1 00:04:18,024 --> 00:04:18,625 -- GOOD MORNING. TODAY, FRIDAY, 2 00:04:18,625 --> 00:04:20,994 OCTOBER 16th, 2026. THIS IS THE 3 00:04:20,994 --> 00:04:22,295 MEETING OF THE ECONOMIC AND 4 00:04:22,295 --> 00:04:24,030 REVENUE FORECAST COUNCIL AND THE 5 00:04:24,030 --> 00:04:25,298 MEETING WILL COME TO ORDER. I'M 6 00:04:25,298 --> 00:04:26,532 DAN STRAUSS, CHAIR OF THE 7 00:04:26,532 --> 00:04:27,600 ECONOMIC AND REVENUE FORECAST 8 00:04:27,600 --> 00:04:29,469 COUNCIL. I'M HERE TODAY WITH MY 9 00:04:29,469 --> 00:04:32,071 FORECAST COLLEAGUES. UH, 10 00:04:32,071 --> 00:04:34,340 DIRECTOR MARK AND VICE CHAIR 11 00:04:34,340 --> 00:04:36,376 MARK ELLERBROOK CITY FINANCE 12 00:04:36,376 --> 00:04:38,411 DIRECTOR DWIGHT DIVELY AND 13 00:04:38,411 --> 00:04:38,945 COUNCIL PRESIDENT WILL BE 14 00:04:38,945 --> 00:04:42,949 JOINING US SHORTLY. UM, SO. 15 00:04:42,949 --> 00:04:45,285 WE'RE GOING TO FIGURE OUT THESE 16 00:04:45,285 --> 00:04:45,885 SCRIPTS BECAUSE THESE SCRIPTS 17 00:04:45,885 --> 00:04:47,954 ARE A LITTLE ODD, BUT USUALLY WE 18 00:04:47,954 --> 00:04:48,988 WOULD CALL THE ROLL. SO IF I'M 19 00:04:48,988 --> 00:04:50,223 JUST GOING TO CALL THE ROLL, 20 00:04:50,223 --> 00:04:54,327 DWIGHT HERE, MARK HERE. COUNCIL 21 00:04:54,327 --> 00:04:56,295 PRESIDENT IS EXCUSED UNTIL 22 00:04:56,295 --> 00:04:58,831 PRESENT. AND I'M DAN STRAUSS AND 23 00:04:58,831 --> 00:04:59,465 I'M PRESENT. THE MAIN PURPOSE 24 00:04:59,465 --> 00:05:01,567 OF THIS MEETING OF THE FORECAST 25 00:05:01,567 --> 00:05:02,101 COUNCIL IS TO RECEIVE THE 26 00:05:02,101 --> 00:05:03,536 ECONOMIC REVENUE FORECASTS, 27 00:05:03,536 --> 00:05:05,004 WHICH WILL BE PRESENTED BY THE 28 00:05:05,004 --> 00:05:06,839 STAFF FROM THE ECONOMIC AND 29 00:05:06,839 --> 00:05:08,207 REVENUE FORECAST OFFICES AND THE 30 00:05:08,207 --> 00:05:09,776 CITY BUDGET OFFICE. CITY COUNCIL 31 00:05:09,776 --> 00:05:12,445 IS NOW REVIEWING THE 20 MAYOR'S 32 00:05:12,445 --> 00:05:14,380 2020 728 PROPOSED BUDGET AND THE 33 00:05:14,380 --> 00:05:16,649 FORECAST. WE ARE NOW GIVING. NOW 34 00:05:16,649 --> 00:05:18,451 GOING TO RECEIVE AND REVIEW IS 35 00:05:18,451 --> 00:05:19,919 THE FINAL REVENUE UPDATE OF THIS 36 00:05:19,919 --> 00:05:22,522 YEAR. THIS REVENUE FORECAST IS 37 00:05:22,522 --> 00:05:23,423 ESPECIALLY IMPORTANT BECAUSE IT 38 00:05:23,423 --> 00:05:25,658 WILL SERVE AS THE BASIS FOR THE 39 00:05:25,658 --> 00:05:27,794 2728 ADOPTED BUDGET. IT WILL SET 40 00:05:27,794 --> 00:05:29,896 THE STAGE FOR THE CITY 41 00:05:29,896 --> 00:05:30,563 COUNCIL'S BUDGET DELIBERATIONS 42 00:05:30,563 --> 00:05:32,198 AND DETERMINE THE TOTAL 43 00:05:32,198 --> 00:05:35,234 RESOURCES TO BE APPROPRIATED 44 00:05:35,234 --> 00:05:38,571 THROUGH THE COUNCIL PROCESS 45 00:05:38,571 --> 00:05:40,273 BEFORE WE BEGIN AND MOVING ON, 46 00:05:40,273 --> 00:05:42,041 BEFORE WE MOVE ON TO THE 47 00:05:42,041 --> 00:05:44,343 PRESENTATION, WE NEED TO ADOPT 48 00:05:44,343 --> 00:05:46,012 THE AGENDA. SO IF THERE'S A COPY 49 00:05:46,012 --> 00:05:47,480 OF THE AGENDA HAS BEEN 50 00:05:47,480 --> 00:05:48,781 CIRCULATED TO MEMBERS AND IS 51 00:05:48,781 --> 00:05:50,616 AVAILABLE ONLINE ON THE OFFICE 52 00:05:50,616 --> 00:05:51,818 WEBSITE. IF THERE IS NO 53 00:05:51,818 --> 00:05:54,387 OBJECTION, THE AGENDA WILL BE 54 00:05:54,387 --> 00:05:55,755 ADOPTED. HEARING NO OBJECTION, 55 00:05:55,755 --> 00:05:59,325 THE AGENDA HAS BEEN ADOPTED. WE 56 00:05:59,325 --> 00:06:01,861 WILL MOVE FORWARD INTO THE FIRST 57 00:06:01,861 --> 00:06:03,329 ITEM OF BUSINESS. ITEM NUMBER 58 00:06:03,329 --> 00:06:05,932 ONE. I'LL READ THAT ITEM INTO 59 00:06:05,932 --> 00:06:06,499 THE RECORD APPROVAL OF THE 60 00:06:06,499 --> 00:06:07,934 MINUTES FROM THE AUGUST 7th, 61 00:06:07,934 --> 00:06:11,037 2026 MEETING. A COPY OF THE 62 00:06:11,037 --> 00:06:12,038 AUGUST 7th MEETING OF THE 63 00:06:12,038 --> 00:06:13,506 FORECAST COUNCIL HAS BEEN 64 00:06:13,506 --> 00:06:15,708 CIRCULATED TO MEMBERS AND POSTED 65 00:06:15,708 --> 00:06:16,342 ON THE WEBSITE OF THE FORECAST 66 00:06:16,342 --> 00:06:18,544 OFFICE. I'LL MOVE AND SEEK A 67 00:06:18,544 --> 00:06:19,712 SECOND OF THE APPROVAL OF THE 68 00:06:19,712 --> 00:06:22,415 MINUTES, SO I'LL MOVE. APPROVAL 69 00:06:22,415 --> 00:06:23,850 OF THE AUGUST 7th MINUTES. IS 70 00:06:23,850 --> 00:06:25,151 THERE A SECOND? SECOND. IT'S 71 00:06:25,151 --> 00:06:29,255 BEEN MOVED AND SECONDED TO ADOPT 72 00:06:29,255 --> 00:06:31,691 THE MINUTES AND I'LL. IF 73 00:06:31,691 --> 00:06:35,394 THERE'S NO OBJECTION, THE. THE 74 00:06:35,394 --> 00:06:37,196 MINUTES WILL BE ADOPTED. HEARING 75 00:06:37,196 --> 00:06:39,232 NO OBJECTION, THE MINUTES ARE 76 00:06:39,232 --> 00:06:40,933 ADOPTED. WE'RE GOING TO MOVE 77 00:06:40,933 --> 00:06:42,401 INTO THE MEAT OF TODAY'S 78 00:06:42,401 --> 00:06:44,604 PRESENTATION. THE PRESENTATION 79 00:06:44,604 --> 00:06:46,839 OF THE 2026 ECONOMIC AND REVENUE 80 00:06:46,839 --> 00:06:48,408 FORECASTS AND RECOMMENDATION 81 00:06:48,408 --> 00:06:50,209 FROM THE OFFICE OF ECONOMIC AND 82 00:06:50,209 --> 00:06:50,843 REVENUE FORECASTS REGARDING THE 83 00:06:50,843 --> 00:06:55,882 26, 27 AND 28 REVENUE FORECASTS. 84 00:06:55,882 --> 00:06:57,550 SORRY, THAT WAS ME READING THE 85 00:06:57,550 --> 00:06:59,986 SECOND ITEM INTO THE RECORD. SO 86 00:06:59,986 --> 00:07:01,387 LET'S MOVE INTO TODAY'S AGENDA 87 00:07:01,387 --> 00:07:03,689 ITEM. JOHN IS GOING TO LEAD US 88 00:07:03,689 --> 00:07:05,024 THROUGH THE PRESENTATION, AND 89 00:07:05,024 --> 00:07:06,926 WE'LL ALSO THEN TURN IT OVER TO 90 00:07:06,926 --> 00:07:10,196 CBO IN THEIR PARTICULAR AREAS OF 91 00:07:10,196 --> 00:07:11,697 EXPERTISE. WITH THAT, JOHN. UM, 92 00:07:11,697 --> 00:07:14,400 WE'RE GOING TO BE LOOKING AT 93 00:07:14,400 --> 00:07:16,435 THE THREE, THE, THE PESSIMISTIC 94 00:07:16,435 --> 00:07:17,937 BASELINE AND OPTIMISTIC. AND 95 00:07:17,937 --> 00:07:19,038 YOU'LL HAVE A RECOMMENDATION 96 00:07:19,038 --> 00:07:20,206 FOR US AT THE END. WITH THAT, 97 00:07:20,206 --> 00:07:22,375 LET'S DIG RIGHT ON IN. 98 00:07:22,375 --> 00:07:25,444 -- ALL RIGHT LET'S SEE. THANK 99 00:07:25,444 --> 00:07:29,148 YOU. CHAIR STRAUSS GOOD MORNING. 100 00:07:29,148 --> 00:07:29,782 FORECAST COUNCILMEMBERS, FOR THE 101 00:07:29,782 --> 00:07:31,884 RECORD, JAN DURAS INTERIM 102 00:07:31,884 --> 00:07:32,919 DIRECTOR AND CHIEF ECONOMIST AT 103 00:07:32,919 --> 00:07:34,353 THE OFFICE OF ECONOMIC AND 104 00:07:34,353 --> 00:07:37,123 REVENUE FORECAST. LET ME SHARE 105 00:07:37,123 --> 00:07:46,032 THE SLIDES HERE QUICKLY 106 00:07:46,165 --> 00:07:56,676 ALL RIGHT. SO WE'LL DO IT THE 107 00:08:01,881 --> 00:08:04,784 SAME WAY AS WE DO IT ALWAYS. 108 00:08:04,784 --> 00:08:06,853 WE'LL FIRST LOOK AT THE ECONOMIC 109 00:08:06,853 --> 00:08:08,421 FORECAST. UM THE ECONOMIC 110 00:08:08,421 --> 00:08:09,455 CONDITIONS AND THEN MOVE ON TO 111 00:08:09,455 --> 00:08:12,291 THE REVENUE FORECAST ITSELF. THE 112 00:08:12,291 --> 00:08:13,793 REASON AGAIN FOR THE VIEWING 113 00:08:13,793 --> 00:08:16,329 PUBLIC WHY WE DO THAT IS THAT 114 00:08:16,329 --> 00:08:18,097 THERE ARE SEVERAL LARGE REVENUES 115 00:08:18,097 --> 00:08:20,032 THAT ARE DRIVEN BY THE ECONOMY, 116 00:08:20,032 --> 00:08:21,534 AND THEY'RE RESPONSIVE TO 117 00:08:21,534 --> 00:08:22,835 ECONOMIC CONDITIONS. AND SO 118 00:08:22,835 --> 00:08:24,604 IT'S IMPORTANT TO UNDERSTAND 119 00:08:24,604 --> 00:08:26,372 THOSE. AND IT HELPS TO 120 00:08:26,372 --> 00:08:27,039 UNDERSTAND WHAT'S GOING IN THE 121 00:08:27,039 --> 00:08:28,941 ECONOMY, TO BE ABLE TO 122 00:08:28,941 --> 00:08:30,776 UNDERSTAND THE MAGNITUDE OF 123 00:08:30,776 --> 00:08:32,445 THOSE REVISIONS TO THE FORECAST 124 00:08:32,445 --> 00:08:33,913 AND WHERE THEY ARE DRIVING FROM, 125 00:08:33,913 --> 00:08:36,883 WHAT POTENTIAL RISKS THERE ARE. 126 00:08:36,883 --> 00:08:38,317 SO WITH THAT, LET ME TALK A 127 00:08:38,317 --> 00:08:40,253 LITTLE BIT ABOUT THE CURRENT 128 00:08:40,253 --> 00:08:41,854 ECONOMIC SITUATION. UM, THIS IS 129 00:08:41,854 --> 00:08:44,290 THE CHART THAT WE HAVE SHOWN IN 130 00:08:44,290 --> 00:08:48,728 AUGUST. IT PLOTS THE OIL PRICES 131 00:08:48,728 --> 00:08:50,563 AND THE SEATTLE AREA GAS PRICES 132 00:08:50,563 --> 00:08:53,699 AFTER THE WAR IN IRAN, THERE WAS 133 00:08:53,699 --> 00:08:55,167 A SEVERE, SIGNIFICANT SPIKE IN 134 00:08:55,167 --> 00:08:57,470 OIL PRICES. AND THAT HAS ALSO 135 00:08:57,470 --> 00:08:58,771 TRANSFERRED INTO HIGHER GAS 136 00:08:58,771 --> 00:09:01,073 PRICES. THE CEASE FIRE IN JUNE 137 00:09:01,073 --> 00:09:02,441 RESULTED IN A LITTLE BIT OF A 138 00:09:02,441 --> 00:09:04,076 RETREAT. PRICES CAME DOWN A BIT 139 00:09:04,076 --> 00:09:07,480 IN JULY AND AUGUST, BUT THEN 140 00:09:07,480 --> 00:09:09,382 STARTED TO GO UP AGAIN. 141 00:09:09,382 --> 00:09:10,750 CURRENTLY, DIESEL PRICES IN 142 00:09:10,750 --> 00:09:15,288 PARTICULAR ARE AT RECORD HIGHS 143 00:09:15,288 --> 00:09:17,490 ON US AS A WHOLE. IT'S 6.5% PER 144 00:09:17,490 --> 00:09:20,326 GALLON AND HAS IMPLICATIONS FOR 145 00:09:20,326 --> 00:09:21,961 A POTENTIAL PASS THROUGH INTO 146 00:09:21,961 --> 00:09:25,531 INFLATION OVERALL. SO THAT'S 147 00:09:25,531 --> 00:09:27,567 CERTAINLY A CONTINUING RISK. 148 00:09:27,567 --> 00:09:30,169 THAT SAID, UM IT'S BEEN THE 149 00:09:30,169 --> 00:09:32,905 ECONOMY HAS BEEN PRETTY MUCH 150 00:09:32,905 --> 00:09:34,173 THROUGHOUT THE LAST COUPLE OF 151 00:09:34,173 --> 00:09:36,108 YEARS, DESCRIBED AS AS RESILIENT 152 00:09:36,108 --> 00:09:37,977 AND HOUSEHOLD SPENDING HAS BEEN 153 00:09:37,977 --> 00:09:39,679 DESCRIBED AS RESILIENT. IN 154 00:09:39,679 --> 00:09:43,082 PARTICULAR, THE CHART HERE SHOWS 155 00:09:43,082 --> 00:09:45,251 THE INFLATION YEAR OVER YEAR 156 00:09:45,251 --> 00:09:46,419 CHANGE IN THE CPI INDEX IN GRAY, 157 00:09:46,419 --> 00:09:48,054 AND THEN THE RED LINE SHOWS THE 158 00:09:48,054 --> 00:09:49,522 YEAR OVER YEAR CHANGE IN THE 159 00:09:49,522 --> 00:09:51,724 CONSUMPTION EXPENDITURES. SO AS 160 00:09:51,724 --> 00:09:55,795 YOU CAN SEE, THE SPENDING BY BY 161 00:09:55,795 --> 00:09:58,664 HOUSEHOLDS, UM IS KEEPING PACE 162 00:09:58,664 --> 00:10:00,366 WITH HIGHER PRICES YEAR OVER 163 00:10:00,366 --> 00:10:02,969 YEAR. THE SPENDING IS GROWING 164 00:10:02,969 --> 00:10:04,003 FASTER THAN THE INFLATION RATE. 165 00:10:04,003 --> 00:10:06,205 AND THAT'S NOT JUST THE, THE 166 00:10:06,205 --> 00:10:08,074 DIRECT RESULTS OF HIGHER OIL 167 00:10:08,074 --> 00:10:09,909 PRICES. EVEN IF YOU EXCLUDE 168 00:10:09,909 --> 00:10:11,377 SPENDING ON FOOD AND ENERGY, 169 00:10:11,377 --> 00:10:13,913 THOSE ITEMS THAT HAVE BECOME 170 00:10:13,913 --> 00:10:14,847 PARTICULARLY EXPENSIVE OVER THE 171 00:10:14,847 --> 00:10:16,415 LAST COUPLE OF YEARS, YOU CAN 172 00:10:16,415 --> 00:10:19,852 SEE THAT THE SPENDING, AGAIN, 173 00:10:19,852 --> 00:10:22,421 EXCLUDING THOSE, UH, VOLATILE 174 00:10:22,421 --> 00:10:24,457 FOOD AND ENERGY ITEMS, THAT 175 00:10:24,457 --> 00:10:27,026 SPENDING HAS GONE UP, UH, HAS 176 00:10:27,026 --> 00:10:28,227 GROWN OVER THE LAST COUPLE OF 177 00:10:28,227 --> 00:10:31,697 YEARS. IT HAS GONE UP YEAR OVER 178 00:10:31,697 --> 00:10:33,666 YEAR, EVEN AS THE INFLATION HAS 179 00:10:33,666 --> 00:10:35,001 PICKED UP IN THE LAST COUPLE OF 180 00:10:35,001 --> 00:10:38,771 MONTHS UM, THE WAY HOW 181 00:10:38,771 --> 00:10:40,840 HOUSEHOLDS WERE ABLE TO FINANCE 182 00:10:40,840 --> 00:10:42,108 THEIR SPENDING HAS BEEN 183 00:10:42,108 --> 00:10:44,543 INCREASINGLY IN RECENT MONTHS, 184 00:10:44,543 --> 00:10:47,580 IT'S BEEN INCREASINGLY BY USING 185 00:10:47,580 --> 00:10:50,750 BORROWING, LOWERING THEIR 186 00:10:50,750 --> 00:10:51,917 SAVINGS, THE WAGE GROWTH AND 187 00:10:51,917 --> 00:10:53,853 INCOME GROWTH HAS SLOWED DOWN. 188 00:10:53,853 --> 00:10:54,920 AND SO RELYING ON SPENDING IS 189 00:10:54,920 --> 00:10:56,022 THE WAY HOW THEY CAN SUPPORT 190 00:10:56,022 --> 00:10:57,590 THEIR SPENDING. BUT THAT'S 191 00:10:57,590 --> 00:10:59,358 CERTAINLY POSES SIGNIFICANT 192 00:10:59,358 --> 00:11:01,327 RISKS GOING FORWARD, ESPECIALLY 193 00:11:01,327 --> 00:11:02,561 AS THE INTEREST RATES START TO 194 00:11:02,561 --> 00:11:05,264 RISE, WHICH I'LL TALK ABOUT 195 00:11:05,264 --> 00:11:07,933 MORE. UM, LATER DURING THIS 196 00:11:07,933 --> 00:11:11,937 PRESENTATION. NOW, MOVING ON TO 197 00:11:11,937 --> 00:11:12,571 THE REGIONAL ECONOMY, THE CHART 198 00:11:12,571 --> 00:11:13,639 HERE IS THE ONE THAT WE 199 00:11:13,639 --> 00:11:19,078 TYPICALLY SHOW WE USE LABOR 200 00:11:19,078 --> 00:11:22,948 MARKET AS THE GENERAL. UM, AS IT 201 00:11:22,948 --> 00:11:24,350 HELPS US TO UNDERSTAND THE 202 00:11:24,350 --> 00:11:26,652 GENERAL STATE OF THE REGIONAL 203 00:11:26,652 --> 00:11:29,255 ECONOMY. THE GDP NUMBERS THAT 204 00:11:29,255 --> 00:11:31,857 ARE PUBLISHED FOR, FOR US ARE 205 00:11:31,857 --> 00:11:34,927 RELEASED REASONABLY, UM, 206 00:11:34,927 --> 00:11:37,930 REASONABLY FAST WITH REASONABLE 207 00:11:37,930 --> 00:11:39,999 LITTLE LAG FOR REGIONAL ECONOMY. 208 00:11:39,999 --> 00:11:41,567 THE GDP NUMBERS, THEY USUALLY 209 00:11:41,567 --> 00:11:44,970 CAME OUT AND COME OUT WITH 210 00:11:44,970 --> 00:11:46,439 SIGNIFICANT LAG. SO RIGHT NOW 211 00:11:46,439 --> 00:11:48,007 IT'S A COUPLE OF YEARS BACK. WE 212 00:11:48,007 --> 00:11:50,209 DON'T KNOW WHAT THE CURRENT 213 00:11:50,209 --> 00:11:52,678 OUTPUT IN SEATTLE METRO AREA IS. 214 00:11:52,678 --> 00:11:54,980 BUT THE LABOR MARKET, THE JOB 215 00:11:54,980 --> 00:11:56,382 NUMBERS ARE A USEFUL WAY TO 216 00:11:56,382 --> 00:11:58,250 GAUGE THE OVERALL HEALTH OF THE 217 00:11:58,250 --> 00:12:00,753 REGIONAL ECONOMY. AND SO THAT'S 218 00:12:00,753 --> 00:12:04,857 OUR PRIMARY GOAL TO ECONOMIC 219 00:12:04,857 --> 00:12:07,026 INDICATOR. THE TWO TOP BARS, UH, 220 00:12:07,026 --> 00:12:08,727 THE RED AND THE BLUE BAR AT THE 221 00:12:08,727 --> 00:12:10,930 TOP LABELED TOTAL NON-FARM SHOW. 222 00:12:10,930 --> 00:12:13,165 THE YEAR OVER YEAR CHANGE IN THE 223 00:12:13,165 --> 00:12:15,835 JOB NUMBERS. THE BLUE ONE IS FOR 224 00:12:15,835 --> 00:12:18,370 THE US AS A WHOLE, UH, IN THE 225 00:12:18,370 --> 00:12:19,839 FIRST EIGHT MONTHS OF THE YEAR, 226 00:12:19,839 --> 00:12:21,040 EMPLOYMENT IN THE US HAS GONE UP 227 00:12:21,040 --> 00:12:25,144 BY ABOUT 0.2%. SO IT GREW NOT 228 00:12:25,144 --> 00:12:26,679 SPECTACULARLY, BUT CERTAINLY 229 00:12:26,679 --> 00:12:28,347 WENT UP. THERE WAS A LOT OF 230 00:12:28,347 --> 00:12:29,882 VOLATILITY MONTHS OVER MONTHS. 231 00:12:29,882 --> 00:12:31,617 BUT THE LABOR MARKET IN US HAS 232 00:12:31,617 --> 00:12:34,653 BEEN IN GENERAL DESCRIBED 233 00:12:34,653 --> 00:12:36,122 RECENTLY AS, UH, AS LABOR MARKET 234 00:12:36,122 --> 00:12:38,057 THAT HAS STABILIZED. IT'S RATHER 235 00:12:38,057 --> 00:12:40,226 STAGNANT. IT'S NOT VERY DYNAMIC. 236 00:12:40,226 --> 00:12:42,194 IT'S NOT GROWING FAST. UM, BUT 237 00:12:42,194 --> 00:12:43,329 IT'S CERTAINLY NOT DECLINED. 238 00:12:43,329 --> 00:12:44,330 THERE IS AGAIN, A LOT OF 239 00:12:44,330 --> 00:12:46,132 VOLATILITY IN MONTHS OVER 240 00:12:46,132 --> 00:12:48,033 MONTHS, BUT OVERALL, 0.2 YEAR 241 00:12:48,033 --> 00:12:49,201 OVER YEAR GROWTH IN THE FIRST 242 00:12:49,201 --> 00:12:52,872 EIGHT MONTHS. NOW LOOKING AT 243 00:12:52,872 --> 00:12:55,975 THAT RED BAR, TOTAL NON-FARM JOB 244 00:12:55,975 --> 00:12:57,710 CHANGE FOR SEATTLE METRO AREA. 245 00:12:57,710 --> 00:13:02,314 THAT ONE SHOWS A YEAR OVER YEAR 246 00:13:02,314 --> 00:13:03,382 DECLINE. UM THE THERE HAS BEEN A 247 00:13:03,382 --> 00:13:05,151 COUPLE OF INDUSTRIES THAT HAVE 248 00:13:05,151 --> 00:13:07,386 ADDED JOBS, EDUCATION AND HEALTH 249 00:13:07,386 --> 00:13:08,854 SERVICES IN PARTICULAR, AND 250 00:13:08,854 --> 00:13:11,223 LEISURE AND HOSPITALITY. THOSE 251 00:13:11,223 --> 00:13:12,792 TWO LARGE BARS THAT ARE TO THE 252 00:13:12,792 --> 00:13:16,128 POSITIVE SIDE, UNDERNEATH, UM, 253 00:13:16,128 --> 00:13:18,230 THEY, THESE INDUSTRIES HAVE 254 00:13:18,230 --> 00:13:20,633 GROWN, BUT THERE WERE SOME 255 00:13:20,633 --> 00:13:22,868 SIGNIFICANT JOB LOSSES ELSEWHERE 256 00:13:22,868 --> 00:13:25,070 IN THE ECONOMY. SO THOSE BARS 257 00:13:25,070 --> 00:13:26,772 BELOW THE TOP NON-FARM, THEY 258 00:13:26,772 --> 00:13:28,040 SHOW THE CONTRIBUTION BY 259 00:13:28,040 --> 00:13:28,741 INDIVIDUAL INDUSTRIES. IF YOU 260 00:13:28,741 --> 00:13:30,543 STACK THEM UP, YOU GET THE TOTAL 261 00:13:30,543 --> 00:13:32,711 CHANGE. THERE ARE SOME CHANGES 262 00:13:32,711 --> 00:13:34,847 TO THE POSITIVE SIDE, LIKE I 263 00:13:34,847 --> 00:13:38,918 SAID, BUT THE SIGNIFICANTLY 264 00:13:38,918 --> 00:13:39,518 NEGATIVE ONES OFFSET THE THE 265 00:13:39,518 --> 00:13:41,720 ADDITIONAL JOBS IN LEISURE AND 266 00:13:41,720 --> 00:13:44,156 HOSPITALITY, EDUCATION AND 267 00:13:44,156 --> 00:13:46,258 HEALTH IN PARTICULAR TRADE, 268 00:13:46,258 --> 00:13:48,727 WHOLESALE AND RETAIL TRADE 269 00:13:48,727 --> 00:13:52,164 SECTOR HAS BEEN IN DECLINE OVER 270 00:13:52,164 --> 00:13:54,133 OVER A NUMBER OF YEARS AND HAS 271 00:13:54,133 --> 00:13:56,468 BEEN FURTHER NEGATIVELY AFFECTED 272 00:13:56,468 --> 00:13:58,170 BY BOTH THE TARIFFS AND THE 273 00:13:58,170 --> 00:13:59,338 HIGHER INFLATION DUE TO OIL 274 00:13:59,338 --> 00:14:00,673 PRICES. TECH SECTOR, WE HAVE 275 00:14:00,673 --> 00:14:03,842 DISCUSSED THAT IN PREVIOUS 276 00:14:03,842 --> 00:14:05,444 MEETINGS. TECH SECTOR IS GOING 277 00:14:05,444 --> 00:14:07,880 THROUGH VERY TRANSFORMATIVE 278 00:14:07,880 --> 00:14:10,049 PERIOD. UH, AND THERE HAVE BEEN 279 00:14:10,049 --> 00:14:12,585 SIGNIFICANT LAYOFFS ANNOUNCED 280 00:14:12,585 --> 00:14:14,220 AND THAT'S STARTING TO SHOW UP 281 00:14:14,220 --> 00:14:16,922 IN IN THOSE JOB NUMBERS AS WELL. 282 00:14:16,922 --> 00:14:19,925 SO THERE ISN'T ANY, ANY, ANY 283 00:14:19,925 --> 00:14:21,794 GROWTH IN THAT SECTOR. IT HAS 284 00:14:21,794 --> 00:14:24,496 DISPROPORTIONATE EFFECT ON THE 285 00:14:24,496 --> 00:14:26,398 SEATTLE REGION IN PARTICULAR, 286 00:14:26,398 --> 00:14:27,933 GIVEN HOW LARGE THE SHARE OF 287 00:14:27,933 --> 00:14:29,735 TOTAL EMPLOYMENT THERE IS IN THE 288 00:14:29,735 --> 00:14:31,537 TECH SECTOR. SO WITH THAT, UM, 289 00:14:31,537 --> 00:14:36,041 LET ME MOVE ON TO THE ECONOMIC 290 00:14:36,041 --> 00:14:37,643 OUTLOOK. FIRST OF ALL, CHANGES 291 00:14:37,643 --> 00:14:40,846 IN THE OUTLOOK OVERALL FOR FOR 292 00:14:40,846 --> 00:14:44,550 THE US. UM, THERE HAS BEEN 293 00:14:44,550 --> 00:14:48,387 CERTAINLY THOSE, THOSE RISKS, 294 00:14:48,387 --> 00:14:51,023 THE ELEVATED INFLATION, THE 295 00:14:51,023 --> 00:14:52,324 HIGHER OIL PRICES. RECENTLY 296 00:14:52,324 --> 00:14:53,859 THERE HAS BEEN A SURGE IN LONG 297 00:14:53,859 --> 00:14:55,127 TERM INTEREST RATES. AND THE FED 298 00:14:55,127 --> 00:14:57,730 HAS STARTED TO TIGHTEN ITS 299 00:14:57,730 --> 00:15:00,966 MONETARY POLICY. THOSE ARE ALL 300 00:15:00,966 --> 00:15:07,439 RISKS GOING FORWARD. UM BUT THE 301 00:15:07,439 --> 00:15:10,276 ECONOMY'S OVERALL CONSIDER THE 302 00:15:10,276 --> 00:15:13,345 CURRENT SITUATION. UM REASONABLY 303 00:15:13,345 --> 00:15:16,048 GOOD. UH, THAT WOULD BE PROBABLY 304 00:15:16,048 --> 00:15:17,983 THE TAKEAWAY FROM FROM THIS 305 00:15:17,983 --> 00:15:19,985 CHART. UM, OR AT LEAST BETTER 306 00:15:19,985 --> 00:15:24,056 THAN WHAT THE OVERALL, UM, 307 00:15:24,056 --> 00:15:25,457 IMPRESSION ABOUT THE HEALTH OF 308 00:15:25,457 --> 00:15:27,293 THE ECONOMY AND THE RISKS WHERE, 309 00:15:27,293 --> 00:15:31,563 UM, IN 2025, LET'S SAY IN WHEN 310 00:15:31,563 --> 00:15:34,133 30s WERE INTRODUCED OR IN 2023, 311 00:15:34,133 --> 00:15:36,335 WHEN THE INTEREST RATES STARTED 312 00:15:36,335 --> 00:15:38,470 TO RISE AS THE FED WAS TRYING TO 313 00:15:38,470 --> 00:15:41,073 BRING THE INFLATION DOWN AFTER 314 00:15:41,073 --> 00:15:43,609 THE DISRUPTIONS TO THE SUPPLY 315 00:15:43,609 --> 00:15:45,344 CHAIN CAUSED BY, BY THE COVID. 316 00:15:45,344 --> 00:15:46,679 SO WHAT I MEAN BY THAT IS THE 317 00:15:46,679 --> 00:15:51,383 CHART HERE SHOWS THE AVERAGE 318 00:15:51,383 --> 00:15:51,984 PROBABILITY OF A RECESSION IN 319 00:15:51,984 --> 00:15:54,453 THE NEXT 12 MONTHS, AS REPORTED 320 00:15:54,453 --> 00:15:56,422 BY THE WALL STREET JOURNAL. 321 00:15:56,422 --> 00:15:58,490 IT'S COMING FROM THE SURVEY. 322 00:15:58,490 --> 00:16:01,026 THAT THEY CONDUCT EACH QUARTER. 323 00:16:01,026 --> 00:16:01,827 THEY ASK 60 TO 70 ECONOMISTS, 324 00:16:01,827 --> 00:16:05,798 UH, A COUPLE OF QUESTIONS. THEY 325 00:16:05,798 --> 00:16:07,499 PROVIDE THEIR OUTLOOK FOR GDP 326 00:16:07,499 --> 00:16:08,067 FOR INFLATION, UNEMPLOYMENT 327 00:16:08,067 --> 00:16:09,635 RATE, A COUPLE OF OTHER 328 00:16:09,635 --> 00:16:11,036 INDICATORS. AND THEN ONE 329 00:16:11,036 --> 00:16:12,371 QUESTION THAT THEY ASK THEM IS 330 00:16:12,371 --> 00:16:15,541 WHAT DO THEY PERCEIVE TO BE THE 331 00:16:15,541 --> 00:16:17,042 PROBABILITY OF RECESSION IN THE 332 00:16:17,042 --> 00:16:19,345 NEXT 12 MONTHS? THERE IS A WIDE 333 00:16:19,345 --> 00:16:22,781 RANGE OF ANSWERS. UM, SOME ARE 334 00:16:22,781 --> 00:16:26,352 VERY LOW, SOME ARE VERY HIGH. 335 00:16:26,352 --> 00:16:28,187 UM, THE CHART HERE SHOWS THE 336 00:16:28,187 --> 00:16:30,789 AVERAGE OF, OF THOSE ANSWERS 337 00:16:30,789 --> 00:16:32,691 RIGHT NOW THAT AVERAGE IS AT 338 00:16:32,691 --> 00:16:35,761 24%. AND IT CHANGED VERY LITTLE 339 00:16:35,761 --> 00:16:37,096 SINCE SINCE AUGUST WHEN IT WAS 340 00:16:37,096 --> 00:16:39,698 AT 25 AND IT CAME DOWN FROM 33% 341 00:16:39,698 --> 00:16:45,471 IN APRIL. SO AGAIN, GIVEN THE 342 00:16:45,471 --> 00:16:47,239 GDP DATA THAT HAS BEEN RELEASED 343 00:16:47,239 --> 00:16:50,576 OVER THE LAST COUPLE OF, MONTHS, 344 00:16:50,576 --> 00:16:53,912 LAST COUPLE OF QUARTERS, GIVEN 345 00:16:53,912 --> 00:16:55,581 THE STATE OF OF THE LABOR 346 00:16:55,581 --> 00:16:58,384 MARKET, UH, EVEN WITH HIGHER OIL 347 00:16:58,384 --> 00:17:01,120 PRICES, EVEN WITH HIGHER 348 00:17:01,120 --> 00:17:02,521 INFLATION, ECONOMIES GENERALLY 349 00:17:02,521 --> 00:17:03,055 BELIEVE THAT THE RISK OF 350 00:17:03,055 --> 00:17:07,092 RECESSION HAVE COME DOWN OVER, 351 00:17:07,092 --> 00:17:08,861 UM, OVER TIME FROM, FROM THEIR 352 00:17:08,861 --> 00:17:10,396 HIGHS LAST YEAR AFTER THE TARIFF 353 00:17:10,396 --> 00:17:12,197 WAS INTRODUCED, IT WAS CLOSE TO 354 00:17:12,197 --> 00:17:13,999 50%. RIGHT NOW, IT'S 355 00:17:13,999 --> 00:17:16,201 SIGNIFICANTLY LOWER THAN THAT. 356 00:17:16,201 --> 00:17:21,740 AND SO THE RISKS ARE THERE. THEY 357 00:17:21,740 --> 00:17:22,875 ARE HIGHER THAN THE AVERAGE, 358 00:17:22,875 --> 00:17:24,676 WHICH WOULD BE SOMEWHERE AROUND 359 00:17:24,676 --> 00:17:26,245 15%, BUT CERTAINLY NOT AS HIGH 360 00:17:26,245 --> 00:17:28,414 AS WHAT WE HAVE SEEN IN 2023, 361 00:17:28,414 --> 00:17:35,054 LET'S SAY, OR IN 2025. NOW 362 00:17:35,054 --> 00:17:36,522 LOOKING A LITTLE BIT CLOSER AT 363 00:17:36,522 --> 00:17:38,724 THOSE RISKS, UH, HIGH INFLATION, 364 00:17:38,724 --> 00:17:40,692 HIGH INTEREST RATES THAT I 365 00:17:40,692 --> 00:17:43,429 MENTIONED HERE IS HOW THE CHANGE 366 00:17:43,429 --> 00:17:45,731 IN THE FORECAST LOOKS LIKE. I'LL 367 00:17:45,731 --> 00:17:48,867 GO A LITTLE BIT, UH, BACK, UM, 368 00:17:48,867 --> 00:17:50,903 I'LL START WITH, WITH WHAT WE, 369 00:17:50,903 --> 00:17:53,272 UH, WHAT WAS EXPECTED BACK IN, 370 00:17:53,272 --> 00:17:55,574 UH, IN MARCH WHEN WE WERE 371 00:17:55,574 --> 00:17:57,142 WORKING ON THE APRIL FORECAST. 372 00:17:57,142 --> 00:17:58,811 SO THOSE TWO LINES HERE THAT ARE 373 00:17:58,811 --> 00:18:01,380 LABELED MARCH 26th BASELINE, 374 00:18:01,380 --> 00:18:03,916 THAT WAS THE FORECAST FOR THE US 375 00:18:03,916 --> 00:18:05,717 ECONOMY THAT WAS RELEASED IN 376 00:18:05,717 --> 00:18:07,920 MARCH AND WAS USED AS THE 377 00:18:07,920 --> 00:18:09,788 UNDERLYING US ECONOMIC FORECAST 378 00:18:09,788 --> 00:18:13,959 WHEN WE WERE DEVELOPING THE 379 00:18:13,959 --> 00:18:16,495 APRIL REVENUE FORECAST. UM, THE 380 00:18:16,495 --> 00:18:19,331 APRIL REVENUE FORECAST CAME 381 00:18:19,331 --> 00:18:22,034 AFTER THE WAR IN IRAN STARTED 382 00:18:22,034 --> 00:18:25,938 AND THE INFLATION FORECAST HAS 383 00:18:25,938 --> 00:18:28,307 BEEN ALREADY ADJUSTED UPWARD, 384 00:18:28,307 --> 00:18:30,809 UM, DUE TO THAT IMPACT ON OIL 385 00:18:30,809 --> 00:18:34,580 PRICES THAT WAS EXPECTED TO COME 386 00:18:34,580 --> 00:18:37,316 EVENTUALLY. UM, AND THEN WITH 387 00:18:37,316 --> 00:18:39,751 THE NEXT UPDATE, WHEN WE WERE 388 00:18:39,751 --> 00:18:41,019 PRESENTING THE REVENUE FORECAST, 389 00:18:41,019 --> 00:18:43,755 UH, LAST TIME IN AUGUST, AND WE 390 00:18:43,755 --> 00:18:46,692 USED WHAT'S LABELED HERE AS THE 391 00:18:46,692 --> 00:18:49,328 JULY 2026 BASELINE FORECAST THAT 392 00:18:49,328 --> 00:18:50,362 INFLATION WAS ACTUALLY HIGHER. 393 00:18:50,362 --> 00:18:53,165 THE ACTUAL INFLATION WAS HIGHER 394 00:18:53,165 --> 00:18:57,436 IN THE FIRST, UH, COUPLE OF 395 00:18:57,436 --> 00:18:58,036 MONTHS OF 2026 THAN WHAT THE 396 00:18:58,036 --> 00:18:59,671 ECONOMISTS BELIEVED. SO THERE 397 00:18:59,671 --> 00:19:01,673 WAS AN UPWARD REVISION TO THE 398 00:19:01,673 --> 00:19:03,542 INFLATION FORECAST. UM, AND 399 00:19:03,542 --> 00:19:05,644 THERE WAS ALSO AN UPWARD 400 00:19:05,644 --> 00:19:07,913 REVISION TO THE EXPECTED PATH OF 401 00:19:07,913 --> 00:19:09,648 THE FEDERAL FUNDS RATE. AND IT 402 00:19:09,648 --> 00:19:11,950 WAS ALREADY THAT, UH CONCERN 403 00:19:11,950 --> 00:19:14,353 THAT, WELL, THE, THIS SHOCK IS 404 00:19:14,353 --> 00:19:14,987 SOMETHING THAT THE FED WILL NOT 405 00:19:14,987 --> 00:19:16,889 BE ABLE TO LOOK THROUGH, EVEN 406 00:19:16,889 --> 00:19:18,557 THOUGH IT'S AN OIL PRICE SHOCK. 