>> GOOD MORNING, EVERYONE.
AND THANK YOU FOR JOINING US.
I WANT TO TELL YOU THAT THIS IS
MAY 13th.
IT'S A SPECIAL BUDGET
COMMITTEE.
AND IT IS NOW 10:57.
THANK YOU ALL FOR BEING HERE.
I WANT TO RECOGNIZE
COUNCILMEMBERS PACHECO,
GONZALEZ, JUAREZ, BEING HERE ON
TIME.
THIS IS THE FIRST COMMITTEE
MEETING OF 2019.
AND I BELIEVE IT'S PROBABLY THE
ONLY ONE THAT WE'LL HAVE UNTIL
WE GET INTO FULL ON BUDGET.
WE'RE ON THE WAY.
YES, COUNCILMEMBER SUWANT.
>> THE ECONOMIC IMPACT WILL BE
PRESENTED BY BEN NOBLE AND THE
OTHERS IN THE CITY BUDGET
OFFICE.
AND THE SECOND ITEM OF BUSINESS
IS -- I'M SORRY?
>> WE HAVE AN AGENDA TO
APPROVE.
WE'LL GET TO THAT.
AND WE'LL HEAR FROM THE CITY
AUDITOR ABOUT THE MOST RECENT
CONDITION REPORT.
AND I BELIEVE IT'S FROM 2017
BUT WE'LL ABOUT 2018.
WE HAVE CALLED THIS MEETING TO
ORDER AND I HAVE TO APPROVE THE
AGENDA.
ANY OBJECTION TO APPROVING THE
AGENDA.
ALL RIGHT.
WE WILL CONTINUE.
I'VE IDENTIFIED THE ITEMS OF
BUSINESS AND BEFORE WE HEAR THE
PRESENTATION FROM THE BUDGET
OFFICE, I BELIEVE ERIK SUND IS
GOING TO GIVE US AN OVERVIEW.
AND I WOULD ALSO LIKE TO
MENTION ERIK AND BEN, THIS IS
THE SECOND YEAR OF OUR TWO YEAR
BIENNIAL BUDGET.
AND WHAT THIS MEANS FROM THE
COUNCIL.
YOU WERE ACCURATE FOR WHAT YOU
EXPECTED.
AND WE DON'T HAVE A TON OF
MONEY THAT WE'LL BE ABLE TO
SPEND OVER ABOVE THE SECOND
YEAR.
>> THANK YOU, CHAIR BAGSHAW AND
MEMBERS OF THE BUDGET
COMMITTEE.
I AM ERIK SUND.
SEPTEMBER IS A WAYS OFF.
AND DEPARTMENTS ARE ALREADY
HARD AT WORK THROUGHOUT THE
CITY PUTTING TOGETHER THE FIRST
BUILDING BLOCKS OF THE, WELL,
ACTUALLY, ON YOUR NOTE ABOUT
THE BIENNIAL BUDGET.
LAST FALL ALONG WITH THE 2019
BUDGET, THE COUNCIL ENDORSED A
2020 BUDGET WHICH PROVIDES I
GUESS THE FIRST OF SEVERAL
BUILDING BLOCKS FOR THE 2020
BUDGET WHICH THE COUNCIL WILL
ADOPT THIS FALL.
BUT DEPARTMENTS ARE HARD AT
WORK ON THE DEVELOPMENT OF THE
MAYOR'S PROPOSED 2020 BUDGET OR
AT LEAST ELEMENTS OF IT.
IT IS TYPICAL IN THE OFF YEAR
AS WE MIGHT CALL IT WHERE THE
COUNCIL WILL ONLY BE ADOPTING A
BUDGET FOR NEXT YEAR AND USING
THE 2020 ENDORSED BUDGET
RESOLUTION FROM LAST FALL AS A
BASIS OF COMPARISON AND NOT
LOOKING TO A SECOND YEAR
ENDORSED BUDGET.
BUT IT IS TYPICAL TO HAVE SOME
REVISIONS MADE, AND IS ALSO A
REQUIREMENT TO ADOPT A ONE-YEAR
BUDGET FOR 2020 THIS FALL AS
WELL.
AS PART OF THE PROCESS FOR
PUTTING TOGETHER, THE
DEPARTMENTS ARE WORKING ON THE
PROPOSALS FOR REVISIONS.
WE'RE ALSO GOING TO GET THREE
REVENUE FORECAST UPDATES AS IS
TYPICAL.
THIS THE FIRST FOR 2019 WILL
PROVIDE THE REVENUE BASE FOR
DEVELOPING THE PROPOSED BUDGET.
AND SO THIS IS NOT THE SOLE
FORECAST BUT RATHER THE FIRST
OF SEVERAL STAGES OF BUILDING
TOWARDS THE ONE THAT WILL BACK
THE ADOPTED BUDGET.
AND IT PROVIDES THE COMMITTEE A
SNEAK PREVIEW OF NOT THE
CONTENT OF THE MAYOR'S PROPOSED
BUDGET BUT OF SORT OF THE SENSE
OF EXPANSION OR CONTRACTION IN
TERMS OF RESOURCES AVAILABLE
FOR THAT BUDGET.
THIS FORECAST WILL BE FOLLOWED
IN LATE SUMMER BY A SECOND
REVENUE FORECASTS THAT USED BY
THE CITY BUDGET OFFICE AND THE
MAYOR'S OFFICE TO PUT TOGETHER
LIKE THE LAST STEPS OF BUILDING
THE MAYOR'S PROPOSED BUDGET FOR
2020 AND ENSURING IT IS
BALANCED AND CONSISTENT WITH
STATE LAW.
AND THAT UPDATE WILL BE MADE
AVAILABLE IN LATE SEPTEMBER.
IT'S WORTH REMEMBERING ALWAYS I
THINK THAT ANY ADDITIONAL
RESOURCES THAT ARE IDENTIFIED
EITHER IN THIS FORECAST OR IN
THE LATE SUMMER FORECAST ARE
NOT NECESSARILY DIRECTLY
AVAILABLE FOR PROGRAMMING BY
THE COUNCIL BECAUSE THEY WILL
FORM A PART OF THE REVENUE BASE
THAT HAS USED TO BALANCE THE
MAYOR'S PROPOSED BUDGET.
AND THAT'S SUBJECT TO
INFLATIONARY AND OTHER
PRESSURES THAT ARE, AND BEING
AVAILABLE FOR PROGRAMMING TO
MAYORAL PRIORITIES.
THE COUNCIL CAN OF COURSE WE
PROGRAM FUNDS AS IT SEES FIT
DURING THE ADOPTION PROCESS.
BUT WHEN WE SEE EXTRA RESOURCES
AT THIS POINT IT'S A LITTLE
EARLY TO START PROGRAMMING.
I LIKE TO REMIND PEOPLE.
>> WOULD YOU LIKE TO SAY THAT A
SECOND WAY.
>> THE SHORT WAY IS THAT THE
MAYOR HAS THE FIRST BITE AT ANY
APPLES THAT ARE PUT FORTH IN
THE REVENUE FORECAST.
AND WHILE THE COUNCIL MAY AND
DOES MAKE REVISIONS THAT THESE
ARE NOT FUNDS THAT ARE GOING TO
BE DISTRICTLY NECESSARILY LEFT
ON THE TABLE FOR THE COUNCIL TO
PROGRAM IN THE FALL.
NOW OF COURSE IT WORKS BOTH
WAYS AS WELL.
IF THERE'S A REVENUE FORECAST,
IF THERE WERE TODAY WHICH IS
NOT THE CASE OR IF THERE WERE
LATER IN THE SUMMER A FORECAST
THAT SHOWED A REDUCTION IN
EXPECTED REVENUES OR GROWTH IN
REVENUES THAN IS LESS THAN WHAT
IS NECESSARY TO SUSTAIN
EXPENDITURES THAT ARE BASICALLY
BEEN PROGRAMMED, THEN THE MAYOR
IS ALSO THE FIRST TO KIND OF
HAVE TO DEAL WITH THE FALLOUT
FROM THAT REALITY.
A THIRD REVENUE FORECAST IS
PREPARED IN OCTOBER AND
TYPICALLY, TRANSMITTED TO THE
COUNCIL IN LATE OCTOBER, EARLY
NOVEMBER.
THIS IS TYPICALLY A SMALLER
SCALE UPDATE OF THE REVENUE
FORECAST AND IT PLAYS A SIMILAR
ROLE TO THE SECOND FORECAST FOR
THE MAYOR AND PROVIDES COUNCIL
THE OPPORTUNITY TO MAKE SURE
THAT IT'S BALANCED.
SOMETHING THAT WE HAVE TODAY
THAT WE DID NOT HAVE LAST
SPRING WHEN WE HAD THE REVENUE
FORECAST IS A PRESENTATION FROM
CINDY DRAKE AND JANE DUNKEL OF
THE OFFICE OF THE CITY AUDITOR
WHO WILL PROVIDE US WITH A
DIFFERENT LOOK AT CITY
FINANCES.
THE FINANCIAL CONDITIONS REPORT
PRESENTATION.
THE REQUIREMENT FOR THIS REPORT
IS RELATIVELY NEW.
IT WAS ESTABLISHED IN LATE 2016
BY THE COUNCIL AND IT PROVIDES
A LONG RANGE LOOK AT THE CITY'S
FINANCIAL HEALTH RATHER THAN
LIKE A COMPONENT OF BUILDING
NEXT YEAR'S BUDGET
SPECIFICALLY.
AND COMPARISONS OF FINANCIAL
ASSETS TO LIABILITIES, DEBT
LEVELS, AND DEMOGRAPHIC LEVELS
LIKE PROPERTY VALUES AND THAT
SORT OF THING.
THAT'S PART OF PROVIDING A
LARGER PICTURE FOR FINANCIAL
DECISION MAKING TO SUPPORT ALL
OF THE DECISIONS THE CITY MAKES
ABOUT RESOURCES IN THE LONG-
TERM RATHER THAN A PART OF THE
2020 BUDGET.
>> BEFORE YOU TURN IT OVER,
ERIC, DO YOU HAVE ANYTHING THAT
YOU WANT US TO KNOW
SPECIFICALLY BASED ON YOUR
ANALYSIS?
>> I WOULD SAY THUS FAR WHILE
THE PARTICULAR DETAILS KIND OF
VARY FROM REVENUE SOURCE TO
REVENUE SOURCE, THE PICTURE
APPEARS NOT ENTIRELY UNLIKE
LAST FALL IN THAT THERE APPEARS
TO BE A BROADLY CONSISTENT
SUFFICIENT LEVEL OF RESOURCES
TO CONTINUE ALONG THE COURSE
LAID OUT IN THE ENDORSED BUDGET
RESOLUTION LAST FALL.
IT'S POSSIBLE THAT THERE WILL
BE SOME ADDITIONAL RESOURCES
AVAILABLE TO PROGRAM TO HIGHER
PRIORITY ITEMS.
BUT IT DOESN'T BROADLY LOOK
LIKE A REALLY SUBSTANTIAL
INCREASE IN THE AMOUNT OF FUNDS
THAT ARE AVAILABLE.
THERE MAY BE SOME EXCEPTIONS IN
PARTICULAR AREAS AND SO WITH
THAT A LOT WILL DEPEND ON WHAT
HAPPENS OVER THE COURSE OF THE
SUMMER AND THE SECOND FORECAST
AS WELL AS WHAT THE MAYOR PUTS
FORWARD FOR THE STARTING POINT
FOR THE COUNCIL'S
DELIBERATIONS.
