FRIDAY, APRIL 10th, 2026, THIS
IS THE MEETING OF ECONOMIC
FORECAST COUNCIL, MAY THAT
MEETING COME TO ORDER. I AM DAN,
CHAIR OF THE EC, OR PREVIOUS
CHAIR, I GUESS CURRENTLY UNTIL
WE NOMINATE NEW CHAIRS, I AM
HERE WITH MY FORECAST
COLLEAGUES, CITY COUNCIL
PRESIDENT JOY HOLLINGSWORTH,
DEPUTY DIRECTOR OF CITY
OPERATIONS, MARK ELERBROOK, AND
CITY FINANCIAL DIRECTORER,
REPRESENTATIVES FROM THE CITY
BUDGET OFFICE, AND SEATTLE CITY
COUNCIL CENTRAL STAFF. THERE ARE
A COUPLE SUBSTANTIVE ITEMS WE
FEED TO ACT ON TODAY, SELECTION
AND CHAIR AND VICE CHAIR,
PRESENTATION REVIEW OF THE
ECONOMIC FORECAST AND THE
APPROVAL OF THE 2026 WORK
PROGRAM. BEFORE MOVING ON, LETS
ADOPT AGENDA AND COPY HAS BEEN
CIRCULATED AND THERE ARE COPIES
HERE ON THE COMMITTEE TABLE,
MOVE TO ADOPT THE AGENDA. IS
THERE A SECOND?
>> SECOND.
>> IT HAS BEEN MOVED AND
SECONDED. TODAY'S AGENDA IS
BEFORE THE FORECAST COUNCIL.
THIS IS THE OPPORTUNITY FOR
MEMBERS TO AMEND OR ADD AN ITEM?
IF YOU WOULD LIKE TO, PLEASE
RAISE YOUR HAND ON ZOOM SO WE
ARE ABLE TO SEE YOU POP UP. I AM
SEEING NO AMENDMENTS AT THIS
TIME. TODAY'S AGENDA WILL BE
ADOPTED. HEARING NO OBJECTION,
TODAY'S AGENDA IS ADOPTED.
FIRST ITEM OF BUSINESS, WHICH IS
SELECTING A CHAIR AND VICE CHAIR
FOR THE FORECAST COUNCIL FOR
2026, PER THE ORDINANCE THAT
CREATED THE FORECAST COUNCIL WE
NEED TO ELECT A CHAIR, ELECTING
VICE CHAIR IS OPTIONING BUT I
FIND IT USEFUL, SINCE THE CHAIR
MIGHT NOT ALWAYS BE ABLE TO
ATTEND THE MEETINGS, SO AT THIS
POINT I WOULD ENTERTAIN
NOMINATIONS FROM THE FLOOR. LETS
START WITH THE CHAIR.
>>
>> I MOVE TO NOMINATE COUNCIL
MEMBER DAN STRAUSS.
>> IS THERE A SECOND?
>> SECOND.
>> MOVED AND SECONDED TO ADOPT
STRAUSS AS THE CHAIR. DOUBLE
CHECKING MY SCRIPT. SEEING NONE,
-- WILL THE CLERK PLEASE CALL
THE ROLL? CAN YOU? NO. I WILL
CALL THE ROLL. WE ARE STILL
WORKING OUT WHO IS CLERKING
THIS. COUNCIL PRESIDENT
HOLLINGSWORTH,.
>> AYE.
>> OPERATIONS DIRECTOR MARK?
>>
>> SORRY, DID YOU NOT HEAR ME?
>> HOW WOULD YOU LIKE TO VOTE?
>> I VOTED AYE.
>> WONDERFUL . DWIGHT?
>> AYE.
>> FOUR IN FAVOR, NONE OPPOSED.
MOTION CARRIES, STRAUSS IS
CHAIR, APPRECIATE EVERYBODY. WE
WILL ENTERTAIN NOMINATION FOR
VICE CHAIR, THE FORECAST
COUNCIL, I WOULD LIKE TO
NOMINATE MARK ELERBROOK. IS
THERE A SECOND?
>> SECOND.
>> MOVED AND SECONDED TO ADOPT
MARK ELERBROOK AS VICE CHAIR, I
WILL CALL THE ROLL. COUNCIL
PRESIDENT?
>> AYE.
>> MR. ELERBROOK?
>> AYE.
>> MR. DWIGHT?
>> AYE.
>> STRAUSS VOTES AYE, NONE
OPPOSED. FIRST ITEM OF BUSINESS
HAS BEEN ADDRESSED IN SHORT
ORDER. MOVE ON TO THE SECOND
ITEM OF BUSINESS, I WILL READ
IT, APPROVAL OF MINUTES FROM
OCTOBER 20th, 2025 MEETING, COPY
OF THE MINUTES HAS BEEN
CIRCULATED. I WOULD SEEK-- I
WILL MOVE AND SEEK SECOND FOR
APPROVAL OF THE MINUTES. I MOVE
THE APPROVAL OF THE MINUTES. IS
THERE A SECOND?
>> SECOND.
>> IT HAS BEEN MOVED AND
SECONDED. IF NO OBJECTIONS, THE
MINUTES WILL BE APPROVED.
HEARING NO OBJECTIONS, MINUTES
AAPPROVED.
>> MOVING ALONG TO THE MEAT OF
THE AGENDA, PRESENTATION OF 2026
ECONOMIC AND REVENUE FORECASTS,
AND RECOMMENDATION REGARDING THE
2026/2027 AND 2028 REVENUE
FORECASTS. THAT WAS ME READING
IT INTO THE RECORD. IF THERE WAS
ANY CONFUSION THERE. SO MOVING
ON TO THIS ITEM, WHICH IS THE
PRESENTATION OF THE ECONOMIC AND
REVENUE FORECASTS LED BY STAFF
FROM THE FORECAST OFFICE. THIS
APRIL FORECAST IS THE FIRST OF
THREE FORECASTS THAT OCCUR THIS
YEAR, WE WILL RETURN IN AUGUST
AND THEN IN OCTOBER TO RECEIVE
THE REVISED FORECASTS. APRIL
REVENUE FORECAST TAKES INTO
ACCOUNT 2025 YEAR END ACTUAL
REVENUE, AN IMPORTANT DATA POINT
FOR US BECAUSE IT PROJECTIONS
UNTIL WE GET THE MONEY IN THE
DOOR AND SERVES AS AN
OPPORTUNITY CHECK IN REGARDING
REVENUE ASSUMPTION UNDERLYING
THE 2026 BUDGET ADOPTED BY CITY
COUNCIL LAST NOVEMBER. MOREOVER
THE FORECASTS FOR 2027 AND 2028
PROVIDE THE PRELIMINARY OUTLOOK
FOR THE YEARS AS WE BEGIN TO
PLAN FOR THE BUDGET AS WE ONLY
NEEDED TO BALANCE ONE YEAR LAST
YEAR WE WILL NEED TWO YEARS IN
THE UP COMING YEAR. TODAY'S
PRESENTATION WILL BE LED BY THE
STAFF, AS A REMINDER, THE OFFICE
WAS ESTABLISHED IN 2021 AND
MODELED BASED ON SIMILAR
INDEPENDENT FORECASTING OFFICES
OPERATING IN KING COUNTY, AND
WASHINGTON STATE, PURPOSE TO
INCREASE TRANSPARENCY AND
ACCOUNTABILITY AND TO INSURE THE
FORECAST COUNCIL IS FULLY
INFORMED AND ABLE TO HAVE FULL
RANGE OF QUESTIONS ADDRESSED,
STAFF WILL PARTICIPATE IN THE
BRIEFING. STAFF FROM THE BUDGET
OFFICE IS PRESENT TODAY WITHIN
THE PURVIEW OF THE REVENUE
FORECAST, OR CITY BUDGET OFFICE,
EXCUSE ME. FORECAST OFFICE WILL
PRESENT THREE ECONOMIC AND
REVENUE SCENARIOS, BASELINE,
PESSIMISTIC, OPTIMISTIC AND
RECOMMENDATION OF WHICH SHOULD
BECOME THE FORMAL FORECAST FOR
THIS YEAR. AGAIN, REVISED
AUGUST, REVISED IN OCTOBER, AND
BEFORE WE JUMP IN, BEFORE I TURN
IT OVER TO DIRECTOR DURAS, I
WANT TO BRING US WHERE WE WERE
ONE YEAR AGO TODAY, AND ONE YEAR
AGO TODAY WAS THE FIRST FOUR
MONTHS OF THE CURRENT FEDERAL
ADMINISTRATION AND WEEK TWO OF
THE THREE-WEEK TARIFF WAR, AND
SO I SAY THAT BECAUSE LAST
YEAR'S REVENUE FORECAST IN
APRIL WAS VERY DIFFICULT TO
PREDICT. I BELIEVE WE ADOPTED
THE PESSIMISTIC SCENARIO AT THAT
TIME BECAUSE THE VOLATILITY
INDEX WAS HIGHER THAN IT WAS
DURING THE PANDEMIC. REALLY
QUITE INCREDIBLE, AND NOT A
POSITIVE WAY, ALL OF THE
CHANGES, ALL OF THE VOLATILITY,
BACK TO APRIL, AND LAST APRIL WE
WERE EXPECTING SLOW, STEADY
GROWTH, BUT WE GOT VOLATILITY.
THIS YEAR, YOU HAVE BEEN PLACED
IN A SIMILAR POSITION WITH THE
WAR IN IRAN JUST STARTING A FEW
WEEKS AGO. WE ARE NOT SURE IF
THERE IS CEASE-FIRE TODAY OR NOT
AND WE RECOGNIZE YOU HAVE TO
MAKE THE FORECAST IN SHORT ORDER
AND THIS IS THE SECOND YEAR IN A
ROW THAT YOU HAVE BEEN TASKED
WITH DOING SO AMONGST
INTERNATIONAL INSTABILITY. I
JUST WANT TO SHARE THAT FOR
EVERYBODY BECAUSE WHILE WE WILL
RECEIVE YOUR PRESENTATION TODAY,
AND YOU HAVE DONE THE BEST JOB I
KNOW YOU CAN DO, THERE ARE JUST
FACTORS OUTSIDE OF ANY OF OUR
CONTROL THAT ARE UNKNOWN AT THIS
MOMENT. SO THANK YOU FOR DOING
THAT TOUGH JOB. I AM SORRY THIS
IS THE SECOND YEAR IN A ROW THAT
THE FEDERAL ADMINISTRATION HAS
CAUSED SO MUCH DISRUPTION FOR
US, BUT WITH THAT, AS THE
PREFACE, I WILL TURN IT OVER TO
YOU UNLESS MARK, AS VICE CHAIR,
OR OTHER, WANTS TO SAY ANYTHING
BEFORE WE JUMP IN.
>> NO, THANK YOU VERY MUCH,
CHAIR STRAUSS, I THINK YOU
INCAPSULATED IT WELL, THIS IS A
CHALLENGING TIME TO FORECAST
ANYTHING Y. AM INTERESTED IN
SEEING WHAT WE HAVE BEFORE US.
OVER TO YOU, DIRECTOR DURAS.
>> THANK YOU, CHAIR STRAUSS,
GOOD MORNING, FOR THE RECORD I
AM INTERIM AND DIRECTOR AND
CHIEF AT THE OFFICE OF ECONOMIC
AND REVENUE FORECASTS.
>> HELLO, THIS IS SHAUN
THOMPSON, REGIONAL ECONOMIST.
>> GOOD MORNING, JOSEPH RUSSELL,
MANAGER OF THE ECONOMIC AND
REVENUE TEAM IN THE CITY BUDGET
OFFICE.
>> MY APOLOGIES, AS WE ARE
GETTING IN HERE, WE WILL DO
OPERATIONS, IF YOU CAN PULL THE
MICROPHONE AS CLOSE TO YOU AS
POSSIBLE, AND THEY ALSO MOVE UP
AND DOWN, IT WILL HELP
EVERYBODY, INCLUDING MYSELF.
THANK YOU.
>> GOOD MORNING, I AM ALEX ZHANG
WITH THE CITY BUDGET OFFICE.
>> ALL RIGHT. TRYING TO SHARE
THE SCREEN. HAVING SOME
DIFFICULTIES HERE.
>> FOR THE VIEWING PUBLIC, WE
ARE GOING TO TAKE A MOMENT WHILE
WE UNSHARE AND RESHARE THE
SLIDES.
>> THIS IS AN APRIL FORECAST
UPDATE. WE WILL PRESENT IT IN
THE USUAL FASHION, FIRST, IT IS
GOING TO BE DEVELOPED SUMMARY OF
ECONOMIC CONDITIONS AND THE
ECONOMIC OUTLOOK FOR U.S. AND
FOR THE SEATTLE METRO AREA, AND
IN THE SECOND PART WE WILL MOVE
ON TO THE REVENUE FORECAST,
FIRST LOOK BACK AT THE ACTUAL
REVENUE FOR 2025 AND GENERAL
FUND REVENUE AND FINISH UP WITH
SUMMARY OF THE FORECAST RISKS
AND RECOMMENDATION OF THE
FORECAST SCENARIO. SO AS A
REMINDER FOR, WELL, I THINK WE
HAVE THREE NEW PEOPLE ON THE
FORECAST COUNCIL, SO, FOR THOSE
NEW FORECAST COUNCIL MEMBERS AND
THE THE PUBLIC VIEWING THE FIRST
TIME, THE REASON WE ARE
PRESENING THIS WAY IS REVENUE
FORECASTS ARE DEVELOPED IN TWO
STEPS, THE FIRST STEP IS
DEVELOPING REGIONAL ECONOMY
FORECAST, THE MAIN INPUT THERE
IS U.S. FORECAST FOR THE
NATIONAL ECONOMY, AND THEN THE
SECOND STEP IS TAKING THE
REGIONAL ECONOMY FORECAST
TOGETHER WITH THE FORECAST FOR
U.S. ECONOMY AND USING THOSE AS
INPUTS FOR A COUPLE OF REVENUE
FORECAST MODELS THAT WE MAINTAIN
AND DEVELOP, WE USE THOSE MODELS
TO FORECAST THE REVENUES. WHILE
DEVELOPING THOSE FORECASTS, WE
ARE TASKED TO DEVELOP THREE
FORECAST SCENARIOS, BASELINE,
OPTIMISTIC, AND PESSIMISTIC ONE,
AND THEN EACH FORECAST UPDATE
APRIL AND AUGAND SAY OCTOBER
WILL BE MADE RECOMMENDATION
WHICH SCENARIO SHOULD BE ADOPTED
AS THE OFFICIAL FORECAST WHEN WE
ARE FORECASTING IN APRIL, ONE
THING TO KEEP IN MIND HERE IS
EVEN THOUGH IT IS ALREADY THE
FOURTH MONTH OF THE YEAR, BY
THIS POINT IN THE YEAR WE HAVE
COLLECTED LITTLE REVENUE FOR THE
CURRENT YEAR. MOST REVENUE COME
IN THE FIRST TWO MONTHS ARE
ACCRUED THROUGH THE PREVIOUS
YEAR BECAUSE THEY ARE PAYMENTS
FOR OBLIGATIONS FOR 20 TWOIB,
AND THAT SHARE OF REVENUE WE
COLLECT OUT OF OVERALL TOTAL,
GOES UP WITH EACH FORECAST
UPDATE SO WE WILL HAVE MORE
INFORMATION TO INFORM THE
FORECAST ITSELF. BUT IT IS
IMPORTANT TO KNOW EVEN BY THE
TIME WE GET TO THE OCTOBER
FORECAST, THAT WE PRESENT MID
OCTOBER, WE ONLY HAVE
INFORMATION HALF OF WHAT WILL
BECOME OVERALL GENERAL REVENUE.