407 00:19:18,557 --> 00:19:20,425 THERE IS A RISK THAT IT WILL 408 00:19:20,425 --> 00:19:22,194 BLEED INTO THE OVERALL 409 00:19:22,194 --> 00:19:23,262 INFLATION. AND SO THAT WILL HAVE 410 00:19:23,262 --> 00:19:25,931 TO DO SOMETHING GIVEN THAT IT'S 411 00:19:25,931 --> 00:19:27,966 AN ADDITIONAL SUPPLY SHOCK AND 412 00:19:27,966 --> 00:19:28,534 THE ACCUMULATION OF SUPPLY 413 00:19:28,534 --> 00:19:30,836 SHOCKS CAN CAUSE INFLATION 414 00:19:30,836 --> 00:19:34,640 EXPECTATIONS TO GO UP. UM, SO 415 00:19:34,640 --> 00:19:35,941 FORECAST FOR THE FEDERAL FUNDS 416 00:19:35,941 --> 00:19:40,646 RATE HAS GONE UP BETWEEN MARCH, 417 00:19:40,646 --> 00:19:41,847 MARCH AND JULY. THEN HERE IS 418 00:19:41,847 --> 00:19:43,348 WHERE WE ARE RIGHT NOW. THAT 419 00:19:43,348 --> 00:19:45,050 LAST LINE THAT JUST SHOWED UP 420 00:19:45,050 --> 00:19:48,186 THAT'S LABELED AS SEPTEMBER 421 00:19:48,186 --> 00:19:49,888 2026 BASELINE IS THE FORECAST 422 00:19:49,888 --> 00:19:54,359 FOR THE US ECONOMY THAT WE USED 423 00:19:54,359 --> 00:19:56,528 AS THE UNDERLYING STARTING POINT 424 00:19:56,528 --> 00:19:57,129 WHEN DEVELOPING OUR REGIONAL 425 00:19:57,129 --> 00:19:59,631 ECONOMIC FORECAST AND THE 426 00:19:59,631 --> 00:20:02,367 REVENUE FORECAST ITSELF. UM, 427 00:20:02,367 --> 00:20:07,539 THAT FORECAST IS AN AVERAGE OF 428 00:20:07,539 --> 00:20:10,475 WHAT S&P GLOBAL MARKET 429 00:20:10,475 --> 00:20:11,043 INTELLIGENCE AND MOODY'S 430 00:20:11,043 --> 00:20:12,578 ANALYTICS EXPECT. WE ARE USING 431 00:20:12,578 --> 00:20:16,014 BOTH OF THEM TO. AND THE AVERAGE 432 00:20:16,014 --> 00:20:17,149 TO KIND OF, UM, MAKE SURE THAT 433 00:20:17,149 --> 00:20:19,351 WE ARE NOT USING FORECAST THAT 434 00:20:19,351 --> 00:20:23,655 IS OVERLY OPTIMISTIC OR OVERLY 435 00:20:23,655 --> 00:20:24,256 PESSIMISTIC. THE INTERESTING 436 00:20:24,256 --> 00:20:27,559 THING ABOUT THE LAST FORECAST IS 437 00:20:27,559 --> 00:20:28,193 THERE'S ACTUALLY VERY LITTLE 438 00:20:28,193 --> 00:20:30,062 DISAGREEMENT ABOUT THE PATH FOR 439 00:20:30,062 --> 00:20:32,564 THE INFLATION GOING FORWARD 440 00:20:32,564 --> 00:20:34,299 AMONG DIFFERENT FORECASTERS. 441 00:20:34,299 --> 00:20:36,168 AMONG THOSE TWO INSTITUTIONS IN 442 00:20:36,168 --> 00:20:37,903 PARTICULAR. SO AS YOU CAN SEE, 443 00:20:37,903 --> 00:20:39,171 THE FORECAST FOR INFLATION HAS 444 00:20:39,171 --> 00:20:40,739 BEEN BROUGHT DOWN A LITTLE BIT. 445 00:20:40,739 --> 00:20:46,778 UM, THE THAT PEAK, UM, IS REALLY 446 00:20:46,778 --> 00:20:48,780 THAT WE SAW IN THE FIRST COUPLE 447 00:20:48,780 --> 00:20:53,552 OF MONTHS IN MAY, AND JUNE THAT, 448 00:20:53,552 --> 00:20:57,155 UH, INFLATION IS CONSIDERED TO 449 00:20:57,155 --> 00:21:00,425 BE THE PEAK. AND FROM NOW ON, 450 00:21:00,425 --> 00:21:01,393 THE PERCEPTION AGAIN, THIS IS 451 00:21:01,393 --> 00:21:03,428 BACK IN SEPTEMBER WAS THAT 452 00:21:03,428 --> 00:21:05,030 INFLATION IS GOING TO SLOWLY 453 00:21:05,030 --> 00:21:09,668 EASE DOWN. NOW, UM, THAT 454 00:21:09,668 --> 00:21:10,302 FORECAST IS OBVIOUSLY A LITTLE 455 00:21:10,302 --> 00:21:12,504 BIT DATED. WE ARE ALREADY IN A, 456 00:21:12,504 --> 00:21:14,506 IN THE MIDDLE OF OCTOBER. SINCE 457 00:21:14,506 --> 00:21:18,543 THEN THERE HAVE BEEN FURTHER CPI 458 00:21:18,543 --> 00:21:21,113 DATA RELEASED IN THE MIDDLE OF 459 00:21:21,113 --> 00:21:26,551 SEPTEMBER, UH, FOR AUGUST. AND 460 00:21:26,551 --> 00:21:28,287 WE HAVE SEEN THE INFLATION ALSO 461 00:21:28,287 --> 00:21:30,989 REPORTED FOR, FOR SEPTEMBER, THE 462 00:21:30,989 --> 00:21:33,392 RECENT OCTOBER UH, RELEASE, UH, 463 00:21:33,392 --> 00:21:36,461 BOTH OF THEM SUGGEST THAT THAT 464 00:21:36,461 --> 00:21:38,297 SEPTEMBER FORECAST IS PROBABLY 465 00:21:38,297 --> 00:21:40,966 BE TOO OPTIMISTIC. AND THE NEXT 466 00:21:40,966 --> 00:21:43,568 REVISION WILL BE TO, TO MOVE THE 467 00:21:43,568 --> 00:21:44,670 INFLATION FORECAST A LITTLE BIT 468 00:21:44,670 --> 00:21:48,140 BACK UP TOWARDS WHERE IT WAS IN, 469 00:21:48,140 --> 00:21:50,709 UH, IN THAT JULY. BASELINE 470 00:21:50,709 --> 00:21:52,878 FORECAST. SO THAT'S CERTAINLY A 471 00:21:52,878 --> 00:21:55,147 RISK. THAT SAID, UM, THERE IS A 472 00:21:55,147 --> 00:21:56,748 REALLY STRONG COMMITMENT BY FED 473 00:21:56,748 --> 00:21:59,317 TO BRING INFLATION DOWN. AND SO 474 00:21:59,317 --> 00:21:59,951 THE EXPECTATION IS THAT THE FED 475 00:21:59,951 --> 00:22:03,088 WILL DO WHAT IT TAKES TO BRING 476 00:22:03,088 --> 00:22:04,289 INFLATION BACK TO THE 2% TARGET. 477 00:22:04,289 --> 00:22:05,357 THAT CAN BE SEEN ALSO IN THE 478 00:22:05,357 --> 00:22:06,692 CHART ON THE RIGHT, WHICH SHOWS 479 00:22:06,692 --> 00:22:10,662 THE FEDERAL FUNDS RATE AND AGAIN 480 00:22:10,662 --> 00:22:13,765 HAS BEEN REVISED HIGHER. UM, 481 00:22:13,765 --> 00:22:14,900 THAT ACTUALLY AGAIN IS A BIT 482 00:22:14,900 --> 00:22:18,103 DATED. ITS FORECAST FROM EARLY 483 00:22:18,103 --> 00:22:19,971 SEPTEMBER. SO BEFORE THE, THE 484 00:22:19,971 --> 00:22:23,508 MEETING OF THE FED, THE WHERE 485 00:22:23,508 --> 00:22:25,711 THEY DID RAISE THE INTEREST RATE 486 00:22:25,711 --> 00:22:26,645 BY 0.25 PERCENTAGE POINT. AND 487 00:22:26,645 --> 00:22:28,280 THE FED OFFICIALS HAVE SIGNALED 488 00:22:28,280 --> 00:22:30,449 THAT THEY DO BELIEVE THAT 489 00:22:30,449 --> 00:22:32,250 ANOTHER POINT, 25%, UH, TEN 490 00:22:32,250 --> 00:22:34,419 PERCENTAGE POINT INCREASE IS 491 00:22:34,419 --> 00:22:36,822 APPROPRIATE BY THE END OF THIS 492 00:22:36,822 --> 00:22:37,989 YEAR. UM, IN ADDITION TO THAT, 493 00:22:37,989 --> 00:22:40,592 FINANCIAL MARKETS ARE PRICING IN 494 00:22:40,592 --> 00:22:43,528 ADDITIONAL INTEREST RATE 495 00:22:43,528 --> 00:22:45,263 INCREASES IN 2027. SO A LITTLE 496 00:22:45,263 --> 00:22:47,933 BIT UNCLEAR HOW THAT THING WILL 497 00:22:47,933 --> 00:22:49,434 REALLY PLAY OUT. UM, BUT AGAIN, 498 00:22:49,434 --> 00:22:52,270 THERE IS CERTAINLY GOING TO BE 499 00:22:52,270 --> 00:22:54,039 AN UPWARD REVISION TO THE 500 00:22:54,039 --> 00:22:55,107 FEDERAL FUNDS FORECAST THAT WE 501 00:22:55,107 --> 00:22:56,508 ARE, WE ARE PRESENTING HERE. AND 502 00:22:56,508 --> 00:22:58,410 THAT'S SOMETHING THAT NEEDS TO 503 00:22:58,410 --> 00:23:07,252 BE KEPT IN MIND. UH, NOW. THE 504 00:23:07,252 --> 00:23:10,055 SECOND SCENARIO, THE PESSIMISTIC 505 00:23:10,055 --> 00:23:11,056 SCENARIO THAT I'LL TALK A LITTLE 506 00:23:11,056 --> 00:23:12,724 BIT ABOUT HERE IS THE ONE WHERE, 507 00:23:12,724 --> 00:23:16,061 AS YOU CAN SEE, THE INFLATION 508 00:23:16,061 --> 00:23:18,130 WOULD ACTUALLY PICK UP. AND 509 00:23:18,130 --> 00:23:20,265 THAT'S SOMETHING THAT WE DID 510 00:23:20,265 --> 00:23:22,834 OBSERVE IN RECENT MONTHS. SO THE 511 00:23:22,834 --> 00:23:24,002 DARKER BROWN LINE THAT SHOWS THE 512 00:23:24,002 --> 00:23:27,939 PICK UP IN, IN THE, IN THE 513 00:23:27,939 --> 00:23:30,976 FOURTH QUARTER IS CERTAINLY, UM, 514 00:23:30,976 --> 00:23:33,311 THE ONE THAT'S, UH, MORE CLOSER 515 00:23:33,311 --> 00:23:34,413 TO THE EXPECTATIONS ON THE OTHER 516 00:23:34,413 --> 00:23:36,915 SIDE. AND YOU CAN, HOWEVER, SEE 517 00:23:36,915 --> 00:23:37,949 THAT THAT PESSIMISTIC SCENARIO, 518 00:23:37,949 --> 00:23:40,652 BECAUSE IT'S BUILT AROUND THE 519 00:23:40,652 --> 00:23:42,354 ASSUMPTIONS, UM, THAT, UH, 520 00:23:42,354 --> 00:23:43,688 BASICALLY MEAN THAT THE ECONOMY 521 00:23:43,688 --> 00:23:46,658 IS GOING INTO A RECESSION. SO 522 00:23:46,658 --> 00:23:48,860 IT'S AT 25%, ROUGHLY 25% CASE 523 00:23:48,860 --> 00:23:51,630 SCENARIO. UH, IF THE ECONOMY 524 00:23:51,630 --> 00:23:53,064 GOES INTO RECESSION AND THERE IS 525 00:23:53,064 --> 00:23:55,300 A SIGNIFICANT SLOWDOWN IN 526 00:23:55,300 --> 00:23:55,934 ECONOMIC ACTIVITY, SIGNIFICANT 527 00:23:55,934 --> 00:23:59,304 JOB LAYOFFS, FED WILL HAVE TO 528 00:23:59,304 --> 00:24:02,307 BALANCE THESE TWO, UM, ITS DUAL 529 00:24:02,307 --> 00:24:03,708 MANDATE, A RISK OF HIGHER 530 00:24:03,708 --> 00:24:05,343 INFLATION AND RISK OF 531 00:24:05,343 --> 00:24:05,944 SIGNIFICANT JOB LOSSES WOULD 532 00:24:05,944 --> 00:24:07,445 MEAN THAT IT WOULD LOOK AT HOW 533 00:24:07,445 --> 00:24:09,347 FAR IT IS FROM THOSE TWO 534 00:24:09,347 --> 00:24:10,482 TARGETS. AND IF THE JOB LOSSES 535 00:24:10,482 --> 00:24:11,450 ARE SIGNIFICANT, IT WOULD 536 00:24:11,450 --> 00:24:13,785 ACTUALLY BE FORCED TO CUT THE 537 00:24:13,785 --> 00:24:15,153 INTEREST RATE TO SUPPORT THE 538 00:24:15,153 --> 00:24:16,421 ECONOMY, BECAUSE INFLATION IS 539 00:24:16,421 --> 00:24:17,556 ACTUALLY GOING TO BE EXPECTED TO 540 00:24:17,556 --> 00:24:21,126 COME DOWN BY ITSELF DUE TO LESS 541 00:24:21,126 --> 00:24:22,861 DEMAND, DUE TO LOWER EMPLOYMENT. 542 00:24:22,861 --> 00:24:26,998 AND SO THE PATH FOR FOR INTEREST 543 00:24:26,998 --> 00:24:29,034 RATE THERE IS ACTUALLY SHOWING 544 00:24:29,034 --> 00:24:31,736 UH, QUITE SIGNIFICANT DECLINES 545 00:24:31,736 --> 00:24:33,171 AGAIN, TO SUPPORT THE, THE 546 00:24:33,171 --> 00:24:35,140 ECONOMY. THAT'S WHAT THE FED 547 00:24:35,140 --> 00:24:39,945 WILL BE TRYING TO DO. MOVING ON 548 00:24:39,945 --> 00:24:43,215 TO THE OUTLOOK FOR UM GROWTH 549 00:24:43,215 --> 00:24:46,051 OVERALL AND ECONOMIC GROWTH 550 00:24:46,051 --> 00:24:48,920 OVERALL AND THE JOB GROWTH, 551 00:24:48,920 --> 00:24:52,324 THESE CHART AGAIN SHOW THE 552 00:24:52,324 --> 00:24:55,026 UNDERLYING FORECAST. BACK WHEN 553 00:24:55,026 --> 00:24:58,330 WE WERE WORKING ON THE APRIL 554 00:24:58,330 --> 00:24:58,930 REVENUE FORECAST AND USED THE 555 00:24:58,930 --> 00:25:02,968 MARCH US FORECAST, THERE IS THAT 556 00:25:02,968 --> 00:25:04,102 LAG BETWEEN WHEN WE DELIVER THE 557 00:25:04,102 --> 00:25:05,203 FORECAST, IT TAKES A COUPLE OF 558 00:25:05,203 --> 00:25:07,873 WEEKS TO FINISH IT. SO USUALLY 559 00:25:07,873 --> 00:25:11,910 THOSE ECONOMIC FORECASTS ARE ONE 560 00:25:11,910 --> 00:25:14,246 MONTH PRIOR TO WHEN WE WERE 561 00:25:14,246 --> 00:25:16,781 DELIVERING THE FORECAST. UM THE 562 00:25:16,781 --> 00:25:20,585 GDP WAS EXPECTED TO GROW AROUND 563 00:25:20,585 --> 00:25:23,421 2% UNEMPLOYMENT GROWTH. SORRY, 564 00:25:23,421 --> 00:25:24,055 EMPLOYMENT GROWTH WAS SUPPOSED 565 00:25:24,055 --> 00:25:26,057 TO BE ALREADY PRETTY LOW. THERE 566 00:25:26,057 --> 00:25:27,859 HAS BEEN A SIGNIFICANT SLOWDOWN 567 00:25:27,859 --> 00:25:29,694 IN JOB GROWTH THROUGHOUT 2025. 568 00:25:29,694 --> 00:25:31,129 AND THE OUTLOOK WAS THAT THAT'S 569 00:25:31,129 --> 00:25:33,698 GOING TO CONTINUE WITH THE 570 00:25:33,698 --> 00:25:36,334 ADDITIONAL INFORMATION ABOUT THE 571 00:25:36,334 --> 00:25:39,671 IMPACT OF, UH, THE IRAN WAR. BUT 572 00:25:39,671 --> 00:25:41,940 AT THE SAME TIME, A FEDERAL 573 00:25:41,940 --> 00:25:44,976 GOVERNMENT, UM, FISCAL SUPPORT, 574 00:25:44,976 --> 00:25:49,281 UH IN TERMS OF THE HR ONE AND 575 00:25:49,281 --> 00:25:53,218 THEN THE BUILD OUT BY THE, OUT 576 00:25:53,218 --> 00:25:55,820 BY THE AI COMPANIES, UM, 577 00:25:55,820 --> 00:25:58,623 OVERALL, THAT MEANT THAT THE 578 00:25:58,623 --> 00:26:00,191 REAL GDP FORECAST HAD NOT REALLY 579 00:26:00,191 --> 00:26:03,395 CHANGED MUCH. IT HAS BEEN 580 00:26:03,395 --> 00:26:03,995 REVISED SLIGHTLY DOWN FOR 26, 581 00:26:03,995 --> 00:26:05,997 BUT ACTUALLY SLIGHTLY UP FOR 27. 582 00:26:05,997 --> 00:26:10,669 AND SO BETWEEN MARCH AND JULY 583 00:26:10,669 --> 00:26:11,436 THERE WASN'T ANY DRAMATIC CHANGE 584 00:26:11,436 --> 00:26:14,573 STILL HOVERING AROUND 2% 585 00:26:14,573 --> 00:26:16,608 EMPLOYMENT STILL PRETTY LOW 586 00:26:16,608 --> 00:26:18,176 BELOW HALF OF A PERCENT GROWTH. 587 00:26:18,176 --> 00:26:21,413 AND THEN HERE IS WHERE WE ARE 588 00:26:21,413 --> 00:26:24,249 RIGHT NOW. THE SEPTEMBER US 589 00:26:24,249 --> 00:26:26,484 FORECAST IS ACTUALLY SLIGHTLY 590 00:26:26,484 --> 00:26:29,120 BETTER THAN THE JULY FORECAST 591 00:26:29,120 --> 00:26:33,959 FOR THE GDP GROWTH ABOVE 2%. SO 592 00:26:33,959 --> 00:26:36,194 WHAT WOULD BE DESCRIBED AS A 593 00:26:36,194 --> 00:26:39,898 SOLID GDP GROWTH. UM THE 594 00:26:39,898 --> 00:26:41,599 HOUSEHOLDS ARE STRUGGLING BUT 595 00:26:41,599 --> 00:26:43,702 THEY ARE STILL ABLE TO USE THOSE 596 00:26:43,702 --> 00:26:45,203 SPENDINGS THAT I TALKED ABOUT 597 00:26:45,203 --> 00:26:48,039 BEFORE TO SUPPORT THEIR 598 00:26:48,039 --> 00:26:50,608 EXPENDITURES. THE AI INVESTMENT 599 00:26:50,608 --> 00:26:52,377 IS, UH, BOOSTING THE OVERALL 600 00:26:52,377 --> 00:26:55,280 GROWTH. AND SO THERE HASN'T BEEN 601 00:26:55,280 --> 00:26:58,283 A SIGNIFICANT IMPACT SO FAR ON, 602 00:26:58,283 --> 00:27:00,852 ON THE ECONOMIC GROWTH, 603 00:27:00,852 --> 00:27:02,253 EMPLOYMENT, NOT MUCH OF A CHANGE 604 00:27:02,253 --> 00:27:04,556 THERE, SLIGHTLY IMPROVED 605 00:27:04,556 --> 00:27:06,491 COMPARED TO THE JULY, BUT VERY, 606 00:27:06,491 --> 00:27:08,860 VERY SLOW EMPLOYMENT GROWTH IN 607 00:27:08,860 --> 00:27:12,497 THE BASELINE SCENARIO AS BEFORE. 608 00:27:12,497 --> 00:27:14,232 AND THEN THIS IS WHAT THE 609 00:27:14,232 --> 00:27:17,435 RECESSION, WHAT THAT 25% 610 00:27:17,435 --> 00:27:18,703 RECESSION SCENARIO WOULD LOOK 611 00:27:18,703 --> 00:27:20,638 LIKE. THE GDP WOULD DECLINE IN 612 00:27:20,638 --> 00:27:25,210 THE FIRST HALF OF 2027. UM, AND 613 00:27:25,210 --> 00:27:27,078 JOB LOSSES WOULD, WOULD ENSUE 614 00:27:27,078 --> 00:27:29,514 BECAUSE OF THAT. AND THE, THE 615 00:27:29,514 --> 00:27:31,950 KIND OF NARRATIVE AROUND THE 616 00:27:31,950 --> 00:27:33,985 SCENARIO IS THAT THOSE 617 00:27:33,985 --> 00:27:35,487 DISRUPTIONS TO OIL SUPPLY SHOCK 618 00:27:35,487 --> 00:27:37,288 AND HIGH OIL PRICES, THEY CAN 619 00:27:37,288 --> 00:27:39,791 LEAD TO THE CRACKS THAT 620 00:27:39,791 --> 00:27:41,226 EVENTUALLY LEAD TO THE ECONOMY 621 00:27:41,226 --> 00:27:43,695 FALLING INTO A RECESSION AS 622 00:27:43,695 --> 00:27:46,131 HOUSEHOLDS ARE FORCED TO 623 00:27:46,131 --> 00:27:47,565 RESTRICT THEIR SPENDING, A LOSS 624 00:27:47,565 --> 00:27:50,168 OF CONFIDENCE IN THE AI AND HOW 625 00:27:50,168 --> 00:27:51,903 THOSE EARNINGS ARE GOING TO PLAY 626 00:27:51,903 --> 00:27:53,905 OUT, AND WHEN EXACTLY THEY WILL 627 00:27:53,905 --> 00:27:55,306 MATERIALIZE. ALL THAT MIGHT LEAD 628 00:27:55,306 --> 00:27:58,243 TO A SIGNIFICANT PULLBACK BY 629 00:27:58,243 --> 00:28:00,345 BUSINESSES AND THEIR INVESTMENT 630 00:28:00,345 --> 00:28:02,280 FELL OFF IN IN STOCK PRICES, 631 00:28:02,280 --> 00:28:03,715 WHICH THROUGH A NEGATIVE WEALTH 632 00:28:03,715 --> 00:28:05,383 EFFECT, IF THERE IS A 633 00:28:05,383 --> 00:28:06,951 SIGNIFICANT DROP IN, UH, IN 634 00:28:06,951 --> 00:28:09,220 STOCK PRICES, THE FOUR ONE K, 635 00:28:09,220 --> 00:28:13,792 UM, LOOK MUCH WORSE. AGAIN, THAT 636 00:28:13,792 --> 00:28:14,926 WOULD LEAD TO HOUSEHOLDS AND 637 00:28:14,926 --> 00:28:18,763 RETIRED UH, PEOPLE TO BE MORE 638 00:28:18,763 --> 00:28:19,364 CAUTIOUS WITH THEIR SPENDING. 639 00:28:19,364 --> 00:28:21,733 AND OVERALL, THAT WOULD, UH, 640 00:28:21,733 --> 00:28:23,468 THAT WOULD LEAD TO THAT, THAT 641 00:28:23,468 --> 00:28:28,373 SLOWDOWN, THAT RECESSION IN 642 00:28:28,373 --> 00:28:30,508 2027. THAT'S THE BASIC 643 00:28:30,508 --> 00:28:34,646 NARRATIVE HERE, 25%, LIKE I 644 00:28:34,646 --> 00:28:36,214 SAID. SO NOT, NOT THE BASELINE, 645 00:28:36,214 --> 00:28:37,382 NOT, NOT THE MOST LIKELY 646 00:28:37,382 --> 00:28:41,753 OUTCOME, BUT THE SIGNIFICANT 647 00:28:41,753 --> 00:28:43,054 RISKS THERE. MOVING ON TO THE 648 00:28:43,054 --> 00:28:44,422 OUTLOOK FOR THE REGIONAL 649 00:28:44,422 --> 00:28:45,623 ECONOMY, UM, THERE HAS BEEN A 650 00:28:45,623 --> 00:28:47,859 REVISION TO THE EMPLOYMENT DATA 651 00:28:47,859 --> 00:28:51,262 BY THE EMPLOYMENT, UH, SECURITY 652 00:28:51,262 --> 00:28:53,798 DEPARTMENT. WASHINGTON STATE, 653 00:28:53,798 --> 00:28:54,432 EMPLOYMENT SECURITY DEPARTMENT 654 00:28:54,432 --> 00:28:56,267 REVISES THE EMPLOYMENT DATA 655 00:28:56,267 --> 00:28:58,703 REGULARLY. THIS TIME IT WAS 656 00:28:58,703 --> 00:29:01,339 REVISION TO THE UPSIDE. SO 657 00:29:01,339 --> 00:29:04,175 HIGHER JOB NUMBERS FOR 2026. AND 658 00:29:04,175 --> 00:29:07,445 THAT HAS LED TO, UM, TO OVERALL 659 00:29:07,445 --> 00:29:11,316 BETTER PICTURE FOR 2026. BUT UM, 660 00:29:11,316 --> 00:29:12,884 BUT NOT NECESSARILY SOMETHING 661 00:29:12,884 --> 00:29:14,586 THAT WOULD, UH, THAT WOULD 662 00:29:14,586 --> 00:29:16,121 TRANSLATE INTO HIGHER GROWTH IN 663 00:29:16,121 --> 00:29:18,289 A COUPLE OF YEARS. THE CHART 664 00:29:18,289 --> 00:29:22,894 AGAIN, GOES BACK FIRST TO SHOW 665 00:29:22,894 --> 00:29:24,629 THE APRIL UNDERLYING EMPLOYMENT 666 00:29:24,629 --> 00:29:27,198 FORECAST, HOW IT WAS REVISED IN 667 00:29:27,198 --> 00:29:29,267 AUGUST. THE CHANGE IN THE 668 00:29:29,267 --> 00:29:31,769 HISTORICAL DATA THAT REFLECTS 669 00:29:31,769 --> 00:29:34,873 THOSE REVISIONS TO THE IS THE 670 00:29:34,873 --> 00:29:36,608 HISTORICAL EMPLOYMENT ESTIMATES. 671 00:29:36,608 --> 00:29:38,143 AND SO IT'S NOT JUST THE 672 00:29:38,143 --> 00:29:39,177 REVISION TO THE FORECAST GOING 673 00:29:39,177 --> 00:29:41,246 FORWARD, BUT IT'S USUALLY 674 00:29:41,246 --> 00:29:44,182 REVISION TO THE HISTORICAL DATA 675 00:29:44,182 --> 00:29:45,984 GOING BACK. UM, AND THEN THE 676 00:29:45,984 --> 00:29:50,488 LAST, UH, LAST LINE THAT, UH, 677 00:29:50,488 --> 00:29:53,091 LIKE I SAID, REVISION IMPROVED 678 00:29:53,091 --> 00:29:56,161 THE 2026, UH, JOB GROWTH 679 00:29:56,161 --> 00:29:58,563 SLIGHTLY STILL HOVERS AROUND 680 00:29:58,563 --> 00:30:00,865 ZERO. AND THAT ESSENTIALLY FLAT 681 00:30:00,865 --> 00:30:02,267 EMPLOYMENT IS ALSO EXPECTED IN 682 00:30:02,267 --> 00:30:06,805 THE NEXT YEAR. UM, AND AND THE 683 00:30:06,805 --> 00:30:09,807 REGIONAL ECONOMY WOULD GO 684 00:30:09,807 --> 00:30:11,876 SIGNIFICANTLY BEYOND ITS 685 00:30:11,876 --> 00:30:12,510 PRE-PANDEMIC EMPLOYMENT LEVELS. 686 00:30:12,510 --> 00:30:15,313 ONLY IN 2028. SO NEXT YEAR, IT 687 00:30:15,313 --> 00:30:19,150 DOESN'T LOOK LIKE A YEAR WITH A 688 00:30:19,150 --> 00:30:20,952 STRONG EMPLOYMENT GROWTH IS JUST 689 00:30:20,952 --> 00:30:22,020 HARD TO SEE WHERE THAT GROWTH 690 00:30:22,020 --> 00:30:24,956 WOULD BE COMING FROM, GIVEN THE 691 00:30:24,956 --> 00:30:27,926 RECENTLY ANNOUNCED LAYOFFS AND 692 00:30:27,926 --> 00:30:28,393 OVERALL HIGH ECONOMIC 693 00:30:28,393 --> 00:30:31,229 UNCERTAINTY THE PESSIMISTIC 694 00:30:31,229 --> 00:30:32,163 SCENARIO IS SIMILAR TO WHAT IT 695 00:30:32,163 --> 00:30:36,334 LOOKED LIKE FOR THE US ECONOMY. 696 00:30:36,334 --> 00:30:39,237 NOTABLE JOB LOSSES UH, ROUGHLY 697 00:30:39,237 --> 00:30:42,040 3.2% JOBS LOST BETWEEN THE 698 00:30:42,040 --> 00:30:44,108 SECOND HALF OF 26 AND THE THIRD 699 00:30:44,108 --> 00:30:47,478 QUARTER OF 27. THAT'S ROUGHLY 700 00:30:47,478 --> 00:30:49,948 58,000 JOBS IN THE REGIONAL 701 00:30:49,948 --> 00:30:53,551 ECONOMY. AND THEN IT WOULD NOT 702 00:30:53,551 --> 00:30:56,087 BE A LONG LASTING RECESSION IN 703 00:30:56,087 --> 00:30:58,756 THESE FORECAST. THOSE JOB LOSSES 704 00:30:58,756 --> 00:31:00,992 WOULD BE RECOVERED REASONABLY 705 00:31:00,992 --> 00:31:02,393 QUICKLY. AND THAT MEANS STILL, 706 00:31:02,393 --> 00:31:05,663 BY THE END OF 2029. SO NOT NOT 707 00:31:05,663 --> 00:31:09,934 QUICKLY ENOUGH IN SOME SENSE. 708 00:31:09,934 --> 00:31:13,304 FINALLY, THE LAST THING WHEN IT 709 00:31:13,304 --> 00:31:14,939 COMES TO THE UPDATED ECONOMIC 710 00:31:14,939 --> 00:31:17,408 FORECAST, THIS IS WHAT THE 711 00:31:17,408 --> 00:31:18,843 INFLATION FORECAST LOOKED LIKE 712 00:31:18,843 --> 00:31:20,845 IN APRIL. SIMILARLY TO WHAT WE 713 00:31:20,845 --> 00:31:23,948 SAW FOR THE US FORECAST, WE HAVE 714 00:31:23,948 --> 00:31:25,950 REVISED IT UP, UH, IN AUGUST. 715 00:31:25,950 --> 00:31:29,254 UM, TO TO INCORPORATE THE ACTUAL 716 00:31:29,254 --> 00:31:30,822 IMPACT OF, UH, OF OIL PRICES AND 717 00:31:30,822 --> 00:31:33,858 WHAT WE ACTUALLY HAVE SEEN IN 718 00:31:33,858 --> 00:31:38,029 THE INFLATION DATA REPORTED BY 719 00:31:38,029 --> 00:31:42,433 BLS. UM, AND THEN BECAUSE, UH, 720 00:31:42,433 --> 00:31:44,936 SUMMER AND THE THIRD QUARTER, 721 00:31:44,936 --> 00:31:45,536 THE AUGUST READING WAS LOWER 722 00:31:45,536 --> 00:31:48,940 THAN OUR AUGUST FORECAST, UH, 723 00:31:48,940 --> 00:31:50,508 AFTER IT WAS RELEASED IN 724 00:31:50,508 --> 00:31:51,109 SEPTEMBER, THE INFLATION FOR 725 00:31:51,109 --> 00:31:52,343 AUGUST WAS ACTUALLY LOWER THAN 726 00:31:52,343 --> 00:31:53,244 WHAT WE WERE PREDICTING IT TO 727 00:31:53,244 --> 00:31:58,016 BE. UM, IN THE EARLY AUGUST 728 00:31:58,016 --> 00:31:59,784 FORECAST, SIMILARLY TO WHAT WE 729 00:31:59,784 --> 00:32:01,920 HAVE SEEN IN THE US INFLATION 730 00:32:01,920 --> 00:32:04,489 DATA, THE CURRENT FORECAST 731 00:32:04,489 --> 00:32:07,292 REVISES THE BASELINE OUTLOOK 732 00:32:07,292 --> 00:32:16,868 DOWN. UM, BY ABOUT 0.2. UH OH 733 00:32:16,868 --> 00:32:19,504 GEEZ. UM, BUT, UH, BUT IT'S NOT 734 00:32:19,504 --> 00:32:22,540 A SIGNIFICANTLY ROSIER OUTLOOK. 735 00:32:22,540 --> 00:32:25,877 I WOULDN'T REALLY CALL IT THAT. 736 00:32:25,877 --> 00:32:29,447 UM, AND THEN THE PESSIMISTIC 737 00:32:29,447 --> 00:32:31,683 SCENARIO THAT ONE IS, UH, IS THE 738 00:32:31,683 --> 00:32:34,585 ONE WHERE WE WOULD SEE, UH, MORE 739 00:32:34,585 --> 00:32:37,221 OF A PICKUP IN THE FOURTH 740 00:32:37,221 --> 00:32:40,992 QUARTER OF 2024. UM, THE ACTUAL 741 00:32:40,992 --> 00:32:41,526 OUTCOME WILL BE PROBABLY 742 00:32:41,526 --> 00:32:42,927 SOMEWHERE IN BETWEEN THOSE BASED 743 00:32:42,927 --> 00:32:44,462 ON WHAT THINGS LOOK LIKE RIGHT 744 00:32:44,462 --> 00:32:46,531 NOW. THAT SAID, THERE'S 745 00:32:46,531 --> 00:32:49,634 OBVIOUSLY A LOT OF RISKS THERE. 746 00:32:49,634 --> 00:32:51,436 IT'S HARD TO TELL HOW THE 747 00:32:51,436 --> 00:32:52,804 SITUATION IN IRAN WILL REALLY 748 00:32:52,804 --> 00:32:54,238 PLAY OUT, WHAT MIGHT HAPPEN TO 749 00:32:54,238 --> 00:32:56,007 OIL PRICES. JUST LOTS AND LOTS 750 00:32:56,007 --> 00:32:59,277 OF UNCERTAINTY THERE. UM, SO 751 00:32:59,277 --> 00:33:01,412 WITH THAT, I'M HAPPY TO TAKE 752 00:33:01,412 --> 00:33:03,548 ANY QUESTIONS ABOUT THE ECONOMIC 753 00:33:03,548 --> 00:33:03,815 OUTLOOK. 754 00:33:03,815 --> 00:33:05,149 -- THANK YOU DIRECTOR. AND I GOT 755 00:33:05,149 --> 00:33:06,384 SO EXCITED FOR YOUR 756 00:33:06,384 --> 00:33:07,585 PRESENTATION. I FORGOT TO 757 00:33:07,585 --> 00:33:09,020 INTRODUCE THE TABLE. WE HAVE ONE 758 00:33:09,020 --> 00:33:10,621 NEW PERSON WITH US TODAY. UH, 759 00:33:10,621 --> 00:33:12,523 YOU'VE ALSO GOT SEAN FROM YOUR 760 00:33:12,523 --> 00:33:13,758 OFFICE. SEAN, ALWAYS GREAT TO 761 00:33:13,758 --> 00:33:17,328 SEE YOU. UH, FROM CBO. WE HAVE 762 00:33:17,328 --> 00:33:18,663 JOE, WE ALWAYS GOOD TO SEE YOU. 763 00:33:18,663 --> 00:33:20,064 UM, ALEX, ALWAYS GOOD TO SEE 764 00:33:20,064 --> 00:33:22,767 YOU. AND WE NOW HAVE MATT. MATT, 765 00:33:22,767 --> 00:33:23,901 WELCOME TO THE TABLE. IT SOUNDS 766 00:33:23,901 --> 00:33:25,370 LIKE YOU STARTED IN JULY, SO, 767 00:33:25,370 --> 00:33:27,705 UH, REALLY HAPPY TO HAVE YOU 768 00:33:27,705 --> 00:33:28,339 HERE WITH THAT. COLLEAGUES. ARE 769 00:33:28,339 --> 00:33:30,308 THERE ANY QUESTIONS ABOUT THE 770 00:33:30,308 --> 00:33:36,714 GENERAL ECONOMIC SITUATION OR 771 00:33:36,714 --> 00:33:39,417 STATEMENTS? NO, I'LL JUST SHARE 772 00:33:39,417 --> 00:33:40,818 MY REFLECTIONS AND JOHN, 773 00:33:40,818 --> 00:33:43,454 DIRECTOR, I ALWAYS APPRECIATE 774 00:33:43,454 --> 00:33:45,289 YOUR ANALYSIS HERE, ESPECIALLY 775 00:33:45,289 --> 00:33:47,392 THIS TIME LOOKING AT PULLING IN 776 00:33:47,392 --> 00:33:49,427 THE CEASE FIRE OF THE WAR INTO 777 00:33:49,427 --> 00:33:51,496 YOUR ANALYSIS. BECAUSE ACROSS 778 00:33:51,496 --> 00:33:55,066 OUR ECONOMIC SPECTRUM, THIS WAR 779 00:33:55,066 --> 00:33:55,666 WITH IRAN THAT WAS UNPROVOKED 780 00:33:55,666 --> 00:33:58,603 AND UNNECESSARY HAS COMPLETELY 781 00:33:58,603 --> 00:34:03,274 DISRUPTED WHAT WAS A SLOW GROWTH 782 00:34:03,274 --> 00:34:03,908 ECONOMY INTO SOMETHING THAT IS 783 00:34:03,908 --> 00:34:06,511 COMPLETELY UNKNOWN AT THIS TIME. 784 00:34:06,511 --> 00:34:07,111 WE'RE SEEING THOSE IMPACTS 785 00:34:07,111 --> 00:34:08,312 ACROSS THE DIESEL SECTOR, BUT 786 00:34:08,312 --> 00:34:10,415 THEN ALSO FLOATING INTO EVERY 787 00:34:10,415 --> 00:34:13,217 OTHER ASPECT OF OUR LIFE. IN 788 00:34:13,217 --> 00:34:14,919 ADDITION, WE'RE SEEING THE 789 00:34:14,919 --> 00:34:16,020 STOCK MARKET MAKE HUGE GAINS IN 790 00:34:16,020 --> 00:34:17,155 THESE LAST COUPLE OF WEEKS, BUT 791 00:34:17,155 --> 00:34:20,358 IT SEEMS LIKE IT REALLY COULD BE 792 00:34:20,358 --> 00:34:22,593 THAT A BUBBLE THAT MAY FINALLY 793 00:34:22,593 --> 00:34:24,228 BURST, BECAUSE WE'VE ALSO SEEN 794 00:34:24,228 --> 00:34:26,130 SOME PRETTY BIG DROPS. AND SO 795 00:34:26,130 --> 00:34:27,799 IT'S YOU ALWAYS CHOOSE THE BEST 796 00:34:27,799 --> 00:34:31,335 WEEK TO DO THESE, UH, REVENUE 797 00:34:31,335 --> 00:34:32,503 FORECASTS. I THINK IN THE LAST 798 00:34:32,503 --> 00:34:34,639 COUPLE REVENUE FORECASTS, WE'VE 799 00:34:34,639 --> 00:34:37,475 HAD UM, SOME OTHER WARS AND 800 00:34:37,475 --> 00:34:38,543 SOME, I MEAN, IT SEEMS LIKE 801 00:34:38,543 --> 00:34:40,211 EVERY TIME WE GET, WE GET 802 00:34:40,211 --> 00:34:42,346 TOGETHER, THERE'S SOMETHING THAT 803 00:34:42,346 --> 00:34:43,781 GOES WRONG IN THE US ECONOMY. 