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
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
Regional Economy
April 30, 2018Regional Economy and General Fund Revenue Overview3
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Combined Retail Sales and B&O Tax BaseYear-Over-Year Growth Rate
Regional Economy
April 30, 2018Regional Economy and General Fund Revenue Overview4
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Value of Building Permits Issued, Seattle
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
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.
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
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SeattleCPI
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
Revenue Analysis
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34% 47%
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Property Taxes Retail Sales Taxes Business Taxes andLicenses
Utility Taxes Other Taxes
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General Fund Taxes by Payer - 2017
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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
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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
Forecast Update
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April Forecast General Subfund Revenues
November Pass-through April Update
Forecast Update
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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
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
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
Forecast Update
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$74 $77
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Real Estate Excise Tax
November April Update
Implications for the 2019 – 2020 Biennial Budget
Ben Noble, City Budget Office
Sustainable Budget?
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Growth is Forecast to Slow
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Combined Retail Sales and B&O Tax BaseYear-over-Year Growth Rate
Tax Base
SeattleCPI
Construction Dependence is a Financial Risk for the General Fund
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Tax Revenues from Construction
Sales Taxes B&O Taxes Property Tax
General Fund Forecast
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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
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