SO HERE ON THE RIGHT SIDE, TRIES
TO SUMMARIZE HOW MUCH REVENUE IS
COMING IN AND WHAT IT IS THAT WE
SEE WITH EACH FORECAST, AS YOU
CAN SEE, IT VARIES QUITE A BIT
WITH REVENUE STREAMS, FOR SOME
OF THEM WE RECEIVE THOSE
PAYMENTS FOR OBLIGATIONS WITH
LITTLE DELAY, REAL ESTATE TAXES
ONE OF THE REVENUE STREAMS WHERE
WE HAVE MOST INSIGHT INTO,
ALREADY IN APRIL, AND WE GET
CLOSE TO 75% OF THE REVENUES BY
THE TIME WE PRESENTING THE
OCTOBER FORECAST. ON THE OTHER
END, BUSINESS AND OCCUPATION
TAXES AND PAYROLL EXPENSE TAXES,
WE HAVE PRETTY MUCH NO INSIGHT
INTO THE CURRENT YEAR, BY THE
TIME WE GET TO THE OCTOBER
FORECAST, THERE IS USUALLY LESS
THAN HALF OF OVERALL REVENUES
COLLECTED, DLIFBEN THE DELAY
BETWEEN THE TIME IT TAKES PLACE
AND WHEN PAYMENTS ARE DUE AND
PROCESSED. SO THAT IS IMPORTANT
TO KEEP IN MIND, AGAIN, BECAUSE
THE APRIL FORECAST IS GOING TO
BE MOSTLY INFORMED BY THE
CURRENT ECONOMIC CONDITIONS, THE
OUTLOOK FOR THE ECONOMY, AND
THEN WHAT WE HAVE COLLECTED IN
THE PREVIOUS YEARS, THOSE ARE
THE MAIN THINGS BUILDING FOR THE
APRIL FORECAST. TURNING TO THE
FIRST ONE, LOOKING BACK AT THE
PREVIOUS YEAR, HOW WILL THE
SEATTLE AREA ECONOMY PERFORM IN
2025? THE CHART ON THE RIGHT
SHOWS THE FORECAST AND ACTUAL
VALUES FOR A COUPLE OF MAIN
INDICATORS, SUMMARIZING THE
ECONOMY PERFORMANCE, STARTING
WITH EMPLOYMENT, THAT IS OUR
MAIN INDICATOR TO ASSESS THE
OVERALL HEALTH OF THE REGIONAL
ECONOMY, OUR FORECAST IN
OCTOBER, 2025, SLIGHTLY DARKER,
GRAY BAR, THAT FORECAST
PREDICTED DECLINE IN REGIONAL
EMPLOYMENT, ROUGHLY 0.6, HALF A
PERCENT DECLINE IN REGIONAL
EMPLOYMENT, THE ACTUAL OUTCOME
WAS SLIGHTLY BETTER, MINUS 0.1%,
THE EMPLOYMENT, TOTAL EMPLOYMENT
OF DECLINE, BUT SLIGHTLY, ONLY
SLIGHTLY, THE MAIN REASON HERE
IS THAT THE WASHINGTON STATE
EMPLOYMENT SECURITY DEPARTMENT
HAS REVISED REGIONAL EMPLOYMENT
ESTIMATE DATA. THEY DO THAT
REGULARLY AND OCCASIONALLY QUITE
SIGNIFICANT CHANGES IN THIS
FORECAST REVISED EMPLOYMENT
ESTIMATES DOWN FOR 2024 AND
SLIGHTLY UP FOR 2025, SO THAT
MEANS THE JOB GROWTH LAST YEAR,
2025 JOB GROWTH, CAME IN
SLIGHTLY ABOVE OUR FORECAST, THE
TRADITION HAPPENED LAST MONTH,
BEFORE THAT REVISION, THE
ESTIMATES WERE THAT THE
EMPLOYMENT DECLINED BY 0.8% IN
SEATTLE AREA ECONOMY. SO, AGAIN,
OCCASIONALLY QUITE SIGNIFICANT
CHANGES. THAT IS CONSIDERED
GENERAL GOOD NEWS. LITTLE MORE
GOOD NEWS INFLATION SIDE, 2025
WAS VERY VOLATILE YEAR, LOT OF
UNCERTAINTY, LOT OF MOVING
PARTS, IN THE END, INFLATION
CAME IN BELOW EXPECTATIONS. THAT
IS 2.4%, IT WAS ACTUALLY ALSO
LOWER THAN THE INFLATION THAT
WAS SEEN ON THE NATIONAL LEVEL,
AND IT WAS ROUGHLY WHERE WE WERE
EXPECTING IT TO BE EVEN BACK IN
OCTOBER OF 2024, BEFORE ALL OF
THE UNCERTAINTY THEY BROUGHT AND
ALL THE CHANGES AND THE
DIFFERENT REVISIONS IN THE
FORECASTS. THEN MOVING ON TO THE
TAXABLE SALES, AGAIN, GOOD NEWS
THERE, OUR FORECAST FOR THE
PREVIOUS YEAR, THE FINAL ONE
FROM OCTOBER, 2025, WAS TAXABLE
SALES WILL GROW BY 1.25%, WHICH
WOULD MEAN DECLINING IN REAL
TERMS, ADJUSTED FOR INFLATION,
BUT THE DECLINE WAS ONLY SMALL,
DEFINITELY SMALLER THAN WE
EXPECTED. TAXABLE SALES, 2.2%,
EVEN THOUGH CONSUMER SPENDING IN
THE CITY WAS WEAKER THAN THE
NATIONAL ECONOMY, AND EVEN
THOUGH TAXABLE SALES IN
CONSTRUCTION SECTOR HAVE
DECLINED 4.4%, WAY DOWN ON TOTAL
SALES TAX REVENUE. WE DID SEE
STRONG PERFORMANCE LAST QUARTER
OF 2025. THEN FINALLY, FOR
PERSONAL INCOME, THERE IS ONLY
TWO BARS IN THE CHART, THE
REASON HERE IS THAT ACTUAL
PERSONAL INCOME FOR 2025 WILL BE
ON THE RELEASE BY BEA IN
DECEMBER OF THIS YEAR, SO WE
DON'T HAVE ANY INSIGHT INTO
PERSONAL INCOME FOR SEATTLE
METRO AREA, WE DO KNOW THAT FOR
WASHINGTON STATE AS A WHOLE,
PERSONAL INCOME AND WAGES
SALARIES GREW SLIGHTLY ABOVE 5%,
SO THAT GIVES US CONFIDENCE FOR
SEATTLE AREA, WE ARE GOING TO BE
CLOSE TO THAT 5% FORECAST FOR
PERSONAL INCOME ONCE THE DATA IS
EVENTUALLY RELEASED AT THE END
OF THIS YEAR. LOOKING A LITTLE
MORE CLOSELY AT EMPLOYMENT DATA,
KIND OF TRYING TO SEE WHERE THE
JOBS ARE, THESE APPEARING IN
WHICH PARTS OF THE ECONOMY, WE
ARE SEEING EMPLOYMENT DECLINES.
THE BAD NEWS HERE IS THAT IT IS
PRETTY MUCH ACROSS THE BOARD, WE
EXPECT THE EXCEPTIONS FOR
GOVERNMENT AND EDUCATION AND
HEALTH SERVICES AND WE ARE, AND
TRANSPORTATION AFTER THE LAST
REVISION, WE ARE SEEING DECLINES
IN ALL MAIN PARTS OF THE
REGIONAL ECONOMY, NUMBER OF
REASONS FOR THAT, SPECIFIC TO
DIFFERENT INDUSTRIES. FOR
CONSTRUCTION THERE IS LOW DEMAND
FOR OFFICE SPACE, INTEREST RATES
DON'T HELP EITHER. SIGNIFICANT
DECREASE, WE HAVE SEEN THAT FOR
A COUPLE OF YEARS. MANUFACTURING
EMPLOYMENT HAS DECLINED BECAUSE
OF SOME LAYOFFS AT BOEING EARLY
2025, YOU ARE ABLE TO POINT OUT
THE SEATTLE METRO DIVISION, SO
KING AND SNOHOMISH COUNTY, THIS
IS NOT CITY OF SEATTLE
EMPLOYMENT. THEN FOR LABOR
DEMAND THERE IS JUST WEAK, THERE
IS LITTLE HIRING, COMPANIES ARE
EXPECTING WIDER ADOPTION OF AI
AND FOCUSING ON NEW INVESTMENT
IN AI, EXPECTING TO MEET FEWER
EMPLOYEES, THEY ARE HOLDING ON
TO HIRING. BECAUSE OF THE
LAYOFFS, THERE ARE DECLINES IN
THE SECTOR, PROFESSIONAL, THE
COMPANIES IN SEATTLE AREA.
MOVING ON TO MORE RECENT
DEVELOPMENTS HERE, SUMMARIZES
THE IMPACT OF WHAT HAS BEEN
GOING ON SINCE, LATE FEBRUARY,
WAR IN IRAN LED TO A LARGE SPIKE
IN OIL PRICES AND GAS PRICES,
THE CHART ON THE RIGHT SHOWS
TEXAS INTERMEDIATE OIL PRICES
WAS AT SLIGHTLY LIGHTER GRAY
LINE, THE ONE BELOW, AND THE ONE
ABOVE, VALLEY ON THE RIGHT, THE
SIDE, SHOWS THE SEATTLE AREA GAS
PRICES WHICH ARE REACHING LEVELS
THAT WE HAVE LAST SEEN IN 2022,
WHEN RUSSIA ATTACKED UKRAINE. SO
QUITE A SIGNIFICANT INCREASE IN
GAS PRICES THAT ARE EXPECTED TO
LEAD TO HIGHER OVERALL INFLATION
AND CREATE HEAD WINDS FOR THE
ECONOMY. THIS INCREASE IN
UNCERTAINTY HAS LED TO RISING
RECESSION RISKS, WE HAVE SEEN
SOME DECLINES THERE, AND WE WERE
CERTAINLY EXPECTING LESS
UNCERTAINTY THIS YEAR, BUT HERE
WE ARE. SO IN MARCH, SURVEY OF
WALL STREET JOURNAL OF ECONOMY,
THE WALL STREET JOURNAL CONDUCTS
EVERY QUARTER, AND ASK ABOUT 60
ECONOMISTS WHAT THEY BELIEVE IS
THE PROBABILITY OF RECESSION IN
THE NEXT 12 MONTHS, THAT SURVEY
AVERAGE OF THE PROBABILITY WAS
32, IT WAS UP FROM 27% IN
JANUARY, SO, AGAIN, RECESSION
ARISING, NOT AS HIGH AS LAST
YEAR, AT LEAST THAT IS WHAT THE
SITUATION WAS IN MID MARCH, THE
TIME OF THAT SURVEY. LAST YEAR
AFTER THE TARIFFS WERE
ANNOUNCED, THE RECESSION
PROBABILITY JUMPED TO 45%. SO,
OVERALL, RIGHT NOW MARKETS ARE
UP BEHAVING IN AN ERRATIC WAY
BUT THERE IS LESS VOLATILITY
THAN LAST YEAR. LAST YEAR,
S&P500 INDEX FELL BY MORE THAN
15%, I BELIEVE CLOSE TO 18%,
BETWEEN THE WEAK AND THE BOTTOM
AFTER THE TARIFF ANNOUNCEMENT.
THIS YEAR DECLINE WAS ABOUT 9%,
BUT SINCE THE BOTTOM MARKETS
HAVE RECOVERED MOST OF THE
LOSSES RIGHT NOW THEY ARE-- THE
S&P500 IS ONLY ABOUT 2.3% DOWN.
SO THE EXPECTATION IS HERE THAT
THIS CONFLICT IS NOT GOING TO
LAST LONG, THE STRAIT OR HORMUZ
IS GOING TO BE REOPENED BECAUSE
IT IS IN THE BEST INTEREST OF
THE ADMINISTRATION FOR THESE TO
NOT TO DRAG ON FOR TOO LONG.
NOW, MOVING ON TO THE ECONOMIC
OUTLOOK FIRST, FOR THE U.S., THE
FORECAST PRESENTED HERE IS
WEIGHTED AVERAGE OF THE TWO
FORECASTS THAT WE HAVE OBTAINED
FROM S&P GLOBAL AND ANALYTICS,
WE ARE CONSTRUCTING AVERAGE
FORECAST OF THE TWO TO KIND OF
MITIGATE THE RISKS, SOMETIMES
ONE OF THEM MIGHT BE MORE
OPTIMISTIC, SOMETIMES THE OTHER
MIGHT BE TOO OPTIMISTIC. BY
AVERAGING THAT WE ARE TRYING TO
DEAL WITH THAT. THOSE FORECASTS
WERE RELEASED IN EARLY MARCH,
AND SINCE THEN THERE HAS BEEN
QUITE A SIGNIFICANT DEVELOPMENT,
THE CONFLICT IN IRAN LASTED
LONGER AND THE OIL PRICES
CLIMBED HIGHER THAN EXPECTED. SO
WHILE DEVELOPING THAT FORECAST,
WE DID SOME ADJUSTMENTS THAT ARE
SLIGHTLY MORE TECHNICAL AND THE
DETAILED FORECASTS ARE AVAILABLE
ON OUR WEBSITE, THE SPREADSHEET
THERE EXPLAINS HOW EXACTLY WE
CONSTRUCT THAT AVERAGE FOR THE
BASELINE SCENARIO, AND FOR THE
PESSIMISTIC SCENARIO. THE BOTTOM
LINE HERE IS THAT WE ARE
ACTUALLY TAKING A COMBINATION OF
WHAT S&P GLOBAL CALL PESSIMISTIC
SCENARIO AND WE ARE CONSTRUCTING
THE THING THAT IS CALLED
BASELINE HERE IN THE AVERAGE
FORECAST BY ACTUALLY
INCORPORATING SOME OF THOSE MORE
PESSIMISTIC ASSUMPTIONS FROM
EARLY MARCH. THE POINT HERE, THE
MAIN GOAL HERE IS TO TAKE INTO
ACCOUNT FOR THE FACT THAT THE
OIL PRICES HAVE CONTINUED TO
CLIMB HIGHER THAN WHAT THOSE
INITIAL EXPECTATIONS WERE WHICH
EXPECTED THE STRAIT OR HORMUZ TO
OPEN BY EARLY APRIL, THAT MEANS
COMPLETELY REOPEN BY EARLY
APRIL. HERE IS WHAT THAT CURRENT
MARCH BASELINE SCENARIO LOOKS
LIKE, IT IS AVERAGE AND IT IS
WEIGHTED AVERAGE TAKING INTO
ACCOUNT WHAT S&P REFERRED TO AS
BASELINE AND PESSIMISTIC
SCENARIO. THER RED LINE THAT
SHOWS THE CURRENT BASELINE
AVERAGE FORECAST FOR THE U.S.,
AS YOU CAN SEE, IS ABOVE THE
LINE FROM OCTOBER. OVERALL, U.S.
ECONOMY STILL EXPECTED TO GROW
AT SOLID BASE, THERE IS LOTS OF
INVESTMENT IN AI, THERE IS SOME
STIMULUS EXPECTED TO BOOST THE
ECONOMY THE FIRST HALF OF 2026,
SO EVEN WITH THOSE HEADWINDS
CREATED BY THE WAR IN IRAN, THE
ECONOMY IS STILL EXPECTED TO
GROW WITH A SOLID ROUGHLY
2-POINT% BASE IN THE BASELINE
SCENARIO. THAT MIGHT BE REVISED
DOWN A LITTLE DEPENDING ON HOW
LONG THE CONFLICT IN IRAN LASTS
BUT THE BASELINE DOES NOT EXPECT
THE RECESSION, THE PESSIMISTIC
SCENARIO DOES&IT WOULD BE A
STEEP DECLINE INTO A RECESSION
IN THE SECOND HALF OF 2026 IF
THE OIL PRICES STAY HIGH FOR A
PROLONGED TIME, THERE IS JUST
NOTHING THAT CAN BE REALLY DONE
TO AVOID THE RECESSION. THE
RISING COST, THERE WILL BE LESS
SPENDING, EXPECTED TO TUMBLE AND
OVERALL ECONOMY DOWN DRIVEN AND
RECESSION WOULD ENSUE. SO THAT
IS THE EXPECTATION REGARDING THE
ECONOMY. THE CHART ON THE RIGHT,
THE RIGHT PANEL SHOWS THE
EXPECTATION REGARDING
EMPLOYMENT, AGAIN, GOING BACK
SLIGHTLY, LOOKING AT WHAT THE
EXPECTATIONS WERE BACK IN
OCTOBER, IN THE BASELINE
SCENARIO, VERY LITTLE GROWTH WAS
EXPECTED BELOW 0.5% YEAR OVER
YEAR INCREASES IN EMPLOYMENT.
THAT HAS BEEN REVISED EVEN
FURTHER DOWN, THERE IS THAT
ASYMMETRIC HERE BETWEEN THE
CHANGES IN REAL GDP AND
EMPLOYMENT, THE OUTLOOK FOR JOB
GROWTH IS VERY, VERY WEAK. THERE
IS BOTH LESS LABOR SUPPLY AND
LESS LABOR DEMAND, SO THE
OVERALL PICTURE IS JUST VERY
LITTLE HIRING AND VERY LITTLE
FIRING, THE EMPLOYMENT WILL STAY
ROUGHLY CHANGED. IN THE BASELINE
SCENARIO, PESSIMISTIC SCENARIO,
RECESSION, AGAIN, THERE WILL BE
SIGNIFICANT WIDESPREAD LAYOFF SO
EMPLOYMENT WIM DECLINE,
EMPLOYMENT WOULD DECLINE IN THE
ALTERNATIVE SCENARIO. WHEN IT
COMES TO EXPECTATIONS FOR
INFLATION, THIS IS YET ANOTHER
SUPPLY, FED WAS FIRST FACING,
VERY CHALLENGING SITUATION
REGARD ING THE IMPACT OF TARIFFS
AND IMMIGRATION RESTRICTIONS,
NOW WITH OIL PRICE SHOCKS, THEY
HAVE YET ANOTHER THING TO DEAL
WITH. SEEMS UNLIKELY AT THIS
POINT THERE WILL BE SIGNIFICANT
RATE CUTS, BEFORE THE CONFLICT,
TWO OR THREE INTEREST RATE CUTS
EACH A QUARTER OF A PERCENTAGE
POINT PEREXPECTED THROUGHOUT THE
YEAR. RIGHT NOW IT SEEMS MORE
LIKELY THE FED WOULD WAIT AND
SEE HOW THESE PLAY OUT AND KEEP
THE INTEREST RATE UNCHANGING,
3.5 TO 3.75 TRYING TO GET
INFLATION DOWN TO ITS TARGET.