804 00:34:43,781 --> 00:34:44,916 THE WEEK BEFORE. UH, ANYTHING 805 00:34:44,916 --> 00:34:46,050 YOU WANT TO I SEE MAYBE WANT TO 806 00:34:46,050 --> 00:34:47,852 SHARE SOMETHING TO THAT. 807 00:34:47,852 --> 00:34:50,988 -- THAT'S CERTAINLY TRUE. IT 808 00:34:50,988 --> 00:34:51,556 SEEMS LIKE WASHINGTON STATE 809 00:34:51,556 --> 00:34:52,156 ECONOMIC AND REVENUE FORECAST 810 00:34:52,156 --> 00:34:52,757 COUNCIL IS BETTER IN TIMING 811 00:34:52,757 --> 00:34:54,792 THEIR FORECASTS. UM, AND I'M 812 00:34:54,792 --> 00:34:56,060 ESPECIALLY WORRIED ABOUT THE 813 00:34:56,060 --> 00:34:58,863 APRIL BECAUSE LAST APRIL, APRIL 814 00:34:58,863 --> 00:35:02,033 25th, IT WAS, UH, THE TARIFFS 815 00:35:02,033 --> 00:35:03,668 THIS APRIL, IT WAS THE WAR. SO 816 00:35:03,668 --> 00:35:06,137 YEAH, IT'S SIX MONTHS FROM NOW 817 00:35:06,137 --> 00:35:07,872 AND A LOT MIGHT HAPPEN BY THEN. 818 00:35:07,872 --> 00:35:08,940 -- SO AND. 819 00:35:08,940 --> 00:35:09,640 -- THERE'S, THERE'S CERTAINLY 820 00:35:09,640 --> 00:35:11,375 CONCERNS THERE. YES. 821 00:35:11,375 --> 00:35:14,312 -- AND ALL OF THOSE THINGS HAVE 822 00:35:14,312 --> 00:35:14,879 BEEN SELF-INDUCED FROM THE 823 00:35:14,879 --> 00:35:17,081 UNITED STATES, AS IS A NATIONAL 824 00:35:17,081 --> 00:35:18,950 ECONOMY, WHICH IS REALLY QUITE 825 00:35:18,950 --> 00:35:20,384 UNFORTUNATE BECAUSE AS THIS 826 00:35:20,384 --> 00:35:21,719 CURRENT FEDERAL ADMINISTRATION 827 00:35:21,719 --> 00:35:22,753 CAME INTO PLACE, WE WERE ALL 828 00:35:22,753 --> 00:35:23,988 LOOKING AT SLOW GROWTH COMING 829 00:35:23,988 --> 00:35:25,990 OUT OF THE PANDEMIC, AND WE'VE 830 00:35:25,990 --> 00:35:27,992 SEEN BURSTS, BUT THEN ALSO HUGE 831 00:35:27,992 --> 00:35:29,827 DROPS. AND THAT'S LED TO THE 832 00:35:29,827 --> 00:35:31,028 INFLATION SITUATION THAT WE HAVE 833 00:35:31,028 --> 00:35:35,633 GOING ON RIGHT NOW ON SLIDE SIX. 834 00:35:35,633 --> 00:35:37,502 I GUESS THERE WAS ONE SLIDE. 835 00:35:37,502 --> 00:35:41,272 LET'S GO BACK TO THIS ONE 836 00:35:41,272 --> 00:35:51,716 ABOUT. WAS IT? SLIDE TEN. 837 00:35:53,351 --> 00:35:53,518 -- UH. 838 00:35:53,518 --> 00:35:55,219 -- THIS ONE I THINK REALLY JUST 839 00:35:55,219 --> 00:35:57,788 SHOWS WHERE WE ARE TODAY IN A 840 00:35:57,788 --> 00:35:59,290 REALLY MEANINGFUL WAY. AND 841 00:35:59,290 --> 00:36:01,125 THAT'S WE'RE AT A FLAT LINE. 842 00:36:01,125 --> 00:36:02,727 UM, WE'VE BEEN AT A FLAT LINE 843 00:36:02,727 --> 00:36:05,463 FOR A NUMBER OF YEARS WITH THE 844 00:36:05,463 --> 00:36:06,898 HOPES TO, UH, INCREASE, YOU 845 00:36:06,898 --> 00:36:10,168 KNOW, THIS IS BOTH REAL. LET'S 846 00:36:10,168 --> 00:36:13,471 SEE. I'M SORRY, WE HAVE 847 00:36:13,471 --> 00:36:15,439 DIFFERENT SIDES. OH, HE DOESN'T 848 00:36:15,439 --> 00:36:18,009 PUT THE PESSIMISTIC UP THERE. 849 00:36:18,009 --> 00:36:20,711 YEAH, YEAH. SO WITH GDP AND 850 00:36:20,711 --> 00:36:23,414 EMPLOYMENT HERE, UM, YOU KNOW, 851 00:36:23,414 --> 00:36:24,482 WE'RE REALLY SEEING THIS FLAT 852 00:36:24,482 --> 00:36:27,485 LINE THAT'S OCCURRING. AND FOR 853 00:36:27,485 --> 00:36:28,753 SEVERAL YEARS NOW WE'VE BEEN 854 00:36:28,753 --> 00:36:31,255 EITHER WARNED OR WARNING THAT WE 855 00:36:31,255 --> 00:36:32,957 WERE GOING TO HIT EITHER A 856 00:36:32,957 --> 00:36:35,259 RECESSION. IT'S GOOD TO SEE THAT 857 00:36:35,259 --> 00:36:36,761 THAT HAS DROPPED 1%, BUT THAT, 858 00:36:36,761 --> 00:36:38,362 YOU KNOW, PROBABILITY OF 859 00:36:38,362 --> 00:36:40,431 RECESSION HAS BEEN HIGH AT 860 00:36:40,431 --> 00:36:42,600 TIMES. AND, YOU KNOW, WE'VE ALL 861 00:36:42,600 --> 00:36:43,134 BEEN HOPING FOR THIS SLOW 862 00:36:43,134 --> 00:36:45,303 GROWTH. BUT THIS SLIDE TEN 863 00:36:45,303 --> 00:36:46,804 REALLY SHOWS HOW MUCH OF A 864 00:36:46,804 --> 00:36:48,873 FLATLINE WE'RE AT RIGHT NOW. 865 00:36:48,873 --> 00:36:51,909 UM, ON SLIDE SIX, I JUST KIND OF 866 00:36:51,909 --> 00:36:54,278 CALLING OUT WHAT IS DRIVING OUR 867 00:36:54,278 --> 00:36:58,049 OWN ECONOMY. UM, A NUMBER OF 868 00:36:58,049 --> 00:36:58,649 DIFFERENT TIMES THROUGH THIS 869 00:36:58,649 --> 00:36:59,817 BUDGET PROCESS AND THROUGH THE 870 00:36:59,817 --> 00:37:01,185 SEVEN YEAR LOOK BACK AND ALL THE 871 00:37:01,185 --> 00:37:03,154 REST, YOU KNOW, WE ASK, HOW DID 872 00:37:03,154 --> 00:37:04,822 WE GET INTO A STRUCTURAL BUDGET 873 00:37:04,822 --> 00:37:08,159 DEFICIT? YES, ALL 281 CITIES AND 874 00:37:08,159 --> 00:37:10,394 TOWNS IN THE STATE ARE IN A 875 00:37:10,394 --> 00:37:10,928 STRUCTURAL BUDGET DEFICIT 876 00:37:10,928 --> 00:37:12,430 BECAUSE OF THE WAY THE STATE 877 00:37:12,430 --> 00:37:13,898 PROPERTY TAX STRUCTURE IS 878 00:37:13,898 --> 00:37:14,932 STRUCTURED. ANYHOW, SEATTLE DOES 879 00:37:14,932 --> 00:37:17,034 HAVE MORE LEVIES. THAT HELPS US 880 00:37:17,034 --> 00:37:19,136 CLOSE THOSE GAPS. BUT AT THE 881 00:37:19,136 --> 00:37:21,472 SAME TIME, HOW DID WE GET INTO 882 00:37:21,472 --> 00:37:22,106 THIS STRUCTURAL BUDGET DEFICIT? 883 00:37:22,106 --> 00:37:25,810 IT'S TEN YEARS OF HIGH GROWTH 884 00:37:25,810 --> 00:37:26,410 NOW EXPERIENCING VERY LITTLE 885 00:37:26,410 --> 00:37:29,680 GROWTH. AND THIS SLIDE FOR ME 886 00:37:29,680 --> 00:37:31,482 TELLS THE STORY OF HOW DO WE GET 887 00:37:31,482 --> 00:37:34,752 OUT OF IT? OR WHAT DO WE NEED TO 888 00:37:34,752 --> 00:37:37,655 DO? I JUST HIGHLIGHT THAT 889 00:37:37,655 --> 00:37:39,757 MANUFACTURING HERE IN SEATTLE IS 890 00:37:39,757 --> 00:37:40,825 OUTPACING THE NATIONAL AVERAGE, 891 00:37:40,825 --> 00:37:42,693 AS WELL AS LEISURE AND 892 00:37:42,693 --> 00:37:44,262 HOSPITALITY. SO WHILE WE HAVE 893 00:37:44,262 --> 00:37:45,496 DOWNTOWN OFFICE SPACE THAT GOES 894 00:37:45,496 --> 00:37:47,064 UNRENTED, WHICH IMPACTS OUR 895 00:37:47,064 --> 00:37:48,899 COMMERCIAL PARKING TAX, IT 896 00:37:48,899 --> 00:37:51,302 IMPACTS OUR SALES TAX, IT 897 00:37:51,302 --> 00:37:53,604 IMPACTS SO MUCH. BUT IF WE 898 00:37:53,604 --> 00:37:55,473 DIDN'T HAVE THESE CRUISE SHIPS 899 00:37:55,473 --> 00:37:58,242 DOWN HERE, OUR DOWNTOWN WOULD BE 900 00:37:58,242 --> 00:38:00,144 HOLLOWED OUT. AND I JUST SAY 901 00:38:00,144 --> 00:38:01,412 THAT BECAUSE AS A BORN AND 902 00:38:01,412 --> 00:38:03,648 RAISED SEATTLEITE, I WAS ALWAYS 903 00:38:03,648 --> 00:38:04,248 SKEPTICAL OF THE CRUISE SHIPS 904 00:38:04,248 --> 00:38:05,816 COMING IN AT FIRST. AND MY GOSH, 905 00:38:05,816 --> 00:38:08,219 IT IS WHAT IS KEEPING DOWNTOWN 906 00:38:08,219 --> 00:38:09,954 FLOATING RIGHT NOW. AND SO I 907 00:38:09,954 --> 00:38:11,956 JUST NOTE THAT. BUT THEN ALSO 908 00:38:11,956 --> 00:38:14,892 MANUFACTURING, IT'S THE 909 00:38:14,892 --> 00:38:16,494 SLEEPIEST INDUSTRIES IN OUR 910 00:38:16,494 --> 00:38:17,962 CITY. IT'S THE INDUSTRIES THAT 911 00:38:17,962 --> 00:38:19,864 HAVE GRAY WALLS AND NO WINDOWS 912 00:38:19,864 --> 00:38:21,232 AND BIG TALL FENCES THAT YOU 913 00:38:21,232 --> 00:38:22,867 CAN'T SEE BEHIND. AND IT ALWAYS 914 00:38:22,867 --> 00:38:23,834 LOOKS LIKE THERE MIGHT BE 915 00:38:23,834 --> 00:38:24,535 NOTHING GOING ON ON THE OTHER 916 00:38:24,535 --> 00:38:27,405 SIDE OF THAT WALL OR FENCE, BUT 917 00:38:27,405 --> 00:38:29,774 HERE IT SHOWS IT'S WHAT'S 918 00:38:29,774 --> 00:38:30,374 BUOYING OUR REVENUE FORECAST 919 00:38:30,374 --> 00:38:32,143 TODAY. SO I JUST WANTED TO CALL 920 00:38:32,143 --> 00:38:34,512 THOSE THINGS OUT. UM, CAN YOU 921 00:38:34,512 --> 00:38:35,946 HELP ME UNDERSTAND THE WHOLESALE 922 00:38:35,946 --> 00:38:37,815 RETAIL? IS THIS JUST BECAUSE 923 00:38:37,815 --> 00:38:38,849 PEOPLE ARE BUYING ONLINE MORE? 924 00:38:38,849 --> 00:38:40,985 OR IS IT THAT WE DON'T HAVE 925 00:38:40,985 --> 00:38:42,420 ENOUGH COSTCOS IN TOWN? WHAT'S 926 00:38:42,420 --> 00:38:45,022 GOING ON HERE? YEAH, SURE. 927 00:38:45,022 --> 00:38:47,324 -- UM, SO FOR WHOLESALE AND 928 00:38:47,324 --> 00:38:48,759 RETAIL TRADE, UH, THE EMPLOYMENT 929 00:38:48,759 --> 00:38:53,631 HAS BEEN IN DECLINE OVER SOME 930 00:38:53,631 --> 00:38:54,265 TIME ALREADY BEFORE THAT HAS TO 931 00:38:54,265 --> 00:38:57,735 DO WITH A SHIFT TO PEOPLE BUYING 932 00:38:57,735 --> 00:39:00,638 ONLINE. UM, SO LESS EMPLOYMENT 933 00:39:00,638 --> 00:39:04,075 NEEDED IN BRICK AND MORTAR. UM, 934 00:39:04,075 --> 00:39:07,912 THERE HAS BEEN, UH, SOME, SOME 935 00:39:07,912 --> 00:39:08,979 ADVANCES IN, IN TECHNOLOGY AND 936 00:39:08,979 --> 00:39:11,749 SOME AUTOMATION THAT HELP TO, 937 00:39:11,749 --> 00:39:13,651 UH, INCREASE THE INCREASE THE 938 00:39:13,651 --> 00:39:16,454 PRODUCTIVITY. AND SO BUSINESSES, 939 00:39:16,454 --> 00:39:18,189 ESPECIALLY BECAUSE THEY ARE 940 00:39:18,189 --> 00:39:20,458 FACING HIGHER COST. UM, UM, THE 941 00:39:20,458 --> 00:39:22,293 INFLATION HAS BEEN HIGH ALREADY 942 00:39:22,293 --> 00:39:24,195 BEFORE. UM, AND IT'S EVEN WORSE 943 00:39:24,195 --> 00:39:28,199 NOW WITH THE HIGH OIL PRICES. 944 00:39:28,199 --> 00:39:28,833 THOSE COMPANIES ARE LOOKING FOR 945 00:39:28,833 --> 00:39:30,434 A WAY TO CUT THEIR COST. AND SO 946 00:39:30,434 --> 00:39:33,938 WHEN THEY CAN AUTOMATE, THEY DO. 947 00:39:33,938 --> 00:39:35,072 UM, SO THERE HAS BEEN 948 00:39:35,072 --> 00:39:37,375 ADDITIONAL, UH, SOME LAYOFFS 949 00:39:37,375 --> 00:39:38,743 ANNOUNCED IN THAT SECTOR, NOT AS 950 00:39:38,743 --> 00:39:39,944 BIG AS LAYOFFS IN THE TECH 951 00:39:39,944 --> 00:39:42,613 SECTOR. AND THEY DEFINITELY 952 00:39:42,613 --> 00:39:43,914 DIDN'T MAKE HEADLINES AS, UH, 953 00:39:43,914 --> 00:39:45,883 AS OTHER ONES. UM, BUT THOSE 954 00:39:45,883 --> 00:39:47,518 WOULD BE A COUPLE OF REASONS 955 00:39:47,518 --> 00:39:49,787 THAT, UH, WHY WE SEE WHAT WE ARE 956 00:39:49,787 --> 00:39:50,421 SEEING HERE. 957 00:39:50,421 --> 00:39:51,288 -- I WANT TO TEASE OUT WHAT YOU 958 00:39:51,288 --> 00:39:52,723 WERE SAYING ABOUT AUTOMATION. 959 00:39:52,723 --> 00:39:56,293 YOU'RE NOT TALKING ABOUT AI, 960 00:39:56,293 --> 00:39:56,560 CORRECT. 961 00:39:56,560 --> 00:39:57,495 -- UM. 962 00:39:57,495 --> 00:39:58,629 -- AND THE REASON I ASK THAT 963 00:39:58,629 --> 00:39:59,764 BECAUSE WHEN YOU TALKED ABOUT 964 00:39:59,764 --> 00:40:01,298 THE TECH SECTOR HAVING THEIR 965 00:40:01,298 --> 00:40:02,266 DIFFERENT SET OF LAYOFFS, THAT I 966 00:40:02,266 --> 00:40:03,834 ASSUME THAT THAT IS MORE CLOSELY 967 00:40:03,834 --> 00:40:04,869 TIED TO AI, WHICH IS ALSO 968 00:40:04,869 --> 00:40:06,170 OCCURRING. BUT WHEN YOU'RE 969 00:40:06,170 --> 00:40:07,538 TALKING ABOUT AUTOMATION, YOU'RE 970 00:40:07,538 --> 00:40:10,040 TALKING ABOUT COMPUTERS. TAKE 971 00:40:10,040 --> 00:40:10,841 SELF-CHECKOUTS AT THE GROCERY 972 00:40:10,841 --> 00:40:11,442 STORE. IS THAT WHAT YOU'RE 973 00:40:11,442 --> 00:40:11,809 TALKING ABOUT? 974 00:40:11,809 --> 00:40:13,544 -- THAT WOULD BE THE KIND OF 975 00:40:13,544 --> 00:40:14,612 THING WITH AI. IT'S STILL A 976 00:40:14,612 --> 00:40:16,514 LITTLE BIT TOO EARLY TO TELL 977 00:40:16,514 --> 00:40:19,250 WHAT EXACTLY THE IMPACT ON THE 978 00:40:19,250 --> 00:40:21,385 OVERALL EMPLOYMENT IS. THERE 979 00:40:21,385 --> 00:40:23,020 CERTAINLY, UM, LESS HIRING. SO 980 00:40:23,020 --> 00:40:24,155 COMPANIES ARE STILL TRYING TO 981 00:40:24,155 --> 00:40:25,990 FIGURE OUT WHAT THAT MIGHT MEAN 982 00:40:25,990 --> 00:40:27,858 FOR, FOR THEIR EMPLOYMENT. 983 00:40:27,858 --> 00:40:28,959 CERTAINLY A BIGGER FACTOR FOR 984 00:40:28,959 --> 00:40:31,796 THE TECH SECTOR. LIKE YOU SAID. 985 00:40:31,796 --> 00:40:34,398 SO, BUT STILL, EVEN IN IN RETAIL 986 00:40:34,398 --> 00:40:37,668 TRADING, THOSE, UH, COMPANIES 987 00:40:37,668 --> 00:40:39,737 HAVE ALL SORTS OF JOBS, NOT JUST 988 00:40:39,737 --> 00:40:43,340 PEOPLE WHO ARE PHYSICALLY THERE 989 00:40:43,340 --> 00:40:43,941 IN THE STORE, BUT, UM, THEY, 990 00:40:43,941 --> 00:40:46,710 THEY ARE CORPORATE OFFICES, THEY 991 00:40:46,710 --> 00:40:49,213 ARE HR, UM, LAWYERS, UM, THOSE 992 00:40:49,213 --> 00:40:51,148 KIND OF, UH, THERE ARE LOTS OF 993 00:40:51,148 --> 00:40:52,950 TASKS THAT CAN BE AUTOMATED THAT 994 00:40:52,950 --> 00:40:55,920 MIGHT BE, UM, DONE BY AI OR AI 995 00:40:55,920 --> 00:40:58,122 CAN, MIGHT HELP DO IT FASTER. 996 00:40:58,122 --> 00:40:59,557 AND THERE IS CERTAINLY A LOT OF 997 00:40:59,557 --> 00:41:02,059 HOPE THAT IT WILL DO THAT IN THE 998 00:41:02,059 --> 00:41:04,228 FUTURE. SO LESS HIRING. WOULD 999 00:41:04,228 --> 00:41:05,696 THAT ALSO MEAN THAT WE ARE 1000 00:41:05,696 --> 00:41:06,330 SEEING LESS EMPLOYMENT GROWTH? 1001 00:41:06,330 --> 00:41:09,967 SO EVEN IF THERE AREN'T LAYOFFS, 1002 00:41:09,967 --> 00:41:12,203 LESS HIRING CAN LEAD TO SLOWER 1003 00:41:12,203 --> 00:41:13,637 GROWTH BECAUSE SOME PEOPLE WILL 1004 00:41:13,637 --> 00:41:16,507 BE RETIRING. SOME PEOPLE MIGHT 1005 00:41:16,507 --> 00:41:17,241 DECIDE THAT THIS IS A GOOD TIME 1006 00:41:17,241 --> 00:41:19,243 TO DO IT. 1007 00:41:19,243 --> 00:41:19,743 -- COMPUTERS ARE TAKING 1008 00:41:19,743 --> 00:41:23,347 PEOPLE'S JOBS 1009 00:41:23,347 --> 00:41:23,914 -- THEY'RE CERTAINLY SOME 1010 00:41:23,914 --> 00:41:25,749 WORRIES THAT THAT IS GOING TO BE 1011 00:41:25,749 --> 00:41:28,018 THERE'S GOING TO BE POTENTIALLY 1012 00:41:28,018 --> 00:41:28,519 BIG DISRUPTION. AND THE 1013 00:41:28,519 --> 00:41:30,554 UNCERTAINTY IS VERY LARGE. IT 1014 00:41:30,554 --> 00:41:33,791 CAN BE A SIGNIFICANT DISRUPTION 1015 00:41:33,791 --> 00:41:36,360 IN IN JOB MARKET. YES. 1016 00:41:36,360 --> 00:41:36,894 -- VICE CHAIR ELLENBERG. 1017 00:41:36,894 --> 00:41:37,661 -- YEAH, GREAT. THANK YOU VERY 1018 00:41:37,661 --> 00:41:38,596 MUCH. THIS IS REALLY 1019 00:41:38,596 --> 00:41:39,830 INTERESTING. I JUST WANTED TO 1020 00:41:39,830 --> 00:41:42,533 ASK IN THIS HOST. HOST, EXCUSE 1021 00:41:42,533 --> 00:41:43,601 ME, WHOLESALE RETAIL TRADE LINE. 1022 00:41:43,601 --> 00:41:45,302 IS THERE SOMETHING ABOUT OUR 1023 00:41:45,302 --> 00:41:47,137 REGION THAT MAKES US MORE 1024 00:41:47,137 --> 00:41:48,639 SUSCEPTIBLE TO THAT? BECAUSE I 1025 00:41:48,639 --> 00:41:50,708 THINK, RIGHT. I MEAN, I WOULD 1026 00:41:50,708 --> 00:41:52,209 ASSUME THAT WHETHER YOU'RE HERE 1027 00:41:52,209 --> 00:41:53,677 OR YOU'RE IN TOPEKA, KANSAS, 1028 00:41:53,677 --> 00:41:55,613 RIGHT? THAT SHIFT IS GENERALLY 1029 00:41:55,613 --> 00:41:57,248 OCCURRING. BUT WE SEE SOMETHING 1030 00:41:57,248 --> 00:42:00,951 LIKE 4 OR 5 TIMES THAT SHIFT 1031 00:42:00,951 --> 00:42:03,220 FROM TECHNOLOGY OR, YOU KNOW, IN 1032 00:42:03,220 --> 00:42:04,421 THE WHOLESALE RETAIL AREA. 1033 00:42:04,421 --> 00:42:05,523 -- YEAH, WE HAVE TO LOOK A 1034 00:42:05,523 --> 00:42:06,824 LITTLE BIT DEEPER INTO THAT. UH, 1035 00:42:06,824 --> 00:42:10,694 THERE ARE CERTAINLY LARGE 1036 00:42:10,694 --> 00:42:11,195 REVISIONS BETWEEN THOSE 1037 00:42:11,195 --> 00:42:12,263 FORECASTS THAT WE ARE 1038 00:42:12,263 --> 00:42:14,365 PRESENTING. SO, UM, WE'LL, 1039 00:42:14,365 --> 00:42:16,433 WE'LL LOOK INTO IT. UH, IT'S 1040 00:42:16,433 --> 00:42:17,835 POSSIBLE THAT SOME OF THOSE JOB 1041 00:42:17,835 --> 00:42:19,703 LOSSES WILL BE REVISED, BUT THE 1042 00:42:19,703 --> 00:42:23,007 ESD DOES IS THEY USE THE 1043 00:42:23,007 --> 00:42:26,644 ADMINISTRATIVE DATA. UM, EVERY 1044 00:42:26,644 --> 00:42:27,244 QUARTER WHEN THEY RECEIVE THE 1045 00:42:27,244 --> 00:42:27,945 UNEMPLOYMENT INSURANCE DATA, 1046 00:42:27,945 --> 00:42:29,980 THEY UPDATE THEIR EMPLOYMENT 1047 00:42:29,980 --> 00:42:31,749 ESTIMATES, UM, THAT ARE 1048 00:42:31,749 --> 00:42:33,550 PREVIOUSLY BASED ON JUST SOME 1049 00:42:33,550 --> 00:42:34,685 SMALL SAMPLE SURVEY. UM, AND SO 1050 00:42:34,685 --> 00:42:36,320 RIGHT NOW WHAT THEY DO HAVE IS 1051 00:42:36,320 --> 00:42:38,255 THAT ADMINISTRATIVE DATA ONLY 1052 00:42:38,255 --> 00:42:40,557 FOR THE FIRST QUARTER OF 2026. 1053 00:42:40,557 --> 00:42:43,694 UM, SO WHEN THEY WILL RECEIVE, 1054 00:42:43,694 --> 00:42:45,629 UH, THE SECOND QUARTER 1055 00:42:45,629 --> 00:42:48,065 ADMINISTRATIVE DATA, THEY WILL 1056 00:42:48,065 --> 00:42:49,867 PROVIDE MORE PRECISE ESTIMATE 1057 00:42:49,867 --> 00:42:50,868 WHAT WAS ACTUALLY GOING ON IN 1058 00:42:50,868 --> 00:42:52,436 THE FIRST HALF OF 2026. BUT 1059 00:42:52,436 --> 00:42:53,771 YEAH, THAT'S CERTAINLY SOMETHING 1060 00:42:53,771 --> 00:42:56,173 WE WANT TO INVESTIGATE. YES. 1061 00:42:56,173 --> 00:42:56,840 -- YEAH, I'M GOING TO TIE THIS 1062 00:42:56,840 --> 00:43:00,177 BACK TO DOWNTOWN AS WELL, WHERE 1063 00:43:00,177 --> 00:43:03,147 EVEN AS RECENTLY AS 2022, 2023, 1064 00:43:03,147 --> 00:43:04,982 WE STARTED REZONING PARTS OF 1065 00:43:04,982 --> 00:43:07,585 THIRD PIKE PINE. THIS AREA FROM 1066 00:43:07,585 --> 00:43:10,854 BEING A TYPE OF ZONE THAT WAS 1067 00:43:10,854 --> 00:43:12,790 CREATED FOR DOWNTOWN RETAIL. 1068 00:43:12,790 --> 00:43:13,424 THIS IS SOMETHING THAT WE HAVE 1069 00:43:13,424 --> 00:43:16,393 TO LOOK AT BEYOND JUST WHAT ARE 1070 00:43:16,393 --> 00:43:18,095 THE ECONOMIC POLICIES THAT WE'RE 1071 00:43:18,095 --> 00:43:18,996 PASSING OR ANY OF THIS. WE 1072 00:43:18,996 --> 00:43:21,732 ACTUALLY NEED TO REZONE PARTS OF 1073 00:43:21,732 --> 00:43:24,201 DOWNTOWN, AND THERE'S MORE TO 1074 00:43:24,201 --> 00:43:25,736 DO BECAUSE THE ZONING WAS BUILT 1075 00:43:25,736 --> 00:43:27,571 AT A TIME WHEN PEOPLE WOULD 1076 00:43:27,571 --> 00:43:28,973 PHYSICALLY COME DOWNTOWN TO GO 1077 00:43:28,973 --> 00:43:31,442 SHOPPING. WE SEE PACIFIC PLACE 1078 00:43:31,442 --> 00:43:34,311 BEING EMPTY. WE SEE WESTLAKE 1079 00:43:34,311 --> 00:43:35,245 CENTER POTENTIALLY. I MEAN, IT 1080 00:43:35,245 --> 00:43:36,614 WOULD BE A GOOD PLACE TO PUT 1081 00:43:36,614 --> 00:43:38,182 ANOTHER CIVIC HUB AT THIS POINT. 1082 00:43:38,182 --> 00:43:42,786 YOU KNOW, WE SEE THESE PLACES 1083 00:43:42,786 --> 00:43:43,287 THAT HAVE TRADITIONALLY 1084 00:43:43,287 --> 00:43:44,755 BENEFITED AND ACTUALLY THEY'RE 1085 00:43:44,755 --> 00:43:46,657 THE OUTCOMES REQUIRE HUMAN 1086 00:43:46,657 --> 00:43:48,692 BEINGS TO COME DOWN. AND THAT'S 1087 00:43:48,692 --> 00:43:50,894 JUST NOT HAPPENING ANYMORE. SO 1088 00:43:50,894 --> 00:43:51,695 THERE'S SO MUCH WORK THAT WE 1089 00:43:51,695 --> 00:43:53,330 NEED TO DO. RETAIL IS ONE OF 1090 00:43:53,330 --> 00:43:56,233 THOSE WHERE, YOU KNOW, 1091 00:43:56,233 --> 00:43:56,800 ESPECIALLY OVER THE LAST MY 1092 00:43:56,800 --> 00:43:58,535 LIFETIME, UP UNTIL THE LAST 1093 00:43:58,535 --> 00:44:00,404 DECADE, IT'S REALLY PEOPLE COME 1094 00:44:00,404 --> 00:44:01,939 DOWNTOWN TO GO SHOPPING. AND 1095 00:44:01,939 --> 00:44:04,241 THAT JUST DOESN'T, ESPECIALLY 1096 00:44:04,241 --> 00:44:05,175 AFTER THE PANDEMIC, THAT 1097 00:44:05,175 --> 00:44:07,678 DOESN'T REALLY HAPPEN. ANY 1098 00:44:07,678 --> 00:44:12,850 OTHER QUESTIONS, COMMENTS? FIRST 1099 00:44:12,850 --> 00:44:13,517 GROUP OF NON-POLITICIANS I'VE 1100 00:44:13,517 --> 00:44:15,419 HAD AT THE COMMITTEE TABLE IN A 1101 00:44:15,419 --> 00:44:16,920 WEEK. WITH THAT, IF YOU WANT TO 1102 00:44:16,920 --> 00:44:22,893 TAKE US INTO OUR ECONOMIC 1103 00:44:22,893 --> 00:44:23,160 FORECAST. 1104 00:44:23,160 --> 00:44:23,427 -- SURE. 1105 00:44:23,427 --> 00:44:25,362 -- UM, I GUESS ONE LAST THING 1106 00:44:25,362 --> 00:44:26,530 BEFORE WE MOVE ON FROM THIS 1107 00:44:26,530 --> 00:44:27,664 SLIDE. THE LEISURE AND 1108 00:44:27,664 --> 00:44:28,866 HOSPITALITY. UH, ONE THING I 1109 00:44:28,866 --> 00:44:30,634 FORGOT TO MENTION IS THE WORLD 1110 00:44:30,634 --> 00:44:32,436 CUP CERTAINLY HELPED. UM, WE 1111 00:44:32,436 --> 00:44:36,240 ARE, WE HAVE SEEN AN UPTICK IN 1112 00:44:36,240 --> 00:44:37,374 EMPLOYMENT IN THAT SECTOR OVER 1113 00:44:37,374 --> 00:44:39,209 THOSE MONTHS WHERE WE WOULD 1114 00:44:39,209 --> 00:44:40,244 EXPECT THE POSITIVE EFFECT OF, 1115 00:44:40,244 --> 00:44:42,646 OF, OF WORLD CUP. AND THAT WOULD 1116 00:44:42,646 --> 00:44:44,114 EXPLAIN WHY THAT INCREASE IS 1117 00:44:44,114 --> 00:44:46,250 ALSO LARGER FOR SEATTLE AREA 1118 00:44:46,250 --> 00:44:48,519 THAN FOR THE US AS A WHOLE HERE. 1119 00:44:48,519 --> 00:44:49,286 -- YEAH. BEFORE WE GO ON, NOW 1120 00:44:49,286 --> 00:44:50,954 THAT YOU BRING UP WORLD CUP. SO 1121 00:44:50,954 --> 00:44:53,991 I KNOW IN THE LAST YEAR WE HAD 1122 00:44:53,991 --> 00:44:56,026 PRETTY HIGH PROJECTIONS AND THEN 1123 00:44:56,026 --> 00:44:56,660 THOSE PROJECTIONS GOT DOWNGRADED 1124 00:44:56,660 --> 00:45:00,364 AGAIN WITH THE FEDERAL 1125 00:45:00,364 --> 00:45:01,031 ADMINISTRATION'S INTERNATIONAL 1126 00:45:01,031 --> 00:45:03,233 POSTURE. AND THEN AND ESPECIALLY 1127 00:45:03,233 --> 00:45:04,301 RIGHT BEFORE THE WORLD CUP, WE 1128 00:45:04,301 --> 00:45:09,006 WERE SEEING VERY LOW HOTEL. UH, 1129 00:45:09,006 --> 00:45:10,574 I DON'T KNOW. WE HAD HIGH 1130 00:45:10,574 --> 00:45:12,042 VACANCY RATES IN HOTELS AS 1131 00:45:12,042 --> 00:45:13,477 COMPARED TO WHAT WE WERE 1132 00:45:13,477 --> 00:45:14,078 THINKING WAS GOING TO HAPPEN. 1133 00:45:14,078 --> 00:45:16,013 BUT THEN IT FELT LIKE IN THAT 1134 00:45:16,013 --> 00:45:16,847 WEEK, IN THOSE THREE WEEKS OF 1135 00:45:16,847 --> 00:45:18,449 WORLD CUP, EVERYTHING JUST KIND 1136 00:45:18,449 --> 00:45:21,452 OF POPPED OFF. BUT I AM HOPING 1137 00:45:21,452 --> 00:45:22,619 BEFORE WE GET INTO THE BAD NEWS 1138 00:45:22,619 --> 00:45:24,588 OF THIS REVENUE FORECAST, I'LL 1139 00:45:24,588 --> 00:45:26,590 JUST KIND OF SPEAK SOME HOPE 1140 00:45:26,590 --> 00:45:28,025 INTO THE FUTURE THAT I'M HOPING 1141 00:45:28,025 --> 00:45:29,426 THAT WHEN WE GET OUR RECEIPTS 1142 00:45:29,426 --> 00:45:31,095 NEXT YEAR, THEY'RE BETTER THAN 1143 00:45:31,095 --> 00:45:33,864 WHAT WE THOUGHT, BECAUSE THIS IS 1144 00:45:33,864 --> 00:45:34,431 ANOTHER AREA WHERE DIRECTOR 1145 00:45:34,431 --> 00:45:36,066 DUROSS, IT'S JUST CHALLENGING. 1146 00:45:36,066 --> 00:45:37,101 IT'S JUST VERY CHALLENGING TO 1147 00:45:37,101 --> 00:45:39,236 GET AN ACCURATE FORECAST ON A 1148 00:45:39,236 --> 00:45:40,971 SITUATION WHERE WE'VE NEVER 1149 00:45:40,971 --> 00:45:42,706 HOSTED THIS BEFORE. IT'S A ONE 1150 00:45:42,706 --> 00:45:44,775 TIME EXPERIENCE. IT THE 1151 00:45:44,775 --> 00:45:45,809 INDICATORS THAT WE WERE LOOKING 1152 00:45:45,809 --> 00:45:47,611 AT, LIKE HOTEL VACANCY RATES AND 1153 00:45:47,611 --> 00:45:48,779 OTHERS JUST COULDN'T GIVE US A 1154 00:45:48,779 --> 00:45:50,314 GOOD PICTURE. BUT DO YOU HAVE 1155 00:45:50,314 --> 00:45:52,649 ANY THOUGHTS AFTER YOU, YOU, YOU 1156 00:45:52,649 --> 00:45:54,518 HAD THE SAME EXPERIENCE OF 1157 00:45:54,518 --> 00:45:56,286 SEEING HIGH PROJECTIONS, LOW 1158 00:45:56,286 --> 00:45:57,788 PROJECTIONS, AND THEN MAYBE WHAT 1159 00:45:57,788 --> 00:45:58,055 HAPPENED? 1160 00:45:58,055 --> 00:45:59,089 -- UH, YEAH, WE'LL TALK A LITTLE 1161 00:45:59,089 --> 00:46:01,291 BIT ABOUT THOSE THINGS WHEN WE 1162 00:46:01,291 --> 00:46:05,562 GET TO THE REVENUE UPDATE. THERE 1163 00:46:05,562 --> 00:46:07,531 HAS BEEN CERTAINLY AN UPTICK FOR 1164 00:46:07,531 --> 00:46:09,600 FOR SALES TAX. THERE'S BEEN, 1165 00:46:09,600 --> 00:46:11,201 UH, I BELIEVE GOOD NEWS FOR 1166 00:46:11,201 --> 00:46:16,306 SHORT TERM RENTAL. UM, UM, SO 1167 00:46:16,306 --> 00:46:18,075 IT'S NOT JUST HOTELS, BUT THE 1168 00:46:18,075 --> 00:46:19,710 AIRBNBS. THEY DEFINITELY 1169 00:46:19,710 --> 00:46:21,411 BENEFITED, UH, MAYBE EVEN MORE 1170 00:46:21,411 --> 00:46:23,680 SO THAN HOTELS FROM ADDITIONAL 1171 00:46:23,680 --> 00:46:25,883 VISITORS. BUT YEAH, 1172 00:46:25,883 --> 00:46:28,018 INTERNATIONAL VISITOR NUMBERS 1173 00:46:28,018 --> 00:46:30,754 ARE, UM, NEGATIVELY AFFECTED BY 1174 00:46:30,754 --> 00:46:32,456 THE FEDERAL GOVERNMENT'S 1175 00:46:32,456 --> 00:46:33,090 ACTIONS. AND SO THERE IS A HOPE 1176 00:46:33,090 --> 00:46:35,025 THAT THAT WILL PICK UP OVER 1177 00:46:35,025 --> 00:46:39,129 TIME. UM, YEAH. 1178 00:46:39,129 --> 00:46:40,531 -- THE BLUE JAYS AREN'T COMING 1179 00:46:40,531 --> 00:46:43,000 HERE TO PLAY BASEBALL THIS YEAR. 1180 00:46:43,000 --> 00:46:46,336 SO, YOU KNOW, THERE'S A 1181 00:46:46,336 --> 00:46:53,076 PROBLEM. 1182 00:46:53,076 --> 00:46:54,578 -- OKAY, MOVING ON TO THE 1183 00:46:54,578 --> 00:46:58,482 REVENUE UPDATE FIRST. UM, JUST 1184 00:46:58,482 --> 00:46:59,616 TO GIVE THE VIEWING PUBLIC AN 1185 00:46:59,616 --> 00:47:01,051 IDEA OF WHAT IT IS THAT WE 1186 00:47:01,051 --> 00:47:02,586 ALREADY KNOW ABOUT 2026 AT THIS 1187 00:47:02,586 --> 00:47:04,021 POINT, IT'S OCTOBER, BUT BY 1188 00:47:04,021 --> 00:47:09,293 THIS TIME OF YEAR, THE CITY 1189 00:47:09,293 --> 00:47:09,927 USUALLY RECEIVES SLIGHTLY MORE 1190 00:47:09,927 --> 00:47:12,396 THAN HALF OF THE OVERALL ANNUAL 1191 00:47:12,396 --> 00:47:14,198 REVENUES BECAUSE OF THE LAG 1192 00:47:14,198 --> 00:47:15,966 BETWEEN WHEN THE ECONOMIC 1193 00:47:15,966 --> 00:47:17,067 ACTIVITY TAKES PLACE AND THEN 1194 00:47:17,067 --> 00:47:18,669 THE DUE DATES, AND THEN THE TIME 1195 00:47:18,669 --> 00:47:20,270 BY WHICH, UH, THOSE THOSE 1196 00:47:20,270 --> 00:47:22,573 RETURNS ARE PROCESSED AND POSTED 1197 00:47:22,573 --> 00:47:24,808 IN THE CITY'S FINANCIAL SYSTEMS. 1198 00:47:24,808 --> 00:47:28,045 THERE IS A, THE CHART SHOWS HOW 1199 00:47:28,045 --> 00:47:30,113 MUCH, UM, VARIATION THERE IS 1200 00:47:30,113 --> 00:47:32,549 AMONG THOSE DIFFERENT, UH, 1201 00:47:32,549 --> 00:47:35,886 REVENUE STREAMS AND HOW MUCH OF 1202 00:47:35,886 --> 00:47:37,788 REVENUE SHARE WE ARE RECEIVING 1203 00:47:37,788 --> 00:47:39,189 BY THE TIME YOU'RE DELIVERING 1204 00:47:39,189 --> 00:47:39,957 THE APRIL, AUGUST AND THE 1205 00:47:39,957 --> 00:47:45,395 OCTOBER FORECAST. UM, SO WE HAVE 1206 00:47:45,395 --> 00:47:48,232 JUST RECENTLY RELEASED THE Q3 1207 00:47:48,232 --> 00:47:50,067 REVENUE REPORT AND HAS BEEN 1208 00:47:50,067 --> 00:47:52,869 SHARED ON OUR WEB PAGE. AND, UH, 1209 00:47:52,869 --> 00:47:54,304 MEMBERS OF THE PUBLIC CAN 1210 00:47:54,304 --> 00:47:54,938 SUBSCRIBE TO A NEWSLETTER AND BE 1211 00:47:54,938 --> 00:47:57,507 UPDATED ABOUT THESE RELEASES AND 1212 00:47:57,507 --> 00:47:58,508 THE FORECASTS THAT WE PUT ON OUR 1213 00:47:58,508 --> 00:48:01,545 WEB PAGE. UH, WHAT THE THIRD 1214 00:48:01,545 --> 00:48:03,013 QUARTER REPORT SHOWS IS THAT, 1215 00:48:03,013 --> 00:48:08,385 UH, THE GENERAL FUND HAS BEEN 1216 00:48:08,385 --> 00:48:09,853 ABOUT 1%, 11.2 MILLION BELOW THE 1217 00:48:09,853 --> 00:48:11,688 ANTICIPATED AUGUST FORECAST. BUT 1218 00:48:11,688 --> 00:48:15,926 THAT HAS TO DO WITH THE GRANTS. 