Select Budget Committee June 4, 2025

Good morning.

The June 5th, 2025 Select Budget Committee will come to order.

It is 9.30 a.m.

I'm Dan Strauss, chair of the committee.

Will the clerk please call the roll?

I will note that Council Member Moore has been excused.

Council Member Saka and Council Member Hollingsworth are also excused until they arrive.

I see Council Member Hollingsworth here now.

Clerk, will you please call the roll?

Thank you.

Okay.

Council Member Rivera.

Present.

Council Member Hollingsworth.

Present.

Thank you.

Council Member Kettle.

Here.

Council President Nelson.

Present.

Council Member Rink.

Present.

Council Member Solomon.

Here.

And Chair Strauss.

Present.

That is seven present.

Thank you.

Mr. Chair, I'm here as well.

Council Member Saka, thank you.

Thank you, Council Member Saka.

Today we have four items on the agenda.

We have the budget reform processing content for briefing and discussion.

We have an update from the executive regarding the current budget situation.

We also will have two votes, the 2024 budget exceptions ordinance, as well as an ordinance allowing the city to pay off 2014 bonds in advance.

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

Hearing no objection, the agenda is adopted.

Colleagues, we are gonna walk through today these four different items.

We have the changes to the process in the fall budget Process, sorry.

And then we also have a discussion about the content of the budget and the reform that we've been doing to the content.

A lot of the reform work is not necessarily work that we do in committee.

It's work that we do every single week.

I meet with the CBO and our central staff budget team.

Today will be a short presentation about some of that work, but I'll say that because of the April forecast, downturn forecast, this meeting has changed quite significantly so that we can be present and ready for the changes that need to be made this year, not in the fall budget process for next year.

So with that, we'll now open the hybrid public comment.

Public comments should relate to the items on the agenda and within the purview of the Select Budget Committee.

Clerk, how many speakers do we have signed up today?

Two remote.

Thank you.

With two remote speakers signed up, each person will have two minutes.

Public comment period will be moderated in the following manner.

Public comment period is up to 20 minutes.

Speakers will be called in the order in which they're registered.

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

Speakers' microphones will be muted if they do not enter their comments within the allotted time to allow us to call on the next speaker.

Up first, we have Alberto Alvarez followed by David Haynes.

Alberto, I see you have been promoted.

Star six to unmute.

Hello.

Council is now faced with a severe economic downturn and a budget that will not match the needs of the people.

Cuts and layoffs might get you a tenth of the way to a balanced budget, but at some point, those cuts become so deep you end up severing entire limbs.

Reduction in services and staffing will further destabilize working class families and elders on fixed income.

nelson's business agenda is an active threat to that stability people are making sacrifices just to keep their home and live on a shrinking budget when council has the job of appointing a district five member a business choice will bring only pain and loss the danger is real and your appointment is a life and death decision for thousands of people get this one right The choice is taxing millionaire investors, not regressive cuts and layoffs.

That is all.

Thank you and have a good day.

Thank you.

And up next is David Haynes.

David, once you're promoted, star six to unmute.

I see you're here.

Star six to unmute, David.

David, I see you are here.

Star six to unmute.

There you are.

Welcome.

Hi, thank you, David.

Thank you.

You know, I hate to say this, please forgive, but it's almost like the budget chair is weaponizing the budget process.

And I say that because we did not get a truly transparent, detailed analysis of the spending priorities that got reissued with added money that originated from defunding the police, shifting the paradigm, and prioritizing, I dare say, unconstitutional spending priorities that exacerbated the public safety, the homeless crisis, and the housing crisis.

And yet, it seems like the central staff has been coached in how to pull the wool over the eyes of the new council.

it's almost like there's a tit for tat rivalry within the Roberts rules that a couple of council members compete with.

And it's like, exactly what are you doing?

Because there seems like to be a co-opting of certain issues, like office of housing is being directed and then Seattle channel is being backstabbed.

And it's a concern that we have this circumventation and co-opting of what is expected as far as proper policies.

And it's like the central staff puts on this charade of transparency that really is just a generalized overview that still delays hearing concerns about the people when it comes to testifying about what the budget is that never produced the 10% investment in solving the homeless crisis, but yet it's still increased from $6 billion to $8 billion.

But yet some of the policies that were implemented are the reason why we have an economic downturn.

And those policies haven't been corrected.

They've been hidden in the budget.

And staff, I swear, seems to be coached into running interference for those policies and pulling the wool over the council that needs to sober up and pay attention to what the hell's going on with the budget.

Because y'all got it wrong last time.

That concludes our registered public commentaries.

Thank you.

Thank you, David.

And please do refrain from vulgar language during public comment.

I always appreciate you calling in.

That does conclude our public comment as seeing as we have no additional speakers remotely or physically present.

We will move on to the next agenda item.

Folks, feel free to come on up.

The first agenda item today is briefing discussion on the council's fall 2025 budget process.

Will the clerk please read the title under the record?

Agenda N1, budget reform, processing content for briefing and discussion.

Thank you.

We are joined by Director Ben Noble, Calvin Chow, Tom Mikesell, all of central staff colleagues.

We have had some changes even since the last time we all came together as a select budget committee, which is that Deputy Director Yolanda Ho has moved on from central staff.

So we've made some changes.

Director Noble will speak about some of the staffing changes that have occurred and walk us through the presentation about how we will be engaging in budget reform, both in process and in content.

Director, over to you, and if everyone wants to introduce himself for the record and then kick it off.

Ben Noble, Central Staff Director.

Tom Mikesell, Central Staff Analyst.

Kelvin Chow with Central Staff as well.

And just before you begin, colleagues, Council Member Saka gave me some good feedback a couple months ago about the way we were running these meetings.

So one of the facilitation changes that I've made while running the budget meetings are we'll let the presenters get all the way through their presentation and we'll take...

questions from colleagues, I will go last.

While they are presenting, since I've had these presentations multiple times and we meet every week, if there is a piece of information that is germane to the presentation that has not been shared, I will ask for that clarifying question so that everyone has full information.

With that, over to you, Director Noble.

Thank you.

Thank you very much.

As Chair Strauss has described, our goal today is essentially to give you a preview of the budget process for the fall that will include just walking through the calendar at some level of detail and talking to you about some of the changes that we've made there, but then also talk about some substantive changes we're making to materials to prepare you for the budget deliberations that are coming.

So with that, I'm just going to dive in.

I'm going to figure out how to get to the next screen or not.

Or rather, Tom is going to for me.

Thank you, Tom.

So the next slide is actually the budget calendar itself, and I believe there's a hard copy at your spot at the dais.

But just make a couple comments before I shift to the calendar itself.

One, just in terms of beginning and end, if you will.

The council's budget review process will formally start on September 23rd.

That's when the mayor will transmit the budget.

That is consistent with state law that requires that it be transmitted 90 days before the end of the year.

And then final council action is scheduled for Friday, November 21st.

That's the Friday before Thanksgiving.

And that's not It's not by accident, if you will.

That date is the final date that this council has composed the members you have today and the one that you will appoint soon to the 5th District will meet.

The election will be certified the following Monday, at which point the new representative from District 2 will take office.

The idea here is that you all as a collective, and Council Member Solomon most specifically, who all have participated in the budget deliberations and discussions will be the ones who take the final vote.

So that was part of the driver there.

Candidly, we also try to wrap up before Thanksgiving in general, but there is reason for that.

In terms of some key changes to the calendar itself, there are a couple that focus particularly on transparency and public engagement.

And that transparency is also, as I'll discuss, transparency to the public and amongst yourselves.

So in particular, the initial public hearing is shifted back about 10 days to provide an earlier opportunity for you all to hear from the public and your constituents.

And then in addition, we've added, in some ways restored, a phase of analysis and discussion that had been in the budget calendar previously, and I'll get to it in a second, that will allow you all to hear from one another about the budget amendments and changes that you are considering in advance of the chair constructing a balancing package.

And so let me walk through the calendar in more detail to show you how that will all work.

So again, copy this at your spot at the dais.

I'm going to do this very quickly.

Again, as I mentioned, Transmittal on the 23rd of September.

Then if you recall, there's an initial phase when the departments, not all of the departments, the departments where there are key changes and also departments of particular interest.

Classically, the public safety departments will be here.

Human services will be here.

And then we will be working with you and with the budget office and with our own knowledge to schedule, and with the chair, to schedule other departments that we're going to think where there's particular action, if you will, in terms of budget changes.

Expect a lot of changes this year.

But again, given limited time, we won't have all, not realistic to have all departments in.

There is then a public hearing scheduled for the 7th.

And then the initial phase of analysis, and again, to recall, there's a first phase where central staff will give you our take, if you will, on the budget.

And the goal is to inform you about changes that we see and potential implications of those changes, things that the executive might not have said, might not have had time to say.

And again, we will highlight departments and issues that we think are particularly important.

typically organize those sets of presentations in two ways.

One is around the departments in an obvious way, but then sometimes there are also cross-cutting issues that deserve attention unto themselves.

So we'll get back to you.

The approach we had taken last year.

Also consistent with last year is that there will be a revenue forecast presentation, a revenue forecast update on October 20th.

So the Forecast Office will prepare that revenue update, present it to the Forecast Council, and also present it to you.

That will then set the revenues that are available to budget for your final deliberation.

So that's obviously a very important piece of information.

Consist of...

The day following is when initial proposals are due, and this is again gonna lead into this new phase.