FOR THE BASELINE SCENARIO, AS
YOU CAN SEE, THERE ISN'T A
NOTICEABLE INCREASE IN THE
EXPECTED INFLATION FOR 2026, FOR
CURRENT YEAR, AT LEAST FOR THE
FIRST HALF THE DARKER RED LINE
IS NOT REALLY ABOVE THE PREVIOUS
FORECAST FROM OCTOBER, THE
REASON HERE IS THAT THE OVERALL
PASS THROUGH OF TARIFFS WAS MUCH
SLOWER THAN EXPECTED AND ONLY
EXPECTED TO REALLY KICK IN AND
CAUSE HIGHER INCREASES THIS
YEAR, AND BIGGER IMPACT WOULD BE
FELT SOMEWHERE AROUND SUMMER. SO
PREVIOUS YEAR, SO INFLATION
COMING IN BELOW THE PREVIOUS
FORECAST, THAT MEANS EVEN WITH
ADDITIONAL IMPACT OF HIGHER OIL
PRICES, THE BASELINE SCENARIO
HERE IS ROUGHLY WHERE IT WOULD
HAVE BEEN PREVIOUSLY, FOR,
AGAIN, FIRST HALF OF 2026. NOW,
AGAIN, DEPENDING ON HOW LONG THE
CONFLICT WILL LAST, HOW HIGH THE
OIL PRICES WILL GO, AND HOW LONG
THEY WILL STAY THERE, THE
OUTLOOK CAN BE SIGNIFICANTLY
WORSE AND INFLATION CAN
POTENTIALLY REACH 4% IN THE
PESSIMISTIC SCENARIO FROM MARCH,
AGAIN, THIS WAS CONSTRUCTED AS
THE AVERAGE OF WHAT S&P GLOBAL
EXPECT. AND THAT CAN BE, AGAIN,
REVISED UPWARDS, SO EXCEED 4%.
WE JUST GOT RATE FOR MARCH
TODAY&THE INFLATION CAME IN AT
3.3%. SO, AGAIN, SOME INITIAL
IMPACTS ARE ALREADY SEEN IN
ENERGY PRICES BUT IT WILL TAKE A
LITTLE BIT LONGER FOR THE
OVERALL PRICES TO REACT TO
HIGHER OIL PRICES, AND HOW MUCH
THEY WILL, WE WILL HAVE TO WAIT
AND SEE.
MOVING ON TO OUTLOOK FOR SEATTLE
METRO AREA, FOR INFLATION, WE
HAVE VERY SIMILAR SORT OF A
STORY, UPWARD REVISION,
DEPENDING WHICH SCENARIO WE ARE
LOOKING AT, 4% IN THE BASELINE
SCENARIO, OR THE 4.5% IN
PESSIMISTIC SCENARIO, THEY ARE
BOTH SIGNIFICANT INCREASES
RELATIVE TO OUR PREDICTIONS FROM
OCTOBER, BUT AS A REMINDER BACK
IN 2022, THE PROBLEM WITH
INFLATION WAS EVEN WORSE AND
INFLATION PEAKEDED AROUND 9%,
EVEN WITH THE CURRENT
DISRUPTIONS, AS OF NOW, THE
SPIKE IN OVERALL INFLATION WOULD
NOT BE ANYTHING LIKE WHAT WE
HAVE SEEN COUPLE YEARS AGO.
FINGERS CROSSED. MOVING ON TO
EMPLOYMENT GROWTH, LOOKING AHEAD
TO BASELINE SCENARIO. GIVEN WHAT
WE HAVE SEEN IN THE DATA AND
GIVEN THE ANNOUNCED LAYOFFS BY
AMAZON, WE HAVE BEEN COMPELLED
TO REVISE THE EMPLOYMENT
FORECAST DOWN, AS YOU CAN SEE,
THE EMPLOYMENT WOULD NOT REALLY
GROW OR LAST THE NEXT TWO YEARS,
THERE IS ESSENTIALLY NO NET JOB
INCREASES OVER THE NEXT TWO
YEARS, AND WE WILL BE, STILL,
ROUGHLY THE SAME POSITION MOVING
INTO 2028 IN THE BASELINE
SCENARIO. IN THE PESSIMISTIC
SCENARIO, THINGS WOULD GET
WORSE, AND THE RECESSION WOULD
RESOLVE IN CUMULATIVELY 2.7%
EMPLOYMENT LOSSES BY MID 2027,
AND THE RECOVERY WOULD BE UNTIL
2029, AT WHICH POINT, WE WOULD
BE WHERE WE ARE RIGHT NOW, ONE
THING I WOULD WANT TO POINT OUT
HERE IS THE FORECAST HERE WAS
DEVELOPED BEFORE ESD RELEASED
THE NEW DATA THAT I WAS TALKING
ABOUT EARLIER, SO WITH THE NEXT
FORECAST, THERE IS SOME UPSIDE
RISK TO THE EMPLOYMENT FORECAST,
POTENTIALLY WILL BE REVISED
SLIGHTLY JUST BECAUSE OF
TECHNICAL THINGS THAT PAST
HISTORICAL DATA LOOKS REALLY
DIFFERENT THAN PREVIOUSLY
REPORTED WHEN WE WERE WORKING ON
THE FORECAST THAT HILL HERE WILL
ESSENTIALLY BE GONE AND
EMPLOYMENT IN THE NEXT CHART,
UNLESS BIG CHANGES, WOULD
ROUGHLY HOVER AROUND THE SAME
LEVEL, NO NEW JOBS ADDED SINCE
2023, ESPECIALLY. THOSE LOW JOB
GROWTH PROSPECTS ARE IMPORTANT
FOR REVENUE, IMPORTANT FOR ALL
SORTS OF THINGS, INDIRECTLY,
THROUGH VACANCY RATES CAN HAVE
QUITE MEANINGFUL IMPACT ON THE
REVENUES CTE IS RECEIVING. THE
CHART HERE SHOWS THE VACANCY
RATES, OFFICE VACANCY RATES IN
THE U.S., SEATTLE, AND THEN IN
THE REST OF KING COUNTY. WE HAVE
SEEN THIS CHART A COUPLE OF
TIMES IN PREVIOUS PRESENTATIONS,
THERE WAS SIGNIFICANT INCREASE
IN VACANCY RATE IN SEATTLE,
DEMAND FOR OFFICE SPACE IS VERY
LOW, WORK ARRANGEMENT, LOW
EMPLOYMENT GROWTH, AND HYBRID
WORK ARRANGEMENTS, THERE IS AN
INDEX THAT IS RELEASED EACH
QUARTER FOR HOW MUCH DEMAND
THERE IS FOR OFFICE SPACE BY
REAL ESTATE, BUT FOR BDS, OFFICE
DEMAND INDEX, THEY TRACK A
COUPLE OF CITIES AND SEATTLE IN
RECENT YEARS HAS BEEN THE LOWEST
ONE, CURRENTLY DEMAND FOR OFFICE
SPACE IS ROUGHLY HALF OF THE
PRE-PANDEMIC AVERAGE IN SEATTLE,
WHEREAS IT IS ABOUT 36% IN U.S.,
SO AS YOU CAN SEE IN THE CHART,
THE OFFICE VAC ANCY RATES ARE
NOT EXPECTED TO DECLINE REALLY
MEANINGFULLY, EVEN BY 2030, WE
ARE STILL, EXPECTING THE OFFICE
VACANCY RATES TO BE ABOVE 20% IN
SEATTLE. THAT HAS IMPLICATIONS
DIRECTLY AND INDIRECTLY FOR
REVENUES, LIKE I SAID, ONE OF
THE THINGS THAT WE HAVE BEEN
LOOKING AT, AND SHAUN DID SOME
WORK HERE, WAS THE IMPACT ON
ASSESSED VALUE.
>> THANK YOU. WITH ALL THE
DISCUSSION AROUND NEW LEVEES AND
HOW CRITICAL PROPERTY TAX IS TO
SEATTLE BUDGET, WANT TO TAKE A
MOMENT TO TALK ASSESSED VALUE
THE LAST FEW YEARS. TO START
FROM THIS TABLE, TO THE RIGHT,
TOTAL SEATTLE ASSESSED VALUE HAS
GROWN 25% SINCE 2019, $244
BILLION UP TO $306. HEADLINE
NUMBER CAN BE KIND OF MISLEADING
ABOUT WHAT THE UNDERLYING FORCES
ARE HAPPENING HERE WE SEE
RESIDENTIAL IS THE ANK FOR THE
VALLEY FOR SEATTLE, IT WAS THE
MAJORITY BACK IN 2019 ABOUT 52%
OF TOTAL ASSESSED VALUE, GROWN
TO 57.5% CHANGE 4.8%, THIS IS
GOOD FROM BUDGET STANDPOINT,
RESIDENTIAL ASSESSED VALUE TENDS
TO BE STICKIEST DURING A DOWN
TURN. LIKEWISE, MAJOR OFFICE,
FOURTH FROM THE LEFT, THAT HAS
BEEN ON DOWN TURN THE LAST SIX
OR SO YEARS, A THE SHARE OF
MAJOR OFFICE BUILDINGS 11% TO
6.8, THIS IS FOLLOWING WITH THE
SLIDE BEFORE SHOWING THE
STRUGGLES MAJOR OFFICE HAS BEEN
DEALING WITH, BUT LUCKILY FOR US
THIS ISN'T NECESSARILY A WORRY
FOR THE FORECAST, THE DECLINE
HAS HAPPENED AND BAKED IN THE
NUMBERS HERE. OUTSIDE THE TWO
GROUPS THERE ARE SOME
HIGHLIGHTS, INDUSTRIAL AND
MEDICAL BUILDINGS HAVE GROWN
63%, 80% RESPECTIVELY FROM 2019
UP TO 2026. APARTMENTS, THEY
HAVE GROWN MORE MODEST AT 15%
BUT WHAT IS INTERESTING IS THEIR
SHARE OF TOTAL AV HAS GONE DOWN
SLIGHTLY 1.3% NEGATIVE FROM 2026
TO 2019. THIS SHOWS YOU
MULTIFAMILY VALUE FOR ASSESSED
VALUE ARE NOT NECESSARILY
GROWING AS STRONG AS RESIDENTIAL
VALUES. BUT OVERALL, THE BOTTOM
LINE IS BASE IS LARGER BUT MORE
ALIGNED ON RESIDENTIAL THAN IT
WAS SEVEN YEARS AGO AND THAT
SHIFT HAPPENED, LARGELY, BECAUSE
COMMERCIAL, PARTICULARLY MAJOR
OFFICE, DIDN'T KEEP PACE. THAT
IS PRETTY MUCH THAT FOR ASSESSED
VALUE.
>> BEFORE MOVING ON TO REVENUE,
LAST PIECE OF INFORMATION
PREVALENT TO REVENUE FORECAST I
WANTED TO SHARE WITH YOU. WE
HAVE PRESENTED THE OUTLOOK FOR
NUMBER OF INTERNATIONAL VISITORS
AND IN GENERAL. LAST YEAR THERE
WAS A WORRY FEWER INTERNATIONAL
VISITORS COMING IN, IN
PARTICULAR, FROM CANADA, 2025,
WILL NOT BE PARTICULARLY STRONG
YEAR, AND GIVEN THE SALES TAX,
HOSPITALITY DEPEND ON REV FEW,
THAT WAS CONCERNING. THE GOOD
NEWS IS OXFORD ECONOMICS,
PARTICULARLY, THEIR SUBSIDIARY
TOURISM, ECONOMICS, THEY PREDICT
THAT AFTER THAT LARGE DECLINE IN
2025, 2026, WILL LOOK MUCH
BETTER, THE NUMBER OF
INTERNATIONAL OVERNIGHT VISITORS
COMING TO SEATTLE IS EXPECTED TO
GO UP BY 15%, AND THE SPENDING
BY INTERNATIONAL VISITORS IS
EXPECTED TO GO 14% THIS YEAR AND
SPENDING BY DOMESTIC VISITORS
GROW BY ROUGHLY 18% THIS YEAR.
SO THAT CERTAINLY IS GOOD NEWS,
AGAIN, FROM A STANDPOINT OF
SALES TAX, REVENUES, ADMISSIONS
TAX REVENUES, AND GENERAL,
GENERALLY GOOD NEWS FOR THE
BUSINESSES THAT RELY ON THOSE
VISITORS AND SPENDING THAT THEY
BRING TO THE CITY. SO, FINALLY,
MOVING TO THE REVENUE PART OF
THE CURRENT, OF TODAY'S
PRESENTATION. LOOKING BACK AT
2025, THIS IS THE REASON WHY WE
ARE DOING IT, BECAUSE THAT IS
WHAT WE KNOW ABOUT REVENUE
COLLECTION, THERE IS VERY LITTLE
REVENUE WE HAVE RECEIVED FOR
CURRENT SO SO FORECAST IS
LARGELY BASED ON WHAT HAPPENED
2025 PLUS THE ECONOMIC OUTLOOK
THAT WE JUST WENT OVER. SO QUICK
SUMMARY FOR 2025, AS YOU CAN SEE
AT THE VERY BOTTOM, IF YOU LOOK
AT THESE TWO NUMBERS, THE VERY,
VERY BOTTOM, THEY SUMMARIZE THE
TOTAL GENERAL FUND EXCLUDING
FUNDS BALANCE TRANSFER AND
PROVIDE THE BEST INSIGHT INTO
THE OVERALL REVENUE COLLECTED
FOR THE GENERAL FUND. EVEN WITH
ALL THAT VOLATILITY WE HAVE BEEN
THROUGH, AND THERE CERTAINLY
HAVE BEEN LARGE REVISIONS IN THE
FORECAST, LAST YEAR, EVEN WITH
ALL THAT THE FINAL REVENUES CAME
VERY CLOSE TO OUR OCTOBER
FORECAST, 7.1 MILLION ABOVE THE
FORECAST, TO THE GOOD SIDE. SO
ROUGHLY 0.4% VARIANCE FROM
OCTOBER FORECAST. WE HAVE SEEN
AN INCREASE IN 3.5% YEAR OVER
YEAR LAST YEAR, SO,
ADDITIONALLY, ABOUT $55 MILLION
MORE IN THOSE REVENUES EXCLUDING
GRANTS AND FUND BALANCE
TRANSFERS. THE TABLE HERE
PRESENTS ALL THE DIFFERENT
REVENUES UNLESS THERE IS
PARTICULAR QUESTIONS, I WOULD
NOT GO TOO MUCH INTO THE
DETAILS, JUST WANT TO POINT OUT
THE FORECAST OFFICE IS
FORECASTING THE REVENUE
HIGHLIGHTED WITH BLUE BARS,
HIGHLIGHTED IN BLUE, THE REST OF
THE REVENUES, THE CBO FORECAST
OVERSEES THE FORECAST FOR THOSE
REVENUE STREAMS. SO, AGAIN, IN
GENERAL, GOOD NEWS AS YOU CAN
SEE, SALES TAX AND BUSINESS
OCCUPATION TAX OUTPERFORM THE
EXPECTATIONS ROUGHLY BY 1%. IN
GENERAL, AGAIN, QUITE CLOSE TO
THE EXPECTATIONS, CERTAINLY GOOD
NEWS GIVING THE VOLATILITY AND
UNCERTAINTY WE HAVE FACED LAST
YEAR.
FOR NON-GENERAL FUND REVENUE,
MOSTLY GOOD NEWS, EXPENSE TAX
REVENUE CAME IN MORE THAN $20
MILLION ABOVE THE FORECAST, THAT
IS ROUGHLY 5% VARIANCE FROM THE
FORECAST, GIBBON HOW VOLATILE
AND HOW LITTLE HISTORY WE HAVE,
I WOULD PERSONALLY CONSIDER THIS
PRETTY ACCURATE, AS A REMINDER
LAST YEAR, WE HAD SIGNIFICANT
SHORTFALL, REVENUES CAME IN $40
MILLION BELOW THE FORECAST.
CERTAINLY GOOD NEWS HERE, ONE
THING, LITTLE BIT OF CAVEAT IS
TOTAL REVENUE, 20 MILLION OF
THAT ARE NOT REALLY PAYMENTS FOR
2025 OBLIGATIONS BUT LATE
PAYMENTS FOR PREVIOUS YEARS,
THAT IS RELEVANT BECAUSE CHANGE
IS THE BASE THAT THE FORECAST
STARTS AND THE GROWTH EXPECTED,
REALLY APPLIED TO THOSE TAX
OBLIGATIONS, NOT REALLY THE PAST
PAYMENTS, LATE PAYMENTS WE HAVE
RECEIVED FOR, LETS SAY, 2022 AND
2023, CERTAINLY IMPROVE THE
OUTCOME FOR 2025, BUT LESS
RELEVANT FOR THE OUTLOOK FOR
NEXT COUPLE OF YEARS. AGAIN,
UNLESS THERE ARE QUESTIONS I
WILL MOVE ON.
>> THANK YOU, I WILL TAKE THIS
OPPORTUNITY TO PAUSE FOR JUST A
MOMENT SO THAT FOLKS CAN FINALLY
SOAK IN ALL OF THE, WHAT
ACTUALLY OCCURRED IN 2025, AND I
WILL REPEAT BACK SOME OF THE
THINGS I HEARD YOU SAY, WHICH
IS, YOU KNOW, AGAIN, LAST APRIL,
INCREDIBLE AMOUNT VOLVOLATILITY
AND YOU GOT THIS WITHIN ONE
POINT, 1%, YOU GOT THIS VERY
ACCURATE, I REALLY APPRECIATE
THAT. JUMP START PAYROLL EXPENSE
TAX, A NEW TAX, WE DON'T HAVE A
LONG HISTORY WITH IT, IT IS ALSO
VOLATILE, YOU CAME VERY CLOSE TO
THAT NUMBER AS WELL. WHAT I AM
SEEING HERE IS THAT TOTAL
GENERAL FUND WITHOUT GRANTS AND
TRANSFERS, PLUS THE PAYROLL
EXPENSE TAX, WE CAME INTO THE
POSITIVE AT $27.2 MILLION.
ACROSS BOTH FUNDS. IS THAT
CORRECT?
>> YEP. YEP. PLUS, AS YOU CAN
SEE, THERE IS ALSO A LITTLE BIT
MORE READ SLIGHTLY MORE TAX.
