>>> THE FINANCE AND HOUSING
COMMITTEE MEETING. EXCUSE ME,
THURSDAY, AUGUST 10, 2023. THE
TIME IS 9:30 A.M. I'M TERESA
MOSQUEDA. I'M GOING TO CALL THI
MEETING TO ORDER. MADAM CLERK,
CAN YOU PLEASE CALL THE ROLL?
>> COUNCILMEMBER HERBOLD?
COUNCILMEMBER PEDERSEN?
>> PRESENT.
>> COUNCILMEMBER NELSON?
>> PRESENT.
>> COUNCILMEMBER LEWIS?
>> PRESENT.
>> MADAM CHAIR MOSQUEDA?
>> PRESENT.
>> AND I SEE OUR VICE CHAIR
LOGGING IN. COUNCILMEMBER
HERBOLD?
>> PRESENT. GOOD MORNING.
>> GOOD MORNING.
>> MADAM CHAIR, THAT'S FIVE
PRESENT.
>> THANK YOU SO MUCH. THANKS,
COLLEAGUES FOR JOINING US HERE
TODAY. WE DO HAVE A FULL HOUSE,
SO I APPRECIATE YOU DIALING IN.
IN AUGUST WE HAVE A MEETING EAC
WEEK. THANKS FOR YOUR EXTRA TIM
TODAY. I DON'T THINK WE'RE GOIN
TO GO LONG, SO I WILL MAKE UP
FOR OUR MEETING THAT WE HAD LAS
TIME. WE HAVE AN OPPORTUNITY
TODAY TO HEAR PUBLIC COMMENT.
THE ONLY THING ON OUR AGENDA
TODAY IS A BRIEFING AND
DISCUSSION OF THE SEATTLE
REVENUE STABILIZATION WORK
GROUP. AND A CORRESPONDING
PRESENTATION FROM CENTRAL STAFF
WHICH WILL GO INTO THE
BACKGROUND, THE HISTORY, THE
ORIGIN OF HOW WE FIND OURSELVES
IN THIS GAP BETWEEN REVENUE AND
EXPENSES, AND THE HISTORY OVER
THE LAST ABOUT FOUR OR FIVE
YEARS THAT HAS LED TO THE
CURRENT SITUATION AS WE LOOK
FOUR TO SIX YEARS OUT. IF
THERE'S NO OBJECTION, TODAY'S
AGENDA WILL BE ADOPTED. SEEING
NO OBJECTION, TODAY'S AGENDA IS
ADOPTED. I SEE TWO PEOPLE IN
PERSON, BUT I DON'T KNOW IF
ANYBODY IS PROVIDING PUBLIC
COMMENT TODAY. DOESN'T SOUND
LIKE IT.
>> NO.
>> OKAY. AND I DON'T SEE ANYBOD
ONLINE. THAT WILL OPEN OUR
PUBLIC COMMENT AND CLOSE OUR
PUBLIC COMMENT. IF YOU DO HAVE
ADDITIONAL COMMENTS, I WOULD
ENCOURAGE YOU TO SEND IN YOUR
WRITTEN STATEMENTS TO COUNCIL A
SEATTLE.GOV. WITH THAT WE'RE
GOING TO MOVE ON TO THE FIRST
AND ONLY ITEM ON THE AGENDA
TODAY. MADAM CLERK, PLEASE READ
ITEM NUMBER ONE ON THE RECORD.
>> AND CAN FOLKS ON THE ZOOM
HERE, THE CLERK. WE'VE GOT A
THUMBS UP FROM THE DEPUTY
DIRECTOR, ALY PENNUCCI. WITH
THAT WE HAVE WITH US TODAY
DEPUTY DIRECTOR PENNUCCI. AND
I'M GOING TO DO A QUICK CALL TO
SEE IF WE CAN MAKE SURE THAT OU
GOOD DEPUTY MAYOR, TIFFANY
WASHINGTON, IS ABLE TO GET INTO
THE ZOOM. SO IF SOMEBODY CAN
HELP ME WITH THAT IN MAKING SUR
SHE HAS ALL THE CREDENTIALS
NEEDED TO GET IN. WE'RE GOING T
HAVE A PRESENTATION INCLUDING
TWO PANELS, MYSELF, AND DEPUTY
MAYOR WASHINGTON WILL BE HERE T
PRESENT ON THE UPCOMING
PRESENTATION OR HAND OFF OF THE
SEATTLE REVENUE STABILIZATION
WORK GROUP. WE WILL THEN HAVE A
SECOND PANEL INCLUDING MEMBERS
OF THE CENTRAL STAFF INCLUDING
DEPUTY DIRECTOR PENNUCCI AND TO
MIKESELL, EXCUSE ME. WE HAVE AN
OPPORTUNITY AS WELL, OF COURSE,
TO HAVE ANY TECHNICAL QUESTIONS
ANSWERED BY CENTRAL STAFF. BUT
THE CITY'S BUDGET OFFICE HAS
SUGGESTED THEY CAN MAKE
THEMSELVES AVAILABLE. ORIGINALL
WE WERE THINKING ABOUT HAVING
THEM HERE, BUT THEY ARE VERY,
VERY BUSY AS YOU CAN IMAGINE
PREPARING THE 2024 BUDGET FOR
OUR CONSIDERATION THIS FALL. AN
GIVEN THE TECHNICAL EXPERTISE
ALSO IT COEXISTS WITHIN OUR
CENTRAL STAFF. THEY'RE NOT A
PART OF THE PANEL, BUT OBVIOUSL
THEY WANTED TO MAKE SURE THEY
KNEW THAT THEY WERE AVAILABLE A
WELL. AND WITH THAT I UNDERSTAN
THAT DEPUTY MAYOR TIFFANY
WASHINGTON IS LOGGING IN. I'LL
SAY SOME OPENING COMMENTS AS SH
JOINS US. THANKS COLLEAGUES FOR
YOUR PATIENCE. I KNOW A LOT OF
PEOPLE HAVE BEEN EAGERLY
ANTICIPATING TODAY AS WE PRESEN
THIS SEATTLE REVENUE
STABILIZATION WORK GROUP.
YESTERDAY MAYOR BRUCE HARRELL
SENT OUT A PRESS RELEASE WITH
HIS ADMINISTRATION AND OUR
OFFICE THAT ANNOUNCED THE
REVENUE STABILIZATION WORK GROU
HAD COMPLETED THEIR WORK AND HA
ISSUED A FINAL REPORT
CONSIDERING REVENUE OPTIONS TO
ADDRESS THE CITY'S WIDENING GAP
AS FOLKS KNOW THIS WAS FOUNDED
LAST YEAR AND THE GROUP INCLUDE
A DIVERSE ARRAY OF CIVIC POLICY
COMMUNITY AND BUSINESS LEADERS
WHO HAVE WORKED TOGETHER TO
CONSIDER REVENUE OPTIONS TO
ADDRESS THIS LOOMING REVENUE GA
AND CONTINUE TO SUPPORT THE
SERVICES PROGRAM. THE GAP WAS
PROJECTED IN 2025 AND FOR THE
SIX YEARS PRESENTED AFTER THAT.
GIVEN THE LOOMING GAP FOR THE
PROJECTED EXPENSES AND REVENUE
AS THE MAYOR'S PRESS NOTICE
STATED, WE MUST ALL FIND
SOLUTIONS TO CLOSE THIS GAP. I
APPRECIATE THE MAYOR'S TEAM, TH
CITY BUDGET'S OFFICE, CENTRAL
STAFF, MY OFFICE, AND THE
COMMUNITY ORGANIZATIONS THAT
PARTICIPATED IN THIS GROUP,
LEADERS IN THEIR OWN INDUSTRIES
AND AREAS WERE ABLE TO OUTLINE
REPORT OF WHAT OPTIONS EXIST.
AND WITH THAT I WANT TO WELCOME
DEPUTY MAYOR WASHINGTON. THANK
YOU SO MUCH FOR JOINING US THIS
MORNING. I'LL TURN IT OVER TO
YOU FOR YOUR INTRODUCTORY
COMMENTS. THEN I'LL WRAP UP WIT
PANEL ONE AND WE CAN HAND IT TO
PANEL 2. GOOD MORNING DEPUTY
MAYOR WASHINGTON AND THANK YOU
AGAIN FOR ALL OF YOUR WORK ON
THIS REVENUE STABILIZATION WORK
GROUP IN HELPING US GET OVER TH
FINISH LINE. GOOD MORNING.
>> GOOD MORNING EVERYONE. THANK
YOU, COUNCIL MEMBERS FOR HOSTIN
THIS CONVERSATION TODAY. BEFORE
I JUMP IN TO MY COMMENTS, I
WOULD LIKE TO THANK YOU,
COUNCILMEMBER MOSQUEDA, FOR
JOINING WITH THE MAYOR'S OFFICE
TO CONVENE THIS REVENUE
STABILIZATION WORK GROUP. WE
WORK TOGETHER WHICH BOTH OF OUR
OFFICES JOINTLY IDENTIFY AND
IMPROVE THE MEMBERSHIP TO YOUR
SERVING FIRST WITH DEPUTY MAYOR
HARRELL AND TO EACH OF OUR
BRANCHES PROVIDING STAFF WITH
TECHNICAL EXPERTISE TO HELP
SUPPORT THE WORK OF THE WORK
GROUP MEMBER TO WHICH REVENUE
RESOURCES WERE ENLISTED TO
RECONSIDER. WHAT WE LEARNED AND
WE CONTINUE TO LEARN IS THAT IT
IS INVALUABLE THAT WE WORK
TOGETHER. SO THE FINAL REPORT
THAT COUNCILMEMBER MOSQUEDA AND
I HAVE THE PLEASURE OF
PRESENTING TO THE PUBLIC TODAY
IS THE ACCUMULATION OF NINE
MEETINGS OVER THE LAST 11
MONTHS. THIS REPORT CONTAINS TH
THOUGHTS AND FEEDBACK OF MANY
SMART MINDS WHO ARE INVESTED IN
THE SUCCESS OF THE CITY AND ITS
PEOPLE. I'D LIKE TO OFFER A
SPECIAL THANKS TO EACH OF THE 1
WORK GROUP MEMBERS WHO
VOLUNTEERED THEIR VALUABLE TIME
TO DELVE INTO CHALLENGING ISSUE
AND HAVE AT TIMES TOUGH
CONVERSATIONS. WHY THERE WASN'T
ALWAYS THERE, BUT THERE WAS
RESPECT. AND TO ADDRESS THE
SIZABLE BUDGET GAP IN THE YEARS
AHEAD. $224. I KNOW THAT LATER
IN THIS MEETING, COUNCIL CENTRA
STAFF WILL REVIEW THE INDIVIDUA
FINDINGS ONE BY ONE, AT WHICH
POINT THE HARD PART BEGINS. BOT
MAYOR HARRELL AND YOU ON THE
CITY COUNCIL, WILL NEED TO
EVALUATE EFFICIENCIES, REVIEW
SPENDING, SEEK SUPPORT FROM OUR
STATE AND FEDERAL GOVERNMENT
PARTNERS, AND CONSIDER REVENUE
OPTIONS. PREFERABLY ONES THAT
DON'T PUT A DISPROPORTIONATE
BURDEN ON THOSE LEAST ABLE TO
AFFORD IT. THIS WORK GROUP
REPORT GIVES US MANY OPTIONS TO
CONSIDER. I HOPE OUR TWO
BRANCHES CAN CONTINUE TO PARTNE
AS WE DID LAST YEAR TO ADDRESS
THE CHALLENGES AND OPPORTUNITIE
AHEAD. THE WORK WILL BE
DIFFICULT, BUT IT'S ACHIEVABLE.
AND I'M GLAD TO BE DOING IT WIT
YOU. THANK YOU.
>> THANK YOU SO MUCH. I'LL
CONCLUDE MY COMMENTS, AND WE
WILL CONSIDER THE REPORT HANDED
OFF TO THE SEATTLE CITY COUNCIL
FOR FURTHER DELIBERATIONS. THAN
YOU AGAIN VERY MUCH DEPUTY MAYO
WASHINGTON FOR BEING HERE TO
PRESENT THE REPORT WITH ME. AS
CO-CHAIRS OF THIS WORK GROUP, I
KNOW THAT WE HAVE BEEN
DILIGENTLY WORKING HARD
TOGETHER. AS THE DEPUTY MAYOR
WASHINGTON NOTED, PRIOR TO HER
JOINING THE WORK GROUP, WE HAD
THE OPPORTUNITY TO WORK CLOSELY
WITH SENIOR DEPUTY MAYOR HARREL
AND MY TEAM, BEGINNING IN
OCTOBER OF 2022. THAT WAS THE
FIRST OFFICIAL CONVENING. I WAN
TO THANK MAYOR HARRELL AND DAN
NULTY WHO HAD HELPED US IDENTIF
INDIVIDUALS WHO ARE GOING TO
PARTICIPATE ON THE WORK GROUP
ALONG WITH THE CHIEF OF STAFF A
THE TIME WHO HELPED US IDENTIFY
THE FOLKS WHO COULD SIT AT THE
TABLE, KNOWING THAT REVENUE IS
CRITICAL AND CRUCIAL TO HELPING
CREATE THAT ECONOMY AND ALL
BUDGET. WE KNEW WE NEEDED THE
RIGHT FOLKS AT THE TABLE TO HEL
US LOOK THROUGH THE OPTIONS TO
PREVENT FUTURE HARM TO FAMILIES
BUSINESSES, AND ANYTHING THAT
WOULD SLOW GROWTH. WE ALSO HAD
THE CHANCE OVER THE LAST YEARS
SINCE OCTOBER TO LOOK AT THE
GROWING POPULATION NEEDS, THAT
INCREASE SERVICES THAT WERE
NEEDED TO SERVE THE GROWING
RESIDENTS OF OUR CITY TO
INCREASE THE NUMBER OF SMALL
BUSINESSES AND THE COMMUNITY
DEMANDS AND THE CONVERSATIONS
THAT WE HAD REALLY ELEVATED THA
WE NEEDED SOLUTIONS TO HELP
SCALE TO MEET THE NEEDS OF
SEATTLE. I TOO AM VERY THANKFUL
TO THE MEMBERS AND ALL THE
EXECUTIVE TEAMS, OUR CENTRAL
STAFF TEAM AND MY OFFICE AS WEL
AS DEPUTY MAYOR WASHINGTON'S
OFFICE AND EVERYONE WITHIN MAYO
HARRELL'S ADMINISTRATION FOR
HELPING TO FINALIZE THIS REPORT
THERE IS MUCH WORK AHEAD OF US
AS DEPUTY MAYOR WASHINGTON
NOTED. MUCH WORK AHEAD OF US TO
CLOSE THIS GAP TOGETHER AND
AGAIN TODAY IS JUST THE
BEGINNING OF THE CONVERSATION.
THERE IS NO ACTION SCHEDULED FO
A VOTE TODAY. WE ARE IN
RECEIVING MODE. AND WE WILL SOR
OF TREAT TODAY AS IF IT WERE TH
MAYOR'S TEAM COMING TO PRESENT
US WITH THEIR PROPOSED BUDGET.
SIMILARLY WE ARE PRESENTING THE
REPORT TO COUNCIL TODAY WITH
MORE WORK TO TAKE PLACE OVER TH
NEXT FEW MONTHS WITH CENTRAL
STAFF. AGAIN, I WANT TO THANK
EVERY MEMBER OF THE
PARTICIPATING WORK GROUP AS
WELL. THEY BROUGHT TO THE TABLE
IMPORTANT LENS TO MAKE SURE WE
VALUATED EACH OF THE OVER 60
POTENTIAL IDEAS. THE EVALUATION
CRITERIA DEVELOPED BY THE WORK
GROUP INCLUDED CRITERIA TO LOOK
THROUGH THE LENS OF WHETHER OR
NOT THERE WAS GOING TO BE
SIGNIFICANT AND POTENTIAL
REVENUE GENERATED. WE LOOKED AT
THE PRACTICALITY OF APPROVAL AN
IMPLEMENTATION. WE LOOKED AT
WHETHER OR NOT THE REVENUE
SOURCE WAS PROGRESSIVE IN WHO I
WOULD IMPACT AND WHETHER IT
WOULD IMPACT THE
UNDERREPRESENTED COMMUNITIES. W
ALSO LOOKED AT HOW IT COULD BE
STIMULUS TO SUPPORT THE CITY
WIDE ECONOMIC ACTIVITY WITH AN
EMPHASIS ON SMALL BUSINESSES.