So from October 28th through the 30th, so that's slightly, I don't know what color it is on here, it's purple on the screen, is a discussion of council member budget proposals.

And the idea here is that you as a collective will discuss potential budget amendments that may be in somewhat nascent stages at this point in development that you are individually considering.

And you will hear from one another about those, and the chair will be hearing from you all collectively, and the public will also be hearing what that range of options is.

That will then feed in to the chair's balancing package, which will be released on the 5th.

But again, the idea here is, and this is different from last year, Last year, as you developed those proposals, you were largely doing that individually, and that information was being shared with the chair, but it wasn't necessarily being shared with all council members, so that you weren't aware of the full set of options that were being deliberated by the chair as he put together the balancing package.

And that will be different this year, and we think helpful in terms of transparency, again, both for yourselves and for the public as a whole.

So a significant change.

Chair's balancing package on the 5th, a public hearing then to follow, and then the date when final amendment proposals.

So the discussion from the 28th to the 30th are initial budget proposals.

The chair will then incorporate his own and some of yours into a balancing package, presumably.

And then you will have the opportunity to develop self-balanced amendment proposals.

I should emphasize, for both sets of proposals, two additional sponsors.

So a total of three sponsors will be required.

Again, the goal here is to really focus on things that are viable and have the potential to move forward.

Then set for committee votes on the November 14th and again on the 17th.

Central staff will be working with CBO on the 18th and 19th of November to make sure we got it all right.

And then final vote for the committee on the 20th and for the council on the 21st.

To emphasize again just a couple of things that were on the calendar.

Our goal will be, in terms of that new phase, that discussion of council member budget proposals, our goal will be to publish those 24 hours in advance of the next meeting.

We at Central Staff work on kind of a rolling calendar of due dates, but the goal again is, for sake of transparency, that those be posted 24 hours in advance.

Similarly, we're going to be posting online a tool that will let the public ultimately see all of the amendments that are viable, that have been put forth, and that have the requisite sponsors.

This is something we've done in the past, but with the transitions coming into last year, we weren't able to pull together.

But we'll have that for the proposals phase, for the balancing package, and then for the committee voting phase as well.

So again, this is something that will allow the public and others to see with the full set of things, full set of amendments that are under consideration.

One thing, last year we had a challenge, just again with logistics, about being able to add sponsorships.

So not surprisingly, when council members start to see proposals from their colleagues, they often want to throw their weight behind it, if you will, and add themselves as a sponsor.

We weren't prepared to do that last year from a technological perspective.

We will be this year.

but what we're likely to do is have you use your little electronic hands, and then we will take those notes and then confirm the outcome of that.

But again, just something that we know matters to you and that we can manage.

And the last point is that we will make every effort to publish the chair's balancing package 48 hours before that second public hearing.

I'm not asking for sympathy from all of you, but I do want you to recognize that is a bit of a challenge.

The final day that you will be presenting proposals is on Thursday, and 48 hours in advance of that date is the following Tuesday, and that doesn't leave a whole lot of time to pull together the balancing package, but that's why we've used this language about every effort.

I just want to make sure that we don't get caught, if you will.

But that is the most intense period for us, and in some ways one we look forward to.

In terms of some actual substance and materials that we're preparing, I wanted to highlight that we central staff are currently updating what had been the five-year budget look back.

So last year, A good number of new members joined the City Council.

We thought it would be helpful to take a look back and to provide some broader context for the budget.

So we did a five-year look back comparing 2024 to 2019. We picked 2019 very much on purpose in that it was pre-pandemic.

So you get a sense of how the budget had evolved over that period.

We're going to update that for the additions and changes that were made for 2025. So that work is underway.

The goal is to get it done by the end of this month.

I'm going to fall short of committing to that.

We're staffing a little bit challenged at my end in terms of folks who can work on it, but we are underway on that work as we speak.

And Director Noble, before we move on, colleagues, I had desired originally when we set up the annual calendar for committee, to spend a fair amount of time in June and in this meeting specifically diving into the six year look back because having that knowledge months in advance of taking up the fall budget process sets us up in a way that we're able to review and then follow up on the questions that we have about these items and the changes that have been made to the budget where we want to find savings where we want to possibly expand programs Due to the central staff staffing changes over the last few months, we were unable to get this ready for today.

So Director Noble, thank you for continuing to commit to have this document before us and let's do touch base to see when we can have this back in committee.

Thank you.

And actually, with that comment, I was a little missed this morning in not explaining that this is very much the budget team this year, although not exclusively this.

Ed and Cizic will be back from paternity leave soon and join.

And also, Brian, good night, and our team is helping coordinate at my end of the hall, if you will, in terms of the logistics of this.

proverbial line about taking a village applies here and I will take credit for having brought a bunch of books on board to make sure that you are properly staffed and that the process runs as smoothly as possible so we're looking again looking forward to that another thing on substance that we're continuing to monitor the budget related slides due dates on these are such that they're largely arriving over the next few months and But just to remind you about what's included there, one is a request to work with CBO to report on the programs that are available for employees who are subject to layoff.

There were a number of layoffs that were incorporated in the 2025 budget.

Actually, just this morning confirmed that we will be getting the results of that analysis on the 11th.

And the chair's intended to provide a presentation on the 18th at his committee.

So there'll be some more about this to come.

And with this, colleagues, you're seeing this information being shared in real time.

I will say that we do need it as soon as possible.

The 11th is while just next week for folks who are facing layoffs at the end of this month, every day matters.

Thank you.

Sorry to surprise you with that news.

It arrived on email since we spoke last.

There's a request to the CBO and work underway to report on historic patterns of budget underspends, and particularly around grants.

I think this would be a particularly interesting analysis, just to preview some of the thinking here.

We know historically that the city underspends its budget, particularly around the general fund as an example, to a fair degree.

This isn't anyone's fault, if you will.

It's a natural consequence of people not knowing exactly what they're going to be able to achieve during the year.

And you'll hear today about a budget exceptions ordinance where people have overspent their budget.

Nobody wants to be in that place, so we tend to have a little bit of cushion.

But knowing that, we end up finishing the year with more cash than had necessarily had been anticipated.

And at some point, we need to perhaps update our expectations, our anticipations, because it does create opportunities to budget differently, to anticipate that underspend.

and to potentially allocate resources accordingly.

Let me just leave it at that.

Also, there was a slide requesting analysis of potential early retirement incentive for city employees.

Again, in the context of the reality of the city's workforce likely shrinking, certainly in some departments and in some areas.

The notion here is that there might be a way for a win-win, if you will, to both to reduce the city's workforce in a way that is less disruptive to the individuals.

There was a request for an inventory on city-funded youth programs, so that will be arriving shortly.

There was also a slide calling out the establishment of a working group or task force to examine alternative financing and operating models for the Seattle Channel.

That group has actually already been meeting, fifth meeting I believe today.

that work is well underway.

And the last one, again, and I think this is due later this summer, a request for the Office of Housing to explore the use of bonds in master leasing.

So looking for ways to, on the bond side, it's really financing.

That's not funding.

On the master leasing side, it's about use of the available funds and whether that's an approach that could be effective.

So again, we're monitoring all of those, and we'll be reporting back either to this committee or to other relevant committees as that information comes in.

And then looking forward in terms of next steps over the rest of the summer, essentially, before the budget itself arrives, today you'll be taking up an exceptions ordinance and a bond repayment legislation.

You'll hear more about that.

The carry forward ordinance was provided to Council currently working with the Budget Office to refine that and adapt it to the revenue forecast.

So it had been prepared in advance of the April revenue forecast that, as you know, took a fair amount of money off the table, if you will, and so that needs some adjustment there.

CBO is currently working to prepare the mid-year supplemental.

A preview on that front, and Director Eder will give you more.

Not going to be a whole lot of new spending, if any, in that mid-year supplemental, because there is not a whole lot of new money.

In fact, there is none.

Quite the opposite.

The revenue forecast is below.

Given the context of the overall budget, that is the deficit we are facing and the magnitude of that deficit north of $100 million, the Chair does see value in discussion of revenue options.

I'm not putting a thumb down on the policy side one way or the other.

but just for the council as a whole to understand that landscape.

And I would add, particularly, I would describe as significant revenue options.

So there's always options for small increases in fees and fines and the like.

But given the structural problem we're facing, if you're going to look at revenue options, likely the more interesting ones would be ones that could raise significant revenue.

All that is to say that we can have a discussion that's relatively contained in that space, because there are limited options.

But again, I thought it would be useful for you all to be aware of them.

And then other very important event is that early in August you will get the revenue forecast update.

So again, just to remind you, there's a forecast done in April, August, and October.

The August forecast is particularly important because it's the one that the mayor will balance his proposal to.

So there isn't another forecast before the mayor submits on the 23rd.

His budget will be balanced to that August forecast and then you'll get an update a little bit later.

So we will say staff will be monitoring that and we will inform you one way or the other about its implications.

So that's what you all have to look forward to and happy to take any questions.

Thank you, Director Noble.

And if you could spend just a moment longer speaking about Calvin Chow's new role and how we're facilitating central staff's work on this budget process.

Yeah, no, thank you.

So sort of lines about how many people it takes to replace any one.

So Calvin will be joining me and working very closely with Council Member Strauss in terms of establishing the agendas for individual meetings.

We'll then be working with each of you.

We'll come to visit each of you and hear your, again, throughout the budget process, probably once early, kind of once in the middle, and once towards the end, we'll get on your calendars.

We are available otherwise as well.

to bring in, to discuss your proposals and to put some frame around them as well.