1219 00:48:15,926 --> 00:48:17,961 UM, GRANTS ARE A SPECIAL KIND OF 1220 00:48:17,961 --> 00:48:19,997 REVENUE WHERE THEY ARE ENTERED 1221 00:48:19,997 --> 00:48:20,964 INTO THE FORECAST WHEN THEY ARE 1222 00:48:20,964 --> 00:48:25,369 AWARDED. BUT, UM, THE THERE ARE 1223 00:48:25,369 --> 00:48:27,070 REIMBURSEMENT ONLY WHEN THE 1224 00:48:27,070 --> 00:48:28,905 ACTIVITY ACTUALLY TAKES PLACE. 1225 00:48:28,905 --> 00:48:31,909 AND SO THE ACTUAL GRANTS OFTEN 1226 00:48:31,909 --> 00:48:33,577 VARY SIGNIFICANTLY FROM THOSE, 1227 00:48:33,577 --> 00:48:35,579 UH, INITIAL FORECAST, BUT THAT 1228 00:48:35,579 --> 00:48:38,115 MONEY IS EXPECTED TO, TO SHOW UP 1229 00:48:38,115 --> 00:48:39,182 EVENTUALLY. SO WHAT WE USUALLY 1230 00:48:39,182 --> 00:48:41,151 DO IS WE LOOK AT THE GENERAL 1231 00:48:41,151 --> 00:48:42,352 FUND EXCLUDING GRANTS, AND WE 1232 00:48:42,352 --> 00:48:44,288 ALSO EXCLUDE FUND BALANCE 1233 00:48:44,288 --> 00:48:45,622 TRANSFERS BECAUSE THAT WON'T BE 1234 00:48:45,622 --> 00:48:47,691 IN DOUBLE COUNTING REVENUES FROM 1235 00:48:47,691 --> 00:48:50,060 PAYROLL EXPENSE TAX IN 1236 00:48:50,060 --> 00:48:52,796 PARTICULAR. UM WHICH IS REPORTED 1237 00:48:52,796 --> 00:48:54,965 SEPARATELY ON NON GENERAL FUND 1238 00:48:54,965 --> 00:48:56,466 REVENUES. SO FOR GENERAL FUND 1239 00:48:56,466 --> 00:48:58,168 EXCLUDING GRANTS AND FUND 1240 00:48:58,168 --> 00:49:00,337 BALANCE TRANSFERS, THE REVENUES 1241 00:49:00,337 --> 00:49:03,206 ARE ACTUALLY ABOVE OUR AUGUST 1242 00:49:03,206 --> 00:49:05,509 EXPECTATIONS BY ABOUT 11.26 1243 00:49:05,509 --> 00:49:10,314 MILLION. SO THAT'S 1.15%. A LOT 1244 00:49:10,314 --> 00:49:11,682 OF IT IS HIGHER REVENUES FROM 1245 00:49:11,682 --> 00:49:13,016 SALES TAX AND FROM A BUSINESS 1246 00:49:13,016 --> 00:49:16,453 AND OCCUPATION TAX. I'LL TALK A 1247 00:49:16,453 --> 00:49:18,255 LITTLE BIT ABOUT THOSE. WHEN WE 1248 00:49:18,255 --> 00:49:22,492 GET TO THE FORECAST TABLE. UM AT 1249 00:49:22,492 --> 00:49:24,027 THIS POINT IT'S REALLY. SO TO 1250 00:49:24,027 --> 00:49:26,129 SUMMARIZE HERE WHAT WE HAVE SO 1251 00:49:26,129 --> 00:49:28,899 FAR RECEIVED AND WHAT WAS USED 1252 00:49:28,899 --> 00:49:30,367 FOR THE FORECAST IS RETURNS AS 1253 00:49:30,367 --> 00:49:32,202 OF THE SECOND QUARTER FOR 1254 00:49:32,202 --> 00:49:34,404 BUSINESS AND OCCUPATION TAX. WE 1255 00:49:34,404 --> 00:49:36,640 NOW HAVE SALES TAX REVENUES 1256 00:49:36,640 --> 00:49:38,642 THROUGH JULY. SO THAT ALREADY 1257 00:49:38,642 --> 00:49:39,843 COVERS THE PERIOD DURING WHICH 1258 00:49:39,843 --> 00:49:41,478 THE WORLD CUP TOOK PLACE. AND WE 1259 00:49:41,478 --> 00:49:44,281 HAVE REVENUES THROUGH SEPTEMBER. 1260 00:49:44,281 --> 00:49:45,882 SO FOR THE FIRST THREE QUARTERS 1261 00:49:45,882 --> 00:49:51,154 OF THE YEAR. UM SO SALES TAX 1262 00:49:51,154 --> 00:49:52,656 REVENUES FIRST, UM THE CHART 1263 00:49:52,656 --> 00:49:54,224 HERE IS GOING TO PROVIDE SOME 1264 00:49:54,224 --> 00:49:57,928 KIND OF A LOOK BACK ON WHERE WE 1265 00:49:57,928 --> 00:50:01,031 ARE, WHAT, UH, SALES TAX REVENUE 1266 00:50:01,031 --> 00:50:02,099 LOOKS LIKE. IT'S THE REVENUE 1267 00:50:02,099 --> 00:50:04,034 THAT, UH, WHERE WE RECEIVE 1268 00:50:04,034 --> 00:50:05,769 UPDATES EVERY MONTH. SO IT'S 1269 00:50:05,769 --> 00:50:07,838 COMING REASONABLY TIMELY. THERE 1270 00:50:07,838 --> 00:50:09,306 IS STILL ABOUT TWO MONTHS DELAY. 1271 00:50:09,306 --> 00:50:12,676 LIKE I SAID, WE HAVE, UH, DATA 1272 00:50:12,676 --> 00:50:14,711 FOR JULY AS THE LAST MONTH 1273 00:50:14,711 --> 00:50:17,147 THAT'S AVAILABLE FOR JULY 1274 00:50:17,147 --> 00:50:20,617 FILING PERIODS. UM OBLIGATIONS. 1275 00:50:20,617 --> 00:50:24,788 SO, UM, WHAT WE HAVE SEEN, UH, 1276 00:50:24,788 --> 00:50:26,823 IS THIS YEAR, WHAT WE HAVE SEEN 1277 00:50:26,823 --> 00:50:29,659 IS A SIGNIFICANT GROWTH IN SALES 1278 00:50:29,659 --> 00:50:32,362 TAX REVENUES FROM, UH, 1279 00:50:32,362 --> 00:50:34,164 INFORMATION PROFESSIONAL AND 1280 00:50:34,164 --> 00:50:36,333 BUSINESS SERVICES. UM, AND 1281 00:50:36,333 --> 00:50:37,868 WHAT'S LABELED HERE AS THE REST 1282 00:50:37,868 --> 00:50:39,403 OF INDUSTRIES IN, IN GENERAL, 1283 00:50:39,403 --> 00:50:40,971 THAT HAS TO DO WITH THE EXPANDED 1284 00:50:40,971 --> 00:50:44,841 TAX BASE DUE TO 5814, THE YEAR 1285 00:50:44,841 --> 00:50:46,943 OVER YEAR GROWTH RATES ARE 1286 00:50:46,943 --> 00:50:48,779 REALLY SIGNIFICANT. SO THOSE 1287 00:50:48,779 --> 00:50:50,514 PURPLE BARS, STARTING WITH 1288 00:50:50,514 --> 00:50:51,848 JANUARY 2026, AS YOU CAN SEE, 1289 00:50:51,848 --> 00:50:56,253 THERE ARE SIGNIFICANTLY TALLER 1290 00:50:56,253 --> 00:50:58,522 THAN IN 2024 OR 2025. AS AGAIN, 1291 00:50:58,522 --> 00:51:02,259 THE TAX BASE HAS EXPANDED AND 1292 00:51:02,259 --> 00:51:04,828 THAT HAS CONTRIBUTED TO THE 1293 00:51:04,828 --> 00:51:08,031 OVERALL GROWTH BY ABOUT 8% ON 1294 00:51:08,031 --> 00:51:10,734 AVERAGE, WE HAVE ABOUT 11.6% 1295 00:51:10,734 --> 00:51:12,169 MORE YEAR OVER YEAR IN SALES 1296 00:51:12,169 --> 00:51:15,705 TAX, AND 8% OF THAT IS, UH, 1297 00:51:15,705 --> 00:51:17,441 THOSE INFORMATION AND 1298 00:51:17,441 --> 00:51:17,974 PROFESSIONAL AND BUSINESS 1299 00:51:17,974 --> 00:51:19,342 SERVICES SECTOR AND THE REST OF 1300 00:51:19,342 --> 00:51:25,015 THE INDUSTRIES, UH. UM, THEN THE 1301 00:51:25,015 --> 00:51:27,350 RED BARS HERE SHOW THE 1302 00:51:27,350 --> 00:51:29,419 CONTRIBUTION OF LEISURE AND 1303 00:51:29,419 --> 00:51:33,056 HOSPITALITY SECTOR AND THOSE 1304 00:51:33,056 --> 00:51:34,591 LAST TWO BARS ALL THE WAY TO THE 1305 00:51:34,591 --> 00:51:36,860 RIGHT. THAT'S JUNE AND JULY 1306 00:51:36,860 --> 00:51:39,362 FILING PERIOD. AND AS YOU CAN 1307 00:51:39,362 --> 00:51:42,032 SEE, THAT WORLD CUP HAS 1308 00:51:42,032 --> 00:51:43,700 CONTRIBUTED TO THE YEAR OVER 1309 00:51:43,700 --> 00:51:47,637 YEAR GROWTH. THOSE BARS ARE 1310 00:51:47,637 --> 00:51:50,240 SLIGHTLY HIGHER THAN THAN THE 1311 00:51:50,240 --> 00:51:52,108 BARS IN 2025. UM, BUT OVERALL, 1312 00:51:52,108 --> 00:51:55,178 IT'S A RELATIVELY SMALLER SHARE 1313 00:51:55,178 --> 00:51:58,181 OF OVERALL REVENUES. LEISURE AND 1314 00:51:58,181 --> 00:51:59,716 HOSPITAL IS ABOUT 15% OF OVERALL 1315 00:51:59,716 --> 00:52:00,917 REVENUE. SO EVEN IF THERE IS A 1316 00:52:00,917 --> 00:52:02,119 SIGNIFICANT YEAR OVER YEAR 1317 00:52:02,119 --> 00:52:03,720 GROWTH, THE TOTAL CONTRIBUTION 1318 00:52:03,720 --> 00:52:06,123 TO THE TO THE SALES TAX, UM, 1319 00:52:06,123 --> 00:52:09,292 LOOKS SMALLER IN THIS CHART. SO 1320 00:52:09,292 --> 00:52:11,962 IT CONTRIBUTED ABOUT 1% TO 11.6% 1321 00:52:11,962 --> 00:52:13,864 YEAR OVER YEAR GROWTH. THAT'S 1322 00:52:13,864 --> 00:52:15,632 THE LEISURE AND HOSPITALITY 1323 00:52:15,632 --> 00:52:20,036 CONTRIBUTION. AND THEN WHAT WE 1324 00:52:20,036 --> 00:52:21,571 HAVE UH, SEEN IS THE 1325 00:52:21,571 --> 00:52:22,339 CONSTRUCTION SECTOR. THAT WAS A 1326 00:52:22,339 --> 00:52:25,942 LITTLE BIT UP A LITTLE BIT DOWN 1327 00:52:25,942 --> 00:52:28,044 OVER THE YEAR IN GENERAL, BETTER 1328 00:52:28,044 --> 00:52:30,747 THAN WHAT THINGS LOOKED LIKE IN 1329 00:52:30,747 --> 00:52:31,781 25 OR 2024. WHEN YOU CAN SEE 1330 00:52:31,781 --> 00:52:33,350 THAT THOSE YELLOW BARS HAVE BEEN 1331 00:52:33,350 --> 00:52:35,819 PRETTY MUCH CONSISTENTLY BELOW 1332 00:52:35,819 --> 00:52:37,220 ZERO, AND THERE HAS BEEN A 1333 00:52:37,220 --> 00:52:39,856 DECLINE IN CONSTRUCTION ACTIVITY 1334 00:52:39,856 --> 00:52:43,193 IN 24 AND 25, THIS YEAR HAS BEEN 1335 00:52:43,193 --> 00:52:45,795 MORE STABLE. UM, OVERALL, 1336 00:52:45,795 --> 00:52:47,898 DEDUCTED ONLY 0.2% FROM THE 1337 00:52:47,898 --> 00:52:50,500 OVERALL SALES TAX GROWTH. SO 1338 00:52:50,500 --> 00:52:54,771 THAT WAS A BIT OF A, UH, A BIT 1339 00:52:54,771 --> 00:52:57,707 OF AN IMPROVEMENT COMPARED TO 1340 00:52:57,707 --> 00:52:59,476 LAST TWO YEARS. AND THEN 1341 00:52:59,476 --> 00:53:00,977 FINALLY, THE BLUE BARS HERE SHOW 1342 00:53:00,977 --> 00:53:03,113 THE CONTRIBUTION OF THE 1343 00:53:03,113 --> 00:53:05,682 WHOLESALE AND RETAIL TRADE 1344 00:53:05,682 --> 00:53:09,319 SECTOR. UM, THAT SECTOR HAS 1345 00:53:09,319 --> 00:53:10,654 CONTRIBUTED 2.8% TO THE OVERALL 1346 00:53:10,654 --> 00:53:15,759 GROWTH. UH, IT'S, UH, HAS TO DO 1347 00:53:15,759 --> 00:53:18,395 WITH THE FACT WITH THE CHART 1348 00:53:18,395 --> 00:53:20,096 WHERE I WAS SHOWING THE 1349 00:53:20,096 --> 00:53:21,898 SPENDING, THE CONSUMPTION 1350 00:53:21,898 --> 00:53:23,033 EXPENDITURES YEAR OVER YEAR, AND 1351 00:53:23,033 --> 00:53:24,868 THE FACT THAT THE HOUSEHOLDS ARE 1352 00:53:24,868 --> 00:53:27,771 STILL BEING ABLE, UM, TO SPEND, 1353 00:53:27,771 --> 00:53:29,272 EVEN THOUGH THEY ARE MORE 1354 00:53:29,272 --> 00:53:29,906 CAUTIOUS, THEY'RE CERTAINLY 1355 00:53:29,906 --> 00:53:30,540 GOING TO BE MORE CAUTIOUS ABOUT 1356 00:53:30,540 --> 00:53:34,444 BIG TICKET ITEMS. BUT, UH, THERE 1357 00:53:34,444 --> 00:53:39,416 HAVE BEEN, UH, CERTAINLY SOME, 1358 00:53:39,416 --> 00:53:42,786 UH, UH, SOME HIGHER THAN THAN 1359 00:53:42,786 --> 00:53:44,854 EXPECTED RETAIL SALES REPORT AND 1360 00:53:44,854 --> 00:53:45,822 CONSUMPTION EXPENDITURE REPORT. 1361 00:53:45,822 --> 00:53:47,757 AND THAT, THAT DEFINITELY HELPS 1362 00:53:47,757 --> 00:53:50,126 ALSO WITH THE SALES TAX FROM THE 1363 00:53:50,126 --> 00:53:54,231 TRADE SECTOR AND SO FINALLY, 1364 00:53:54,231 --> 00:53:56,166 THIS IS WHAT OVERALL THE GROWTH 1365 00:53:56,166 --> 00:53:58,068 LOOK LIKE. THAT BLACK LINE ADDS 1366 00:53:58,068 --> 00:54:00,437 UP. THE POSITIVE SUBTRACTS THE 1367 00:54:00,437 --> 00:54:03,273 NEGATIVE ONES AND SHOWS HOW THE 1368 00:54:03,273 --> 00:54:06,009 YEAR OVER YEAR SALES TAX GROWTH 1369 00:54:06,009 --> 00:54:08,845 EVOLVED OVER TIME. THE TAKEAWAY 1370 00:54:08,845 --> 00:54:10,614 IS WHAT I SAID BEFORE AND IT HAS 1371 00:54:10,614 --> 00:54:13,116 BEEN SIGNIFICANTLY HIGHER YEAR 1372 00:54:13,116 --> 00:54:16,052 OVER YEAR FOR 26, PRIMARILY 1373 00:54:16,052 --> 00:54:20,890 BECAUSE OF, UH, 5814 AND SOME 1374 00:54:20,890 --> 00:54:26,062 POSITIVE, UH, SLIGHTLY MORE 1375 00:54:26,062 --> 00:54:28,932 POSITIVE CHANGES IN TRADE SO 1376 00:54:28,932 --> 00:54:31,401 WITH THAT, LET'S LOOK AT THE 1377 00:54:31,401 --> 00:54:34,170 UPDATE FOR, FOR THE FORECAST 1378 00:54:34,170 --> 00:54:37,907 FIRST, UH, FOCUSING ONLY ON, ON 1379 00:54:37,907 --> 00:54:40,443 THE BOTTOM LINE HERE, THE TWO 1380 00:54:40,443 --> 00:54:42,679 LINES AT THE BOTTOM SHOW THE 1381 00:54:42,679 --> 00:54:45,248 TOTAL GENERAL FUND. UH, AND THEN 1382 00:54:45,248 --> 00:54:47,017 THE ONE BELOW THAT. THAT'S TOTAL 1383 00:54:47,017 --> 00:54:48,752 GENERAL FUND EXCLUDING GRANTS 1384 00:54:48,752 --> 00:54:50,086 AND FUND BALANCE TRANSFERS. LIKE 1385 00:54:50,086 --> 00:54:52,289 I SAID, WE BELIEVE THAT THAT'S A 1386 00:54:52,289 --> 00:54:56,259 BETTER MEASURE OF THE TRENDS IN 1387 00:54:56,259 --> 00:54:56,793 REVENUES BECAUSE OF SOME 1388 00:54:56,793 --> 00:54:58,728 TECHNICAL THINGS ABOUT GRANTS 1389 00:54:58,728 --> 00:55:00,363 AND BECAUSE WE DON'T WANT TO 1390 00:55:00,363 --> 00:55:01,965 DOUBLE COUNT THE FUND BALANCE, 1391 00:55:01,965 --> 00:55:04,901 TRANSFERS, REVENUES. SO OVERALL, 1392 00:55:04,901 --> 00:55:08,238 UM, THESE FORECASTS ADDS ABOUT 9 1393 00:55:08,238 --> 00:55:11,107 MILLION TO THE 2026 GENERAL FUND 1394 00:55:11,107 --> 00:55:12,575 REVENUES. THOSE TWO LINES 1395 00:55:12,575 --> 00:55:15,211 ACTUALLY DON'T DIFFER IN TERMS 1396 00:55:15,211 --> 00:55:16,279 OF THE DIFFERENCE IN TERMS OF A 1397 00:55:16,279 --> 00:55:18,548 CHANGE BETWEEN THE AUGUST AND 1398 00:55:18,548 --> 00:55:20,717 THE CURRENT FORECAST, BECAUSE 1399 00:55:20,717 --> 00:55:22,318 GRANT AND FUND BALANCE TRANSFERS 1400 00:55:22,318 --> 00:55:23,753 FORECASTS HAVE NOT BEEN REVISED 1401 00:55:23,753 --> 00:55:25,488 IN ANY WAY. UM, THERE IS NO 1402 00:55:25,488 --> 00:55:27,390 CHANGE THERE. AND SO, UH, THE, 1403 00:55:27,390 --> 00:55:30,527 THE, THE ADDS THE DIFFERENCE 1404 00:55:30,527 --> 00:55:33,863 BETWEEN, UH, PROPOSED BUDGET AND 1405 00:55:33,863 --> 00:55:34,531 THE CURRENT OCTOBER FORECAST IS 1406 00:55:34,531 --> 00:55:35,632 THE SAME IN THOSE TWO LINES, 2 1407 00:55:35,632 --> 00:55:39,936 MILLION FOR 2026, ONLY 1.2 FOR 1408 00:55:39,936 --> 00:55:43,073 27. AND THEN, UH, DOWNWARD 1409 00:55:43,073 --> 00:55:48,445 REVISION 2.4 DOWN FOR 2028 1410 00:55:48,445 --> 00:55:50,380 OVERALL, ABOUT 7.8 MILLION UP 1411 00:55:50,380 --> 00:55:52,415 OVER THE THREE YEARS. UH, OUT 1412 00:55:52,415 --> 00:55:55,752 OF, UH, WHAT'S, UH, ROUGHLY 6 1413 00:55:55,752 --> 00:55:57,620 BILLION IF YOU ADD UP THE THREE 1414 00:55:57,620 --> 00:55:59,789 YEARS FOR GENERAL FUND, IT'S 1415 00:55:59,789 --> 00:56:01,791 GOING TO BE ABOUT SIX, UH, 6 1416 00:56:01,791 --> 00:56:03,960 BILLION FOR GENERAL FUND WITHOUT 1417 00:56:03,960 --> 00:56:06,496 GRANTS AND FUND BALANCE 1418 00:56:06,496 --> 00:56:08,765 TRANSFERS. UM, IT'S SOMEWHERE 1419 00:56:08,765 --> 00:56:11,534 AROUND, UM, THREE, FIVE, 5.6 1420 00:56:11,534 --> 00:56:14,137 BILLION. SO 7.8 MILLION OUT OF 1421 00:56:14,137 --> 00:56:18,341 5.6 IS NOT A LARGE, RELATIVELY 1422 00:56:18,341 --> 00:56:18,708 LARGE REVISION. 1423 00:56:18,708 --> 00:56:19,642 -- AND DIRECTOR, I'M JUST GOING 1424 00:56:19,642 --> 00:56:21,344 TO DOUBLE CHECK THE ASSUMPTION 1425 00:56:21,344 --> 00:56:24,814 THAT I HAVE, WHICH IS IN YOUR 1426 00:56:24,814 --> 00:56:26,316 COLUMNS DIFFERENCE FROM 27 TO 1427 00:56:26,316 --> 00:56:28,418 28. PROPOSED BUDGET FORECAST. BY 1428 00:56:28,418 --> 00:56:30,987 THAT YOU MEAN THE AUGUST 2026 1429 00:56:30,987 --> 00:56:32,722 FORECAST. IS THAT CORRECT? 1430 00:56:32,722 --> 00:56:33,857 -- SO WHAT WE ARE DOING HERE IS 1431 00:56:33,857 --> 00:56:36,926 THE SAME AS WE WERE DOING IN THE 1432 00:56:36,926 --> 00:56:40,029 PAST AFTER THE OFFICIAL FORECAST 1433 00:56:40,029 --> 00:56:41,631 IS ADOPTED BY THE FORECAST 1434 00:56:41,631 --> 00:56:45,068 COUNCIL, THE MAYOR PROPOSES ITS 1435 00:56:45,068 --> 00:56:46,236 BUDGET. AND SO WHEN WE ARE 1436 00:56:46,236 --> 00:56:47,403 PRESENTING THESE FORECAST, WE 1437 00:56:47,403 --> 00:56:49,272 TAKE INTO ACCOUNT THE POLICY 1438 00:56:49,272 --> 00:56:52,642 CHANGES. ANY SORT OF POLICY 1439 00:56:52,642 --> 00:56:55,545 CHANGES THAT ARE INCLUDED AFTER 1440 00:56:55,545 --> 00:56:57,981 THE AUGUST FORECAST IS 1441 00:56:57,981 --> 00:56:59,115 PRESENTED. UM AND SO THAT WILL 1442 00:56:59,115 --> 00:57:00,316 BE IN PARTICULAR IMPORTANT WHEN 1443 00:57:00,316 --> 00:57:01,451 YOU GET TO THE PAYROLL TAX ON 1444 00:57:01,451 --> 00:57:03,353 THE NEXT SLIDE, IT WILL MAKE 1445 00:57:03,353 --> 00:57:05,054 MORE SENSE. BUT WHENEVER LET'S 1446 00:57:05,054 --> 00:57:09,125 SAY UM THERE IS AN ADDITIONAL, 1447 00:57:09,125 --> 00:57:10,794 UH, CHANGE IN SOME OF THE 1448 00:57:10,794 --> 00:57:11,928 REVENUES AGAIN, BETWEEN THAT 1449 00:57:11,928 --> 00:57:14,564 OFFICIAL FORECAST AND, UH, WHAT, 1450 00:57:14,564 --> 00:57:16,599 WHAT THE MAYOR PRESENTS AS A 1451 00:57:16,599 --> 00:57:18,268 PROPOSED BUDGET. WE TAKE THE 1452 00:57:18,268 --> 00:57:19,436 PROPOSED BUDGET ITSELF, NOT THE 1453 00:57:19,436 --> 00:57:24,374 ONE THAT HAS BEEN APPROVED BY 1454 00:57:24,374 --> 00:57:24,841 THE FORECAST COUNCIL. 1455 00:57:24,841 --> 00:57:25,975 -- THERE'S QUITE A BIT OF 1456 00:57:25,975 --> 00:57:29,012 FURTHER DISCUSSION THAT WE WILL 1457 00:57:29,012 --> 00:57:30,580 HAVE. KEEP GOING ON. JUST I 1458 00:57:30,580 --> 00:57:32,248 THINK THAT IT IS CRITICALLY 1459 00:57:32,248 --> 00:57:33,616 IMPORTANT FOR THE TRANSPARENCY 1460 00:57:33,616 --> 00:57:37,420 OF THIS FORECAST OFFICE THAT WE 1461 00:57:37,420 --> 00:57:40,056 ARE CLEAR WITH THESE THINGS. 1462 00:57:40,056 --> 00:57:40,723 -- AND SO THAT'S HOW THE ORGAN 1463 00:57:40,723 --> 00:57:42,659 ORGAN STATES IT. SO THE MAYOR, 1464 00:57:42,659 --> 00:57:44,894 WHENEVER THERE IS A CHANGE 1465 00:57:44,894 --> 00:57:46,596 BETWEEN THE FORECAST THAT IS 1466 00:57:46,596 --> 00:57:47,163 OFFICIALLY APPROVED BY THE 1467 00:57:47,163 --> 00:57:48,398 FORECAST COUNCIL AND WHAT THE 1468 00:57:48,398 --> 00:57:50,200 MAYOR IS USING, THEY HAVE TO 1469 00:57:50,200 --> 00:57:52,235 SUBMIT. AND THEY DID SUBMIT AN 1470 00:57:52,235 --> 00:57:54,471 OFFICIAL LETTER EXPLAINING WHAT 1471 00:57:54,471 --> 00:57:57,173 THOSE DIFFERENCES ARE. 1472 00:57:57,173 --> 00:57:59,175 -- WE'LL HAVE FURTHER 1473 00:57:59,175 --> 00:57:59,476 DISCUSSION. 1474 00:57:59,476 --> 00:58:04,981 -- YEAH. UM SO, UM, LOOKING NOW 1475 00:58:04,981 --> 00:58:06,683 AT THOSE INDIVIDUAL INDIVIDUAL 1476 00:58:06,683 --> 00:58:08,318 ITEMS, UH, GOING OVER THEM ONE 1477 00:58:08,318 --> 00:58:11,354 BY ONE, AS I SAID, THE OVERALL 1478 00:58:11,354 --> 00:58:13,623 CHANGES ARE NOT LARGE, BUT THERE 1479 00:58:13,623 --> 00:58:15,024 ARE SIGNIFICANT CHANGES TO SOME 1480 00:58:15,024 --> 00:58:16,159 OF THE REVENUE STREAMS. AND 1481 00:58:16,159 --> 00:58:17,760 IT'S GOING TO BE USEFUL TO TALK 1482 00:58:17,760 --> 00:58:19,896 ABOUT THEM. AND SOME OF THOSE 1483 00:58:19,896 --> 00:58:21,664 CHANGES IN THE ECONOMIC 1484 00:58:21,664 --> 00:58:22,966 CONDITIONS WILL BE, UM, THAT WE 1485 00:58:22,966 --> 00:58:25,368 HAVE DISCUSSED WILL BE USEFUL TO 1486 00:58:25,368 --> 00:58:26,035 UNDERSTAND WHAT'S GOING ON HERE. 1487 00:58:26,035 --> 00:58:28,771 SO LET'S START AT THE TOP. UM, 1488 00:58:28,771 --> 00:58:30,673 FOR THE PUBLIC, THOSE LINES THAT 1489 00:58:30,673 --> 00:58:32,876 ARE HIGHLIGHTED BLUE, THOSE ARE 1490 00:58:32,876 --> 00:58:35,445 THE REVENUES THAT THE OFFICE OF 1491 00:58:35,445 --> 00:58:37,847 ECONOMIC AND REVENUE FORECAST. 1492 00:58:37,847 --> 00:58:40,049 UM, HAS IN ITS PURVIEW. THE 1493 00:58:40,049 --> 00:58:43,052 OTHER LINES ARE THE FORECAST 1494 00:58:43,052 --> 00:58:45,788 WHERE THE BUDGET OFFICE IS IN, 1495 00:58:45,788 --> 00:58:47,357 IN THE LEAD. SO WE'LL, WE'LL BE 1496 00:58:47,357 --> 00:58:51,060 TAKING TURNS AND, UH, BUDGET 1497 00:58:51,060 --> 00:58:52,528 OFFICE TEAM WILL TALK ABOUT 1498 00:58:52,528 --> 00:58:54,731 THOSE, UH, NON BLUE LINES FIRST, 1499 00:58:54,731 --> 00:58:56,266 STARTING WITH PROPERTY TAX. 1500 00:58:56,266 --> 00:58:59,302 -- ALEX OH, SURE. THANK YOU. UM, 1501 00:58:59,302 --> 00:59:01,204 THERE IS A CONSIDERABLE REVISION 1502 00:59:01,204 --> 00:59:01,804 DOWNWARD FOR WELCOME. 1503 00:59:01,804 --> 00:59:03,339 -- ALEX. IF YOU COULD INTRODUCE 1504 00:59:03,339 --> 00:59:03,973 YOURSELF AS YOU START TALKING. 1505 00:59:03,973 --> 00:59:04,374 WE'RE GLAD. 1506 00:59:04,374 --> 00:59:07,443 -- TO SEE YOU AGAIN. YEAH. UM, 1507 00:59:07,443 --> 00:59:08,044 ALEX ZHANG ECONOMIST WITH THE 1508 00:59:08,044 --> 00:59:11,981 CITY BUDGET OFFICE. UM, PROPERTY 1509 00:59:11,981 --> 00:59:13,483 TAXES UNDER MY PURVIEW. AND SO 1510 00:59:13,483 --> 00:59:16,853 THIS UM, CONSIDERABLE REVISION 1511 00:59:16,853 --> 00:59:19,255 DOWNWARD FOR 2728 IS SOLELY DUE 1512 00:59:19,255 --> 00:59:21,224 TO THE MEDIC ONE LEVY, UM, WHICH 1513 00:59:21,224 --> 00:59:24,494 IS A COUNTY LEVY OF WHICH THE 1514 00:59:24,494 --> 00:59:27,931 CITY GETS A SHARE. UM, SO THERE 1515 00:59:27,931 --> 00:59:30,633 HAVE BEEN STATE LEGISLATIVE 1516 00:59:30,633 --> 00:59:32,669 CHANGES TO THE SENIOR EXEMPTION 1517 00:59:32,669 --> 00:59:34,270 FOR PROPERTY TAX THAT TAKE 1518 00:59:34,270 --> 00:59:40,109 EFFECT IN 2027. UM, THAT EXPANDS 1519 00:59:40,109 --> 00:59:40,710 THE SENIOR EXEMPTION PROGRAM. 1520 00:59:40,710 --> 00:59:42,812 AND SO GENERALLY EXEMPTIONS 1521 00:59:42,812 --> 00:59:45,348 REDUCE TAXABLE PROPERTY VALUE, 1522 00:59:45,348 --> 00:59:48,985 WHICH IN TURN SHRINKS THE TAX 1523 00:59:48,985 --> 00:59:51,054 BASE. AND SO, UM, WHILE THIS 1524 00:59:51,054 --> 00:59:53,656 DOES NOT HAVE A SIGNIFICANT 1525 00:59:53,656 --> 00:59:55,458 IMPACT ON OUR GENERAL EXPENSE 1526 00:59:55,458 --> 00:59:59,696 PROPERTY TAX, BECAUSE UM, WHEN 1527 00:59:59,696 --> 01:00:01,364 THE TAX BASE CHANGES THE TAX 1528 01:00:01,364 --> 01:00:03,566 RATE FOR THE GENERAL EXPENSE 1529 01:00:03,566 --> 01:00:04,233 SIMPLY ADJUSTS SO THAT WE 1530 01:00:04,233 --> 01:00:06,502 COLLECT WHAT WE WANT TO COLLECT 1531 01:00:06,502 --> 01:00:10,573 THE EMS LEVY SHARE, UM, MOVES IN 1532 01:00:10,573 --> 01:00:12,809 DIRECT PROPORTION TO OUR, THE 1533 01:00:12,809 --> 01:00:14,377 CITY'S AVE, THE CITY'S ASSESSED 1534 01:00:14,377 --> 01:00:19,449 VALUE. AND SO UM, ALTHOUGH THE 1535 01:00:19,449 --> 01:00:21,017 PRELIMINARY ASSESSED VALUE FOR 1536 01:00:21,017 --> 01:00:26,489 THE CITY FOR 2027, UM, CAN STILL 1537 01:00:26,489 --> 01:00:27,123 CHANGE BETWEEN NOW AND THE END 1538 01:00:27,123 --> 01:00:30,059 OF THE YEAR, THERE IS STRONG 1539 01:00:30,059 --> 01:00:32,495 INDICATION THAT THERE IS A 1540 01:00:32,495 --> 01:00:34,097 SIZABLE DECLINE FROM, UH, FROM 1541 01:00:34,097 --> 01:00:36,299 LAST YEAR, UM, AT LEAST PARTLY 1542 01:00:36,299 --> 01:00:38,668 DUE TO THIS EXPANSION OF THE 1543 01:00:38,668 --> 01:00:41,137 SENIOR EXEMPTION. UM, PART OF IT 1544 01:00:41,137 --> 01:00:43,106 IS PROBABLY ALSO DUE TO MARKET 1545 01:00:43,106 --> 01:00:45,108 CONDITIONS, BUT THE SENIOR 1546 01:00:45,108 --> 01:00:47,643 EXEMPTION EXPANSION IS, IS 1547 01:00:47,643 --> 01:00:50,213 SIGNIFICANTLY IMPACTING, UM, 1548 01:00:50,213 --> 01:00:52,315 TAXABLE PROPERTY VALUE FOR 2027. 1549 01:00:52,315 --> 01:00:55,118 UH, WE DO EXPECT THIS TO BE, 1550 01:00:55,118 --> 01:00:58,621 SINCE IT'S A POLICY CHANGE TO 1551 01:00:58,621 --> 01:01:00,790 BE A SUDDEN DROP IN 2027. AND 1552 01:01:00,790 --> 01:01:04,327 FOR THE TAX BASE TO THEN, UM, 1553 01:01:04,327 --> 01:01:05,695 RESUME ITS GROWTH IN THE OUT 1554 01:01:05,695 --> 01:01:08,498 YEARS, UM, BUT AGAIN, THAT, 1555 01:01:08,498 --> 01:01:11,034 THAT'S WHY, UH, THE EMS LEVY 1556 01:01:11,034 --> 01:01:14,370 HAS BEEN REVISED DOWNWARD, ABOUT 1557 01:01:14,370 --> 01:01:15,972 4,000,000 IN 27 AND 6,000,000 IN 1558 01:01:15,972 --> 01:01:17,006 28. 1559 01:01:17,006 --> 01:01:18,174 -- SO, ALEX, AS I'M HEARING 1560 01:01:18,174 --> 01:01:20,376 THIS, YOU WOULD CHARACTERIZE 1561 01:01:20,376 --> 01:01:20,943 THIS MORE LIKE A CORRECTION 1562 01:01:20,943 --> 01:01:23,479 RATHER THAN A CHANGE. SO LIKE, 1563 01:01:23,479 --> 01:01:24,414 WE'LL MAKE THIS CORRECTION NOW 1564 01:01:24,414 --> 01:01:25,815 AND THEN YOU'LL HAVE A BETTER 1565 01:01:25,815 --> 01:01:27,283 FORECAST IN THE FUTURE. IS THAT 1566 01:01:27,283 --> 01:01:29,018 OR MORE ACCURATE? 1567 01:01:29,018 --> 01:01:30,853 -- UH, WELL, THIS YEAR I 1568 01:01:30,853 --> 01:01:32,221 WOULDN'T CALL IT A CORRECTION. 1569 01:01:32,221 --> 01:01:33,589 I'D CALL IT JUST A CHANGE IN 1570 01:01:33,589 --> 01:01:36,392 THE FORECAST IN RESPONSE TO A 1571 01:01:36,392 --> 01:01:38,728 POLICY CHANGE. IT'S CERTAINLY 1572 01:01:38,728 --> 01:01:40,096 NOT UM, IT'S MORE OF A POLICY 1573 01:01:40,096 --> 01:01:43,032 CHANGE THAN AN ECONOMIC CHANGE 1574 01:01:43,032 --> 01:01:44,934 IN THAT THE STATE HAS TAKEN 1575 01:01:44,934 --> 01:01:47,437 ACTION TO CHANGE THIS EXEMPTION 1576 01:01:47,437 --> 01:01:48,638 PROGRAM AND MAKE IT MORE 1577 01:01:48,638 --> 01:01:51,474 GENEROUS. UM, WHICH AGAIN MEANS 1578 01:01:51,474 --> 01:01:53,142 THAT OUR TAX BASE IS JUST 1579 01:01:53,142 --> 01:01:54,977 SMALLER 1580 01:01:54,977 --> 01:01:57,013 -- SO MAYBE I'LL TRY IT A 1581 01:01:57,013 --> 01:01:57,580 DIFFERENT WAY WITH WITHOUT 1582 01:01:57,580 --> 01:01:58,948 TRYING TO USE ECONOMIC TERMS 1583 01:01:58,948 --> 01:02:00,283 THAT I DON'T HAVE THE DEPTH 1584 01:02:00,283 --> 01:02:04,120 THAT YOU DO. THIS IS A ONE TIME 1585 01:02:04,120 --> 01:02:04,420 EXPERIENCE. 1586 01:02:04,420 --> 01:02:05,822 -- WE WOULD EXPECT. YES, YES. 1587 01:02:05,822 --> 01:02:09,258 BECAUSE IT'S A ONE TIME POLICY 1588 01:02:09,258 --> 01:02:10,860 CHANGE THAT TAKES EFFECT IN 1589 01:02:10,860 --> 01:02:11,160 2027. YEAH. 1590 01:02:11,160 --> 01:02:15,131 -- FANTASTIC. THANK YOU. 1591 01:02:15,131 --> 01:02:15,398 -- YEAH. 1592 01:02:15,398 --> 01:02:20,002 -- ALL RIGHT. SO NOW MOVING TO 1593 01:02:20,002 --> 01:02:21,871 MOVING ON TO THE SALES TAX. UH, 1594 01:02:21,871 --> 01:02:25,641 FORECAST REVISION OVERALL AT 1595 01:02:25,641 --> 01:02:26,909 ABOUT 7.1 MILLION. MOST OF IT IS 1596 01:02:26,909 --> 01:02:30,213 COMING FROM HIGHER REVENUES IN 1597 01:02:30,213 --> 01:02:35,818 2026. UH, THAT IS, UH, DRIVEN 1598 01:02:35,818 --> 01:02:40,523 BY, AS I SAID BEFORE, A BIT OF A 1599 01:02:40,523 --> 01:02:42,225 POSITIVE SURPRISE FOR REVENUES 1600 01:02:42,225 --> 01:02:44,660 COMING FROM TRADE. UM, 1601 01:02:44,660 --> 01:02:47,697 DEFINITELY GOOD NEWS ON THE 1602 01:02:47,697 --> 01:02:50,032 LEISURE AND HOSPITALITY. UM, 1603 01:02:50,032 --> 01:02:50,867 ONLY SLIGHT DOWNWARD REVISION 1604 01:02:50,867 --> 01:02:52,869 FOR THE CONSTRUCTION SECTOR, 1605 01:02:52,869 --> 01:02:54,737 WHICH OVERALL HELD REASONABLY 1606 01:02:54,737 --> 01:02:56,105 STEADY. AND THEN, UH, A GOOD 1607 01:02:56,105 --> 01:02:59,742 CHUNK OF THE 6.6 MILLION IS, UH, 1608 01:02:59,742 --> 01:03:01,844 REVENUES, UH, UM, FROM THE REST 1609 01:03:01,844 --> 01:03:04,480 OF THE SERVICES, UM, 1610 01:03:04,480 --> 01:03:05,114 PROFESSIONAL BUSINESS SERVICES, 1611 01:03:05,114 --> 01:03:06,249 INFORMATION SECTORS WHERE AGAIN, 1612 01:03:06,249 --> 01:03:08,784 WE ARE WORKING ON REVISING OUR 1613 01:03:08,784 --> 01:03:10,953 ESTIMATES FOR THE IMPACT OF 1614 01:03:10,953 --> 01:03:11,888 5814. AND IT'S A LITTLE BIT 1615 01:03:11,888 --> 01:03:12,955 MORE CHALLENGING TO GET THE 1616 01:03:12,955 --> 01:03:15,124 FORECAST RIGHT. SO WE ARE SEEING 1617 01:03:15,124 --> 01:03:19,862 THESE LARGER, UM, UH, RELATIVELY 1618 01:03:19,862 --> 01:03:21,831 LARGER REVISIONS THIS YEAR IN 1619 01:03:21,831 --> 01:03:23,800 THE SALES FORECAST. UM. 1620 01:03:23,800 --> 01:03:24,700 -- CAN YOU EXPLAIN THAT A LITTLE 1621 01:03:24,700 --> 01:03:25,968 BIT MORE ABOUT THE CHANGES FROM 1622 01:03:25,968 --> 01:03:28,738 THE STATE BILL? 1623 01:03:28,738 --> 01:03:30,273 -- SORRY, SAY CHANGES. 