AND AFTER GENERATING THE 63 LIS
OF THE POTENTIAL IDEAS FOR
REVENUE OPTIONS, AS YOU HEARD,
THE WORK GROUP APPLIED THIS
EVALUATION WORK GROUP CRITERIA
AND WE NARROWED IT DOWN TO A
LIST OF NINE NEW OR EXPANDED
REVENUE OPTIONS. ALL OF WHICH
ARE OPTIONS THAT WE WILL TAKE
FROM TODAY AND DO FURTHER
ANALYSIS ON. AND THE NINE
OPTIONS IDENTIFIED IN THE REPOR
JUST FOR THE RECORD INCLUDE
CHANGES TO THE JUMP START
PROGRESSIVE PAYROLL TAX, THE
SECOND CITY LEVEL CAPITAL GAINS
THE THIRD IS A CEO PAY RATIO
TAX. AND THE FOURTH IS A VACANC
TAX. FIFTH IS THE PROGRESSIVE
REAL ESTATE EXCISE TAX. SIXTH I
A STATE TAX, AND SEVENTH IS AN
INHERITANCE TAX, AND NINE IS AN
INCOME TAX. I WANT TO BE CLEAR
AS STATED IN THE RELEASE
YESTERDAY AND BY DEPUTY MAYOR
WASHINGTON, THE GROUP ALSO NOTE
THAT THE AREAS FOR THE FUTURE
ANALYSIS. NOTING THAT WE DID NO
HAVE A LEGAL TEAM EVALUATING
EACH OPTION AT THE TABLE. THAT'
ACTUALLY WHAT CENTRAL STAFF DOE
WITH OUR LAW DEPARTMENT AS WE
CONSIDER POSSIBLE PRIORITIES OR
OPTIONS FOR THE COUNCIL. THAT
GROUP ALSO ACKNOWLEDGED THAT
THERE ARE SOME AREAS INCLUDED I
THIS NINE ITEM LIST THAT
REQUIRES FUTURE CHANGES AT THE
STATE LEVEL TO GIVE US THE
STATUTORY AUTHORITY AND
ADDITIONAL FLEXIBILITY TO MOVE
FORWARD WITH SOME OF THOSE
SUGGESTED OPTIONS. AND IT THERE
IS MUCH WORK TO DO IN
PARTNERSHIP WITH OUR STATE
LEGISLATIVE PARTNERS WHO I
GREATLY APPRECIATE HAVE BEEN
MOVING FORWARD ON MANY
PROGRESSIVE REVENUE OPTIONS AT
THE STATE LEVEL OVER THE LAST
HALF DECADE OR SO. I GREATLY
APPRECIATE THEM. FURTHER THE
GROUP ALSO IDENTIFIED THAT WE
NEED TO CONTINUE TO LOOK FOR AN
UNINTENDED CONSEQUENCES AND THE
NEED TO ELEVATE EQUITY TOOLS AS
WE LOOK AT ANY NEW REVENUE
ESPECIALLY FOR UNDERREPRESENTED
COMMUNITIES. THESE
RECOMMENDATIONS ARE, EXCUSE ME,
THESE OPTIONS HAVE THE INTENT O
BEING THE START AND JUST THE
BEGINNING OF AN ONGOING
CONVERSATION THAT WE WILL HAVE
JOINTLY WITH THE EXECUTIVE
BRANCH. THE WORK GROUP OFFERS
SPECIFIC FEEDBACK ON VARIOUS
STRATEGIES. WE ARE THANKFUL FOR
ALL OF THOSE PARTICIPATING
MEMBERS WHO NOT ONLY PROVIDE
FEEDBACK IN THE MEETING, BUT DI
IN-DEPTH ANALYSIS, RESEARCH THA
WE GREATLY APPRECIATE SOME OF
WHICH WAS INCLUDED IN THE
FINANCE AND HOUSING COMMITTEE
AGENDA AND THE LINKS TO THE
MATERIALS. I GREATLY APPRECIATE
THAT WE HAVE SUCH PARTNERSHIP
WITH THE MAYOR'S OFFICE. THANK
YOU DEPUTY MAYOR WASHINGTON FOR
BEING HERE AND COLLEAGUES,
BEFORE WE HAND IT OFF TO THE
SECOND PANEL, I WANT TO JUST
REMIND US OF THE CHARGE THAT WA
IN FRONT OF US WITH THE
STATEMENT OF LEGISLATIVE INTENT
FG002B001, WHICH WAS PASSED IN
2021, WHICH REQUESTED THE
MAYOR'S OFFICE AND COUNCIL IN
COLLABORATION TO AND I QUOTE,
REVIEW SEATTLE'S TAX STRUCTURE
AND IDENTIFY WAYS IN MAKING IT
MORE EQUITABLE AND RAISE NEW
PROGRESSIVE REVENUE. THAT WAS
THE CHARGE OF THE WORK GROUP. W
KNOW OUTSIDE OF THAT PEOPLE WIL
ABSOLUTELY BE BRINGING THEIR
PRIORITIES AND STRATEGIES TO TH
MAYOR'S OFFICE AS THEY FINALIZE
THEIR BUDGET PRIORITIES FOR THE
UPCOMING 2024 CALENDAR YEAR,
EVEN THOUGH WE'RE IN THE MIDDLE
OF WHAT WE'RE TRYING TO TREAT A
THE BIANNUAL BUDGET. PEOPLE WIL
COME TO COUNCIL AND MAKE SIMILA
REQUEST OF THE COUNCIL MEMBERS
AS WELL. THAT'S OBVIOUSLY
SOMETHING THAT WE'RE USED TO AN
ARE ANTICIPATING. BUT THE
CONVERSATION ABOUT LEVERS
LEVELS, PRIORITIES, REDUCTIONS
IN THE EXISTING BUDGET WAS NOT
THE CHARGE OF THIS WORK GROUP.
THIS WORK GROUP WAS CONVENED
SPECIFICALLY TO LOOK AT
SEATTLE'S TAX STRUCTURE AND
IDENTIFY WAYS TO MAKE IT MORE
EQUITABLE AND RAISE NEW
PROGRESSIVE REVENUE. SO AGAIN,
THANK YOU TO OUR COLLEAGUES FRO
THE WORK GROUP FOR ADHERING TO
THAT DIRECTIVE AND FOR HELPING
US FINALIZE THIS PRESENTATION.
WANT TO THANK YOU AGAIN FOR YOU
INCREDIBLE LEADERSHIP IN THE EN
THERE TO RALLY. AND I HEARD
CATS. AND TO MAKE SURE THAT
EVERYBODY KNOWS WHO WAS ON THE
WORK GROUP THAT I WANT TO READ
THE COCHAIRS AND MYSELF AND
DEPUTY MAYOR WASHINGTON FROM TH
COALITION OF THE CITY UNIONS,
ANDREW GUILLEN, DARRYL POWELL
FROM PRINCIPLE FINANCE SERVICES
SENATOR DAVID FROCK, FORMER
SENATOR. AND FORMER DEPUTY MAYO
KIM WHO IS NOW A PRINCIPAL AT
INSA CONSULTING. JOE, OUR LOCAL
CELEBRITY. KATIE WHO IS OUR
EXECUTIVE TREASURY SECRETARY.
AND KATIE WILSON,
CONGRATULATIONS TO HER ON HER
GROWING FAMILY WITH THE GENERAL
SECRETARY OF TRANSIT WRITERS
UNION. LINDSAY GRAD, A LONG-TIM
COMMUNITY ADVOCATE AND LEADER A
SCIU. LOIS CHAIRMAN, THE FORMER
CHAIRMAN AT GREATER BUSINESS
SEATTLE ASSOCIATION. MISHA, OUR
EXECUTIVE DIRECTOR AT THE POLIC
CENTER. AND THE EXECUTIVE
DIRECTOR AT HOUSING DEVELOPMENT
AND RACHEL SMITH, CEO OF THE
SEATTLE METROPOLITAN CHAMBERS O
COMMERCE. AGAIN, THANK YOU TO
DEPUTY MAYOR WHO CO-CHAIRED FRO
OCTOBER THROUGH JULY OF 2023 AN
PARTICIPATING STAFF BECAUSE WE
LOVE TO RECOGNIZE STAFF IS A
DIRECTOR OF CITY BUDGET'S OFFIC
AND DAN EATER, OUR DIRECTOR.
DAVE HENNES FROM THE CITY'S
BUDGET OFFICE, TOM MIKESELL FRO
CENTRAL STAFF, ALY PENNUCCI FRO
CENTRAL STAFF, AND ALEXANDRA
FROM THE CITY'S OFFICE. WITH
THAT DEPP TU MAYOR WASHINGTON.
ANY CLOSING COMMENTS FROM YOU A
WE CLOSE OUT PANEL NUMBER ONE?
OKAY, I KNOW SHE MAY HAVE HAD T
GO TO ANOTHER ENGAGEMENT. THANK
YOU VERY MUCH TO DEPUTY MAYOR
WASHINGTON AND I WILL TAKE SOME
QUESTIONS BEFORE WE GO OVER TO
THE DETAILED PRESENTATION OF TH
WORK GROUP AND CENTRAL STAFF
MEMO. AGAIN, I JUST WANT TO
REMIND FOLKS, WE'RE IN RECEIVIN
MODE TODAY. NO ACTION OR, YOU
KNOW, EVEN PRIORITIZATION. I'LL
SUMMARIZE AS WELL WHAT THE NEXT
STEPS WILL BE BECAUSE WE KNOW W
HAVE A LOT OF WORK AHEAD.
>> GOT IT. THANK YOU. IN YOUR
INTRODUCTION, YOU MENTIONED THE
LIST OF POTENTIAL OPTIONS THAT
CAN BE CONSIDERED IN THE NEXT
STEPS. I JUST WANTED FOR THE
PUBLIC FOR THEIR INFORMATION TO
REITERATE WHAT YOU AND THE MAYO
SAID IN THE PRESS RELEASE. YOU
SUGGESTED THAT NONE OF THESE
OPTIONS ARE, IN FACT,
RECOMMENDATIONS, AND THE REPORT
DID NOT MAKE A RECOMMENDATION T
GO FORWARD WITH ANY OF THESE
OPTIONS?
>> THAT'S CORRECT. COUNCIL
MEMBERS WILL APPRECIATE THIS.
THERE IS A LOT OF WORK TO DO
WITH THE LAW DEPARTMENT AND WIT
CENTRAL STAFF ON THE POLICY
ANALYSIS, SO THESE ARE LISTED A
OPTIONS. THANK YOU. WITH THAT
THANK YOU TO DEPUTY MAYOR
WASHINGTON, AND I WILL GO AHEAD
AND TURN IT OVER TO OUR SECOND
PANEL. FOLKS, IF YOU HAVEN'T HA
A CHANCE TO READ THE CENTRAL
STAFF MEMOS, IT'S GOLD. IT'S
DETAILED ANALYSIS THAT PROVIDES
HISTORIC CONTEXT TO THE CURRENT
SITUATION THAT WE'RE FACING.
IMPORTANT FACTS TO GROUND US.
AND HELPS US GET AWAY FROM THE
SORT OF BINARY THINKING OF ONE
THING OR ANOTHER, A VERY MUCH
COMBINATION OF THE SITUATION
THAT WE FOUND OURSELVES IN THE
LAST THREE TO FIVE YEARS. I'LL
LET CENTRAL STAFF DO A JOB OF
EXPLAINING WHAT HAS TRANSPIRED
IN THE LAST FEW YEARS. I WANT T
THANK DEPUTY DIRECTOR PENNUCCI
AND IF TOM MIKESELL IS JOINING
US TODAY, HE'S GIVEN PERMISSION
TO BE ADDED TO THE SPEAKERS
HERE. WITH THAT, I'LL TURN IT
OVER TO DEPUTY DIRECTOR
PENNUCCI.
>> THANK YOU, CHAIR MOSQUEDA.
TOM MIKESELL AND I WILL PROVIDE
SOME TODAY. I'LL PROVIDE SOME
ADDITIONAL INFORMATION, THE
ANALYSIS OF THE GENERAL FUND
DEFICIT. SINCE AT LEAST THE FAL
OF 2020, WE HAVE CENTRAL STAFF
AS A PART OF THE COUNCIL ANNUAL
BUDGET DELIBERATIONS, RELATED T
THE SUSTAINABILITY OF THE
GENERAL FUND. AND TRANSFERS FRO
THE OTHER FUNDS. THIS IS NOT
SUSTAINABLE OVER THE LONG TERM.
WITH THIS CONTEXT OF BALANCING
ONGOING PROGRAMS AND SERVICES
USING ONE-TIME RESOURCES, THEY
HAVE BOTH ADOPTED BUDGETS THAT
PRIORITIZE MAINTAINING AND
EXPANDING THE SERVICES TO
RESPOND TO COMMUNITY NEEDS. THI
INCLUDES INVESTMENTS IN THE
SMALL BUSINESSES AND THE WORK
FORCE DEVELOPMENT, RESPONDING T
THE CITY'S HOMELESS STATE OF
EMERGENCY, INVESTMENT IN
COMMUNITY SAFETY AND PUBLIC
SAFETY AND HOUSING AMONG MANY
PROGRAMS AND SERVICES. THESE
ONE-TIME RESOURCES THAT WERE
USED TO BALANCE THE PROGRAMS IN
THE GENERAL FUND ARE EXPIRING,
RESULTING IN A NEED FOR
ADDITIONAL ONGOING GENERAL FUND
REVENUES TO MAINTAIN THE CURREN
LEVEL OF SERVICES. THE DIFFICUL
QUESTIONS WILL NEED TO COME TO
DECISION AND WHETHER TO MAINTAI
THIS LEVEL OF SERVICE AND HAVIN
THAT ABILITY TO EXPAND THE
SERVICES TO MEET EMERGING
COMMUNITY NEEDS IS THE PRIORITY
IF YOU AGREE THAT THE CURRENT
LEVEL OF INVESTMENTS ACROSS ALL
CITY FUNDS IS NEEDED TO MEET TH
COMMUNITY NEEDS, THEN YOU NEED
ADDITION FALL ONGOING REVENUES
TO SUPPORT THOSE INVESTMENTS. I
YOU BELIEVE THE CITY SERVICES
COULD BE SCALED BACK, THEN YOU
NEED TO IDENTIFY THE SPECIFIC
CITY SERVICES AND PROGRAMS TO
REDUCE OR ELIMINATE. IN 2021,
THE COUNCIL AT THAT TIME
CONFIRMED MAINTAINING AND
EXPANDING SERVICES IS THE
PRIORITY AND THEREFORE NEW
REVENUE WAS THE PREFERRED
SOLUTION. THIS LED THEM TO ADOP
THE STATEMENT OF LEGISLATIVE
INTENT IN 2021 THAT THIS WORK
GROUP REPORT IS RESPONDING TO.
WITH THAT CONTEXT, I'LL BRIEFLY
WALK THROUGH THE REVENUE OPTION
IDENTIFIED BY THE WORK GROUP FO
THE CITY'S CONSIDERATION AND
THEN I'LL PASS IT ON TO TOM TO
WALK THROUGH THE ANALYSIS OF TH
GENERAL FUND DEFICIT. BEFORE I
DO THAT, I'LL JUST NOTE THAT I'
JUST GENERALLY HIGHLIGHTING THE
INFORMATION FROM THE WORK GROUP
REPORT, AND THEN IN SOME CASES
JUST PROVIDING ADDITIONAL
CONTEXT TO DESCRIBE WHAT THE TA
IS. THE REPORT THOUGH IS A
PRODUCT OF THE WORK GROUP THAT
WAS NOT AUTHORIZED BY CENTRAL
STAFF AND IF THE COUNCIL DECIDE
TO PURSUE ANY OF THESE OPTIONS
AS CHAIR MOSQUEDA AND COUNCIL
MEMBER NELSON BOTH DESCRIBED
ADDITIONAL WORK AND AFALL SIS I
NEEDED IN THIS. AND AGAIN THE
STATEMENT OF LEGISLATIVE INTENT
FROM 2021 REQUESTED THAT THIS
WORK GROUP JUST IDENTIFY A LIST
OF OPTIONS, NOT TO MAKE
RECOMMENDATIONS. SO NOW I DID
HAVE A MEMO THAT OUTLINED THE
PROCESS. MUCH OF THAT WAS
DESCRIBED BY DEPUTY MAYOR
WASHINGTON AND CHAIR MOSQUEDA.
WON'T REITERATE THAT. BUT I
NOTED THAT THERE WERE 12 MEMBER
PLUS TWO CO-CHAIRS. 13 MEMBERS
PLUS TWO CO-CHAIRS, JUST
CORRECTING THAT. SO AS DESCRIBE
PREVIOUSLY, THE GROUP MET NINE
TIMES BETWEEN OCTOBER 2022 AND
AUGUST. AFTER SOME INITIAL
DISCUSSIONS THAT PROVIDED SOME
CONTEXT AND BACKGROUND THAT LED
TO THE STATEMENT OF LEGISLATURE
THE WORK GROUP EVALUATED OVER 6
POTENTIAL REVENUE IDEAS USING
THE VALUE THAT THEY JUST
DESCRIBED. AND ALSO I'LL JUST
NOTE WHAT CHAIR MOSQUEDA
DESCRIBED IS THAT THE CITY WAS
NOT ABLE TO PROVIDE DETAILED
LEGAL ADVICE BECAUSE THE WORK
GROUP IS NOT COVERED BY THE
CITY'S CLIENT RELATIONSHIP. AND
THEREFORE THAT DID NOT INCLUDE
OR INFORM THE WORK GROUP
DELIBERATION. THAT AFALL SIS
WILL BE PROVIDED TO THE COUNCIL
AND THE MAYOR AND ANY OF THESE
OPTIONS ARE PURSUED. AND SO IN
THE END, THE WORK GROUP NARROWE
THAT LIST OF OVER 60 IDEAS TO
NINE REVENUE OPTIONS TO PRESENT
FOR THE MAYOR AND THE COUNCIL'S
CONSIDERATION. AND I'M HAPPY TO
TAKE QUESTIONS AS YOU HAVE THEM
ALONG THE WAY THAT WE MIGHT NOT
HAVE ALL THE ANSWERS TODAY. BUT
AGAIN WITH DIRECTION FROM ALL O
YOU, WE'LL CONTINUE TO DO THAT
RESEARCH AND ANALYZE THESE
IDEAS. SO THE FIRST OPTION FOR
THE GROUP WAS MAKING CHANGES TO
THE JUMP START PAYROLL TAX.
