the ability to take on more of the things this council and city government wants to make progress on.

But I would just hope that at this moment, people are demanding and what the exigent moment is demanding is that those be our primary focus, public safety and homelessness.

Thank you very much, Councilmember Lewis.

And Councilmember Nelson, I believe you have the last question for us today.

Yes, and it will be quick.

I was going to make this point in discussion of the Seattle Rescue Plan update, but since it's fresh and relates to something that was said yesterday in briefings, I want to make a quick point, Madam Chair.

When I was talking about Seattle Restored yesterday, which is one of the things that is funded by the Seattle Rescue Plan, I wanted to make a correction that that program that I praised yesterday does not have jumpstart funds.

It's just information for the public and for my colleagues.

Thank you.

I'm sorry, are you asking a question here for folks?

Okay, I see you're going off camera.

All right, so I did have a question about slide number nine.

Slide number nine has property taxes going down in terms of our 2022 projections, but are up over 2021. Can you talk a little bit about what you're seeing there?

Why are property taxes going down in 2022?

So that relates to the Medic One EMS levy that I was describing, that due to the growth rate differentials in King County total AV versus Seattle AV, that the rate actually declined further than the city's AV increased.

And so when you multiply those two together, we're getting a smaller number in 2022 than we did previously in the adopted budget.

Is that an AV is assessed value?

Sorry, yes.

So they're they're up over 2021, but they're down compared to our initial projections.

Yes, exactly.

OK, because yeah, I think everybody would assume property taxes are continuing to go up, but they're just not up compared to the projections that we had initially consider.

And just to make sure I got this right, that they're they're down relative to 2021 actuals.

and they're down relative to 2022 adopted.

Okay, so they're not up over the 2021 correct.

Okay, I think that helps as projected.

We're still in 2022. We're still collecting the taxes, so we'll see what happens.

But it's a pretty done deal with the property tax.

Once you know the rate and once you know the A.

V. It's just a matter of whether everybody pays their property taxes in a timely way.

That makes sense.

OK.

Any additional comments?

Allie, any additional tee-up for the 4th?

We've talked a lot about the 4th, a lot of anticipation there.

OK.

Thank you, Chair Mosqueda.

We are looking forward to the conversation and a lot of work to do between now and May 4th.

OK, great.

And again, thanks to William for the presentation.

We will have the ARPA spending at our next committee meeting.

We'll also have a possible office of housing staffing legislation that is still in the mayor's office, so to be determined on that.

And we will have this, the much anticipated part two of the general fund balancing analysis.

This will be an update of our six year financial plan.

Again, that meeting is going to be on May 4th.

All right.

Hearing nothing for the good of the order, we did it pretty much on time.

Director Noble, I see you still with us.

Thank you.

There was no additional comments for you and Jan, but we appreciate your presentation and really thankful for the work that you all did on this committee to update that template as well.

20 years in the making.

We did it today.

So that but will happen next Tuesday.

Appreciate all your time.

And if you do have any questions, I'll just put this out there.

I know that folks on the line here would be happy to continue to answer those in anticipation of the fourth.

So if there's additional questions, please let my office and Director Panucci know, or Director Panucci directly if you prefer, so that we can compile any additional questions if you didn't get the chance to answer those today, but appreciate the robust discussion.

Colleagues, have a great rest of your day, and we will see you soon.