Tom is very much our technical expert in terms of the implications for balancing, so he will be working very closely with our team to make sure that we are able to put together a budget proposal that is, in fact, balanced and identifying options for you to achieve that balance.

Brian Goodnight will be leading effort on, again, sort of behind the scenes.

It's perhaps not apparent to you, but preparing you know, tens and tens of amendments, organizing agendas, putting them in a rational order, timing that out, that's all a complicated process.

And again, I will only claim credit for having been smart enough to delegate parts of it so that it operates smoothly for you.

I'm not going to work that hard.

There weren't enough hours in the day.

So again, very much a team effort.

And again, I overall think it's valuable for you and for central staff to have ever more folks aware of how the whole process works.

Otherwise, as an analyst, you touch it in just certain small ways.

You don't get to see the bigger picture.

Again, it's valuable for the team and for you all to have that knowledge spread across numerous folks.

Thank you, Director Noble.

And I realize that because you and I and the rest of the team have been so deep in the weeds on this work, we put two presentations together, process and then the second content, ran through everything.

So colleagues, I'm going to start with process.

If we could go back to the calendar.

And colleagues, if you all have questions about the process, let's take those now.

We'll close out process and then move on to the content.

of the six year look back, the slides, and this budget work.

So, colleagues, any questions on the process?

Council President.

By process, do you mean the schedule?

Yes.

Okay.

So I'm comparing the 2025 and the 2024 budget process.

And one thing that I'm noticing, I really like that, first of all, I'll say that I like the open at deus discussion of council member budget proposals.

And because the more we can talk about them in public, the better.

That is in response to the mayor's proposed budget.

Last, but we don't have a very long time to really discuss the council member responses and amendments to the chairs package.

There are two voting days, but there won't be a lot of time to maybe develop potential amendments because they are due two days after that.

And I think that that is probably the, not just the concept, but something more concrete.

So I'm just wondering, is there flexibility for the deadline on the council member amendments to the chairs package in the week of the 10th?

And not at this time due to staffing turnaround because to create, and I'll let central staff discuss this about what staffing is required to create an amendment One of the ways that I ran budget last year was, colleagues, I basically included every one of your requests.

And that was hard for some folks because folks didn't realize that some people had many requests, some people didn't have many requests.

This is a way for all of you to get your amendments out, not just to the chair's package, but just in general.

And so the idea...

or a proposal that if it's not in the chair's package, most of the work's already done.

So your idea has already been generated.

If you're discussing, you're wanting to cut things out that the chair has put in, that's a different conversation.

But I'll turn it over to Director Noble.

That's largely what I was going to say.

We're very conscious of this constraint, and the calendar is challenging overall between the revenue forecast, Election Day, and there are some fixed constraints.

But again, the notion described by the chair is that you will have had the opportunity and the need to prepare ideas for these initial budget proposals the week before.

So our general anticipation is that the council's self-balanced amendments will be variations on things that you had prepared earlier and things that perhaps didn't get in the package, and or that you've heard about in the times since then, but again, that time is relatively narrow.

And again, the deadline requirement is that you give us, You don't have to have an incredible level of specificity.

So ideally something more than a vague idea, right?

But we will then have the week that follows essentially from the 7th to the 14th to prepare those.

But again, my expectation is that most of them will be in variations on things that have been prepared in advance.

Obviously, some new things could come up.

And then in terms of committee discussions, you do have those two days, the 14th and the 17th, and we can, depending on where we, it's hard to know where we will end up, but there could be opportunity to talk about the amendments as a whole before diving into individual voting.

I'll let.

Counsel President, continue.

Yeah.

Thank you very much.

Yeah.

I just think it's a question of, um, given the scarcity this coming year, um, there could be, uh, you know, just putting everything in the balancing package that was, that was presented all the, all the council members, um, wish lists that might've worked last year, but it's going to work less this year.

So there are going to be, um, hard choices that are, that have to be made and, it could be that council members wanna change those hard choices that end up reflected in the chair's balancing package.

I'm just thinking, so I don't know really now what my colleagues' priorities will be, but I'm assuming that there could be significant changes from the chair's balancing package, just a note.

And then I'm also questioning why is the, The public hearing the day after the chair's balancing package comes out is different.

I mean, last week there was a whole week in between the chair's balancing package coming out and the public hearing.

So I'm just thinking that is there any way to add or move the public hearing so there's more public input that's better informed?

Thank you.

There has been discussions about adding another public hearing.

The idea of the way that this is set up is that there is a public hearing at the beginning of the presentation to review the department presentations in the mayor's proposed budget.

There's then a public hearing to review the chair's package and there may need to be a public hearing to review council member amendments to the chair's package and that's something that we'll continue to discuss.

And last year, the public hearing was before the budget amendments from council members.

So I'm just saying that, you know, it was just, I would imagine that it might be difficult for the public to absorb what's in the chair's balancing package overnight, but to be continued.

Thank you, and that is why we are striving to publish the chair's package 48 hours ahead of the public hearing.

So it would be published on the 4th.

We would take it up in committee on the 5th.

And then a public hearing would be on the 6th.

I appreciate your feedback.

Any further questions, Council President?

Nope.

Thank you.

Council Member Kettle.

Thank you, Chair Strauss.

Thank you, Director Noble, Mr. Mikesell, and Mr. Chow.

Good to see you, Mr. Chow, joining the team effort here.

I sit on transportation committee, so I recognize all the great work.

And, Director Noble, I respect the idea of decide and delegate, an art that is not really known.

in many circles, but I appreciate that.

Chair and for essential staff, I appreciate the changes to the calendar, particularly the second one in the sense of I think that's helpful.

I think it would be helpful for me.

That's a lesson learned for me from last year.

This year, you know, I will be looking if I'm going to be signing on for like fully developed amendment ideas like drafts before signing on.

And I'll do the same.

And also I'll make a commitment not to have any restrictions on any amendment ideas that I have.

They'll be open for consideration.

So for central staff can talk with my colleagues on them as well.

So to basically have an open AI of amendment council member AI amendment ideas.

So thank you for that.

Noted all the counts, the calendar points.

as well.

I think that's really important.

And can I just say, too, I really appreciate chair plus central staff having the six-year look back, the five- and now six-year look back, because I think it's important for us to be looking at the context of everything, because there's been many changes, particularly in revenue, you know, between levies and the like.

So there's been a lot of changes.

And so we need to understand those as we go forward.

And I look forward to the slides that are coming in, those on budget.

I'm also, with my public safety hat on, really interested in youth programs.

A lot of times that's community safety.

And I just wanted to shout out the last one.

because one thing that I worked with Council Member Moore on last year was this idea of having a Seattle Housing Plan, which then became Seattle Housing Investment Plan, or SHIP.

I appreciate the maritime acronym.

And because I really do think that it would be beneficial to the city if OH kind of went through the process SDOT has to do for their Seattle transportation plan.

If we did the same thing for a housing plan, where we looked at, instead of transit and pedestrians and so forth, that we looked at affordable housing, social housing, and see the trade-offs, look at the revenues, and really have a comprehensive plan in that same model.

I think that would be, from a transparency point of view, very nice and very helpful.

And also, bringing it back to this discussion, very helpful for what we're trying to do on budget, Chair.

So thank you for this.

And that is all.

Thanks.

Appreciate it.

Thank you.

So no questions, just some observations.

Thank you.

Council Member Rivera.

Thank you, Chair, and thank you all for being here.

Chair, I just have a question looking at this calendar.

The chair's balancing package comes out on Wednesday and then the following day.

is really the only day we would have to work with our central staff if we wanted to do a self-balance amendment because they're due by noon on Friday.

That doesn't give a lot of time and I'm also mindful that central staff helps us with all of this.

We don't do this on our own.

And so I've also noticed that there are five weeks between the mayor submittal of the budget and then discussion of the budget proposal.

So I wonder if there's opportunity to push back that or push forward, however you want to look at it, but to the week of October 20th, that discussion of the budget proposals is still leaves four weeks.

But then if you have that bear, excuse me, chairs balancing package the week of the 27th, then it would allow a few more days, you know, to, if there is, if there are council members that want to make a change to the balance, to the chairs balancing package, by proffering their self-balanced amendment with a co-sponsor, it gives a little more time for council members and central staff to work together to make that happen.

Because you can imagine if there's one central staffer and multiple council members trying to do a self-balanced amendment, I'm also mindful that that might create some issue.

So just trying to find room to make sure that staff also has the time they need to help us.

I'd say great minds think alike.

That was something that I had pushed for.

This is where we ended up due to staffing.

And I think it would probably be good for you and Director Noble to speak off, not at committee about the elements that go into there because I also had asked for that.

I'll share a few more things, which is that from the central staff presentations, we'll all be working together.

So likely if you've got something that you're interested in, we start by planting the seed with your questions of departments.

We then grow that seed when we are having central staff presentations on the policy considerations.

The seed is then blooming with your council member budget proposals.

And it's either fully grown in the chair's package or is fully grown in an amendment to the chair's package.

And so the hope and the goal here is that for your priorities, we're not learning about them necessarily in the discussion of council member proposals, we're starting to learn about your priorities in the department presentations.

And I know that things change and that more information becomes available.

So there's always the exception, right?

But exceptions can't be the rule.

I'll also share a little bit more information about the chair's balancing package.

So between the 28th and the 30th of October, that'll be the discussion of the council member budget proposals.