>> DEPUTY DIRECTOR, DO YOU WANT
TO SCROLL THROUGH THE REPORTS,
SO THAT IT IS SHARED ON THE
SCREEN AS WELL, SO PEOPLE CAN
TRACK WHICH ITEM WE'RE ON?
>> SURE.
>> OKAY, GREAT.
>> AND I WANTED TO OFFER
SOMETHING AS ALY IS PULLING THA
UP. FOLKS MIGHT SEE THAT THERE'
TWO NUMBERS BEING USED. WE TALK
A LOT ABOUT THE CLIFF THAT'S
COMING IN 2025 BEING $221
MILLION. THE PRESS RELEASE AND
DEPUTY MAYOR WASHINGTON AND
MYSELF ALSO THIS MORNING JUST
NOTED THERE'S A $224 MILLION
GAP. $224 MILLION IS THE ANNUAL
AVERAGE GAP THAT WE'RE EXPECTIN
STARTING IN 2025. SO THERE IS A
PROJECTED, YOU KNOW, SIX-YEAR
GAP. THE AVERAGE OF EACH YEAR I
$224 MILLION. AND SO JUST WANTE
TO MAKE SURE FOLKS KNOW WHERE
THOSE NUMBERS ARE COMING FROM I
YOU'RE LOOKING AT THE BOT
TESTIMONY OF PAGE TWO BEFORE WE
HEAD INTO THE SUMMARY THERE.
>> THANK YOU, ALY. PLEASE GO
AHEAD.
>> THANK YOU.
>> AND SO THIS FIRST OPTION
WOULD BE CHANGES TO THE JUMP
START PAYROLL TAX. THIS WOULD
INCREASE THE TAX RATE FOR THOSE
WHO PAID THEIR TAX. THAT COULD
BE PLAYED OUT BY INCREASING THE
NUMBER OF BUSINESSES REQUIRED T
PAY THE TAX, YOU KNOW, IN
LOWERING THE THRESHOLD FOR WHIC
BUSINESSES THE TAX APPLIES TO O
INCREASING THE NUMBER OF
EMPLOYEES FOR WHOM THE TAX
APPLIES TO, WHICH WOULD
ESSENTIALLY MEAN LOWER IN THE
SALARY THRESHOLD OR MAKING OTHE
POLICY CHANGES. THIS COULD BE
ACHIEVED WITHOUT VOTER APPROVAL
AND THE WORK GROUP ASSUMED THAT
IF SUCH A CHANGE WAS MADE THAT
ANY REVENUE THAT IS GENERATED
FROM THIS ADDITIONAL INCREMENT
FROM THIS ADJUSTMENT WOULD BE
GENERAL FUND REVENUE RATHER THA
BEING DEDICATED TO THE JUMP
START SPENDING PLAN FOR WHICH
THAT EXISTING REVENUE IS ALL
DIRECTED TO STARTING IN 2025.
THE SECOND OPTION WOULD BE A
CITY LEVEL CAPITAL GAINS TAX,
WHICH WOULD IMPOSE THE TAX ON
THE ANNUAL GAINS TO THE
INDIVIDUAL SALES OF THE
NON-EXACT CAPITAL ASSETS. IT'S
ASSUMED THAT THIS WOULD BE
MODELED AFTER THE STATE TAX,
WHICH WOULD APPLY TO THOSE
ASSETS OVER THOSE GAINS UP ON
$215,000 AND THAT I'LL NOTE
HERE, WITH THE OPTION ONE AND
TWO THAT THERE IS LEGISLATION
THAT IS ALREADY INTRODUCED THAT
RELATES TO THESE TWO IDEAS AND
WITH THE CAPITAL GAINS AND THE
TAX IDEAS AND THE COUNCIL MEMBE
AND THE BILL SPONSORED BY
COUNCIL MEMBER PEDERSEN
INTRODUCED EARLIER THIS YEAR.
AND THE AMOUNT OF NEW REVENUE
GENERATED FROM THE LOCAL CAPITA
GAINS TAX WOULD DEPEND ON THE
RATE AND THE ESTIMATE THAT WAS
USED TO INFORM THE WORK GROUP
DISCUSSIONS ARE ASSUMED THAT TH
1% TAX COULD GENERATE BETWEEN
$25 AND $30 MILLION ANNUALLY.
AND LET US SCROLL HERE. THE
THIRD OPTION WOULD IMPOSE THAT
TAX RELATED TO THE HIGH CEO PAY
RATIO. THAT'LL BE A TAX ON
CORPORATIONS THAT WILL PAY THEI
CEOs OR THE TOP EXECUTIVES
SIGNIFICANTLY MORE THAN THEIR
LOWEST PAID WORKERS OR THE
MEDIAN PAY OF THE
NON-EXECUTIVES. THIS COULD
POTENTIALLY BE STRUCTURED AS A
SURCHARGE TO THE EXISTING JUMP
START. AND THE TAX AND THAT
ESTIMATE RANGES, THEY'RE A BIT
UNCLEAR. THERE ARE TWO EXAMPLES
THAT THE WORK GROUP WOULD LOOK
AT IN THESE DISCUSSIONS. ONE WA
FROM PORTLAND THAT HAS AN
ESTIMATE OF ABOUT $4 MILLION
ANNUAL REVENUE AND ANOTHER IS
FROM SAN FRANCISCO THAT I
BELIEVE IS BETWEEN $60 AND $140
MILLION. MORE WORK IS NEEDED TO
UNDERSTAND THE POTENTIAL REVENU
GENERATION WOULD BE LOCALLY.
>> I WOULD JUST WANT TO SAY ON
THIS ONE, ASK FOR CLARIFICATION
OR CLARIFY THE FIRST BULLET
THERE ON THE HIGH CEO PAID RATI
TAX. IT SAYS THIS TAX COULD BE
IMPLEMENTED. IT GOES ON TO TALK
ABOUT HOW WE WOULD STILL NEED T
DO ADDITIONAL WORK TO IDENTIFY
LIKE THE VEHICLE OR THE POLICY
APPROACH. AND I THINK THAT'S
CONSISTENT WITH WHAT IS SAID ON
THE LAST LINE OF YOUR MEMO. JUS
NOTING THE FIRST TWO CLEARLY
HAVING THE STATUTE THAT WE COUL
BUILD UPON. THIS THIRD ONE IS I
A SIMILAR VAIN. WE HAVE THE
STATUTORY AUTHORITY TO DO SO,
BUT IT IS ALONG WITH THE OTHER
SEVEN BECAUSE YOU WOULD NEED TO
DO ADDITIONAL RESEARCH ON HOW T
APPLY IT OR STAND UP THE
INFRASTRUCTURE IF YOU WILL, IS
THAT CORRECT?
>> YES, THAT'S CORRECT, CHAIR
MOSQUEDA. ALL OF THESE IDEAS
WOULD REQUIRE ADDITIONAL WORK A
WE THINK IT IS LIKELY POSSIBLE
ON A SHORTER TERM THAN SOME OF
THE OTHER IDEAS THAT CLEARLY
NEED A STATE AUTHORIZATION.
CENTRAL STAFF HAS NOT DONE MUCH
WORK ON THIS IDEA, SO IT WASN'T
IMMEDIATELY DONE FROM A
PRACTICAL STANDPOINT LISTED IN
OUR MEMO. BUT YES, WE DO THINK
THAT THIS IS MORE FAVORABLE THA
MANY OF THE OTHER OPTIONS THAT
MIGHT REQUIRE A LONGER, YOU
KNOW.
>> OKAY, THANK YOU SO MUCH.
>> OKAY, THE FOURTH OPTION IS A
VACANCY TAX, IMPOSING A TAX ON
BUILDING THAT SAT EMPTY.
TYPICALLY THAT THRESHOLD IS A
SIX-MONTH VACANCY ASSUMPTION.
THE WORK GROUP, THE ESTIMATES
THAT WE'RE DISCUSSING ASSUMES
THIS COULD GENERATE BETWEEN $5
MILLION AND $20 MILLION ANNUALL
DEPENDING ON HOW IT IS
STRUCTURED. THE INTENT OF THIS
TAX IS TO PROVIDE ADDITIONAL
INCENTIVES FOR THE PROPERTY
OWNERS TO LEAVE THOSE PROPERTIE
VACANT. SO PRESUMABLY THE
INCREASED SUPPLY OF HOUSING AS
THEY WERE NO LONGER VACANT.
AGAIN, MORE WORK IS NEEDED TO
UNDERSTAND THIS PROPOSAL, THE
CONTEXT OF THE STATUA. THAT'S
TRUE FOR THE OTHER OPTIONS AS
WELL. THE FIFTH OPTION IS
PROGRESSIVE REAL ESTATE EXCISE
TAX. AN ADDITIONAL TAX INCREMEN
ON THE SALES AND PROPERTY OVER
THE CERTAIN PRICE. THIS WOULD
REQUIRE A STATE ACTION GRANTING
THE CITY THE ADDITIONAL
AUTHORITY IF THAT AUTHORITY WAS
GRANTED, THE ESTIMATES ASSUMED
BY THE GROUP IS THE ANNUAL
REVENUE BETWEEN $17 MILLION AND
$14 MILLION IF YOU ASSUME THIS
WAS APPLIED TO THE PROPERTIES
VALUED AT HIGHER THAN $5
MILLION.
>> AND JUST A LITTLE CONTEXT ON
THAT ONE. THE REASON THAT $5
MILLION IS USED AS AN EXAMPLE I
BECAUSE LOS ANGELES COUNTY JUST
LAST NOVEMBER AUTHORIZED A
PROGRESSIVE REAL ESTATE EXCISE
TAX ON PROPERTY SALES OF MORE
THAN $5 MILLION. THAT'S A LEVEL
THAT COULD BE ADJUSTED FOR AS I
THE REPRESENTATIVE, AS I
UNDERSTAND HE AND THE MEMBERS O
THE STATE LEGISLATURE HAD BEEN
WORKING ON ADVANCING THE
PROGRESSIVE REAL ESTATE TAX
OPTION AND THE LAST LEGISLATIVE
SESSION AND LOOK FORWARD TO
CONTINUING TO LEARN MORE ABOUT
THAT EFFORT AND THE UPCOMING
LEGISLATIVE SESSION AS WELL,
GIVEN IT IS ON OUR LIST OF
OPTIONS HERE.
>> THE SIXTH OPTION WOULD BE IN
A STATE TAX, LEVIED ON THE
ESTATE. AND THAT IS BASED AFTER
ALL ALLOWABLE DEBTS THAT HAVE
BEEN PAID WITH THAT RATE FROM
10% TO 20%. AND SO AND THE
ESTIMATES THAT WERE DISCUSSED
WITH THE WORK GROUP WOULD BE
THAT ALL THE TAXES COULD
GENERATE BETWEEN $5 TO $10
MILLION ANNUALLY.
>> THE SEVENTH OPTION SAN
INHERITANCE TAX, WHICH IS
SIMILAR TO AN ESTATE TAX, EXCEP
THEY ARE PAID BY THE BENEFICIAR
OF THE REQUEST OF THE STATE AND
IT IS A VALUE AT THE TIME OF TH
DEATH. BUT THEY CONSIDERED
MODELING THIS ON THE OTHER STAT
TAXES, AND WASHINGTON STATE,
THEY USED TO HAVE A TAX UNTIL I
WAS SIMILAR TAXES UNTIL IT WAS
KILLED BY THE VOTER IN 1981 AND
THAT IT WAS REPLACED WITH THE
STATE TAX. AND THE REVENUE
GENERATION, IT IS A BIT UNCLEAR
AND IT WILL DEPEND ON THE
FACTORS, WHERE IT WASN'T A
CURRENT ESTIMATE DISCUSSED IN
THAT WORK GROUP AND THAT THEY
WOULD LIKELY REQUIRE THE STATE
AUTHORITY. AND THE EIGHT OPTION
WOULD BE A TAX THAT WOULD TAX
PEOPLE FOR ENTERING OR DRIVING
INTO HIGHLY CONGESTED AREAS. AN
WITH THE GOAL OF REDUCING
TRAFFIC AND GENERATING REVENUE.
AND WE ARE AUTHORIZED BY THE
STATE LAW IN A TRANSPORTATION
DISTRICT TO IMPOSE SUCH A TAX,
BUT THEY ARE RESTRICTED TO THE
TRANSPORTATION PURPOSES. IN THE
SPIRIT OF LOOKING FOR REVENUE T
SUPPORT THAT GENERAL FUND
INVESTMENTS THAT THEY WILL NEED
TO HAVE CHANGES TO THAT STATE
LAW TO ALLOW THAT FLEXIBILITY O
THE USE OF FUNDS AND THAT THEY
ARE LIKELY SIGNIFICANT IN THAT
ADMINISTRATOR CHALLENGES TO GET
THAT TO SET UP.
>> AND WHAT IS IDENTIFIED BY TH
WORK GROUP IS THAT INCOME TAX
AND THAT THERE WAS A SUPREME
COURT DECISION THAT CONFIRMED
THAT THEY ARE ABLE TO IMPOSE A
FLAT INCOME TAX OF UP TO 1% OF
THE TOTAL INCOME. HOWEVER, IT
DOESN'T ALLOW FOR A MORE
PROGRESSIVE INCOME TAX WHERE
THEY WOULD INCREASE. THE
ESTIMATE IS A 1% FLAT TAX THAT
COULD GENERATE $660 ANNUALLY AN
IT WAS IMPORTANT THAT IN ORDER
TO CONSIDER A FLAT TAX AND NOT
PARTICULARLY PROGRESSIVE, THERE
WOULD NEED TO BE A CONSIDERATIO
ON HOW TO USE THAT AND TARGETED
TO ADDRESS THE NEEDS OF LOWER
INCOME HOUSEHOLDS. AND SO AS
REQUESTED, THE WORK GROUP WOULD
IDENTIFY THE NINE OPTIONS FOR
FURTHER CONSIDERATION BY THE
COUNCIL AND THE MAYOR. AND SO
NOW IT IS IN YOUR COURT TO
DECIDE WHICH OF THESE IDEAS
SHOULD BE FURTHER DEVELOPED. AS
I NOTED PREVIOUSLY FROM THE
PRACTICAL PERSPECTIVE OPTIONS
ONE OR TWO OR THE MOST READY TO
MOVE IN AND THAT THEY WILL
DEVELOP THE REMAINING OPTIONS
THAT WILL REQUIRE MORE TIME THA
WILL BE DEVELOPED IN THE
REQUIREMENTS AROUND KINGS TO
STATE AND THAT STATE LAW AND AL
NINE OPTIONS AND THAT WE WOULD
FURTHER EXPLORE IF YOU DECIDE T
TAKE THOSE UP.
>> OKAY. WE'RE GOING TO HOLD ON
THE NEXT STEP CONVERSATIONS
RIGHT NOW. IT IS IMPORTANT FOR
US TO INCLUDE IN THIS DISCUSSIO
BEFORE WE DO THAT AND HOW WE GO
HERE. BUT THERE SEEMS TO BE A
LOT OF QUESTIONS OR CONFUSIONS
ON HOW WE GOT TO THAT SITUATION
IN THE FIRST PLACE. IT IS
SOMETHING THAT WE COULD CONTINU
TO COME BACK TO SO THAT THEY
HAVE THE FACTS. AGAIN, THERE IS
NO ONE PAR TU OR ONE INCIDENT O
ONE STRATEGY THAT HAS LED TO
THIS AND A COMBINATION OF BOTH
CONDITIONS OF THE ECONOMY AND
THAT NEED OF THE POPULATION AND
SMALL BUSINESSES AND IN SUPPORT
DURING COVID AND IT IS A
COMBINATION OF THE APPROACH TO
BUDGETING TRADITIONALLY AND
PRIOR TO 2020 WHEN COVID STARTE
AND A COMBINATION OF THAT
GROWING POPULATION THAT WE WOUL
HAVE IN THIS AREA AND HOW WE
RESPONDED TO THAT. I'LL TURN IT
OVER TO TOM MIKESELL AT THIS
POINT, AND THEN WE'LL TURN IT
BACK TO HAVE THE ADDITION FALL
QUESTIONS. BEFORE WE WRAP, WE'L
TALK ABOUT NEXT STEPS. GOOD
MORNING, TOM.
>> GOOD MORNING MEMBERS OF THE
HOUSE. AND TOM MIKESELL WITH
YOUR CENTRAL STAFF. AND SO THIS
MORNING, AS DESCRIBED BY THE
CHAIR, SOME OF THE HISTORY OVER
THE LAST DECADE OR SO AND
LEADING UP TO WHERE WE ARE TODA
AND EXPANDING THE FINANCIAL
DYNAMICS OF THE GENERAL FUND AN
PERHAPS BETTER SOME OF THE
CHARACTERISTICS OF WHY WE ARE
FACING THE DEFICIT AND SO OUR
DIFFERENCE BETWEEN REVENUES, AN
BEING LESS THAN THE EXPENDITURE
OF 2025. AND AS CHAIR NOTED THA
THE STAFF MEMO HAS AGREED TO TH
AGENDA AND THAT IT WILL BE FROM
THAT MEMO. IT WAS INTENDED TO B
COMPLIMENTARY TO THE OTHER
MATERIALS THAT YOU HEARD THIS
MORNING AND THAT WORK GROUP IN
PARTICULAR AND IT IS INTENDED T
GO INTO DETAIL IN SOME PLACES
AND PERHAPS EXPAND WHAT IS BEIN
OFFERED THAT I DID STRUCTURE IT
IN THAT TIMELINE THAT WE DON'T
WANT TO REITERATE THE LAST FOUR
YEARS TOO MUCH, BUT IT IS USEFU
TO UNDERSTAND.