>> I JUST WANT TO SAY THIS IS
REALLY GOOD. THIS IS REALLY
ACCURATE. I APPRECIATE THAT. I
THINK FOR THE GENERAL PUBLIC,
HEARING PLUS $27 MILLION, IT IS
A LOT OF MONEY, HOWEVER, IN
CONTEXT OF OUR $6 PLUS BILLION
BUDGET, IT IS NOT, SO I JUST--
IT VERY GOOD. I WANT TO TAKE
THIS MOMENT TO THANK YOU, AND
CHECK IN WITH MY COLLEAGUES TO
SEE IF THERE ARE ANY FURTHER
QUESTIONS ABOUT 2025, BEFORE WE
MOVE INTO THE 2026 THROUGH 2028
FORECAST. I SEE PANELIST WITH
THEIR HAND RAISED, HOWEVER, I
CAN'T SEE WHOM IT IS.
>> DEPUTY DIRECTOR.
>> MARK, TAKE IT AWAY.
>> I WILL JUST START TALKING.
THANK YOU VERY MUCH. THANKS FOR
THE PRESENTATION. EXCELLENT AND
VERY EASY TO FOLLOW ALONG. THON
PRIOR SLIDE TO THE ONE THAT IS
PRESENTLY UP, AND I KNOW YOU
IDENTIFIED WHERE THE FORECAST
COUNCIL SORT OF HAS THE
FORECASTING PURVIEW, WHICH ARE
THE BLUE LINES, I DID NOTICE,
OBVIOUSLY, THE DISCREPANCY IN
THE GRANT AND YOU MAY OR MAY NOT
BE ABLE TO SAY WHAT THAT, THE
REASON BEHIND SORT OF THE $32
MILLION DIFFERENCE THERE IS.
>> I CAN JUMP IN AND SPEAK TO
THAT. THIS IS SIMPLY AN
INDICATION WHAT MANY OF THE
GRANTS HAVE NOT BEEN SPENT DOWN
YET. WE GET REVENUES REIMBURSED
WHEN SPENDING HAPPENS, AND A LOT
OF THESE GRANTS, SPENDING OCCURS
OVER MULTIPLE YEARS. SO YOU WILL
SEE A VERY SIMILAR NUMBER IN THE
2026 FORECAST, TO THE POSITIVE,
BECAUSE ALL OF THAT
APPROPRIATION HAS BEEN CARRIED
OVER FROM LAST YEAR.
>> ALL RIGHT. THANK YOU VERY
MUCH. APPRECIATE IT. NO FURTHER
QUESTIONS.
>> THANK YOU.
>> YOU WILL NOTICE AT THE BOTTOM
OOF THE TABLES WE GENERALLY
REMOVE GRANTS AND TRANSFERS IN
THE FINAL LINE, JUST TO HELP YOU
SEE THE TOTALS WITHOUT THOSE
RELATIVELY TECHNICAL LINES
INCLUDED. SO, NOTHING TOO
ALARMING IN THAT LINE ABOUT
GRANTS. IT IS MOSTLY THE
TECHNICALITIES OF HOW THE GRANTS
ARE SPENT AND SUBQUENT REVENUES
COME IN FOR THEM.
>> I WILL ADD THERE IS SIMILARLY
BIG CHANGES WHEN WE SEE THE
TABLES FOR THE FORECAST ITSELF,
IN A COUPLE OF SLIDES. BEFORE
THAT, THERE IS ONE MORE THING I
FORGOT. FOR BUSINESS AND
OCCUPATION TAX, ONE REASON
REVENUE CAME HIGHER ABOVE THE
FORECAST, ROUGHLY 6 MILLION IN
REFUNDS WE EXPECTED TO BE
FINALIZED AND PROCESSED AND
POSTED BY THE TIME THE BOOKS
CLOSE FOR 2025. THOSE REFUNDS
HAVE NOT BEEN FINALIZED, SO $6
MILLEN, TO THE PLUS SIDE, WILL
BE THAT DEDUCTED FROM NEXT YEAR,
REFUNDS ARE STILL EXPECTED TO BE
PAID THIS YEAR, AGAIN, ROUGHLY
$6 MILLION THERE, THAT WE HAVE
TO TAKE OUT HERE TO KIND OF GET
THE OVERALL PICTURE FOR THE
REVENUE. THE MAIN POINT HOLDS,
GIVEN ALL THE VULTILITY, IN THE
END IT HAS NOT BEEN A BAD YEAR,
REVENUES GROW, ABOVE THE RATE OF
INFLATION, 3.5% INCREASE THERE,
EVEN IF YOU ADJUSTED FOR THE $6
MILLION, STILL GOING TO BE ABOVE
THE RATE OF THE INFLATION,
CERTAINLY THERE WASN'T ANY BIG
SHORTFALL IN REVENUE, COMPARED
TO OUR OUTLOOK IN OCTOBER.
>> BEFORE YOU MOVE ON, JUST TO
SUMMARIZE THAT NEW INFORMATION
FROM YOU, IT SOUNDS LIKE THAT
BRINGS TOTAL GENERAL FUND
WITHOUT GRANTS FOR TRANSFERS
DOWN TO MORE ACCURATE $1.1
MILLION FROM, AS A VARIANCE,
BETWEEN THE FORECAST AND THE
ACTUAL.
>> THAT IS YES, PRETTY MUCH
THERE ON THE MARK, I WANT TO
THANK ALL OF THE MEMBERS, NOT
JUST MY TEAM, BUT THE CBO,
BECAUSE, AS YOU CAN SEE, THERE
IS LOTS OF LINES WHERE THEY ARE
PROVIDING INPUT INTO THE
FORECAST.
>> SO I AM GOING TO ASK YOU TO
BRING YOUR MICROPHONE CLOSER TO
YOUR MOUTH, BECAUSE JUST IN THIS
ROOM YOU CAN HEAR MY VOICE
BOOMING, BUT YOURS IS
WHISPERING, SO, JUST MICK
JAGGER, PRETEND YOU ARE IN THE
ROLLING STONES, MY FRIEND.
BEFORE WE MOVE ON, LAST COMMENT,
THAT IS REALLY ACCURATE. IF YOU
GOT THIS DOWN TO A $1.1 MILLION
DIFFERENCE GENERAL FUND WITHOUT
GRANTS TRANSFER AND $20 MILLION
VARIANCE ON JUMP START, REALLY
WELL DONE. NOW, FOR THE NEWS
EVERYBODY IS PINING FOR, OVER TO
YOU, DIRECTOR DURAS.
>> RIGHT, FINALLY GETTING TO THE
MOST INTERESTING PART OF THE
TALK, THE OUTLOOK FOR CURRENT
YEAR AND THEN FOLLOWING TWO,
FIRST, FOCUSING ON THE BOTTOM
LINE BEFORE WE LOOK AT
INDIVIDUAL ITEMS IN THE TABLE.
THE BOTTOM LINE, FIRST COLUMN
HERE SHOWS THE 2025 ACTUALS AND
THEN THE NEXT THREE ARE 2026
REVENUES, 2027, AND 2028
REVENUES. PRIMARILY FOCUSING ON
THE LINE TOTAL GENERAL FUND WAS
OUT GRANTS AND TRANSFERS BECAUSE
OF THE TECHNICALITIES AROUND
GRANTS AND THE FUND BALANCE
TRANSFERS ARE NOT REALLY
REVENUES, PER SE, JUST MONEY
MOVED BETWEEN DIFFERENT FUNDS
CHT YOU CAN SEE HERE THAT THE
REVENUES ARE EXPECTED TO GROW
SIGNIFICANTLY IN 2026, 9.1% YEAR
OVER YEAR GROWTH IS LARGELY DUE
TO NEW REVENUES. NEW SALES TAX,
PUBLIC SAFETY SALES TAX, AND THE
ESSB5814, CLASSIFIED ACTIVITIES
IS GOING TO BOOST SALES TAX
REVENUES FURTHER. AND THEN FOR
BUSINESS OCCUPATION TAX,
RESTRUCTURE EXPECTED TO GENERATE
ADDITIONAL REVENUE, ANOTHER
REASON WHY THERE IS A BIG JUMP
IN THE GROWTH RATE OF REVENUE IN
THE CURRENT YEAR, STILL, THE
NEXT TWO YEARS OF THE PROJECTED
GROWTH IS 4.1% FOR EACH OF THOSE
YEARS SO THE RATE OF INFLATION,
WHICH IS SHOWN AT THE VERY
BOTTOM. WHEN IT COMES TO THE
CHANGES IN THE FORECAST AT THE
NEXT THREE COLUMNS, COMPARED TO
THE LAST FORECAST, THE ADOPTED
BUDGET, 2026, AND THEN THE
FORECAST FOR 2027 AND 2028,
WHICH ARE REALLY NOT PART OF THE
ADOPTED BUDGET BUT WE DID
FORECAST THOSE YEARS, THE
CHANGES ARE MINUS $10 MILLION
FOR THE CURRENT YEAR, AND THEN
ADDITIONAL $12.6 TO THE PLUS
SIDE FOR 2017, $27.4 FOR 28.
THOSE ARE THE TOTALS, NOW
LOOKING AT THOSE INDIVIDUAL
REVENUES AND WE WILL GO OVER
THEM ONE BY ONE TO KIND OF
EXPLAIN WHAT IS GOING ON HERE,
AGAIN, THE ROWS HIGHLIGHTED IN
BLUE ARE THE ONES THAT ARE
FORECAST OFFICE IS RESPONSIBLE
FOR, THE REMAINING ONES ARE IN
PURVIEW OF THE BUDGET OFFICE, SO
THEY WILL START WITH THE
PROPERTY TAX WHICH--
>> YEAH, I AM GOING TO INVITE
ALEX TO SPEAK ON THAT ONE IF SHE
IS STILL WITH US REMOTELY. ALEX
AND I ARE GOING TO PING-PONG
BACK AND FORTH ON THE WHITE ROWS
OF THIS TABLE. ALEX, TAKE IT
AWAY.
>> YEAH, FOR PROPERTY TAX, THIS
IS, ESSENTIALLY, WE DISCOVERED A
DIFFERENCE BETWEEN OUR
METHODOLOGY AND KING COUNTY'S
METHODOLOGY FOR CALCULATING THE
ALLOWABLE LEVY FOR OUR GENERAL
EXPENSE. WE HAD TO CORRECT OUR
METHODOLOGY TO THEIRS,
UNFORTUNATELY THAT DID LEAD TO
REDUCTION $2 MILLION FOR 2026. I
HAD HAPPY TO GO IN THE MECHANICS
BUT IT IS A LITTLE BIT IN THE
WEEDS IN TERMS OF THE
CALCULATIONS. ON THE UPSIDE, EMS
LEVY, THIS INCLUDES BOTH GENERAL
EXPENSE PROPERTY TAX AND THE
MEDIC, EMS WAS REVISED UPWARD A
LITTLE IN 2026 BECAUSE 2026
ASSESSED VALUE PERFORM ED BETTER
THAN EXPECTATION.
>> MOVING ON TO A COUPLE OF
LINES THAT OUR OFFICE IS
FORECASTING, SALES AND USE TAX
FIRST, IN GENERAL UPWARD
REVISION, WE HAVE TRIED TO
INCORPORATE ESTIMATES IN, BACK
IN OCTOBER, ESTIMATES FOR
ADDITIONAL REVENUE CREATED BY
THE THREE CLASSIFICATION OFFICE
OF ACTIVITIES FROM SERVICE TO
RETAIL. WE ARE SEEN INITIAL
INFORMATION THAT COMPELLED US TO
REVISE THE FORECAST UP, TOGETHER
WITH MAYBE SLIGHTLY LESS
PESSIMISTIC OFFICE FOR
CONSTRUCTION SECTOR, WE ARE SEEN
LARGE PERMITS GO THROUGH AT THE
END OF THE LAST YEAR, JUST MORE
CONSTRUCTION ACTIVITY THAN
PREVIOUSLY EXPECTED, AND THEN
2026, 0.4 ADDITIONAL REVENUE,
THERE IS LOTS OF CROSS CURRENTS
THERE, CURRENT WEAKER ECONOMIC
OUTLOOK, PARTIALLY OFFSET BY
THOSE SLIGHTLY HIGHER THAN
EXPECTED REVENUES THAT WE HAVE
SEEN IN 2025, WHICH SUGGESTS
ADDITIONAL REVENUES GENERATED BY
THE CLASSIFICATION IS HIGHER
THAN WE PREVIOUSLY ESTIMATED.
FOR BUSINESS AND OCCUPATION TAX,
DOWNWARD REFLECT $6 MILLION IN
REFUNDS I MENTIONED, SO FOR
2026, $6 MILLION THERE IS REALLY
JUST REFUND AMOUNT MOVE FROM
2025 TO 2026, IN ADDITION TO
THAT, LAYOFFS IN THE TECH SECTOR
ARE EXPECTED TO WEIGH DOWN ON
REVENUE HERE, AND FINALLY, THE
CONSTRUCTION SECTOR FORECAST FOR
BUSINESS OCCUPATION TAX,
DEVELOPED SEPARATELY FROM THE
ONE IN THE SALES TAX SEEM TO BE
SLIGHTLY TOO OPTIMISTIC, THAT
WAS REVISED DOWN. THERE IS
ASYMMETRIC HERE BETWEEN THE
DIRECTION FOR SALES AND YOUTH
TAX AND BUSINESS AND OCCUPATION
TAX. SHAUN CAN PROVIDE
ADDITIONAL INFORMATION.
>> PRIMARILY TWO GROUPS,
TELECOMMUNICATION WHICH RELIES
ON TELEVISION AND THEN ENERGY
RELATED FOR STEAM AND NATURAL
GAS. THE PUDGET SOUND ENERGY
WHICH DOES THE RATE SETTING FOR
NATURAL GAS RAISED RATES LAST
YEAR, SO WE INCURRED $3 MILLION
YEAR OVER YEAR GROWTH, THIS
RAISES THE BASE LEVEL FOR THE
FORECAST SO WE HAVE SEEN FROM
THEREAT, LIKEWISE WITH THE
CONFLICT WITHIN THE MIDDLE EAST,
ENERGY PRICES INCREASED, OR
EXPECTATIONS HAVE IN THE SHORT
TERM, AND LIKEWISE WITH
TELECOMMUNICATION GREEP
UTILITIES FORECAST BEFORE WE
ALWAYS ASSUME, OR SAW, RATHER,
DECLINE IN YEAR OVER YEAR
PAYMENT, PEOPLE ARE CUTTING
CABLE, CUTTING USUAL METHODS OF
COMMUNICATIONS, BUT FOR 2025 WE
HAVE SEEN THE DECLINE KIND OF
EVAPORATED. LUCKILY, FOR US,
UTILITIES, PRIVATE UTILITIES ARE
IMPROVING NOW, TELECOMMUNICATION
S SEEM TO BE MODEST GROWTH, AND
ALLOW THE FORECAST FOR THE
DIFFERENCES OF $15 MILLION OVER
THREE YEARS PRIMARILY DRIVEN BY
THE FORCES. THAT IS PRETTY MUCH
IT FOR PRIVATE UTILITY TAXES.
>> ALL RIGHT. WE WILL HAND IT
OVER TO JOE AND HIS TEAM.
>> I WILL QUICKLY TALK PUBLIC
UTILITY TAXES, THAT INCLUDES
CITY LIGHT AND SPU TAX REVENUES,
IN 2026 THEY WERE, SORRY, THE
ELECTRIC TAX REVENUES WERE
REVISED DOWN SLIGHTLY, MOSTLY
ACCOUNTING FOR WARMER WEATHER AT
THE START OF THE YEAR, AND
OVERALL THEIR LOAD FORECAST OVER
THE NEXT FEW YEARS HAS BEEN
REVISED DOWN DUE TO LOWER THAN
EXPECTED EV ADOPTION AS WELL AS
LESS COMMERCIAL ACTIVITY.
HOWEVER, YOU CAN SEE IN 2027,
2028, THAT IS MORE THAN OFFSET
BY ANTICIPATED RATE INCREASES
FOR CITY LIGHT. GOING INTO OTHER
CITY TAXES, NOT SURE IF YOU HAVE
A PART TO ADD HERE, JOE, BUT
SOME OF THIS IS DEFINITELY
DRIVEN BY THE TAX, A FAIRLY
DIFFICULT TAX TO FORECAST
BECAUSE, ESSENTIALLY, THIS IS
REVENUES THAT WE RECEIVE FROM
ENTITIES THAT LEASE
PUBLICLY-OWNED PROPERTY. SO WE
HAVE LIMITED INFORMATION ON HOW
LONG THE LEASES ARE AND HOW
REGULARLY THE RENTS INCREASE ON
THE LEASES, SO IN 2025 THESE
REVENUES OUT PERFORMED
EXPECTATIONS BY QUITE A BIT. SO
THAT IS MOSTLY WHAT IS DRIVING
THE INCREASE IN THIS ONE.
>> YEAH, THAT IS THE DRIVING
FORCE UNDER OTHER CITY TAXES,
FOR SURE. PARKING METERS ARE
RELATIVELY FLAT, NOT TOO MUCH
HERE. THIS IS A COMBINATION OF
THE REVENUES WE RECEIVED FROM
FOLKS PAYING METERS, WHEN THEY
PARK ON THE STREET, AND ALSO THE
FEES PAID FOR METER HOODING, WE
CALL IT, WHERE YOU RESERVE
SPACES THAT WOULD OTHERWISE BY
PAID PARKING. THAT IS THE METER
HOODING IS ABOUT 10% OF THIS
ROW. WE CONTINUE TO SEE SOME
DECLINES IN PAID TRANSACTIONS
FOR METERS, BUT MOSTLY WE SEE
RELATIVELY FLAT OUTLOOK FOR THAT
AND SLIGHT-- THERE IS A SLIGHT
DOWNWARD REVISION HIDDEN HERE
FOR THE METER HOODING FEES,
LIKELY DUE TO SLIGHTLY LOWER
THAN EXPECTED CONSTRUCTION
ACTIVITY ON THE STREETS. MOVING
ON TO THE COURT FINDS ROW HERE.