>> THANK YOU, ERIK.
THANK YOU VERY MUCH.
SHALL I TURN IT OVER TO YOUR
COLLEAGUES.
>> WE'LL DO THE INTRODUCTIONS.
BEN NOBLE, CITY'S BUDGET
DIRECTION.
>> DAVID HENNES, CITY BUDGET
OFFICE.
>> GEORGE EMERSON, CITY BUDGET
OFFICE.
>> A COUPLE OF KEY REVENUE
SOURCES WE'LL START BY GIVING
YOU A SENSE OF OVERALL ECONOMIC
CONDITIONS AT A HIGH LEVEL BOTH
STATE AND NATIONAL AND THEN THE
IMPACT OF, THE LOCAL MARKET AND
ITS IMPACTS ON REVENUES AS
HIGHLIGHTED BY YOUR STAFF.
OVERALL PICTURE, GENERALLY FUND
FORECAST IS MORE OR LESS SPOT
ON TO WHAT WE HAD SEEN IN THE
FALL.
THERE ARE A COUPLE THAT ARE
SLIGHTLY OFF FROM FORECAST,
BELOW FORECAST THAT CREATE
CHALLENGES.
LET ME GIVE YOU A CHANCE TO ASK
QUESTIONS ON THE CONTEXT OF THE
NUMBERS.
>> ALL RIGHT.
THANK YOU.
>> SO WE'LL GO THROUGH THIS.
WE HAVE U.S. SLIDES AND
REGIONAL, LOCAL SLIDES TO
ILLUSTRATE WHY WE DON'T HAVE A
LOT OF NEW MONEY TO ADD TO THE
BUDGET.
AT THE U.S. LEVEL, EMPLOYMENT
CHANGE.
ON THE LEFT SIDE SIDE, THE
GREEN COLUMNS ARE ACTUAL IN
THE, ON THE BOOKS NUMBERS AND
THE RED COLUMNS ARE FORECAST
FROM OUR NATIONAL FORECASTER
WHICH IS IHS MARKET.
AND IF YOU LOOK AT 2014, 2015,
YOU SEE THE PEAK AT 3 MILLION
ADDED ANNUALLY.
AND AS IT GOES TO THE RIGHT.
YOU SEE A DECLINE TO A TROUGH
AND A BLIP UP THERE IN 2018,
2019 BEFORE IT MOVES INTO THE
RED COLUMNS WHICH SHOW
CONTINUED DECLINE.
WE BELIEVE THAT BLIP IS DUE TO
THE FEDERAL STIMULUS, A TAX CUT
AND AN INCREASE ON SPENDING.
AND THAT WAS ENOUGH TO DRIVE UP
EMPLOYMENT.
BUT IF YOU REMOVE THAT WHAT YOU
WOULD SEE IS A GENERAL DECLINE
FROM THE LEFT TO THE RIGHT.
AND WE BELIEVE THAT, AND
ACTUALLY, OUR NATIONAL
FORECASTER BELIEVES IT WILL
CONTINUE TO DECLINE AS WE MOVE
INTO THE FUTURE.
WE HAVE SLOWING GDP GROWTH.
3% IN 2018.
2.4% FOR 2019.
AND 2020, 2%.
WITH DECLINING GDP YOU GET
DECLINING EMPLOYMENT.
THE FORECAST IS THE BASELINE
FORECAST WHICH THEY ATTACH A
PROBABILITY OF ABOUT 60% CHANCE
OF OCCURRING.
THEY ALSO DO A PESSIMISTIC
FORECAST WHICH THEY HAVE PUT
OUT AT ABOUT 30% CHANCE OF
HAPPENING.
THAT'S UP FROM 20% ABOUT A YEAR
AGO.
THE RECESSION TALK IS
INCREASING.
THIS NEXT SLIDE SHOWS THAT THE
WALL STREET JOURNAL SURVEY, 49%
OF THOSE SURVEYED INDICATED
THEY THOUGHT THE RECESSION WAS
GOING TO BEGIN IN 2020.
ANOTHER 40% THOUGHT 2021.
AND SO UPWARDS OF 90% BELIEVE
WE'LL HAVE A RECESSION AND IT'S
GOING TO START IN 2020 OR 2021.
AND ECONOMISTS ARE NOTORIOUS
ABOUT PREDICTING RECESSIONS.
BUT THE DATA IS BEGINNING TO
SHOW IT'S SLOWING DOWN.
>> HELP ME WITH THIS.
WE KNOW IT COMES IN CYCLES, AND
OFTENTIMES 10-YEAR CYCLES.
AND WE'RE WELL PAST THAT NOW.
WITHIN THAT BOX, COULD YOU
DESCRIBE THE 30%.
>> THEY LOOK AT THE DATA AND
TRY AND FIGURE OUT THE
LIKELIHOOD OF THESE EVENTS
OCCURRING, LEADING TO A CERTAIN
STRING OF EVENTS SUCH AS THE
DECREASE IN EMPLOYMENT.
LOSS OF INCOME.
WHAT'S GOING TO HAPPEN TO THE
STOCK MARKET.
WHAT'S GOING TO HAPPEN IN THE
HOUSING MARKET.
IF PEOPLE PERCEIVE A LOSS OF
VALUE IN THEIR HOMES AND THEIR
ASSET PORTFOLIOS.
THY MAY BEGIN TO CONTRACT
SPENDING.
AND TO THE BEST OF THEIR
ABILITY THEY ATTACH A
PROBABILITY TO THAT SEQUENCE OF
EVENTS OCCURRING.
AND THEY BELIEVE IT'S A 30%
CHANCE THAT BY AS EARLY AS THE
1st QUARTER OF 2020, WE COULD
BEGIN TO SEE A RECESSION, A
NEGATIVE GROWTH IN GDP.
NOT JUST A SLOWDOWN, BUT IT
WOULD GO NEGATIVE.
AND THERE'S ABOUT A 30% CHANCE
OF THAT.
AND I THINK THAT THOSE TWO
INDICATORS ARE BOTH REALLY
INTERESTING SURVEY FACTS OR
SURVEY OPINIONS.
BUT THERE'S A LITTLE DISSONANCE
THERE WHEN YOU FIRST LOOK AT IT
ASSUMING THAT IT'S GOING TO
HAPPEN, WHEN WILL IT.
YOU DON'T CHOOSE NEVER.
SO THAT'S HOW YOU GET 100%
VERSUS 30.
>> WE'RE 100% RIGHT IN
PREDICTING A RECESSION, IT'S
THE TIMING THAT'S UP IN THE
AIR.
>> GENERALLY, THE PUGET SOUND
REGION, KING, PIERCE, SNOHOMISH
COUNTY, A LOT OF OUR DATA IS
FROM KING AND SNOHOMISH
COUNTIES ONLY.
WHAT WE'VE BEEN THROUGH IS WE
SAW THE RECESSION OCCUR, AND WE
SAW EMPLOYMENT GROWTH LED BY
BOEING AND AMAZON IN THE EARLY
STAGES COMING OUR 2009 AND
2010.
THE STRONG GROWTH LEADS TO
POPULATION INCREASE.
PEOPLE MOVE IN TO TAKE THE
JOBS.
AND THAT TENDS TO STIMULATE
DEMAND FOR HOUSING.
AND WE'VE GOT SLIDES THAT SHOW
ALL OF THIS.
BUT DEMAND FOR HOUSING AND
OFFICE SPACE.
YOU'VE SEEN THE BOOM IN CUSK,
UNION, AND SO FORTH.
IT LOWERS THE VACANCY RATES.
AND WE HAVE SEEN A LARGE
CONSTRUCTION INCREASE.
WE'VE HAD, WE'RE NEAR THE PEAK
AND MOVING INTO A PERIOD OF
SLOWER GROWTH AND PART OF THAT
IS DRIVEN BY THE FACT THAT WE
HAVE BEEN BUILDING NEW HOUSING
UNITS FOR EXAMPLE.
AND WE HAVE SEEN A LEVELING OFF
OF RENTS AND HOME PRICES AND IN
FACT A DECLINE AND THAT IS IN
COMBINATION WITH THE EMPLOYMENT
GROWTH STARTING TO PULL DOWN.
BOEING HAS PULLED BACK ON
HIRING.
AND AMAZON HAS PULLED BACK ON
HIRING.
THAT GENERALLY LEADS TO THE
SENSE THAT THE GROWTH OF THE
ECONOMY IS SLOWING.
AND IT WILL WONT TO SLOW.
AS A RESULT, OUR REVENUE GROWTH
WILL SLOW.
WE BELIEVE THE GROWTH RATE WILL
SLOW.
MOVING INTO PICTURES.
WE'VE GOT THE ANNUAL EMPLOYMENT
CHANGE IN THE SEATTLE METRO
AREA ON THE NEXT SLIDE.
YOU CAN SEE COMING OUT OF THE
RECESSION, YOU SEE THE GROWTH
IN EMPLOYMENT, KING AND
SNOHOMISH COUNTIES.
AND THE SLIDE IS DESIGNED WITH
ACTUAL NUMBERS IN THE DARK
GREEN ON THE LEFT.
AND THE LIGHTER SHADED
FORECAST.
IT PEAKS IN 2015, 2016.
AND BOEING LAYOFFS AND SO
FORTH, WE SAW A DROP IN 2017.
>> THE CURIOSITY OF HOW MUCH OF
THAT, IS DUE TO THE FEDERAL
STIMULUS.
OTHERWISE, YOU CAN SEE THE
TREND GROWTH IS TO A SLOWING
LEVEL.
CONSTRUCTION IS A BIG PART OF
THAT.
THIS IS A VIEW OF ONE
PARTICULAR SECTOR.
THIS INCLUDING AMAZON ONLINE
SALES.
YOU CAN SEE THE REVIC RAMP FROM
FROM, TO 190,000 IN 2017.
IT LEVELS OUT.
AND WE HAVE STATE LEVEL DATA
THAT SUBSTANTIATES THIS.
WE BELIEVE ABOUT 2/3 OF THAT
LONG RAMPUP IS DUE TO AMAZON.
AT THE LEVELS IS WHAT'S OF
INTEREST IN THE SENSE OF WHERE
WE'RE GOING.
>> THE MESSAGE IS ON THE RIGHT
SIDE OF THE GRAPH WHERE YOU CAN
SEE, WE'RE SEEING A STABLE
LEVEL OF EMPLOYMENT.
AND OVERALL A SLOWING IN THE
RATE OF JOB CREATION WITHIN THE
REGION.
>> AND THE INCREASE IN
EMPLOYMENT LEADS TO INCREASE IN
POPULATION.
AND WE HAVE A, THIS IS FROM THE
BACKGROUND STATE OFFICE OF
FINANCIAL MANAGEMENT.
THEY PUT IT.
WE EXPECT TO GET THE 2019
ESTIMATE BY JULY AND WE BELIEVE
IT WILL SHOW A DECREASE IN
POPULATION GROWTH BUT YOU CAN
SEE 2017 WAS THE PEAK YEAR OF
GROWTH INTO SEATTLE OF OVER
25,000 PEOPLE.
AND THAT ALL TOLD BETWEEN 2010
AND 2018.
WE ADDED ABOUT 122,000.
AND THAT'S THE PRESSURE ON
HOUSING THAT WE WERE TALKING
ABOUT.
>> BACK ON SLIDE SIX RELATED TO
RE-VAIL TRADE EMPLOYMENT.