1624 01:03:30,273 --> 01:03:31,240 -- IN I CAN'T REMEMBER THE 1625 01:03:31,240 --> 01:03:33,876 STATE BILL'S NAME, NUMBER 1458. 1626 01:03:33,876 --> 01:03:34,610 -- 14. 15. 1627 01:03:34,610 --> 01:03:36,445 -- 14. CAN YOU EXPLAIN WHAT THAT 1628 01:03:36,445 --> 01:03:36,679 MEANS? 1629 01:03:36,679 --> 01:03:40,783 -- YES. 58. 14 HAS EXPANDED THE 1630 01:03:40,783 --> 01:03:43,753 TAX BASE. UH, UM, IT ALSO HAS 1631 01:03:43,753 --> 01:03:44,353 IMPLICATIONS FOR BUSINESS AND 1632 01:03:44,353 --> 01:03:46,389 OCCUPATION TAX. BUT FOR, FOR THE 1633 01:03:46,389 --> 01:03:48,524 SALES TAX, CERTAIN, UH, 1634 01:03:48,524 --> 01:03:51,027 ACTIVITIES, CERTAIN SERVICES 1635 01:03:51,027 --> 01:03:51,827 THAT WERE NOT SUBJECT TO THE 1636 01:03:51,827 --> 01:03:57,733 SALES TAX ARE NOW TAXABLE. AND 1637 01:03:57,733 --> 01:03:59,735 SO THAT EXPANDS THE TAX BASE AND 1638 01:03:59,735 --> 01:04:00,703 ADDS SIGNIFICANTLY TO THE 1639 01:04:00,703 --> 01:04:03,673 REVENUES. IT'S A CUSTOM 1640 01:04:03,673 --> 01:04:04,307 SOFTWARE ADVERTISING, THOSE SORT 1641 01:04:04,307 --> 01:04:06,309 OF THINGS WHERE THERE IS A 1642 01:04:06,309 --> 01:04:07,844 SUBSTANTIAL AMOUNT OF SALES. AND 1643 01:04:07,844 --> 01:04:10,680 THEY DO CONTRIBUTE SIGNIFICANTLY 1644 01:04:10,680 --> 01:04:15,251 WITH THIS CHANGE. 1645 01:04:15,251 --> 01:04:15,651 -- GREAT. THANKS. 1646 01:04:15,651 --> 01:04:17,820 -- UH, THE NEXT ONE IS BUSINESS 1647 01:04:17,820 --> 01:04:20,323 AND OCCUPATION TAX. UH, ON 1648 01:04:20,323 --> 01:04:22,091 AVERAGE, ABOUT SLIGHTLY OVER 2 1649 01:04:22,091 --> 01:04:26,462 MILLION, UH, OVER THE THREE 1650 01:04:26,462 --> 01:04:28,764 YEAR, 6.9 IN TOTAL. UM, IN THE 1651 01:04:28,764 --> 01:04:31,167 THIRD QUARTER REVENUE REPORT, WE 1652 01:04:31,167 --> 01:04:34,837 TALKED A LITTLE BIT MORE ABOUT 1653 01:04:34,837 --> 01:04:35,471 WHERE THE ACTUALS ARE RELATIVE 1654 01:04:35,471 --> 01:04:37,306 TO THE AUGUST FORECAST. THE GAP 1655 01:04:37,306 --> 01:04:41,611 THERE IS ACTUALLY WIDER, UM, AS 1656 01:04:41,611 --> 01:04:44,614 OF THIRD QUARTER, WHICH IS BASED 1657 01:04:44,614 --> 01:04:46,282 ON TAX OBLIGATIONS FOR QUARTER 1658 01:04:46,282 --> 01:04:48,784 ONE AND QUARTER TWO. GIVEN THAT 1659 01:04:48,784 --> 01:04:50,620 LAG BETWEEN WHEN THE ECONOMIC 1660 01:04:50,620 --> 01:04:52,421 ACTIVITY TAKES PLACE, WHEN THE 1661 01:04:52,421 --> 01:04:54,023 RETURNS ARE ARE DUE AND WHEN 1662 01:04:54,023 --> 01:04:57,159 THEY ARE PROCESSED, BUSINESS AND 1663 01:04:57,159 --> 01:04:59,395 OCCUPATION TAX FOR FIRST TWO 1664 01:04:59,395 --> 01:05:01,797 QUARTERS, UM, THOSE REVENUES 1665 01:05:01,797 --> 01:05:05,735 WERE ABOVE OUR FORECAST BY ABOUT 1666 01:05:05,735 --> 01:05:10,339 9.5 MILLION. UM 7.5 OUT OF THAT 1667 01:05:10,339 --> 01:05:12,608 IS DUE TO REFUNDS. WHAT WE 1668 01:05:12,608 --> 01:05:17,179 USUALLY DO, WE TALK TO THE 1669 01:05:17,179 --> 01:05:18,481 OFFICE OF CITY FINANCE TEAM, UH, 1670 01:05:18,481 --> 01:05:22,184 AND, AND GET SOME INPUT FROM 1671 01:05:22,184 --> 01:05:25,821 THEIR TEAM ON WHAT THEY EXPECT 1672 01:05:25,821 --> 01:05:28,357 TO SEE FOR REFUNDS AND 1673 01:05:28,357 --> 01:05:28,991 ASSESSMENTS THROUGHOUT THE NEXT 1674 01:05:28,991 --> 01:05:30,393 COUPLE OF MONTHS. THOSE CAN 1675 01:05:30,393 --> 01:05:32,995 SUBSTANTIALLY CHANGE THE 1676 01:05:32,995 --> 01:05:34,163 REVENUES THAT THE CITY RECEIVES. 1677 01:05:34,163 --> 01:05:35,898 AND WHENEVER THERE IS A LARGE 1678 01:05:35,898 --> 01:05:37,600 REFUND REQUEST, UH, THAT'S 1679 01:05:37,600 --> 01:05:40,536 LIKELY TO BE PROCESSED, 1680 01:05:40,536 --> 01:05:43,906 APPROVED, UH, REVIEWED AND 1681 01:05:43,906 --> 01:05:45,808 PROCESSED AND POSTED BY THE END 1682 01:05:45,808 --> 01:05:47,610 OF THE YEAR. WE DO WANT TO 1683 01:05:47,610 --> 01:05:49,011 INCORPORATE THAT INTO THE 1684 01:05:49,011 --> 01:05:52,848 FORECAST. SO WE HAVE, UH, BEEN 1685 01:05:52,848 --> 01:05:53,983 INFORMED ABOUT A NUMBER OF 1686 01:05:53,983 --> 01:05:56,319 REALLY LARGE REFUNDS, UH, 1687 01:05:56,319 --> 01:05:58,954 OVERALL, THEY ADD UP TO THE 7.5 1688 01:05:58,954 --> 01:06:01,390 MILLION WHERE THERE IS A 1689 01:06:01,390 --> 01:06:04,627 CURRENTLY, UM, CURRENTLY AN 1690 01:06:04,627 --> 01:06:06,529 EXPECTATION THAT THAT WILL BE 1691 01:06:06,529 --> 01:06:07,897 PROCESSED BY THE END OF THE 1692 01:06:07,897 --> 01:06:09,031 YEAR. IT HAS NOT BEEN YET. AND 1693 01:06:09,031 --> 01:06:13,269 SO TEMPORARILY, THE REVENUES ARE 1694 01:06:13,269 --> 01:06:14,737 SIGNIFICANTLY HIGHER. UM, THERE 1695 01:06:14,737 --> 01:06:16,272 IS STILL SOME UNCERTAINTY ABOUT 1696 01:06:16,272 --> 01:06:18,174 THE TIMELINE. THOSE REVIEWS ARE 1697 01:06:18,174 --> 01:06:19,675 NOT EASY. AND SO IT'S A LITTLE 1698 01:06:19,675 --> 01:06:21,477 BIT HARDER TO TELL WHEN EXACTLY 1699 01:06:21,477 --> 01:06:22,678 THAN THEY MIGHT BE WRAPPED UP 1700 01:06:22,678 --> 01:06:26,282 AND FINALIZED. UM, THEY 1701 01:06:26,282 --> 01:06:27,717 OCCASIONALLY DO CHANGE A LOT, 1702 01:06:27,717 --> 01:06:28,918 BUT, UH, GIVEN THE INFORMATION 1703 01:06:28,918 --> 01:06:31,721 THAT, THAT WE HAVE, UH, GIVEN 1704 01:06:31,721 --> 01:06:33,356 WHAT'S LIKELY OUTCOME IS, UH, 1705 01:06:33,356 --> 01:06:35,558 WE DO BELIEVE THAT INSTEAD OF 1706 01:06:35,558 --> 01:06:39,662 9.5, 2.3 MILLION IS MORE OF AN 1707 01:06:39,662 --> 01:06:41,764 APPROPRIATE CHANGE TO THE 26 1708 01:06:41,764 --> 01:06:43,666 REVENUES, GIVEN THAT WE DO HAVE 1709 01:06:43,666 --> 01:06:46,969 SLIGHTLY MORE BUSINESS 1710 01:06:46,969 --> 01:06:47,503 OCCUPATION REVENUES THAN 1711 01:06:47,503 --> 01:06:49,238 EXPECTED. THAT SAID, WITH THE 1712 01:06:49,238 --> 01:06:51,974 BANK RESTRUCTURE AND THAT IMPACT 1713 01:06:51,974 --> 01:06:55,144 OF A 5814, THE UNCERTAINTY ABOUT 1714 01:06:55,144 --> 01:06:56,579 WHERE BUSINESS AND OCCUPATION 1715 01:06:56,579 --> 01:06:58,814 TAX REVENUES WILL LAND THIS YEAR 1716 01:06:58,814 --> 01:07:03,052 IS CERTAINLY LARGER. SO, UH, ONE 1717 01:07:03,052 --> 01:07:04,920 THING THAT I WOULD I SHOULD 1718 01:07:04,920 --> 01:07:06,188 PROBABLY MENTION HERE, AND THAT 1719 01:07:06,188 --> 01:07:09,425 IS A LITTLE BIT TECHNICAL, BUT 1720 01:07:09,425 --> 01:07:10,259 THE RESTRUCTURE HAS ALSO SHIFTED 1721 01:07:10,259 --> 01:07:12,428 SOME OF THE FILERS FROM 1722 01:07:12,428 --> 01:07:14,597 QUARTERLY FREQUENCY TO THE 1723 01:07:14,597 --> 01:07:16,298 ANNUAL FREQUENCY. UH, THE 1724 01:07:16,298 --> 01:07:17,833 DEADLINE FOR THE ANNUAL FILING 1725 01:07:17,833 --> 01:07:19,835 IS, UH, HAS BEEN SHIFTED, HAS 1726 01:07:19,835 --> 01:07:23,572 BEEN MOVED FROM END OF JANUARY 1727 01:07:23,572 --> 01:07:25,074 TO APRIL. UM, THAT MEANS THAT 1728 01:07:25,074 --> 01:07:29,011 SOME OF THOSE REVENUES, UH, CAN 1729 01:07:29,011 --> 01:07:31,313 ACTUALLY, FOR 2026, OBLIGATIONS 1730 01:07:31,313 --> 01:07:33,783 CAN ACTUALLY ONLY POST AFTER THE 1731 01:07:33,783 --> 01:07:37,286 BOOKS CLOSED FOR 2026. UH, AND 1732 01:07:37,286 --> 01:07:40,489 SO WE ARE NOT, UH, AGAIN, THAT, 1733 01:07:40,489 --> 01:07:41,757 THAT, THAT, UH, ADDITIONAL 1734 01:07:41,757 --> 01:07:43,159 UNCERTAINTY THERE MEANS THAT 1735 01:07:43,159 --> 01:07:44,860 WHAT WE ARE PRESENTING HERE 1736 01:07:44,860 --> 01:07:48,764 SHOULD, UH, UH, IS OUR BEST 1737 01:07:48,764 --> 01:07:49,398 UNDERSTANDING. BUT CERTAINLY WE 1738 01:07:49,398 --> 01:07:50,065 HAVE LESS CONFIDENCE IN THE 1739 01:07:50,065 --> 01:07:52,701 BUSINESS OCCUPATION FORECAST. 1740 01:07:52,701 --> 01:07:55,771 UH, AND I WANT TO BE REALLY, UH, 1741 01:07:55,771 --> 01:07:58,507 REALLY, UM, CLEAR ABOUT THAT 1742 01:07:58,507 --> 01:07:59,141 LESS CONFIDENCE THIS YEAR THAN 1743 01:07:59,141 --> 01:08:01,310 IN PREVIOUS YEARS TO MANY, A LOT 1744 01:08:01,310 --> 01:08:04,547 OF THINGS, A LOT OF MOVING PARTS 1745 01:08:04,547 --> 01:08:07,016 HERE. UM, MOVING ON TO UTILITY 1746 01:08:07,016 --> 01:08:07,950 TAX PUBLIC UTILITY TAX, WE CAN 1747 01:08:07,950 --> 01:08:09,552 PROVIDE SOME MORE CONTEXT THERE. 1748 01:08:09,552 --> 01:08:11,086 -- YES. THANK YOU JOHN. I'LL BE 1749 01:08:11,086 --> 01:08:11,921 HAPPY TO WALK THROUGH WHAT'S 1750 01:08:11,921 --> 01:08:15,691 GOING ON WITH UTILITY TAXES. SO 1751 01:08:15,691 --> 01:08:16,892 PRIVATE UTILITY TAXES ARE. 1752 01:08:16,892 --> 01:08:17,993 -- SEAN, CAN YOU INTRODUCE 1753 01:08:17,993 --> 01:08:18,260 YOURSELF? 1754 01:08:18,260 --> 01:08:19,228 -- OH OF COURSE, OF COURSE. MY 1755 01:08:19,228 --> 01:08:21,497 NAME IS SEAN THOMPSON. I WORK 1756 01:08:21,497 --> 01:08:22,965 WITH JAN DURAS AND THE OFFICE OF 1757 01:08:22,965 --> 01:08:24,733 ECONOMIC REVENUE FORECAST, AND I 1758 01:08:24,733 --> 01:08:25,234 HELP DO PRIVATE UTILITY 1759 01:08:25,234 --> 01:08:26,202 FORECASTS, ALONG WITH SOME 1760 01:08:26,202 --> 01:08:29,171 ASSESSED VALUE WORK AS WELL. UM, 1761 01:08:29,171 --> 01:08:31,474 ANYWAYS, SO PRIVATE UTILITY 1762 01:08:31,474 --> 01:08:33,309 TAXES ARE TAXES ON PRIVATE 1763 01:08:33,309 --> 01:08:35,311 COMPANIES THAT PROVIDE UTILITIES 1764 01:08:35,311 --> 01:08:36,545 LIKE CABLE, TELEPHONE, STEAM, 1765 01:08:36,545 --> 01:08:39,148 NATURAL GAS, AND SOLID WASTE. AS 1766 01:08:39,148 --> 01:08:41,016 A GROUP, THERE ARE ABOUT 40 TO 1767 01:08:41,016 --> 01:08:44,153 45 MILLION A YEAR FOR THE CITY. 1768 01:08:44,153 --> 01:08:45,688 AND AS CUSTOMERS BILLS GO UP, 1769 01:08:45,688 --> 01:08:47,156 REVENUES GO UP. AND AS CUSTOMERS 1770 01:08:47,156 --> 01:08:48,224 USE LESS OR THEY MOVE AWAY FROM 1771 01:08:48,224 --> 01:08:49,758 THE SERVICE, REVENUES WILL GO 1772 01:08:49,758 --> 01:08:51,927 DOWN. ACTUALS THROUGH SEPTEMBER 1773 01:08:51,927 --> 01:08:53,896 HAVE BEEN TRACKING ABOUT 1.8 1774 01:08:53,896 --> 01:08:55,998 MILLION BELOW EXPECTATIONS, 1775 01:08:55,998 --> 01:08:57,500 ABOUT 6%. AND THAT FORECASTING 1776 01:08:57,500 --> 01:08:59,735 MISS IS PRIMARILY PRIMARILY 1777 01:08:59,735 --> 01:09:01,670 DRIVEN BY CABLE AND TELEPHONE 1778 01:09:01,670 --> 01:09:03,939 FORECASTS. SO FOR TELEPHONE IN 1779 01:09:03,939 --> 01:09:04,874 2025, WE ACTUALLY HAD A LARGE 1780 01:09:04,874 --> 01:09:06,542 BOOST IN PAYMENTS. AND THIS 1781 01:09:06,542 --> 01:09:09,178 PATTERN DID NOT OCCUR AGAIN IN 1782 01:09:09,178 --> 01:09:13,782 2026. UM AS RETURNED TO HIS LONG 1783 01:09:13,782 --> 01:09:15,618 THIS LONG RUN TREND OF CONTINUED 1784 01:09:15,618 --> 01:09:17,753 DECLINE AS CUSTOMERS MOVE AWAY 1785 01:09:17,753 --> 01:09:19,622 FROM LANDLINES. UM, CABLE IS A 1786 01:09:19,622 --> 01:09:22,391 SIMILAR STORY. UM, AS PEOPLE CUT 1787 01:09:22,391 --> 01:09:24,393 THE CORD, CABLE COMPANIES HAVE 1788 01:09:24,393 --> 01:09:25,961 LESS SUBSCRIBERS AND WE'VE SEEN 1789 01:09:25,961 --> 01:09:27,930 THAT DECLINE REVENUES WITHIN OUR 1790 01:09:27,930 --> 01:09:29,331 RECEIPTS AS WELL TO NATURAL GAS, 1791 01:09:29,331 --> 01:09:31,367 WHICH IS ANOTHER PRIVATE UTILITY 1792 01:09:31,367 --> 01:09:32,801 IS A LITTLE BIT OF A POSITIVE OR 1793 01:09:32,801 --> 01:09:34,803 A BRIGHT SPOT IN SPITE OF A 1794 01:09:34,803 --> 01:09:37,172 WARMER WINTER. THIS YEAR, WE 1795 01:09:37,172 --> 01:09:38,807 ACTUALLY HAD HIGHER REVENUES, 1796 01:09:38,807 --> 01:09:41,076 PRIMARILY DRIVEN BY PUGET SOUND 1797 01:09:41,076 --> 01:09:41,710 ENERGY'S RATE INCREASE THAT 1798 01:09:41,710 --> 01:09:43,612 OCCURRED EARLIER THIS YEAR. UM, 1799 01:09:43,612 --> 01:09:44,713 WHAT DOES THAT MEAN FOR PRIVATE 1800 01:09:44,713 --> 01:09:46,315 UTILITIES? WELL, WE CAN SEE HERE 1801 01:09:46,315 --> 01:09:50,519 THAT THE FOR 2026, WE ACTUALLY 1802 01:09:50,519 --> 01:09:51,053 INCREASED REVENUES BY 0.2 1803 01:09:51,053 --> 01:09:54,089 MILLION 200,000. BUT FOR 2027, 1804 01:09:54,089 --> 01:09:56,592 2028, WE HAVE A DECLINE OF 1.2 1805 01:09:56,592 --> 01:09:59,361 MILLION AND 2.4 MILLION, 1806 01:09:59,361 --> 01:10:03,699 RESPECTIVELY. UM, THIS IS 1807 01:10:03,699 --> 01:10:04,233 PRIMARILY REFLECTING THE 1808 01:10:04,233 --> 01:10:05,935 RESETTING OF CABLE AND TELEPHONE 1809 01:10:05,935 --> 01:10:06,902 FORECASTS TO REFLECT THE LOWER 1810 01:10:06,902 --> 01:10:09,238 PAYMENTS THIS YEAR. UM, AND 1811 01:10:09,238 --> 01:10:10,539 FURTHERMORE, SOME SLIGHT 1812 01:10:10,539 --> 01:10:11,173 OFFSETTING FROM NATURAL GAS DUE 1813 01:10:11,173 --> 01:10:13,442 TO ITS HIGHER RATES. UM, A FEW 1814 01:10:13,442 --> 01:10:15,911 THINGS TO KEEP AN EYE OUT FOR. 1815 01:10:15,911 --> 01:10:18,314 PRIVATE UTILITY TAXES, WEATHER 1816 01:10:18,314 --> 01:10:18,881 FORECASTERS ARE EXPECTING A 1817 01:10:18,881 --> 01:10:21,083 STRONGER EL NINO THIS YEAR, 1818 01:10:21,083 --> 01:10:22,117 WHICH MEANS A MILDER WINTER FOR 1819 01:10:22,117 --> 01:10:23,452 US WITH LESS HEAT DEMAND, WE 1820 01:10:23,452 --> 01:10:24,987 SHOULD EXPECT LESS REVENUES 1821 01:10:24,987 --> 01:10:26,722 WITHIN STEAM AND NATURAL GAS. 1822 01:10:26,722 --> 01:10:29,058 UM, ON THE OPPOSITE SIDE, ON THE 1823 01:10:29,058 --> 01:10:31,560 POSITIVE SIDE, PUGET SOUND 1824 01:10:31,560 --> 01:10:32,061 ENERGY HAS ASKED STATE 1825 01:10:32,061 --> 01:10:33,329 REGULATORS TO FURTHER INCREASE 1826 01:10:33,329 --> 01:10:36,198 RATES AT THE BEGINNING OF 2027. 1827 01:10:36,198 --> 01:10:36,832 THIS DECISION IS STILL PENDING 1828 01:10:36,832 --> 01:10:38,601 AND ISN'T REALLY REFLECTED 1829 01:10:38,601 --> 01:10:40,369 WITHIN THIS FORECAST. AND THEN 1830 01:10:40,369 --> 01:10:42,538 FINALLY, DUE TO HIGH OFFICE 1831 01:10:42,538 --> 01:10:44,607 VACANCY RATES AND BUILDING 1832 01:10:44,607 --> 01:10:45,441 EMISSION STANDARDS, UM, THAT 1833 01:10:45,441 --> 01:10:47,076 MIGHT SUPPRESS GROWTH IN NATURAL 1834 01:10:47,076 --> 01:10:48,877 GAS AND STEAM IN THE LONG TERM. 1835 01:10:48,877 --> 01:10:51,914 UM, BUT IN A NUTSHELL, PRIVATE 1836 01:10:51,914 --> 01:10:53,849 UTILITIES IS A STABLE AND SMALL 1837 01:10:53,849 --> 01:10:55,751 TAX BASE AS MOVING AWAY FROM 1838 01:10:55,751 --> 01:10:58,387 CABLE AND TELEPHONE REVENUES AND 1839 01:10:58,387 --> 01:11:00,856 MORE TOWARDS ENERGY. AND WE HAVE 1840 01:11:00,856 --> 01:11:02,191 REVISED THE GROWTH DOWNWARD TO 1841 01:11:02,191 --> 01:11:03,626 REFLECT THE PAYMENTS WE HAVE 1842 01:11:03,626 --> 01:11:05,060 SEEN THIS YEAR. UM, AND I THINK 1843 01:11:05,060 --> 01:11:06,562 THAT'S ABOUT IT. IF THERE'S ANY 1844 01:11:06,562 --> 01:11:07,363 QUESTIONS I'LL BE HAPPY TO 1845 01:11:07,363 --> 01:11:08,631 ANSWER. IF NOT, I'LL BE HAPPY 1846 01:11:08,631 --> 01:11:10,466 TO TOSS IT BACK TO CBO. 1847 01:11:10,466 --> 01:11:11,700 -- YEAH, JUST CLARIFYING THERE. 1848 01:11:11,700 --> 01:11:13,168 WHEN YOU WERE TALKING ABOUT THE 1849 01:11:13,168 --> 01:11:15,871 PSC, NATURAL GAS RATE HIKES THAT 1850 01:11:15,871 --> 01:11:19,375 ARE GOING ON, THAT IS WHAT IS 1851 01:11:19,375 --> 01:11:20,075 DRIVING UP YOUR ANALYSIS. BUT 1852 01:11:20,075 --> 01:11:22,177 WHAT YOU ARE WORRIED FOR IS A 1853 01:11:22,177 --> 01:11:24,313 MILD WINTER. OH, YES. 1854 01:11:24,313 --> 01:11:24,780 ESSENTIALLY CORRECT. 1855 01:11:24,780 --> 01:11:26,115 -- THE WEATHER FORECAST IS 1856 01:11:26,115 --> 01:11:28,083 EXPECTING A MILD WINTER. THAT'S 1857 01:11:28,083 --> 01:11:29,218 TO THE DOWNSIDE FOR STEAM AND 1858 01:11:29,218 --> 01:11:31,020 NATURAL GAS. AS FOR THE UPSIDE, 1859 01:11:31,020 --> 01:11:33,288 YEAH THERE'S ANOTHER RATE 1860 01:11:33,288 --> 01:11:34,056 INCREASE ON THE BOOKS HAS BEEN 1861 01:11:34,056 --> 01:11:35,658 APPROVED YET. IT WOULD ONLY 1862 01:11:35,658 --> 01:11:37,192 AFFECT NATURAL GAS. IT WOULDN'T 1863 01:11:37,192 --> 01:11:38,227 AFFECT STEAM. BUT THOSE ARE THE 1864 01:11:38,227 --> 01:11:39,962 TWO FACTORS WITHIN THE ENERGY 1865 01:11:39,962 --> 01:11:41,864 SIDE OF PRIVATE UTILITIES. YES, 1866 01:11:41,864 --> 01:11:42,798 GREAT. 1867 01:11:42,798 --> 01:11:44,166 -- BUT IF A STEAM PLANT USED 1868 01:11:44,166 --> 01:11:45,301 NATURAL GAS TO CREATE THEIR 1869 01:11:45,301 --> 01:11:45,934 STEAM, THERE MIGHT BE SOMETHING 1870 01:11:45,934 --> 01:11:47,102 THERE. 1871 01:11:47,102 --> 01:11:47,703 -- POTENTIALLY, POTENTIALLY, 1872 01:11:47,703 --> 01:11:49,605 YES. IT'S A VERY SMALL MARKET, 1873 01:11:49,605 --> 01:11:49,872 BUT YES. 1874 01:11:49,872 --> 01:11:50,572 -- FAIR ENOUGH. WELL, WE'LL TURN 1875 01:11:50,572 --> 01:11:52,174 IT BACK OVER TO CBO. AND IF YOU 1876 01:11:52,174 --> 01:11:52,808 WANT TO INTRODUCE YOURSELVES FOR 1877 01:11:52,808 --> 01:11:54,043 THE RECORD, AS YOU START YOUR 1878 01:11:54,043 --> 01:11:58,781 SECTIONS. THANK YOU. 1879 01:11:58,781 --> 01:12:01,350 -- I WILL START WITH PUBLIC 1880 01:12:01,350 --> 01:12:02,051 UTILITY TAXES AND OTHER CITY 1881 01:12:02,051 --> 01:12:04,186 TAXES. SO FOR PUBLIC UTILITY 1882 01:12:04,186 --> 01:12:07,890 TAXES, UM, PERHAPS STANDING OUT 1883 01:12:07,890 --> 01:12:10,826 A BIT BECAUSE THERE IS NO 1884 01:12:10,826 --> 01:12:13,062 CHANGE. 2026 ACTUAL COLLECTIONS 1885 01:12:13,062 --> 01:12:14,063 ARE TRACKING VERY CLOSELY WITH 1886 01:12:14,063 --> 01:12:19,034 FORECASTS CURRENTLY. UM, THERE 1887 01:12:19,034 --> 01:12:21,637 IS ALSO TYPICALLY NOT A 1888 01:12:21,637 --> 01:12:23,906 COMPELLING ARGUMENT TO CHANGE. 1889 01:12:23,906 --> 01:12:26,141 UM, THE FORECAST FOR THE BUDGET 1890 01:12:26,141 --> 01:12:28,377 YEARS SO CLOSE TO THE PROPOSED 1891 01:12:28,377 --> 01:12:32,548 BUDGET, UH, PUBLIC UTILITY TAX 1892 01:12:32,548 --> 01:12:35,084 REVENUES ARE USUALLY A FAIRLY 1893 01:12:35,084 --> 01:12:37,886 STABLE REVENUE SOURCE. UM, 1894 01:12:37,886 --> 01:12:40,155 BECAUSE USAGE IS USUALLY FAIRLY 1895 01:12:40,155 --> 01:12:42,424 STABLE. UM, THE, IT CAN 1896 01:12:42,424 --> 01:12:44,993 OBVIOUSLY CHANGE WITH SUDDEN 1897 01:12:44,993 --> 01:12:46,729 WEATHER FLUCTUATIONS, BUT 1898 01:12:46,729 --> 01:12:49,998 TYPICALLY, UM, DON'T, UH, 1899 01:12:49,998 --> 01:12:52,468 AREN'T IMPACTED VERY MUCH BY 1900 01:12:52,468 --> 01:12:54,803 ECONOMIC CONDITIONS. AND SO 1901 01:12:54,803 --> 01:12:57,406 THERE'S NO CHANGE FOR PUBLIC 1902 01:12:57,406 --> 01:12:59,908 UTILITY TAXES. OTHER CITY TAXES 1903 01:12:59,908 --> 01:13:01,643 ARE REVISED DOWN JUST SLIGHTLY. 1904 01:13:01,643 --> 01:13:03,412 UM, ACROSS THE THREE YEARS THAT 1905 01:13:03,412 --> 01:13:05,614 IS DRIVEN SOLELY BY LEASEHOLD 1906 01:13:05,614 --> 01:13:09,785 EXCISE TAX. UM, 2026 ACTUALS ARE 1907 01:13:09,785 --> 01:13:11,920 COMING IN A LITTLE BIT LOWER. UM 1908 01:13:11,920 --> 01:13:15,524 DUE TO THE LARGEST TAXPAYERS. 1909 01:13:15,524 --> 01:13:17,693 UM, MAKING PAYMENTS THAT ARE 1910 01:13:17,693 --> 01:13:20,062 LOWER THAN EXPECTED. AND THOSE 1911 01:13:20,062 --> 01:13:22,698 LARGER TAXPAYERS INCLUDE SEATAC 1912 01:13:22,698 --> 01:13:27,603 AIRPORT AND THE PORT OF SEATTLE. 1913 01:13:27,603 --> 01:13:29,471 UM, IT'S HARD TO SAY THAT THERE 1914 01:13:29,471 --> 01:13:33,342 IS A DIRECT CORRELATION BETWEEN 1915 01:13:33,342 --> 01:13:33,876 THIS REVENUE AND ECONOMIC 1916 01:13:33,876 --> 01:13:35,344 CONDITIONS, PARTLY BECAUSE A LOT 1917 01:13:35,344 --> 01:13:39,948 OF THESE CONTRACTS CAN BE, UM, 1918 01:13:39,948 --> 01:13:40,949 CAN SPAN MULTIPLE YEARS. UH, AND 1919 01:13:40,949 --> 01:13:42,985 SO IT'S, IT'S A LITTLE BIT HARD 1920 01:13:42,985 --> 01:13:44,586 TO TEASE OUT THE YEAR OVER YEAR 1921 01:13:44,586 --> 01:13:48,190 TREND. AND SO, UM, SO 26 THROUGH 1922 01:13:48,190 --> 01:13:50,092 28, UH, HAVE BEEN REVISED DOWN 1923 01:13:50,092 --> 01:13:53,262 DUE TO, UM, WHAT ACTUALS ARE 1924 01:13:53,262 --> 01:13:58,333 LOOKING LIKE THIS YEAR. 1925 01:13:58,333 --> 01:14:00,636 -- HI. MATT FRANKLIN CITY BUDGET 1926 01:14:00,636 --> 01:14:04,339 OFFICE. UM, PARKING METER 1927 01:14:04,339 --> 01:14:06,575 FORECASTS. UM, WE HAVE IMPROVED 1928 01:14:06,575 --> 01:14:09,144 OUR PARKING METER FORECASTS 1% 1929 01:14:09,144 --> 01:14:13,248 IN 2026 AND 5% IN BOTH 27 AND 1930 01:14:13,248 --> 01:14:15,417 2028. AND THE GAINS CAME 1931 01:14:15,417 --> 01:14:16,952 PRIMARILY FROM NOVEMBER RATE 1932 01:14:16,952 --> 01:14:18,453 CHANGES THAT SDOT RECENTLY 1933 01:14:18,453 --> 01:14:19,721 ANNOUNCED, WHICH ARE INCREASING 1934 01:14:19,721 --> 01:14:22,057 PARKING RATES, AND 35% OF OUR 1935 01:14:22,057 --> 01:14:25,060 BUSIEST LOCATIONS AND DECREASING 1936 01:14:25,060 --> 01:14:26,462 THEM IN 9%. ADDITIONALLY, WE HAD 1937 01:14:26,462 --> 01:14:28,697 SOME MODEST GAINS FROM 1938 01:14:28,697 --> 01:14:30,666 ADDITIONAL EVENTS THAT WERE 1939 01:14:30,666 --> 01:14:32,501 ANNOUNCED AT CLIMATE CLIMATE 1940 01:14:32,501 --> 01:14:34,803 PLEDGE ARENA. UM, AND THOSE WERE 1941 01:14:34,803 --> 01:14:36,138 CARRIED FORWARD IN OUT YEARS AS 1942 01:14:36,138 --> 01:14:40,576 WELL. UM, UM, ADDITIONALLY, 1943 01:14:40,576 --> 01:14:42,311 COURT FINES, UM, WE, THE COURT 1944 01:14:42,311 --> 01:14:45,414 FINED FORECAST WAS, UH, PULLED 1945 01:14:45,414 --> 01:14:47,916 DOWN AND THAT WAS DRIVEN BY 1946 01:14:47,916 --> 01:14:50,919 PARKING CITATIONS. OUR PARKING 1947 01:14:50,919 --> 01:14:56,492 CITATIONS, UH, IN 2025, Q4, OUR 1948 01:14:56,492 --> 01:14:56,959 CITATIONS ISSUED FELL 1949 01:14:56,959 --> 01:14:58,594 DRASTICALLY 33%. UM, IN NOVEMBER 1950 01:14:58,594 --> 01:15:01,997 AND IT FELL 50% IN DECEMBER TO A 1951 01:15:01,997 --> 01:15:03,298 YEAR PRIOR. OUR MODEL HAS SHOWN 1952 01:15:03,298 --> 01:15:06,001 IN 2026 THAT CITATIONS WERE 1953 01:15:06,001 --> 01:15:08,804 RETURNING TO 2025 LEVELS FASTER 1954 01:15:08,804 --> 01:15:11,273 THAN ANTICIPATED. UM, HOWEVER, 1955 01:15:11,273 --> 01:15:13,075 Q3 RESULTS HAVE BUCKED THAT 1956 01:15:13,075 --> 01:15:15,143 TREND. Q3 PARKING CITATIONS 1957 01:15:15,143 --> 01:15:20,616 FINISHED DOWN 14% TO 2025, AND 1958 01:15:20,616 --> 01:15:21,683 WE EXPECT THAT TO CONTINUE GOING 1959 01:15:21,683 --> 01:15:23,719 FORWARD. AND OUR CONVERSATIONS 1960 01:15:23,719 --> 01:15:26,255 WITH PARKING ENFORCEMENT, 1961 01:15:26,255 --> 01:15:26,855 MANAGEMENT, WE UNDERSTAND THE 1962 01:15:26,855 --> 01:15:28,357 DECLINE IS DRIVEN BY THE 1963 01:15:28,357 --> 01:15:30,425 DISCONTINUATION OF AUTOMATIC 1964 01:15:30,425 --> 01:15:32,027 LICENSE PLATE READERS AND 1965 01:15:32,027 --> 01:15:32,661 STAFFING EXPECTED TO REMAIN AT 1966 01:15:32,661 --> 01:15:35,898 THEIR CURRENT LEVELS GOING 1967 01:15:35,898 --> 01:15:36,164 FORWARD. 1968 01:15:36,164 --> 01:15:37,232 -- THANK YOU. IT SOUNDS LIKE 1969 01:15:37,232 --> 01:15:38,767 WE'RE FINALLY GETTING THE TAIL 1970 01:15:38,767 --> 01:15:41,069 OF OUR THE TAIL END OF CHANGING 1971 01:15:41,069 --> 01:15:43,338 OUR PARKING RATES AND INCREASING 1972 01:15:43,338 --> 01:15:45,641 OUR FINES. IT USED TO BE MORE IT 1973 01:15:45,641 --> 01:15:47,109 USED TO BE CHEAPER JUST TO GET A 1974 01:15:47,109 --> 01:15:48,477 TICKET THAN TO PAY YOUR PARKING 1975 01:15:48,477 --> 01:15:50,112 RATES. UH, THE ONE QUESTION THAT 1976 01:15:50,112 --> 01:15:52,414 YOU MIGHT NOT HAVE THE ANSWER 1977 01:15:52,414 --> 01:15:53,215 TO, UH, BECAUSE THIS IS REAL 1978 01:15:53,215 --> 01:15:55,217 TIME. I'M JUST THINKING, I KNOW 1979 01:15:55,217 --> 01:15:57,786 THAT THE PARKING RATE STRUCTURE 1980 01:15:57,786 --> 01:15:59,922 FOR UPTOWN AROUND CLIMATE PLEDGE 1981 01:15:59,922 --> 01:16:03,959 ARENA IS DYNAMIC BECAUSE IT IS 1982 01:16:03,959 --> 01:16:06,428 INTENDED TO SUPPORT THE LOCAL 1983 01:16:06,428 --> 01:16:07,596 NEIGHBORHOOD WHILE ENSURING WHEN 1984 01:16:07,596 --> 01:16:09,298 THERE ARE BIG EVENTS THAT PEOPLE 1985 01:16:09,298 --> 01:16:10,632 CHOOSE OTHER MODES OF 1986 01:16:10,632 --> 01:16:11,733 TRANSPORTATION OR FIND A PLACE 1987 01:16:11,733 --> 01:16:14,036 THAT DOES NOT TAKE FROM THE 1988 01:16:14,036 --> 01:16:15,103 LOCAL NEIGHBORHOOD. IS THAT DO 1989 01:16:15,103 --> 01:16:16,705 WE KNOW IF THAT SAME MODEL IS 1990 01:16:16,705 --> 01:16:18,674 APPLIED TO THE STADIUMS AND THE 1991 01:16:18,674 --> 01:16:21,643 STADIUM AREA HERE IN SOTO? 1992 01:16:21,643 --> 01:16:23,612 -- UM, TO MY KNOWLEDGE, IT IS 1993 01:16:23,612 --> 01:16:26,048 NOT, I THINK CLIMATE PLEDGE 1994 01:16:26,048 --> 01:16:28,317 ARENA IS THE ONLY NEIGHBORHOOD 1995 01:16:28,317 --> 01:16:29,451 THAT HAS THAT PRICING MODEL 1996 01:16:29,451 --> 01:16:30,485 IMPLEMENTED RIGHT NOW. 1997 01:16:30,485 --> 01:16:31,720 -- THANK YOU. I THINK WE MIGHT 1998 01:16:31,720 --> 01:16:35,090 NEED TO LOOK INTO THAT. KEEP ON 1999 01:16:35,090 --> 01:16:36,491 GOING. AND JOE, DID YOU GET RID 2000 01:16:36,491 --> 01:16:39,094 OF PARKING? YEAH, YEAH. PARKING 2001 01:16:39,094 --> 01:16:39,328 METERS. 