THERE IS LOT UNDER THIS ROW THAT
ARE MOSTLY CITATIONS, PROCESSED
BY THE SEATTLE MUNICIPAL COURT.
THE LION'S SHARE ARE PARKING
TICKETS. ALSO UNDER HERE ARE 70%
OF RED LIGHT CAMERAS. THE REAL
ACTIVITY HAPPENING HERE IN 2026,
REVISION OF $5.5 MILLION
DOWNWARD, SEVERAL FACTORS
UNDERLIE THIS, ONE IS MUCH LOWER
THAN EXPECTED PARKING TICKETS
HANDED OUT IN THE FALL AND INTO
THE WINTER MONTHS. SOME OF THAT
CONTINUING INTO THE SPRING, SO
VOLUME IS LOWER THAN WE HAD
ANTICIPATED, THERE WAS ALSO SOME
EXPECTATION OF INCREASED HIRING
IN THE 2026 ADOPTED BUDGET FOR
PEOs, WE HAVE YET TO SEE THAT
MATERIALIZE. THE HIGHERING UP
HAS ONLY KEPT PACE WITH HOW MANY
PARKING ENFORCEMENT OFFICERS
HAVE BEEN LOST, SO WE HAVE
LOWERED THE EXPECTATION FOR
ADDITIONAL HIRING IN THIS
FORECAST AS WELL. THE OTHER
FACTOR THAT IS HAPPENING UNDER
THIS ROW IS THAT CHANGES TO
STATE LAW IN THE MOST RECENT
LEGISLATIVE SESSION LIMITED THE
ABILITY TO USE AUTOMATIC LICENSE
PLATE READERS AROUND SENSITIVE
BUILDINGS, ANDTHER PARKING
ENFORCEMENT OFFICERS HAVE RELIED
ON WHAT WE CALL ALPR TECHNOLOGY,
TO A SMALL EXTENT. IT IS NOT A
HUGE PORTION OF WHAT THEY DO,
BUT THEIR TECHNOLOGY DOESN'T
ALLOW THEM TO TURN IT ON AND OFF
AROUND THESE SENSITIVE BUILDINGS
AND CENTERS, SO THEY HAVE
ANTICIPATED NEEDING TO TURN THAT
OFF UNLESS THEIR TECHNOLOGY CAN
BE ADJUSTED. SO THIS FORECAST,
YOU CAN SEE IN THE OUT YEARS,
THERE ARE SOME TICKS DOWN IN
2027 AND 2028, THAT IS
ANTICIPATING THE ALPR TECHNOLOGY
WILL NOT BE AVAILABLE TO PARKING
ENFORCEMENT OFFICERS GOING
FORWARD.
>> JOE, I WILL JUMP IN WITH MY
THREE-TIMES-A-YEAR CAVEAT WHAT
YOU SAID, IN ADDITION TO ALL OF
THAT WHAT YOU SAID IN THE PAST
FEW YEARS WE ADJUSTED PARKING
RATES TO A HIGHER LEVEL BECAUSE
PEOPLE WERE CHOOSING NOT TO PAY
PARKING AND RATHER TICKET PRICE,
BECAUSE IT WAS CHEAPER THAN
PAYING FOR PARKING. THAT ADDED
VOLATILITY TO YOUR COURT FINDS,
IT ADDED VOLATILITY TO THE
PARKING RIGHTS, AND THEN ON TOP
OF THAT, WE PROMISED YOU THAT WE
WOULD BE ROLLING OUT THE
SPEEDING CAMERAS THROUGHOUT THE
CITY, SDOT AND SPD HAVE YET TO
GET THOSE DEPLOYED ON OUR
STREETS AND SO THERE ARE A
NUMBER OF OTHER VARIABLES,
LEGISLATIVELY AND
ADMINISTRATIVELY WITHIN THE CITY
OF SEATTLE THAT MADE IT
DIFFICULT TO PREDICT THE
NUMBERS.
>> YEAH, THANK YOU. THERE IS A
LOT GOING ON WITH TRAFFIC
CAMERAS. I WILL SPEAK TO THAT IN
THE NEXT SLIDE BECAUSE THOSE
SPEED CAMERAS ARE ALLOTTED AS
NON-GENERAL FUND, THEY COULD GO
TO AUTOMATIC TRAFFIC SAFETY
CAMERA FUND. I WILL SPEAK TO
THAT ON THE NEXT SLIDE.
GENERALLY SPEAKING, THE PARKING
TICKET FINES DID GO UP IN 2025,
WE DID SEE A MARK INCREASE IN
THOSE REVENUES, THIS DOWNWARD
$5.5 MILLION IS RELATIVE TO THE
EXPECTATION OF WHAT WE WOULD
BRING IN FOR 2026. YES, THE
OVERALL REVENUES ARE UP EVEN
THOUGH REVISED DOWNWARD. I AM
GOING TO MOVE ON HERE, UNLESS
THERE ARE OTHER QUESTIONS ON
COURT FINES. THIS ROW HAS A LOT
GOING ON AS WELL. THE DRIVING
FORCE IS INTEREST INCOME ON THE
GENERAL FUNDS CASH BALANCES. WE
HAVE ANTICIPATED A DOWNWARD
REVISION OF $1.9 MILLION IN
2026, AND THEN UPWARD REVISION
OF $3.2 MILLION IN 2027 AND
RELATIVELY FLAT IN 2028. OUR
CASH BALANCES ARE INVESTED IN
VERY LOW RISK TREASURY NOTES.
THOSE NOTES ARE SHORT TERM AND
SO THEY GENERALLY FLUCTUATE
QUITE A BIT. THIS IS A
CHALLENGING REVENUE STREAM TO
PREDICT, BUT RIGHT NOW THE
ANTICIPATION IS THAT WE WILL SEE
LOWER YIELDS IN 2026 BUT
INCREASE IN 2027 ANTICIPATING
INTEREST RATES IN GENERAL, THE
FEDERAL FUNDS RATE, THAT IS,
WILL STAY HIGHER THAN WE HAD
PREVIOUSLY ANTICIPATED. SO WE
ANTICIPATE THAT MEANS THAT
YIELDS THAT WOULD GENERALLY GO
UP FOR THE SHORT-TERM INTEREST
RATES SO IN 2027 WE ADJUSTED
THAT FORECAST UP A BIT FOR THAT
REASON. LETS SEE, I AM MOVING ON
NOW TO REVENUE FROM OTHER PUBLIC
ENTITIES. NOT TOO MUCH CHANGE,
$2.2 MILLION ADJUSTMENT IN 2026,
THESE ARE-- THIS LINE
ENCOMPASSES QUITE A FEW
STATE-SHARED REVENUES. SO THAT
INCLUDES TRANSFERS FROM THE
STATE FOR CRIMINAL JUSTICE
PURPOSES, AS WELL AS LIQUOR TAX,
SLIGHT ADJUSTMENT HERE FOR OVER
PERFORMANCE OF THOSE REVENUES IN
2025, SO THE MODEL HAS BEEN
ADJUST UPWARD ANTICIPATING
SLIGHTLY HIGHER IN THE OUT
YEARS. I AM GOING TO PASS IT TO
ALEX TO TALK SERVICE CHARGES AND
REIMBURSEMENTS.
>> SERVICE CHARGES, THIS
CATEGORY HASN'T CHANGED MUCH,
PRETTY STABLE OVER THE THREE
YEARS, JUST TO REFRESH
EVERYBODY, THIS CATEGORY
INCLUDES A LOT OF IT IS INTERNAL
SERVICE CHARGES AND COST SHARING
BETWEEN DEPARTMENTS. THIS ALSO
INCLUDES REVENUE THAT, FOR
EXAMPLE, SPD GETS FROM PROVIDING
SECURITY, FOR EXAMPLE, AT
SPORTING EVENTS LIKE THAT. THIS
CATEGORY IS USUALLY PRETTY
STABLE. GRANTS, LIKE I SAID ON
THE 2025 ACTUAL SLIDES, SO THIS
MIRRORS MORE OR LESS THE NUMBER
WHICH INDICATED A LOT OF THE
GRANTS WERE NOT SPENT DOWN, THAT
APPROPRIATION HAS BEEN CARRIED
FORWARD INTO 2026, AND REFLECTED
HERE, MOSTLY BUDGETED MECHANICS
THING WHERE WE ARE REFLECTING
THE REVENUE IN AGGREGATE OF THIS
YEAR IN ORDER TO BALANCE THE
FUND GIVEN ALL OF THE
APPROPRIATION AS WELL. AND THEN
FUND BALANCE TRANSFERS, THEY
ALSO HAVE NOT CHANGED MUCH. THIS
IS MOSTLY DRIVEN BY TRANSFERS
FROM THE PAYROLL EXPENSE TAX,
AND AS OF THIS APRIL FORECAST,
THOSE ASSUMPTIONS HAVE NOT
CHANGED. THESE ARE JUST MARGINAL
CHANGES OUTSIDE OF PAYROLL
EXPENSES, TAX TRANSFERS.
>> ALL RIGHT. I THINK WITH THAT
WE CAN MOVE ON TO THE
NON-GENERAL FUND REVENUES,
PAYROLL EXPENSE TAX, FIRST, AS
YOU CAN SEE, HERE IS WHERE THE
NEWS IS NOT SO GREAT. THERE IS A
DOWNWARD REVISION FOR CURRENT
YEAR AND THEN ALSO THE FOLLOWING
TWO, THE MAIN REASON HERE IS
THAT, WELL, THERE IS TWO, SO,
AMAZON ANNOUNCED 5,000, 4,000
PLUS LAYOFFS APECTING THE TAX
BASE THEN IN ADDITION TO THAT,
THE STOCK PRICES, GIVEN THE
RECENT DEVELOPMENTS, ARE NOT
WHERE THEY WERE EXPECTED TO BE
WHEN WE WERE GENERATING THE
FORECAST BACK IN OCTOBER, AS A
REMINDER, STOCK PRICES DO MATTER
FOR PAYROLL EXPENSE TAX BECAUSE
LARGE PART OF THE COMPENSATIONS
THAT SUBJECT TO THIS TAX IS IN
FORMAL DISTRICT, STOCK UNITS. SO
THE VALUE OF THAT FLUCTUATES
WITH CURRENT STOCK PRICES FOR
THOSE MAIN TAXPAYERS THAT DO
COMPENSATE THEIR EMPLOYEES IN
THE FORM OF RESTRICTED STOCK
UNITS. SO WITH LOWER CURRENT
STOCK PRICES AND, IN GENERAL,
LOWER OUTLOOK FOR THE REST OF
THE YEAR, COMPARED TO THE
OCTOBER FORECAST, THERE IS THAT
$STAEN MILLION DOWNWARD REVISION
FOR THE CURRENT YEAR, IT KIND OF
CARRIES OVER INTO 2027 AND 2028
AS WE ARE STARTING FROM A LOWER
BASE. FOR PAYROLL EXPENSE TAX
FUND REVENUE INTEREST INCOME
PART--
>> I CAN SPEAK TO THAT. SIMILAR
STORY WE SEE DOWNWARD REVISION
AND BUMP UP IN 2027, ALL DRIVEN
BY PROJECTIONS FOR YIELDS ON THE
SHORT-TERM TREASURY NOTES, WHICH
IS WHERE WE INVEST OUR CASH
BALANCES. FOR THE MOST PART. I
WILL JUST HIGHLIGHT THAT BOTH
HERE AND IN THE GENERAL FUND
INTEREST INCOME, ON THE PREVIOUS
SLIDE, WE DO SEE A DOWNWARD
TREND IN THESE INTEREST INCOMES,
JUST BECAUSE WE ARE REVISING THE
FORECAST, I WANT TO HIGHLIGHT,
THOUGH, IN THAT SORT OF APRIL
FORECAST SECTION WE DO SEE THESE
DOWNWARD TICKS IN THIS FORECAST,
THAT IS BECAUSE OVERALL INTEREST
RATES ARE COMING OFF A HIGH
PERIOD. WE EXPECT TO SEE LOWER
ININTEREST INCOME IN COMING
YEARS THOUGH WE REVISED THE
FORECAST A BIT.
>> BEFORE WE MOVE ON, REGULAR
MOMENT WHEN WE START TALKING
ABOUT PAYROLL EXPENSE TAX, THANK
YOU, AGAIN, THANK YOU, YOU HAVE
BEEN TRYING TO FORECAST A TAX
THAT HAS NOT BEEN COLLECTED
BEFORE. WE ARE IN THE 5th YEAR
OF COLLECTION, 6th YEAR OFA
ESMENT, AND I WILL TAKE, THE
VOLATILITY OF THE TAX IN AND OF
ITSELF, BECAUSE IT IS DEPENDENT
UPON THE STOCK MARKET T CAN BE
HARD TO PREDICT, EVEN IF YOU HAD
THE HISTORY TO PREDICT IT WITH,
SO I APPRECIATE THE ACIACY IN
WHICH YOU ARE ABLE TO PROVIDE US
WITH THAT VOLATILITY. TO THE
SIDE OF THAT, THAT HELD
CONSTANT, THE FACT THAT WE HAVE
ONLY HAD SIX YEARS OF ASSESSMENT
AND FIVE YEARS OF COLLECTION,
MEANS THIS IS REALLY THE FIRST
TIME WE ARE ABLE TO DO A
FIVE-YEAR SMOOTHING ANALYSIS, IN
MY OPINION, THE BASELINE IN
WHICH, IT IS THE FOUNDATION IN
WHICH YOU NEED TO MOVE FORWARD
FROM THE. AND IN THE EARLY YEARS
ASSESSMENT AND COLLECTION, THERE
WAS NOT ENOUGH TIME FOR
BUSINESS-- AND IT IS COMMON
ECONOMIC PRACTICE, MOVE WITH
YOUR FEET, WHICH IS TO SAY IF
THERE IS A HIGHER TAX IN ONE
PLACE, THERE IS A WAY TO AVOID
THAT TAX BY MOVING TO ANOTHER,
RIGHT? THAT IS THE SUBSTITUTION
EFFECT OF THE LARGER THE
GEOGRAPHIC BOUNDARY, THE BETTER
FOR THE TAX, IN THIS CASE,
BECAUSE IT IS JUST WITH SEATTLE,
IT IS EASIER TO AVOID THAN IF IT
WAS FOR THE ENTIRE STATE, AND
WITH THAT, IN THE EARLY YEARS OF
ASSESSMENT AND COLLECTION, THERE
IS A LACK OF ABILITY TO AVOID
THE TAX, HOWEVER, FIVE YEARS
LATER, WE ARE STARTING TO SEE
HOW THAT CAN ACTUALLY BE
APPLIED. THERE ARE THREE REALLY
DISTINCT VARIABLES WORKING
AGAINST YOU BEING ACCURATE,
WHICH IS JUST TIME AND HISTORY,
TAX AVOIDANCE, AND THEN THE
VOLATILITY OF THIS. SO ALL OF
THAT TO SAY, THANK YOU. GOOD
WORK. I JUST WANTED TO SHARE
THAT CONTEXT BECAUSE I WOULD
LOVE TO WORK WITH YOU AND MAYBE
VICE CHAIR ELERBROOK, DWIGHT,
COUNCIL PRESIDENT SHOULD SHE
DESIRE, WHETHER OPEN SESSION OR
WORK GROUPS THAT DOESN'T BREAK
OPEN PUCKLIC MEETING ACT, IN A
WAY TO BETTER UNDERSTAND HOW WE
CAN USE THE LAST FIVE TO SIX
YEARS TO CREATE THAT FOUNDATION
IN WHICH WE ARE ABLE TO GO FROM
HERE. BECAUSE UNTIL NOW, WE HAVE
BEEN LACKING THAT CRITICAL DATA,
SO I JUST KIND OF MAKE THAT--
ANY OTHER COMMENTS FROM
COMMITTEE MEMBERS? ?
>> THANK YOU.
>> THANK YOU, CHAIR STRAUSS.
VERY NICE TO HEAR THAT THE HARD
WORK IS APPRECIATED. SO, MOVING
ON, INTEREST RATES ARE EXPECTED
TO STAY HIGHER FOR A LONGER
PERIOD OF TIME. THERE ARE FEWER
HOMES EXPECTED TO BE SOLD THIS
YEAR THAN, AGAIN, NEXT YEAR, AND
THE ONE AFTER. IN ADDITION, THE
HIGH VACANCY RATES THAT WE HAVE
PRESENTEDER AND DECLINING
ASSESSED VALUES ALSO MEAN
WHEREVER A LARGE OFFICE BUILDING
IS SOLD, SOME COMMERCIAL
BUILDING IN GENERAL IS SOLD,
LOWER ASSESSED VALUES AND ALSO
IMPLICATIONS, THAT MEANS LESS
RATE REVENUES HERE. THE OVERALL
DOWNWARD REVISION IS IN EXCESS
$10 MILLION OVER THREE YEARS BUT
HEAVILY IMPACTING 2026, IN
PARTICULAR. THEN FOR THE
ADMISSION TAX REVENUES, WE HAVE
TRIED TO INTORPERATE THAT NUMBER
OF VISITORS COMING TO SEATTLE,
AS FORECASTED BY TOURISM
ECONOMICS AND RECENTLY THERE HAS
BEEN NEWS MAYBE HOTEL ROOMS ARE
NOT REALLY FILLING UP AS MUCH AS
EXPECTED, OR FOR WORLD CUP, THAT
IS CERTAINLY CONCERNING NEWS.