CAN YOU PROVIDE WHAT PROPORTION
OF JOBS ARE REPRESENTED BY THIS
PARTICULAR SECTOR.
2/3 OF GROWTH IN THE SECTOR.
HOW DOES THAT PLAY OUT OVERALL?
>> I THINK IT'S ON THE ORDER OF
A 5th OF A 6th.
>> JUST LOOK ON THE BACK OF THE
ENVELOPE.
THANK YOU.
>> I'LL GET THAT FOR YOU.
>> SEND IT TO ALL OF US.
>> IT'S A SUBSTANTIAL SECTOR,
BUT THE EXACT NUMBER WE CAN GET
TO YOU.
>> I YOU EXPECT POPULATION TO
GO DOWN.
THE SLOWING OF PEOPLE MOVING
INTO THE AREA.
>> IN OUR OF OUR LANGUAGE,
THAT'S THE POINT.
>> THAT SIMILARLY WITH
POPULATION AND THE LIKES.
THIS, ALL INDICATIONS ARE THAT
WE ARE AT A SLOWING.
THE RATE OF GROWTH HAS SLOWED
ANOTHER VIEW OF POPULATION
GROWTH, THESE ARE WASHINGTON
DRIVER'S LICENSES.
THIS COMES FROM THE DEPARTMENT
OF LICENSING.
MOVING INTO THE STATE.
SO THESE ARE PEOPLE MOVING.
THIS IS THE STATE OF WASHINGTON
FROM OTHER STATES OR ELSEWHERE.
YOU CAN SEE THE DATA GOES BACK
ALL THE WAY TO JANUARY OF 2000.
AND WE'VE BEEN ADDING A FAIR
NUMBER.
AND IF YOU LOOK TO THE RIGHT
YOU BEGIN TO SEE JANUARY 2014,
JANUARY 2015.
YOU SEE THE RAPID RAMPUP THAT
CORRESPONDED TO THE POPULATION
GROWTH IN SEATTLE.
NEW LICENSES AND OF INTEREST IS
THE MORE RAPID RATE OF DECLINE
AT THE FAR RIGHT EDGE OF THE
CHART.
YOU SEE IT.
WE CAME DOWN FROM 201 AND 2017.
>> LIKELY LOOKING FOR WORK OR
HAVING SECURED A JOB.
THESE ARE FOLKS OUT OF STATE
NOW IN STATE AND THE DATA IS
AVAILABLE IN RELATIVELY TIMELY
WAYS.
>> COUNCILMEMBER GONZALEZ --
>> THANK YOU.
I'M A LITTLE CONFUSED ABOUT
WHAT UTILITY WE ARE ASCRIBING
TO SLIDE EIGHT.
>> I THINK IT'S JUST ANOTHER
INDICATION OF THE PATTERN THAT
WE'RE SEEING IS BEING SHOWN BY
VARIOUS DIFFERENT DATA STREAMS.
>> THE PATTERNS OF POPULATION
GROWTH?
>> OF GROWTH.
>> I WOULD DISCOURAGE US FROM
USING THIS AS ONE OF THE DATA
POINTS.
I THINK AS WE CONTINUE TO,
FIRST OF ALL, NOT EVERYBODY
GETTINGS A DRIVER'S LICENSE.
IT COULD INCLUDE
IDENTIFICATIONS NOT UTILIZED
SPECIFICALLY FOR THE PURPOSE OF
DRIVING A VEHICLE.
AND ON TOP OF THAT, THERE ARE
MANY PEOPLE WHO ARE MOVING TO
SEATTLE IN PARTICULAR WHO ARE
BEGINNING TO RELY ON OUR
TRANSIT SYSTEM.
IN MY OFFICE ALONE OUT OF MY
FOUR LEGISLATIVE AIDES, THREE
OF THEM DO NOT OWN CARS.
THERE'S NO REASON TO HAVE A
DRIVER'S LICENSE THIS COULD BE
MISLEADING IN TERMS OF OUR
ABILITY AS A CITY TO ACCURATELY
ESTIMATE WHAT THE POPULATION
GROWTH.
I JUST THINK THIS IS A VERY OUT
OF CONTEXT, OUTDATED WAY OF
VIEWING DATA SOURCES THAT COULD
GIVE US A PERSPECTIVE ON WHAT
OUR ANTICIPATED POPULATION
GROWTH AND THOSE TRENDS MIGHT
BE.
>> THOSE ARE HELPFUL
OBSERVATIONS.
WE GENERALLY DON'T RELY ON ANY
SPECIFIC DATA COURSE.
I THINK YOU POINTS ARE WELL
TAKEN.
>>> DO YOU WANT TO MOVE TO THE
HOUSING MARKET?
>> SURE.
SO AS WE TALKED ABOUT THE
INCREASE IN POPULATION PUTS
PRESSURE ON THE HOUSING MARKET.
AND WE'VE ALL BEEN LIVING THIS
AND WHAT THIS CHART SHOWS IS
MEDIAN RENT FOR ALL RENTAL
UNITS.
WHATEVER IS BEING RENTED.
WE'VE LOST OUR MAIN RENTAL
SOURCE WHICH WAS DUPREE AND
SCOTT.
THE RAPID INCREASE AS YOU MOVE
INTO 2017 AND 2018.
IT PEAKS AND THEN A DECLINE AND
A LEVELING OUT.
AND WE'LL WATCH THIS VERY
CLOSELY.
WHAT WE WERE INTERESTED IN IN
THINKING ABOUT IS THAT WE'VE
ADDED A FAIR NUMBER OF HOUSING
UNITS.
AND THERE'S ANOTHER 18,000 ON
THE BOOKS UNDER CONSTRUCTION.
AND WHAT WE WOULD INCREASE, IS
THAT, AND WE ARE SEEING SOME
MODERATION.
AND WE'LL BE VERY INTERESTED IN
CONTINUING TO WATCH THIS.
>> THE NEXT SLIDE IS ABOUT
SINGLE FAMILY FOAM HAILS.
>> ONE OF YOUR BULLET POINTS
SAYS ONE IN 10 APARTMENTS ARE
VACANT.
I'M SURPRISED BUT HEARTENED.
WE'VE BEEN TRYING TO CREATE A
LANDLORD LIAISON PROGRAM SO WE
CAN GET MORE PEOPLE IN HOUSING
THAT NEED HOUSING.
I'D LOVE TO KNOW MORE ABOUT
DATA FOR THE LOWER INCOME OR
MIDDLE INCOME OF WHAT WE CAN DO
WITH THIS.
IF YOU WOULD FOLLOW UP AFTER
THIS PRESENTATION TO LEARN A
WILL NOT.
IS THERING THE THAT WE CAN
POINT TO.
>> JUST A FOLLOW-UP.
A 10% VACANCY RATE DOES SOUND
HIGH.
AND DOES ZILLOW, IS THEIR
RESEARCH DIFFERENT, A DIFFERENT
APPROACH THAN OUR FORMER
REPORTS FROM CANE AND SCOTT.
AND THEY I THINK FOCUS
SPECIFICALLY ON UNITS THAT WERE
VACANT AND THAT THE PROPERTY
OWNERS WERE SEEKING TO RENT.
I DON'T KNOW IF ZILLOW IS DOING
A BROADER LOOK AT NOT ONLY
UNIONS THAT THE OINDERS ARE
SEEKING TO RENT.
BUT UNITS THAT CAN BE HELD FOR
INVESTMENT PURPOSES.
IT WOULD BE HOPEFUL TO KNOW
WHAT THE METHODOLOGY IS FOR
THIS PARTICULAR DATA POINT.
>> WE CAN PROVIDE MORE.
THIS SAYS NOS
>> LOOKING AT THE NEXT LIKE.
THIS IS THE SINGLE FAMILY HOME
SALES FROM NORTHWEST MULTIPLE
LISTING SERVICE.
THESE ARE CLOSED SALES AND THE
ACTUAL MEDIAN PRICE OF A SINGLE
FAMILY HOME FROM THE ABOUT THE
LATE, WE'VE SEEN DECLINES AND
WE'RE WATCHING CLOSELY.
THIS IS A HUGE FACTOR.
ONE OF THE THINGS THAT ALL OF
THIS HOUSING IS BASED ON THE
CONSTRUCTION INDUSTRY.
THIS NEXT SLIDE SHOWS THE VALUE
OF PERMITS ISSUED FOR
CONSTRUCTION.
AND YOU CAN SEE THE RAMPUP AND
THE USUAL PATTERN LEFT TO RIGHT
WITH A PEAK IN 2017.
2017 IS A BIT ANOMALOUS BECAUSE
THERE WERE POLICY CHANGES THAT
LED TO A LOT OF DEVELOPERS
TRYING TO GET APPLICATIONS IN BY
THE END OF 2017.
THAT NUMBER, THAT COLUMN IS A
LITTLE HIGH.
WHAT WE'RE SEEING IN 2019
THOUGH IS ABOUT 5% BELOW IN
TERMS OF THE VALUE OF PERMITS
ISSUED.
WE ARE SEEING A SLOWDOWN IN THE
PERMIT DATA.
>> ONE OF THE FACTORS THAT WE
ARE CONCERNED ABOUT.
AND BEEP MAY HAVE MORE TO SAY
ABOUT THIS A BIT LATER.
WHEN YOU THINK ABOUT
CONSTRUCTION AND REVENUE, WE
HAVE BECOME INCREASINGLY
DEPENDENT ON CONSTRUCTION
RELATED REVENUES AND OUR
GENERAL FUND TAX STREAM.
WHEN YOU LOOK AT THE CHART.
2018 WAS THE PEAK YEAR AS $116
MILLION OF CONSTRUCTION
INDUSTRY RELATED TAX REVENUES.
SO THIS DOES NOT INCLUDE THINGS
LIKE FINANCE AND REAL ESTATE
BEING, THIS IS JUST THE
CONSTRUCTION INDUSTRY, THE
BUILDERS AND SO FORTH.
THIS SORT OF UNDERSTATES OUR
DEPENDENCE ON CONSTRUCTION.
WE'RE UP AT 8.6% OF THE FUND IN
2018 WAS RELATED TO THE
CONSTRUCTION INDUSTRY.
AND THAT MAKES US A LITTLE
NERVOUS.
AS OPPOSED TO COMING UP, WE
WERE DOWN IN THE 40s AND 50s
AND 60s.
SO THAT'S A FAIR THING TO WORRY
ABOUT.
WHAT IS NOT IN THERE IS THE
REAL ESTATE EXCISE TAX FOR
EXAMPLE.
WE SAW $77 MILLION.
THE FORECAST IS GOING FORWARD
FOR IT TO REMAIN PRETTY HIGH.
AND WHAT WE HAVE IS A FAIR
AMOUNT OF COMMERCIAL
TRANSACTIONS AOCCURRING.
AND SOME RECENT ACTIVITY.
>> IN TERMS OF THE DATA
REFLECTED ON SLIDE 12 AS WELL
AS SLIDE 13, I WOULD JUST LIKE
TO MAKE SURE THAT THESE
FORECASTS INCLUDE PARTICULARLY
FOR SOME OF THE OUTER YEARS,
INCLUDE AND ARE TAKING INTO
ACCOUNT THE LEGISLATIVE CHANGES
THAT OCCURRED REGARDING CONDO
DEVELOPMENT AND SOME OF THE
MODIFICATIONS MADE TO THE REAL
ESTATE EXCISE TAX FRAMEWORK.