2002 01:16:39,328 --> 01:16:40,862 -- YEAH. I DUMPED IT ON MATT. 2003 01:16:40,862 --> 01:16:42,130 THAT'S RIGHT. YEAH. 2004 01:16:42,130 --> 01:16:43,065 -- WELL YOU DID ALL THE HARD 2005 01:16:43,065 --> 01:16:44,833 WORK AND NOW NOW THINGS ARE 2006 01:16:44,833 --> 01:16:47,002 STABILIZING. UH, YOU MISSED A 2007 01:16:47,002 --> 01:16:48,870 COUPLE OF YEARS OF, UH, NOT 2008 01:16:48,870 --> 01:16:51,239 JOE'S FAULT, BUT UP AND DOWN. 2009 01:16:51,239 --> 01:16:51,440 YEAH. 2010 01:16:51,440 --> 01:16:52,908 -- WE SAW IT IN THE DATA. 2011 01:16:52,908 --> 01:16:55,410 -- YEAH, YEAH. UM. YEAH. WELCOME 2012 01:16:55,410 --> 01:16:56,912 TO MATT. UH, NEW MEMBER OF OUR 2013 01:16:56,912 --> 01:16:59,214 TEAM, AND I'M VERY HAPPY TO 2014 01:16:59,214 --> 01:17:01,783 HAVE HIM IN DOING THESE KIND OF 2015 01:17:01,783 --> 01:17:02,351 TOPSY TURVY TRANSPORTATION 2016 01:17:02,351 --> 01:17:05,287 RELATED REVENUE STREAMS. UM, I 2017 01:17:05,287 --> 01:17:07,089 WILL SPEAK TO THE LINE IN THIS 2018 01:17:07,089 --> 01:17:08,357 TABLE LABEL LICENSES, PERMITS, 2019 01:17:08,357 --> 01:17:10,258 INTEREST INCOME AND OTHER, WHICH 2020 01:17:10,258 --> 01:17:12,260 IS, UM, QUITE A GRAB BAG OF 2021 01:17:12,260 --> 01:17:14,563 THINGS, BUT, THE, THE LION'S 2022 01:17:14,563 --> 01:17:15,664 SHARE OF WHAT HAPPENS HERE IS 2023 01:17:15,664 --> 01:17:17,599 MOSTLY AN INTEREST INCOME. AND 2024 01:17:17,599 --> 01:17:19,101 THAT'S WHAT'S DRIVING THE 2025 01:17:19,101 --> 01:17:20,769 CHANGE WE SEE HERE. WE SEE A 2026 01:17:20,769 --> 01:17:23,572 REVISION UPWARD OF, UH, ABOUT 2027 01:17:23,572 --> 01:17:25,374 ALMOST 9 MILLION, 8.9 MILLION 2028 01:17:25,374 --> 01:17:27,209 ACROSS THE THREE YEAR TERM HERE. 2029 01:17:27,209 --> 01:17:30,078 UM, THIS IS DRIVEN LARGELY BY 2030 01:17:30,078 --> 01:17:33,315 THE BOND MARKET. UM, WE, YOU'VE 2031 01:17:33,315 --> 01:17:35,017 SEEN MAYBE IN THE HEADLINES 2032 01:17:35,017 --> 01:17:36,785 LATELY THAT YIELDS ON TREASURY, 2033 01:17:36,785 --> 01:17:39,187 UH, TREASURIES ARE UP 2034 01:17:39,187 --> 01:17:40,856 SIGNIFICANTLY. UM, AND MOST OF 2035 01:17:40,856 --> 01:17:45,060 OUR CASH BALANCES ARE, ARE, UM, 2036 01:17:45,060 --> 01:17:45,694 DEPOSITED OR INVESTED IN THESE 2037 01:17:45,694 --> 01:17:48,463 SHORT TERM, VERY SECURE U.S. 2038 01:17:48,463 --> 01:17:52,467 TREASURY BONDS. UH, AND SO, UM, 2039 01:17:52,467 --> 01:17:53,068 THIS UPWARD REVISION REFLECTS 2040 01:17:53,068 --> 01:17:55,370 HIGHER EXPECTED YIELDS FROM 2041 01:17:55,370 --> 01:17:59,841 THOSE INVESTMENTS UM, THE NEXT 2042 01:17:59,841 --> 01:18:02,177 ROW IN THIS TABLE IS EXCUSE ME, 2043 01:18:02,177 --> 01:18:03,812 IS LABELED REVENUE FROM OTHER 2044 01:18:03,812 --> 01:18:06,982 PUBLIC UTILITIES. UM, VERY 2045 01:18:06,982 --> 01:18:09,885 LITTLE CHANGE HERE UP ALMOST 2046 01:18:09,885 --> 01:18:12,187 1,000,000.7, UH, IN OR $700,000 2047 01:18:12,187 --> 01:18:13,622 ACROSS THE THREE YEAR TERM. 2048 01:18:13,622 --> 01:18:17,292 THESE THIS LINE IS COMPOSED OF 2049 01:18:17,292 --> 01:18:18,860 STATE SHARED REVENUES. THESE ARE 2050 01:18:18,860 --> 01:18:20,195 REVENUES THAT THE STATE SHARES 2051 01:18:20,195 --> 01:18:21,830 WITH LOCAL GOVERNMENT, UH, FOR 2052 01:18:21,830 --> 01:18:24,099 THINGS SUCH AS MARIJUANA AND 2053 01:18:24,099 --> 01:18:26,368 LIQUOR SALES, EXCISE TAXES AND, 2054 01:18:26,368 --> 01:18:29,071 UH, CRIMINAL JUSTICE PURPOSES, 2055 01:18:29,071 --> 01:18:30,906 EXPLICITLY. UM, AND WE HAVE HAD 2056 01:18:30,906 --> 01:18:35,477 SOME DECLINES IN OUR, IN THOSE 2057 01:18:35,477 --> 01:18:37,646 TRANSFERS FOR MARIJUANA AND 2058 01:18:37,646 --> 01:18:39,214 LIQUOR EXCISE TAXES. THOSE HAVE 2059 01:18:39,214 --> 01:18:41,750 BEEN OFFSET HERE BY HIGHER THAN 2060 01:18:41,750 --> 01:18:43,652 EXPECTED, UH, TRANSFERS FOR 2061 01:18:43,652 --> 01:18:46,488 CRIMINAL JUSTICE, UH, PURPOSES, 2062 01:18:46,488 --> 01:18:48,790 WHICH ARE MOSTLY BASED ON, UH, 2063 01:18:48,790 --> 01:18:50,358 SALES TAXES TO THE STATE AND A 2064 01:18:50,358 --> 01:18:53,295 SORT OF COMPLICATED FORMULA 2065 01:18:53,295 --> 01:18:54,563 POPULATION CRIME RATES. UM, AND 2066 01:18:54,563 --> 01:18:57,666 SO, UM, WE'VE SEEN SLIGHTLY 2067 01:18:57,666 --> 01:18:59,634 HIGHER, UH, TRANSFERS FROM THOSE 2068 01:18:59,634 --> 01:19:02,938 THAT OFFSET DIPS IN OTHER, 2069 01:19:02,938 --> 01:19:05,040 TRANSFERS. UM, SO, UM, NO OTHER 2070 01:19:05,040 --> 01:19:08,810 CHANGES IN THIS TABLE. UM, 2071 01:19:08,810 --> 01:19:09,444 UNLESS THERE'S QUESTIONS ON 2072 01:19:09,444 --> 01:19:11,179 THOSE FINAL LINES OR ANY OF MY 2073 01:19:11,179 --> 01:19:12,914 COLLEAGUES WANT TO SAY ANYTHING 2074 01:19:12,914 --> 01:19:14,916 THERE. UM, UH, I THINK I CAN 2075 01:19:14,916 --> 01:19:18,887 PASS IT BACK TO YOU ON. 2076 01:19:18,887 --> 01:19:19,955 -- SO IF THERE ARE NO OTHER 2077 01:19:19,955 --> 01:19:21,656 QUESTIONS ABOUT THE GENERAL 2078 01:19:21,656 --> 01:19:23,992 FUND, WE CAN MOVE ON TO NON 2079 01:19:23,992 --> 01:19:24,326 GENERAL FUND. 2080 01:19:24,326 --> 01:19:25,694 -- I'LL JUST DO A HIGH LEVEL 2081 01:19:25,694 --> 01:19:28,363 SUMMARY OF ALL OF THESE UPS AND 2082 01:19:28,363 --> 01:19:30,198 DOWNS THAT YOU'VE JUST DESCRIBED 2083 01:19:30,198 --> 01:19:32,234 ACROSS THE THREE YEAR PERIOD OF 2084 01:19:32,234 --> 01:19:34,436 26, WHAT WE HAVE TO BUDGET FOR 2085 01:19:34,436 --> 01:19:36,838 27 AND 28 IN THIS BIENNIAL 2086 01:19:36,838 --> 01:19:39,341 BUDGET, THERE'S A NET POSITIVE 2087 01:19:39,341 --> 01:19:40,842 OF $7.8 MILLION. IS THAT 2088 01:19:40,842 --> 01:19:41,109 CORRECT? 2089 01:19:41,109 --> 01:19:42,978 -- THAT'S A GOOD SUMMARY. 2090 01:19:42,978 --> 01:19:44,379 -- AND IN THE LAST FEW YEARS, 2091 01:19:44,379 --> 01:19:45,413 BEFORE WE GET TO PAYROLL TAX AND 2092 01:19:45,413 --> 01:19:46,681 ALL THE JUMPSTART AND ALL THAT 2093 01:19:46,681 --> 01:19:48,583 OTHER STUFF IN THE LAST FEW 2094 01:19:48,583 --> 01:19:50,819 YEARS, I'M SAYING SINCE 2020, 2095 01:19:50,819 --> 01:19:54,156 SINCE THE PANDEMIC. SO I'M 2096 01:19:54,156 --> 01:19:55,323 EXCLUDING THE GREAT GROWTH SPURT 2097 01:19:55,323 --> 01:19:57,792 THAT WE HAD. WHAT WERE WE 2098 01:19:57,792 --> 01:19:59,194 GENERALLY SEEING IN THIS REALM? 2099 01:19:59,194 --> 01:20:02,564 IS THIS A LOW, MEDIUM, HIGH? 2100 01:20:02,564 --> 01:20:04,332 -- THIS WOULD BE ONE OF THE 2101 01:20:04,332 --> 01:20:05,767 SMALLEST CHANGES. I WOULD SAY. 2102 01:20:05,767 --> 01:20:07,869 WE HAVE SEEN A LOT OF VOLATILITY 2103 01:20:07,869 --> 01:20:10,038 OVER THE LAST TWO YEARS. UH, 2104 01:20:10,038 --> 01:20:11,706 APRIL FORECAST, AS I SAID, WERE 2105 01:20:11,706 --> 01:20:13,675 USUALLY BAD NEWS DUE TO TARIFFS 2106 01:20:13,675 --> 01:20:16,211 LAST YEAR DUE TO IRAN WAR. THIS 2107 01:20:16,211 --> 01:20:17,612 YEAR IN AUGUST, THERE WAS A 2108 01:20:17,612 --> 01:20:19,614 LITTLE BIT OF RELIEF IN BOTH 2109 01:20:19,614 --> 01:20:21,817 LAST YEAR AND THIS YEAR AS AFTER 2110 01:20:21,817 --> 01:20:25,921 THAT INITIAL, UM, NEGATIVE 2111 01:20:25,921 --> 01:20:26,454 RESPONSE IN THE FINANCIAL 2112 01:20:26,454 --> 01:20:28,990 MARKETS AND OVERALL, MORE 2113 01:20:28,990 --> 01:20:29,658 PESSIMISTIC OUTLOOK, THINGS 2114 01:20:29,658 --> 01:20:31,626 IMPROVED BY THE SUMMER. SO THERE 2115 01:20:31,626 --> 01:20:33,795 WAS QUITE A LOT OF VOLATILITY IN 2116 01:20:33,795 --> 01:20:35,897 THIS THING HERE IS REASONABLY 2117 01:20:35,897 --> 01:20:40,669 WELL RATHER SMALL. IT'S UH 7.8 2118 01:20:40,669 --> 01:20:44,406 MILLION OUT OF 6 BILLION, WHICH 2119 01:20:44,406 --> 01:20:46,174 UH., 0.1 3%. THANK YOU VERY 2120 01:20:46,174 --> 01:20:48,610 MUCH, DIRECTOR. 2121 01:20:48,610 --> 01:20:52,447 -- THAT'S A PRETTY GOOD 2122 01:20:52,447 --> 01:20:52,714 FORECAST. 2123 01:20:52,714 --> 01:20:54,382 -- THE THE WE ARE BENEFITING 2124 01:20:54,382 --> 01:20:56,451 FROM AN ACCURATE FORECAST AND WE 2125 01:20:56,451 --> 01:20:58,753 ARE. THE DOWNSIDE IS THAT THIS 2126 01:20:58,753 --> 01:21:00,355 IS ONE OF THE SMALLEST 2127 01:21:00,355 --> 01:21:02,157 INCREASES. WOULD YOU SAY THE 2128 01:21:02,157 --> 01:21:03,725 SMALLEST OR ONE OF THE SMALLEST. 2129 01:21:03,725 --> 01:21:05,360 -- ONE OF THE SMALLEST? I 2130 01:21:05,360 --> 01:21:07,162 BELIEVE I WOULD HAVE TO LOOK AT 2131 01:21:07,162 --> 01:21:09,030 THE NUMBERS EXACTLY, BUT I THINK 2132 01:21:09,030 --> 01:21:10,999 THERE WAS ONE OF THE FORECASTS 2133 01:21:10,999 --> 01:21:12,767 THAT WAS QUITE, QUITE OF A WASH 2134 01:21:12,767 --> 01:21:14,903 RECENTLY. BUT UH, I DON'T KNOW 2135 01:21:14,903 --> 01:21:17,272 THE NUMBERS OFF THE TOP OF MY 2136 01:21:17,272 --> 01:21:19,174 HEAD FOR GENERAL FUNDS, THE 2137 01:21:19,174 --> 01:21:21,409 OVERALL, THE CHANGES ARE VERY 2138 01:21:21,409 --> 01:21:22,911 SMALL. CAVEAT HERE IS THAT THIS 2139 01:21:22,911 --> 01:21:24,980 IS STILL A FORECAST. WE DON'T 2140 01:21:24,980 --> 01:21:27,249 KNOW WHAT 26 WILL END UP LIKE. 2141 01:21:27,249 --> 01:21:28,116 SO THERE MIGHT BE A BIGGER 2142 01:21:28,116 --> 01:21:30,118 VARIANCE. LIKE I SAID, THERE IS 2143 01:21:30,118 --> 01:21:32,754 CERTAINLY UH, THAT IMPACT OF THE 2144 01:21:32,754 --> 01:21:34,890 BAL RESTRUCTURE. AND 5814 ON 2145 01:21:34,890 --> 01:21:37,826 BUSINESS AND OCCUPATION TAX 2146 01:21:37,826 --> 01:21:39,828 SALES TAX REVENUES WITH HIGHER 2147 01:21:39,828 --> 01:21:41,396 HIGHER INTEREST RATES. WE'LL SEE 2148 01:21:41,396 --> 01:21:42,063 WHAT THE REST OF THE YEAR LOOKS 2149 01:21:42,063 --> 01:21:45,333 LIKE. BUT THE OVERALL CHANGES 2150 01:21:45,333 --> 01:21:47,836 HERE ARE SMALL BECAUSE THE 2151 01:21:47,836 --> 01:21:49,271 UNDERLYING THINGS DID NOT CHANGE 2152 01:21:49,271 --> 01:21:51,072 THAT MUCH FOR, UH, FOR GENERAL 2153 01:21:51,072 --> 01:21:52,374 FUND. 2154 01:21:52,374 --> 01:21:53,341 -- SO I'LL PREP SEAN TO DO THE 2155 01:21:53,341 --> 01:21:55,243 RESEARCH WHILE WE'RE GOING 2156 01:21:55,243 --> 01:21:57,679 THROUGH THE NEXT SECTION OF WHEN 2157 01:21:57,679 --> 01:21:58,813 WE ADOPTED THE PESSIMISTIC 2158 01:21:58,813 --> 01:22:02,217 FORECAST IN APRIL OF 25. 2159 01:22:02,217 --> 01:22:05,287 -- WE DID. YEAH. APRIL 25th, WE 2160 01:22:05,287 --> 01:22:06,921 ADOPTED A PESSIMISTIC OUTLOOK. 2161 01:22:06,921 --> 01:22:07,922 THERE WAS QUITE A. YEAH, SORRY. 2162 01:22:07,922 --> 01:22:10,792 -- GO AHEAD. YEAH, I'D LOVE TO 2163 01:22:10,792 --> 01:22:12,260 COMPARE THE ACTUALS BETWEEN THAT 2164 01:22:12,260 --> 01:22:12,861 PESSIMISTIC FORECAST AND THIS 2165 01:22:12,861 --> 01:22:14,529 ONE. SO SEAN, MAYBE WHILE WE'RE 2166 01:22:14,529 --> 01:22:15,163 GOING THROUGH THIS NEXT TABLE, 2167 01:22:15,163 --> 01:22:16,598 IF YOU COULD PULL UP WHAT WE 2168 01:22:16,598 --> 01:22:20,468 WHAT THE GENERAL FUND THREE YEAR 2169 01:22:20,468 --> 01:22:22,537 DIFFERENCE AND WHAT THE OTHER 2170 01:22:22,537 --> 01:22:23,972 FUND'S THREE YEAR DIFFERENCE WAS 2171 01:22:23,972 --> 01:22:25,907 BACK THEN. BUT BACK TO YOU, 2172 01:22:25,907 --> 01:22:26,875 DIRECTOR DORIS, TO TAKE US 2173 01:22:26,875 --> 01:22:28,043 THROUGH THE OTHER SELECTED 2174 01:22:28,043 --> 01:22:35,517 REVENUES 2175 01:22:35,517 --> 01:22:37,452 -- ALL RIGHT. THIS IS A TABLE 2176 01:22:37,452 --> 01:22:39,187 THAT SHOWS THE SELECTED OTHER 2177 01:22:39,187 --> 01:22:41,790 REVENUES, THE BASELINE SCENARIO 2178 01:22:41,790 --> 01:22:43,425 FORECAST FOR NON GENERAL FUND 2179 01:22:43,425 --> 01:22:45,760 REVENUES. UM, STARTING AT THE 2180 01:22:45,760 --> 01:22:48,129 TOP WITH A PAYROLL EXPENSE TAX 2181 01:22:48,129 --> 01:22:53,168 UH, THAT HAS BEEN THE DIFFERENCE 2182 01:22:53,168 --> 01:22:54,669 BETWEEN THE CURRENT THE OCTOBER 2183 01:22:54,669 --> 01:22:57,739 FORECAST AND THE PROPOSED BUDGET 2184 01:22:57,739 --> 01:22:58,606 FORECAST IS 12.4 MILLION OVERALL 2185 01:22:58,606 --> 01:23:02,544 TO THE POSITIVE SIDE WITH UH, 6 2186 01:23:02,544 --> 01:23:05,146 MILLION ROUGHLY IN 27 AND 28 2187 01:23:05,146 --> 01:23:07,882 HERE. UM, WHAT I NEED, WHAT I 2188 01:23:07,882 --> 01:23:09,884 SHOULD POINT OUT IS THAT WHAT WE 2189 01:23:09,884 --> 01:23:12,754 ARE COMPARING IS THE CURRENT 2190 01:23:12,754 --> 01:23:13,755 OCTOBER FORECAST WITH THAT 2191 01:23:13,755 --> 01:23:16,624 PROPOSED BUDGET FORECAST, NOT 2192 01:23:16,624 --> 01:23:18,893 THE OFFICIAL FORECAST ADOPTED BY 2193 01:23:18,893 --> 01:23:20,662 THE FORECAST COUNCIL IN AUGUST. 2194 01:23:20,662 --> 01:23:24,466 UH, AS I SAID THAT THAT'S, UH, 2195 01:23:24,466 --> 01:23:25,867 THE PRACTICE THAT'S IN PLACE 2196 01:23:25,867 --> 01:23:27,235 THAT HAS BEEN IN PLACE OVER THE 2197 01:23:27,235 --> 01:23:30,772 LAST COUPLE OF YEARS TO GET A 2198 01:23:30,772 --> 01:23:33,274 SENSE OF HOW MUCH ADDITIONAL 2199 01:23:33,274 --> 01:23:35,343 REVENUES ARE THERE. UM, STARTING 2200 01:23:35,343 --> 01:23:37,045 WITH WHAT THE MAYOR HAS PROPOSED 2201 01:23:37,045 --> 01:23:39,080 AS, UH, AS THE BUDGET IN 2202 01:23:39,080 --> 01:23:41,449 PARTICULAR FOR PAYROLL EXPENSE 2203 01:23:41,449 --> 01:23:44,719 TAX, THE, THE PROPOSED BUDGET 2204 01:23:44,719 --> 01:23:46,888 ASSUMES THE EXTENSION OF THE 2205 01:23:46,888 --> 01:23:48,923 HEALTH CARE EXEMPTION. UM, 2206 01:23:48,923 --> 01:23:50,392 THAT'S NOT THE CURRENT LAW. AND 2207 01:23:50,392 --> 01:23:52,293 THE OCTOBER FORECAST IS BASED ON 2208 01:23:52,293 --> 01:23:53,495 THE CURRENT LAW, WHICH ASSUMES 2209 01:23:53,495 --> 01:23:55,230 THAT THE EXEMPTION GOES AWAY, 2210 01:23:55,230 --> 01:23:58,733 THAT WHAT THAT MEANS IS THAT IF 2211 01:23:58,733 --> 01:24:01,336 THE EXTENSION IS NOT, UH, IF THE 2212 01:24:01,336 --> 01:24:04,939 EXEMPTION IS NOT EXTENDED, THAT 2213 01:24:04,939 --> 01:24:07,509 THERE WILL BE 5.7 MILLION MORE 2214 01:24:07,509 --> 01:24:10,245 IN 27 AND 5.8 MILLION MORE IN 28 2215 01:24:10,245 --> 01:24:14,249 RELATIVE, UH, TO, UH, RELATIVE 2216 01:24:14,249 --> 01:24:15,083 TO THE PROPOSED BUDGET, WHICH 2217 01:24:15,083 --> 01:24:19,220 AGAIN PROPOSES THE, EXEMPTION 2218 01:24:19,220 --> 01:24:20,955 TO, TO BE EXTENDED. SO OVERALL, 2219 01:24:20,955 --> 01:24:23,558 THAT ADDS UP TO ABOUT 11.5 2220 01:24:23,558 --> 01:24:27,595 MILLION, UM, TAKING THE 11.5 OUT 2221 01:24:27,595 --> 01:24:33,301 OF THE 12.4, UM, THAT, THAT, UH, 2222 01:24:33,301 --> 01:24:33,868 UPWARD REVISION FOR PAYROLL 2223 01:24:33,868 --> 01:24:36,037 EXPENSE TAX IS VERY SLIGHT TO 2224 01:24:36,037 --> 01:24:37,972 THE POSITIVE SIDE, BUT CERTAINLY 2225 01:24:37,972 --> 01:24:41,242 NOT, UH, WHAT, WHAT IT MIGHT 2226 01:24:41,242 --> 01:24:43,378 APPEAR, WHAT OTHER WAY? IF WE 2227 01:24:43,378 --> 01:24:45,280 WERE PRESENTING HERE, NOT THE 2228 01:24:45,280 --> 01:24:46,514 DIFFERENCE FROM THE PROPOSED 2229 01:24:46,514 --> 01:24:49,050 BUDGET FORECAST, BUT FROM THE 2230 01:24:49,050 --> 01:24:51,653 FORECAST THAT WAS PRESENTED TO 2231 01:24:51,653 --> 01:24:54,422 THE FORECAST COUNCIL, IT WOULD 2232 01:24:54,422 --> 01:25:00,028 NOT BE 12.4, BUT, UH, 12.4 2233 01:25:00,028 --> 01:25:02,597 -11.5. SO ONLY 0.9 MILLION IN 2234 01:25:02,597 --> 01:25:08,269 THIS TABLE. AND THE 6.0 FOR 27 2235 01:25:08,269 --> 01:25:10,872 WOULD BE ONLY 0.3. THE 6.1 WOULD 2236 01:25:10,872 --> 01:25:17,579 CHANGE AGAIN 2.3 ONLY IF THAT 2237 01:25:17,579 --> 01:25:20,381 MAKES SENSE. UM, THEN MOVING ON 2238 01:25:20,381 --> 01:25:21,049 TO AND I'LL TALK A LITTLE BIT 2239 01:25:21,049 --> 01:25:22,750 MORE ABOUT THE PAYROLL EXPENSE 2240 01:25:22,750 --> 01:25:23,585 TAX. WE HAVE A SEPARATE SLIDE 2241 01:25:23,585 --> 01:25:25,086 FOR THAT. SO RIGHT NOW LET'S 2242 01:25:25,086 --> 01:25:28,289 MOVE ON TO THE INTEREST RATE. 2243 01:25:28,289 --> 01:25:30,325 -- YEAH. UM THE NEXT LINE IS THE 2244 01:25:30,325 --> 01:25:31,426 INTEREST INCOME ON THE PAYROLL 2245 01:25:31,426 --> 01:25:35,697 EXPENSE TAX FUND. SIMILAR STORY 2246 01:25:35,697 --> 01:25:36,331 TO THE INTEREST INCOME FOR THE 2247 01:25:36,331 --> 01:25:37,665 GENERAL FUND. WE SAW IN PREVIOUS 2248 01:25:37,665 --> 01:25:40,935 SLIDE. WE DO HAVE A UPWARD 2249 01:25:40,935 --> 01:25:42,270 REVISION ACROSS THE THREE YEAR 2250 01:25:42,270 --> 01:25:44,172 PERIOD OF ALMOST $4 MILLION IN 2251 01:25:44,172 --> 01:25:45,673 THIS LINE. AND THAT AGAIN IS DUE 2252 01:25:45,673 --> 01:25:49,410 TO HIGHER YIELDS EXPECTED BASED 2253 01:25:49,410 --> 01:25:52,113 ON HIGHER TREASURY YIELDS ON ON 2254 01:25:52,113 --> 01:25:55,550 SHORT TERM TREASURY BONDS. 2255 01:25:55,550 --> 01:25:56,718 DIRECTOR, DO YOU WANT TO SPEAK 2256 01:25:56,718 --> 01:25:58,720 TO REACH? 2257 01:25:58,720 --> 01:25:59,921 -- UM ALL RIGHT. UM SO MOVING ON 2258 01:25:59,921 --> 01:26:01,322 TO THREE. THIS IS WHERE THE 2259 01:26:01,322 --> 01:26:03,892 REALLY BAD NEWS IN THIS FORECAST 2260 01:26:03,892 --> 01:26:05,693 IS. UH IT HAS BEEN REVISED DOWN 2261 01:26:05,693 --> 01:26:10,064 BY 19.5 MILLION OVER THE COURSE 2262 01:26:10,064 --> 01:26:11,866 OF THREE YEARS. WE UM, 2263 01:26:11,866 --> 01:26:15,170 SIGNIFICANTLY BIG DOWNWARD 2264 01:26:15,170 --> 01:26:16,538 REVISIONS FOR 27 AND 28. THAT 2265 01:26:16,538 --> 01:26:17,171 HAS TO DO WITH THE CHANGES IN 2266 01:26:17,171 --> 01:26:18,573 THE OUTLOOK FOR, FOR THE 2267 01:26:18,573 --> 01:26:19,641 INTEREST RATE AND FOR THE 2268 01:26:19,641 --> 01:26:21,576 HOUSING SECTOR. AND AGAIN, WE 2269 01:26:21,576 --> 01:26:23,344 HAVE, UH, I HAVE SEPARATE SLIDES 2270 01:26:23,344 --> 01:26:27,081 ON THAT. SO IF THAT'S OKAY, I 2271 01:26:27,081 --> 01:26:27,882 WOULD POSTPONE THE DISCUSSION 2272 01:26:27,882 --> 01:26:31,119 UNTIL WE GET TO THAT PART. SO 2273 01:26:31,119 --> 01:26:33,521 THEN THE NEXT ONE IS THE 2274 01:26:33,521 --> 01:26:35,823 ADMISSIONS, UH, HAS BEEN REVISED 2275 01:26:35,823 --> 01:26:37,725 DOWN SOMEWHAT. THAT HAS TO DO 2276 01:26:37,725 --> 01:26:41,262 WITH THE, UM, CHANGES IN THE 2277 01:26:41,262 --> 01:26:42,864 NUMBER OF INTERNATIONAL 2278 01:26:42,864 --> 01:26:44,966 VISITORS. UH, EVEN THOUGH THE 2279 01:26:44,966 --> 01:26:46,367 WORLD CUP WAS, UH, DEFINITELY A 2280 01:26:46,367 --> 01:26:48,937 BENEFIT FOR THE SALES TAX, IT 2281 01:26:48,937 --> 01:26:52,473 HAS NOT REALLY BEEN THE CASE FOR 2282 01:26:52,473 --> 01:26:54,409 THE ADMISSIONS TAX. UH, THE, 2283 01:26:54,409 --> 01:26:55,877 THOSE EVENTS THEMSELVES, THE 2284 01:26:55,877 --> 01:26:57,078 ADMISSION TAX WAS NOT IMPOSED 2285 01:26:57,078 --> 01:26:58,646 ON, ON THOSE GAMES. SO THEY DID 2286 01:26:58,646 --> 01:27:00,682 NOT CONTRIBUTE DIRECTLY TO THE 2287 01:27:00,682 --> 01:27:01,683 ADMISSIONS TAX. AND WE HAVE 2288 01:27:01,683 --> 01:27:04,419 DISCUSSED IN THE PAST THAT, UH 2289 01:27:04,419 --> 01:27:08,289 AND THEN, UH OUR PREVIOUS 2290 01:27:08,289 --> 01:27:10,425 CENTRAL STAFF DIRECTOR NOBLE 2291 01:27:10,425 --> 01:27:12,794 HAD, UH, QUITE A NICE SUMMARY IN 2292 01:27:12,794 --> 01:27:14,262 ONE OF THE MEETINGS WHERE HE WAS 2293 01:27:14,262 --> 01:27:16,764 TALKING ABOUT THE CROWDING OUT 2294 01:27:16,764 --> 01:27:18,266 EFFECT WHERE SOMEBODY GOES TO A 2295 01:27:18,266 --> 01:27:20,535 SOCCER GAME, THEY DON'T GO TO A 2296 01:27:20,535 --> 01:27:22,403 GALLERY, FOR EXAMPLE, THE PEOPLE 2297 01:27:22,403 --> 01:27:24,706 WHO ARE COMING HERE FOR THE 2298 01:27:24,706 --> 01:27:26,007 SOCCER GAMES MIGHT BE CROWDING 2299 01:27:26,007 --> 01:27:27,575 OUT THE VISITORS THAT WOULD 2300 01:27:27,575 --> 01:27:28,776 OTHERWISE WOULD HAVE COME HERE. 2301 01:27:28,776 --> 01:27:31,879 UM, AND ATTENDED, UH, SOME, SOME 2302 01:27:31,879 --> 01:27:34,382 OF THE LANDMARKS IN SEATTLE THAT 2303 01:27:34,382 --> 01:27:36,184 ARE COLLECTING THE ADMISSIONS 2304 01:27:36,184 --> 01:27:39,854 TAX. UM, SO THAT'S THE REASON 2305 01:27:39,854 --> 01:27:41,623 FOR THE SLIGHT DOWNWARD REVISION 2306 01:27:41,623 --> 01:27:44,192 FOR THE ADMISSIONS TAX. THEN 2307 01:27:44,192 --> 01:27:45,360 MOVING ON TO SWEETENED BEVERAGE 2308 01:27:45,360 --> 01:27:45,893 TAX. JOE. 2309 01:27:45,893 --> 01:27:47,962 -- YEAH, I'LL SPEAK TO THAT, UM 2310 01:27:47,962 --> 01:27:49,564 SWEETENED BEVERAGE TAX HERE. WE 2311 01:27:49,564 --> 01:27:54,235 SEE, UH, SOME UPS AND DOWNS, BUT 2312 01:27:54,235 --> 01:27:55,570 OVERALL A 2.5, A $2.4 MILLION 2313 01:27:55,570 --> 01:27:57,205 UPWARD REVISION OVER THE THREE 2314 01:27:57,205 --> 01:27:59,440 YEAR PERIOD. UH, THIS CHANGE IS 2315 01:27:59,440 --> 01:28:02,143 WE CAN SEE A LITTLE BIT OF A DIP 2316 01:28:02,143 --> 01:28:03,511 IN 2026 OF ABOUT HALF $1 2317 01:28:03,511 --> 01:28:06,347 MILLION. AND THAT IS DRIVEN BY 2318 01:28:06,347 --> 01:28:08,916 SLIGHTLY SMALLER FIRST QUARTER, 2319 01:28:08,916 --> 01:28:12,553 UM, UH, REVENUES THAN WE HAD 2320 01:28:12,553 --> 01:28:13,187 PREVIOUSLY ANTICIPATED. OVERALL, 2321 01:28:13,187 --> 01:28:14,022 THOUGH, IN THE OUT YEARS, WE DO 2322 01:28:14,022 --> 01:28:15,723 SEE AN UPWARD REVISION TO THIS 2323 01:28:15,723 --> 01:28:17,191 FORECAST. AND THAT'S DRIVEN 2324 01:28:17,191 --> 01:28:18,726 LARGELY BY ONE OF THE LEADING 2325 01:28:18,726 --> 01:28:19,360 INDICATORS, WHICH IS EMPLOYMENT 2326 01:28:19,360 --> 01:28:21,462 AND LEISURE AND HOSPITALITY, 2327 01:28:21,462 --> 01:28:23,665 WHICH WAS REVISED UPWARD IN THIS 2328 01:28:23,665 --> 01:28:25,967 FORECAST. AND WE SPOKE A LITTLE 2329 01:28:25,967 --> 01:28:26,601 BIT ABOUT THAT TREND AS BEING 2330 01:28:26,601 --> 01:28:28,703 ONE OF THE FEW BRIGHT SPOTS IN 2331 01:28:28,703 --> 01:28:30,271 LOCAL EMPLOYMENT PICTURE. UM, 2332 01:28:30,271 --> 01:28:34,008 AND SO, UH, THAT IS PART MOSTLY 2333 01:28:34,008 --> 01:28:35,376 THE STORY FOR THE OUT YEAR 2334 01:28:35,376 --> 01:28:36,744 UPWARD ADJUSTMENT. THERE WAS 2335 01:28:36,744 --> 01:28:40,281 ALSO SOME, UM, UH, TECHNICAL 2336 01:28:40,281 --> 01:28:40,748 ADJUSTMENTS TO HOW WE 2337 01:28:40,748 --> 01:28:41,949 INCORPORATE LAG PAYMENTS IN 2338 01:28:41,949 --> 01:28:45,153 THIS, UH, IN THE, THE MODEL THAT 2339 01:28:45,153 --> 01:28:46,020 PRODUCES REVENUE. SO THAT ALSO 2340 01:28:46,020 --> 01:28:48,056 ACCOUNTS FOR SOME OF THE UPWARD 2341 01:28:48,056 --> 01:28:53,328 ADJUSTMENT IN 27 AND 28. ALEX 2342 01:28:53,328 --> 01:28:54,662 SPEAK TO SHORT TERM RENTAL TAX, 2343 01:28:54,662 --> 01:28:55,863 PLEASE. 2344 01:28:55,863 --> 01:28:57,665 -- YEAH. UM, RETURNING TO OUR 2345 01:28:57,665 --> 01:28:59,734 PREVIOUS DISCUSSION ABOUT WORLD 2346 01:28:59,734 --> 01:29:02,270 CUP IMPACTS. UM, SO WE DID TAKE 2347 01:29:02,270 --> 01:29:03,905 A CONSERVATIVE STANCE ON WORLD 2348 01:29:03,905 --> 01:29:09,043 WORLD CUP EFFECTS IN AUGUST. UM, 2349 01:29:09,043 --> 01:29:10,645 SINCE THEN WE'VE RECEIVED ACTUAL 2350 01:29:10,645 --> 01:29:11,212 COLLECTIONS FOR SHORT TERM 2351 01:29:11,212 --> 01:29:14,982 RENTAL TAX FOR JUNE AND JULY. 2352 01:29:14,982 --> 01:29:16,951 AND PLEASANTLY SURPRISED THAT 2353 01:29:16,951 --> 01:29:18,820 THERE DOES SEEM TO BE, UM, QUITE 2354 01:29:18,820 --> 01:29:22,423 A BIT OF A BUMP FROM WORLD CUP 2355 01:29:22,423 --> 01:29:23,524 FOR THOSE TWO MONTHS, ABOUT HALF 2356 01:29:23,524 --> 01:29:26,761 A MILLION, WHICH, YOU KNOW, FOR 2357 01:29:26,761 --> 01:29:28,930 A TAX STREAM OF ABOUT $12 2358 01:29:28,930 --> 01:29:31,132 MILLION. THAT'S NOT NOTHING. 2359 01:29:31,132 --> 01:29:32,133 UM, HOWEVER, OF COURSE THIS IS A 2360 01:29:32,133 --> 01:29:35,103 ONE TIME EVENT. AND SO, UM, THAT 2361 01:29:35,103 --> 01:29:40,441 IS NOT AFFECTING 27 AND 28. 2362 01:29:40,441 --> 01:29:41,976 -- I WANT TO, I KNOW THERE'S 2363 01:29:41,976 --> 01:29:43,811 INTEREST IN THE, THE WORLD CUP 2364 01:29:43,811 --> 01:29:45,246 EFFECTS ON THESE REVENUES. SO I 2365 01:29:45,246 --> 01:29:46,047 DID WANT TO GO BACK TO SWEETENED 2366 01:29:46,047 --> 01:29:48,683 BEVERAGE TAX. I, I OMITTED TO 2367 01:29:48,683 --> 01:29:50,318 MENTION THAT, UM, THAT WE DID, 2368 01:29:50,318 --> 01:29:53,054 WE HAD PROJECTED A SMALL BUMP TO 2369 01:29:53,054 --> 01:29:54,956 THESE REVENUES IN 2026. AND WE 2370 01:29:54,956 --> 01:29:56,023 DO HAVE ACTUALS FOR THE SECOND 2371 01:29:56,023 --> 01:29:58,426 QUARTER. AND THOSE CAME IN 2372 01:29:58,426 --> 01:29:59,961 RELATIVELY CONSISTENT WITH THE 2373 01:29:59,961 --> 01:30:00,928 BUMP WE HAD PROJECTED, WHICH WAS 2374 01:30:00,928 --> 01:30:04,232 AROUND A 6% INCREASE, A ONE TIME 2375 01:30:04,232 --> 01:30:07,235 INCREASE IN, UM, THE Q2 REVENUES 2376 01:30:07,235 --> 01:30:09,303 FOR SWEETENED BEVERAGE TAX. SO, 2377 01:30:09,303 --> 01:30:11,239 UM, THERE IS SOME INCREASE IN, 2378 01:30:11,239 --> 01:30:12,306 IN 2026. YOU CAN SEE THAT 2379 01:30:12,306 --> 01:30:14,609 REFLECTED IN THE OVERALL HIGHER 2380 01:30:14,609 --> 01:30:16,444 REVENUES IN 26 FOR THIS REVENUE 2381 01:30:16,444 --> 01:30:19,680 STREAM 2382 01:30:19,680 --> 01:30:22,150 -- ALL RIGHT. UH, THE NEXT TWO 2383 01:30:22,150 --> 01:30:24,252 ARE AGAIN IN PURVIEW OF THE 2384 01:30:24,252 --> 01:30:24,819 FORECAST OFFICE AFFORDABLE 2385 01:30:24,819 --> 01:30:27,655 HOUSING SALES TAX. UM, THAT ONE 2386 01:30:27,655 --> 01:30:29,423 HAS SPECIAL RULES ABOUT THE CAP 2387 01:30:29,423 --> 01:30:31,325 THAT IMPOSED ON HOW MUCH THE 2388 01:30:31,325 --> 01:30:34,395 CITY RECEIVES FROM THE STATE. 2389 01:30:34,395 --> 01:30:34,962 AND GENERAL, THERE IS VERY 2390 01:30:34,962 --> 01:30:38,299 LITTLE VARIATION. UM, SO NOT 2391 01:30:38,299 --> 01:30:38,866 PARTICULARLY BIG DIFFERENCE 2392 01:30:38,866 --> 01:30:41,102 THERE FOR TRANSPORTATION 2393 01:30:41,102 --> 01:30:43,471 BENEFITS SALES TAX. HERE WE ARE 2394 01:30:43,471 --> 01:30:47,008 SHOWING THE FOR 26, UH, AND FOR 2395 01:30:47,008 --> 01:30:49,610 THE FIRST QUARTER OF 27, BECAUSE 2396 01:30:49,610 --> 01:30:50,178 THE TRANSPORTATION BENEFITS 2397 01:30:50,178 --> 01:30:55,216 DISTRICT SALES TAX, UM, THAT IT 2398 01:30:55,216 --> 01:30:57,785 ENDS ON APRIL 1st, 2027. IF IT 2399 01:30:57,785 --> 01:31:01,722 IS RENEWED AT THE 0.3% RATE, 2400 01:31:01,722 --> 01:31:02,256 THERE WOULD BE ADDITIONAL 2401 01:31:02,256 --> 01:31:04,492 REVENUES IN 27, ABOUT 94 2402 01:31:04,492 --> 01:31:09,697 MILLION. UM, ADDITIONAL 125.4 2403 01:31:09,697 --> 01:31:11,232 MILLION IN 2028. BUT AGAIN, 2404 01:31:11,232 --> 01:31:15,470 GIVEN THAT, UM, THE FORECAST IN 2405 01:31:15,470 --> 01:31:16,070 THIS TABLE ARE FOLLOWING THE 2406 01:31:16,070 --> 01:31:18,439 CURRENT LAW, WE ARE NOT SHOWING 2407 01:31:18,439 --> 01:31:19,841 THEM EXPLICITLY IN THIS TABLE, 2408 01:31:19,841 --> 01:31:23,377 JUST AS A FOOTNOTE. UM, FOR THE 2409 01:31:23,377 --> 01:31:26,981 SAKE OF COMPLETENESS, UM, THEN 2410 01:31:26,981 --> 01:31:27,448 VEHICLE LICENSE FEE. 2411 01:31:27,448 --> 01:31:29,417 -- YEAH. THE OTHER COMPONENT OF 2412 01:31:29,417 --> 01:31:31,853 SEATTLE TRANSIT BENEFIT DISTRICT 2413 01:31:31,853 --> 01:31:32,553 IS A VEHICLE LICENSE FEE. THIS 2414 01:31:32,553 --> 01:31:35,690 IS A $50 CAR TAB FEE THAT YOU 2415 01:31:35,690 --> 01:31:37,725 PAY WHEN YOU REGISTER A CAR IN 2416 01:31:37,725 --> 01:31:39,861 THE CITY. UM, THIS FORECAST HAS 2417 01:31:39,861 --> 01:31:41,496 BEEN REVISED UP SLIGHTLY AT 2418 01:31:41,496 --> 01:31:43,297 ABOUT 1.1 MILLION ACROSS THE 2419 01:31:43,297 --> 01:31:45,666 THREE YEAR PERIOD. THIS IS 2420 01:31:45,666 --> 01:31:47,802 DRIVEN MAINLY BY UM THE STATE'S 2421 01:31:47,802 --> 01:31:50,171 FORECAST FOR CAR REGISTRATIONS. 