From the 31st and then through the weekend, November 1st and 2nd, I'll be working with central staff over the weekend to create the chair's balancing package.

which then results in I will be meeting with council members individually on November 3rd so that if we got it correct, thumbs up.

If something needs to be changed, we're hoping that, you know, for large scale changes, no changes can be made.

But if small tweaks need to be made, we're able to do that on the 3rd before we publish on the 4th.

The conversation is on the fifth.

The public hearing is on the sixth.

You will likely have the ability to know what changes and amendments you would like to pursue.

The deadline is the seventh.

You'll likely receive that information on the third.

So while the calendar looks like it's a 48-hour turnaround, the goal here is to increase transparency and collaboration.

And so you will have about four and a half days, not two.

Does that help?

It does, Chair.

Thank you.

So you are saying that on the 3rd is when we will know whether our amendments made it into your balancing package.

That's the goal.

And what happens if that goal is not met?

We're back to a less than 48-hour turnaround.

If that goal is not met on the 3rd, then the next goal that we are meeting, that we are striving to meet, is a public publishing of the Chair's package on the 4th.

So then that's still one, two.

And it occurs to me that the schedule that we put together did not show the publishing deadline.

So on election day, November 4th, we do intend to publish the chair's package for the public.

And I'll just be candid here of saying if folks have a lot of changes, like if I didn't get your proposals correct and then we have to make a bunch of changes on the third, that's what would delay that publishing.

If nobody has any changes to the chairs to what I've put in for you in the chairs package, then publishing earlier on the fourth is a potential, right?

So the variable there is how much feedback are you giving me?

And I would add, too, that the proposals on the 7th, they're due in that relatively short window, are not fully baked.

So, I mean, obviously, helpful for us if you thought more than not, but you're really identifying for us the issues that you intend to bring forward amendments on, and we will then, it's going to be a very busy week for us, and we expect that the week that follows, the week of Veterans Day, will be a busy one to prepare those amendments.

So just to assure you that there are various pinch points in here, and we've debated different ways of doing the schedule.

Just for what it's worth, having time between the revenue forecast on the 20th and the discussion of council member proposals on the 28th I think is particularly important because I think that revenue forecast could really inform the range of options that are realistic to bring forward and would like that time to be able to work with you.

I'll be candid.

My goal in this, and I'm I've been through this process a few times.

I think that this is a personal kind of perspective, and you may have a different one, and you get to decide, to be clear, but I think that focusing attention on amendments that are at some level viable and realistic is more useful for you all and for the public than, you know, a long list of things that, candidly, you would like to restore.

We're going to be in a phase where there are going to be more things cut than added, and there's going to be a fair amount of pain associated with those.

And again, I fully respect that it will be your prerogative to try to make decisions and make efforts to restore some or all, you know, realistically, not all.

But to the extent that you all then collectively focus on what's likely realistic, I think that Certainly central staff will benefit being able to put energy where it's going to be most productive, but again, I think for you all as well.

So that's another reason I'm in some ways less worried, because if we can maintain that focus, there'll be less volume of work.

And if I could add on, just to say, to emphasize again that this initial, bringing back the initial discussion of council member amendments lets you have more time to kind of understand the issues at play.

get more information from us and from the executive to inform your deliberations so that when we get to that decision about whether to propose amendments to the chair's package, hopefully we're not scrambling to get new information, we're not scrambling to come up with new ideas.

We're talking about getting direction from you about how much, whether to move forward or not, it makes it easier for staff to respond to rather than sort of new information, new ideas.

And just thank you.

Vice Chair, anything else?

Oh, no, thank you.

Fantastic.

Council President, I see your hand.

I do wanna check in to see if other colleagues who have not yet spoken would like to speak on this item and just noting that we are, we need to keep moving.

So Council President, I'll call on you and then I'd like to keep moving.

Thank you very much for doing the look back and making it a six year look back.

And I would just offer it seemed as though that the discussion or what I heard was that there wasn't an opportunity to present that in committee.

If that was correct, I do offer the option of a Monday morning briefing so that all council members can hear that.

It's another place where we can get that information out.

So just putting that on the table and just would I'm glad that the chair's balancing package will be ready and publicly posted earlier than the fifth, and I would just suggest as soon as we can, giving that, making available information to council members, being available to answer questions from council members when it is posted, even though it's not going to be formally presented until the fifth, would be helpful in case we are thinking about changes to the balancing package.

Thank you.

Thank you.

I realized I had asked to just speak about process and then we'd continue on to content.

So just double checking.

Does anyone, I know council member Kettle already spoke about the six year look back as did council president.

Anyone else have comments or questions about the six year look back or the budget related statements of legislative intent?

I'm seeing none.

I will make my comments about this presentation sitting here on the select budget committee calendar.

This was a process having this additional time of council member budget proposals was a process that we've used in the past.

When I inherited the budget calendar last year, did not include it and I strived to include everyone's amendments to the greatest possibility of my ability.

Some other changes this year is not only is there a sponsorship requirement to proposals and amendments, there will also be verification.

There were a couple situations last budget cycle where it was not I think people were caught off guard that their names were attached to amendments.

And so we will be having likely a process where central staff will verify and also my office will verify that the sponsors have indeed co-sponsored.

When we move on into the section where the discussion of council member budget proposals and co-sponsorship is added, please do be careful Co-sponsorship indicates support levels across the council.

And so if an item has seven or five or six co-sponsors, that's something that will likely be put into the chair's balancing package to our, you know, and this is all the caveat to the greatest of our building depending on the next two revenue forecasts.

I'll also state that rules are in place to foster transparency and accuracy.

Walk on amendments, undercut this ability to be transparent and accurate.

Last year we had a number of walk-on amendments and a few of them actually caused technical errors that were not caught until after final budget passage.

The reason that they weren't necessarily caught is because the level of work that goes into creating a budget amendment is not just writing words on paper.

It's spending many hours speaking with others in departments within CBO's office, with other colleagues about what the implications are both inside that budget summary level and .

are discouraged, of course there's always an exception.

Last year it felt more like a rule than an exception.

And the reason, it's not just because it's good to have rules.

These rules are in place to foster transparency and accuracy.

Ben, if you could tick down to the last slide in this.

There will be a presentation on revenue options.

There are revenue options that are councilmatic.

There are revenue options that are sent to voters.

There are revenue options that have already been authorized by the state, and there are revenue options that can be council generated.

I'm not putting my finger on the scale of which one is which, and we need to understand our full range of possibilities because for these to work, we need to start the revenue work before we get to the fall budget process.

The fall budget process is focused on the next year's budget and that's a lot of work.

Creating revenue options is an entirely other body of work.

that does not work when it's coincided and when it's overlapped.

And so if revenue is of interest to you, I ask that you alert.

If you don't wanna tell me, that's fine.

You definitely need to tell Director Noble ASAP.

Any further questions?

Otherwise, we'll move on to the next presentation.

Clerk, would you please read the second agenda item into the record?

Attent item two, executive budget update for briefing and discussion.

Thank you.

We're joined by Director Eder.

And just as we are changing over, I wanted to clarify, we had looked to have this, to spend essentially this entire meeting on the six year look back and the statement of legislative intents regarding budget reform.

because of the staffing turnover at central staff, that document was not ready for us to digest today.

So council president, I appreciate you offering briefings.

It's more that we needed that information today so that we could be ready for fall.

We will be able to come back to this at future dates.

With that, Director Eder will engage in the same facilitation style where I'll hold my questions unless I hear an item that we've discussed in the past that would be relevant.

And then I'll ask for that follow-up in real time.

Other than that, we'll allow you to get through your presentation and then council members will have questions and I'll save my statements for the end.

Over to you, Director Eder.

Thank you, Chair Strauss, members of the Select Budget Committee.

Happy to be here today.

Thank you for the opportunity to present.

I am Interim Director of the City Budget Office.

As you heard from the Office of Economic and Revenue Forecasts, as well as from your own central staff on May 7th, the city is facing multiple challenges.

including but not limited to a significant downturn in the city's general fund and in the payroll expense tax fund.

I don't have all the answers today about how we're going to address these challenges, but I know that the executive and the council are going to work cooperatively, and we will be able to tackle these together and be successful.

I'm here to discuss the actions that we have already taken as a city to date, and I'll also describe some of the other tools that we may employ moving forward.

As I go through the deck, I'll provide some context, review what departments are currently working on, and wrap up with some concluding thoughts.

Sorry, I'm up to slide number four.

Thank you.

So just to give the biggest picture, in November of 2024, the city council locked into place a version of the mayor's proposed budgets for 2025, an adopted budget for the city, and 2026 in the form of an endorsed budget.

The final budgets were balanced using the revenue forecast from October of 2024, the latest and greatest information then available to the city.

In April, a number of broader economic factors led the city to downgrade its expectation for all city revenues, most notably the general fund and the payroll expense tax fund.

This led to an additional $217 million effectively no longer being available in the general fund and what I'll call for short the PET, the Payroll Expense Tax Fund, by the end of 2026. Last month, Director Noble and Tom Mikesell on your central staff presented a revised look at the city's financial plans for the general fund and the PET.

The mayor took immediate actions that I'll review with you in upcoming slides.

to counterbalance some of the bad news with significant underspends.

And some of these steps he took in 2024 that led to some better news than might otherwise have been the case with the downturn in revenues.

At a point in time estimate as of May, We are anticipating $150 million of combined deficit in the general fund and the payroll expense tax fund by the end of 2026. Not yet reflected here are some cost pressures that we know about and are dealing with for extra costs to deliver some of the critical public services that are included in the budget.