>> I THINK THE REAL ESTATE
EXCISE TAX WON'T CHANGE THE
CITY'S REVENUES.
I THINK IT WILL BE EFFECTIVE
FOR THE STATE BUT NOT THE CITY.
AS FAR AS FACTORING IN THE
OTHER LEGISLATIVE CHANGES INTO
THE FORECAST.
I BELIEVE TOM HAS THAT IN
THERE.
TO THE EXTENT THAT HE THINKS
IT'S GOING TO MAKE A HUGE
CHANGE IN THE FORECAST PERIOD
VERSUS MOVING FORWARD.
>> I WOULD APPRECIATE IT IF WE
COULD GET ADDITIONAL
INFORMATION.
THAT ALLOW US PERHAPS A LITTLE
BIT MORE OF A WINDOW INTO
UNDERSTANDING WHAT FACTORS
WE'RE TAKING INTO THE FORECAST.
AND GIVE US A HIGHER LEVEL OF
FORECAST THAT THEY ARE MORE
ACCURATE FORECASTS.
>> SO IF I MAY BRIEFLY, ON THE
AS FAR AS RETAX, THE STATE HAS
MOVED TO THE PROGRESSIVE RATE.
THAT'S FOR THE STATE PORTION OF
THE TAX.
NOT THE LOCAL OPTION.
THEY MADE MODIFICATIONS THAT
DON'T FACT THE MMENT BY BROADER
AUTHORITY TO UTILIZE HALF OF
THE REVENUE.
FOR INVESTMENTS RELATED TO
HOUSING FOR THE HOMELESS.
AND HOW MUCH CAN CREATED WITH
IT.
CHOICES BETWEEN THE NEWLY
AUTHORIZED USES AND SOME OF THE
THINGS THAT WOULD OTHERWISE BE
DONE WITH THE MONEY.
>> THAT'S SORT OF MY ELECTRIC
LITIGATION.
ANOTHER PATH IS WHETHER OR NOT
THE FORECASTS ARE SUBJECT TO
HAVING THAT LEVEL OF GRANULAR
DETAIL THAT YOU JUST DESCRIBED.
GIVEN THE PAYMENT.
IF WE LAYER ON TOP THE HAVE
ACTIONS CAN WE HOW MUCH CAN WE.
MANY MY MIND, I'D LIKE TO GET A
BETTER SENSE HOW MANY DOLLARS
WE THINK WE MIGHT HAVE
AVAILABLE FOR DISCRETIONARY USE
AND PROPORTION FOR AFFORDABLE
HOUSING IN PARTICULAR.
IT INCREASED 2014 THROUGH 2018
ABOVE 5% EACH YEAR.
THIS IS RATHER ROBUST GROWTH
AND AS YOU CAN SEE FROM THE
BLACK LINE, WELL ABOVE CPI
WHICH MAY OR MAY NOT REFLECT
TOTAL CITY COSTS WITH
HEALTHCARE, WITH WAGES, ET
CETERA.
>>> 2018 WE WANT TO POINT OUT
THAT THERE'S A FEW FACTORS THAT
LED TO THE LARGE GROWTH, 8% FOR
2018.
THE FIRST IS A LITTLE RED BIT
OF A COLUMN WHICH IS THE
SWEETENED BEVERAGE TAX.
THE OTHER CHANGES, WE INCREASED
THE TAX BASE BECAUSE OF THE WAY
FAIR TECHNICIAN WHICH INCREASED
THE TAXATION ON RE- MOTE
SALES.
THAT'S INCREASED THE REVENUES
THREE TO $5 MILLION IN
BEGINNING IN 2018 AND THAT WILL
CONTINUE FORWARD.
AND WE ALSO INCREASED THE TAX
RATE BY ABOUT A PERCENT.
THAT GOT US UP TO THE MAXIMUM
TAX RATE.
>> DOES, HOW REVENUES RELATE TO
CPI AND ARE WE KIND OF KEEPING
UP.
I THINK OF THE THINGS WE DO.
NUMBER OF FIRST RESPONDERS,
PLAY FIELD AREAS, LIBRARY
HOURS.
AND IF THERE'S A WAY TO COMBINE
THOSE TWO AND SEE HOW
POPULATION GROWTH AND CPI ARE
RELATIVE TO OTHER MEASURES,
THAT WOULD BE A USEFUL THING
FOR ME.
>> WE'VE DONE SOME OF THE
ANALYSIS.
NOT ALL OF OUR COSTS ARE
PROPORTIONATE TO POPULATION.
THIS IS A ROUGH NOTION OF THAT.
YOUR OBSERVATIONS WITH CRITICAL
AS WELL.
>> AND A COUPLE OF THE AREAS
I'M INTERESTED IN, MY COLLEAGUES
WHO THIEF UP HERE.
WE HEAR YOUR NEED TO BE DOING
MORE WITH LESS.
WHEN THE POPULATION IS
INCREASING AND WE ARE SPADING,
WHETHER IT'S BEEN.
AND RESPONDING TO THE HOMELESS
AND TRYING TO GET FACILITIES
OPEN THAT ARE MEETING THE NEEDS
AND RESPONDING TO THE DEMANDS
FOR CLEANER CITY STREETS AND SO
ON.
I WOULD LOVE FOR US IN THE NEXT
FEW WEEKS TO BEGIN TO COLLECT
THAT.
AND THE REVENUES ARE COMING IN
ARE GOD BUT WHAT AROUND
RESPONSES.
WE'VE GOT THE EMERGENCY
RESPONSE SET UP.
MANY THANKS TO THE FIRED FOR
THE WORK THEY ARE DOING.
AND I'D LIKE TO GET A LIVE.
WE DO IT.
INVESTMENTS THAT ARE WORKING,
I'M GOING TO ASK THE FOUR OF
YOU TO BE WORKING WITH MY.
>> A DETAILS ACCOUNTING OF THAT
PREPARED AND AN UPDATED
ONGOING, SO THAT SHOULD BE
RELATIVELY EASY TO PROVIDE THAT
INFORMATION.
>> JUST CAREERS AS TO THE LARGE
BUMP FOR THE SWEETENED BEVERAGE
TAX IN 20 THERE.
>> THIS IS ABOUT GROWTH.
AND THE ABSOLUTE DOLLARS ARE
THERE AND THEY ARE GROWING BUT
AT A SMALLER RATE.
AND THEY ARE NOT ADDING AS MUCH
OF A PERCENTAGE RANGE GROWTH.
>> FOLLOWING UP ON SWEETENED
BEVERAGE TAX.
WE'RE GOING TO TAX YOUR SWEAT
NOW.
I JUST WANTED TO GET A SENSE
FROM YOU ALL IN TERMS OF THAT
PROJECTED GROWTH WHICH IS ON
TOP OF WHAT WE WILL BE EXPECT
TO HAVE.
CAN YOU TALK TO ME ABOUT THE
METHODOLOGY.
THERE'S BEEN CRITICISM ABOUT
HOW THE CITY INITIALLY MADE
ESTIMATES ABOUT WHAT WE WOULD
RECEIVE IN REVENUE AND WE HAVE
FAR EXCEEDED THAT THE
REPRESENTS.
AND IT HAS BEEN UTILIZED AT AN
ARGUMENT AGAINST THE SWEETENED
BEVERAGE TAX AND REPEALING IT
SOME DEAL.
>> I APPRECIATE THE OPPORTUNITY
TO SPEAK TO THAT POINT BECAUSE
WE ARE RESPONSIBLE FOR THOSE
ESTIMATES.
AND I'M HAPPY TO EXPLAIN.
AS A HIGH LEVEL.
FOR 2019 THOSE HAVE ACTUAL
DALLAS.
BY FACTOR THE.
YOU CAN T, IT'S A SIGNIFICANT
REVENUE SOURCE.
WE DID SYSTEMATICALLY UNDER-
FORECAST WHAT THOSE REVENUES
WOULD BE AND THE REASON IS THAT
UNTIL WE STARTED TO TAX SODA OR
SWEETENED BEVERAGES.
WE HAD NO LEVEL OF CONSUMPTION.
AND A GOOD DEAL OF SWEETENED
BEVERAGES ARE SOLD IN
RESTAURANTS WHERE WE DON'T HAVE
AN ITEMIZATION.
WE DIDN'T KNOW THE TAX BASE.
WE DIDN'T KNOW HOW MUCH SODAS
WAS BEING CONSUMED.
ALSO OUR DAYTIME POPULATION OF
EMPLOYEES.
WHAT WE HAD WAS NATIONAL DATA.
AND FROM BERKELEY, CALIFORNIA,
THEY HAD IMPOSED SUCH A TAX.
BUT THE NIGHTTIME POPULATION
AND WORK TIME POPULATION ARE
DIFFERENT.
BERKELEY.
WE DEVELOPED 15.
WE HAVE NO REASON TO CONCLUDE
THAT THE SEW THE TAX, IF THE
TAX IN THEORY, AND YOU HAVE
EXPRESSED A DESIRE TO
DISCOURAGE THE CONSUMPTION OF
SODA.
IT WAS A SYNTAX OF A FORM.
WE DON'T KNOW THE LEVEL OF
CONSUMPTION BEFORE THE TAX.
WE KNOW THE LEVEL OF
CONSUMPTION NOW.
AND IT WAS A COMPLICATED TAX
BECAUSE IT'S ASSESSED ON THE
DISTRIBUTION.
SO WE'RE SETTING UP THE
CHANNELS.
IN ANY CASE.
WE DON'T HAVE DATA TO PROVE IT
EITHER.
AND THE REASON REVENUES HAVE
RECOMMEND IN IS THAT.
AT THIS POINT WITH THE YEAR'S
EXPERIENCE WE THINK WE'VE GOT
THIS JUST ABOUT RIGHT BUT I
DON'T DOUBT THAT IT COULD
CONTINUE TO SLIGHTLY OUTPACE.
AND WE HAVE AN UPWARD REVISION
AS A RESULT OF THE 2018
NUMBERS.
>> I HAVE OVERSIMPLIFIED.
TRR THIS IS A MULTIFACETED
EFFORT THAT WAS FUELED BY A LOT
OF DIFFERENT POLICY
MOTIVATIONS.
AND ONE OF WHICH WAS NOT
NECESSARILY TO IMMEDIATELY SEE
THE.
A REVENUE SOURCE THAT YOU
WOULD.
INGEST SWEETENED BEVERAGE AS A
ADDITION PROPORTIONATE RATE
THAT HAS DISPARITY PUBLIC
HEALTH OKAYS.
AND AT ALSO FOOD INSECURITY
THROUGHOUT THE CITY.
I DON'T WANT MY QUESTION TO BE
PERCEIVED ADDS ONE THAT IS
SQUARELY FOCUSED ON THE
REDUCTION OF CONSUMPTION.
>> COUNCILMEMBER O'BRIEN.
>> I APPRECIATE THE CLARITY ON
THE BUDGET FISCAL REALITY OF
UNDER THE CIRCUMSTANCES NOT
KNOWING HOW MUCH IS CONSUMED
AND THE COMPLEXITY OF HOW WE
COLLECT IT.
I WANT TO FLAG FROM A PUBLIC
HEALTH PERSPECTIVE THERE'S
EXTENSIVE WORK BEING DONE TO
MAYBE NOT, IT WOULD BE
INFORMATIVE FOR BUDGET PURPOSES
TO ESTABLISH A BASELINE OF
CONSUMPTION AND MONITOR THAT
OVER TIME.