2422 01:31:50,171 --> 01:31:54,642 WE WE PIGGYBACK ON THAT FORECAST 2423 01:31:54,642 --> 01:31:55,109 TO PREDICT LOCAL CAR 2424 01:31:55,109 --> 01:31:56,344 REGISTRATIONS. UM AND SO THAT 2425 01:31:56,344 --> 01:32:00,081 WAS REVISED UPWARD SLIGHTLY IN, 2426 01:32:00,081 --> 01:32:01,215 UH, IN THEIR LATEST IN THEIR, I 2427 01:32:01,215 --> 01:32:02,450 BELIEVE SEPTEMBER WAS WHEN THEY 2428 01:32:02,450 --> 01:32:04,418 UPDATED THAT FORECAST. AND SO 2429 01:32:04,418 --> 01:32:06,454 THAT'S WHAT'S DRIVING THIS 2430 01:32:06,454 --> 01:32:09,190 CHANGE HERE 2431 01:32:09,190 --> 01:32:10,925 -- AND THE LAST REVENUE SOURCE 2432 01:32:10,925 --> 01:32:12,860 WE'LL SPEAK TO IS OUR AUTOMATIC 2433 01:32:12,860 --> 01:32:14,929 TRAFFIC SAFETY CAM CAMERA 2434 01:32:14,929 --> 01:32:16,197 PROGRAM. UM, WE'VE GOT A FEW 2435 01:32:16,197 --> 01:32:18,032 DIFFERENT CAMERA TYPES THAT ARE 2436 01:32:18,032 --> 01:32:20,001 DRIVING THE UPWARD REVISION IN 2437 01:32:20,001 --> 01:32:24,005 OUR FORECAST. FOR ONE, HOUR 2438 01:32:24,005 --> 01:32:24,572 SCHOOL ZONE SAFETY CAMERAS. 2439 01:32:24,572 --> 01:32:27,542 WE'VE GOT 70 CAMERAS TOTAL, 28 2440 01:32:27,542 --> 01:32:28,743 OF WHICH WERE LAUNCHED IN THE 2441 01:32:28,743 --> 01:32:31,078 LAST 12 MONTHS. AND TEN WERE 2442 01:32:31,078 --> 01:32:33,180 STILL IN THEIR 30 DAY WARNING 2443 01:32:33,180 --> 01:32:34,315 PERIOD IN SEPTEMBER. WHEN WE 2444 01:32:34,315 --> 01:32:37,351 WERE RUNNING THIS FORECAST AND 2445 01:32:37,351 --> 01:32:38,486 WE SAW A MODEST IMPROVEMENT, 2446 01:32:38,486 --> 01:32:41,522 ABOUT 1% OVERALL IN THE 2447 01:32:41,522 --> 01:32:42,924 CITATIONS ISSUED FROM THESE 2448 01:32:42,924 --> 01:32:45,159 CAMERAS, FROM OUR PRIOR 2449 01:32:45,159 --> 01:32:46,193 FORECAST. UM, ADDITIONALLY, OUR 2450 01:32:46,193 --> 01:32:47,895 BLOCK, THE BOX AND BUS LANE 2451 01:32:47,895 --> 01:32:50,865 CAMERAS, UM, SAW A LARGE SPIKE 2452 01:32:50,865 --> 01:32:52,433 IN JUNE AND JULY, POSSIBLY DUE 2453 01:32:52,433 --> 01:32:54,335 TO WORLD CUP TRAFFIC. WE MADE 2454 01:32:54,335 --> 01:32:56,837 SURE TO TAKE THOSE OUT OF 2455 01:32:56,837 --> 01:32:58,539 SUBSEQUENT YEARS FOR THE 2456 01:32:58,539 --> 01:33:00,474 FORECAST. UM, BUT NEVERTHELESS 2457 01:33:00,474 --> 01:33:03,511 THEY DID ADD ABOUT HALF $1 2458 01:33:03,511 --> 01:33:05,313 MILLION IN 2026 REVENUES. 2459 01:33:05,313 --> 01:33:07,448 -- IT'S REALLY GREAT 2460 01:33:07,448 --> 01:33:08,082 INFORMATION. THERE'S BEEN A 2461 01:33:08,082 --> 01:33:09,917 LARGE PUSH FOR THE LAST SIX 2462 01:33:09,917 --> 01:33:14,956 YEARS TO GET MORE RED LIGHT AND 2463 01:33:14,956 --> 01:33:15,523 SPEEDING CAMERAS INSTALLED 2464 01:33:15,523 --> 01:33:16,090 THROUGHOUT THE CITY. AND I 2465 01:33:16,090 --> 01:33:17,224 DON'T KNOW WHAT THE PROBLEM 2466 01:33:17,224 --> 01:33:18,526 THIS IS NOT FOR Y'ALL. THIS IS 2467 01:33:18,526 --> 01:33:20,027 ME SPEAKING INTO THE ETHER. I 2468 01:33:20,027 --> 01:33:21,529 DON'T KNOW WHAT THE PROBLEM IS 2469 01:33:21,529 --> 01:33:23,030 BETWEEN SDOT AND THE SEATTLE 2470 01:33:23,030 --> 01:33:25,600 POLICE DEPARTMENT. IT IS 2471 01:33:25,600 --> 01:33:26,133 LITERALLY BEEN EASIER TO 2472 01:33:26,133 --> 01:33:27,535 NEGOTIATE THE CARE DEPARTMENT'S 2473 01:33:27,535 --> 01:33:30,438 ABILITY TO RESPOND TO THE 2474 01:33:30,438 --> 01:33:31,939 STREETS OF SEATTLE THAN IT HAS 2475 01:33:31,939 --> 01:33:35,242 BEEN TO GET THESE CAMERAS PUT IN 2476 01:33:35,242 --> 01:33:37,845 PLACE. AND THIS IS ALL THE WHILE 2477 01:33:37,845 --> 01:33:40,014 THAT SDOT IS HAVING INCREDIBLE 2478 01:33:40,014 --> 01:33:40,448 PROBLEMS WITH THEIR 2479 01:33:40,448 --> 01:33:43,150 TRANSPORTATION FUND, SO I'M NOT 2480 01:33:43,150 --> 01:33:43,751 NOTING THIS FOR THE FORECAST 2481 01:33:43,751 --> 01:33:46,020 OFFICE, BUT I'M NOTING THIS FOR 2482 01:33:46,020 --> 01:33:48,889 ALL OF THE 3000 PEOPLE WATCHING 2483 01:33:48,889 --> 01:33:49,290 SEATTLE CHANNEL. 2484 01:33:49,290 --> 01:33:50,725 -- YEAH. AND IT'S WORTH NOTING 2485 01:33:50,725 --> 01:33:53,227 HERE, JUST IN THE THAT FINAL 2486 01:33:53,227 --> 01:33:54,862 LINE, THE TRAFFIC SAFETY CAMERAS 2487 01:33:54,862 --> 01:33:56,697 ARE THERE. UM, YOU DO SEE IF YOU 2488 01:33:56,697 --> 01:33:58,165 LOOK AT THE TOTALS FROM 26 2489 01:33:58,165 --> 01:34:00,401 THROUGH 28, YOU DO SEE A 2490 01:34:00,401 --> 01:34:01,535 LEVELING UP THERE. AND THAT IS 2491 01:34:01,535 --> 01:34:03,871 DUE TO THE ASSUMPTION THAT THOSE 2492 01:34:03,871 --> 01:34:06,040 FULL TIME SPEED CAMERAS WOULD BE 2493 01:34:06,040 --> 01:34:08,709 INSTALLED IN THE MIDDLE OF 2027. 2494 01:34:08,709 --> 01:34:09,343 -- AND LET ME JUST DOUBLE CHECK 2495 01:34:09,343 --> 01:34:11,912 THIS, THOUGH. THIS IS JUST THE 2496 01:34:11,912 --> 01:34:14,115 FIRST TRANCHE OF CAMERAS THAT 2497 01:34:14,115 --> 01:34:16,150 ARE BEING EXPANDED SINCE 2020. 2498 01:34:16,150 --> 01:34:17,918 -- THIS WOULD BE FULL TIME SPEED 2499 01:34:17,918 --> 01:34:18,919 CAMERAS. THIS WOULD BE A NEW 2500 01:34:18,919 --> 01:34:21,922 TYPE OF CAMERA THAT THE CITY HAS 2501 01:34:21,922 --> 01:34:24,058 NOT HAD BEFORE. SO THE 2502 01:34:24,058 --> 01:34:26,060 ASSUMPTION IS THAT THE THAT 2503 01:34:26,060 --> 01:34:27,128 INITIAL TRANCHE IS, IS ALL THAT 2504 01:34:27,128 --> 01:34:28,996 IS INCLUDED IN THE 27 AND 28 2505 01:34:28,996 --> 01:34:30,664 NUMBERS. 2506 01:34:30,664 --> 01:34:31,298 -- SO IT HAS TAKEN SEVEN YEARS 2507 01:34:31,298 --> 01:34:33,601 TO GET SPEED CAMERAS ON OUR 2508 01:34:33,601 --> 01:34:34,268 STREETS. SOUNDS LIKE THAT'S NOT 2509 01:34:34,268 --> 01:34:35,603 FOR YOU TO RESPOND TO. UM, BUT 2510 01:34:35,603 --> 01:34:39,306 I'M GLAD TO FINALLY HAVE, UH, 2511 01:34:39,306 --> 01:34:40,908 THIS REVENUE STREAM CARRY ON. 2512 01:34:40,908 --> 01:34:44,945 THANK YOU SORRY, I DIDN'T MEAN 2513 01:34:44,945 --> 01:34:47,948 TO DISRUPT YOU ALL SO MUCH. 2514 01:34:47,948 --> 01:34:48,349 WHO'S UP NEXT? 2515 01:34:48,349 --> 01:34:49,750 -- I THINK WE ARE AT THE BOTTOM 2516 01:34:49,750 --> 01:34:54,522 OF A TABLE. SO THE THE FINAL 2517 01:34:54,522 --> 01:34:57,658 LINE HERE SHOWS THE OVERALL 2518 01:34:57,658 --> 01:34:59,827 GRAND TOTAL TAKING GENERAL FUND 2519 01:34:59,827 --> 01:35:01,896 PLUS ALL THESE OTHER NON GENERAL 2520 01:35:01,896 --> 01:35:04,465 FUND REVENUES, ADDING IT ALL UP. 2521 01:35:04,465 --> 01:35:07,435 UM, AND SO THERE IS ABOUT 8.8 2522 01:35:07,435 --> 01:35:08,736 MILLION TO THE PLUS SIDE FOR 2523 01:35:08,736 --> 01:35:11,105 GENERAL PLUS NON GENERAL FUND 2524 01:35:11,105 --> 01:35:15,309 REVENUES WITH THE CAVEAT HERE 2525 01:35:15,309 --> 01:35:17,211 THAT THERE IS A 11.5 MILLION IN 2526 01:35:17,211 --> 01:35:18,813 THAT HEALTH CARE EXEMPTION, UH, 2527 01:35:18,813 --> 01:35:21,482 WHICH IS UH, HAS BEEN THE 2528 01:35:21,482 --> 01:35:25,586 EXEMPTION HAS BEEN PROPOSED TO 2529 01:35:25,586 --> 01:35:27,788 BE EXTENDED IN THE PROPOSED 2530 01:35:27,788 --> 01:35:28,889 BUDGET. BUT THE OCTOBER 2531 01:35:28,889 --> 01:35:29,890 FORECAST, SINCE IT'S BASED ON 2532 01:35:29,890 --> 01:35:32,526 THE CURRENT LAW, DOES NOT 2533 01:35:32,526 --> 01:35:34,261 INCORPORATE IT. IF THAT 2534 01:35:34,261 --> 01:35:37,364 EXTENSION IS PASSED, THERE IS 2535 01:35:37,364 --> 01:35:39,800 11.5 MILLION LESS. SO IT WOULD 2536 01:35:39,800 --> 01:35:43,838 CHANGE FROM 8.8 TO THE POSITIVE 2537 01:35:43,838 --> 01:35:47,241 SIDE TO 2.8. ON A NEGATIVE SIDE. 2538 01:35:47,241 --> 01:35:49,543 BUT THAT THE CHANGE IS VERY 2539 01:35:49,543 --> 01:35:52,713 SMALL. AGAIN, GIVEN THAT THERE 2540 01:35:52,713 --> 01:35:54,315 IS 7.5 BILLION, IT'S LESS THAN 2541 01:35:54,315 --> 01:35:55,816 A HALF PERCENT. EITHER WAY TO 2542 01:35:55,816 --> 01:36:00,121 THE POSITIVE OR NEGATIVE SIDE. 2543 01:36:00,121 --> 01:36:04,658 UM, SO WITH THAT, UNLESS 2544 01:36:04,658 --> 01:36:05,993 THERE'S ANY QUESTIONS ABOUT, UM. 2545 01:36:05,993 --> 01:36:07,461 -- I'LL JUST TAKE SOME TOP 2546 01:36:07,461 --> 01:36:09,997 LINES HERE FOR YOU BEFORE YOU 2547 01:36:09,997 --> 01:36:12,299 TICK ON. SO BETWEEN THE GENERAL 2548 01:36:12,299 --> 01:36:14,201 FUND REVENUES AND THE SELECTED 2549 01:36:14,201 --> 01:36:17,805 OTHER REVENUES, WE'RE LOOKING AT 2550 01:36:17,805 --> 01:36:20,508 ABOUT $16.6 MILLION ADDITIONAL 2551 01:36:20,508 --> 01:36:23,744 SINCE THE PROPOSED BUDGET. IS 2552 01:36:23,744 --> 01:36:24,078 THAT CORRECT? 2553 01:36:24,078 --> 01:36:24,779 -- CAN YOU REPEAT IT ONE MORE 2554 01:36:24,779 --> 01:36:26,680 TIME, PLEASE? 2555 01:36:26,680 --> 01:36:27,782 -- I GOT 16.6. BUT IF YOU DON'T 2556 01:36:27,782 --> 01:36:28,449 HAVE THE SUMMARY SLIDES, WE 2557 01:36:28,449 --> 01:36:31,085 MIGHT NEED TO START CREATING 2558 01:36:31,085 --> 01:36:31,285 THEM. 2559 01:36:31,285 --> 01:36:36,657 -- SO YOU ARE ADDING THESE 7.8 2560 01:36:36,657 --> 01:36:39,627 MILLION HERE. AND THE 8.8. SO 2561 01:36:39,627 --> 01:36:42,429 THE 8.8 ALREADY INCORPORATES THE 2562 01:36:42,429 --> 01:36:44,765 7.8 ON THE PREVIOUS SLIDE. SO 2563 01:36:44,765 --> 01:36:46,433 THE THE LINE HERE IS NOT THE THE 2564 01:36:46,433 --> 01:36:48,435 SUM OF THE NON GENERAL FUND 2565 01:36:48,435 --> 01:36:51,739 REVENUES. IT'S ALREADY ADDING 2566 01:36:51,739 --> 01:36:53,073 THE PREVIOUS LINE. SO IT'S GRAND 2567 01:36:53,073 --> 01:36:54,542 TOTAL FOR GENERAL FUND. PLUS 2568 01:36:54,542 --> 01:36:57,611 THIS THING HERE. IF YOU ARE 2569 01:36:57,611 --> 01:36:59,180 INTERESTED ONLY IN HOW THE NON 2570 01:36:59,180 --> 01:37:01,815 GENERAL FUND REVENUES CHANGE. UM 2571 01:37:01,815 --> 01:37:05,085 YOU SHOULD NEED TO TAKE OUT THE 2572 01:37:05,085 --> 01:37:06,587 7.8 OUT OF THE 8.8. SO NON 2573 01:37:06,587 --> 01:37:08,689 GENERAL FUND REVENUES SHOWN ON 2574 01:37:08,689 --> 01:37:10,691 THIS SLIDE ADD UP TO PLUS 1 2575 01:37:10,691 --> 01:37:12,860 MILLION OVER THREE YEARS. 2576 01:37:12,860 --> 01:37:14,461 -- SO WE'RE LOOKING AT SO THIS 2577 01:37:14,461 --> 01:37:16,997 GRAND TOTAL AT THE BOTTOM 2578 01:37:16,997 --> 01:37:20,234 INCORPORATES SLIDE 16. AND 17. 2579 01:37:20,234 --> 01:37:22,102 AND SO WHAT WE ARE LOOKING AT IS 2580 01:37:22,102 --> 01:37:26,473 8.8. NET POSITIVE. SINCE AUGUST. 2581 01:37:26,473 --> 01:37:28,175 I'M GOING TO CALL IT THE AUGUST 2582 01:37:28,175 --> 01:37:29,510 FORECAST. EVEN THOUGH THERE'S 2583 01:37:29,510 --> 01:37:30,678 SOME NUANCE THERE. IS THAT 2584 01:37:30,678 --> 01:37:30,945 CORRECT. 2585 01:37:30,945 --> 01:37:31,879 -- THAT IS CORRECT. YES. 2586 01:37:31,879 --> 01:37:33,781 -- AND THEN, SEAN, WERE YOU ABLE 2587 01:37:33,781 --> 01:37:37,451 TO FIND WHEN WE ADOPTED THE 2588 01:37:37,451 --> 01:37:39,119 PESSIMISTIC FORECAST IN 2025, 2589 01:37:39,119 --> 01:37:40,621 WHAT OUR NET POSITIVE WAS THERE 2590 01:37:40,621 --> 01:37:43,891 OR WAS IT A NET. 2591 01:37:43,891 --> 01:37:44,458 -- NEGATIVE NUMBERS? YEAH. 2592 01:37:44,458 --> 01:37:46,660 -- FOR APRIL OF 2025. 2593 01:37:46,660 --> 01:37:51,565 -- UM, SO I GUESS JUST TO 2594 01:37:51,565 --> 01:37:53,267 CLARIFY, ARE YOU INTERESTED IN 2595 01:37:53,267 --> 01:37:54,935 THE CHANGE THAT WAS PRESENTED IN 2596 01:37:54,935 --> 01:37:57,271 APRIL OR THEN THE POSITIVE 2597 01:37:57,271 --> 01:37:58,739 UPWARD REVISION IN AUGUST? 2598 01:37:58,739 --> 01:38:00,040 BECAUSE IN APRIL THERE WAS A 2599 01:38:00,040 --> 01:38:01,242 DOWNWARD REVISION. 2600 01:38:01,242 --> 01:38:01,475 -- YEP. 2601 01:38:01,475 --> 01:38:02,576 -- SO. 25 AND THAT'S THE ONE 2602 01:38:02,576 --> 01:38:04,378 THAT YOU YOU'RE. 2603 01:38:04,378 --> 01:38:06,614 -- LOOKING FOR THAT. APRIL. WHAT 2604 01:38:06,614 --> 01:38:08,916 WAS THIS? 8.8 NUMBER IN APRIL OF 2605 01:38:08,916 --> 01:38:12,386 2025? YEAH, THERE. 2606 01:38:12,386 --> 01:38:14,288 -- ARE INCLUDING THE GRAND TOTAL 2607 01:38:14,288 --> 01:38:15,956 OR JUST NON GENERAL FUND 2608 01:38:15,956 --> 01:38:16,223 REVENUES. 2609 01:38:16,223 --> 01:38:17,324 -- WE CAN BREAK IT OUT. GENERAL 2610 01:38:17,324 --> 01:38:18,559 FUND FIRST. 2611 01:38:18,559 --> 01:38:19,760 -- AND THEN AS FOR THE BASELINE 2612 01:38:19,760 --> 01:38:21,528 OR THE PESSIMISTIC SCENARIO. 2613 01:38:21,528 --> 01:38:22,129 -- WE ADOPTED THE PESSIMISTIC 2614 01:38:22,129 --> 01:38:25,933 THAT YEAR. CORRECT. OF COURSE. 2615 01:38:25,933 --> 01:38:26,533 -- YEAH. THIS IS THE NUMBER 2616 01:38:26,533 --> 01:38:35,009 RIGHT HERE ON. YEAH. SO FOR THE 2617 01:38:35,009 --> 01:38:37,011 GENERAL FUND REVENUES APRIL 2618 01:38:37,011 --> 01:38:38,746 PESSIMISTIC SCENARIO BACK IN 2619 01:38:38,746 --> 01:38:39,413 LAST APRIL'S FORECAST, WE HAD A 2620 01:38:39,413 --> 01:38:40,748 THREE YEAR TOTAL DIFFERENCE FOR 2621 01:38:40,748 --> 01:38:41,482 THE. 2622 01:38:41,482 --> 01:38:43,684 -- GENERAL. APRIL 26th. 2623 01:38:43,684 --> 01:38:45,819 -- OH SORRY. LET ME DOUBLE 2624 01:38:45,819 --> 01:38:46,053 CHECK. 2625 01:38:46,053 --> 01:38:50,224 -- I THINK I HAVE IT HERE. UM. 2626 01:38:50,224 --> 01:38:52,426 APRIL 2025 FORECAST. UH, WAS 2627 01:38:52,426 --> 01:38:56,664 PRESENTED FOR YEARS 25 AND 26. 2628 01:38:56,664 --> 01:38:58,165 SO WE HAVE THE NUMBERS FOR 27 2629 01:38:58,165 --> 01:38:59,433 AND 28, JUST NOT IN THE SLIDES. 2630 01:38:59,433 --> 01:39:01,735 AND WE CAN DEFINITELY PROVIDE 2631 01:39:01,735 --> 01:39:04,638 THOSE. UM, BUT WHEN WE WERE 2632 01:39:04,638 --> 01:39:06,573 PRESENTING IT, WHEN WE WERE 2633 01:39:06,573 --> 01:39:07,107 PRESENTING THAT FORECAST, 2634 01:39:07,107 --> 01:39:11,812 BECAUSE IT WAS 2025, THE 278 2635 01:39:11,812 --> 01:39:15,049 BUDGET WAS NOT IN THE WORKS YET. 2636 01:39:15,049 --> 01:39:15,616 WE WERE ONLY PRESENTING THE 2637 01:39:15,616 --> 01:39:17,952 FORECAST FOR THE YEAR 25. THAT 2638 01:39:17,952 --> 01:39:20,254 WAS THE REVISED FORECAST FOR 25 2639 01:39:20,254 --> 01:39:21,722 AND THEN FOR 26. SO OVER THOSE 2640 01:39:21,722 --> 01:39:23,757 TWO YEARS 2641 01:39:23,757 --> 01:39:24,925 -- DIRECTOR, I'M JUST GOING TO 2642 01:39:24,925 --> 01:39:26,160 KIND OF FOCUS US HERE RIGHT NOW. 2643 01:39:26,160 --> 01:39:28,262 WE'VE GOT THE THREE YEAR TOTAL 2644 01:39:28,262 --> 01:39:29,763 DIFFERENCE, GRAND TOTAL. I'M 2645 01:39:29,763 --> 01:39:31,598 LOOKING FOR THE COMPARABLE 2646 01:39:31,598 --> 01:39:34,535 NUMBER THERE FOR APRIL OF 2025. 2647 01:39:34,535 --> 01:39:36,637 IN THE PESSIMISTIC SCENARIO. 2648 01:39:36,637 --> 01:39:38,672 -- ALL RIGHT. SO JUST AGAIN TO 2649 01:39:38,672 --> 01:39:40,140 CLARIFY THE QUESTION IS WHICH 2650 01:39:40,140 --> 01:39:43,077 YEARS WOULD YOU WANT TO COMPARE 2651 01:39:43,077 --> 01:39:43,477 IN THAT FORECAST. 2652 01:39:43,477 --> 01:39:44,945 -- FROM THAT FORECAST WE WERE 2653 01:39:44,945 --> 01:39:46,280 FORECASTING THE NEXT TWO YEARS. 2654 01:39:46,280 --> 01:39:48,182 SO I'M JUST LOOKING FOR THAT. 2655 01:39:48,182 --> 01:39:48,816 -- WHAT WAS ON THE SLIDES WHEN 2656 01:39:48,816 --> 01:39:50,751 WE WERE PRESENTING IT? IT WAS 2657 01:39:50,751 --> 01:39:52,086 TWO YEARS INSTEAD OF THREE 2658 01:39:52,086 --> 01:39:56,156 YEARS. IT WAS TWO YEARS, 25, 26. 2659 01:39:56,156 --> 01:39:57,858 AND FOR GENERAL FUND WITHOUT 2660 01:39:57,858 --> 01:39:59,993 GRANTS AND TRANSFERS, IT WAS 50 2661 01:39:59,993 --> 01:40:01,362 MILLION TO THE DOWNSIDE. 2662 01:40:01,362 --> 01:40:02,262 -- OKAY. SO IN. 2663 01:40:02,262 --> 01:40:02,663 -- OUR AND THEN. 2664 01:40:02,663 --> 01:40:05,032 -- SO IN OUR PESSIMISTIC 2665 01:40:05,032 --> 01:40:08,902 SCENARIO, IN APRIL 25th, IT WAS 2666 01:40:08,902 --> 01:40:09,370 -58.8 NUMBER WAS -50. 2667 01:40:09,370 --> 01:40:10,270 -- WELL, THAT WAS JUST THE 2668 01:40:10,270 --> 01:40:12,339 GENERAL FUND. AND I HAVE A 2669 01:40:12,339 --> 01:40:13,507 BREAKDOWN. WE DID NOT HAVE THE 2670 01:40:13,507 --> 01:40:14,675 GRAND TOTAL LINE IN THE SLIDES 2671 01:40:14,675 --> 01:40:15,342 THAT I'M OPENING HERE. SO I 2672 01:40:15,342 --> 01:40:17,811 WOULD HAVE TO, UH, GIVE ME A 2673 01:40:17,811 --> 01:40:19,847 SECOND. THAT'S 50 MILLION 2674 01:40:19,847 --> 01:40:25,686 GENERAL FUND AND THEN ADDITIONAL 2675 01:40:25,686 --> 01:40:27,054 150 OF NON-GENERAL FUNDS. SO 2676 01:40:27,054 --> 01:40:28,756 OVERALL, ABOUT, I BELIEVE 250 2677 01:40:28,756 --> 01:40:31,458 MILLION, GIVE OR TAKE., 2678 01:40:31,458 --> 01:40:32,793 -- NEGATIVE. 2679 01:40:32,793 --> 01:40:33,293 -- NEGATIVE, NEGATIVE. 2680 01:40:33,293 --> 01:40:35,429 -- AND THEN WHEN WE GOT TO THAT 2681 01:40:35,429 --> 01:40:39,400 AUGUST CORRECTION, WHAT WAS 2682 01:40:39,400 --> 01:40:41,268 THAT? BECAUSE I'M JUST TRYING 2683 01:40:41,268 --> 01:40:42,736 TO BASELINE WHERE WE ARE TODAY 2684 01:40:42,736 --> 01:40:43,871 VERSUS LIKE THE WORST PLACE 2685 01:40:43,871 --> 01:40:45,139 WE'VE BEEN IN THE LAST FEW 2686 01:40:45,139 --> 01:40:45,372 YEARS. 2687 01:40:45,372 --> 01:40:52,613 -- THAT'S A GREAT QUESTION. 2688 01:40:52,613 --> 01:40:55,649 -- SO WHEN THE AUGUST BASELINE 2689 01:40:55,649 --> 01:40:59,787 SCENARIO WAS, UH, RECOMMENDED 2690 01:40:59,787 --> 01:41:02,055 AND APPROVED IN 2025, THE TWO 2691 01:41:02,055 --> 01:41:05,125 YEAR DIFFERENCE WAS 62.8 MILLION 2692 01:41:05,125 --> 01:41:09,430 TO THE PLUS SIDE FOR THE GENERAL 2693 01:41:09,430 --> 01:41:17,304 FUND. 2694 01:41:17,438 --> 01:41:23,544 AND WHAT LOOKS LIKE ABOUT 32 2695 01:41:23,544 --> 01:41:25,979 MILLION TO THE PLUS SIDE FOR NON 2696 01:41:25,979 --> 01:41:32,186 GENERAL FUND. SO 32 PLUS 62, 2697 01:41:32,186 --> 01:41:34,321 ABOUT 100 MILLION. SO IT DID NOT 2698 01:41:34,321 --> 01:41:35,322 REVERSE EVERYTHING. UM, ONE 2699 01:41:35,322 --> 01:41:37,858 THING THAT HAPPENED IN 2025 IS 2700 01:41:37,858 --> 01:41:40,928 THAT WE GOT MUCH LESS THAN 2701 01:41:40,928 --> 01:41:41,562 EXPECTED IN PAYROLL TAX REVENUES 2702 01:41:41,562 --> 01:41:44,832 FOR YEAR 2024. AND THAT BROUGHT 2703 01:41:44,832 --> 01:41:47,801 DOWN THE PAYROLL EXPENSE TAX 2704 01:41:47,801 --> 01:41:49,536 CONSIDERABLY EVEN AFTER, UH, THE 2705 01:41:49,536 --> 01:41:50,871 SITUATION AROUND TARIFFS HAS 2706 01:41:50,871 --> 01:41:53,474 CALMED DOWN THE EFFECT OF LOWER 2707 01:41:53,474 --> 01:41:56,276 PAYROLL TAX REVENUES PERSISTED. 2708 01:41:56,276 --> 01:41:58,645 AND SO THE AUGUST FORECAST DID 2709 01:41:58,645 --> 01:42:03,684 NOT REVERSE ALL THOSE, DOWNWARD 2710 01:42:03,684 --> 01:42:04,151 REVISIONS LAST YEAR. 2711 01:42:04,151 --> 01:42:07,554 -- UH, YES. AND WHEN WE'RE DOING 2712 01:42:07,554 --> 01:42:09,590 THE ANNUAL BUDGETING PROCESS, 2713 01:42:09,590 --> 01:42:10,224 THE APRIL FORECAST IS IMPORTANT 2714 01:42:10,224 --> 01:42:11,558 FOR US TO UNDERSTAND WHERE WE 2715 01:42:11,558 --> 01:42:13,827 ARE BASELINE. BUT WHEN WE'RE 2716 01:42:13,827 --> 01:42:16,330 LOOKING FOR NET POSITIVE, UM, 2717 01:42:16,330 --> 01:42:18,232 THAT AUGUST FORECAST THAT STILL 2718 01:42:18,232 --> 01:42:22,469 HAD ABOUT $100 MILLION, IS THAT 2719 01:42:22,469 --> 01:42:23,103 NOT AN ADDITIONAL $100 MILLION 2720 01:42:23,103 --> 01:42:25,105 FROM THE YEAR? THE BUDGET 2721 01:42:25,105 --> 01:42:25,372 PREVIOUS. 2722 01:42:25,372 --> 01:42:28,876 -- NOT RELATIVE TO THE PROPOSED 2723 01:42:28,876 --> 01:42:31,845 BUDGET. SO THE APRIL FORECAST 2724 01:42:31,845 --> 01:42:33,881 LOWERED REVENUES CONSIDERABLY 2725 01:42:33,881 --> 01:42:35,716 RELATIVE TO THE OR RELATIVE TO 2726 01:42:35,716 --> 01:42:37,251 THE PREVIOUS YEAR'S, UH, 2727 01:42:37,251 --> 01:42:43,157 ADOPTED BUDGET FOR 2025. AND 2728 01:42:43,157 --> 01:42:45,592 THEN GIVEN THAT THAT DOWNWARD 2729 01:42:45,592 --> 01:42:46,159 REVISION WAS SIGNIFICANTLY 2730 01:42:46,159 --> 01:42:48,095 BIGGER THAN THE UPWARD REVISION 2731 01:42:48,095 --> 01:42:50,564 IN AUGUST, THE AUGUST 25th 2732 01:42:50,564 --> 01:42:54,134 FORECAST STILL SHOWED REVENUES 2733 01:42:54,134 --> 01:42:56,503 BELOW THE ADOPTED BUDGET FOR 2734 01:42:56,503 --> 01:42:56,703 2025. 2735 01:42:56,703 --> 01:42:59,239 -- OKAY, BY ABOUT $50 MILLION. 2736 01:42:59,239 --> 01:43:00,707 -- I WOULD HAVE TO LOOK AT THE 2737 01:43:00,707 --> 01:43:02,509 NUMBERS, I THINK. NOT REALLY, 2738 01:43:02,509 --> 01:43:03,810 BUT SORRY, I'M NOT REALLY GOOD 2739 01:43:03,810 --> 01:43:04,545 WITH NUMBERS RIGHT NOW, BUT WE 2740 01:43:04,545 --> 01:43:07,581 CAN CERTAINLY PROVIDE THAT 2741 01:43:07,581 --> 01:43:07,915 INFORMATION. 2742 01:43:07,915 --> 01:43:12,386 -- OKAY, I'M THE OVER. UM, I'M 2743 01:43:12,386 --> 01:43:13,153 SORRY, I'M I HAVEN'T PREPPED 2744 01:43:13,153 --> 01:43:15,923 YOU WELL TO JUST TALK AT THE 2745 01:43:15,923 --> 01:43:17,057 HIGH LEVEL BECAUSE WHAT I'M 2746 01:43:17,057 --> 01:43:19,259 JUST TRYING TO DO RIGHT NOW IS 2747 01:43:19,259 --> 01:43:20,494 GROUND US IN WHERE ARE WE ARE 2748 01:43:20,494 --> 01:43:23,096 TODAY VERSUS WHERE WE WERE IN 2749 01:43:23,096 --> 01:43:24,097 THE MOST UNCERTAIN TIME IN THE 2750 01:43:24,097 --> 01:43:26,500 LAST FEW YEARS. AND SO WHAT I'M 2751 01:43:26,500 --> 01:43:31,038 HEARING GENERALLY IS THAT I 2752 01:43:31,038 --> 01:43:32,272 THINK WE'RE MAYBE HAVING A 2753 01:43:32,272 --> 01:43:34,074 LITTLE BIT OF NUANCED DIFFERENCE 2754 01:43:34,074 --> 01:43:36,276 HERE, BUT THAT AT WORST, IT WAS 2755 01:43:36,276 --> 01:43:37,945 50 MILLION NEGATIVE, BUT AT BEST 2756 01:43:37,945 --> 01:43:40,647 IT WAS 100 MILLION POSITIVE IN 2757 01:43:40,647 --> 01:43:42,616 THE WORST, MOST VOLATILE SPACES. 2758 01:43:42,616 --> 01:43:45,786 AND THIS YEAR WE'VE GOT 8.8 2759 01:43:45,786 --> 01:43:46,053 POSITIVE. 2760 01:43:46,053 --> 01:43:48,555 -- YEAH. OH I SEE NOW. UM SO WE 2761 01:43:48,555 --> 01:43:49,189 ARE IGNORING THE PAYROLL EXPENSE 2762 01:43:49,189 --> 01:43:50,224 TAX BECAUSE THAT'S A SEPARATE 2763 01:43:50,224 --> 01:43:51,258 THING. AND LOOKING AT THE 2764 01:43:51,258 --> 01:43:54,194 GENERAL FUND, ONLY THOSE 50 2765 01:43:54,194 --> 01:43:56,997 MILLION. THAT'S CORRECT NUMBER 2766 01:43:56,997 --> 01:43:58,732 THAT YOU WERE SAYING YOU'RE 2767 01:43:58,732 --> 01:43:59,066 REFERRING TO. 2768 01:43:59,066 --> 01:44:00,734 -- ALL RIGHT. I'M JUST TRYING 2769 01:44:00,734 --> 01:44:02,235 TO DO A PRETTY HIGH LEVEL 2770 01:44:02,235 --> 01:44:02,903 COMPARISON. I THINK WE'RE GOING 2771 01:44:02,903 --> 01:44:05,238 TO MOVE ON AT THIS TIME. SO IF 2772 01:44:05,238 --> 01:44:08,075 YOU WANT TO TALK ABOUT THE NEXT 2773 01:44:08,075 --> 01:44:11,144 SLIDES, PLEASE. 2774 01:44:11,144 --> 01:44:17,651 -- OKAY. UM. SO THE NEXT COUPLE 2775 01:44:17,651 --> 01:44:20,120 OF SLIDES DISCUSS THE RISKS FOR 2776 01:44:20,120 --> 01:44:21,722 THOSE MOST VOLATILE REVENUES. 2777 01:44:21,722 --> 01:44:25,392 AND IN PARTICULAR JUMP START 2778 01:44:25,392 --> 01:44:27,995 PAYROLL EXPENSE TAX AND RIGHT 2779 01:44:27,995 --> 01:44:30,264 FIRST, UH, THE PAYROLL EXPENSE 2780 01:44:30,264 --> 01:44:33,900 TAX FORECAST. UM, IT IS INFORMED 2781 01:44:33,900 --> 01:44:38,005 BY, UM, THE DATA THAT WE DO HAVE 2782 01:44:38,005 --> 01:44:40,207 ON EMPLOYMENT FROM WASHINGTON 2783 01:44:40,207 --> 01:44:41,875 STATE EMPLOYMENT SECURITY 2784 01:44:41,875 --> 01:44:43,277 DEPARTMENT. THE DATA, HOWEVER, 2785 01:44:43,277 --> 01:44:44,378 COMES WITH A SIGNIFICANT LAG. SO 2786 01:44:44,378 --> 01:44:46,446 RIGHT NOW WE HAVE INFORMATION 2787 01:44:46,446 --> 01:44:49,016 AVAILABLE THROUGH FIRST QUARTER 2788 01:44:49,016 --> 01:44:55,155 OF 2026. AND WE DO SEE SOME 2789 01:44:55,155 --> 01:44:56,657 EFFECTS OF LAYOFFS ALREADY IN 2790 01:44:56,657 --> 01:44:58,825 THAT DATA. SO WE HAVE 2791 01:44:58,825 --> 01:44:59,393 INCORPORATED THE IMPACT OF 2792 01:44:59,393 --> 01:45:01,395 LAYOFFS IN THE TECH SECTOR. OR 2793 01:45:01,395 --> 01:45:05,198 WOULD WE BE EXPECT THE IMPACT ON 2794 01:45:05,198 --> 01:45:07,501 JOBS JOB NUMBERS TO BE IN THIS 2795 01:45:07,501 --> 01:45:11,605 FORECAST. UM THE OTHER IMPORTANT 2796 01:45:11,605 --> 01:45:15,876 FACTOR HERE ARE THE CHANGES IN 2797 01:45:15,876 --> 01:45:16,510 THE STOCK PRICES WE HAVE 2798 01:45:16,510 --> 01:45:17,944 DISCUSSED IN THE PAST THAT A 2799 01:45:17,944 --> 01:45:19,646 LARGE SHARE OF THE COMPENSATION 2800 01:45:19,646 --> 01:45:20,947 IS A FORM OF RESTRICTED STOCK 2801 01:45:20,947 --> 01:45:22,482 UNITS, AND MOVEMENTS IN STOCK 2802 01:45:22,482 --> 01:45:24,718 PRICES HAVE SIGNIFICANT IMPACT 2803 01:45:24,718 --> 01:45:26,353 ON THE COMPENSATION THAT THE 2804 01:45:26,353 --> 01:45:28,055 TECH WORKERS RECEIVE AND BY 2805 01:45:28,055 --> 01:45:31,024 EXTENSION, HAVE SIGNIFICANT 2806 01:45:31,024 --> 01:45:31,625 IMPACT ON PAYROLL EXPENSE TAX 2807 01:45:31,625 --> 01:45:35,595 REVENUES. SO WE HAVE TRIED TO 2808 01:45:35,595 --> 01:45:36,196 INCORPORATE WHAT THE CURRENT 2809 01:45:36,196 --> 01:45:38,932 OUTLOOK IS FOR STOCK PRICES 2810 01:45:38,932 --> 01:45:42,269 THROUGH YEAR END 2026 AND THEN 2811 01:45:42,269 --> 01:45:44,838 OUTLOOK FOR THE NEXT YEAR. OUR 2812 01:45:44,838 --> 01:45:46,440 USUAL SOURCE OF DATA FOR THIS 2813 01:45:46,440 --> 01:45:50,043 ARE THE WALL STREET JOURNAL 2814 01:45:50,043 --> 01:45:52,579 ANALYST UH, RATINGS, WHERE THEY 2815 01:45:52,579 --> 01:45:54,748 PROVIDE STOCK PRICE TARGETS. THE 2816 01:45:54,748 --> 01:45:58,418 AVERAGE, THE LOW AND THE HIGH 2817 01:45:58,418 --> 01:46:00,220 END. UM, AND THAT'S WHAT THE 2818 01:46:00,220 --> 01:46:01,755 CHART SHOWS HERE. THE COMPANIES 2819 01:46:01,755 --> 01:46:03,890 HERE ARE FOR ILLUSTRATIVE 2820 01:46:03,890 --> 01:46:04,858 PURPOSES. THEY ARE NOT BASED ON 2821 01:46:04,858 --> 01:46:07,060 WHETHER OR NOT THESE COMPANIES 2822 01:46:07,060 --> 01:46:07,627 HAVE A PAYROLL EXPENSE TAX 2823 01:46:07,627 --> 01:46:09,129 OBLIGATION, BUT THEY DO PROVIDE, 2824 01:46:09,129 --> 01:46:11,131 UH, SOME INSIGHTS INTO JUST HOW 2825 01:46:11,131 --> 01:46:15,869 MUCH UNCERTAINTY THERE IS AROUND 2826 01:46:15,869 --> 01:46:16,870 WHERE THE STOCK MARKET IS 2827 01:46:16,870 --> 01:46:20,741 POTENTIALLY HEADING IN 2027. SO 2828 01:46:20,741 --> 01:46:23,343 THE DOTS SHOW THE EXPECTED 2829 01:46:23,343 --> 01:46:25,045 AVERAGE CHANGE IN THE STOCK 2830 01:46:25,045 --> 01:46:27,214 PRICE OF THOSE COMPANIES HERE. 2831 01:46:27,214 --> 01:46:31,051 AND THEN THE RANGE, THE LINE 2832 01:46:31,051 --> 01:46:32,119 SHOWS THE RANGE FROM THE LOW TO 2833 01:46:32,119 --> 01:46:35,722 THE HIGH. UM ESTIMATE FROM THOSE 2834 01:46:35,722 --> 01:46:38,358 WALL STREET JOURNAL ANALYSTS. AS 2835 01:46:38,358 --> 01:46:40,861 YOU CAN SEE, ON AVERAGE, THEY DO 2836 01:46:40,861 --> 01:46:42,896 EXPECT, UH, THE TECH COMPANIES, 2837 01:46:42,896 --> 01:46:45,699 THOSE THAT ARE, UM, INVOLVED IN 2838 01:46:45,699 --> 01:46:47,834 AI BUILD OUT, THEY EXPECT THEIR 2839 01:46:47,834 --> 01:46:49,703 STOCK PRICES TO CONTINUE TO GROW 2840 01:46:49,703 --> 01:46:53,840 AND QUITE, QUITE NOTABLY NEXT 2841 01:46:53,840 --> 01:46:56,276 YEAR, BUT WITH A LOT OF 2842 01:46:56,276 --> 01:46:58,311 UNCERTAINTY AND THINGS CAN BE 2843 01:46:58,311 --> 01:47:00,480 SIGNIFICANTLY BETTER, BUT ALSO 2844 01:47:00,480 --> 01:47:02,749 SIGNIFICANTLY WORSE THAN WHAT 2845 01:47:02,749 --> 01:47:04,451 THE AVERAGE SCENARIO SHOWS. UH, 2846 01:47:04,451 --> 01:47:06,052 SO THAT'S ONE RISK. THE OTHER 2847 01:47:06,052 --> 01:47:07,788 RISK IS BECAUSE WE ONLY HAVE 2848 01:47:07,788 --> 01:47:08,755 LIMITED INFORMATION ON THE 2849 01:47:08,755 --> 01:47:10,090 IMPACT OF LAYOFFS. WE HAVE 2850 01:47:10,090 --> 01:47:13,860 CHANGES IN, UH, UM, OVERALL 2851 01:47:13,860 --> 01:47:14,494 HEADCOUNT THROUGH FIRST QUARTER, 2852 01:47:14,494 --> 01:47:15,929 BUT WE DON'T REALLY HAVE 2853 01:47:15,929 --> 01:47:21,067 INFORMATION ON HOW MANY OF THOSE 2854 01:47:21,067 --> 01:47:21,601 EMPLOYEES WERE SUBJECT TO 2855 01:47:21,601 --> 01:47:22,602 PAYROLL EXPENSE TAX, HOW LARGE 2856 01:47:22,602 --> 01:47:23,603 THEIR COMPENSATION WAS. WE 2857 01:47:23,603 --> 01:47:25,739 DON'T HAVE ANY OF THAT 2858 01:47:25,739 --> 01:47:28,275 INFORMATION. SO THERE IS 2859 01:47:28,275 --> 01:47:28,909 PROBABLY EVEN MORE UNCERTAINTY 2860 01:47:28,909 --> 01:47:30,110 AROUND PAYROLL EXPENSE TAX 2861 01:47:30,110 --> 01:47:32,746 FORECASTS THAN, THAN TYPICALLY. 