>> AND IT DOESN'T SEEM TO MATTE
HOW THEY GOT HERE, BUT THEY
CONTINUE TO COME UP AS THEY
DECIDED TO COME UP HERE THIS
YEAR AND LET'S RELIVE THE LAST
FEW YEARS.
>> AND WITH THAT I WILL KIND OF
DIVE IN AND TO KIND OF GIVE THA
OUTLINE AND AGAIN WITH THE
TIMELINE FOCUSED ON THE BASIC
TOUCHSTONES AND LOOKING AT THE
YEARS AND THE PANDEMIC WHERE WE
ARE EXPERIENCING THE RAPID
GROWTH AND REVENUES AND THAT HO
ECONOMY AND WHERE THEY WERE MET
WITH EXPANSION THAT WOULD
COMMAND THE CITY SERVICES AND
THAT THERE TO SUPPORT THAT AND
COVID SORT OF CHANGED THAT
FOUNDATION AND OUR EXPECTATIONS
AND COUNCIL AND MAYOR MET THE
NEEDS THROUGH THE PANDEMIC WITH
THE PUBLIC HEALTH AND THE OTHER
EMERGENCY ASSISTANCE TO GIVE
THEM THAT POPULATION THAT IS
STILL GROWING. IF ANYTHING THER
IS AN INCREASE IN THE SERVICE
NEEDS AND HOW THAT BUDGET WAS
BALANCED IN THAT TIME FRAME AND
LOOKING AT WHERE WE ARE
POST-PANDEMIC AND TO BOTH HOW
THE SERVICE NEEDS HAVE NOT DONE
AWAY AND THAT INFLATION HAS
TURNED AND IT IS A RAPID PACE
WITH SOME LINGERING INCREASES
THAT HAVE NOT BEEN FULLY FILLED
BACK. AND SO THOSE ARE JUST THE
REALITIES THAT WE FACED. AND
THAT ALSO TO CLOSE OUT, I WILL
COVER SOME LESSONS THAT WERE
LEARNED WITH THAT IN THE LAST
FEW YEARS AND ON SOME THINGS
THAT ARE CURRENTLY UNDERWAY THA
COUNCIL HAS PUT IN PLACE TO
AVOID THESE TYPES OF CHALLENGES
IN THE FUTURE. AND SO JUST TO G
INTO KIND OF THE FIRST STAGE.
AFTER THE GREAT RECESSION, OFF
TO THE RACES, THERE WAS A 21%
INCREASE ABOUT 3.5% IN YEARS AN
PULLING IT FROM PUBLICLY
AVAILABLE IN THIS CASE AND THE
CITY'S ANNUAL FINANCIAL REPORT,
WHICH KIND OF UPDATES AS WE
DISCLOSED IN THAT FINANCIAL
STATUSES EACH YEAR.
>> DO YOU MIND ZOOMING IN? JUST
ZOOM IN ONE MORE TIME AND THAT
IT WILL CLEAR THE MARGINS THERE
THAT'S A LITTLE BIT BETTER.
THANK YOU. SO POPULATION WAS
BRISK FROM 2012 THROUGH 2019.
INFLATION WAS FORTUNATELY VERY
LOW. AND IT GREW BY 16%. IT'S A
STANDARD INFLATION GAUGE WITH
THEM ON AVERAGE, WHICH IN
CONTEXT TO WHAT THE NUMBERS ARE
SHOWING ARE VERY LOW. SO THE
POPULATION NEEDS ARE GROWING.
THERE WAS SIGNIFICANT DEMAND.
AND AS YOU'LL SEE UNDER THE NEX
BULLET ON THE PRIOR PAGE. YEAH.
AND SO THE SERVICES, THAT BUDGE
KEPT PACE AND GREW BY OVER 50%
FROM $926 MILLION TO $9.4
BILLION, 26% ANNUALLY.
TRADITIONS AND STAFFING AND THE
CITY SERVICES. SO IF YOU LOOK A
THE NON-UTILITY AND THE
NON-TRANSPORTATION STAFFING THA
HAVE DEDICATED REVENUE STREAMS
VERSES THE GENERAL SERVICES.
STAFFING GREW BY 26% DURING THA
TIME PERIOD. IT'S REALLY
DIFFICULT TO SAY PRECISELY HOW
MANY MORE OF THOSE WERE STRICTL
IN THAT GENERAL FUND BECAUSE,
WELL, WE DON'T HAVE A SYSTEM
THAT STOOD OUT TO TRACK OR THE
BUDGETS, BUT WULY, YOU KNOW, BY
EXCLUDING THE TRANSPORTATION
THAT IT IS ON THE ORDER OF THE
26% INCREASE. AND IT'S GROWING
RAPIDLY. THE CITY STAFFING WAS
KEEPING PACE WITH THAT. BUT
THERE WERE OTHER THINGS TO
CONSIDER THAT IT'S NOT PURELY
CAPTURED WITH THE ALGORITHM
POPULATION PLUS INFLATION SORT
OF METRIC. AND THAT IS SOME
SIGNIFICANT COMMUNITY NEEDS THA
WERE UNIQUE TO THE DYNAMIC AND
RAPIDLY GROWING CITY. FIRST WE
HAD A SETTLEMENT AGREEMENT TO
THE DEPARTMENT OF JUSTICE THAT
RESOLVED IN A LAWSUIT THAT WAS
ALLEGING THE DEPARTMENT THAT HA
ENGAGED IN A PATTERN OF
PRACTICE. THAT CURRENTLY
REQUIRES THE WORK ON THE BEHALF
OF THE CITY AND THE RESOURCES T
MOVE. AND THEY BOTH DECLARED A
HOME IN THIS EMERGENCY, WHICH
AGAIN, CONTINUES AND WAS, IN
FACT -- [ INAUDIBLE ] CUSTOMERS
OF THE HOUSING, COMMENCED WITH
POPULATION GROWTH. PEOPLE NEED
PLACE TO LIVE WHEN THEY MOVED
HERE. AND THAT IS SOMETHING THA
AGAIN, WE STRUGGLE WITH TO THIS
DAY. AND THEN FINALLY SOMETHING
KIND OF UNIQUE IS THE EMERGENCY
GROWTH OF THE GIG ECONOMY, WHIC
IN SOME WAYS PROVIDES GREATER
EFFICIENCIES THAN THE PROVISION
OF SERVICE, BUT IT ALSO CAN IN
SOME WAYS INCREASE THE IMPACT O
THE LABOR STANDARDS AND
INEQUALITY IN THE POPULATION.
AND SO THOSE ARE KIND OF THE
ADDITIONAL CHARACTERISTICS THAT
ADD TO THE COMMUNITY NEED AND
PERHAPS REQUIRE A GREATER LEVEL
OF EXPENDITURES THAN JUST
KEEPING UP WITH THE GROWTH. BUT
THE GOOD NEWS IS --
>> BEFORE YOU GO. I WANT TO ADD
A COMMENT AS WELL.
>> YEAH, I WAS JUST GOING TO GO
TO C NEXT.
>> OKAY, PERFECT. WELL, THE
COMMENT THAT I WOULD ADHERE IS,
AND THANK YOU AGAIN, TOM, FOR
THIS PRESENTATION. IN LOOKING A
SUB ONE, 21% INCREASE IN THE
POPULATION OVER THE PREVIOUS
DECADE BASICALLY. CORRESPONDS
ALMOST SIMILARLY WITH THE 26%
INCREASE IN THE STAFF NEEDED FO
SERVICES TO SERVE THE ONGOING
POPULATION. SO 21% INCREASE IN
POPULATION AND 26% IN THE STAFF
TO SERVE THAT GROWING
POPULATION. AS PEOPLE HAVE
ASKED, WHY ARE WE ADDING
ADDITIONAL STAFFING, YOU KNOW,
IS THE CITY GROWING? ARE WE
BEING THOUGHTFUL ABOUT WHERE TH
POSITIONS ARE BEING ADDED AND
THEN AT THE SAME TIME, SAY THAT
WE NEED MORE INVESTMENT IN
POLICE AND HOMELESS SERVICES. I
HOUSING, YOUR MEMO CALLS OUT
THAT THE INVESTMENTS THAT WERE
BEING MADE WERE HELPING TO
FURTHER THE NEED TO SERVE THE
FOLKS PROVIDING SERVICES GIVEN
THE BUDGETARY IMPACTS OF THE
CONSENT DECREE. AND THE
INVESTMENTS IN THE HOMELESSNESS
DUE TO THE STATE OF EMERGENCY.
AND THE NEED FOR US TO SCALE UP
THE SUPPORT FOR THE HOUSING
SERVICES AS THE TOP THREE. SO I
JUST WANTED TO CALL OUT THE
IMPORTANCE OF THE CORRELATION,
WHERE THE PEOPLE ARE SAYING THA
YOU NEED ADDITIONAL SERVICES IN
THESE AREAS AND THE DIRECT
INVESTMENTS THAT WERE MADE IN
ADDITION TO THE STAFFING THAT
WAS SCALED UP TO MEET THAT
GROWING POPULATION NEEDS. THANK
YOU FOR STARTING WITH THOSE TWO
SECTIONS.
>> AND I WOULD ADD TO THAT. AS
THE CITY GOVERNMENT AND ALL THE
GOVERNMENTS AND IN LARGE PART
ARE SERVICE AND THEY REQUIRE TH
STAFFING IN ORDER TO DO THAT AN
PROVIDE THE PUBLIC GOODS THAT
DAY THAT IT WILL EXIST. TO
PROVIDE. I SEE A QUESTION FROM
VICE CHAIR.
>> SURE, VICE CHAIR HERBOLD,
YOUR CAMERA IS NOT ON.
>> I SEE THAT. I DON'T KNOW
WHAT'S GOING ON.
>> I KNOW. SORRY ABOUT THAT. BU
YES, WE CAN HEAR YOU WELL.
>> THANKS. I'LL SEE IF I CAN
CHANGE THAT AFTER MY QUESTION.
AND I DON'T KNOW HOW YOU CAME U
WITH THESE FOUR PARTICULAR
FACTORS. THEY'RE VERY USEFUL.
WAS THERE A CRITERIA THAT YOU
APPLIED TO IDENTIFYING THESE
FOUR PARTICULAR THINGS? THE ONL
REASON THAT I'M ASKING IS THAT
COULD THINK OF, YOU KNOW,
ANOTHER FACTOR. BUT PERHAPS
BECAUSE OF THE WAY YOU FILTERED
THE PURPOSE OF THIS MEMO THAT I
WOULD NOT QUALIFY? AND I'M
SUGGESTING IT WHILE RECOGNIZING
THAT YOU MIGHT TOSS IT OUT. BUT
THE JUDGMENT IN CLAIMS HAS
INCREASED OVER THE LAST FEW
YEARS AS WELL GREATLY FOR
PAYMENT OF VARIOUS CLAIMS AND
LAWSUITS. AND I WOULD WONDER IF
THAT IS ALSO A FACTOR?
>> AND WHATEVER MEANS, THAT THE
CRITERIA IS THOSE THINGS. AND
COMPLETELY ACCURATE THAT IT IS
ALSO SOMETHING ADDED TO THE
FINANCIAL NEEDS OF THE CITY. AN
SO I COULD ABSOLUTELY HAVE BEEN
AT IT.
>> AND OF SOME OF THE KEY THING
THAT ARE DRIVING AND SOME OF TH
INCREASED INVESTMENTS THAT ARE
NOT THE ONLY FACTORS, SO HAPPY
TO CONTINUE TO FILL THE LIST.
>> AND I THINK ANOTHER ONE OF
THOSE FACTORS IS IMPORTANT AND
WILL BE BROUGHT UP IN E AS WELL
WHEN WE WOULD LOOK AT THAT HUMA
SERVICE CONTRACT AND
INFLATIONARY THAT WAS A GOOD
CATCH FROM TOM MIKESELL DURING
THAT BUDGET YEAR AS WELL.
>> AND SO WE WOULD DESCRIBE THA
KIND OF RAPIDLY GROWING NEED
PRIOR TO 2019 AND AFTER THE
GREAT RECESSION. AND NOW THEY
WILL TALK ABOUT THAT TIME
EXPERIENCE AND THAT THEY WOULD
ENABLE THE CITY TO SUPPORT THOS
SERVICES. AND A FEW STATISTICS
IT IN THAT REGARD AND THAT
PERSONAL INCOME NEARLY GREW BY
HALF OF 26% DURING THAT TIME
PERIOD AND THAT HOUSING PERMIT,
THEY ALSO GREW BY OVER 50% AND
THEN THEY GREW BY 21%. WHICH IS
QUITE SIMILAR TO THAT GROWTH
THAT I WOULD SAY. AND THE
ASSESSED VALUE, WHICH IS THE
BASIS OF THE PROPERTY TAXES THA
REALLY TOOK OFF AND THAT IN FAC
IT DID MORE THAN DOUBLE IN THAT
TIME PERIOD AND THAT IT IS,
AGAIN, SOMETHING TO NOTE ALONG
THE WAY THAT THE GROWTH WAS SO
GRAPHIC THAT THERE WAS A
DECISION TO THAT RESOLUTION IN
2016 AND TO DISCONNECT THE
EMERGENCY FUND FROM THE GROWTH
IN THE ASSESSED VALUE AND TO US
THAT METRIC AS DESCRIBED
EARLIER. THEY WERE GROWING MUCH
SLOWLY. AND THE RAPID GROWTH IN
THAT ASSESSED VALUE WAS
REQUIRING THE EVER LARGER TO TH
EMERGENCY FUND AND AT A TIME
WHEN AS THEY DID IN THAT
RESOLUTION THAT WE WERE IN THAT
HOMELESS EMERGENCY AND THEY WER
NEEDED TO BE ALLOCATED TO THE
GREATER NEED. AND SO IT SEEMS
THAT PERHAPS BEEFING UP THAT
RESERVE FUND IN GOOD TIMES MIGH
HAVE BEEN AN ALTERNATE TO
CONSIDER. AND IN REGARDS TO HOW
TO NAVIGATE WHEN TIMES WERE
REALLY GOOD. AND IF YOU GO TO
THE NEXT SECTION. AND THAT I DO
HAVE TO SAY THAT AND THANK YOU
FOR FLAGGING THIS CHANGE TO THE
ASSESSED VALUE AND THAT HOLIDAY
GIVEN. I WASN'T FAMILIAR WITH
THAT HISTORY, SO I WAS LEARNING
SOMETHING NEW. IT REMINDED ME O
THE LEVEL WHEN IN GOOD TIMES,
INDIVIDUALS, THEY WILL ADVOCATE
FOR THAT RATE HOLIDAY RELATED T
THE WORKERS COMPENSATION FUND
AND THEN IN THAT RECESSION TIME
A LOT OF PEOPLE WILL NEED THOSE
FUNDS FOR THE UNEMPLOYMENT
INSURANCE OR THE WORKERS COMP
AND THAT IT WAS A REALLY HARD
LESSON AND THAT GREAT RECESSION
WHEN THE RATE WAS APPLIED FOR
INSURANCE AND ALMOST EVERYBODY
NEEDED IT THAT IT SOUNDS LIKE A
GOOD IDEA AND THAT IT IS WHY IT
IS SO IMPERATIVE TO PROTECT
THESE RESERVES TO SAVE TIME FOR
WHEN THINGS ARE BAD AND SO THAN
YOU FOR FLAGGING THIS AS I HAD
NOT REALIZED THAT IT HAS CHANGE
AND APPRECIATE THAT FLAG AND
THAT PERHAPS IT'S THE FUTURE
WORK TO THINK ABOUT HOW TO
RECREATE THAT AND I'M SURE THAT
IT WILL TAKE A LOT OF WORK AND
THAT IT IS NOT A PART OF THE
OPTION, BUT I'M FLAGGING THAT
HISTORY, WHICH HAS BEEN MADE
HARDER TIMES FOR THE WORKERS AN
SMALL EMPLOYERS. AND SO THANKS
FOR FLAGGING THAT.
>> AND TO RELATE TO THE GROWTH
AND THAT ECONOMY WITH REVENUES,
SO THE REVENUE BASE GREW RAPIDL
SINCE 2012 THROUGH 2019 AND
SIMILAR TO EXPENDITURES ABOUT
50% OR 7% ON THE ANNUAL AVERAGE
AND IT IS A GOOD AFALL SIS FOR
THAT ACCURATE CITY DONE AND WHA
IS AVAILABLE ON THEIR WEBSITE
THAT WOULD LOOK AT THEIR REVIEW
AND OVER THAT TIME PERIOD AND
THAT IN TERMS OF MEETING THE
EXPERIENCE AND SO REVENUES
COMING IN BETTER THAN EXPECTED.