THERE WERE SURVEYS AFTER IT WAS
PASSED AND IT MAY NOT BE
COMPREHENSIVE ENOUGH TO DICK
INDICATE BUDGET BUT IT'S MORE
TO LOOK AT THE PUBLIC HEALTH
TENDS AND SEE WHAT'S HAPPENING.
AS THE NUMBERS CONTINUE TO COME
IN THAT WOULD BE INFORMATIVE.
>> AND WE'LL HAVE INFORMATION
ON POPULATION AND EMPLOYMENT TO
SCALE IT.
THIS WILL BE ACTUAL REVEALED
CONSUMPTION AS TAXED.
THAT WOULD BE USEFUL
INFORMATION TO HAVE GOING
FORWARD.
>> AS A QUICK TIME CHECK FOR MY
COLLEAGUES, WE HAVE THREE MORE
PAGES DISCUSSING REVENUE AND
FORECAST RISKS AND THE GENERAL
FUND UPDATE.
AND AFTER THIS A FINANCIAL
CONDITION REPORT FROM OUR
AUDITORS AND PUBLIC COMMENT
AFTER THAT.
>> SO WE CAN GO QUICKLY THROUGH
THE TABLE DEPENDING ON HOW MANY
QUESTIONS YOU MIGHT HAVE.
THIS IS THE TABLE WE GENERALLY
PRESENT.
2018, 2019, AND 2020 ACROSS THE
TOP.
AND THE PROPERTY TAX, NOT THE
PROPERTY TAX, BUT THE REVENUE
INSTRUMENTS ARE DOWN THE LEFT-
HAND SIDE.
AND WE SHOW ACTUALS OR REVISED
FORECASTS IN THE NON-SHADED
COLUMNS AND THE CHANGE FROM OUR
NOVEMBER FORECAST THE BASIS OF
THE 2019 ADOPTEDENDORSED
BUDGET.
I THINK THE BIG STORY IS THE
GRAND TOTAL ROW.
ABOUT HALFWAY DOWN THE PAGE
WHERE YOU CAN SEE THAT IN THE
GRAY SHADED COLUMNS,
PARTICULARLY 2019 AND 2020 FOR
EMPHASIS HERE ADDING ABOUT $3.7
MILLION IN 2019 AND $2.8
MILLION IN 2020 OVER THE
PREVIOUS FORECAST.
EXACTLY AS YOU SAID AT THE
BEGINNING.
THERE'S NOT A LOT OF NEW
REVENUES BEING ADDED HERE.
>> JUST TO EMPHASIZE THAT
POINT.
A FORECAST OF JUST UNDER $1.4
BILLION FOR EACH OF THOSE
YEARS, THE DIFFERENTIATION IS
LESS THAN $4 MILLION A YEAR.
IN TOTAL, JUST OVER SIX.
THAT'S RELATIVE TO $2.8 BILLION
IN EXPECTED REVENUES OVERALL IN
THAT SAME TIME PERIOD.
>> OF COURSE EACH REVENUE
STREAM HAS A STORY.
YOU SEE ALMOST $35 MILLION IN
2018.
AND MOST OF THAT IS COMING FROM
THE SUB FUND ABOVE THAT.
THE THING TO KNOW THAT'S
IMPORTANT IS THAT MOST OF THAT
REVENUE HAS DIRECT EXPENDITURES
ASSOCIATED WITH IT.
GRANTS WE RECEIVE OR
REIMBURSEMENTS FOR PAYMENTS OR
SERVICES DELIVERED.
TRANSFERS FROM ONE DEPARTMENT
INTO THE GENERAL FUND, FOR
SERVICES RENDERED.
IT'S NOT NEW AVAILABLE
DISCRETIONARY REVENUE TO SPEND
BECAUSE IT'S, IT HAS A CALL ON
IT.
A BUNCH OF GRANT ACCEPTANCES.
AND IT CAN ONLY BE SPENT FOR
SPECIFIC PURPOSES DICTATED AT
THAT TIME.
EVERY TIME WE GIVE YOU A
FORECAST THIS TIME OF YEAR,
THERE'S A BUMP IN THAT
CATEGORY.
AND THE ESSENCE OF IT IS GRANTS
OR ONE DEPARTMENT PAYING
ANOTHER FOR A SPECIFIC SERVICE.
IT'S NOT NET MONEY AVAILABLE.
THE FIGURES FOR 19 AND '20 ARE
FORECAST INCREMENTS.
INCREASES BEYOND WHAT WE
ORIGINALLY EXPECTED AND DON'T
IMMEDIATELY HAVE A CALL ON
THEM.
>> YOU'VE GOT DECREASES IN THE
GENERAL SUB FUND REVENUES.
>> THERE'S A MIX OF THINGS.
AND IN THE INDIVIDUAL
CATEGORIES SOME GOING UP AND
SOME GOING DOWN.
AND IN THE CONTEXT OF $1.4
BILLION, THAT'S NOT UNUSUAL BUT
GIVES YOU A SENSE OF WHAT'S
CHANGING.
>> COUNCILMEMBER HERBOLD.
>> ONE OF THE PROJECTIONS
REMINDS ME OF A REQUEST THAT
THE COUNCIL MADE LAST YEAR.
AND WE DIDN'T HAVE ENOUGH
INFORMATION AND THAT RELATES
SPECIFICALLY TO THE SHORT TERM
RENTAL COST.
THIS LOOKS LIKE WE MIGHT BE
FORECASTING A REDUCTION IN WHAT
WAS PREVIOUSLY FORECAST.
>> CORRECT.
>> COULD YOU PROVIDE A LITTLE
BIT MORE DETAIL ON THAT.
>> IT'S A NEW TAX AND IT WAS
INTENDED TO HAVE AN EFFECTIVE
DATE ON OCTOBER 1, 2018.
WE WOULD HAVE HAD A QUARTER OF
REVENUE THAT WE WOULD HAVE SEEN
IN THE 1st QUARTER OF 2019
IMPLYING WE WOULD GET A FULL
YEAR OF REVENUE FOR 2019.
THE DEPARTMENT OF REVENUE MOVED
THE FETCH DATE OF THE TAX BACK
TO JANUARY 1, 2019.
SO WHAT WE'VE DONE IS WE'VE
LOST A QUARTER OF REVENUE.
WE ORIGINALLY PREDICTED.
BECAUSE OF THE WAY IT'S BEING
ADMINISTERED.
THE MONEY WILL COME JUST LATER
THAN WE THOUGHT.
AND IT'S SHIFTING OUT OF 2019.
>> GIVEN THAT THE COUNCIL ASKED
FOR THE S.L.Y.
REPORT AND UNDER THE LEADERSHIP
OF COUNCILMEMBER MOSQUEDA WHO
IS NOT HERE TODAY, THE INTEREST
WAS FOCUSED ON WHETHER OR NOT
THERE MIGHT BE REVENUE THAT THE
COUNCIL COULD CONSIDER USING
ITS BOND AUTHORITY TO BOND
AGAINST FOR HOUSING IN THE
FUTURE AND GIVEN THAT THE
PROJECTION IS LESS TO DO WITH
INACCURATE FORECASTS AND MORE
TO DO WITH THE TIMING, I'M
WONDERING IF WE COULD GO BACK.
AND I THINK THE S.L.Y.
REPORT SAID THAT WE DIDN'T HAVE
THE INFORMATION.
IT SEEMS LIKE WE DO HAVE A
LITTLE BIT MORE INFORMATION
THAN WE THOUGHT WE DID.
>> WE DIDN'T HAVE THE
INFORMATION AND NOW I'M GLAD WE
WAITED BECAUSE THIS IS AN
INTERESTING DEVELOPMENT.
I DON'T THINK FROM A POLICY
PERSPECTIVE IT HAS SIGNIFICANT
IMPACTS.
THIS MONEY, A SIGNIFICANT SHARE
OF IT IS DEDICATED TO
AFFORDABLE HOUSING.
GIVEN THE TIMING ON THE DRAW
FOR THE RESOURCES, IT'S JUST A
CASH FLOW QUESTION THAT WE'LL
BE ABLE TO HANDLE.
LESS MONEY ARRIVING AND WE
WEREN'T EXPECTING TO PUT THE
MONEY OUT THE DOOR.
I DON'T THINK THIS WILL FORCE
POLICY SHIFTS THERE.
AND WE SHOULD BE ABLE TO ANSWER
THAT QUESTION MORE GENERALLY.
I DO WANT TO TAKE A CHANCE
BEFORE WE LEAVE THIS PAGE TO
TALK ABOUT SOME OF THESE OTHER
ONES.
I WANTED TO NOTE IF WE SHIFT
BELOW TO THE GREEN BOX, FIRST
OF ALL ON THE SWEETENED
BEVERAGE SIDE, THE LINE
DIRECTLY ABOVE, I WANT TO NOTE,
WE HAVE ONCE AGAIN REVISED THE
FORECASTS AND REVISED THEM
UPWARDS, THERE WILL BE SOME
ADDITIONAL RESOURCE FLOWING
INTO THE REVENUE STREAM.
WE'VE PURPOSELY NOT LISTED IT
IN THE GRAND TOTAL.
IT HAS A NUMBER OF DEDICATED
PURPOSES.
AND WE'LL BRING YOU LEGISLATION
FOR BOTH THIS AND THE STORM
TERM RENTAL TAX TO MOVE OUT OF
THE GENERAL FUND AND PUT THEM IN
THEIR OWN SPECIAL FUNDS.
IT'S CLEANER FROM AN ACCOUNTING
PERSPECTIVE.
THAT WILL BE SOME ONE TIME
RESOURCE AVAILABLE IN 2018.
THE WAY TO THINK ABOUT THEM IS
ONE TIME.
THAT'S MONEY THAT IS SITTING AS
A FUND BALANCE.
FOR '19 AND '20 WE RECOGNIZE
$2.4 MILLION THAT WILL BE
ONGOING REVENUES THAT WE'LL BE
ABLE TO PROGRAM AND WE'VE
STARTED INITIAL CONSULTATION
WITH THE CITIZENS ADVISORY
BOARD ABOUT THE POTENTIAL USE
OF THE REVENUES.
WE'LL BRING YOU PROPOSALS ON
THOSE.
WE MENTIONED SHORT TERM RENTAL
TAX.
WE SEE A ONE TIME DROP THERE.
MOVING TO THE GREEN, AND THESE
ARE NOT IN THE GENERAL FUND
ALREADY.
THE REAL ESTATE EXCISE TAX AS
WE MENTIONED THERE ARE THINGS
THAT CHANGE AT THE STATE LEVEL
OVERALL.
THERE ARE TWO QUARTER PERCENT
TAXES ON REAL ESTATE.
ONE IS REIT 1 AND REIT 2. AND
GIVEN WHAT WE'RE SEEING IN THE
PRICES IN THE MARKET
STABILIZING, WE'RE REDUCING THE
FORECAST FOR '19 AND '20 BY AN
AVERAGE OF $3 MILLION A YEAR.
WE HAVE A APPROPRIATED MORE
MUNICIPAL THAN WE EXPECT TO
GET.
WE'RE LOOKING AT THAT NOW.
AND LOOKING AT WHERE WE CAN,
WHERE WE CAN MAKE SUGGESTIONS
FOR YOU TO REDUCE EXPECTATIONS
HERE IS THAT THERE MAY BE
OPPORTUNITIES TO REDUCE
APPROPRIATIONS TO PROJECTS THAT
WEREN'T ACTUALLY GOING TO WRITE
CHECKS OUT THE DOOR AND CAN
MINIMIZE IMPACTS ON THE GROUND.