2862 01:47:32,746 --> 01:47:33,947 BUT THAT'S SOMETHING TO KEEP IN 2863 01:47:33,947 --> 01:47:36,216 MIND. UM, THERE DWIGHT DIVELY. 2864 01:47:36,216 --> 01:47:39,419 -- CAN I JUST NOTE THAT WHAT 2865 01:47:39,419 --> 01:47:41,588 THIS SAYS IS THE MEAN 2866 01:47:41,588 --> 01:47:42,122 EXPECTATION IS THAT THESE 2867 01:47:42,122 --> 01:47:45,525 COMPANIES STOCK VALUES GO UP 25% 2868 01:47:45,525 --> 01:47:47,160 NEXT YEAR. AND THE WORST CASE 2869 01:47:47,160 --> 01:47:47,727 OUTCOME THAT ANYONE IS 2870 01:47:47,727 --> 01:47:48,628 PREDICTING IS THAT ON AVERAGE, 2871 01:47:48,628 --> 01:47:50,397 THEY'LL GO DOWN 5%. 2872 01:47:50,397 --> 01:47:51,832 -- SOMETHING LIKE THAT. YES. 2873 01:47:51,832 --> 01:47:54,234 -- AND THAT I MEAN, SUGGEST YOU 2874 01:47:54,234 --> 01:47:56,269 WOULDN'T HAVE THERE'S NO 2875 01:47:56,269 --> 01:47:57,370 POSSIBILITY OF A RECESSION IN 2876 01:47:57,370 --> 01:47:59,973 THAT SCENARIO. THERE'S NO 2877 01:47:59,973 --> 01:48:02,843 POSSIBILITY OF AN AI BUST. SO 2878 01:48:02,843 --> 01:48:04,010 AND I GUESS I'M NOT A STOCK 2879 01:48:04,010 --> 01:48:05,912 TRADER, SO I'M NOT QUALIFIED TO 2880 01:48:05,912 --> 01:48:07,214 SAY, BUT IT SEEMS REAL 2881 01:48:07,214 --> 01:48:08,181 OPTIMISTIC TO ME. 2882 01:48:08,181 --> 01:48:09,616 -- YEAH. WELL, YOU CAN SEE THAT 2883 01:48:09,616 --> 01:48:11,718 THERE IS SOME VARIATION. ORACLE 2884 01:48:11,718 --> 01:48:12,686 FOR EXAMPLE, IN THE WORST CASE 2885 01:48:12,686 --> 01:48:14,554 SCENARIO WOULD FALL DOWN 25%. 2886 01:48:14,554 --> 01:48:20,794 BUT YEAH, IT'S NOT UH, IT'S 2887 01:48:20,794 --> 01:48:21,361 SURPRISING HOW LITTLE OF A 2888 01:48:21,361 --> 01:48:22,996 DOWNSIDE THERE IS. POTENTIALLY. 2889 01:48:22,996 --> 01:48:24,965 THERE CAN BE A SIGNIFICANT 2890 01:48:24,965 --> 01:48:27,667 CORRECTION. AND IT LOOKS LIKE 2891 01:48:27,667 --> 01:48:28,802 THESE RATING RATINGS FROM THE 2892 01:48:28,802 --> 01:48:30,237 ANALYSTS ARE NOT REALLY 2893 01:48:30,237 --> 01:48:33,039 INCORPORATING THAT. AND THEY DO 2894 01:48:33,039 --> 01:48:35,408 BELIEVE THAT THERE IS A LOT OF 2895 01:48:35,408 --> 01:48:39,079 UPSIDE MORE UPSIDE AND DOWNSIDE. 2896 01:48:39,079 --> 01:48:41,181 SO UM A LOT OF UNCERTAINTY WHEN 2897 01:48:41,181 --> 01:48:42,782 IT COMES TO THE TIMING OF THOSE 2898 01:48:42,782 --> 01:48:44,451 EARNINGS WHEN THEY WILL 2899 01:48:44,451 --> 01:48:45,552 MATERIALIZE AND WHETHER THEY 2900 01:48:45,552 --> 01:48:47,487 JUSTIFY THE INCREDIBLE AMOUNT OF 2901 01:48:47,487 --> 01:48:54,461 INVESTMENT. SO YES, RISKY. VERY. 2902 01:48:54,461 --> 01:49:00,533 YEAH, THAT'S A GOOD POINT. ALL 2903 01:49:00,533 --> 01:49:01,234 RIGHT. SO THAT'S PAYROLL EXPENSE 2904 01:49:01,234 --> 01:49:03,537 TAX. AND THEN, UH, THE REVENUE 2905 01:49:03,537 --> 01:49:05,372 THAT HAS SEEN THE LARGEST 2906 01:49:05,372 --> 01:49:08,308 REVISION IN THE CURRENT FORECAST 2907 01:49:08,308 --> 01:49:09,876 READ RATE IS, UH, REALLY VERY 2908 01:49:09,876 --> 01:49:11,378 WELL. WE HAVE A MUCH LONGER 2909 01:49:11,378 --> 01:49:13,880 HISTORY THAN FOR PAYROLL EXPENSE 2910 01:49:13,880 --> 01:49:15,081 TAX REVENUES. AND THE CHART HERE 2911 01:49:15,081 --> 01:49:17,384 SHOWS THE YEAR OVER YEAR CHANGE 2912 01:49:17,384 --> 01:49:19,319 IN THE OVERALL RATE COLLECTION. 2913 01:49:19,319 --> 01:49:23,189 UM, OVER THE LAST, UH, 30 YEARS. 2914 01:49:23,189 --> 01:49:26,626 SO THAT'S QUITE A LONG HISTORY. 2915 01:49:26,626 --> 01:49:28,261 UM, AND IT'S LONG ENOUGH TO SEE 2916 01:49:28,261 --> 01:49:30,797 JUST HOW VOLATILE THIS REVENUE 2917 01:49:30,797 --> 01:49:32,432 STREAM IS. AND THERE HAVE BEEN 2918 01:49:32,432 --> 01:49:34,734 YEARS WHERE IT HAS DROPPED BY 2919 01:49:34,734 --> 01:49:36,169 MORE THAN 50%. THE LARGEST DROP 2920 01:49:36,169 --> 01:49:40,407 IS CLOSE TO A 60% YEAR OVER YEAR 2921 01:49:40,407 --> 01:49:43,043 DROP IN 2008, FOLLOWED BY AN 2922 01:49:43,043 --> 01:49:45,712 ALMOST 30% DROP NEXT YEAR. UM, 2923 01:49:45,712 --> 01:49:48,148 AND THEN A COUPLE OF YEARS AFTER 2924 01:49:48,148 --> 01:49:50,750 THAT IN 2012, UM, THAT WAS THE 2925 01:49:50,750 --> 01:49:54,921 RECORD GROWTH FOR REVENUES. AND 2926 01:49:54,921 --> 01:49:56,356 IT GREW MORE THAN 60% YEAR OVER 2927 01:49:56,356 --> 01:49:58,725 YEAR. SO VERY, VERY VOLATILE 2928 01:49:58,725 --> 01:50:00,460 BECAUSE HOUSING MARKET IS IN 2929 01:50:00,460 --> 01:50:03,697 GENERAL MORE, UM, RESPONSIVE TO 2930 01:50:03,697 --> 01:50:07,133 CHANGES IN ECONOMIC CONDITIONS 2931 01:50:07,133 --> 01:50:08,802 WHEN MORTGAGE RATES CHANGE, A 2932 01:50:08,802 --> 01:50:10,670 LOT OF PEOPLE MIGHT BE PUSHED 2933 01:50:10,670 --> 01:50:13,273 OUT OF THE MARKET. SO HOW MANY 2934 01:50:13,273 --> 01:50:15,575 HOMES ARE SOLD VARIES. IN 2935 01:50:15,575 --> 01:50:18,712 ADDITION TO THAT, UH, A LOT OF 2936 01:50:18,712 --> 01:50:21,247 THAT REVENUE COMES FROM SALES OF 2937 01:50:21,247 --> 01:50:24,517 LARGE PROPERTIES OFFICE OR LARGE 2938 01:50:24,517 --> 01:50:26,319 APARTMENT BUILDINGS. AND WHEN 2939 01:50:26,319 --> 01:50:28,388 THEIR VALUE CHANGES OR THE 2940 01:50:28,388 --> 01:50:30,390 OVERALL OUTLOOK CHANGES, UH, THE 2941 01:50:30,390 --> 01:50:32,859 AMOUNT THAT WE RECEIVE FROM READ 2942 01:50:32,859 --> 01:50:34,361 FROM SALES OF THOSE PROPERTIES 2943 01:50:34,361 --> 01:50:38,631 CAN VARY SIGNIFICANTLY. AND SO, 2944 01:50:38,631 --> 01:50:41,101 UM, THE CHART HERE SHOWS HOW THE 2945 01:50:41,101 --> 01:50:46,239 FORECAST HAS EVOLVED SINCE, UH, 2946 01:50:46,239 --> 01:50:47,707 THE ADOPTED BUDGET FOR 2026. 2947 01:50:47,707 --> 01:50:50,377 THAT, THAT FAINT SALMON LINE. 2948 01:50:50,377 --> 01:50:53,079 UM, THEN IT HAS BEEN REVISED 2949 01:50:53,079 --> 01:50:55,615 DOWN FOR THE CURRENT YEAR. THE 2950 01:50:55,615 --> 01:50:58,284 GROWTH HAS BEEN ESSENTIALLY 2951 01:50:58,284 --> 01:50:58,885 REMOVED COMPLETELY OUT OF THE 2952 01:50:58,885 --> 01:50:59,686 FORECAST FOR, FOR THE CURRENT 2953 01:50:59,686 --> 01:51:02,455 YEAR IN THE APRIL FORECAST, WE 2954 01:51:02,455 --> 01:51:03,289 HAVE SEEN FURTHER DOWNWARD 2955 01:51:03,289 --> 01:51:06,893 REVISION IN IN AUGUST. AND THIS 2956 01:51:06,893 --> 01:51:08,762 IS THE CURRENT ONE. SO OVERALL 2957 01:51:08,762 --> 01:51:10,663 WE ARE NOW EXPECTING ABOUT A 10% 2958 01:51:10,663 --> 01:51:15,902 YEAR OVER YEAR DECLINE IN 2026. 2959 01:51:15,902 --> 01:51:18,204 UM, SO THAT IS BASED ON THE US 2960 01:51:18,204 --> 01:51:21,007 FORECAST, UH, FROM SEPTEMBER 2961 01:51:21,007 --> 01:51:23,843 THAT HAS ALREADY INCORPORATED 2962 01:51:23,843 --> 01:51:25,712 SOME INCREASES IN THE INTEREST 2963 01:51:25,712 --> 01:51:27,047 RATES, BUT NOT TO THE FULL 2964 01:51:27,047 --> 01:51:28,581 EXTENT. AND SO THERE IS 2965 01:51:28,581 --> 01:51:31,084 CERTAINLY SOME DOWNSIDE. UM, AS 2966 01:51:31,084 --> 01:51:33,787 YOU CAN SEE, THE TABLE SHOWS THE 2967 01:51:33,787 --> 01:51:36,790 OVERALL IMPACT OF THOSE DOWNWARD 2968 01:51:36,790 --> 01:51:38,858 REVISIONS TO THE FORECAST. WE 2969 01:51:38,858 --> 01:51:41,728 HAVE SEEN, UM INTEREST RATES IN 2970 01:51:41,728 --> 01:51:43,663 GENERAL INTEREST RATE FORECAST 2971 01:51:43,663 --> 01:51:45,498 REVISED UP. THAT HAS LED TO 2972 01:51:45,498 --> 01:51:47,600 LOWER FORECASTS FOR HOME SALES 2973 01:51:47,600 --> 01:51:49,369 AND LOWER FORECASTS FOR READ. 2974 01:51:49,369 --> 01:51:52,639 AND THAT'S WHAT THE NEXT SLIDE 2975 01:51:52,639 --> 01:51:54,007 SHOWS. UM THE PANEL ON THE LEFT 2976 01:51:54,007 --> 01:51:56,676 SHOWS THE 30 YEAR MORTGAGE RATE 2977 01:51:56,676 --> 01:51:58,978 AND THE PANEL ON THE RIGHT SHOWS 2978 01:51:58,978 --> 01:52:00,647 THE US SALES OF THE EXISTING 2979 01:52:00,647 --> 01:52:01,981 HOMES IN THE US. ONE THING I 2980 01:52:01,981 --> 01:52:04,384 WANT TO NOTE HERE POINT OUT HERE 2981 01:52:04,384 --> 01:52:07,720 IS THAT THAT, UH, RUN UP IN THE 2982 01:52:07,720 --> 01:52:10,190 MORTGAGE RATES WAS REALLY FAST 2983 01:52:10,190 --> 01:52:12,659 IN 2022. SO IT WENT FROM 4% TO 2984 01:52:12,659 --> 01:52:15,161 7% OVER A VERY SHORT PERIOD OF 2985 01:52:15,161 --> 01:52:20,233 TIME. UM, 3% EACH POINT INCREASE 2986 01:52:20,233 --> 01:52:21,835 IN MORTGAGE RATES HAS ALSO LED 2987 01:52:21,835 --> 01:52:23,403 TO A DROP IN SALES OF EXISTING 2988 01:52:23,403 --> 01:52:25,505 HOMES FROM 6 MILLION TO 4 2989 01:52:25,505 --> 01:52:28,408 MILLION. SO THAT'S ABOUT 30% 2990 01:52:28,408 --> 01:52:30,743 DROP FOR THREE PERCENTAGE POINT 2991 01:52:30,743 --> 01:52:31,978 INCREASE IN MORTGAGE RATES. SO 2992 01:52:31,978 --> 01:52:35,081 ABOUT 10% DROP BACK OF AN 2993 01:52:35,081 --> 01:52:36,783 ENVELOPE CALCULATION, 10% DROP 2994 01:52:36,783 --> 01:52:39,085 IN EXISTING HOME SALES FOR EACH 2995 01:52:39,085 --> 01:52:40,887 PERCENTAGE POINT INCREASE IN THE 2996 01:52:40,887 --> 01:52:43,890 MORTGAGE RATE AND THAT, AGAIN, 2997 01:52:43,890 --> 01:52:46,593 TIES TO THE FACT THAT WE HAVE 2998 01:52:46,593 --> 01:52:49,596 SEEN RATES DECLINE SIGNIFICANTLY 2999 01:52:49,596 --> 01:52:51,531 IN 2022 AND 23. THOSE ARE THE 3000 01:52:51,531 --> 01:52:53,466 TWO YEARS WHERE REVENUES HAVE 3001 01:52:53,466 --> 01:52:55,301 GONE UP DOWN SIGNIFICANTLY, EVEN 3002 01:52:55,301 --> 01:52:57,270 WHEN THOSE YEARS WERE NOT YEARS 3003 01:52:57,270 --> 01:53:02,408 OF RECESSION. UM, IN PAST, THOSE 3004 01:53:02,408 --> 01:53:04,811 SIGNIFICANT DECLINES OCCURRED 3005 01:53:04,811 --> 01:53:05,378 DURING THE RECESSION YEARS, 3006 01:53:05,378 --> 01:53:07,046 2020, RECESSION WAS A LITTLE BIT 3007 01:53:07,046 --> 01:53:08,615 OF A STRANGE ONE. THERE WERE 3008 01:53:08,615 --> 01:53:09,716 SOME OTHER THINGS GOING ON 3009 01:53:09,716 --> 01:53:11,551 THERE, BUT THE MAJOR DECLINES 3010 01:53:11,551 --> 01:53:13,853 IN, UH, EIGHT, NINE, THAT WAS, 3011 01:53:13,853 --> 01:53:18,625 UH, UH, THE FINANCIAL CRISIS AND 3012 01:53:18,625 --> 01:53:19,659 THE RECESSION THAT THAT 3013 01:53:19,659 --> 01:53:21,895 FOLLOWED. AND THEN THE PREVIOUS 3014 01:53:21,895 --> 01:53:23,296 DECLINE IN 2001, AGAIN, 3015 01:53:23,296 --> 01:53:25,231 RECESSION PERIOD. BUT 2022 AND 3016 01:53:25,231 --> 01:53:27,534 THREE, RECESSION DID NOT OCCUR 3017 01:53:27,534 --> 01:53:31,037 IN THE US. US CAME SUPER CLOSE 3018 01:53:31,037 --> 01:53:35,208 TO, UH A SOFT LANDING, UM, WHICH 3019 01:53:35,208 --> 01:53:37,577 IS QUITE, QUITE REMARKABLE. BUT 3020 01:53:37,577 --> 01:53:39,212 THE IMPACT ON READ WAS 3021 01:53:39,212 --> 01:53:40,747 SUBSTANTIAL BECAUSE OF THAT RUN 3022 01:53:40,747 --> 01:53:41,414 UP IN MORTGAGE RATES. NOW, WHAT 3023 01:53:41,414 --> 01:53:44,217 WE HAVE SEEN IN THIS YEAR IS A 3024 01:53:44,217 --> 01:53:46,019 SIMILAR SORT OF THING, JUST AT A 3025 01:53:46,019 --> 01:53:47,453 SMALLER SCALE. SO WHEN WE LOOK 3026 01:53:47,453 --> 01:53:51,124 AT HOW THE CHANGES IN MORTGAGE 3027 01:53:51,124 --> 01:53:53,393 RATES FORECAST EVOLVED OVER 3028 01:53:53,393 --> 01:53:54,494 TIME, UM, THERE HAS BEEN A 3029 01:53:54,494 --> 01:53:55,895 LITTLE BIT OF DOWNWARD REVISION 3030 01:53:55,895 --> 01:53:59,933 IN MARCH, BUT HOME SALES WERE 3031 01:53:59,933 --> 01:54:01,534 FORECASTED LOWER THAN IN JULY. 3032 01:54:01,534 --> 01:54:03,303 FORECAST. THERE HAS BEEN ALREADY 3033 01:54:03,303 --> 01:54:04,938 THE EXPECTATION THAT MORTGAGE 3034 01:54:04,938 --> 01:54:08,274 RATES ARE NOT COMING BELOW 6%. 3035 01:54:08,274 --> 01:54:10,109 THEY WILL ACTUALLY GO UP IN A 3036 01:54:10,109 --> 01:54:13,246 SHORTER PERIOD AND THEN START TO 3037 01:54:13,246 --> 01:54:14,747 DECLINE GRADUALLY, WITH THE 3038 01:54:14,747 --> 01:54:17,784 SIGNIFICANT IMPACT ON HOME 3039 01:54:17,784 --> 01:54:18,618 SALES. THIS IS THE FORECAST THAT 3040 01:54:18,618 --> 01:54:21,788 UNDERLIES THE OCTOBER REVENUE 3041 01:54:21,788 --> 01:54:23,990 FORECAST. SEPTEMBER 2026. SO 3042 01:54:23,990 --> 01:54:25,959 EVEN FURTHER UPWARD REVISION IN 3043 01:54:25,959 --> 01:54:27,060 THE MORTGAGE RATES AND A 3044 01:54:27,060 --> 01:54:28,828 DOWNWARD REVISION IN HOME SALES. 3045 01:54:28,828 --> 01:54:32,665 AND JUST YESTERDAY, WE HAVE 3046 01:54:32,665 --> 01:54:34,067 RECEIVED AN UPDATED US FORECAST. 3047 01:54:34,067 --> 01:54:36,202 SO THAT'S NOT THE ONE THAT 3048 01:54:36,202 --> 01:54:37,904 BUILT INTO THE REVENUE FORECAST. 3049 01:54:37,904 --> 01:54:40,006 BUT BECAUSE MORTGAGE RATES ARE 3050 01:54:40,006 --> 01:54:43,810 CURRENTLY OVER 7% AND THEY ARE 3051 01:54:43,810 --> 01:54:46,246 EXPECTED TO GO DOWN, BUT ONLY 3052 01:54:46,246 --> 01:54:49,849 GRADUALLY, UM, THE HOME SALES 3053 01:54:49,849 --> 01:54:51,451 FORECAST HAS BEEN REVISED DOWN. 3054 01:54:51,451 --> 01:54:54,053 AND THAT HAS IMPLICATIONS. UH, 3055 01:54:54,053 --> 01:54:56,222 UNLESS THERE IS A QUICK REVERSAL 3056 01:54:56,222 --> 01:54:57,590 THAT HAS IMPLICATIONS FOR RATE 3057 01:54:57,590 --> 01:54:59,225 REVENUES GOING FORWARD. SO SIX 3058 01:54:59,225 --> 01:55:00,560 MONTHS FROM NOW, WHEN WE ARE 3059 01:55:00,560 --> 01:55:02,662 PRESENTING THE APRIL FORECAST, 3060 01:55:02,662 --> 01:55:03,896 UH, IT'S QUITE POSSIBLE THAT WE 3061 01:55:03,896 --> 01:55:05,531 ARE GOING TO SEE ANOTHER 3062 01:55:05,531 --> 01:55:09,102 DOWNWARD REVISION FOR THAT 3063 01:55:09,102 --> 01:55:09,369 FORECAST. 3064 01:55:09,369 --> 01:55:11,037 -- THANK YOU. JOHN. THIS IS THE 3065 01:55:11,037 --> 01:55:12,939 WORST PART OF THE REVENUE 3066 01:55:12,939 --> 01:55:15,141 FORECAST SIMPLY BECAUSE IT IS 3067 01:55:15,141 --> 01:55:18,945 OUR TELLTALE. WE HAD THAT BRIEF 3068 01:55:18,945 --> 01:55:20,913 REPRIEVE IN 2024 WHERE WE 3069 01:55:20,913 --> 01:55:22,315 THOUGHT THINGS WERE GETTING 3070 01:55:22,315 --> 01:55:23,082 BETTER, BUT THAT WAS AGAIN, 3071 01:55:23,082 --> 01:55:24,951 BEFORE THE FEDERAL 3072 01:55:24,951 --> 01:55:25,585 ADMINISTRATION CHANGED WITH ALL 3073 01:55:25,585 --> 01:55:28,187 THESE FEDERALLY SELF-INDUCED 3074 01:55:28,187 --> 01:55:28,988 NEGATIVE ECONOMIC IMPACTS THAT 3075 01:55:28,988 --> 01:55:30,490 HAVE OCCURRED. UM, COLLEAGUES, 3076 01:55:30,490 --> 01:55:32,358 ANY OTHER QUESTIONS ON REIT 3077 01:55:32,358 --> 01:55:35,194 RIGHT NOW? UH, DIRECTOR, I SEE 3078 01:55:35,194 --> 01:55:38,965 THAT YOU HAVE OFFERED US, UH, 3079 01:55:38,965 --> 01:55:39,632 YOU'VE RECOMMENDED THE BASELINE 3080 01:55:39,632 --> 01:55:40,833 SCENARIO. SO YOU'VE GOT ABOUT 3081 01:55:40,833 --> 01:55:42,001 TWO MINUTES TO GET THROUGH THE 3082 01:55:42,001 --> 01:55:43,336 PESSIMISTIC. SO WE'RE GOING TO 3083 01:55:43,336 --> 01:55:45,571 GO HIGH LEVEL. YOU CAN, YOU CAN 3084 01:55:45,571 --> 01:55:46,739 TAKE US TO THE GRAND TOTALS IF 3085 01:55:46,739 --> 01:55:48,408 YOU'D LIKE, BUT YOU GOT ABOUT 3086 01:55:48,408 --> 01:55:49,475 TWO MINUTES. THANK YOU SIR. 3087 01:55:49,475 --> 01:55:51,311 -- YEAH. SO FOR THE VIEWING 3088 01:55:51,311 --> 01:55:53,947 PUBLIC WE ARE PREPARING THREE 3089 01:55:53,947 --> 01:55:55,682 SCENARIOS. WE ARE TASKED WITH 3090 01:55:55,682 --> 01:55:57,583 PREPARING A BASELINE SCENARIO 3091 01:55:57,583 --> 01:55:58,217 FORECAST AND TWO ALTERNATIVES, 3092 01:55:58,217 --> 01:55:59,686 AN OPTIMISTIC ONE AND A 3093 01:55:59,686 --> 01:56:03,656 PESSIMISTIC ONE THAT WE HAVE, 3094 01:56:03,656 --> 01:56:06,059 UH, HERE WE HAVE FOCUSED ON THE 3095 01:56:06,059 --> 01:56:09,262 BASELINE, UH, THE TABLE SHOWS 3096 01:56:09,262 --> 01:56:09,996 THE PESSIMISTIC SCENARIO, BUT. 3097 01:56:09,996 --> 01:56:10,163 UH. 3098 01:56:10,163 --> 01:56:10,997 -- DIRECTOR, I'M GOING TO HELP 3099 01:56:10,997 --> 01:56:13,132 YOU OUT. AND IF WE COULD JUST 3100 01:56:13,132 --> 01:56:14,600 ROLL THE SLIDE 23 SO YOU CAN 3101 01:56:14,600 --> 01:56:16,469 SHOW THE COMPARISONS 3102 01:56:16,469 --> 01:56:16,736 -- SURE. 3103 01:56:16,736 --> 01:56:20,340 -- THANK YOU. YEAH. SO THIS IS 3104 01:56:20,340 --> 01:56:22,608 A, BROAD OVERVIEW OF, UH, THE 3105 01:56:22,608 --> 01:56:24,744 CHANGES FROM THE BASELINE 3106 01:56:24,744 --> 01:56:26,879 SCENARIO TO THE ALTERNATIVES. 3107 01:56:26,879 --> 01:56:27,513 UM, SIGNIFICANTLY LESS REVENUES 3108 01:56:27,513 --> 01:56:28,948 IN THE PESSIMISTIC SCENARIO, 3109 01:56:28,948 --> 01:56:31,384 SIGNIFICANTLY MORE REVENUES IN, 3110 01:56:31,384 --> 01:56:33,486 IN THE OPTIMISTIC SCENARIO OVER 3111 01:56:33,486 --> 01:56:37,223 THE COURSE OF Tâ–ˆHREE YEARS. UM, 3112 01:56:37,223 --> 01:56:38,758 WE ALWAYS RECOMMEND ONE OF THOSE 3113 01:56:38,758 --> 01:56:40,360 SCENARIOS TO, TO BE ADOPTED AS 3114 01:56:40,360 --> 01:56:44,497 THE OFFICIAL FORECAST. UM, GIVEN 3115 01:56:44,497 --> 01:56:45,698 WHAT, UH, THE CURRENT OUTLOOK 3116 01:56:45,698 --> 01:56:47,200 LOOKS LIKE, WE HAVE DISCUSSED 3117 01:56:47,200 --> 01:56:48,701 THE PROBABILITY OF A RECESSION, 3118 01:56:48,701 --> 01:56:50,403 THE LIKELIHOOD OF THAT 3119 01:56:50,403 --> 01:56:50,970 PESSIMISTIC SCENARIO BEING 3120 01:56:50,970 --> 01:56:53,039 SOMEWHERE AROUND 25%. OUR 3121 01:56:53,039 --> 01:56:55,308 CURRENT RECOMMENDATION IS TO 3122 01:56:55,308 --> 01:56:56,576 ADOPT THE BASELINE SCENARIO, 3123 01:56:56,576 --> 01:56:58,378 SINCE THAT IS THE MOST LIKELY 3124 01:56:58,378 --> 01:57:00,847 OUTCOME. THE HEISENBERG 3125 01:57:00,847 --> 01:57:02,882 UNCERTAINTY IS THERE. THE RISKS 3126 01:57:02,882 --> 01:57:04,250 ARE THERE. BUT AS OF THIS POINT, 3127 01:57:04,250 --> 01:57:06,886 IT DOES NOT LOOK LIKE, UH, THE 3128 01:57:06,886 --> 01:57:08,521 ECONOMY IS HEADING INTO A 3129 01:57:08,521 --> 01:57:09,956 RECESSION, WHICH IS WHAT THAT 3130 01:57:09,956 --> 01:57:11,724 PESSIMISTIC SCENARIO IS BUILT 3131 01:57:11,724 --> 01:57:15,194 AROUND. SO WITH THAT, I'M HAPPY 3132 01:57:15,194 --> 01:57:16,129 TO TAKE ANY QUESTIONS. 3133 01:57:16,129 --> 01:57:16,796 -- I KNOW THERE'S NO SUCH THING 3134 01:57:16,796 --> 01:57:19,732 AS A LOCALIZED RECESSION, BUT IT 3135 01:57:19,732 --> 01:57:21,300 SURE DOES FEEL LIKE WE ARE IN 3136 01:57:21,300 --> 01:57:22,535 ONE THAT IS DIFFERENT THAN A 3137 01:57:22,535 --> 01:57:24,170 NATIONAL RECESSION. SO ALL OF 3138 01:57:24,170 --> 01:57:25,805 THE INDICATORS THAT WE HAVE 3139 01:57:25,805 --> 01:57:28,741 HOPED WOULD COME BACK UP SINCE 3140 01:57:28,741 --> 01:57:31,310 ABOUT 2021, 2022 HAVE RISEN 3141 01:57:31,310 --> 01:57:33,479 SLIGHTLY AND THEN FLATLINED. SO, 3142 01:57:33,479 --> 01:57:35,515 UH, THIS IS POSITIVE THAT IT'S 3143 01:57:35,515 --> 01:57:37,784 NOT IN THE NEGATIVE DIRECTION, 3144 01:57:37,784 --> 01:57:40,720 UH, BUT THE FLAT LINE. IF YOU'RE 3145 01:57:40,720 --> 01:57:41,654 NOT GROWING OR SHRINKING IN A 3146 01:57:41,654 --> 01:57:42,722 FLAT LINE TO ME IS A LITTLE BIT 3147 01:57:42,722 --> 01:57:46,125 OF SHRINKING. SO NOT, I TAKE 3148 01:57:46,125 --> 01:57:46,926 THIS AS A BAD FORECAST. I KNOW 3149 01:57:46,926 --> 01:57:49,595 THAT MOST PEOPLE WILL TAKE IT A 3150 01:57:49,595 --> 01:57:51,497 BAD FORECAST ONCE IT GOES 3151 01:57:51,497 --> 01:57:52,732 NEGATIVE, BUT JUST THE 3152 01:57:52,732 --> 01:57:53,599 UNDERSTANDING OF WHAT YOU SHARED 3153 01:57:53,599 --> 01:57:55,201 EARLIER, THAT THIS IS ONE OF THE 3154 01:57:55,201 --> 01:57:57,069 SMALLEST, IF NOT THE SMALLEST 3155 01:57:57,069 --> 01:57:59,705 GAINS IN A FORECAST, AND THAT'S 3156 01:57:59,705 --> 01:58:00,940 NOTHING TO SAY ABOUT YOUR 3157 01:58:00,940 --> 01:58:02,341 FORECASTING SKILLS. YOUR 3158 01:58:02,341 --> 01:58:04,277 FORECASTING SKILLS ARE GREAT. 3159 01:58:04,277 --> 01:58:05,445 IT'S THAT THIS IS ONE OF THE 3160 01:58:05,445 --> 01:58:07,280 SMALLEST GAINS THAT WE'VE HAD 3161 01:58:07,280 --> 01:58:08,514 SINCE IN THE LAST SEVEN YEARS. 3162 01:58:08,514 --> 01:58:09,615 SO THAT THAT'S A REAL BIG 3163 01:58:09,615 --> 01:58:13,019 PROBLEM. UM, NOT YOUR PROBLEM. 3164 01:58:13,019 --> 01:58:15,021 OUR PROBLEM, UH, BUT I'M JUST 3165 01:58:15,021 --> 01:58:16,689 LIKE, THAT'S THE GRAVITY OF THE 3166 01:58:16,689 --> 01:58:19,292 SITUATION WE'RE IN COLLEAGUES. 3167 01:58:19,292 --> 01:58:23,863 ANY DISCUSSION ON SLIDE 24 OR 3168 01:58:23,863 --> 01:58:26,833 THE PRESENTATION ALL RIGHT. 3169 01:58:26,833 --> 01:58:28,835 WELL, I GAVE YOU I GAVE YOU TWO 3170 01:58:28,835 --> 01:58:32,004 MINUTES. YOU DID IT IN ONE. I 3171 01:58:32,004 --> 01:58:33,940 APPRECIATE YOU, FRIEND. UH, 3172 01:58:33,940 --> 01:58:35,174 ANYTHING ELSE THAT WE SHOULD 3173 01:58:35,174 --> 01:58:41,481 THINK ABOUT BEFORE WE, UH, ADOPT 3174 01:58:41,481 --> 01:58:41,981 OR FINISH THIS MEETING? 3175 01:58:41,981 --> 01:58:42,849 FANTASTIC. WELL, I REALLY 3176 01:58:42,849 --> 01:58:44,617 APPRECIATE EVERYONE FROM CBO. 3177 01:58:44,617 --> 01:58:46,619 ALEX, JOE, MATT, I REALLY 3178 01:58:46,619 --> 01:58:48,020 APPRECIATE YOU, SEAN. DIRECTOR. 3179 01:58:48,020 --> 01:58:49,622 DORIS. VICE CHAIR ELDERBROOK. 3180 01:58:49,622 --> 01:58:51,524 MR.. DWIGHT DIVELY, ALWAYS A 3181 01:58:51,524 --> 01:58:55,862 PLEASURE. UM, I'M JUST GOING TO 3182 01:58:55,862 --> 01:58:57,797 JUMP RIGHT ON IN. PER THE 3183 01:58:57,797 --> 01:58:58,364 ORDINANCE THAT CREATED THE 3184 01:58:58,364 --> 01:58:58,998 FORECAST OFFICE AND THIS 3185 01:58:58,998 --> 01:59:00,700 FORECAST COUNCIL IS THE ROLE OF 3186 01:59:00,700 --> 01:59:01,334 THE FORECAST COUNCIL TO REVIEW 3187 01:59:01,334 --> 01:59:05,438 AND APPROVE THE FORECAST. IT IS 3188 01:59:05,438 --> 01:59:06,706 WE REPRESENT THE ELECTED 3189 01:59:06,706 --> 01:59:07,206 LEADERSHIP OF BOTH THE 3190 01:59:07,206 --> 01:59:09,709 LEGISLATIVE AND EXECUTIVE 3191 01:59:09,709 --> 01:59:12,378 BRANCHES AS IT'S THE. AND AS A 3192 01:59:12,378 --> 01:59:14,380 TWO SEPARATELY ELECTED BODIES, 3193 01:59:14,380 --> 01:59:17,617 WE HAVE THE ABILITY TO OVERRIDE 3194 01:59:17,617 --> 01:59:18,150 THE RECOMMENDATION OF THE 3195 01:59:18,150 --> 01:59:18,885 FORECAST OFFICE. SHOULD WE 3196 01:59:18,885 --> 01:59:21,387 JUDGE. THIS MAKES SENSE. PER 3197 01:59:21,387 --> 01:59:23,256 ESTABLISHING THE ORDINANCE, SUCH 3198 01:59:23,256 --> 01:59:25,091 A DECISION WOULD REQUIRE THREE 3199 01:59:25,091 --> 01:59:27,894 MEMBER VOTING APPROVAL OF AN 3200 01:59:27,894 --> 01:59:29,695 ALTERNATIVE SCENARIO. AND AS 3201 01:59:29,695 --> 01:59:31,731 YOU'VE HEARD, DIRECTOR DUROSS 3202 01:59:31,731 --> 01:59:32,331 RECOMMENDS THAT THE BASELINE 3203 01:59:32,331 --> 01:59:33,966 SCENARIO OF THE OCTOBER 26th 3204 01:59:33,966 --> 01:59:36,035 FORECAST IS USED AS THE OFFICIAL 3205 01:59:36,035 --> 01:59:37,670 FORECAST. IF WE ALL AGREE THAT 3206 01:59:37,670 --> 01:59:38,905 THIS IS A FORECAST THAT SHOULD 3207 01:59:38,905 --> 01:59:41,607 BE USED, WE. WE DO NOT NEED TO 3208 01:59:41,607 --> 01:59:42,675 TAKE A VOTE. I WOULD SIMPLY 3209 01:59:42,675 --> 01:59:45,077 REQUEST THAT THE MEETING MINUTES 3210 01:59:45,077 --> 01:59:45,578 REFLECT OUR CONCURRENCE 3211 01:59:45,578 --> 01:59:47,146 REGARDING THE RECOMMENDED 3212 01:59:47,146 --> 01:59:49,115 FORECAST. THIS IS THE FORMAL 3213 01:59:49,115 --> 01:59:49,649 STEP CALLED FOR UNDER THE 3214 01:59:49,649 --> 01:59:53,219 BYLAWS. AS WE. AS THE WAY WE 3215 01:59:53,219 --> 01:59:55,188 WILL REPORT OUR APPROVAL OF THE 3216 01:59:55,188 --> 01:59:57,890 FORECASTS. ARE THERE ANY 3217 01:59:57,890 --> 01:59:58,658 OBJECTIONS TO APPROVING THE 3218 01:59:58,658 --> 02:00:00,059 FORECAST AS RECOMMENDED BY 3219 02:00:00,059 --> 02:00:02,094 DIRECTOR? 3220 02:00:02,094 --> 02:00:02,495 -- NO OBJECTION. 3221 02:00:02,495 --> 02:00:04,030 -- FANTASTIC. NOT HEARING ANY 3222 02:00:04,030 --> 02:00:05,498 OBJECTIONS? I WILL DIRECT THE 3223 02:00:05,498 --> 02:00:07,099 FORECAST OFFICE TO RECORD RECORD 3224 02:00:07,099 --> 02:00:08,801 OUR CONCURRENCE WITH THE 3225 02:00:08,801 --> 02:00:12,505 RECOMMENDED FORECAST IN THE 3226 02:00:12,505 --> 02:00:17,443 MEETING MINUTES. THAT MEANS THAT 3227 02:00:17,443 --> 02:00:19,312 WE HAVE REACHED THE END OF OUR 3228 02:00:19,312 --> 02:00:20,479 FORMAL AGENDA WITH TWO MINUTES 3229 02:00:20,479 --> 02:00:21,914 TO SPARE. IF THERE ARE NO 3230 02:00:21,914 --> 02:00:23,349 FURTHER QUESTIONS, ANY FURTHER 3231 02:00:23,349 --> 02:00:24,050 QUESTIONS, ANY FURTHER COMMENTS? 3232 02:00:24,050 --> 02:00:25,117 ANYTHING FOR THE GOOD OF THE 3233 02:00:25,117 --> 02:00:27,253 ORDER? UH, THE ECONOMIC AND 3234 02:00:27,253 --> 02:00:29,488 REVENUE FORECAST COUNCIL WILL BE 3235 02:00:29,488 --> 02:00:30,856 ADJOURNED. AND, UH, WE'LL SEE 3236 02:00:30,856 --> 02:00:32,091 YOU IN APRIL. THANK YOU, THANK 3237 02:00:32,091 --> 02:00:37,229 YOU, THANK YOU. YEAH. BUDGET