AND WHAT THAT MEANT IS THAT EAC
YEAR AND AS THEY WILL RECOGNIZE
AND LOOKING AT THAT BILL THAT
THE REVENUE REQUIREMENTS AND
THAT THEY WILL BE MADE. AND SO
THAT IS WHAT WILL FACTOR IN AND
HOW THEY PLAY IN AND HOW THEY
LOOK AT THAT PANDEMIC PERIOD
THAT IT IS FASCINATING WHEN YOU
WOULD LOOK AT THEIR PLANS AND
THAT IT WILL BE A DOCUMENT
HIGHLIGHTED OVER THE LAST COUPL
OF YEARS. AND WITH THE COMMUNIT
AND THAT COUNCIL AND SHOWING NO
ONLY THAT NEAR TERM BUT THE
LONG-TERM VIEW AND THAT
FINANCIAL SITUATION AND THAT TH
PLAN THAT WAS SUBMITTED WITH TH
BUDGET IMMEDIATELY PRIOR TO
2020, SO PRIOR TO THE PANDEMIC
WILL SHOW THAT THERE WILL BE A
$39 MILLION DEFICIT. SO EVEN
BEFORE THE PANDEMIC, THERE WAS
PROJECTION THAT THEY WERE GOING
TO OUTPACE REVENUES. AND TO
TOUCH ON WHAT THEY MENTIONED
THAT IT APPEARS BASED ON THE
REVIEW THAT THAT PLAN DID NOT
INCLUDE THE PROVISION THAT WAS
APPROVED BY COUNCIL AND IN THAT
YEAR THAT EITHER 2019 OR 2018
FOR HUMAN SERVICES PROVIDERS
THAT NOW HAS BEEN INCLUDED IN
WHAT WE'RE LOOKING AT TODAY. BU
BACK THEN, IF THAT WAS INCLUDED
IN THAT PROJECTION THAT THE
DEFICIT FOR THE FUTURE WOULD
HAVE BEEN LARGER THAN THE $18
MILLION BY 2023. AND SO THIS IS
TO SAY EVEN BEFORE THAT PANDEMI
THAT THEY WERE PROJECTED FOR TH
FUTURE TO MAKE IT HARDER. AND
THAT AT THE TIME IT IS NOT CLEA
ON WHAT WILL BE USED FOR THOSE
FINANCIALS, AND THAT THIS IS
SOMETHING WE WILL TALK ABOUT
WITH THAT TOOL KIT AND KNOWING
WHAT THEY ARE TO MAKE IT BETTER
AND WHEN YOU'RE TRYING TO FIGUR
OUT WHAT'S GOING ON AND IN
UNDERSTANDING THE ALTERNATIVES
AND WHAT DIFFERENT THINGS ABOUT
THAT FUTURE COULD MEAN FOR YOUR
FINANCES. SO THAT IS KIND OF TH
VIEW OF THE PANDEMIC.
>> AND LET'S PAUSE THERE FOR A
SECOND. THIS LAST ONE IS REAL
IMPORTANT AND THAT IT WAS YOU
AND THAT TEAM AND IT WAS NOT
INCLUDED IN THAT TIME AND
LEGISLATION THAT WAS PASSED. AN
IT WAS IMPERATIVE THAT YOU
CAUGHT IT WHEN YOU DID AND SO W
COULD IDENTIFY WHAT WAS THE
FUTURE BUDGETING TO MAKE IT IN
AND SO THANK YOU FOR CATCHING
THAT AND THE TEAM. AND IT IS
UNKNOWN WHAT DETAILED
ASSUMPTIONS WERE USED AS THEY
WERE NOT DISCLOSED BY THE
EXECUTIVE. IT HAD IS EXACTLY WH
WE'RE IN THE MIDDLE OF THE
BUDGET TRANSPARENCY DISCUSSION
RIGHT NOW AND A PART OF THE
RECOMMENDATION THAT THEY HAVE
BEEN ASKING FOR IN THE LAST
THREE YEARS AND A PART OF WHAT
WE'RE TRYING TO GET OUT THAT
WILL BE COMING NEXT MONTH. AND
WE HAVE TAKEN STEPS IN LAST
YEAR'S BUDGET AND MAYBE PRIOR T
TRY TO LIFT UP THE ASSUMPTIONS
INTO THAT ABOVE THE LINE
CALCULATIONS AND THAT IS
SUFFICIENT ENOUGH TO CARRY
FORWARD IN FUTURE YEARS TO KNOW
WHAT IT WILL BE GIVEN THE
ONGOING NEGOTIATIONS THAT ARE
HAPPENING. WE ARE NOT SUPPOSE
TO, RIGHT? BUT WE WANT TO MAKE
SURE THAT IS A PART OF THE
PLANNING THAT'S GOING FORWARD
AND THAT IT DOES NOT GET OUT AN
THAT TOM, COULD YOU BOTH REMIND
US OF WHAT WE HAVE ALREADY DONE
TO TRY TO ELEVATE THE FINANCIAL
PLAN, THE PLANNING THAT WILL
NEED TO GO INTO THE FUTURE
EXPENSES RELATED TO THE
ASSUMPTIONS PURSUANT TO SOME OF
OUR CONTRACTS AND ALSO WHAT WE
ARE GOING TO BE DOING IN THAT
VERY NEAR FUTURE FOR SUCCESSFUL
LEGISLATION THAT I'M MOVING
FORWARD?
>> ABSOLUTE LYRIC CHAIR
MOSQUEDA. AND SO TODAY, WE HAVE
BEEN DOING WITH YOUR LEADERSHIP
THE UPDATES OF THE GENERAL FUND
FINANCIAL PLAN AT COMMITTEE. AN
SO THAT IS SOMETHING THAT
PREVIOUSLY HAD NOT BEEN DONE AN
NOW IT IS A REGULAR TOPIC TO
DISCUSS THAT COMMITTEE. ANY TIM
THERE IS A REVENUE FORECAST
THAT'S PRESENTED, WE UPDATE
THOSE NUMBERS AND SHOW WHAT THE
NEW PROJECTIONS WILL LOOK LIKE.
AND WITH REGARDS TO THAT REVENU
FORECAST, TWO YEARS AGO COUNCIL
ADOPTED A NEW APPROACH WITH
REGARDS TO REVENUE FORECASTING
BY CREATING THE INDEPENDENT
OFFICE OF ECONOMIC REVENUE
FORECAST. AND SO THAT GROUP,
WHICH THEY ARE MEETING THIS
AFTERNOON OF THAT FORECAST. THA
GROUP IS INDEPENDENT, SO IT IS
NOT DIRECTLY RESPONDENT TO
EITHER THAT EXECUTIVE
LEGISLATIVE BRANCH. THEY'RE
GIVEN THE FREEDOM TO PRODUCE
INDEPENDENCE AND NON-BIAS
REVENUE FORECAST THAT ARE
PROVIDED TO A FORECAST COUNCIL
THAT STAFF WAS LED BY TWO
MEMBERS OF THE EXECUTIVE, TWO
MEMBERS OF THE COUNCIL BRANCH T
KIND OF DETERMINE WHAT THE
REVENUE ASSUMPTION SHOULD BE IN
REGARDS TO THE ECONOMIC
SCENARIOS. AND SO THAT KIND OF
PUTS IT ON THAT APPROACH IN
REGARDS TO REVENUE FORECASTING.
AND ALSO THERE WAS AS REQUIRED
BY A SLIDE FROM LAST BUDGET, TH
LAST BUDGET PROCESS, THERE WAS
WORK GROUP THAT INCLUDED MEMBER
OF CENTRAL STAFF AND THE
BUDGET'S OFFICE TO LOOK AT JUST
THIS TYPE OF MATERIAL AND TO
FIGURE OUT DIFFERENT WAYS TO
DEAL WITH BIANNUAL BUDGETING,
TREATING THE SECOND YEAR OF THE
BIANNUAL BUDGET AND WITH MINIMA
MODIFICATIONS, AND DOING MORE
DELIBERATE FINANCIAL MONITORING
OF EXPENDITURES AND THE FORECAS
THAT WAS CREATED DOES A REGULAR
QUARTERLY REVENUE REPORT, AND S
SHOWING THE KIND OF PERFORMANCE
OF OUR GENERAL FUND AND THE
OTHER FUND REVENUES AS THE YEAR
PROGRESSES AND LOOK FORWARD TO
THE FUTURE AND THE CITY BUDGET'
OFFICE THAT'S UNDERWAY AND
HOPEFULLY THAT WE WILL HAVE A
COMPLETE PRODUCT BY NEXT YEAR
THAT WILL INFORM THAT
EXPENDITURE SIDE OF THE FEELING
TO GET THAT REAL-TIME
PERFORMANCE ON THE CITY
FINANCES. AND THERE IS A PART O
THE WORK GROUP RECOMMENDATION
AND AN INTENT TO LOOK AT
PLANNING RESERVES. AND SO AS YO
VERY WELL DESCRIBED, KIND OF
BELOW THAT LINE LIMITS OF THE
BUDGET. THINGS THAT ARE NOT
INCLUDED IN THAT BUDGET AND
PARTICULARLY IN REGARDS TO SOME
LABOR COSTS AND OTHER LEGAL
CONSIDERATIONS. MOVING THOSE
ABOVE THE LINES TO BE A PART OF
THE BUDGET THAT WILL GET
DELIBERATED AND ADOPTED. THAT'S
LOOKING AHEAD TO TRY TO HAVE
THAT IN PLACE FOR 2025. AND THE
FINALLY FISCAL NOTES, THE LAST
COMMITTEE MEETING. THIS IS LAST
WEEK. WE WENT TO A REVIEW OF OU
CURRENT PROCESS AND THE FISCAL
AND SUMMARY ESTIMATES OF
LEGISLATION AND A SERIES OF
OBSERVATION AND WHAT YOU
INDICATED BUILDING THE
LEGISLATION AND SOME OF THOSE
BEST PRACTICES TO GO INTO EFFEC
IN 2024. AND SO PERHAPS NOT AN
EXHAUSTIVE PAY, BUT HEY, A LIST
OF THE HIGHLIGHTS IN THAT VERY
SAME THING THAT WOULD HAVE BEEN
UNDERWAY FOR THE LAST SEVERAL
YEARS TO ENHANCE THE FISCAL
TRANSPARENCY AND TO ENHANCE THA
AS POSSIBLE FOR THE SECOND
ACCOUNT.
>> GREAT, THANK YOU. AND SO
PLEASE NOTE AS TOM SAID, THESE
HAVE BEEN UNDERWAY FOR A PART O
THE YEAR AND THE WORK GROUP AND
A PART OF THE STRATEGY THAT WE
WERE ALREADY MOVING IN AND CALL
FOR ADDITIOAL TRANSPARENCY AND
ACCOUNTABILITY, AND OPENNESS TO
HAVING CENTRAL STAFF AND THE
EXECUTIVE HAVE BETTER ACCESS TO
SOMETHING WE'VE BEEN ACTIVELY
WORKING ON AND THAT WILL ONLY
HELP TO INFORM THAT PUBLIC AS
WELL. WHEN WE HAVE GREATER
ACCESS TO THE INFORMATION, WE
SURE IT IN CENTRAL STAFF MEMO
AND A PART OF OUR PROCESS. AND
THE LEGISLATIVE BRANCH IS THE
PLACE TO DO THAT DEEP DIVE INTO
THE BUDGET PROPOSAL, RIGHT? IT'
THE PROPOSAL. OURS IS THE
ANALYSIS IN THE FINAL
CONSTRUCTION. EVERYTHING THAT W
COULD DO TO GIVE OURSELVES THE
ADDITIONAL TOOLS AND THE
TRANSPARENCY, THE FURTHER
ACCOUNTABILITY TO BOTH MEMBERS
OF THE PUBLIC AND BETWEEN
BRANCHES OF THE GOVERNMENT AS
WELL. AND SO THAT IS SOMETHING
THAT HAS BEEN LONG ANTICIPATED,
LONG WORKED ON. I'M EXCITED THA
THERE SEEMS TO BE A LOT OF
INTEREST IN HELPING TO MOVE
FORWARD THESE TRANSPARENCY
IDEAS. PLEASE BE ON THE LOOKOUT
FOR THAT LEGISLATION. WE'LL HAV
THE COMMITTEE MEETINGS ON THE
14th AND THE 20th OF SEPTEMBER
TO CONSIDER SUCH LEGISLATION.
ALL RIGHT, LET'S GO INTO FORWAR
LOOKING AND TALK ABOUT WHAT'S
HAPPENED THAT IS EXACERBATING
SOME OF OUR BUDGETARY CRISIS
GIVEN THE PANDEMIC AND THE WAY
IN WHICH REVENUE FLOWED AND THE
NEEDS THAT WE SAW EMERGE.
>> SO THIS IS UNDER ITEM TWO OF
THE MEMO. IT IS ON PAGE, UM --
PAGE FIVE. AND SO AS WE RECALL,
THE COVID PANDEMIC BEGAN AROUND
MARCH OF 2020. AND A SERIES OF
PROBING ASIAN AND THE STATE OF
EMERGENCY BOTH LOCAL AND
STATEWIDE AND THERE WAS THE
GOVERNOR STATE ORDER, WHICH SHU
DOWN NON-CRITICAL MOVEMENTS OF
VISITORS AROUND THE STATE, WHIC
HAD TWO IMPORTANT FACTS. AND TO
ADDRESS THAT PUBLIC HEALTH
EMERGENCY, WHICH AT THAT TIME
WAS VERY UNCERTAIN ABOUT. AND I
WAS LEADING TO THE LOSS OF LIFE
AND ALSO THEY SHUT DOWN THE
CRITICAL SECTORS IN THAT ECONOM
AND WHICH IS FOR THE REVENUE OF
THE SERVICES. AND SO WE HAVE AN
INCREASE REVENUE OF THE SERVICE
DEMAND AND UNFORTUNATELY AN
ABRUPT KICK TO THE ECONOMY THAT
HELPS FUND THOSE SERVICES. AND
THEN, IN FACT, LOOK UNDER THE
ITEM HERE OF THE MEMO, IN 2020,
THE FIRST YEAR OF THE PANDEMIC,
THE ONGOING ACTUAL GENERAL FUND
REVENUES DECREASED BY ABOUT $18
MILLION, SO THAT'S ABOUT 13%.
AND THE IMPACT WAS IMMEDIATE AN
FAIRLY STEEP. THE REVENUES DID
BEGIN TO GROW AGAIN. HOWEVER, I
WAS AT A SLOWER RATE. IF YOU
RECALL EARLIER AND YOU MENTIONE
PRIOR TO 2019 AFTER THE GREAT
RECESSION, REVENUES WERE GOING
ABOUT 70% FOR YEAR AND HOWEVER
DURING THE PANDEMIC PERIOD
THROUGH 2022, THAT IT GOT DOWN
TO ABOUT 2% ANNUALLY AND SO IT
IS LIKE DIGGING A BIG HOLE AND
THEN SLOWLY ADDING DIRT IN AND
SO THAT KIND OF SUMMARIZES KIND
OF THE SNAPSHOT OF IMMEDIATELY
WHAT HAPPENED. HOWEVER, THE PAN
DEMOBBING LEFT FOR TWO YEARS AS
YOU'LL RECALL. AND THE ISSUES
THAT THE CITY WAS EXPERIENCING
KIND OF LOOKING AT THE SUCCESS
AND THAT GROWTH PRIOR TO 2019
AND THE THINGS OF THE HOUSING
CRISIS AND THE HOUSING
EMERGENCY, THAT IT'S EXACERBATE
BY COVID EMERGENCY DEMAND. AND
RACIAL RECKONING THAT WAS
BROUGHT BY THE MURDER OF GEORGE
FLOYD BY THE POLICE OFFICER. AN
SO AS A RESULT, THE GENERAL FUN
BUDGET EXPENDITURES GREW BY 18%
SO $246 MILLION. SO WE HAD KIND
OF A DOUBLE WHAMMY FOR LACK OF
MORE ELOQUENT TERM OF A
DECLINING IMPACT REVENUE BASE
WITH SLOW GROWTH. AND JUST
CRITICAL NEEDS THAT WERE
INCREASING. AND SO THAT SORT OF
YOU KNOW, AS I INDICATED
EARLIER, PRIOR 2020, THE
FINANCIAL PLANS WERE PROJECTING
THE DEFICIT. AND THEN WE GO INT
THE CRISIS. AND THEN MATTERS GO
MUCH WORSE. AND SO THAT IS WHAT
MAYOR AND COUNCIL HAVE HAD TO
ADDRESS OVER TH LAST THREE
YEARS. IF WE COULD LOOK AT THE
NEXT SLIDE. WE WILL KIND OF TAL
ABOUT HOW WE MANAGED THE DEAL
WITH THAT. WITH THE SERVICE NEE
BECAUSE EXPENDITURES HAVE NOT
BEEN DECREASED AND NOR HAS THE
SIGNIFICANT DECLINE IN THE
DEMAND FOR SERVICE IN THE CITY.
AND IN ORDER TO BALANCE THAT
BUDGET AND GIVEN THAT OUR
STRUCTURAL REVENUES WERE DOWN
GROWING MORE SLOWLY AND THE
NEEDS WERE HIGHER. THERE ARE A
VARIETY OF MEASURES. AND IT IS
BEST JUST GOING THROUGH THEM ON
BY ONE. ONE THING WE'VE USED IS
THE PRIOR YEAR FUND BALANCES. I
MENTIONED THAT THERE IS A TRACK
RECORD OF REVENUE ACTUALS THAT
ARE COMING IN BETTER THAN WHAT'
FORECASTED. THERE'S AN
ADDITIONAL ONE-TIME MONEY THAT
COULD BE USED TO BALANCE NEXT
YEAR'S BUDGET. AND ANOTHER
ELEMENT THAT'S NOT HERE, BUT
IT'S SIMILAR, A PART OF THE
ONE-TIME BALANCE IS UNDERSPEND.