BUT THAT'S A REAL ISSUE THAT
WE'RE DEALING WITH NOW.
THE COMMERCIAL PARKING TAX.
12.5% TAX ON COMMERCIAL
PARKING.
WE PROJECTED GROWTH IN 2018 AND
BEYOND IN THAT STREAM.
AND WHAT WE SAW TO A
SIGNIFICANT SURPRISE IN 2018
WAS THAT THERE WAS NOT AN
INCREASE IN ACTUAL REVENUES
FROM THE COMMERCIAL PARKING
TAX, THEY HAD FLATTENED OUT.
WE ARE BROUGHT DOWN THE
FORECAST.
AND THIS MONEY FELLOWS
SPECIFICALLY TO SDOT.
IT'S A SOURCE WE HAVE ISSUED
DEBT AGAINST.
>> AT THE NATIONAL LEVEL I WAS
GOING TO REFRESH.
THE DOW WAS OFF 600 POINTS.
THERE'S A GOOD DEAL OF
UNCERTAINTY.
AND THAT WAS TRIGGERED BY
DEVELOPMENTS ON THE TRADE FRONT
WITH CHINA.
WE'RE A TRADE DEPENDENT REGION.
I'M NOT TELLING YOU ANYTHING
YOU DON'T KNOW.
BUT IT'S A REALTIME CONCERN,
AND SPECIFICALLY CITED TARIFFS
AND TRADE WAR.
WE'RE PROJECTING A DROP IN
CONSTRUCTION ACTIVITY LOCALLY.
AMAZON HAS BEEN A DRIVER OF THE
LOCAL ECONOMY THROUGH THE
HIRING IF NOTHING ELSE.
WE'RE EXPECTING THAT TO HAVE
SLOWED AND FLATTENED.
AND BOEING IS GOING THROUGH A
DIFFERENT CIRCUMSTANCE AND THE
IMPACT OF THE 787 MAX ISSUES ON
LOCAL EMPLOYMENT AND PRODUCTION
ARE CLEARLY NOT IN THE POSITIVE
DIRECTION.
BOEING IS A SMALLER SHARE OF
OUR ECONOMY THAN IT HAS BEEN IN
THE PAST.
HIGH PAYING JOBS WITH IMPORTANT
IMPACTS OVERALL.
>> SO WE TALK A LOT ABOUT
REVENUES.
I WANT TO WALK YOU THROUGH THIS
AND GIVE YOU A SENSE OF THE
BOTTOM LINE AND GIVE YOU A LOOK
AT HOW TIGHT THINGS REMAIN.
IN 2018, WE STARTED THE YEAR
WITH JUST UNDER $64 MILLION.
THAT INCLUDED SOME SIGNIFICANT
RESERVES, IN PARTICULAR RELATED
TO THE POLICE OFFICER GUILD
CONTRACT THAT WAS SETTLED IN
2018 AND RECEIPTED ROW PAYMENTS
THAT WENT OUT ACCORDINGLY.
THE TOTAL EXPENDITURES WERE
JUST OVER THAT.
AND RELYING ON SOME OF THE FUND
BALANCE AND THE LINE IN RED.
ADDITIONAL ANTICIPATED
EXPENDITURES.
FUNDING RESERVES WE'RE HOLDING
TO ADDRESS A NUMBER OF
OUTSTANDING ISSUES AMONG OTHER
THINGS.
WE ARE NEGOTIATING WITH THE
CITY'S UNIONS AROUND WAGE AND
COMPENSATION FOR 19, 20 AND
BEYOND.
WE ENDED 2018 WITH A FUND
BALANCE IN THE GENERAL FUND
22.5.
THAT'S WITHIN A HALF MILLION
DOLLARS OF WHAT WE HAD
PROJECTED SO WE'RE SPOT ON.
BUT WE'RE NOT IN EXCESS.
I CANDIDLY HAD HOPED WE'D
FINISH, A ONE TIME RESOURCE TO
TAME ON ONE TIME EXPENDITURES.
AT THIS POINT WE'RE NOT LEAVING
'18 WITH THOSE RESOURCES.
THE $22 MILLION IS EXACTLY WHAT
WE NEED TO CARRY INTO 2019.
THAT'S THE FUND BALANCE.
YOU CAN SEE WHERE REVENUES IS
$1.4 BILLION, AND THE
EXPENDITURES, SOME OF WHAT YOU
SEE IN THIS LINE IS NOT YET
REFLECTED IN THE BUDGET.
WE'RE ABOUT TO BRING YOU THE
CARRY FORWARD ORDINANCE.
AND IN PARTICULAR UNSPENT GRANT
RESOURCES ARE SOMETHING THAT WE
CARRY FORWARD.
AND AGAIN, WE'RE STARTING TO
BUILD UP RESERVES FOR
UNANTICIPATED EXPENDITURES.
YOU CAN SEE THE BUILDUP IN '19
AND '20.
WHEN YOU ADOPTED THE BUDGET IN
THE FALL, WE EXPECTED THE FUND
BALANCE AT THE END OF 2020 TO
BE ZERO.
THIS WOULD SHOW THAT THERE
MIGHT BE AS MUCH AS $5 MILLION
AVAILABLE.
4-POINT.
AND RELATIVE TO EXPENDITURES
OVER '19 AND '20 OF $2.8
BILLION, THAT MARGIN IS VERY,
VERY THIN.
IT'S NOT RED, IT'S NOT
NEGATIVE.
SO I TAKE SOME SOLACE IN THAT.
AND ANY CHANGE, WE'D BE UNDER
WATER FOR '20.
WE'RE ON A VERY THIN EDGE.
AND AS WE REVENUES HAVE COME IN
AS PROJECTED AND WE'RE SEEING
THE SLOWING OF GROWTH WE HAD
ANTICIPATED.
WHEN WE BEGAN THE BUDGET
PROCESS INTERNALLY WHICH WE DO
IN JANUARY, FEBRUARY, MARCH, WE
TOLD DEPARTMENTS THAT THEY
SHOULD CONSIDER THE 2020
ENDORSED BUDGET TO BE THEIR
BUDGET.
SO WE'RE NOT RUNNING A BUDGET
PROCESS THAT'S TRYING TO THROW
OPEN THE FULL RANGE OF
EXPENDITURES AND POLICIES THAT
THE DEPARTMENTS MIGHT BE
FACING.
WE HAVE A BIENNIAL BUDGET.
YOU ADOPTED 2019 AND 2020
WITHOUT A SIGNIFICANT SHIFT IN
REVENUE.
IT MAKES SENSE THAT 2020 BE THE
BASIS FOR OUR BUDGET.
WE HAVE ONLY BEEN ASKING FOR
SITUATIONS WHERE THEY NEED A
CHANGE.
AND IN ALMOST ALL
CIRCUMSTANCES, IF THEY NEED TO
CHANGE AN ALLOCATION, THEY
SHOULD ASSUME THAT THEY'LL HAVE
TO FIND THE RESOURCES WITHIN
THEIR EXISTING ALLEGATIONS.
WE DON'T SEE SIGNIFICANT NEW
REVENUE ON THE HORIZON.
THERE'S SOME THINGS THAT ARE
RAMPING UP.
TO GIVE YOU AN IDEA.
HAVING SAID THIS, IT'S NOT THAT
THERE ARE NO FINANCIAL
PRESSURES.
THE OFFICE OF THE EMPLOYEE OBUD
NEEDS TO GET OMBUD NEEDS TO GET
STAFFED UP.
WORKING TO IMPROVE EMPLOYMENT
INVESTIGATION FUNCTIONS THAT
HAD BEEN LEFT TO INDIVIDUAL
DEPARTMENTS INTO A CENTRAL
FUNCTION IN HR.
THAT'S GOING TO REQUIRE
JUGGLING OF RESOURCES AND
INVESTMENT OF RESOURCES.
AND JUDGMENT AND CLAIMS, NEWS
IS NOT WONDERFUL.
THERE ARE SOME FINANCIAL
PRESSURES FROM THINGS THAT HAVE
BEEN PUT IN MOTION THAT WE'RE
MANAGING BUT MANAGING IN A VERY
THIN MARGIN.
>> COUNCILMEMBER HERBOLD.
>> JUST AS A LITTLE BIT OF
CONTEXT FOR THE EXERCISE YOU GO
THROUGH EVERY YEAR.
IT WOULD BE HELPFUL FOR ME TO
UNDERSTAND WHAT EXACTLY, MAYBE
THIS IS WHAT WE'VE BEEN TALKING
ABOUT THIS WHOLE PRESENTATION,
ABOUT PRODUCTIONS AROUND WHEN
ARE PROJECTIONS AROUND WHEN
RECESSIONS ARE GOING TO HIT.
LAST YEAR, YOU WERE PROJECTING
A NEGATIVE $53 MILLION.
IS IT A RECESSION THAT HASN'T
STARTED OR IS THERE MORE TO
THAT.
>> I HAVE TO REMIND MYSELF OF
THE DETAILS.
THE REVENUES PROBABLY CAME IN
SOMEWHAT HIGHER, AND THERE WERE
EXPENDITURE RISKS WE HAD BEEN
ABLE TO MANAGE IN DIFFERENT
WAYS.
SO WE ARE BY DEFINITION
OBLIGATED TO WRITE YOU A
BALANCED BUDGET.
I WAS GIVING YOU A SENSE OF THE
CHALLENGE.
IF WE TRIED TO REPRODUCE
EVERYTHING ON THE TABLE.
THAT'S WHAT IT MIGHT HAVE COST.
WE ATTACKED THAT FROM BOTH
DIRECTIONS, AND HOW DO I REDUCE
THE EXPENDITURES.
AND AS PROPRIETOR, ARE THERE
OPPORTUNITIES ON THE REVENUE
SIDE, LEGISLATIVELY OR BECAUSE
LOCAL ECONOMIC CONDITIONS ARE
CHANGING.
>> THANK YOU.
I WANT TO ACKNOWLEDGE ONE THING
AND COUNCILMEMBER GONZALEZ,
BEN, WHAT I APPRECIATE ABOUT
THIS, I KNOW THAT IT'S ALWAYS
CHALLENGING AND WE ALWAYS WANT
MORE LIKE EVERYBODY ELSE.
BUT I'M APPRECIATIVE OF THE
FACT THAT YOUR REVENUES AND THE
FORECASTS HAVE BEEN CLOSE TO
SPOT ON.
IT'S HELPFUL FOR US TO BE ABLE
TO RELY ON THAT AND KNOW THAT
WE'RE NOT ABLE TO HAVE WHAT WE
WOULD LOVE TO HAVE TO SPEND
COMING UP.
THANK YOU FOR BEING SO DIRECT
ABOUT THIS.
AND WE ACKNOWLEDGE YOUR TEAM
AND DAVE AND GEORGE, ERIK TOO.
IT'S GREAT WORKING WITH YOU,
AND KNOWING THAT WE CAN COUNT
ON THESE NUMBERS.
>> THANK YOU FOR THAT.
AND I'D BE REMISS IF I DIDN'T
MAKE A COMMENT IN HIS ABSENCE.
TOM KERN IS NORMALLY ONE OF THE
HORSEMEN IF YOU WILL AND HAS
BEEN THE AUTHOR OF OUR REGIONAL
FORECAST FOR 10 PLUS YEARS IS
RETIRING.