Notably, it is costing more to deliver the policing services because we have this good problem that we have more police officers than were anticipated in the adopted budget.

But that does add to the cost pressures, and that's not yet reflected in the $150 million deficit.

I'm going to move on to slide five, please.

I want to acknowledge some of the work that Council Member Rink has done with her select committee and that all of you have been grappling with, as has the mayor.

And that is adding to the bad news that we got in the April revenue forecast.

So notably, the federal government has communicated their intent to pull back from grant funds that were previously committed to the city.

is hundreds of millions of dollars that were embedded in the adopted budget and which we were planning on using to deliver critical services to city residents, visitors, and businesses.

The federal government, moreover, has also indicated that it will similarly stop fulfilling commitments that it previously made.

to our partner agencies who are also doing critical work in the region.

These include students at the Seattle Public Schools, transit riders on King County Metro, Sound Transit, and other regional transit agencies, people experiencing homelessness, who are served by the King County Regional Homelessness Authority and others, affordable housing residents at the Seattle Housing Authority and multiple affordable housing providers, and many others who count on the government services projects and programs that our budget supports.

And finally, there is, well, I'm sorry, not finally.

Secondly, there is forecast uncertainty.

We will get two more forecasts this year.

One in August, supporting the mayor's proposed budget, and another one in October, supporting the council's deliberations and action on a final adopted version of the budget.

We could get good news in the August or October forecast.

We're all hopeful for that.

Hope is not a plan, and we may get bad news.

We will see how that pans out.

The last item on this slide is the cost pressures that the uncertainties in the broader economy may mean more costs for the services that we are already delivering when we purchase services from contracts, through contracts from the private sector, when we employ our own people, when we buy goods and do construction projects, those all get more expensive than what was necessarily assumed in the adopted budget.

So that's another kind of a cost pressure, and I just want to acknowledge that that's the environment in which we are living.

Slide six, please.

This is an encapsulation slide that covers some of the same ground that I just described.

How we got here is basically we had an adopted budget that was balanced.

That balance came out of whack when we got significant lowering of anticipated revenues for 2025 and 2026 in the April forecast.

The combined deficit is at least $150 million through the end of 2026. And that reflects both lower 2024 actuals and also the April forecast.

On the right side of this slide are the broad categories of tools available to the city.

We can reduce expenses, and I'm going to talk to you about some of the strategies that the mayor is currently employing to do so.

The chair mentioned the possibility of increasing revenues through new taxes and potentially voter-approved measures.

And we can, through this, still achieve efficiencies delivering essential services with streamlined efforts, and I'll talk about that moving forward.

Okay, slide eight, please.

Upon hearing the news on April 10th from the Office of Economic and Revenue Forecasts, the mayor took immediate steps to rein in spending.

The day after the updated forecast on April 11th, the mayor froze a range of discretionary spending, which is described on the next slide.

The mayor has asked for plans to underspend the 2025 budget, and also to propose less spending in 2026. Both of those are critical strategies for addressing the deficit, which essentially emerged on April 10th.

I'm showing this as an illustration of the seriousness and urgency that we're bringing to the situation, and I know that that urgency is shared by all of you on the dais.

Slide nine describes those immediate steps that I alluded to on the previous slide.

On April 11th, the mayor froze all spending on non-essential travel or training expenses, froze all new contracts that weren't already committed to outside parties, froze spending on new programs, and extended the hiring freeze that was in place for nearly all of 2024 to 2025. Slide 10 is describing the range of options again here.

as I described, some immediate responses which will help, but we're working on a range of other longer-term responses as well.

In addition to the spending freeze in 2025, the series of spending freezes in 2025, we've asked departments for proposals to lower spending from the levels that were included and assumed to be funded in the 2026 budget.

We don't absolutely have to rely on only cuts to get the budget back in balance.

As Chair Strauss mentioned, the city also has in its toolkit options for new revenues.

It's welcome news that the state authorized some new revenue options.

And at the same time, we are evaluating those options, and we'll make some decisions about those in the coming months.

But at the same time, we're evaluating approaches that will allow the city to deliver critical services faster, better, and even more efficiently, wherever possible.

And I'll provide a little more information later in this slide deck on the range of options that we're considering there.

In terms of, so diving in a little bit on those concepts, in terms of reducing, on slide 11, reducing 2025 spending, The first step in digging out from the deficit is to stop adding new discretionary spending.

I believe Director Noble referred to this as well.

So the mayor has directed and CBO has followed through with departments that discretionary spending will not be considered for this year's mid-year supplemental, which will be transmitted later this month for your consideration.

There will, of course, be some technical changes and transfers between budget levels and departments, but we're looking for no new discretionary spending.

The second approach is to spend less in 2025 from the perspective of what's included in the adopted budget.

and to do the same for 2026. And the more we can achieve in terms of reduced spending in 2025, the less onerous the challenge is when we get to the 2025 proposed and eventually adopted budgets.

So we have asked for departments to develop plans for underspending their 25 budget by 5%.

On the next slide, for 2026, we have asked for departments, since we can no longer afford what was included in the endorsed budget, to provide reduction targets for, particularly for general fund and payroll expense tax fund supported spending, to reduce their levels of spending.

We asked for most departments to give us 8% reduction ideas.

Those are very significant reductions in the levels of spending, especially when well over half of the city spending is on city staffing.

We also asked for other departments recognizing the critical need for public safety and homelessness spending to give us some reduction ideas, but a lesser target.

So we asked there for departments to give us ideas for achieving a 2% reduction.

whenever departments give us ideas in the proposed budget that are new ideas, we ask for them to give us offsetting reductions.

So if they want to do something new that's not on the endorsed budget, which we can't afford in the first place, they need to increase their reductions above the 2% and 8% targets that we established for them.

And director before we move on, I want to clarify, this is an exercise.

This is the process in which you are receiving information in order to create a mayor's proposed budget.

Is that correct?

You're not asking, you're not today on June 4th saying that all departments will receive an 8% cut or a 2% cut.

This is an exercise to build the budget.

Is that correct?

That is correct.

It is an exercise which we expect will lead to some or all of those ideas being included in the Mayor's proposed budget.

But the exercise of putting those ideas on the table is the first step to deciding which of those to move forward into the Mayor's adopted budget for your consideration.

tease this out a little bit more.

If you were not asking for this information today, you could arrive in August without the information.

I mean, because these are hard choices.

So by asking that question today, you're preparing yourself for August.

Is that the idea?

Yes, that's exactly right.

And I've had challenging conversations with departments who reasonably are saying, CBO is asking for us to achieve a spending target.

In order to do that, we are going to have to cut our program here, our program there.

Those are going to be devastating cuts.

We really don't think that you're going to want to do it.

I have encouraged, required, that all departments, nonetheless, tell us what it would take for them to achieve these targets so that we can have a full array of options for the mayor's consideration.

The mayor doesn't want to reduce the budget in any of the critical public-facing services that are the priorities of the folks on this dais and the priorities of the mayor himself.

Nonetheless, there are going to be some hard choices that we are collectively going to have to make this fall, unless there is better news in the August and October forecast, because there isn't enough money to do everything that's in the endorsed budget.

So departments have agreed that they will be putting these ideas on the table.

That's the step number one.

Step number two is evaluate all of the trade-offs, figure out which of them we have no choice but to live with, and prioritize what feels like is necessary to continue funding and stop funding some of the things that are definitely wants but aren't necessarily things we can anymore afford.

Thank you for digging deeper.

I just didn't want colleagues or the public to leave this presentation with the perception that these are mandates for the next proposed budget.

Rather, this is the exercise in which to uncover every stone and check every couch cushion.

Back to you, Director Eder.

Yeah, thank you for the opportunity to lay that out.

Slide 13 is beginning to look at what can we do with the remaining resources so that we are ensuring the most streamlined and efficient spending of the resources that are remaining to the city.

And here I won't go through all of the details, but just know that we are looking at this range of ideas as part of the mayor's budget process.

We are looking at phasing out low impact or outdated programs where we have identified them.

Making permits faster and easier to navigate.

identifying efficiencies in workforce and, in particular, looking at vacant positions and determining whether we really need to hire people into those positions.

The more people we hire into vacant positions, the more people who are at least theoretically subject to layoffs.

So we're looking hard at the vacancies to try to minimize the number of people who are hired and then laid off in the coming year.

The last slide is a wrap-up slide.

The mayor intends, of course, to propose a balanced budget, and I know that the city is required to end its budget deliberations with a balanced budget.

Balanced meaning that we have to live within the revenues that we can reasonably expect.

The city will have an update of the look at revenues that will set that balance in August, and another one, as I mentioned, in October in the middle of your budget deliberations.

There are hard decisions before us, but we look forward to partnering with you and absolutely interested in hearing both about those items in the endorsed budget, which are your top priorities, and also any ideas you have for things that you would put on the want list rather than the must have list, and therefore would become subject to reductions or elimination in the mayor's proposed budget.

With that, I'm happy to answer any questions.

Thank you, Director Eder.

Colleagues, questions?

It was a very succinct presentation, but Council Member Saka.

Thank you, Mr. Chair, and thank you, Director Eder, for this presentation today.

I've said before, I'll state again, I think everything is on the table this year with respect to consolidations, cuts, new revenue, including progressive revenue options.

in addition to streamlining but optimizing for current priorities of this council and this executive as well.

So strongly support that.