THE REVISION HERE IS NOT
PARTICULARLY LARGE, BUT, AGAIN,
GIVEN WITH OVERALL ECONOMIC
UNCERTAINTY IT IS HARD TO
PREDICT HOW THE MIDDLE EAST
SITUATION WILL EVOLVE. THERE IS
A POSSIBILITY THERE WILL BE
FURTHER DOWNWARD TRANSITION
THERE BUT IT IS RELATIVELY MINOR
ONE.
>> CAN WE GO BACK TO READ FOR A
MINUTE? THERE IS A VERY
SUBSTANTIAL GROWTH PROJECTED
BETWEEN 2026 AND 2027, AND
AGAIN, SUBSTANTIAL GROWTH IN
2028. IF YOU MAKE THE ASSUMPTION
THAT THE OFFICE MARKET ISN'T
GOING TO RECOVER, IN THAT
PERIOD, WHICH IS CONSISTENT WITH
EARLIER, THIS, I ASSUME,
PRESUMES A SIGNIFICANT INCREASE
IN RESIDENTIAL TRANSACTIONS, AND
I-- THAT GROWTH MAKES ME
NERVOUS. IT SEEMS LIKE A VERY
HIGH RATE OF GROWTH IN
RESIDENTIAL TRANSACTIONS. IS
THERE SOMETHING UNDERLYING THAT
THAT I AM MISSING?
>> NO, THAT IS A GOOD POINT.
YEAH, IT RELIES HEAVILY ON THE
FACT THAT THERE IS LOTS OF
PEOPLE WHO HAVE POSTPONED BUYING
A HOUSE BECAUSE MORTGAGE RATES
HAVE BEEN HIGH. SO THERE IS THAT
POTENTIALLY PENT UP DEMAND. ONCE
THE INTEREST RATES DO COME
DOWN,, NOT LIKELY THIS YEAR, NOT
LIKELY GOING TO MOVE, LONG-TERM
INTEREST RATES ARE HIGHER
BECAUSE OF THE UNCERTAINTY AND
THE CONFLICT IN THE MIDDLE EAST,
BUT ONCE LONGER TERM INTEREST
RATE AND MORTGAGE RATES COME
DOWN, THERE WILL BE MORE PEOPLE
FINALLY MAKING THE MOVE SELLING
THE HOME, I BELIEVE WHAT IS
UNDERLYING THE FORECAST FOR THE
SALES OF EXISTING HOMES. WE HAVE
SOME APPRECIATION OF HOME PRICES
AS WELL IN THE FORECAST, SO, P
TIMES Q AFFECTING THE OVERALL
REVENUE AND PRICES GOING UP, Q,
THE QUANTITY SOLD GOING UP,
SUBSTANTIAL IF CREASE. I DO WANT
TO POINT OUT THIS IS COMING FROM
VERY LOW POINT, WE HAVE SEEN
SUBSTANTIAL DECREASES COUPLE OF
YEARS, WE ARE RECOVERING. ALSO A
CONTRIBUTING FACTOR HERE. REASON
TO BE CONCERNED.
>> THANK YOU.
>> I THINK WE CAN MOVE TO THE
ROW LABELED SWEET AND BEVERAGE
TAX ON THIS TABLE. SINCE 2018, I
BELIEVE, THE CITY HAS HAD A TAX
ON THE DISTRIBUTION OF SUGAR
SWEETENED BEVERAGESISMT WE SEE--
WE HAVE-- THIS IS RELATIVELY
MATURE REVENUE STREAM AT THIS
POINT. THE REVENUES HAVE
STABILIZED $21 MILLION A YEAR,
WE PROJECTED A SLIGHT BUMP IN
THOSE IN 2026 DUE TO WORLD CUP
ACTIVITY AND TOURISM, BUT
STABILIZING THEREAFTER IN 2027
AND 2028. SLIGHT REVISION UPWARD
TO THE FORECAST OF 0.4 MILLION
IN 2026, AS REALLY, BECAUSE 2025
REVENUES OVER PERFORMED JUST A
BIT. WE CARRIED THAT FORWARD
INTO THE MODEL. SHORT-TERM
RENTAL TAX, I WILL ASK ALEX TO
SPEAK TO THAT.
>> YEAH, SHORT-TERM RENTAL TAX,
ESSENTIALLY TAX ON AIRBNB, THIS
HAS BEEN REVISED DOWN A LITTLE
BIT IN THE NEXT FEW YEARS,
COMPARED TO THE ADOPTED, SIMILAR
TO ADMISSIONS TAX. THIS FORECAST
DEPENDS ON HOTEL OUTLOOK,
PARTICULARLY IN DOWNTOWN
SEATTLE, AND THAT OUTLOOK DOES
SEEM TO BE A LITTLE LESS ROSY
ABOUT TOURISM IN THE NEXT COUPLE
OF YEARS, ESPECIALLY THE REBOUND
OF VISITATION FROM CANADA. THAT
IS MOSTLY WHAT IS DRIVING THIS
SLIGHT DOWNWARD REVISION.
DIRECTOR, THE SALES TAX.
>> SO MOVING ON TO
TRANSPORTATION BENEFIT DISTRICTS
SPECIFIC SALES TAX, THERE IS
ONLY REVENUE IN 2026 AND 2027,
THERE IS NO REVENUE PROJECTED IN
2028 BECAUSE SALES TAX ENDS
APRIL 1, 2027. SO FOR THE NEXT
YEAR THERE IS ONLY ONE QUARTER
OF REVENUES THERE. THE CHANGE
COMPARED TO THE PREVIOUS
FORECAST IS NEGLIGIBLE,
ESSENTIALLY VERY LITTLE CHANGE
THERE. THAT IS WHY THERE IS
NOTHING IN THE PART, THE
DIFFERENCE FROM THE PREVIOUS
FORECAST IS SHOWN.
>> THE OTHER COM PONENT OF THE
SEATTLE TRANSIT BENEFIT DISTRICT
IS A FLAT $50 LICENSE TAB FEE.
THAT IS HERE. WE HAVE REVISED IT
DOWN, THOSE CAME IN 6% LOWER
THAN PROJECTED, EVEN IN THE
OCTOBER FORECAST. WE HAVE MADE
ADJUSTMENTS TO THE MODEL
ANTICIPATING LOWER REVENUES IN
THE OUT YEARS BECAUSE OF THAT.
>> CAN I ASK ABOUT THAT? IT IS--
THE PATTERN IS A LITTLE ODD
ADMITTEDLY, THE NUMBERS ARE
SMALL, THAT IT GOES UP IN 2027
AND BACK UP IN 2028. IS THERE
SOMETHING DRIVING THAT?
>> YEAH, ADMITTEDLY, THIS IS A
BIT OF A HARD REVENUE STREAM TO
PREDICT, AS WE HAVE SEEN SOME
PATTERN S IN VEHICLE
REGISTRATIONS IN SEATTLE THAT
HAVE FLATLINED IN TERMS OF
POPULATION DOES CONTINUE TO
INCREASE BUT THE NUMBER OF
VEHICLES WE HAVE HAS MORE OR
LESS FLATLINED. I THINK THE BUMP
IN 2027 IS IN ANTICIPATION OF
LIKELY A VEHICLE PURCHASES THAT
HAVE BEEN PENT UP DUE TO HIGHER
INTEREST RATES. I WOULD HAVE TO
GET BACK TO YOU ON EXACTLY WHY
WE SEE THAT BUT I EXPECT THAT IS
WHAT THE MODEL IS PREDICTING
HERE.
>> THANK YOU.
>> FOR COMMERCIAL PARKING TAX,
THE UPWARD REVISIONS AND THESE
THREE YEARS ARE ESSENTIALLY
TAKING INTO ACCOUNT SLIGHTLY
HIGHER THAN EXPECTED PERFORMANCE
IN 2025, ABOUT $1 MILLION. AND
YOU WILL SEE THAT GROWTH THERE
IS NOT MUCH GROWTH BETWEEN 2026
AND 2027, GENERALLY REFLECTING
THE LITTLE GROWTH WE ARE
EXPECTED TO SEE IN THE REGIONAL
ECONOMY.
>> AND THEN FINALLY, LAST BUT
NOT LEAST, THE AUTOMATED TRAFFIC
SAFETY CAMERAS FUND, AS CHAIR
STRAUSS ALLUDED TO EARLIER,
THERE IS A LOT GOING ON HERE,
THIS BUMP&I DO WANT TO FLAG,
FIRST AND FOREMOST, THIS LINE
DOES NOT INCLUDE REVENUES FROM
ANTICIPATED SPEED CAMERAS.
COUNCIL DID APPROVE IN MAY OF
2025, THE ADDITION OF NON-SCHOOL
ZONE SPEED CAMERAS. THE TIMELINE
AND EXACT LOCATION FOR THOSE
INSTALLATIONS IS STILL UP IN THE
AIR A BIT, SO, AND THE
VARIABILITY OF THOSE REVENUES
BASED ON WHERE THE CAMERAS ARE,
IS QUITE HIGH. WE DID NOT WANT
TO VENTURE OUR FORECAST AT THIS
TIMEMENT WE DO COMMIT TO HAVING
SOMETHING TO A FORECAST IN THE
AUGUST UPDATE. FOR NOW, THIS
DOES NOT INCLUDE THOSE CAMERAS.
WHAT IS HAPPENING UNDER THIS ROW
RIGHT NOW IS AN ADJUSTMENT OF
$5.2 MILLION UPWARD IN 2026 DUE
TO THE INCREASE IN TWO DIFFERENT
CITATIONS UNDER THE BLOCK AND
BOX AND BUS LANE CAMERAS. IN
THAT SAME LEGISLATION IN MAY OF
2025 THAT I ALLUDED TO, COUNCIL
REMOVED THE FIRST-TIME WARNING,
FIRST-TIME WARNING REQUIREMENT
FOR THESE TWO CAMERA TYPES, AND
THAT, ESSENTIALLY, INCREASED THE
NUMBER OF CITATIONS BEING GIVEN
OUT. IF YOUR FIRST TIME YOU
VIOLATE THESE, ARE CAUGHT BY THE
CAMERAS, EITHER IN BUS LANE OR
BLOCKING THE BOX, YOU USED TO
GET A WARNING IN THE MAIL, AND
NOW YOU DO GET A CITATION. THOSE
HAVE DRIVEN UPWARD REVISION IN
THE REVENUE STREAM UNDER THIS
LINE GOING FORWARD. THIS LINE
ALSO INCLUDES SCHOOL ZONE
CAMERAS, AND 30% OF RED LIGHT
CAMERAS. SOME SLIGHT INCREASE TO
THE OUTLOOK FOR THOSE CAMERAS AS
WELL, PARTICULARLY AS SOME ARE
REPAIRED AND OTHER SCHOOLS, SOME
SCHOOL CONSTRUCTION COMPLETES,
SO CAMERAS ARE TURNED BACK ON.
OTHERWISE THOSE ARE RELATIVELY
STABLE. THAT CONCLUDES THIS
TABLE, I BELIEVE, UNLESS THERE
ARE QUESTIONS.
>> MANY. I WILL FIRST SEE IF
VOICE CHAIR MARK HAS QUESTIONS,
OR IF COUNCIL PRESIDENT HAS
QUESTIONS.
>> GO RIGHT AHEAD, CHAIR
STRAUSS.
>> THANK YOU. SO, THERE WE GO,
COUNCIL PRESIDENT.
>> NO, MR. CHAIR, I ACTUALLY
DON'T HAVE ANY QUESTIONS, I
APOLOGIZE. THANK YOU.
>> NO PROBLEM. I WILL JUST DIVE
INTO MY FAMILIAR TOPICS FOR MARK
AND DWIGHT, THIS IS-- I BRING UP
THE SAME THINGS EVERY TIME WE
MEET. TALKING ABOUT FIFA, I KNOW
IN THE PAST WE HAD DISCUSSED YOU
WERE PREPARING TO HAVE FIFA
NUMBERS INCLUDED IN THIS,
HOWEVER, THIS IS ANOTHER PLACE
OF VOLATILITY, IT SOUNDS LIKE
YOU ARE KIND OF HOLDING CONSTANT
WITH A SLIGHT DOWNWARD REVISION
FROM THE LAST TIME YOU PRESENTED
AS FAR AS YOUR FIFA ASSUMPTIONS,
IS THAT ACCURATE?
>> THAT IS PRETTY ACCURATE. FOR
A COUPLE OF FORECAST, WHAT WE
HAVE BEEN DOING IS ESSENTIALLY
RELYING ON TOURISM ECONOMICS AND
CO-STAR, BECAUSE THEY HAVE SOME
FORECASTS FOR HOTEL OCCUPANCY
RATE, AVERAGE DALEY RATE,
REVENUE PER ROOM IN THE HOTEL,
AND THOSE THINGS ARE USED AS
INPUT IN THE SALES TAX FORECAST,
SO, FOR LEISURE AND HOSPITALITY
COMPONENT OF THE SALES TAX,
THOSE ARE IMPORTANT FACTORS. THE
TRAVEL SPENT CHART, IT IS AN
INPUT IN INSALES TAX REVENUE
FORECAST PER LEISURE AND
HOSPITALITY, WHENEVER THERE ARE
ADJUSTMENTS TO THOSE, RECENTLY
THERE HAVE BEEN SOME CONCERNS
MAYBE FEWER INTERNATIONAL
VISITORS MIGHT BE COMING, HIGHER
GAS PRICES, PEOPLE WILL, IN
GENERAL, HAVE LESS MONEY TO
SPEND ON TRAVEL, ON LEISURE AND
HOSPITALITY, THEY MIGHT BE JUST
LESS INCLINED TO TRAVEL OR MORE
WORRIED TO TRAVEL. THAT IS
CERTAINLY A CONCERN. SO THERE IS
AN ASSUMPTION BUILDING TO THE
FORECAST FOR SALES TAX REVENUE,
THE CITY IS NOT GOING TO
DIRECTLY COLLECT ADMISSIONS TAX
ON THOSE GAMES, SO IT IS THOSE
INDIRECT AFFECTS, AGAIN, HOW
MANY PEOPLE ARE EXPECTED TO COME
IN, HOW MUCH THEY ARE EXPECTED
TO PAY.
>> HOW MANY PEOPLE WANT TO COME
INTO THE WATCH PARTIES, WANT TO
COME TO SEATTLE CENTER, WANT TO
COME TO WEST SEATTLE.
>> YEP.
>> COLUMBIA CITY, LAKE CITY,
BALLARD, TO EXPERIENCE THE, OR
EVEN SEE SOME OF THE PRACTICE
GAMES. I WAS TALKING TO SOMEBODY
THAT MENTIONED THE TICKETS ARE
EXPENSIVE FOR THEM, AS THEY ARE
FOR ME, BUT MAYBE A PRACTICE
GAME IS A BETTER WAY TO VIEW
BECAUSE YOU HAVE A CLOSER-- YOU
ARE CLOSER TO THE THE PITCH, IT
LESS EXPENSIVE. THERE ARE MANY
DIFFERENT WAYS. I APPRECIATE-- I
WOULD LIKE TO HAVE IT BOTH WAYS.
I WOULD LIKE TO HAVE A
PESSIMISTIC OUTLOOK AT THIS
MOMENT, AND THEN TO BE SURPRISED
LATER THIS YEAR WHEN THE ACTUALS
COME IN THAT WE HAVE, IN FACT,
WELCOMED MORE PEOPLE THAN WE
PREDICTED. IT IS ALWAYS BETTER
TO HAVE IT IN THAT WAY THAN THE
OPPOSITE. SO I APPRECIATE THAT.
WHEN WE ARE LOOKING AT-- I
APPRECIATE DIRECTOR DIVELY'S
QUESTIONS HERE REGARDING
INTEREST RATES AND YOUR FOLLOW
UP. FOR ME, AS ALWAYS, TELL TALE
OF ARE WE GOING TOWARDS OR AWAY
FROM POTENTIAL ECONOMIC
SLOWDOWN? I RECALL VERY
DISTINCTLY I BELIEVE IT WAS
2021, YEAH, 2021, WHEN RE AUL
MOE ALMOST TOOK A NOVEMBERDAUZ.
NOSE DIVE. P WHAT I AM HEARING
FROM YOU TODAY IS THAT WE ARE
STILL RECOVERING, HOWEVER, WE
ARE JUST NOT RECOVERING AS
QUICKLY AS WE PREDICTED LAST
YEAR. IS THAT CORRECT? WE ARE
STILL TRENDING THE RIGHT WAY,
JUST NOT AS FAST? OR HAVE WE
STARTED TRENDING THE RIGHT WAY?
OR STALLING?
>> GOOD QUESTION. IF YOU LOOK AT
THE NUMBERS ITSELF, NOT THE
REVISION PART, BUT THOSE
REVENUES FOR 2026, 2027, AND
2028, THEY DO GO UP. THERE IS
RECOVERY EXPECTED, THE BUMP ON
THE ROAD, BECAUSE OF HIGHER
INTEREST RATE IN THE CURRENT
YEAR AND BECAUSE OF FEWER HOMES
BEING SOLD AS A CONSEQUENCE. THE
GENERAL STORY IS THE SAME,
UNDERLYING, THE RECOVERY, YEAH,
UNFORTUNATELY, SLOWER RECOVERY.