AND HAD HE NOT BEEN ON
VACATION, THIS WOULD HAVE BEEN
HIS LAST MEETING WITH YOU ALL.
AND I NEED AND WANT TO HONOR
THE WORK HE HAS DONE.
OTHER FOLKS HAVE BEEN INVOLVED
BUT HE'S THE ROCK UPON WHICH
OUR FORECAST HAS BEEN BUILT FOR
SOME TIME.
WE'RE IN THE MIDST OF HIRING
AND CREATING THE OPPORTUNITY
FOR A SMOOTH TRANSITION, BUT IT
WON'T BE THE SAME.
>> GIVE TOM OUR THANKS AND
BEST.
COUNCILMEMBER GONZALEZ.
>> I'LL KEEP MY QUESTION AS
BRIEF AS I CAN.
>> WE ARE WELL INTO MAY AND OUR
1ST QUARTER ENDED IN MARCH.
AND I'M JUST CURIOUS AS TO WHY
WE DON'T YET HAVE QUARTER ONE
SUPPLEMENTAL BUDGET BEFORE US.
AND CAN YOU TALK TO US A LITTLE
BIT ABOUT WHY AND WHEN WE MIGHT
BE ABLE TO ANTICIPATE IT.
>> AS WE COMMUNICATED TO CHAIR
BAGSHAW, WE'RE NOT SENDING A
1st QUARTER SUPPLEMENTAL.
WE'LL SEND A 2nd QUARTER
SUPPLEMENTAL.
GIVEN THAT WE HAVE THE 2019 AND
2020 ADOPTED.
FIRST QUARTER SUPPLEMENTAL IS
REQUEST FOR ADDITIONAL FUNDING.
AND GRANT ACCEPTANCE AND THE
LIKE, WE THOUGHT WE COULD
LARGELY POSTPONE AND TAKE UP IN
JUNE IN PARTICULAR.
THERE WILL BE A STAND ALONE
GRANT ACCEPTANCE FOR S. DOT.
THEY'VE TAKEN, PART OF THIS IS
CHANGING EXPECTATIONS ON THE
EXECUTIVE SIDE AS WELL.
THE BUDGET IS THE BUDGET.
AND THESE ARE THE RESOURCES
THAT ARE AVAILABLE.
AND SPENDING NEEDS TO BE
MANAGED WITHIN THAT RATHER THAN
THE ASSUMPTION THAT THERE WILL
BE SORT OF AN OPPORTUNITY
CONTINUALLY TO ASK FOR MORE.
AND IN A FRAMEWORK WHERE THE
REVISED FORECASTS ARE NOT
INDICATING ADDITIONAL REVENUE,
THAT'S JUST A REALITY.
THERE ARE NOT NEW RESOURCES TO
ALLOCATE THAT WAY.
>> ALL RIGHT.
WELL, THANK YOU.
IF THERE ARE NO FURTHER
QUESTIONS, WE'LL SAY THANK YOU
FOR THIS FOR THIS PROJECTION.
AND I'D LIKE TO MOVE FORWARD
RIGHT NOW WITH THE FINANCIAL
CONDITION 2017 REPORT.
THANK YOU VERY MUCH.
ALL OF YOU WHO CAME.
>> THANK YOU.
AND WELCOME IN IF I MAY ASK FOR
INTRODUCTIONS BECAUSE DAVID
JONES TOLD ME LAST WEEK HE
WOULDN'T BE JOINING US.
>> CINDY DRAKE, DEPUTY CITY
AUDITOR FROM THE OFFICE OF CITY
AUDITOR.
>> JANE DUNKEL OFFICE OF CITY
AUDITOR.
>> THANK YOU FOR BEING WITH US.
LET'S JUST DIVE IN.
>> THANK YOU FOR HAVING US HERE
TODAY.
I'M GOING TO PROVIDE A LITTLE
BIT OF BACKGROUND AND HAND IT
OVER TO JANE DUNKEL WHO DID ALL
THE WORK ON THE PROJECT.
GO AHEAD AND SWITCH TO THE
FIRST.
THE REPORT IS REQUIRED BY CITY
ORDINANCE AND THE INTENT WAS
BOTH TO PROVIDE A GENERAL
CONTEXT FOR COUNCILMEMBERS WHEN
DETERMINING, MAKING BUDGET
DECISIONS, AND ALSO TO PROVIDE
THE PUBLIC WITH INFORMATION
ABOUT THE CITY'S FINANCIAL
CONDITION.
ONE THING I WANTED TO EMPHASIZE
UP FRONT IS WHERE YOU WERE JUST
HEARING FROM THE BUDGET OFFICE
FORECAST AND PROJECTIONS GOING
FORWARD.
THIS REPORT IS LOOKING
BACKWARD.
AND PROVIDING A PICTURE OF THE
CITY'S FINANCIAL CONDITION AS
OF THE END OF 2017.
THAT'S THE LAST YEAR FOR WHICH
THE CITY HAS AUDITED FINANCIAL
STATEMENTS AND THAT'S THE
PRIMARY DATA SOURCE WE'RE USING
FOR OUR WORK.
AND THE LAST THING IS THAT THE
REPORT INCLUDES DATA ON 30
DIFFERENT INDICATORS, AND
PRESENTS 10 YEARS OF DATA FOR
SEVERAL INDICATORS WITH THE
GOAL BEING TO PROVIDE LONG-TERM
FINANCIAL GOALS.
JANE IS GOING TO DISCUSS A
HANDFUL OF THESE.
IF THERE ARE SOME YOU'D LIKE
MORE INFORMATION ON OUTSIDE OF
THE MEETING WE'RE HAPPY TO DO
THAT.
WITH THAT I'LL TURN IT OVER TO
úJANE.
>> GOOD MORNING.
WE'RE GOING TO START WITH OUR
CONCLUSIONS TO MAKE IT EASY.
THROUGH 2017, MOST OF THE
FINANCIAL INDICATORS THAT WE
EXAMINED FOR THE CITY OF
SEATTLE WERE POSITIVE.
AND THERE ARE EXAMPLES OF THOSE
ON THE SHEET AND I'M GOING TO
TALK ABOUT THE FIRST FOUR IN
MORE DETAIL.
THE GENERAL GOVERNMENT, THINK
NONUTILITIES, EVERYTHING EXCEPT
PUBLIC UTILITIES AND SEATTLE
CITY LIGHT.
THEIR SOURCES OF REVENUE ARE
FAIRLY DIVERSIFIED.
72% COME FROM TAXES BUT THE
TYPES OF TAXES ARE DIFFERENT.
SO THAT'S A GOOD THING FROM THE
CITY.
AND THERE'S REVENUE FOR CHARGES
OF SERVICES AND GRANTS AND
CONTRIBUTIONS.
>> ANOTHER KEY INDICATOR FOR US
IS SHORT TERM LIQUIDITY AND THE
WAY TO THINK ABOUT THIS CHART
IS IN YOUR OWN HOUSEHOLD
BUDGET.
ALL WE'RE SAYING IS THAT THE
CITY NEEDS TO HAVE ENOUGH CASH
ON HAND TO BE ABLE TO PAY ITS
BILLS.
AND THE ORANGE LINE SHOWS THAT
YOU WOULD HAVE ENOUGH.
AND THE CITY OVER THE LAST 10
YEARS HAS DONE WELL IN THIS
INDICATOR.
WE HAVE MORE THAN ENOUGH TO PAY
OUR BILLS.
THE NEXT CRITICAL INDICATOR IS
BOND RATING FOR MUNICIPAL
BONDS.
THE CITY BORROWS MONEY FOR
CAPITAL IMPROVEMENTS, SPREADING
THE COST OVER MANY YEARS.
AND IN 2017 AND AS OF THE TIME
OF THIS REPORT, THE CITY HAD
MAINTAINED THE POSSIBLE HIGHEST
CREDIT RATINGS FROM THE THREE
AGENCIES.
AND THIS IS GOOD BECAUSE STRONG
CREDIT RATINGS DECREASE
BORROWING COSTS.
DEBT IS CONSIDERED LESS RISKY
FOR INVESTORS.
>> THESE ARE THE BALANCES OVER
SIX YEARS IN MILLIONS ADJUSTED
FOR INFLATION.
ONE IS THE RAINY DAY FUND WHICH
IS MONEY THAT IS SET ASIDE IN
CASE THE REVENUE PROJECTIONS
WERE NOT TO COME IN AS
ANTICIPATED.
AND THAT'S GOVERNED BY CITY
ORDINANCE AND THE OTHER IS THE
EMERGENCY FUND AND THAT'S
GOVERNED BY STATE LAW AND CITY
ORDINANCE.
AND THAT'S FOR NATIONAL
DISASTERS.
>> CAN I JUST BACK UP.
THIS IS THE WAY BACK MACHINE.
BUT IN MY RECOLLECTION IN 2010,
AND 2012, WE WERE REALLY HAVING
TROUBLE MEETING OUR REVENUE
FORECASTS, WE DROPPED DOWN TO
$5 MILLION IN THAT RAINY DAY
FUND.
WE WERE AT BARE BONES AS I
RECALL.
>> I DON'T HAVE THE DATA ON
THAT RIGHT HERE.
I JUST WENT BACK TO 2012
BECAUSE I THINK SOME OF THE
DEFINITIONS OF THE ACCOUNTS
CHANGED WHICH IS WHY WE DIDN'T
DO THE FULL 10 YEARS.
BUT WE WANTED TO MAKE THE
POINT.
IT'S COMFORTING TO SEE THESE
GROW, BUT THEY ARE THERE FOR
THE PURPOSE OF BEING USED IF WE
NEED IT.
>> I DON'T REMEMBER THE
BALANCE.
>> THERE WERE PROBLEMS AND BETH
WAS OUR BUDGET CHAIR AND JUST
TRYING TO MAKE SURE THAT WE
COULD HAVE THE BALANCE BUDGET
RELYING ON THE RAINY DAY FUND.
AND WE THINK OF TAPPING IT.
BUT IT'S IMPORTANT TO HAVE IT.
>> JUST FOR BOTH OF THESE FUNDS
WE ARE IN COMPLIANCE WITH STATE
AND LOCAL LAWS, AND THAT'S GOOD
AS WELL.
THIS NEXT CHART IS JUST OF
INTEREST.
IT'S SO IF YOU ARE A CITY OF
SEATTLE PROPERTY TAXPAYER, AND
YOU WERE PAYING A HUNDRED
DOLLARS OF YOUR TAX, 28 WOULD
GO TO THE CITY AND THE REST TO
THE COUNTY, STATE SCHOOLS,
SEATTLE PUBLIC SCHOOLS.
THIS IS HOW 1 DOLLAR OF THE 28
WOULD BE DIVIDED.
ON THE RIGHT SIDE ARE ALL VOTER
APPROVED LEVIES AND THOSE HAVE
TO BE SPENT LIKE THE MOVE
SEATTLE TRANSPORTATION LEVY.
FAMILY AND EDUCATION.
AND THE LEFT SIDE IS THE
GENERALLY PROPERTY TAX THAT YOU
ALL AUTHORIZED THROUGH THE
BUDGET PROCESS.
>> 28% OF SEATTLE PROPERTY
TAXES COME BACK TO THE CITY.
AND YOU MENTIONED THAT OF THE
72% IT GOES TO THE COUNTY AND
THE STATE.
IT'S INTERESTING TO ME THAT SO
OFTEN WE FIND DURING THE
LEGISLATIVE SESSION THAT PEOPLE
ARE ANGRY AT SEATTLE FOR ONE
THING OR ANOTHER.