I don't foresee a scenario where whatever we pass, whatever I, okay, I'll speak for myself, whatever I ultimately vote on doesn't include all of those things.

But I want to just get your thoughts on how the executive is currently approaching its upcoming proposed budget for deal.

And I ask because last year, the executive proposed a pre-law budget for SDOT that created some wrinkles for us in our deliberations on this council.

And we ultimately resolved those, but it created additional challenges.

And I think having both a pre-law budget in the interest of transparency, public should understand what happens if, whatever levy, if we put a levy forward before voters, what would happen?

What that would look like if that doesn't pass?

And also we need to do our due diligence and have one assuming that it does pass as well.

So just curious to better understand how the executive's currently thinking about a budget proposal for DEAL.

Yeah, thank you for the question.

I know that the city has in some cases, as you mentioned, assumed that the levy doesn't pass, and in other cases have assumed the levy does pass, and that's in part informed by whether they are renewals of existing levies that have been voted on and passed for many years.

That's a judgment call, and other factors as well.

That's a judgment call that is typically made in the summertime.

about how to frame and sort of have a background alternative version for the council's consideration in either event.

So if the executive assumes that the revenues will be available in his proposed budget, we will also be preparing a what does it look like if the voters don't approve the ballot measure.

and vice versa, if we don't include it, we'll prepare a background what if scenario for what happens if those resources are approved by the voters, which way we go in the proposed budget to be determined.

contingency planning is important for purposes of driving transparency, facilitating effective decision-making, and I think having both of those pieces of information as early as possible would be helpful.

Thank you.

No further questions or comments, Chair.

Thank you, Council Member Saha.

Council President Elston followed by Council Member Kettle.

A question and a comment.

Number one, is the law department considered within the – is that considered a public safety-related department?

The law department has been asked for the 8 percent reductions, and we recognize that they are both a separately elected official office.

and a relatively small department that has two broad missions.

One is on the civil side and one is on the criminal side, both of which have significant constraints.

When the city reduces spending on the civil side, we end up increasing the same number of lawsuits have to be defended.

and the same type of legal advice is needed, so we typically go to outside legal counsel.

It's not like we don't avail ourselves of legal advice.

That makes it very challenging to make changes on the civil side, and on the criminal side, there are entire sets of rights and responsibilities that we as a city have in terms of ensuring due process and making sure that the criminal legal system works.

So there are really limited opportunities and significant downsides from the reductions.

But honestly, that's true in one flavor or another.

For every department that is funded in the city, no one is funded to do something that isn't important.

Well, then I will just make the argument that public safety, if we are going to be We do need prosecutors to do the work that our officers do on the street to prosecute cases that merit it.

And I'm thinking about there was just a big, huge drug bust recently, or two of them.

And so I would make the case that that is very much part of the criminal I mean, the public safety apparatus of the city is making sure that those prosecutors, that we have enough prosecutors and also that they are adequately paid because otherwise they could go work someplace else.

And then I would, on the civil side, I would note that the law department or the CAO is burdened this year with responding to cuts and chaos coming from DC and have dedicated, attorneys to work with individual departments, and that's a whole new body of work that they're having to deal with.

So I am concerned about requesting an 8% cut to that department for those two reasons.

So that was a question that was not my comment.

My comment was on the list of things that we can do to keep the balance, the budget balanced, and I am really, really happy to see the the list on page slide 13 where it says improving city operations and the first one is phasing out low impact or outdated programs absolutely 100% we have to do that I would assume that that's always happening that evaluation of programs and as the oversight body of the city the the council should be always looking at that as well so That's good.

And that is partly why those slides are so important that we requested a record number of slides.

Sorry, executive departments.

But those slides were designed to get at what are you doing, and is it working, and what are the performance metrics, et cetera.

So I'm only tracking my one slide, which is on underspend and the whole long list of what are the departments that have the greatest number of contracts.

So that's due in July, and if that could be advanced or accelerated or whatever, that would be great, because that does help us inform.

And I'm sure that every council member that put in a slide that gets at performance would think the same thing.

I appreciate the opportunity to work in partnership with you, and we'll do everything we can to provide timely responses and beat those deadlines where we can.

Just want to emphasize something that Chair Strauss brought up, This exercise in asking departments to put reductions on the table is an opportunity to evaluate the effects.

It is not the decision, and we will certainly take into consideration your perspective on that.

I know the mayor shares that concern as well for the implications for the law department.

He does also share those concerns for the Parks Department, and as you do as well, and all the other departments who are doing their work with thin resources as it is now, and it'll definitely mean delivering fewer services to people if we go up to as much as 8% of reductions.

So we'll weigh all those trade-offs, propose something, and you will have a fresh look at it yourself when you take up the budget this fall.

Thank you.

Councilmember Kettle followed by Councilmember Rivera.

Thank you, Chair Strauss.

Thank you, Director Eder, for coming back.

I really appreciate the work that's been going into behind this and also pre-briefs and other one-on-ones on different topics and the like.

Some of the key things here, like remaining uncertainties on slide five, forecast uncertainty is key.

I mean, we have businesses now, major American businesses that do not do any forecasts because how can they?

Because of the uncertainty essentially coming out of the federal government.

And I will keep my fingers crossed regarding inflationary cost pressures, because that could go really bad or it could be better than what we may fear.

So the inflationary cost pieces is extremely important.

So thank you for listing that.

You know, on the next slide, I understand that, you know, the general fund payroll expense tax deficit buckets here, the pillars.

I just wanted to note, because I think it's worth being said, and this kind of goes to the, you said hope, or I always say wish strategy.

It's nice to have a wish strategy, but then there's reality, and evolving employment patterns.

We have to be mindful for every action there's a reaction.

Related to employment here in Seattle, public safety is huge in terms of getting people back downtown, also for businesses not to send their people over to the east side, for example.

And so we need to be mindful of that.

And so I appreciate you having the bullet involving employment patterns because I think, again, we as a group need to understand that for every action, there's a reaction.

And so we may be planning on things, but they may not come out to be.

And in general, by the way, I'm always working the public safety piece in terms of support to our businesses, because as I said before, like in our vision for the committee, we need businesses that don't need private security, for example.

And so that's really important.

So thank you for putting that into the slides deck here.

For slides eight and nine, rapid response, immediate steps.

In my mind, this is all responsible.

Mayor Harrell, yourself, and the teams that are involved, I think this is good governance for us all.

And so thank you for highlighting those pieces.

And one question is, what else could there be?

I don't know.

But I think the rapid response media steps is important.

On slide 12, I understand and support the guidance I will add, based on Council President's comment, that if a department reports to the chair of the Public Safety Committee, it is a public safety department.

So just to be clear on that point.

And in the last, so out of all those comments, I do have one question.

And it comes to slide 13. And improving city operations.

I've had multiple meetings on AI.

I've had one with Microsoft over in Redmond.

I've had one here in District 7 with Amazon.

And I've also had one on the safety of AI with Microsoft.

with the IT team, Mr. Lloyd and other key people, some from the mayor's office and the like.

So there's definitely some challenges with AI, which should in some ways scare all of us as it's ramping up in its capabilities, not just in text, but also video and the like.

But there's also great possibilities.

And since this is the topic du jour out there in terms of how the commercial world is using AI, and frankly, this could be an impact, because I've already heard about people who have been laid off, as we've been hearing about layoffs, because algorithms are saying, hey, we can do this job via AI.

So there's that impact, by the way, which is another piece.

But specifically here, in terms of improving city operations, there may be some real possibilities to improve city operations that we're just not thinking of.

And I'm not a...

I'm not a techie myself.

I'm not a computer.

I saw GeekWire or anything like that.

But at the same time, in my past life and the like, I do recognize where this is important.

So I just wanted to ask, is that an area that you're looking in terms of improving city operations is how to leverage AI tools?

I will say, and perhaps Director Noble is closer to this than I am, that the CBO office and central staff are embarking on an effort that started at the end of last year to look at using AI as a tool to compare and contrast some of the support departments as a pilot project to see how efficient our staffing and our budgets are for various duties that are common among peer cities such as Seattle.

And I'm not 100% clear on the timing of the pandemic, The end therefore is from that work, but it is an ongoing process, one among many, that our city is investigating to try to make sure that we are doing things as leanly as possible.

And at any rate, the first step is to figure out how do we measure up against other municipalities.

Thank you.

And by the way, Mr. Lloyd, he has some people who are sharp on this.

And since my chief of staff is on his two-week AT with the Air National Guard, I'll volunteer him up, too, because he's always, there's one reason why I'm having these meetings on AI, because my chief of staff has that foresight.

So I'll offer him up to assist in things AI.

Hopefully he's not watching Seattle Channel right now.

Thank you, Chair.

Thank you, Councilmember Raquel.

Colleagues, I'm going to note that we've got about 15, 16 minutes left as long as we can move through the two voting items quickly.

So I see Vice Chair Rivera and Councilmember Rink with their hands up.

Over to you.

Thank you, Chair, and thank you, Director Eder, for being here.

And I actually want to take the opportunity to also thank you for always being responsive when I reach out on questions related to budget issues for the departments that I help.

oversee as part of my committee work.

So thank you for always being very responsive.

I really appreciate that type of partnership.

We don't always agree, but we are partners and we work together.

So thank you for that.

I too want to lend my appreciation for the work that has been done here, particularly slide 13, because this is what I'm always talking about in terms of good governance and making sure that we're that we are accountable to our constituents, the taxpayers on the work that we do, and making sure that the programs that we are supporting are those that actually have impacts.