AND SO AS WE HAVE NOTED IN OUR
FINANCIAL PLANNING PRESENTATION
THAT WE'VE DONE AT THE COMMUNIT
FOR THE LAST FEW YEARS, AT THE
END OF THE YEAR, THERE'S --
WE'VE BENEFITED FROM SPENDING
LESS THAN WHAT'S PLANNED. AND
THAT JUST PROVIDES EXTRA
RESOURCES ONE TIME, BUT SUPPORT
SPENDING IN THE NEAR TERM. AND
ALSO PARTICULARLY IN 2020 AND
2021, THERE WAS THE USE OF THE
REVENUE PRESENTATION FUND, WHIC
IS INTENDED TO BE USED WHEN
REVENUES ARE IMPACTED BY THE
ECONOMIC FORCES. AND ALSO THAT
EMERGENCY FUND, SINCE WE WERE I
A COVID EMERGENCY IS THE USE OF
THAT BUCKET OF MONEY TO SUPPORT
SPENDING. AND FORTUNATELY
COUNCIL HAS BEEN ABLE TO
REPLENISH THE REVENUE
STABILIZATION FUND THROUGH THEI
FULL LEVEL, HOWEVER, THAT
EMERGENCY FUND IS STILL DOWN.
AND PERHAPS IT SHOULD BE BY
2026. AND ALSO THERE WERE TWO
SIGNIFICANT NOVEL CIVIL GRANTS
THAT WERE AVAILABLE FOR OUR USE
FIRST WAS THE ELITE FUNDS FROM
THE CORONAVIRUS AID IN RELIEF
AND THE SECURITIES ACT OF 2020.
SO THAT HELPED SIGNIFICANTLY
WITH SOME OF THE PUBLIC HEALTH
MEASURES THAT WERE UNDERWAY. AN
ON ONE THING IN REGARDS TO THE
GENERAL FUND IS BECAUSE CITY
STAFF, THEY WERE BEING
REDIRECTED FROM THEIR ORIGINALL
INTENDED PURPOSE TO DO REALLY
COVID FOCUS WORK, WE WERE ABLE
TO USE THOSE CRF FUNDS AND THAT
IS THE ACRONYM THAT WE USED TO
SUPPORT THAT WORK AND NOT ON TH
LIMITED BASIS AND WHERE IT MADE
SENSE TO DO SO. AND ALSO OUR
THOUGHTS WITH THE AMERICAN
RESCUE PLAN ACT OF 2021,
ACTUALLY PROVIDED A PURCHASE TO
THE DIRECT REVENUE REPLACEMENTS
SOME OF THOSE FUNDS WERE USED
FOR INCREASING NEEDS LIKE
ADDITIONAL PUBLIC HEALTH
MEASURES BECAUSE OF COVID. AND
ALSO A PORTION OF IT THAT WAS
JUST USED AS REVENUE
REPLACEMENTS. SO GIVEN THE FACT
THAT WE WERE ABLE TO USE ALL
CITY FUNDS AND THAT WE HAD ABOU
THE FUNDS WHERE IT SHOULD BE AN
BASED ON THE FEDERAL BENCHMARK
THAT WE WERE ALLOWED TO USE
THOSE FUNDS TO BACK FILL THE
GENERAL REVENUE. AND ALSO MORE
RECENTLY THERE HAVE BEEN SOME
ONE-TIME SPENDING REDUCTIONS
THAT HAVE TAKEN PLACE. I WOULD
NOTE THAT IN A LOT OF THOSE
CASES THEY WERE KIND OF OFFSET
BY THE INCREASED SPENDING. THIS
IS HIGHLIGHTED IN THE MEMO FROM
LAST FALL THAT WAS PROVIDED
EARLY IN THAT BUDGET. THERE IS
ABOUT $52 MILLION OF THE ONGOIN
SPENDING THAT WAS ADDED AND IT
WAS PAID FOR BY TEMPORARY
SPENDING REDUCTION AND THAT
TEMPORARY UNDERSPENDING
ASSUMPTION IN 2024. BUT THAT WA
THE MEASURE, YOU KNOW, WHERE
THERE WAS ADDITIONAL SERVICES
ADDED, BUT IT WAS KIND OF FUNDE
FOR THE LACK OF THE BETTER WORD
BY THE ONE-TIME REDUCTION.
>> AND I THINK THE CONVERSATION
WAS HARD. JUST AS A REMINDER,
THE CONVERSATION WAS HARD
BECAUSE WE ALL KNEW THAT IN 202
AND 2021 THAT THERE WERE
INCREASED NEEDS AND THAT THESE
WERE ONE-TIME DOLLARS. WE REALL
TRIED TO REMIND OURSELVES THAT
THESE ARE FEDERAL INFUSED
DOLLARS THAT WILL GO AWAY. BUT
WE WANTED TO SET UP THE SYSTEMS
AND RESPONSES TO MEET THE
ONGOING NEEDS OF THE COMMUNITY,
WHETHER IT WAS SMALL BUSINESS
SUPPORT, FOOD ASSISTANCE,
DOMESTIC VIOLENCE INTERVENTION
STRATEGIES, DIRECT SERVICES IN
THE COMMUNITY. WE NEEDED TO GET
THOSE DOLLARS OUT. I THINK THE
HARD PART HAS BEEN RECOGNIZING
THAT THE IMPACTS OF COVID ARE
ONGOING. AND THE LINGERING
SHADOW OF THE PANDEMIC IN TERMS
OF THE CRISIS BOTH WHETHER IT I
FINANCIAL AND STABILITY, HOUSIN
INSTABILITY, THE PERSONAL
VIOLENCE. THOSE ISSUES CONTINUE
AND WE DON'T HAVE FEDERAL
DOLLARS TO CONTINUE TO BACK FIL
OUR GENERAL FUND THAT HAS YET T
CATCH UP AS ARTICULATED IN THE
MEMO HERE. WE WILL TALK ABOUT
WHEN IT IS PROJECTED TO GROW TO
YOU KNOW, AT LEAST PRE-PANDEMIC
LEVELS AND IT IS NOT RIGHT NOW.
AND SO WE HAVE BEEN TRYING TO B
RESPONSIVE TO THE COMMUNITY
NEEDS. QUICKLY EXPEDITE THE USE
OF THE DOLLARS, OUR FEDERAL
DELEGATION CONTINUES TO APPLAUD
SEATTLE FOR BECAUSE WE ARE AMON
THE CITIES THAT ARE REALLY
EFFICIENT WITH GETTING THOSE
DOLLARS OUT THE DOOR. BUT AS
THOSE DOLLARS ARE NO LONGER
AVAILABLE, WE CONTINUE TO SEE
THE NEED IN COMMUNITY WITHOUT
FEDERAL SUPPORT FOR THOSE FUNDS
AND SO I APPRECIATE THAT THIS I
A GOOD SUMMARY OF HOW WE USE
THOSE DOLLARS TO PLUG HOLES IN
DECREASED REVENUE, BUT THE
INCREASED NEEDS WILL CONTINUE
RIGHT NOW AND INTO THE FUTURE.
>> ABSOLUTELY. I THINK PLUGGING
HOLES, IT'S A GOOD
CHARACTERIZATION. AND IN FACT
THE LAST ELEMENT OF THE ONE-TIM
SOLUTION IS PERHAPS IT IS ONE O
THE MOST SIGNIFICANT IN REGARDS
TO THE NEAR-TERM BUDGET. THAT'S
THE JUMP START ON THE PAYROLL
EXPENSE TAX. AND SO THAT IS A
NEW TAX THAT WAS APPROVED IN
2020 BY COUNCIL. AND THAT IT IS
STRUCTURED AS THE PROGRESSIVE
TAX ON THE HIGH LEVELS OF THE
COMPENSATION. AND THE LARGE
PRIVATE BUSINESSES. AND SO DO W
THINK THERE ARE A SERIES OF
SPENDING LEGISLATION AND THE US
OF THOSE FUNDS THAT CODIFY WITH
THE BULK OF IT GOING TOWARDS
AFFORDABLE HOUSING AND THEN ALS
AMOUNTS GOING TO THE EQUITABLE
DEVELOPMENT AND THE INVESTMENTS
THE ECONOMIC VITALIZATION AND
GREEN NEW DEAL INVESTMENTS, THE
SOME ADMINISTRATION ON THE HILL
AND THE INVESTMENTS FROM THE
FUNDS. AND SO THAT WAS THE
INTENT OF THE JUMP START PAYROL
EXPENSE TAX FROM 2020. HOWEVER,
WE WERE IN THE MIDDLE OF THE
DIFFICULT SITUATION WITH THE
COVID PANDEMIC. AND AT THE TIME
THE FIRST YEAR REVENUE WAS
STRUCTURALLY TOWARDS HELPING TO
BRIDGE THAT GAP AND THAT REVENU
GAP AND A PORTION WAS ALSO
DIRECTED TOWARDS THE NEW COVID
INVESTMENTS. AND SO THAT WAS DU
AS THE TEMPORARY MEASURE. AND
HOWEVER THAT TEMPORARY MEASURE,
THEY HAD TO CONTINUE FOR A
SERIES OF YEARS, THE SMALLER
AMOUNT. THEY HAVE BEEN ABLE TO
GO TOWARDS THEIR ORIGINALLY
PURPOSES, REMAINING SOME PORTIO
OF THE TAX THAT IS USED TO BACK
FILL THE GENERAL FUND LOSS. AND
MORE RECENTLY THE LEGISLATION
AND THE ORDINANCE, WHICH WAS
LABELED THAT ORDINARY
DEVELOPMENT, THAT IT DOES ALLOW
THROUGH 20 IT 24 TO CALL THEM
OUT FROM THE JUMP START PAYROLL
TAX FUND TO GO TOWARDS THE
GENERAL FUND BACK FILL. HOWEVER
IN 2025 THE FULL MEASURE OF THE
TAX REVENUE GOING TOWARDS THE
INTENDED HOUSING IS A PRETTY BI
DEAL FOR THE DEVELOPMENT
INVESTMENTS. THERE'S BEEN A WAY
OF BEING ABLE TO MEET THE NEEDS
WITH RESOURCES AT HAND. BECAUSE
THEY ARE TEMPORARY, THEY DROP
OFF IN 2025, WHICH IS KIND OF
LEADING US TO THE PROJECTION OF
THE FINANCIAL SITUATION, THE
GENERAL FUND. AND I WOULD SAY
THE DEPUTY DIRECTOR PER INITIAL
COMMENTS INDICATED THAT ACROSS
ALL FUNDS, THAT THERE ARE SOME
DECISIONS ABOUT REVENUE
EXPENDITURES BEING MADE. IN
REGARDS TO THE PAYROLL TAX IN
PARTICULAR THAT IT IS WORTH
NOTING THAT THOSE FUNDS DO GO
TOWARDS CODIFYING THE SPENDING
PLAN. IT'S NOT THAT THEY ARE A
DIVERSION OF THAT MONEY TOWARDS
THE FUND THAT IS A CHOICE AND
THAT IT REDUCES THE AMOUNT THAT
IT WILL GO TOWARDS HOUSING, THE
OTHER PURPOSES. I DO SEE A
QUESTION FROM COUNCIL MEMBER
PEDERSEN.
>> LET ME ASK TOM TO SUMMARIZE
THIS LAST PHOTOGRAPH HERE THAT
SUMMARIZES THE WHOLE SECTION,
THEN I'LL TURN IT TO YOU.
>> GREAT. YES, SO THIS LAST
PIECE IS
THE AFFORDABLE HOUSING CRISIS.
DID LINK TO A DEPARTMENT OF
WASHINGTON STATE DEPARTMENT OF
COMMERCE ANALYSIS THAT SHOWED
THE DEPTH OF THE NEED. AND SO
THAT'S USEFUL INFORMATION TO
SHOW THAT THOSE MONEYS DO HAVE
PURPOSE, WHICH IS, I GUESS, GOE
WITHOUT SAYING IN REGARDS TO
THAT COUNCIL CODIFIED SPENDING
PLAN THAT RELATES TO THAT. BUT
THEN ALSO THAT THE INVESTMENTS
FOR SMALL BUSINESS AND WORKERS
ARE ALSO, YOU KNOW, KIND OF THE
TITLE JUMP START THAT'S INTENDE
TO REVITALIZE. BECAUSE WE'RE
VIEWING FROM THE SMALLER
ECONOMIC PACE, THEY ARE
BENEFICIAL IN THAT REGARDS AS
WELL.
>> OKAY. THANK YOU SO MUCH, TOM
I HAVE A QUESTION FOR
COUNCILMEMBER PEDERSEN. PLEASE
GO AHEAD.
>> THANK YOU, CHAIR. I JUST
WANTED -- I HAVEN'T COMMENTED
DURING THE WHOLE COMMITTEE
MEETING, SO IS THIS A GOOD TIME
TO SORT OF SUMMARIZE THOUGHTS
THAT SOME OF THE OTHER COMMITTE
MEMBERS HAVE OR ARE WE GOING TO
HEAR SOMETHING ELSE?
>> WE ARE GOING TO -- IF THIS I
LIKE GENERAL HIGH-LEVEL SUMMARY
THOUGHTS, LET'S GET THROUGH THE
MEMO AND THEN I'LL COME BACK TO
YOU FIRST.
>> OKAY, THANK YOU.
>> EXCUSE ME, COUNCILMEMBER
LEWIS, PLEASE GO AHEAD.
>> OH NO, I JUST TOOK THAT AS A
INVITATION TO GET IN LINE.
>> I LOVE IT.
>> GREAT. WE HAVE TWO PEOPLE
LINED UP. I APPRECIATE YOUR
ENGAGEMENT, COLLEAGUES. SO TOM,
LET'S GO THROUGH THE LAST TWO
SECTIONS OF YOUR MEMO BECAUSE
THIS IS SORT OF THE CRITICAL
NEXT STEP COMPONENTS.
>> GREAT. SO THIS, PART THREE I
SORT OF WHERE WE ARE NOW, WHAT
WE'RE LOOKING AT. I JUST WANT T
HIGHLIGHT THAT IT IS DIFFICULT
TO SEE, BUT THERE ARE, IT'S
IMPORTANT TO NOTE THAT CERTAIN
SECTORS OF OUR ECONOMY HAVE NOT
RECOVERED TO THE 2019 MODELS,
AND SO THAT I WOULD LOOK AT THE
SEA-TAC VOLUMES AND LAST YEAR
THAT IT IS ON THE PAGE OF THAT,
WHICH I LINKED TO. AND THAT THE
ARE 11.9% BELOW THE 2019 LEVELS
THAT YOU'LL SEE THIS YEAR, WE
ARE DOING BETTER THAN LAST YEAR
AND THAT THE YEAR BEFORE WE WER
DOING BETTER. BUT WE ARE STILL
NOT UP TO WHERE WE WERE IN
REGARDS TO TOURISM. WHEN YOU CA
SEE THAT IMPACTING OUR REVENUES
WHEN YOU LOOK AT THE DEPARTMENT
OF REVENUE, THE DEPARTMENT OF
REVENUE, THE SALES TAX
DISTRIBUTION, WHICH IF YOU WERE
JUST THERE FOR INFLATION AND
SHOWED THAT THERE WERE ABOUT
20%, BELOW THE 2019 LEVELS FOR
THAT IMPORTANT PIECE OF OUR
SALES TAX PORTFOLIO. AND ALSO
THE VACANCY AND 19.3%, THAT THE
WERE MUCH LOWER THAN THAT PRIOR
TO THE PANDEMIC. AND THEN ALSO
THE FORECAST OFFICE REGIONAL
ECONOMIC FORECAST WOULD SHOW
THAT 25% BELOW 2019 LEVELS, THE
COULD ACTUALLY NOT GET BACK TO
THAT LEVEL UNTIL 2026. AND IN
TERMS OF THE REAL TIME, YOU CAN
SEE THE SALES TAX SIMILARLY THA
IT IS 20% BELOW IN REAL TERMS,
SO THE INFLATION OF JUSTICE
BELOW 2019 LEVELS. THAT JUST
REPRESENTS WHAT IS INDICATIVE O
THE LAW FOR THE GENERAL FUND TA
BASE. AND THEN ALSO I LOOK AT
THE PRE-2020 FINANCIAL PLAN AND
THOSE PLANS WERE 2023. FOR THIS
YEAR FOR SEVERAL OF OUR REVENUE
CATEGORIES, WE WERE PROJECTING
TO HAVE HIGHER DOLLARS, HIGHER
AMOUNTS THAN WE ARE ACTUALLY
RECEIVING RIGHT NOW. SO I WON'T
GO THROUGH THE LIST. BUT IT'S I
THESE AREAS THAT ARE NOT REALLY
DEPENDENT UPON INFLATION AS
MUCH. THEY'RE REALLY BUILT BY
CASE LOADS AND PARKING
ACTIVITIES, THINGS LIKE THAT. I%
THOSE REVENUES WERE PERFORMING
AT 2023 LEVELS, WE WOULD HAVE A
ADDITIONAL $46 MILLION TO DEPLO
FOR GENERAL FUND SERVICES. AND
SO THIS IS JUST A SNAPSHOT AND
KIND OF SIMILAR TO THE ITEMS OF
THE GROWTH. AND THESE ARE JUST
KIND OF THE REAL OBVIOUS
INDICATORS THAT WE ARE STILL NO
BACK TO WHERE WE WERE IN REGARD
TO THE PRE2020 PLANNING. AND
AGAIN, THE SERVICE NEEDS ARE
STILL THERE. AFFORDABLE HOUSING
HOMELESS SAFETY, THEY ARE ALL
THINGS THAT ARE TOPICS FOR
COUNCIL. NO INDICATION OF A
LOWER NEED. AFFORDABLE HOUSING
WAS A TOPIC THAT WAS DISCUSSED
IN THIS NEXT HOUSING LEVY
COMMITTEE MEETING. AND SIMILAR
TO PRE-'19 INFLATION AS WE ALL
KNOW IS VERY HIGH. FORTUNATELY
IT'S COMING DOWN, BUT IT WAS
VERY HIGH FOR THE LAST SEVERAL
YEARS. THAT MATTERS BECAUSE IT
IMPACTS OUR CITY LABOR CONTRACT
WHICH AS INDICATED PREVIOUSLY,
WE ADDED STAFF MEETING TO KEEP
UP WITH THE SERVICE PRIOR TO TH
PANDEMIC. AND NOW WE ARE FACED
WITH MANY OPEN LABOR CONTRACTS
IN THE DEPARTMENT. AND TO
PROVIDE THE PUBLIC GOOD. THAT
MATTERS BECAUSE A LOT OF THAT I
REGARDS TO STAFFING.
