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Regional Economy and General Fund Revenue Overvie...Apr 30, 2018  · 2015 Q2. 2015 Q3. 2015 Q4....

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Regional Economy and General Fund Revenue Overview Economics & Revenue Team, City Budget Office
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Page 1: Regional Economy and General Fund Revenue Overvie...Apr 30, 2018  · 2015 Q2. 2015 Q3. 2015 Q4. 2016 Q1. 2016 Q2. 2016 Q3. 2016 Q4. 2017 Q1. 2017 Q2. 2017 Q3. 2017 Q4. Combined Retail

Regional Economy and General Fund Revenue Overview

Economics & Revenue Team, City Budget Office

Page 2: Regional Economy and General Fund Revenue Overvie...Apr 30, 2018  · 2015 Q2. 2015 Q3. 2015 Q4. 2016 Q1. 2016 Q2. 2016 Q3. 2016 Q4. 2017 Q1. 2017 Q2. 2017 Q3. 2017 Q4. Combined Retail

U.S. and Regional Economy

April 30, 2018Regional Economy and General Fund Revenue Overview2

National expansion is in 9th year • Soon will be 2nd longest post - WW II

Changes since last forecast• Tax cuts and bipartisan budget agreement

Stronger growth in 2018 & 2019

Risk that economy overheats, leading to Fed rate hikes

• Trade war?

Puget Sound economy• Growth picked up in 2017 Q4

Construction

Page 3: Regional Economy and General Fund Revenue Overvie...Apr 30, 2018  · 2015 Q2. 2015 Q3. 2015 Q4. 2016 Q1. 2016 Q2. 2016 Q3. 2016 Q4. 2017 Q1. 2017 Q2. 2017 Q3. 2017 Q4. Combined Retail

Regional Economy

April 30, 2018Regional Economy and General Fund Revenue Overview3

0%

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Combined Retail Sales and B&O Tax BaseYear-Over-Year Growth Rate

Page 4: Regional Economy and General Fund Revenue Overvie...Apr 30, 2018  · 2015 Q2. 2015 Q3. 2015 Q4. 2016 Q1. 2016 Q2. 2016 Q3. 2016 Q4. 2017 Q1. 2017 Q2. 2017 Q3. 2017 Q4. Combined Retail

Regional Economy

April 30, 2018Regional Economy and General Fund Revenue Overview4

0

200,000,000

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00 Q

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Value of Building Permits Issued, Seattle

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Regional Economy: Forecast

April 30, 2018Regional Economy and General Fund Revenue Overview5

Latest regional forecast is stronger • Reasons include:

Stronger U.S. forecast in 2018, 19

Region ended 2017 strong

• Yields higher revenue forecast

Regional economy is expected to slow • Forecast assumptions:

U. S. economy slows in 2020

Amazon’s growth will slow

Modest construction downturn begins in 2019

Page 6: Regional Economy and General Fund Revenue Overvie...Apr 30, 2018  · 2015 Q2. 2015 Q3. 2015 Q4. 2016 Q1. 2016 Q2. 2016 Q3. 2016 Q4. 2017 Q1. 2017 Q2. 2017 Q3. 2017 Q4. Combined Retail

Regional Economy: Forecast

April 30, 2018Regional Economy and General Fund Revenue Overview6

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Annual Growth of Seattle Metro Area* Employment

*King and Snohomish Counties. Source: Seattle CBO.

Page 7: Regional Economy and General Fund Revenue Overvie...Apr 30, 2018  · 2015 Q2. 2015 Q3. 2015 Q4. 2016 Q1. 2016 Q2. 2016 Q3. 2016 Q4. 2017 Q1. 2017 Q2. 2017 Q3. 2017 Q4. Combined Retail

Sales and B&O Tax Forecast

April 30, 2018Regional Economy and General Fund Revenue Overview7

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Combined Retail Sales and B&O Tax BaseYear-over-Year Growth Rate

Tax Base

SeattleCPI

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Revenue Analysis

April 30, 2018Regional Economy and General Fund Revenue Overview8

Property Taxes, $295 , 24%

Business Taxes, $264 , 22%

Sales Taxes, $253 , 21%

Utility Taxes, $214 , 17%

Other General Subfund Revenues,

$194 , 16%

2017 General Subfund Revenues $1.219 Billion

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Revenue Analysis

April 30, 2018Regional Economy and General Fund Revenue Overview9

34% 47%

100%

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66% 53%

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65%

$-

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Property Taxes Retail Sales Taxes Business Taxes andLicenses

Utility Taxes Other Taxes

Mill

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General Fund Taxes by Payer - 2017

Business Share Non-business Share

Page 10: Regional Economy and General Fund Revenue Overvie...Apr 30, 2018  · 2015 Q2. 2015 Q3. 2015 Q4. 2016 Q1. 2016 Q2. 2016 Q3. 2016 Q4. 2017 Q1. 2017 Q2. 2017 Q3. 2017 Q4. Combined Retail

Revenue Analysis

April 30, 2018Regional Economy and General Fund Revenue Overview10

$684 $696 $724 $749 $767 $811 $840 $880 $926 $973 $1,012 $1,054

$44 $35 $38 $48 $52$62

$77$87

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General Subfund Tax Revenue during Expansion