And if they don't, then we need to shift to something different, and that speaks to that.

This slide speaks to that and I very much appreciate that.

I'll also say that I appreciate the conversation about the across-the-board cuts or percentage cuts.

We know into your comment about services and folks need to know that it will impact services.

I also think we need to prioritize within those services.

right, because there are some services that we are chartered to do and others that we do because we very much want to do.

But we are, you know, they're not all not the services in terms of our responsibility to constituents in the city.

So we do need to prioritize the services even while we're looking at that across the board to make sure we're not inadvertently cutting more from a service that is more essential than some others.

We had the conversation obviously today about public safety.

That's one area and then there are other areas.

So just wanted to at least talk about that also need to prioritize within the across the board pieces.

But overall, I am really happy to see that, you know, these things are being called out and that you know, it's going to be a tough exercise for all of us, for you all, for the council and for the public.

And it's one that is necessary.

And then in terms of the transparent and honest with the constituents that we're not gonna be able to backfill everything we're losing from the federal government.

So ensuring that we're doing not just prioritization there and do what we can to help our constituents.

Also, what is our strategy for working with our Office of Intergovernmental Affairs to work with our delegation to provide support to the delegation to make sure that we are working at the federal level to lend our voices against those cuts at the federal level.

So there's a lot I'm hearing and I know constituents as we all are collectively very, well, what's happening at the federal level is egregious and we can get into a conversation at a later time about that, but just we need to make sure that we are letting the public know that we're not just sitting here taking it, that we are going to be actively you know, via, and we probably are, and we don't have enough information about that direct reader.

And I know that's not what this conversation is about directly, but indirectly, it has a huge impact to have those cuts.

So what are we doing as a city to make sure we're working with our lobbyists in DC, for instance, and our congressional delegation to try to beat back a lot of those cuts as, you know, as we can.

I would like to hear more on that.

because I know our constituents are afraid and I just, I'm afraid about the wanting for us to backfill when we're not able to, while we would love to.

So as part of this budget conversation, I think more information about what we're doing to try to beat that back is important.

So thank you, thank you, Chair.

Thank you, Vice Chair.

Council Member Rink.

Thank you, Cher.

Colleagues, this is clearly my first time as a part of this body working on the city's budget, but this is not my first time working in budgets by a long shot with my most recent experience working on UW's $10 billion budget.

And what is clear is that before us, we have a deeply challenging situation ahead of us.

Revenue is not coming in as expected.

We are looking at a challenging budget environment that could mean devastating cuts for our community.

And over the last several months, as we've been taking in numbers from the revenue and forecast numbers, the state and city's budget has been sobering for me.

This is not a good situation to put it lightly.

And we can assume this situation will get worse in the August forecast, with the likelihood of federal cuts to various local programs remains high.

I know just this weekend I heard about two additional programs that are going to be cut.

The Runaway Homeless Youth grant funding cut, with some of our programs serving homeless youth likely needing to wind down.

Additionally, some of our programs, such as Pocan, losing a million-dollar grant for critical health services.

So as we craft this budget, it is vital for us to protect essential services and programs, including food access, human services, and support for local small businesses who are the backbone of our local economy.

And I wanna uplift that there is a headline in the Seattle Times this morning that Washington households can't afford the basics even if they're not definitionally poor.

And they cited in King County, a single adult under 65 would need to earn $50,000, more than $50,000 before taxes in 2023 to afford basic necessities.

That's significantly more than the state average.

A family of four with two young children would need to earn $138,000 a year before taxes.

So I bring these points up to say, yes, our budget and the deficit ahead of us is a frightening one and doesn't look good, but there's a larger picture here that I appreciate Director Eder outlining.

There's a larger picture here related to the federal situation and the worsening economic conditions as we're grappling with an affordability crisis.

And I can appreciate the attention the executive is given and my colleagues have given to the matter of improving our city operations, but that can't be our only strategy and path forward.

It simply can't be.

We can't efficiency our way out of this.

And so my question, Understanding that, one of the other points that was raised in terms of our strategy moving forward is to evaluate potential revenue enhancements, and so just for the purposes of our conversation today, could you provide us a refresher on what the city's options are on that front?

Certainly, and I know I'm not gonna do justice to this, There will be other opportunities for the council to discuss this.

We were granted a new taxing authority.

Let me start by saying we have very limited options.

We have a new authority to increase the sales tax by 0.1%.

That was approved by the legislature and signed into law by the governor.

a month or so ago, six weeks or so ago.

That would generate something like $38 million in ongoing revenue.

There is a pot of money that the state established, about $100 million statewide for competitive grants the city absolutely will be going after and is well-positioned to get some of those resources, whether that's $1 million or $99 million or something, much more likely something in between.

I don't have...

a prediction of at this point.

The city can go to the voters for property tax measures.

We have been doing that in very targeted levies.

We have the families and education levy that's coming up this November.

That's an example of that.

It's a renewal of an existing levy.

But we could also ask for more general property tax to address the general government needs that would have to be voted on by the people and approved by voters.

It's not something we could enact councilmanically without a vote of the people.

There's business and occupation tax.

We already have a quite substantial business and occupation tax compared to our peers within the region.

We could increase that.

We can't do it councilmanically.

We have reached the maximum of the state-allowed authority.

for councilmanic decision-making on B&O tax.

In other words, we've imposed all of the business and occupation tax that we have the legal authority to do without a subsequent vote of the people.

But we could go to the people and ask for a ballot to be approved that would increase further the B&O tax.

There are some trade-offs there.

As we've mentioned, small businesses and medium and large size businesses are already taxed more in Seattle for the B&O tax than they are in Bellevue, Federal Way, and other major cities in the region.

We also have a payroll expense tax currently in place.

We're, to my knowledge, the only city that has a payroll expense tax in the state.

We could theoretically increase that tax.

I don't anticipate that'll be something that the mayor will be interested in pursuing.

All ideas are on the table, and in the coming months, we're going to make some decisions, and we'll make them together.

Just a couple things I might add.

One, on the property tax side, it's important to recognize that there is a constraint.

There are limitations on the total property tax bill that the city can impose on its residents.

And there is a good deal of headroom, if you will, left in the neighborhood of $150 to $200 million a year, but it's not without bounds.

sort of been consuming it, if you will, with renewals, ever-increasing renewals of levies.

And I'd say that only to, yeah, there's no judgment, value judgment, I just recognize that.

Another option that this, well, I'm sorry, that the council, I'm not sure I can say, this council has considered is a potential city-based capital gains tax.

It's unproven as a revenue stream, and there are potentially some issues there, but that is one that has been discussed.

as we bring you a comprehensive discussion is something that we would add to that list as well.

Beyond that, actually Calvin Chow and the team reminded me the other day that there is a councilmanic option for an increased sales tax for transit purposes and only transit purposes, so that's not going to solve the general problem, but in terms of the kind of comprehensive opportunities that are out there, I would note in a way that you all recognize that the Sales tax options are inherently regressive, but again, we have very limited tools, and as Councilman Rink, you've identified, the needs are in the extreme.

So that will be the challenge you have.

Thank you both for laying that out for us.

And thank you chair also for carving out time and committee to have dedicated conversations related to exploring revenue options and any revenue proposals that come our way.

And I would simply urge my colleagues to keep an open mind as we consider these proposals.

I know our office has been in conversation with a number of King County council member offices as well around joint revenue strategies.

I think we're all grappling with the reality that from a resident's perspective, They don't necessarily care if it's funded from city dollars or county dollars.

What they see is services going away.

And so figuring out how we come together as local governments to speak with a shared voice and come up with also a shared revenue strategy to address the challenges that are ahead of us.

Thank you, Chair.

Thank you, Council Member Rink.

And we've got about two more minutes and then we've got to do two votes in 15 minutes.

My last comments on this presentation, Director Eder, thank you for being present.

I'll echo something that Council Member Saka said, which is I would hope that we avoid the transportation levy situation of last year.

It was the first time I've seen such a thing.

The teams worked together to quickly fix and solve it, but I will also share with you that I have been receiving about once to twice a week a message of help.

Our funding has been cut.

Do you have funding to offset our cuts?

And the need is real and I have to tell folks that we also have a budget problem here.

And as Councilmember Rank already mentioned, we'll have an entire committee reserved for revenue.

With that, any final comments on this presentation?

I'm seeing none, so let's move on to the third agenda item.

Clerk, will you please read the short title onto the record?

Agenda item three, Council Bill 120979, amending Ordinance 126 and 955, which adopted the 2024 budget, including 2024 through 2029 Capital Improvement Program.

For briefing, discussion, and possible vote.

Thank you.

I see Ben Noble has his hand, but if I could just introduce the subject matter first.

Colleagues, we are transitioning into the second or the last quarter of this committee meeting.

We have two votes before us.

When I talk about, I meet with the CBO and central staff director weekly to discuss how we are going to address this budget situation.

This is an example of some of that work.

Today we will have the exceptions ordinance followed by an ordinance to repay bonds early.

This is, as you'll see in this conversation, the exceptions have dropped from a high number of incidents with a high fiscal amount to a low number of incidents with a small fiscal amount, as well as the ordinance to repay the bonds early.

We are using interest from other bonds to pay off a bond early.

So with that, over to you, Director Noble.

As we transition you into this new issue and work on some logistics, I just wanted to correct an oversight on my part that actually is sort of timely.

In describing the budget team, I neglected to call out the role of Patty Wigran, who is essential for us.