>> MADAM CHAIR, CAN I ASK A
CLARIFYING QUESTION ON THAT
POINT?
>> COUNCILMEMBER LEWIS?
>> THANK YOU SO MUCH. AND SORRY
TO JUMP IN. LIKE THAT, BUT
PROBABLY BEST ASKED HERE. SO
TOM, AM I CORRECT FROM LOOKING
AT SOME OF THE OTHER MATERIALS
THAT 85% OF THE PROJECTED FUTUR
SHORTFALL IS FROM ANTICIPATED
LABOR AGREEMENTS THAT ARE YET T
BE FULLY BARGAINED? JUST AS A
CLARIFYING QUESTION?
>> COUNCILMEMBER LEWIS, THAT'S
THE WORK OF THE CBO. NOTHING IN
MY EXPERIENCE WORKING WITH THE
PLANS SUGGEST THAT IT IS NOT
SOMETHING THAT'S INACCURATE. I
MEAN THAT'S CONSISTENT WITH WHA
I CAN SEE IN THE FINANCIAL PLAN
AND THE ASSUMPTIONS THAT I'M
ABLE TO SEE.
>> AND SO IT IS CONSISTENT.
>> AND THIS PUTS MOST OF THAT O
INFLATION, BUT THERE ARE OTHER
DISTRIBUTING FACTORS BECAUSE
THAT'S A SIGNIFICANT PORTION OF
THE DEFICIT THAT WE'RE DEALING
WITH IN THIS CATEGORY AND IT'S
BIG IMPACTING FACTOR. ARE THERE
OTHER THINGS THAT WILL
CONTRIBUTE TO THAT CATEGORY?
>> AND COUNCILMEMBER LEWIS, MY
ASSUMPTION IS THAT IT IS ALL
INFLATION. AND MY ASSUMPTION FO
THE FINANCIAL PLANS PRODUCED
THAT THEY ARE NOT ADDING
ADDITIONAL STAFF IN THEIR
PROJECTION. BUT WITHOUT KNOWING
THE ASSUMPTIONS THAT THEY'RE
USING, THAT WOULD BE MY DEFAULT
AND THAT IT IS LOOKING AT
EXISTING STAFFING AND APPLYING
SOME. BUT AGAIN THEY ARE UNDER
THE NEGOTIATIONS AND I DON'T
KNOW ABOUT THE DETAILS.
>> THANK YOU. COUNCILMEMBER
LEWIS, I WANTED TO INVITE ALY A
WELL TO COMMENT ON IT. IT IS
NOTED ON PAGE SIX OF THE REVENU
STABILIZATION WORK GROUP REPORT
AS WELL. IN ADDITION TO WHAT TO
NOTED IN TERMS OF THE COST,
THERE IS ALSO SORT OF AN ABOUT
WAVE IMPACT THAT IS AFFECTING
THE PERCENTAGE. AND I'M HOPING
THAT MAYBE DEPUTY DIRECTOR
PENNUCCI CAN CHIME IN IF YOU
HAVE ANYTHING TO ADD TO THIS.
AND DURING THE REVENUE
STABILIZATION WORK GROUP, FOR
MANY OF THE POSITIONS THAT WERE
FRONT FACING, THEY THINK
LIBRARIES, COMMUNITY CENTERS,
YOU KNOW, THE DIRECT COMMUNITY
ENGAGEMENT PROGRAMMING. A LOT O
THOSE WERE PUT ON HOLD IN 2020
AND 2021, STARTED TO COME BACK
IN 2022. WHAT WE SEE IS ALMOST
LIKE THAT WAVE COMING UP WHERE
THAT PERCENTAGE IS RELATIVELY
HIGH COMPARED TO THE OTHER COST
BECAUSE WE'RE TRYING TO SCALE
BACK TO FULL CAPACITY AT
LIBRARIES AND THE COMMUNITY
CENTERS, ETC. AND I WANTED TO
ASK HER IF THERE IS ANYTHING
ELSE THAT YOU WOULD ADD TO THAT
WORKPLACE DISCUSSION GIVEN THE
PERCENTAGE THAT LOOKS HIGH
RELATIVE TO THE OTHER
COMPONENTS. AND GIVEN THAT IT I
NOTED ON PAGE SIX IN THAT
REVENUE STABILIZATION WORK
GROUP.
>> AND I THINK THAT THE ONLY
THING THAT I WOULD ADD IS THAT
THERE ARE A NUMBER OF FACTORS
THAT DRIVE THE COST OF OR THE
NEED FOR INCREASED WAGES, RIGHT
IT'S INFLATION AND IT IS ALSO
JUST THE OTHER FACTORS THAT WIL
HAVE THAT HOUSING COST IN
SEATTLE AND THOSE SORTS OF
FACTORS THAT ARE IN
CONSIDERATION IN WHAT EMPLOYERS
WILL DECIDE TO PAY THEIR
EMPLOYEES IN THAT REQUEST. AND
SO IT IS A COMPLICATING FACTOR.
AND I WOULD SORT OF REITERATE
WHAT TOM SAID, WHICH IS THAT
MOST OF THE CITY SERVICES AND
PROGRAMS ARE HUMAN PROGRAMS AND
THEY REQUIRE STAFFING. SO MOST
OF THOSE COSTS, PARTICULARLY
THOSE THAT ARE FUNDED BIT
GENERAL COSTS ARE LABOR RELATED
AND THAT THEY WERE PROJECTING
THAT THE COST TO INCREASE THOSE
POSITIONS WILL BE LOWER OVERTIM
IN THAT LOW INFLATION
ENVIRONMENT. AND IT IS THE BULK
OF THE GENERAL FUND THAT'S
PAYING FOR THE STAFF OR PAYING
FOR CONTRACT AND THE HUMAN
SERVICES. AND THE HUMAN TO HUMA
SERVICE.
>>> One clarification. It seems
that central staff is confirmin
to me that one of the is CBO
anticipating and projecting wha
the near term inflation is goin
to be? Are they projecting that
it will remain elevated or are
they projecting that it will
taper off? How is that factorin
in to the forecast of the
anticipated deficit?
>> I can't disclose all the
details that go into the sort o
confidential labor discussions
but what I will say, we look to
the office of economic and
revenue forecast does provide
regular forecasts of inflation
and, so, those are what we are
looking at as we look at
adjustments to the financial
plan. I believe the last releas
is showing like we are hearing
in the national news a decrease
overtime. But given the number
of open contracts that in some
cases will be retroactive a
couple of years in the high
inflation we have seen to get
wages back up to what they woul
be adjusted for inflation today
it's significant. That is part
of it. Over time, that
incremental cost might not be
quite as higher over year but t
get -- to catch up, essentially
it's a significant cost.
>> It's a good plug for this
afternoon. We will have the
revenue forecast council meetin
at 2:00 P.M. It's broadcast on
Seattle channel. A press
advisory is going out for any
members of the press currently
watching. Tune in because that
exact question will be addresse
in part there. And then
colleagues, another good plug
for next Wednesday where we wil
have the office of the economic
revenue forecast and the city
budget's office in our
committee. There is some revenu
streams and some inflationary
adjustments that CBO will
compliment and add to that are
provided by the office of
economic and revenue forecast.
Both of those in our committee
next Wednesday. Councilmember
Lewis did you have any other
follow-up.
>> No, thank you.
>> Thank you. Great.
Councilmember Nelson are you
getting in the queue for summar
comments.
>> In the queue.
>> I believe we are on the last
page. I will turn it to Tom the
summary comments.
>> Thank you, madam chair. This
will be brief. These are the
tools and some of the tools tha
are already in place and some
are anticipated for the future.
One is to -- seems obvious but
focus on one time future --
particularly the ongoing one. A
we have seen in the morning
discussion, they will have
ramifications for the future an
perhaps require multiple
decisions in the future
depending on what happens. Also
transparency and different
formats for communication. It's
-- we find it's helpful to
display the gap in terms of
lines that show revenues,
expenditures to graphically see
the difference. Different
formatting, different ways to
understand what is going on are
better in this venue. Also,
paying attention to house the
data corresponds and relates to
the actual assumptions. Looking
at the monitoring on a regular
basis so it keeps track of the
performance and early indicatio
where there may be problems
ahead. Then, finally,
considering reserve policies in
the context of [ Inaudible ]
This goes back to the decision
of 2016 to kind of limit the
growth in the emergency fund
and, of course of course right
now it's more difficult that
there is a financial challenge
to do this sort of thing but
with the anticipation that ther
will be good times in Seattle's
future, it may be instructive t
consider looking at some of
those reserves and beef them up
if you will. So, that's the
extent of my comments. So, happ
to answer any questions.
>> Okay. Fantastic. This looks
like a popular presentation.
Thank you, colleagues for your
interest in this. And, again,
thank you to central staff, bot
for your participation, deputy
director Pennucci in the
stabilization work group and th
summary of the process and
overview that you provided that
compliments what deputy mayor
Washington said and thank you t
Tom Mikesell. You have provided
components of this memo and
summary over the last two years
in our committee and it's
helpful, very helpful to have i
all condensed in a chronologica
summary of how we got to this
point in a 10-page memo. We are
trying to push this out to make
sure that more members of the
community, members of the press
and our colleagues and all city
hall including our city staff
have a better understanding of
how we got here and I think tha
this is a dynamic report that
shows it's not just one thing.
For example, it's not just
spending. Might not just be
revenue. It's a combination and
confluence of situations that
led us to where we are at right
now and wanting to respond to
the crises that continues to
grow and worsen, exacerbated by
the pandemic. As you noted, we
are beginning to show signs of
the need to address this prior
to the pandemic as well. With
that, we have a few summary
comments and some questions tha
our colleagues are going to
chime in on now. I will turn it
over first to Councilmember
Pedersen. Thank you
Councilmember Pedersen for your
patients.
>> Thank you for enabling these
presentations and the forum
today. There is a lot of effort
before and during the committee
meeting to summarize and
understand and program the
revenue and expense situation a
city hall. Appreciate the
opportunity to add my own
assessment to the mix. First,
thank you to central staff, cit
budget office and the revenue
stabilization work group member
for their hard work. I do want
to thank our budget chair who
creatively navigated several
budget situations the past four
years. And, of course, that is
preview to my contrarian remark
which will now follow. I do wan
to have a special thanks to the
transit riders union. They have
a longer list of progressive
revenue recommendations attache
to today's agenda. Their list
includes revenue source that we
see in 70 other cities and
across the nation.
Transportation impact fees. In
my view, Seattle has been an
embarrassing outlier in that we
don't authorize the impact fees
and I'm concerned that the mayo
and the next City Council may b
forced to increase property
taxes yet again to replace the
nine year Seattle levy that
expires next year. Recent
polling shows an impressive 75%
support for transportation
backed fees. I want to lift up
that additional option of a fee
not a tax to address the many
transportation safety
infrastructure needs that we
have including sidewalks and
this impact free could free up
other dollars in the budget to
repair and upgrade seat's aging
bridges. Big picture city hall
has a spending problem. With a
total budget of 7 1/2 billion
dollars every year, city hall
could have learned a lot from a
expense stabilization work grou
as well. So, I appreciate the
central staff always looking
carefully at expenditures for u
and the transparency. There are
many cost drivers. We heard of
several of them today. A couple
of key cost drivers that were
not fully discussed are the
ongoing city hall decisions to
grant compensation increases in
past years that exceeded
inflation for city government
employees. That creates a more
expensive compounding baseline
we have inherited and city hall
deciding a few years ago that
city fax appears should shoulde
a greater burden of the pension
costs paid out to city
government employees. I think
pension reform is something tha
could be looked at as well.
Until get more on public safety
and homelessness we should not
get additional revenue from new
taxes unless we use progressed
revenue to alleviate unfair
taxes like Seattle's tax on
drinking water. Nearly 60% of
Seattle voters said taxes are
too high and nearly 2/3 say the
don't Trusty hall to spend tax
dollars responsibly according t
a research in April of 2023.
Perhaps that has changed since
it was several months ago. Tax
reform that would eliminate
progressive tax would rebuild
trust with residents and small
businesses that might be
skeptical of proposals from cit
hall for a fair, balanced and
truly progressive system we mus
repeal progressive taxes, tax o
drinking water,
disproportionately harms lower
income households. I encourage
passage of 120602 to eliminate
the aggressive tax on everyone'
drinking water and regarding th
discussion on the future defici
and the general fund, I want to
clarify that it's my
understanding that this deficit
is not today.
>> Thanks to the hard work of
the budget chair and city offic
but would be in 2025 and it's
not for the entire city budget
but for the general fund. And
the jump start payroll expense
tax has benefited city hall. An
to the extent we face a deficit
in 2025 for that single general
fund, I think the next City
Council could consider once
again liberating those payroll
tax revenues to handle that
deficit rather than locking up
those dollars permanently for
new programs or piling on
another round of taxes. I know
there is not consensus on that
opinion but I wanted to put tha
out there. Thank you, chair.
>> Thank you. Councilmember
Lewis.
>> Thank you so much chair
Mosqueda and appreciate the
report back from the work group
that is very thorough and time
that central staff spent with u
walking through it. A helpful
report. It does a good job of
clarifying the variety of
options that are in front of us
to make sure that we are on a
sustainable financial path
particularly in the context of
the next by annum where a lot o
these assumptions come to bear.
While I appreciate the analysis
on the new revenue sources and
this is a good list to queue up
for additional analysis. We
don't get a lot of credit for i
but in some of the efficiencies
and reforms that are present in
our current budget that include
$60 million worth of
efficiencies and administrative
savings that we factored in
through the normal attritionnal
process of creating a new
budget. So, it hasn't just
historically been an exercise i
seeking new revenue. I don't se
why we have to completely limit
ourselves to that approach, not
that anyone is advocating doing
that in the current process and
think that we should -- to
councilmember Pedersen's
comments, queue up a focus that
looks over the course of the
next year in 2024 of setting up
maybe a way to challenge some
base assumptions and look at
ways the government -- the city
government can analyze how we
deliver services, improving the
provision of services, looking
at ways to consolidate certain
executive functions that may
have certain overlaps and
redundancies. It's been my
observation from being on the
council the last four years tha
we have really been blessed by
having a significant amount of
economic growth, success in the
city of Seattle the last decade
that has resulted commensuratel
in the scope of city government
to meet new and emergent needs.
Office of labor standards is a
great example. Something that
hasn't historically existed.
Something that the city created
to save guard and make sure tha
there was accountability for
people violating the rights of
working people in the city. Tha
is a good service and we took
add vantage of our economic
growth to create. A lot of thes
new and emergent needs during a
time of particular economic
vibrancy do add up. Having a
real focus where we look back
and have a period of assessment
as part of our biannual
budgeting process of how we can
consolidate certain functions
within the city government, how
can we look at having a more
effective and responsive city
government I think is something
that should be a part of this.
would be interested in working
with central staff to flag my
interest in this now on
formalizing how we might have a
practice like that with council
participation through the budge
process this fall, they are
through a resolution or a
statement of legislative intent
on how we might formalize with
the city budget office queuing
up opportunities to really look
at ways we can maintain city
services but potentially look a
things like office and
departmental consolidations or
other kinds of strategies that
might be part of the equation o
making progress on the deficit
that is at the center of this
analysis. So, appreciate the
work that has been done and
appreciate the chair's work in
convening all of this
information before we leave on
recess and go into the budget
process and Earnest in the fall
and look forward to ways to
build on this body of work in a
comprehensive way as we go into
2024 and work on building that
next by an nun Al biannual
budget that will be in the
process of 2024.
>> Councilmember Nelson?