>> I WILL TAKE THIS MOMENT TO
CONNECT THE DOTS BETWEEN THE
AREA VALUE WITH OFFICE SPACE OR
ASSESSED VALUE, SORRY, ASSESSED
VALUE WITH OFFICE SPACE IN
SEATTLE, IT IS NEGATIVE, I THINK
YOU SAID 12%, AND THE OUR OFFICE
SPACE-- WE ARE BEING BUIED BY
OUR RESIDENTIAL AND OTHER
MARKETS, APARTMENTS, ET CETERA,
BUT THIS OFFICE SPACE IS REALLY
STARTING TO CREATE A HOLE IN OUR
ECONOMY, WHERE IF WE WERE ABLE
TO JUMP START OR SPIN UP
SOMETHING THAT CAN CHANGE THE
WAY WE ARE USING OUR OFFICE
SPACE, IT NOT ONLY CREATES
CONSTRUCTION AND SALES TAX, IT
HELPS WITH SOME OF IT AND
IMPROVES OUR ASSESSED VALUE
NUMBERS. I AM NOT EXPECTING YOU
TO COME UP WITH THAT MAGIC
SOLUTION, BUT I AM NOTING IT FOR
MY COLLEAGUES, THAT IS THE
IMPORTANCE OF FINDING A USE FOR
THAT DOWNTOWN OFFICE SPACE,
BECAUSE IT CAN REALLY, IT COULD
GET US INTO THE PROPORTION OF
THE NEXT BOOM DOWN HERE. I AM
NOT SAYING IT WILL BE A BOOM
WHERE WE ARE THE FASTEST GROWING
IN THE CITY AND NATION AGAIN,
BUT IT WOULD AT LEAST GIVE A
BOOM FOR WHERE WE ARE AT RIGHT
NOW. JUST KIND OF CHECKING MY
NUMBERS HERE, WE HAD THE OVERALL
BETWEEN ALL FUNDS REMOVING
GRANTS AND TRANSFERS, WE ARE
DOWN $10 MILLION OR SO IN
GENERAL FUND, BUT THAT INCLUDES
THE $6 MILLION YOU WERE TALKING
ABOUT, WE THEN HAVE ALMOST $17
MILLION DOWN IN JUMP START,
ANOTHER $5.8 IN RETE. THAT
BRINGS ME TO ABOUT-- I DIDN'T
WRITE MY MATH CORRECTLY. LOOKS
LIKE $31 MILLION DOWN, BUT WE
CAME UP WITH ANOTHER $20 MILLION
ABOVE FORECASTED IN OUR ACTUALS
FOR THIS YEAR. SO IT FEELS LIKE
BETWEEN BOTH, WITH THIS UPDATED
FORECAST AND THE ACTUALS COMING
IN, THE PUNCHLINE HERE IS WE ARE
DOWN $10 MILLION IN 2026 ACROSS
ALL GENERAL USE FUNDS. IS THAT
ACCURATE? AM I GETTING THIS
CORRECT?
>> OKAY. I WILL TRY TO DO THE
MATH ON THE FLYISM I DIDN'T
ACTUALLY--
>> I MIGHT SUGGEST IN THE FUTURE
WE DO A SLIDE THAT DOES
SOMETHING TO THAT DEGREE.
>> RIGHT, THERE IS 10 HERE FOR
26, 27, 33, BUT THEN THERE IS
PLUS 5 FOR ATSC CAMERAS, SO
ABOUT 27 DOWN FOR 2026, THERE IS
ABOUT SAME AMOUNT IN ADDITION TO
THE REVENUE FOR 2025 REVENUE, SO
24BET, 7 FOR GENERAL FUND, 27
PLUS 2 FOR 25. THEN YOU HAVE 27,
WHICH IS COUPLE OF NEGATIVE ONES
HERE, SO, YES--
>> I WILL-- I GUESS WE ARE ALL
DESCRIBING THE POINT THAT I AM
MAKING, WHICH IS IT ABOUT A
WASH, RIGHT? AND I WOULD SAY
SAME COMMENTS I HAVE SHARED
PREVIOUSLY, DWIGHT AND MARK,
WHICH IS THAT WHILE THE NATION
HAS NOT BEEN IN A RECESSION, OUR
SEATTLE ECONOMY HAS ABSOLUTELY
BEEN STAGNATING FOR A NUMBER OF
YEARS, WE WERE REALLY HOPING TO
BEGIN THAT SLOW GROWTH AT A
FASTER PACE THIS YEAR, HOPING TO
START IT LAST YEAR, ALL OF THE
FEDERAL AND INTERNATIONAL ISSUES
HAVE CONTRIBUTED TO THIS, SO AS
I SEE, YOU KNOW, WE HAVE BEEN
IN-- LAST YEAR WAS A LITTLE MORE
SLOW GROWTH, EVEN WITH THE
VULTILITY, THIS IS FEELING MORE
LIKE A SECOND ERA OF TRUE
STAGNATION AND WHILE WE ARE NOT
GOING TO CALL IT A RECESSION
HERE, BECAUSE YOU TO-- THAT IS A
TECHNICAL TERM WITH OTHER
FACTORS, ET CETERA, I CALL OUT
HAVING A WASH IS PROBABLY THE
BEST WE COULD DO AND MAYBE-- I
AM NOT TRYING TO STEAL OTHER
PEOPLE'S TALKING POINTS, BUT
MIGHT BE A LITTLE MORE
OPTIMISTIC THAN WHAT COULD
OCCUR. I DON'T THINK IT IS
PESSIMISTIC ENOUGH WE ADOPT THE
PESSIMISTIC SCENARIO, BUT HERE
IS THE POINT, WHICH IS I AM GLAD
THE FORECAST IS ABOUT A WASH,
BECAUSE IT IS BETTER THAN BEING
NEGATIVE, AND I THINK WE AS THE
CITY NEED TO BE ACTING AS IF
THIS IS A NEGATIVE REVENUE
FORECAST. JUST SO THAT WE DO NOT
GET INTO A PLACE OF OVERSPENDING
OR STARTING TO TAKE ON MORE
OBLIGATIONS THAN WE CAN HANDLE.
THERE IS NOTHING TO BE READ IN
BETWEEN THERE, I DO THINK WE
NEED TO EXPAND OUR SHELTER.
SORRY, THAT IS NOT WHAT I AM
TALKING ABOUT, BUT BEYOND
ADDRESSING HOMELESSNESS AND
GETTING PEOPLE OFF THE STREETS T
IS TIME FOR US TO START BEING
CAREFUL AND TIGHTENING OUR BELT
WHERE WE WITH, WHILE WE ARE NOT
LOSING A LOT OF MONEY, AGAIN, IN
A $6 BILLION PLUS BUDGET, WE ARE
TALKING $20 MILLION, $30
MILLION, POSSIBLY $10 MILLION
HERE. BUT ALL OF THAT TO SAY, WE
SHOULD ACT LIKE THIS IS BAD
REVENUE FORECAST, PLEASE, AND I
AM GLAD IT IS NOT WORSE.
>> YEAH, VERY GOOD SUMMARY.
SLIGHTLY TO THE DOWN SIDE.
>> PLEASE.
>> DWIGHT HAS A QUESTION.
>> YOU KNOW, I KNOW IT IS NOT IN
THE TIMEFRAME THAT IS PRESENTED
HERE BUT COULD YOU BRIEFLY TELL
PEOPLE HOW THE MILLIONAIRE'S
TAX, ASSUMING IT ACTUALLY
SURVIVES, WILL ADVERSELY AFFECT
OUR REVENUE?
>> WE ARE FORECASTING 29 AND 30,
BUT MILLIONAIRES TAX BILL HAS
SOME IMPLICATIONS FOR SALES TAX
REVENUES AS WELL BECAUSE IT--
UNTASKS SOME OF THOSE CHANGES TO
THE CLASSIFICATION OF SERVICES
INTO RETAIL. AND THAT STARTS IN
JANUARY 2029, SO WITH THAT,
THERE IS LESS SALES TAX REVENUE
BECAUSE SOME OF THOSE SERVICES
ARE NO LONGER GOING TO BE
SUBJECT TO THE SALES TAX, ON THE
PLUS SIDE, THAT COULD MEAN
ADDITIONAL BUSINESS AND
OCCUPATION TAX REVENUE BECAUSE
THE CLASSIFICATION THERE FOLLOWS
THE SALES TAX REVENUE
CLASSIFICATIONS IN GENERAL SO IT
IS LITTLE BIT HARD TO TELL HOW
BIG OF AN IMPACT IT IS GOING TO
BE BECAUSE WE HAVEN'T COLLECTED
THE ADDITIONAL REVENUE FOR LONG
ENOUGH, SO WE DID TRY TO
ESTIMATE THE IMPACT FOR 2029,
BUT IT IS RELATIVELY SMALL. IT
IS -- AGAIN, THERE IS A LOT OF
UNCERTAINTY, WE WILL TRY TO
IMPROVE THE FORECAST. ONE THING
TO KEEP IN MIND IS DIGITAL
ADVERTISING IS NOT CLASSIFIED
BACK AND NAT IS A SIGNIFICANT
PART OF THE ADDITIONAL REVENUE.
THERE IS A LEGAL CHALLENGE FOR
THAT ONE, OBVIOUSLY, SO THAT CAN
GO AWAY. LOTS OF MOVING PARTS IN
GENERAL HERE.
>> THERE WAS EXEMPTION FOR
HYGIENE PRODUCTS UNDER THE BILL,
THAT DOES ERODE SALES TAX BASE A
LITTLE. I WOULD THROW THAT IN
THERE AS WELL. IN GENERAL, I
THINK US AS A JURISDICTION ARE
SOMEWHAT UNIQUE IN OUR
COLLECTION, AND HAVING THAT AS
OFFSET TO THE DECLINE IN SALES
TAX BECAUSE OCH RECLASSIFICATION
OF SERVICES ISSUE, THAT OFFSETS
AND BUMPS IT UP. THERE ARE OTHER
JURISDICTIONS THAT ARE GOING TO
SUFFER MORE THAN WHAT SEATTLE
DOES.
>> YEAH, SO WE HAVE TRIED TO HOW
WE SEE THE IMPACT OF THE 5814 ON
THE SALES TAX TO THE ESTIMATES
FOR KING COUNTY. THEY ARE
ROUGHLY IN THE SAME BALL PARK,
KING COUNTY DOES NOT COLLECT
BUSINESS AND OCCUPATION TAX
REVENUE, SO A LOT TO THE
POSITIVE SIDE FOR COUNTY, NOT
THAT MUCH FOR SEATTLE BECAUSE OF
THE OFFSET IN FORCE.
>> ALL RIGHT, WITH THAT, THERE
IS A SECOND SCENARIO TO GO OVER.
>> DIRECTOR, I DON'T MEAN TO BE
THIS GUY, BUT WE HAVE GOT ABOUT
13 MINUTES LEFT BEFORE WE NEED
TO GET INTO THE WORKPLAN.
>> I KNOW. I WILL TRY TO BE VERY
QUICK HERE. THE MAIN TAKEAWAY
HERE, PESSIMISTIC SCENARIO
REALLY IS PESSIMISTIC, JUST AS A
REMINDER, BUILT ON ECONOMIC
FORECAST THAT ASSUMES RECESSION
STARTING SECOND HALF OF 2026,
AND GOING INTO 2027 . THAT WOULD
HAVE A SIGNIFICANT IMPACT ON
THOSE REVENUES WHICH ARE DRIVEN
BY ECONOMIC ACTIVITIES, TALKING
SALES TAX, BUSINESS AND
OCCUPATION TAX HERE, BUT ALSO
PARKING METERS, AND OTHER
REVENUES, HIGHER GAS PRICES WITH
JUST GENERALLY IMPACT THE
SPENDING BY HOUSEHOLDS AND
BUSINESSES AND THE LAYOFFS THAT
WOULD ENSUE AND SIGNIFICANT
REVENUE LOSSES FOR THE CITY.
AGAIN, IN THE INTEREST OF TIME I
WILL QUICKLY MOVE TO THE SECOND
PART OF THE PESSIMISTIC SCENARIO
FORECAST FOR NON-GENERAL FUND
REVENUES, THERE IS LARGE IMPACT
HERE ON EXPENSE TAX, THE
RECESSION WOULD MEAN LOWER STOCK
PRICES, LOWER EVALUATION OF
COMPANIES, AND ADDITIONAL
LAYOFFS WHICH WOULD NEGATIVELY
AFFECT THE BASE HERE. FOR RETE,
THAT PLUMMETS AND WOULD DECLINE
SIGNIFICANTLY IN 2026 AND
ADDITIONAL DECLINING IN 2027 AND
ABSOLUTE AMOUNT, NOT JUST
RELATIVE TO OCTOBER. FOR
ADMISSIONS TAX, SIMILARLY,
DOWNWARD REVISIONS AND JOE AND
ALEX CAN PROVIDE SOME SIGHT INTO
THE REMAINING ONES.
>> YEAH, I-- LET ME SEE WHAT TO
SPEAK TO HERE. I THINK GENERALLY
SPEAKING THE DECLINE IN SOME OF
THESE FORECASTS IS A LITTLE BIT
LESS THAN ECONOMICALLY-DRIVEN
ONES, THEY ALL HAVE SOME
ECONOMIC COMPONENT BUT MANY ARE
A LITTLE MORE-- THE WHITE ROWS
CBO FORECASTS ARE A LITTLE MORE
OPERATIONAL IN NATURE, GENERALLY
SPEAKING SO WE DON'T SEE THE
DECLINES QUITE AS HEAVILY AS WE
WITH IN THE RETE OR PAYROLL
EXPENSE TAX. I DON'T-- UNLESS
THERE ARE QUESTIONS, I WILL
LEAVE IT AT THAT.
>> ALL RIGHT. FINALLY, A QUICK
COMPARISON, HOW MUCH IS THE
PESSIMISTIC SCENARIO DIFFERENT
FROM A BASELINE, AND HOW MUCH OF
AN UP SLIGHT DURING THE
OPTIMISTIC SCENARIO THAT WE DID
DEVELOP AND WILL BE AVAILABLE IN
OUR WEBSITE AND WE HAVE SHARED
IT WITH THE STAFF, BUT IN THE
INTEREST OF TIME, KR DID NOT
REALLY GO OVER THE DETAILS HERE.
YOU CAN SEE THAT SPREAD IS QUITE
LARGE FOR 2026, PESSIMISTIC
SCENARIO WOULD MEAN $90 MILLION
LESS IN REVENUE, OPTIMISTIC
WOULD MEAN $30 MILLION TO THE
PLUS SIDE. THAT IS EITHER 3.7%
LESS IN REVENUE OR 1.3% MORE FRN
THE CURRENT YEAR. OVERALL, THE
DECLINE FOR COUPLE OF NEXT YEARS
WOULD BE ABOUT 5% OF THE OVERALL
REVENUES IN THE CASE OF
RECESSION. THE UPSIDE IS TO THE
TUNE OF 3-4%, DEPENDING ON THE
YEAR, 3 FOR THE AVERAGE. SO WITH
THAT, WE ARE COMING TO THE
SUMMARY AND RECOMMENDATION OF
THE FORECAST SCENARIO. SO,
OVERALL, THE OUTLOOK HAS BECOME
MUCHLESS CLEAR GIVEN THE
CONFLICT IN THE MIDDLE EAST. IT
HAS BEEN LONG MONTHS WITH LOTS
OF MOVEMENT IN THE FINANCIAL
MARKETS, LOTS OF CHANGES IN THE
OUTLOOK, AND WE HAVE TRIED TO
INCORPORATE SOME OF THOSE, SOME
OF THE INFORMATION INTO THE
BASELINE SCENARIO. WE FEEL
CONFIDENT WE HAVE MITIGATED SOME
OF THOSE RISKS ARISING FROM THE
FACT THAT THE ECONOMIC FORECAST,
BY S&P GLOBAL AND ANALYTICS WERE
DEVELOPED AT THE EARLY STAGES OF
THE CONFLICT. WE HAVE,
ESSENTIALLY, TAKEN SOME PARTS OF
THEIR PESSIMISTIC SCENARIOS,
WEIGHTED IT WITH THEIR BASELINE,
AND CREATED A BASELINE WHICH IS
ASSUMING SOME OF THOSE NEGATIVE
AFFECTS OF HIGHER OIL PRICES AND
HIGHER GAS PRICES, AND LESS
ECONOMIC ACTIVITY AND LESS
EMPLOYMENT. THAT SAID, WE DO
BELIEVE THE BASELINE SCENARIO IS
THE MOST LIKELY BEST FORWARD, AT
LEAST BASED ON THE INFORMATION
SO FAR, AND GIVEN THE RECENT
CEASE-FIRE, THERE IS SOME HOPE
WE WILL CERTAINLY BE THE CASE.
THERE IS STILL SOME OTHER RISKS
TO THE REGIONAL ECONOMY, IN
PARTICULAR, LAYOFFS ARE NOT
GOING TO GO AWAY. THE AI
ADOPTION OF AI AND LESS HIRING
IN THE TAX IS ANOTHER AREA WHICH
IS NOT GOING TO GO AWAY. THERE
ARE ALL THESE MOVING PARTS
REGARDING THE IMPACT OF THE
5814, THE BILL TO CLASSIFY
SERVICE TO SALES AND LIMITED
DATA FOR THAT. SO, LOTS OF RISK,
LOTS OF MOVING PARTS, WITH ALL
THAT IN MIND, WE BELIEVE THE
BASELINE SCENARIO IS THE ONE TO
BE RECOMMENDED AND WE HAVE
ACCOUNTED FOR SOME OF THOSE
RISKS DIRECTLY, NEVER THE LESS,
AND THIS IS SOMETHING I HAVE
BEEN SAYING A COUPLE OF TIMES
ALREADY, BECOME A LITTLE
REPETITIVE, THERE IS HIGH AMOUNT
OF UNCERTAINTY STILL HERE SO
THERE MIGHT BE SOME LARGE
REVISIONS IN THE FUTURE, THAT
SHOULD BE TAKEN INTO ACCOUNT
HERE. WER THAT WE HAVE COME TO
THE END. HAPPY TO TAKE QUESTIONS
REGARDING THE RECOMMENDATION OR
FORECAST IN GENERAL.