As I described to you, it's a logistical challenge of kind of epic order, and they are lead in that space, but also play an important quality control role, and in fact, as of today, helped get this presentation to you in relatively short order after some issues at our end.

So just wanted to acknowledge that, and I'm going to turn this over to Tom and step away myself with some other duties, but look forward to the work ahead.

Thank you.

Over to you, Tom.

Thank you, Chair Strauss.

Hello again.

Chair Strauss, Council Member Vice Chair Rivera, members of the Select Budget Committee, Tom Mikesell with your central staff.

I'm going to give the second briefing and then a possible vote of the Council Bill 120979, which is the 2024 Exceptions Ordinance.

And again, like- A repeat of the presentation from Finance, Native Communities, and Tribal Governments Committee.

That's why it says here on the header.

It's essentially the same presentation, though I'm going to give it a bit lighter touch for this second brief.

So I just am gonna cover very quickly the sequencing on budget adjustments and how this bill fits into that process, go over budget exception trends as Chair Strauss mentioned, and then dig into the bill, which is a very small bill in this space.

And Tom, I'd say let's just jump to slide four since we've already discussed the, in the last two presentations, we've talked about the next steps already.

So let's jump into, or slide three, I should say, sorry.

Trends slide, sir?

Trends, please.

Okay.

So this is just covering the history of this type of bill.

So the exceptions bill is a technical cleanup bill that is presented to council for consideration after the budget is complete.

So essentially budget exceptions are areas where departments overspent their annual budget allocation.

And so this is an action to correct for that.

So the fewer and the smaller total amount, the better.

This just shows that since 2018, the trend has been down.

And in fact, today's bill is the smallest exception in terms of number of exceptions.

And the total dollar amount, it's 1.8%.

million dollars, and that is the result of some effort by City Council to put forward and implement the Fiscal Transparency Program, which increases some budget monitoring for executive staff and also changed, made a slight modification to the budget director's budget transfer authority and how they can deal with minor exceptions at year end.

So just the takeaway from this slide is that since 2018, the trend is downward with exceptions.

And so And so just to kind of jump to today's bill, which is the smallest bill in this seven-year history, there are two budget exceptions that would actually make an increase to the Ordinance 126955, which is the 2024 adopted budget.

The first item is a $1.1 million increase to the Industrial Insurance Fund, which is essentially where we deposit.

monies for workers' compensation claims.

This is a $1.1 million increase that pay for unanticipated costs that SDHR, the Human Resources Department, received at year end.

The reason why these were unanticipated is because they are for pensionable claims, and so these are claims where the individual is unable to return to work and they have to go immediately into retirement.

These monies seed that retirement fund for that employee.

So this is...

continue to work to try and streamline the budgeting for this amount.

But in this case, they were slightly short of the mark.

Our second item is a $658,000 increase the general fund for the law department to pay for a various unforeseen costs, or I should say areas where costs didn't quite hit where the budget was provided.

A large one was the criminal case management system, which is a multi-year project that is coming online this year, but it was not quite up online last year.

And so there was areas where there were places in the budget where costs were hitting, where budget wasn't in place in time.

And so there was a technical mismatch there.

Also, some monies for law interns and also salary budgets with regards to workday implementation where there was a mismatch there as well.

So this was kind of a technical miss.

City Budget Office and the City Attorney's Office have indicated that they're going to double back on their monitoring for this year and ensure that this type of exception doesn't happen in the future.

And that's it for this bill.

This bill does require as an amendment to the budget, a three-fourths vote of city council for passage.

Thank you, Tom.

I think we can just stop right there.

Colleagues, I will share that I had a conversation with the city attorney and their finance director.

I felt satisfied with the explanation of the perfect storm that occurred for a less than the $658,000 overspend, they have also promised not to do it again.

The Department of Human Resources overspend is something that is unpredictable and I am very proud of the budget reform work that has been done to reduce the number, if we go back to that slide, Tom, if we could, of upwards of four departments and upwards of $30 million in 2020 to only two incidents, one unavoidable for a total of 1.8 million.

This is a good news story of good budget reform practices.

Colleagues, any questions?

Otherwise, I'd like to, any questions at this time?

Thank you all for receiving your briefing.

Clearly, you received your briefing ahead of time.

Seeing as we have no additional questions, I'm gonna move that the committee recommends passage of Council Bill 120979. Is there a second?

Second.

It has been moved and seconded to recommend passage of the bills.

Any final comments?

Seeing none, will the clerk please call the roll on the committee recommendation to pass the bill.

Council Member Rivera.

Aye.

Council Member Hollingsworth.

Yes.

Council Member Kettle.

Aye.

Council President Nelson.

Aye.

Council Member Rink.

Yes.

Council Member Saka.

Aye.

Council Member Solomon.

Aye.

And Chair Strauss.

Yes.

Feet in favor, none opposed.

Thank you.

Council Bill 120979 passes and will be sent to the June 10th City Council meeting.

We'll move on to the fourth item on the agenda today.

which is an ordinance authorizing the advance repayment of 2014 bonds.

Clerk, will you please read the short title under the record?

Agenda item four, Council Bill 120, 988, and many orders 127, 156, which adopted the 2025 budget, including 2025 through 2030 capital improvement program.

The committee, sorry, for briefing discussion and possible vote.

Thank you, clerk.

We've got Director Eder back at the table with you.

I'm gonna steal the thunder to say what I've already said.

We have had bonds that have accrued interest, In the budget reform work of looking under every couch cushion, this interest was identified, amounting in enough money to repay a bond early.

Over to you, Director Eder.

Thank you very much, Chair Strauss, Interim Director of the Budget Office, Dan Eder, for the record.

This is the second time that we have presented.

First time was to the Finance Committee.

Now, of course, there is more of you, some of whom haven't heard the presentation, so I will skip lightly through the slides.

As Chair Strauss mentioned, the bill up for discussion would allow the city to redeem or pay off some of the bonds that were issued in 2014. I'll describe the history of these bonds and why we are proposing, why and how we're proposing to redeem them.

Before we move into the substantive slides, I want to thank my colleagues, Jamie Carnell, the City Finance Director, who was here when we presented at Finance Committee on 521, and also Christy Beattie, the Director of Debt Management, neither of whom are able to be here today, but did all of the substantive work here, so I want to just acknowledge that.

Can we move on to slide two, please?

And Director Ederstein, we've got six minutes remaining.

I might have you skip to slide four rather than the timeline and just get down to the nuts and bolts.

I have asked everyone to receive this briefing ahead of time, so I'm sure hoping that folks know what we're talking about here.

Very good.

So there's about three and a half million dollars that we are planning on redeeming in terms of outstanding bonds.

We will use that using some resources that are available for limited purposes, such as this one.

We are looking at about a total of $1.9 million in interest earnings on the city's past taxable bonds that weren't spent for any other purpose and are available for these kind of capital purposes.

We're also looking at about $1.3 million of unrestricted forecasted levels and is available for this kind of investment.

And we are also looking at about $300,000 of REIT I capital fund dollars that weren't otherwise programmed in the budget.

Next slide describes some of the financial benefits of doing this effectively by paying off these outstanding bonds.

We no longer have to continue paying debt service for the remainder of the life of those bonds, which were otherwise set to be retired in 2034. That's a savings of about $75,000 of interest payments on the bonds that we don't have to continue paying, a total of $675,000 in nominal terms of interest savings through 2034. And with that, the last slide just sets up that if you authorize this legislation or approve this legislation, we will move forward with paying off these bonds as described.

Thank you.

I am gonna move and second the bill, then we'll have a moment for discussion.

So I move that the committee recommends passage of Council Bill 120988. Is there a second?

Second.

Thank you, it has been moved and seconded.

Colleagues, any questions for Director Eder about the presentation here?

It's all quite straightforward.

I see Council President.

I just have one question.

Using unrestricted general funds and access from REIT, is that normal or have we done that in the past?

And I only ask because general funds obviously are unrestricted.

And so therefore that's kind of like gold money.

And I'm just wondering if the downside of doing that has been, what is the rationale for that given that that money can be used for anything?

I apologize if I misstated anything.

There is no use of a general fund proposed to redeem the bonds.

What I was referring to is unrestricted cumulative reserve funds, which is a separate fund altogether.

It's typically where the interest comes from the REIT, REIT 1 and REIT 2, and also I think that there are payments that come in from street vacations.

that earn interest until they're used, but they must be used for restricted purposes.

They're not a general fund resource.

And I'm sorry if, Council President, you weren't able to attend the last meeting where we did quite a bit of this discussion.

Do you have further questions?

We have about two minutes left in the committee meeting.

That is it.

Thank you.

Colleagues, any other questions?

Seeing none, I'm gonna ask the clerk to call the roll on recommendation of the passage of Council Bill 120988.

Council Member DeVetta.

Aye.

Council Member Hollingsworth.

Yes.

Council Member Kettle.

Aye.

Council President Nelson.

Aye.

Council Member Rink.

Yes.

Council Member Saka.

Aye.

Council Member Solomon.

Aye.

And Chair Strauss.

Yes.

Eight in favor, none opposed.

Thank you.

The motion carries and Council Bill 120988 will be sent to the June 10th City Council meeting.

Colleagues, this does conclude the June 2nd, 2025 Select Budget Committee.

Are there any final comments before we adjourn?

Seeing none, thank you for attending.

We are adjourned a minute early at 1129 April.

We are in June 4th, 2025. Thank you, colleagues.