>> Thank you very much for this
discussion. So, this whole
conversation has emphasized tha
-- seems to suggest in general
that spending increases our
results or a function of
population growth, increased
service needs and increasing
inflation. But to me it comes
down to policy choices. Exhibit
A is the fact that in 2020
council passed the payroll if
size tax with anticipated annua
revenues projected at about 200
million or 219 million making i
the largest tax in Seattle's
history that didn't go to a
ballot. Then before the checks
were due to start coming in in
2022, council passed a Sligh in
November of 2021 expressing the
council's commitment to raise
new progressive revenue to pay
for council's priorities like
budgeting and other initiatives
because, quote, the 2022
proposed budget includes ongoin
appropriations but does not
include ongoing revenue source
to supports those investments.
Then just recently council
committed to another policy
choice made inspect 2021 to
establish wage equity between
nonprofit social service worker
and wages of workers at for
profit companies in all sectors
of the economy which I voted
against because I didn't think
it was realistic. That is
another example that we continu
to make these policy choices.
Here we are looking for a sourc
of revenue to pay for that as
well. So, I just want to remind
people that this report not onl
didn't recommend any of the
specific policy options that we
have discussed today, it did no
recommend that we should go in
that direction of a new revenue
source. In fact, it does offer
that there are some other ways
of aligning our spending and
revenue. First of all, the
report says we can increase
revenue through new taxes or ta
increases and reduce general
fund spending for services,
repurpose restricted revenue an
reduce services that it funds
and shift that to the general
fund. And take steps to grow th
city's tax base by spurring
economic activity. So, goes
there are other options on the
table that are not listed in th
central staff memo under next
steps. But I am interested in
considering those other options
as well. Personally I believe
that city leaders should do
everything in their power
everyday to generate and
encourage economic activity,
especially downtown as it
continues to recover from the
pandemic. This isn't just simpl
trickle down economics. One
thing that would help is fixing
permitting slowdowns which coul
attract new businesses and allo
businesses to engage in some
economic growth. That is one
example. Number two, reduce or
eliminate services that do not
meet measurable outcomes, due
maketive of other agencies or
entities no longer aligned with
the current residents prioritie
or grown faster than real world
demands. Look at all
expenditures against revenues
and clearly align plans to make
progress against them then
govern in a way that delivers
results before there is any
discussion of new revenue. So,
all of this, I think, should be
on the table going forward. We
are working in a context where
we still have a lot of progress
to make on the major challenges
And it's not new but more in th
public eye the Fentanyl crisis.
We have to make progress on the
challenges, maintain public
trust and simply just going and
saying here is a list of new
revenue sources that have not
been vetted for their legality
at a minimum or the potential
negative consequences is not th
way to continue to try to build
public trust.
>> Councilmember Herbold, pleas
go ahead.
>> I have a couple of questions
and I'm just resisting the urge
to respond. I don't want to
argue with the prospective of
some of my colleagues. I
appreciate it's a perspective
but I don't feel that it's a
perspective supported by the
analysis that we heard today.
There are decisions that this
council has made because of
factors outside of our control.
So, the statement that, you
know, we increased wages above
inflation, well, how can you
possibly talk about the deliver
of mission critical city
services, whether or not it's
employees within city governmen
or people we contract without
city government. How can you
talk about speeding upper
mighting times when, for
instance, we have vacancies in
every single department of the
city and every single city
contracted service that we
provide. Those are the factors
outside of our control that are
driving us to make some of thes
decisions. Similarly inflation
is out of control. Things like
the increase of the judgment an
claims out of our control. I
just feel like we are saying
things that are not supported b
the facts. It's true that we
made a policy decision as it
relates to jump start to focus
those dollars, not on addressin
this gap that is largely out of
our control and the result of
structural budget problems, but
we made that policy decision to
focus those dollars to allow us
to double the investments of th
housing levy to support economi
development, particularly in th
face of covid and support
climate change investments. So,
that's true, we did make a
policy change to use those
dollars for those priorities an
we made a policy change to not
shift those dollars to address
the gap or limit how many of
those dollars that we are using
to address the gap because we
did -- we had the flexibility
spending ordinance that
compromised with some folks who
are arguing that we should use
all the dollars to address the
gap. I want to focus maybe on
some of the questions that I
have about the revenue
stabilization work group rather
than -- but I could not say
anything. So.
>> Councilmember Nelson we won'
have a debate on this. We let
each councilmember say their
pieces. We will have time to
have conversation about revenue
>> I'm still speaking,
councilmember Nelson. Thank you
I do agree with councilmember
Pedersen is I do appreciate the
work of the work group, I am
disappointed that opportunities
for revenue like transportation
impact fees specifically were -
don't appear to have moved
forward. I understand there was
something like 63 things that -
options that were looked at by
the work group. I don't think w
have that list. So, maybe
transportation impact fees was
on that list at some point. If
it was, I don't understand why
it was taken off because if you
look at the criteria listed in
the central staff memo, it
doesn't seem to be a reason
based on these one, two, goes
three, four, five, six, seven
criteria for patient impact fee
to be left off of the list.
Further, I would love to know -
there is something like --
another 26 or not another --
overlap. 26 options that the --
writers union identified, to be
interested if these 26 options
were included in that original
60 some odd big lists that the
work group looked at and how
they were filtered off. Again,
interested in not just these
couple options understanding
that they are not
recommendations but these coupl
of options that could be
implemented quickly. And that w
have the authority to implement
-- very interested in knowing
how certain options were taken
off the list. Secondly, another
point which with councilmember
Pedersen on as it results to on
of the things that he has
proposed, a position that I hav
taken in the past as related to
the large earners income tax
that council supported a couple
of years ago. The large earners
income tax, if we were cubing
successful in implementing it w
would use some of the funds
generated from that to reduce
the tax burden of taxpayers. In
the spirit of councilmember
Pedersen's proposal on capital
gains we should look at the
proposal as a way to both
address some of the funding gap
that this conversation has
identified but also to reduce
the regressive utility tax as
well because that is -- that
will be a benefit to general
rate payers as well and that is
important. I'm happy to see tha
the SPU advisory rate -- rate
advisory group recently signed
on in support of that proposal
as well as a number of other
stakeholders. So, I just wanted
to get on record on those two
revenue options that
councilmember Pedersen is
leaning on that I am in support
of pursuing.
>> Thank you, councilmember
Herbold. Councilmember Nelson,
your hand is up?
>> I understand there is emotio
about what I said. However, I a
simply suggesting that spending
within our means is not
austerity it's responsibility.
But my question was, when we
were talking about labor costs
which councilmember Lewis
identified in his question, whe
we were -- do you happen to
know, Tom, if the -- if
estimates about increased labor
costs, they were simply interna
employees, correct? This did no
include contract adjustments. I
that correct?
>> Thanks for the question,
councilmember Nelson. The
general fund financial plan wil
largely include costed increase
for labor contracts but it will
also include those areas where
there are statue Tori allow's
for other providers, human
services providers, contracts.
Those inflationnal adjustments
will be included as well. Those
are the ones that I'm familiar
with. The bulk of it will be
internal city employees.
>> Councilmember Nelson, if I
might, that is one of the
ongoing areas of conversation w
are in with the city budget
office to disclose more
assumptions and to use the best
available data to make estimate
about future growth in our
contracts because it's not
entirely clear to us how much
the future expenditure estimate
are assuming the, you know,
increased cost of other
providers outside of the human
service workers that it might
require to deliver those
services. I would say generally
speaking, the expenditure
projections and out years have
improved in the last couple of
years as we strengthen pay
partnership with the city budge
office but I think it's likely
under stating the overall cost
of providing the full scale of
current city services. right no
because I don't know that our
contracts outside of human
services are significantly
assumed to increase. It may nee
that could or din '. or [
Inaudible ]
>> Thank you.
>> Thank you. Just an additiona
point on that, I think a good
example of where we have seen
inflated costs over original
estimates were with some of the
contracts that go through the
regional homelessness authority
as we scaled up the investments
in RHA as well. Okay. So, we go
through the presentation. We
have gone through the central
staff memo. I don't see any
additional hands at this point.
I have a few comments to wrap u
up for next steps. Colleagues,
thank you. Thank you for
engaging on this conversation.
Again, I do hope that some of
the perceptions and assumptions
that we may carry with us can b
grounded in the central staff
memo, the memos that we receive
over the last few years are
hyperlinked in the memo that To
Mikesell provided. We can read
through the past memos in
addition to the 10 page motto
ground our conversation in the
next few months over what has
occurred. We carry with us our
own perception and opinions.
Clearly I do as well. But I hav
also been able to reorient
myself in many ways based on th
feedback and the presentation
that we received from central
staff and city budget office.
This is not an opinion. These
are not unique to central staff
This is very much a shared
understanding of how we got to
this situation and it does not
appear that there will be an
immediate correcting of our
revenue situation, which we wil
hear more about at 2:00 P.M. no
a decrease in commuity need or
a decrease in population. I jus
want to reemphasize the
importance of looking at all of
those central staff memos that
are linked within this 10 page
and continuing to have this on
the top of your desk as we come
back to have these discussions.
Before I consider with
additional follow-up
conversations and next steps I
will see what the vice chair ha
to add to the camera rei
comments here?
>> I want to get back to the
concept of austerity, madam
chair, something that you talke
about a lot when we were in the
covid emergency and in the
throws of it. And this idea of
living within our means is not
austerity is extremely flawed.
Expecting to budget at the same
level without recognition of
increased costs, if that result
in economic hardship, that is
austerity. The definition is
people's living standards are
reduced because of economic
conditions. So, goes if our
decision to not look at new
revenue results inspect economi
hardship for people, then that
is austerity budget. Living
within your means, it sons nice
great sound bite, I'm sure it
will get picked up today. Sound
great. It's not accurate.
>> That's right. That's right.
There is national trends that
talk about this as well. There
was a piece on NPR, January 2nd
talking about increased
population needs yielded more
hardship within cities trying t
absorb not just what we have
been traditionally charged with
30, 40 years ago but responding
to increased population growth,
more people moving to larger
cities and jurisdictions and
relatively stagnant tools to
address it. This is a national
issue that many large cities ar
dealing with. I know as we have
seen manifested by the number o
people living unsheltered in
large cities across the country
many are struggling with how to
respond to increased community
and needs. Councilmember Nelson
follow-up comments then I want
to summaries and get us out on
time.
>> Go ahead.
>> Go ahead? Okay. Thank you.
Because there will be more
conversations to come on this.
So, we will have additional
discussion on this. A few thing
to summarize, thank you for
reading through the revenue
stabilization work group. Thank
you to the time that each of
those work group members spent
to participate in that
discussion to understand more
about the problems that have
been summarized by Tom Mikesell
here today. Thank you for all o
the staff participation and
helping to generate this. This
list of options is intended to
be the response to the directiv
in the statement of legislative
intent. As deputy director
Pennucci noted, it wasn't the
charge of the group to come up
with a recommendation and actio
list. It was the charge to come
up with options. They fulfilled
the request by submitting this
report today. There is a
complimentary document that is
linked on the agenda. It's one
of the resources that was noted
in the report and thank you,
councilmember Pedersen and
Herbold for noting that the
transit riders provided a
comprehensive summary of dozens
of individual one pagers that
offer more information on
possible revenue sources. We
have provided that here as an
example of many of the options
that we looked at. That is a
tremendous amount of work and I
wanted to compliment them as
well. I want to also recognize
that we will continue to have
discussions about the strategie
that are listed. It was not the
charge of this work group to ge
into other strategies such as
evaluating the budget, budget
priorities, looking at changes
in levels, whether an increase
or decrease to the levels. That
was not the charge of this grou
nor did this group make
recommendations at looking at
spending reductions or
repurposing. On page 6 the work
group was formed for the expres
purpose of providing feedback
about potential new revenue
options. This report
acknowledges there are other
strategies to address the
projected gap including looking
at spending and reductions but
we simply acknowledge that thos
are conversations that as I sai
at the beginning that
organizations will continue to
have with the mayor's office as
they create the proposed budget
and the council as we final
lists the budget and create the
final 2024 budget and future
year budgets. Other strategies
other places is clearly going t
happen. That was not the purvie
of this work group. They are no
recommending any of those
strategies here. The soul
purpose was to identify other
opportunities and they did that
There is an opportunity for us
now to final lists this
conversation because it's about
stability. The revenue stabilit
work group is the name of it. I
want to offer to central staff
the following. You have heard
from our colleagues some desire
to look at additional revenue
strategies. I want us to
underscore the importance of
using the stability framework a
we look at revenue options just
as much as we look at the
progress sift of those options.
I have a lot of concerns about
whether or not using jump start
and diluting the spending plan
to go to the general fund as
suggested would yield additiona
stability. There is a lot of
changes in the tech sector. We
have a new revenue source that
is still in its inspain. I thin
there is a lot of interest in
looking at that as clearly
articulated in the revenue
stabilization work group. It
cannot be a stand alone solutio
to the revenue crisis that we
face. None of these options can
be a stand alone solution to th
200-plus million dollars that w
see as a cliff in 2025 and
beyond. Stability and progress
sift are the two things to
underscore going forward. My
cool lesions today have named a
few of the things that they
would like to look at. I would
like to name three as well.
Given that there are three item
on this list that are -- have
been indicated by the work grou
as technically implementable, I
the statutory [ Inaudible ]
Clearly those items 1, 2 and 3
on this list are something that
I would be interested in centra
staff could continue to evaluat
those options, have
conversations with law and we
can continue to have discussion
in our budget committee later
this fall. Those three and what
I heard from my colleagues was
an interest in impact fees was
mentioned by councilmember
Pedersen and Herbold.
Councilmember Herbold noted
interest in large another near'
income tax. The flat rate that
we are dictated in terms of
income tax as directed by the
court, part of what the work
group talked about was any
offset. I will use the word
offset as a general term to mak
sure that we are baking in the
progress sift that I believe th
large earners was attempted to
-- if that is something that we
could look into to see if there
is a policy analysis that could
transpire on that. Councilmembe
Herbold did is capture that
appropriately.
>> Large earners but it was
intended to be mentioned becaus
of the principle behind the
large earners income tax was if
we were going to be increasing
taxes, a progressive taxes that
we wanted to reduce taxes in
another area. I was talking
about that principle that the
council agreed to in exploring
the large earners income tax an
for me it applies to
councilmember Pedersen's capita
gains tax proposal. In creating
a capital gains tax, use it not
only to help address some of th
revenue gaps that we are
identifying here but also to
reduce existing regressive taxe
such as the utility tax.
>> Okay.
>> What he calls the drinking
water tax.
>> Thank you for that
correction. I think in that cas
we will apply that principal as
we ask central staff to look at
item number 3 on the list. Ther
is much more conversation to
happen around this. The initial
direction is to look at what is
actionable, what is authorized,
what is statutorily implement
able to provide us with
additional feedback as we
continue with the budget
process. My assumption here is
that we will all try our best t
continue to treat 2024 as the
second part of the biannual
budget. Biannual budgeting in
con cement here and 2024 is
intended to be the second year
of that. If we stay true to
that, we will be able to free u
additional time so we are not
doing, you know, 100 plus
amendments to the 2024 budget
and we have structured the
budget meetings this fall to
allow more condensed timeline
that we want to treat 2024 as a
-- the second part of the
biannual budget. If that is the
case, my hope is toward the end
of the budget process we have
the chance to come back and hav
council central staff offer
additional sort of -- the next
step, analysis, the possible
proposals on some of the items
that we talked about today. So,
more to come on this. But use a
real great appreciation for the
members of the work group,
central staff, CBO staff and th
mayor's team and the mayor
himself for the interest in thi
effort and collectively with th
mayor's office we will continue
the discussion that has been
initiated here today. I too was
restrained in trying to respond
to some comments. I recognize
this is the beginning of the
discussion but hope that we can
continue to have conversations
that are rooted in facts, are
consistent with past actions
that council members have taken
themselves and allow for us to
recognize the gravity of the
situation we are facing in 2025
if not addressed in the near
future. That is not a practice.
This is not theoretical. We are
going to face severe hardship
starting in 2025 if we don't
have additional solutions to
address the revenue gap. It's
not just a spending problem. As
noted in the factual documents
that we continue to receive, we
need to have a balanced approac
to this that will require
additional revenue. With that,
goes I thank central staff for
the work that you will be
potentially doing now that we
are handing this report off to
the legislative branch. Our nex
meeting will be on Wednesday,
next week starting at 9:30 in
the morning. We will continue
this meeting and have the
projected deficit at that time.
Essential.
>> What?
>> Essential comment.
>> I thought you were going to
ask for other business.
>> Please go ahead. I can't hea
you.
>> I included in the chat the -
a link to the chamber's report
on the work group report and I
also -- you were talking about
preference for option one.
>> I didn't say preference for
option one. I said I'm asking
central staff to look at option
one, two and three.
>> Well, one included, I also
included -- I'm saying this
because I feel like this is a
public meeting and I have to do
this instead of putting it in
the chat. There is a link to an
article about San Francisco's
dependence on technology taxes.
>> You and I might be saying th
same thing right now. I was
raising concerns as well about
reliance on one source facing
volatility.
>> Right, exactly.
>> Well, with that, let's go
ahead and wrap today's
discussion and look forward to
seeing you all next Wednesday.
Please tune in at 2:00 P.M.
today, revenue forecast meaning
2:00 P.M. today. That will be
broadcast by Seattle channel.
Thank you, have a good night --
good day.
>> Thank you.
>> Recording stopped.