AND IF THAT MUCH OF OUR
PROPERTY TAXES ARE GOING TO
HELP FUND THE REST OF THE
STATE, I'M ALWAYS CURIOUS ABOUT
WHAT WE CAN DO AND HOW WE CAN
DO BETTER TO MAKE OUR FRIENDS
AND MAYBES ELSEWHERE IN THE
STATE UNDERSTAND THAT WE COULD
BE CONSIDERED TO BE A BIGGER
FRIEND THAN OFTENTIMES THEY
THINK WE ARE.
WE ARE FUNDING FOR EDUCATION,
ROADS, TWO EXAMPLES STATEWIDE.
>> YES, THAT IS TRUE.
IT IS ALSO TRUE THAT 23%,
ANOTHER 23% DOES GO TO SEATTLE
SCHOOLS AND 15% GOES TO THE
COUNTY, TWO TO THE PORT OF
SEATTLE
SO IT'S DIVIDED UP.
22% GOES TO STATE SCHOOLS AND
SOME OTHER, 3% TO SOUND
TRANSIT.
AND 3% TO THE PARK DISTRICT.
SO THAT'S WHERE THE REST OF
THAT GOES.
BUT WE WANTED TO FOCUS ON WHAT
THE CITY GETS IN THEIR BUDGET.
>> OUR SEATTLE PUBLIC SCHOOLS
ARE GETTING A PERCENTAGE OF
THIS.
SOUND TRANSIT GETS A BIG
PERCENTAGE AND THESE ARE THINGS
WE RELY ON.
>> THAT'S ANOTHER GOOD POINT.
ANOTHER INDICATOR IS THE
PENSION PLAN.
THE MOST RECENT ACTUARIAL
REPORT WAS PRODUCED ON JANUARY
1st, 2018 AND OUR FUNDING RATIO
WAS 69.9%.
THAT'S BASICALLY THE PERCENT.
IT TAKES THE VALUE AND DIVIDES
IT BY THE.
WE HAVE RIGHT NOW ABOUT 70% OF
WHAT WE NEED.
THE SEATTLE CITY COUNCIL DID
COMMIT TO FULLY FUNDING BY 2042
AND YOU DO THAT BY APPROVING
THE EMPLOYER CONTRADICTIONS
ALONG WITH THE EMPLOYEE
CONTRADICTIONS.
AND WE SUPPORT THAT DECISION
AND HOPE THAT THE CITY WILL
CONTINUE TO FUND AT OR ABOVE
THE ACTUARIAL DETERMINED RATE.
AND THERE'S MORE ABOUT THE
FUNDING RATIO OVER 33 PERIOD.
33-YEAR PERIOD.
IT VARIED OVER TIME.
AND AS YOU CAN SEE IT WASN'T
EVEN 100% FROM 1998 TO 2000.
AND AS LOW AS 60%.
SLOWLY SINCE 2013 IT'S BEEN
GROWING AGAIN SINCE THAT
COMMITMENT WAS MADE.
NOW I'M GOING TO TRANSITION TO
DEMOGRAPHIC AND ECONOMIC
INDICATORS.
THERE'S ONE WAY TO LOOK AT HOW
WELL THE CITY GOVERNMENT IS
MANAGING FINANCES, AND THROUGH
2017 THE NEWS IS PRETTY GOOD ON
THAT.
AND ANOTHER THING IS HOW WELL
PEOPLE IN THE CITY ARE DOING.
WE HAVE SELECTED DATA.
WE THOUGHT YOU PROBABLY KNOW
THIS BUT JUST TO CONFIRM BASED
ON THE DATA.
AND IN 2017, 53% OF SEATTLE
HOUSEHOLDS WERE RENTERS.
53% OF THE PEOPLE WERE LIVING
IN RENTER OCCUPIED HOMES.
AND THE VALUE OF ALL OF THE
PROPERTY REGARDLESS OF OWNER IN
BILLIONS UNADJUSTED.
AND IT'S FROM KING COUNTY
ACCESS SORES.
IN 2008, ALL THE SUPPORT WAS
$137 BILLION AND IN 2011, $213
BILLION.
THEY'VE SEEN SUBSTANTIAL
APPRECIATION AS WE ALL KNOW.
>> JUST BECAUSE I LIKE THIS
LITTLE FACTOID.
BUT I THINK THERE'S A LITTLE
BIT OF A NUANCE THAT SOMETIMES
PEOPLE MISS IF THE CITY AUDITOR
GOT IT RIGHT AND I WANT TO
HIGHLIGHT IT.
IT'S NOT THAT 53% OF
SEATTLEITES ARE RENTERS.
IT'S THAT THE HOUSING, 53% OF
THE HOUSING OCCUPIED BY
SEATTLEITES IS OCCUPIED BY
RENTERS.
AND THE REASON THAT NUMBER
MIGHT DIFFERENTIATE BETWEEN THE
TENURE OF INDIVIDUALS VERSUS
THE OCCUPANCY IS BECAUSE OF THE
HOUSEHOLD SIZE.
SO THE ACTUAL PURE NUMBER OF
RENTERS IS I THINK A LITTLE BIT
BELOW 50%.
THE PERCENTAGE OF HOUSEHOLDS,
PHYSICAL STRUCTURES OCCUPIED BY
RENTERS IS HIGHER THAN 50%.
>> THANK YOU FOR THAT
CLARIFICATION.
>> SAID IT RIGHT.
>> NEXT WE WANTED TO DO A
POVERTY INDICATORS, BUT WE
DIDN'T WANT TO USE THE FEDERAL
POVERTY LEVEL.
THANKS TO THE CITY DEMOGRAPHER.
SHE WAS ABLE TO CONNECT US WITH
DIANA PIERCE.
AND SHE'S BEEN CALCULATING A
SELF-SUFFICIENCY NUMBER.
SHE CALCULATES IT FOR 39 STATES
AND THE DISTRICT OF COLUMBIA.
IT'S A MEASURE BASED ON THE
COST OF BASIC NEEDS FOR WORKING
FAMILIES, AND IT TAKES MORE
COSTS INTO ACCOUNT.
HOUSING, CHILD CARE,
HEALTHCARE, TRANSPORTATION, AND
IT'S GEOGRAPHICALLY SPECIFIC.
AND IT'S MORE REALISTIC IN
TERMS OF WHAT FAMILIES NEED TO
GET BY.
THE FOOD THAT'S ALLOCATED IN
THE BUDGET IS FOR GROCERY
STORES ONLY.
IT DOES NOT INCLUDE TAKEOUT OR
RESTAURANTS OR EVEN LATTES.
I WANT YOU TO NOTE THAT A
SINGLE PARENT OF TWO CHILDREN
DEPENDING ON THEIR AGE IN 2017
NEEDED FROM 70,000 TO $82,000 A
YEAR.
THAT'S WHAT THEY NEEDED TO MAKE
TO LIVE IN THE CITY OF SEATTLE.
THE NEXT SLIDE IS MEDIAN INCOME
BUT HOUSEHOLD SIZE AND
CONFIGURATION.
IN 2017.
AND WHAT WE'RE POINTING OUT IS
WHO IS VULNERABLE IN THE CITY
OF SEATTLE.
A SINGLE DAD WITH CHILDREN, THE
MEDIAN INCOME WAS 64 AND A
SINGLE MOTHER, 36.
YOU CAN SEE THAT'S WHO IS
VULNERABLE IN THE CITY AND THE
ECONOMY.
AND THEN A FEW MORE SLIDES WITH
MORE DEMOGRAPHIC INFORMATION
ABOUT THIS.
THIS IS BY AGE OF HOUSEHOLD.
AND HEAD OF HOUSEHOLD.
AND YOU CAN SEE THAT THE PEOPLE
THAT ARE AT RISK ARE YOUNG
ADULTS AND SENIORS.
AND FINALLY, WE ALSO WANTED TO
DO THIS BY RACE AND ETHNICITY.
WE HAD TO GO BACK A FEW YEARS,
WE HAD TO USE DATA FROM 2011
THROUGH 2015 BECAUSE OTHERWISE
THE SAMPLE SIZES ARE NOT BIG
ENOUGH.
AND YOU REALLY SHOULDN'T LOOK
AT THE NATIVE HAWAIIAN OR
PACIFIC ISLANDER, THEY HAVE
HIGH ERROR RATES ON THOSE.
WE PROBABLY SHOULD HAVE TAKEN
THOSE OUT.
THE OTHERS ARE RELIABLE
ESTIMATES.
AND THE HOUSEHOLD MEDIAN INCOME
WAS 70,000.
AND FOR AMERICAN INDIAN OR
ALASKAN NATIVES, 26,000.
AND BLACK OR AFRICAN-AMERICANS,
30,000.
SO AGAIN, JUST KIND OF SHOWING
YOU WHO IS VULNERABLE IN THE
CITY.
SO FINALLY, TO KIND OF LOOP IT
BACK TO THE REVENUE
PRESENTATION THAT YOU HAD.
WE WANTED TO OFFER A FEW IDEAS
ON WHAT YOU MIGHT WANT TO
CONSIDER MOVING AHEAD.
>> ANTICIPATE DEMAND FOR
SERVICES ESPECIALLY FROM
VULNERABLE POPULATIONS.
THAT'S OUR PRESENTATION.
AND WE'RE HAPPY TO ENTERTAIN
QUESTIONS.
>> ANY QUESTIONS FROM MY
COLLEAGUES.
>> THANK YOU, YOU'VE IDENTIFIED
WHERE THE FULL REPORT IS.
YOU SENT IT TO EVERYBODY A
COUPLE OF WEEKS AGO.
I APPRECIATE YOUR GOOD WORK.
DO WE HAVE ANY OTHER COMMENTS
ON THIS.
>> PLEASE.
COUNCILMEMBER GONZALEZ, CAN YOU
CHECK.
CAN YOU CHECK PUBLIC COMMENT
SHEET.
>> ON THE PREVIOUS WHERE YOU
WERE TALKING ABOUT IMPACT OF A
SLOWING ECONOMY.
AND I'M TAKING THESE AS SORT OF
FOR LACK OF A BETTER TERM
RECOMMENDATIONS FROM THE CITY
AUDITOR'S OFFICE.
ON THE FIRST POINT WHERE YOU
TALK ABOUT THE NEED TO MONITOR
REVENUE STREAMS.
WHICH REVENUE STREAM FROM YOUR
PERSPECTIVE YOU ARE REFERRING
TO SPECIFICALLY.
>> SALES TAX, REAL ESTATE,
EXCISE TAX, AND BUSINESS AND
OCCUPATION TAX.
THOSE ONES WOULD BE MORE
SENSITIVE THAN THE PROPERTY TAX
IN THE SHORT TERM.
THERE'S USUALLY A LAG IN THE
IMPACT OF A DOWNTURN IN
PROPERTY TAX.
>> WHEN YOU'RE FLAGGING THIS
ISSUE, YOU ARE FLAGGING THE
TRADITIONAL REVENUE SOURCES
THAT WE TYPICALLY GET FROM OUR
BIGGER TAX BASES THAT EXIST.
>> THAT'S CORRECT, THANK YOU.
>> THANK YOU FOR THAT.
JODY JUST ANNOUNCED THAT NO ONE
HAS SIGNED UP FOR PUBLIC
COMMENT.
SO IF THERE'S NOTHING ELSE FOR
THIS, THE MEETING IS ADJOURNED.