>> THANK YOU, DIRECTOR, WELL
DONE, I WILL CHECK TO SEE, I SEE
VICE CHAIR ELERBROOK, PLEASE.
>> YEAH, THANK YOU VERY MUCH.
BEING MY FIRST TIME, THIS IS A
LOT OF INFORMATION AND I
APPRECIATE ALL OF THE WORK THAT
GOES IN TO IT, AND, FRANKLY, ALL
THE DIFFERENT CONSIDERATIONS YOU
HAVE TO PUT IN TO THE
INFORMATION TO ARRIVE AT ALL
THREE SCENARIOS. THANK YOU FOR
THE TIME. IT IS VERY CLEAR, VERY
DENSE, OBVIOUSLY, BUT A LOT OF
REALLY GOOD INFORMATION. THANKS
FOR THE PRESENTATION AND THE
RECOMMENDATION.
>> FANTASTIC.
>> ANY OTHER QUESTIONS HERE?
OTHERWISE, WE CAN MOVE ON TO THE
ADOPTION OF THE RECOMMENDED
FORECAST. SO BY JUST A LITTLE
BIT OF BACKGROUND, IF THE
FORECAST COUNCIL IS APPROVED TO
APPROVE THE RECOMMENDATION,
WHICH IS THE BASELINE SCENARIO,
NO FORMAL VOTE IS REQUIRED. IF
WE WANT, SO THIS IS-- I AM DOING
A LITTLE BIT OF INTROSENSE IT IS
MARK AND DWIGHT'S FIRST TIME
BACK IN THE MEETING, AND THIS
FUNCTION HAS CHANGED IN THE LAST
NUMBER OF YEARS, RIGHT? AGAIN,
THIS USED TO BE AN OFFICE THAT
WAS HELD ONLY WITHIN CITY BUDGET
OFFICE, IT IS NOW A JOINTLY
OVERSEEN INDEPENDENT COUNCIL, SO
THE TEAM AND STAFF PROVIDE A
RECOMMENDATION, IT IS OUR JOB TO
ACCEPT OR OVERRIDE THIS
RECOMMENDATION. IT GIVES US THE
CHECKS AND BALANCES. SO TODAY
DIRECTOR DURES HAS RECOMMENDED
WE TAKE THE BASELINE
RECOMMENDATION, IF THAT IS THE
HOW WE WANT TO TAKE IT, I WILL
READ THE SCRIPT, WE WILL GO
THROUGH THE MOTION. IF WE, AS
THE FORECAST COUNCIL THOUGHT
THAT HE OR THE TEAM WAS
INCORRECT OR WE WANTED TO BE
MORE OPTIMISTIC OR MORE
PESSIMISTIC, THIS IS WHERE
SOMEONE CAN BRING A MOTION AND
OVERRIDE THAT RECOMMENDATION.
THAT IS JUST KIND OF THE
FUNCTIONALITY OF WHERE WE ARE IN
THE MOMENT. WANT TO DOUBLE CHECK
FURTHER QUESTIONS: I AM PREPARED
TO ACCEPT THE RECOMMENDATION. I
AM NOT SEEING ANY OTHER
OBJECTIONS.
>> WHILE I THINK IT IS TOO
OPTIMISTIC, I WILL ACCEPT IT AS
WEM.
>> WITH THAT, AS YOU HEAR FROM
THE FINANCE DIRECTOR, ACT&I KNOW
THE CBO IS WATCHING, PLEASE ACT
AS IF WE ARE IN A BUDGET PROBLEM
WITH THIS REVENUE FORECAST,
PLEASE. SO WITH THAT, PER THE
ORDINANCE THAT CREATED THE
FORECAST OFFICE AND THIS
FORECAST COUNCIL, ROLE OF THE
FORECAST COUNCIL TO APPROVE THE
FORECAST, IN TERMS OF APPROVING
THE FORECAST IF WE CAN CONCUR
WITH THE RECOMMENDATION OF THE
SCENARIO, NO FORMAL VOTE IS
REQUIRED. THE GOAL OF THE
LEGISLATION WAS TO REMOVE ANY
RISK OF POLITICAL INFLUENCE OVER
THE FORECAST. RECEIVING
RECOMMENDATIONS FROM A STAFF OF
INDEPENDENT EXPERTS IS THE BEST
WAY TO ACHIEVE THIS. THAT SAID,
WE REPRESENT THE ELECK LECT ED
LEADERSHIP AND HAVE THE
AUTHORITY TO OVERRIDE THE
RECOMMENDATION SHOULD WE JUDGE
IT MAKES SENSE. PER ESTABLISHING
THE ORDINANCE A DECISION WOULD
REQUIRE THREE-MEMBER VOTE OF
FOUR APPROVING ALTERNATIVE
SCENARIO. AS YOU HAVE HEARD,
DIRECTOR DURES RECOMMENDED THAT
WE-- THE BASELINE SCENARIO FOR
THE APRIL 2026 FORECAST TO BE
USED AS THE OFFICIAL FORECAST.
IS THERE, IN THE CASE THERE ARE
NO OBJECTIONS TO THIS
RECOMMENDATION, I AM SIMPLY
GOING TO REQUEST THE MEETING
MINUTES REFLECT CONCURRENCE
REGARDING THE RECOMMENDED
FORECAST PER BY LAW, THE FORMAL
STEP AS WAY TO RECORD OUR
APPROVAL. WITH THAT, ANY
OBJECTIONS? SEEING NO
OBJECTIONS, I AM GOING TO DIRECT
THE FORECAST OFFICE TO RECORD
OUR CONCURRENCE WITH THE
RECOMMENDED FORECAST IN THE
MEETING MINUTES. WELL DONE. WITH
THAT, WE ARE GOING TO MOVE ON TO
THE FINAL ITEM OF BUSINESS WITH
13 MINUTES LEFT. I WILL READ
THAT ITEM INTO THE RECORD.
PRESENTATION OF 2026 WORK
PROGRAM FOR THE OFFICE OF
ECONOMIC AND REVENUE FORECASTS,
DISCUSSION AND POSSIBLE VOTE.
PER THE ORDINANCE THAT CREATED
THIS OFFICE, EACH YEAR THE
COUNCIL MUST APPROVE THE
OFFICE'S WORKPLAN, DIRECTOR
DURES WILL REPRESENT THE WORK
PROGRAM, AFTER WHICH, WE WILL
HAVE THE OPPORTUNITY TO DISCUSS
AND APPROVAL OR TABLE THE
PROPOSALF. OVER TO YOU.
>> ALL RIGHT. SO THIS SHOULD NOT
TAKE TOO LONG. BUT IT IS A SHORT
OVERVIEW OF WHAT WE ARE EXPECTED
TO DO AND WHAT WE PLAN TO DO
THIS YEAR. THE BACKGROUND, I
DON'T THINK I HAVE TO SPEND TOO
MUCH TIME ON THIS, THIS OFFICE
IS BASICALLY ESTABLISHED IN 2021
AND FOLLOW SIMILAR STRUCTURE,
SIMILAR ARRANGEMENT IN KING
COUNTY AND WASHINGTON STATE. IT
OVERSEES AND FORECASTS NUMBER OF
REVENUES, LARGE ECONOMICALLY
DRIVEN REVENUES LISTED HERE.
ASSESSED VALUE FORECAST IS
PREPARED BY SHAUN AS INPUT INTO
PROPERTY TAX, WHICH PROPERTY TAX
FORECAST ITSELF IS DEVELOPED BY
THE CBO. WE DO PREPARE THREE
FORECASTS, SO THIS IS THE FIRST
OF THOSE REVENUE FORECAST, IT
WILL BE FOLLOWED BY AUGUST AND
OCTOBER UPDATE. TO DEVELOP THOSE
REVENUE FORECAST, AS I
MENTIONED, WE RELY ON OUR
IN-HOUSE DEVELOPED REGIONAL
ECONOMIC FORECAST. WE ACTUALLY
PREPARE FOUR OF THOSE, THERE IS
INITIAL ONE IN JANUARY, WHICH IS
USED TO INFORM THE OUTLOOK FOR
INFLATION. SO THERE ARE THOSE
FOUR ECONOMIC FORECASTS IN
ADDITION TO THE THREE REVENUE
FORECASTS, THERE IS THREE
PRESENTATIONS, THE NEXT IS
AUGUST 7th, AND THE LAST ONE
WILL BE AT SOME POINT IN
OCTOBER. WE ARE MONITORING
REVENUE AS THEY COME IN AND
PREPARE QUARTERLY REVENUE
REPORTS, THERE IS A DASH BOARD
ON OUR WEBSITE, WHICH I WILL
PLUG IN HERE, THAT SEAN HAS
DEVELOPED THAT PROVIDES EASY
ACCESS FOR BOTH THE STAFF AND
THE PUBLIC AS A WAY TO SEE HOW
THE REVENUES ARE SHAPING UP
THROUGHOUT THE YEAR. THEN TIME
PERMITTING, WE ARE-- WE WOULD
LIKE TO START AND UPDATE OF THE
FORECAST ACCURACY ASSESSMENT,
WHICH HAD BEEN PLANNED FOR THE
NEXT YEAR, SO THAT ASSESSMENT
WOULD LOOK BACK AT LAST FIVE
YEARS, IT WOULD BE AN UPDATE TO
A SIMILAR ASSESSMENT WE DID BACK
IN 2022, WHICH LOOKED AT THE
REVENUES THROUGH 2021, SO, LAST
FIVE YEARS, WOULD LIKE TO ASSESS
HOW GOOD THE FORECAST MODELS
ARE, IN THE SPACE FOR
IMPROVEMENT IS, AND THAT IS,
AGAIN, TIME PERMITTING GIVEN ALL
THE OTHER WORK. AND THERE WILL
BE A COUPLE OF THINGS TO DO
GIVEN THE RESTRUCTURE OF THE B&O
TAX, ESSENTIALLY NEW WAY HOW TO
FORECAST THE REVENUES HAS TO BE
DEVELOPED TO REQUEST FOR
CLASSIFIED ACTIVITIES, THE NEW
DEDUCTION, MODIFIED TAX RATES,
ON TOP OF THE CHANGES DUE TO THE
SENATE BILL 5814. WE ARE WORKING
TO DEVELOP THE SOCIAL HOUSING
TAX, WHICH DID NOT PRESENT HERE,
BUT WE ARE DEVELOPING FORECAST
FOR THAT, TAKING INTO ACCOUNT
RECENT REVENUES THAT THE CITY
HAS COLLECTED FOR 2025, AGAIN,
THE NEW TAX AND POTENTIALLY VERY
VOLTILE. LOT OF CONSIDER HAS TO
GO INTO DEVELOPING THE MODEL AND
CONSIDERING THE DATA SHOULD RELY
ON. THEN THERE IS ONGOING
IMPROVEMENTS THROUGHOUT THE YEAR
IN BETWEEN THE FORECAST WHENEVER
WE HAVE TIME, SHAUN HAS RECENTLY
WORKED ON SIGNIFICANT
IMPROVEMENTS TO THE ASSESSED
VALUE PAYROLL EXPENSE TAX, MORE
DATA AVAILABLE, WE ARE TRYING TO
SPEND MORE TIME LOOKING AT WHERE
WE CAN IMPROVE THE FORECASTS.
FINALLY, THERE IS SOME WORK WE
DO TO SUPPORT OTHER DEPARMS, WE
ARE HERE TO HELP IN ANY WAY WE
CAN, MOST LEGISLATIVE AND
EXECUTIVE STUFF CAN REQUEST
ANALYSIS, EITHER ESTIMATE OF
POTENTIAL REVENUE STREAM OR SOME
ECONOMIC ANALYSIS AND GIVEN THE
AVAILABLE STUFF AND WORKLOAD, WE
ARE HAPPY TO HELP AS MUCH AS WE
CAN HERE. IN ADDITION TO THAT,
OUR OFFICE ASSISTS THE CITY
FINANCE IN PREPARING AND
PRESENTING THE LIMITED TAX
GENERAL OBLIGATION RATING
PRESENTATION THAT TAKES PLACE IN
LATE MAY. WE WORK IN PROVIDING
THE INPUT FOR THAT AND ASSISTING
THE BUDGET OFFICE AND PROVIDING
THE ECONOMIC SECTION OF THE
BUDGET BOOKS AND ESSENTIALLY THE
PARTS THAT SUMMARIZE THE OUTLOOK
FOR THE REVENUES THAT REE IN
PURVIEW OF FORECASTING. SO THAT
IS IT. THAT IS THE GENERAL IDEA.
CONTINUING IMPROVEMENTS TO THE
FORECASTING MODELS, ANY AD HOC
ANALYSIS REQUESTED AND
CONTINUING SUPPORT TO THE OTHER
DEPARTMENTS.
>> THANK YOU, I WOULD SAY IN ITS
5th YEAR OF EXISTENCE, THE
FORECAST COUNCIL, IT IS ABOUT
TIME WE MIGHT STRENGTHEN BY
LAWS, REVIEW THEM, YOU WERE
TALKING THE ASSESSMENTS. IT
STANDS OUT TO ME THAT OUR
FORECAST MEETINGS TO RECEIVE THE
FORECAST ALWAYS TAKE TWO HOURS,
MINIMUM, AND IF WE ONLY MEET
WHEN WE RECEIVE THE FORECAST,
THAT LEAVES NO TIME FOR US TO
MEET IN OPEN PUBLIC SESSION TO
HAVE SOME OF THESE DISCUSSIONS.
SO MY SUGGESTION WILL BE THAT WE
MEET AGAIN MAYBE IN JUNE, OR
JULY, JUST TO HAVE A WORK
MEETING TO ATTEND TO SOME OF
THIS BUSINESS. JOINTLY TOGETHER
BETWEEN THE EXECUTIVE AND THE
LEGISLATIVE BRANCHES, BECAUSE I
THINK SH OF THIS-- I THINK WE
NEED TO HAVE FURTHER, MORE
ROBUST CONVERSATIONS IN WHICH
OUR REGULAR CADENCE OF MEETINGS
DOES NOT PROVIDE US THE TIME TO
DO SO. I WOULD LOVE TO ADD A
MEETING IN JUNE OR JULY.
>> I ABSOLUTELY AGREE WITH THAT
IDEA, AND AS AN EXAMPLE, THE
SOCIAL HOUSING TAX, WHICH IS
NEW, IS GOING TO BE A REALLY
COMPLICATED THING TO FORECAST.
AND HAVING YOU COME IN AND BRIEF
US ON WHAT YOU ARE THINKING AND
WHAT VARIABLES YOU ARE
INCLUDING, I WOULD FIND VERY
INTERESTING.
>> ANY OTHER COMMENTS FROM THE
COMMITTEE? MARK?
>> YEAH, I AGREE. I THINK IT
WOULD BE GOOD TO DIG IN TO THE
BALANCE OF THE WORKPLAN YOU HAVE
LAID OUT HERE. AND I THINK PART
OF THAT ALSO WOULD BE WHEN WHEE
MEET IN JUNE, TO TALK LITTLE BIT
ABOUT HOW THE WORK HAS BEEN
GOING, ARE YOU ABLE TO GET TO
PAST WORK PLANS? YOU KNOW, JUST
UNDERSTAND THE CAPACITY WHAT YOU
ARE CARE AING. I THINK THAT
SHOULD BE ONE OF THE THINGS WE
TALK ABOUT.
>> WONDERFUL. ANYTHING FROM YOU,
COUNCIL PRESIDENT?
>> NO, MR. CHAIR, THANK YOU, I
SUPPORT THAT PLAN, AND ALSO THE
SUGGESTION. GREAT IDEA. THANK
YOU.
>> WONDERFUL. WELL, WITH THAT,
WE MUST, AS THE FORECAST
COUNCIL, APPROVE THE OFFICE'S
WORK PROGRAM, INTERIM DIRECTOR
DURAS HAS PRESENTED IT SO I WILL
MOVE TO ADOPT THE 2026 WORK
PROGRAM. IS THERE A SECOND?
>> SECOND.
>> IT HAS BEEN MOVED AND
SECONDED. ANY LAST COMMENTS?
SEEING NONE, WE WILL DO A VOICE
VOTE. ALL IN FAVOR, SAY AYE.
>> AYE.
>> AYES, MOTION CARRIES, 2026
WORK PLAN HAS BEEN ADOPTED. WITH
THAT, MY SCRIPT SAYS THE NEXT
TIME WE WILL MEET IS FRIDAY
AUGUST 7th, I WILL JUST NOTE
THAT AUGUST BECOMES A DIFFICULT
MONTH, WE MIGHT SHIFT THAT
FORECAST DATE, BUT WITHIN THAT
WEEK BECAUSE THAT IS WITHIN THE
ORDINANCE. AND WE WILL LIKELY
MEET BEFORE THEN IN JUNE OR
JULY, SO THAT WE CAN HAVE A
LITTLE BIT MORE OF A WORKING
MEETING. IF THERE ARE NO FURTHER
QUESTIONS, WE WILL BE ADJOURNED.
HEARING NO FURTHER QUESTIONS, IT
IS 11:27, THANK YOU FOR YOUR
TIME, AND SEE YOU NEXT TIME.