Base Taxes Sales/B&O Construction Tax Policy Changes

Tax Policy Changes:Water Tax rates 2009-2010Tonnage Taxes 2016 Solid Waste Tax rates 2017 B&O Tax rates 2017 & 2018 Sweetened Beverage Tax 2018

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Forecast Update

April 30, 2018Regional Economy and General Fund Revenue Overview11

$1,198

$1,269

$13 $8

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$1,376

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April Forecast General Subfund Revenues

November Pass-through April Update

Page 12: Regional Economy and General Fund Revenue Overvie...Apr 30, 2018  · 2015 Q2. 2015 Q3. 2015 Q4. 2016 Q1. 2016 Q2. 2016 Q3. 2016 Q4. 2017 Q1. 2017 Q2. 2017 Q3. 2017 Q4. Combined Retail

Forecast Update

April 30, 2018Regional Economy and General Fund Revenue Overview12

2019 2020GSF - Item Actuals Chg from Nov Revised Chg from Nov Forecast ForecastProperty Taxes 294,731,000 1,030,000 310,600,000 (219,000) 318,181,000 352,587,000 Sales Taxes 253,035,800 3,545,000 269,944,000 10,163,000 277,864,000 285,006,000 Business Taxes 264,183,000 3,704,000 296,582,000 3,294,000 308,527,000 319,360,000 Public Utility Taxes 153,780,000 1,977,000 158,233,000 805,000 165,755,000 176,074,000 Private Utility Taxes 59,994,000 (1,380,000) 60,499,000 (1,963,000) 59,741,000 59,140,000 Business License Fees 14,801,000 - 16,624,000 1,180,000 17,439,000 17,857,000 Court Fines 26,258,000 380,000 25,948,000 (1,937,000) 25,830,000 25,759,000 Parking Meters 38,223,000 (938,000) 38,203,000 (2,209,000) 37,345,000 37,462,000 Other General Subfund Revenues 114,266,000 11,871,000 101,897,000 393,000 101,301,000 102,893,000

General Subfund - Grand Total 1,219,271,000 21,240,000 1,278,530,000 9,506,000 1,311,982,000 1,376,138,000

2017 2018

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Individual Revenue Changes,from Adopted November 2018 forecast

April 30, 2018Regional Economy and General Fund Revenue Overview13

1) Property Taxes New construction remains strong through forecast period Assumes 2019 Medic 1/EMS levy renewal at $0.30/$1,000 AV

2) Retail Sales and Business & Occupation Taxes Revenue exceeded forecast in 2017

Stronger economy, especially construction Sales tax by $3.3 million B&O tax by $2.5 million

Forecasts for 2018-2020 have increased Stronger 2017 revenue Stronger economic forecast in 2018 and 2019 Construction rebound

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Individual Revenue Changes,from Adopted November 2018 forecast

April 30, 2018Regional Economy and General Fund Revenue Overview14

3) Utility tax revenue slightly exceeded forecast in 2017 Public utility taxes were $2.0 million over Private utility taxes were $1.4 million under

4) Court Fines forecast correction to reflect actual citations

5) On-street parking space reductions driving lower revenue

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Forecast Update

April 30, 2018Regional Economy and General Fund Revenue Overview15

$74 $77

$3 $4

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Real Estate Excise Tax

November April Update

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Implications for the 2019 – 2020 Biennial Budget

Ben Noble, City Budget Office

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Sustainable Budget?

April 30, 2018Regional Economy and General Fund Revenue Overview17

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Growth is Forecast to Slow

April 30, 2018Regional Economy and General Fund Revenue Overview18

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Combined Retail Sales and B&O Tax BaseYear-over-Year Growth Rate

Tax Base

SeattleCPI

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Construction Dependence is a Financial Risk for the General Fund

April 30, 2018Regional Economy and General Fund Revenue Overview19

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Tax Revenues from Construction

Sales Taxes B&O Taxes Property Tax

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General Fund Forecast

April 30, 2018Regional Economy and General Fund Revenue Overview20

2016 Actuals g 2017 Revised 2018 Projected 2019 Projected 2020 ProjectedBeginning Fund Balance $61,568,000 $64,332,000 $37,232,000 $22,176,000 ($28,534,000)Revenues/Resources $1,179,188,000 $1,221,271,000 $1,288,772,000 $1,312,013,000 $1,375,501,000Expenditures* ($1,164,285,000) ($1,231,510,000) ($1,264,419,000) ($1,299,719,000) ($1,333,141,000)Reserves ($12,139,000) ($16,861,000) ($29,409,000) ($53,004,000) ($57,358,000)Judgment & Claims - unbudgeted expenses ($10,000,000) ($10,000,000) ($10,000,000)Ending Fund Balance $64,332,000 $37,232,000 $22,176,000 ($28,534,000) ($53,532,000)* Assumes a $10M underspend in 2018

Preliminary Financial Update for the General Fund - April, 2018

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General Fund Pressures

April 30, 2018Regional Economy and General Fund Revenue Overview21

Additional Financial Pressures and City Funding Priorities• Homelessness - one-time 2018 funding and additional

spending for 2019 and beyond

• Safe consumption site

• Domestic worker bill of rights - enforcement will have both one-time and on-going costs

• Immigrant and Refugee Legal Defense Fund

• Office of Labor Standards

• Implementation of new accounting system

• Technology system replacements/upgrades


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