Seattle COVID-19 Response and 2020 Budget Rebalancing June 24, 2020 Date (xx/xx/xxxx) June 2020 2020 Department Name Page Number Challenges Facing Our City • A public health pandemic that is killing friends, families, and neighbors and COVID-19 has disproportionately impacted communities of color. Expected spending of $233 million on COVID-19 response, focusing on the needs of the most vulnerable and BIPOC communities. • Economic devastation and job losses that have led to record unemployment, an unprecedented loss of $300 million in revenue, and community needs including food access and housing assistance. Now more than ever it is critical to preserving critical budget priorities that serve communities of color and historically underserved communities. • A movement to demand anti-racist action, to divest and rethink policing, and end institutional racism. Date (xx/xx/xxxx) June 2020 Department Name Page Number Budget Process Overview Budget Process for 2021-2022 – as originally planned March – May: CBO calculates baseline budget with wage increases, sunsetting projects, inflation April: CBO receives revenue projections for upcoming year COVID-19 Budget Process January: Previously Approved 2020 Spending Begins March: Directive to Halt Spending; Initial Projections of $100 million shortfall February: First case of COVID-19 in King County Date (xx/xx/xxxx) June 2020 Department Name Summer: Departments propose changes, CBO and Mayor's Office review October – November: Council Hears Public Comment on Budget, Makes Changes May: COVID-19 Spending Projected to Surpass $200 Million for 2020 April: $300 Million Shortfall Projected for 2020 Page Number September: Mayor Proposes Biannual Budget for 2021 and 2022 June: 2020 Spending Must Be Adjusted to Address Shortfall November: City Council Passes Final Budget Approach to COVID-19 Response • Addressing urgent needs including meals, rental assistance, grocery vouchers, utilities, childcare, and other essential needs • Protecting our most vulnerable neighbors experiencing homelessness in partnership with PHSKC and King County • ​Assist small businesses, non-profits, artists, and cultural organizations as they struggle for survival • Continue critical supports for First Responders & free citywide testing Date (xx/xx/xxxx) June 2020 Department Name Page Number Approach to SPD Budget • SPD will face the largest budget cut among all department reductions for the General Fund • Police spending will be reduced by $20 million through the rest of this year • Additional options for reductions are being developed for the 2021 budget • We will engage community to provide substantive input on what 2021 SPD budget choices should be made Date (xx/xx/xxxx) June 2020 Department Name Page Number Approach to Racial Justice Investments & Priorities • Continue critical COVID-19 investments for vulnerable and BIPOC communities like: housing, child care, testing, individuals experiencing homelessness, small businesses and support for immigrant and refugee residents • Preserving programs to invest in community like EDI • Mayor has committed to invest $100 million in BIPOC communities Date (xx/xx/xxxx) June 2020 Department Name Page Number Near term 2020 budget actions following community conversations • Review SPD budget options • Redirect funding initially targeted for N. Precinct - $4 million in capital funding • $5 million for mentorship programs with BIPOC youth • 2020 budget commits $500K to a community engagement process on policing and community investments • Expediting land transfers (Byrd Barr, Central Area Senior Center, FS6) • Develop a new vision for the E. Precinct area in partnership with community leaders Date (xx/xx/xxxx) June 2020 Department Name Page Number Rebalancing 2020 Budget: address revenue shortfall and cost of responding to COVID-19 pandemic • The City’s General Fund budget was balanced assuming almost $1.5 billion in revenue. • Updated forecast confirms that General Fund revenues could fall $200 million short of the total anticipated in the 2020 adopted budget. • The total funding gap for general government services could exceed $300 million because other revenues, such as the soda tax, short-term rental tax, commercial parking tax, and earned revenues at the Seattle Center and Parks Department will also fall short of forecast. • The public health challenge and economic impacts created by COVID-19 has demanded a robust response from the City. We anticipate total spending of $233 million in response. Date (xx/xx/xxxx) June 2020 Department Name Page Number Resources to Balance To minimize any reductions to City services or cuts to critical community programs, the City proposes utilizing state and federal resources as well as one-time sources to balance the 2020 budget. • New State and Federal Resources (FEMA, CARES Act, Coronavirus Relief Fund, State Commerce) • 2019 Year End Reserves (One Time Resources) • 25% of City's Emergency Funds • Refocus City Programs and Staff toward COVID-19 • Focused Budget Reductions, including SPD, City Hiring Freeze, and Travel • Reprioritize use of Levy and MPD Resources Date (xx/xx/xxxx) June 2020 Department Name Page Number Rebalancing the 2020 Budget $378M $233M Total COVID Response $210M Total Budget Shortfall Date (xx/xx/xxxx) June 2020 Department Name Page Number Center the City’s response in race and social justice to help address the disparate impact COVID19 is having on communities of color. Respond to immediate impacts of the COVID-19 emergency and preserve ability to react as the situation evolves​ Protect our most vulnerable neighbors experiencing homelessness and address housing insecurity​ Support essential workers and community needs ​Assist small businesses, artists, and cultural organizations as they struggle for survival Continue critical supports for first responders & provide testing for residents & workers Maintain City services and support the City employees who provide them Date (xx/xx/xxxx) June 2020 Department Name Page Number Total Expenditures for COVID-19 Response COVID-19 Spending Respond to Emergency COVID-19 impacts Protect our most vulnerable neighbors experiencing homelessness and address housing insecurity​ $38,620,000 Support essential household and community needs ​Assist small businesses, artists, and cultural organizations as they struggle for survival $34,110,000 Continue critical supports for First Responders $35,740,000 Maintain city services and support City employees who provide them $80,150,000 TOTAL (Of this total, approx. $65 million is reprioritized General Fund) $39,400,000 $5,210,000 $233,200,000 *Total may not match due to rounding. Date (xx/xx/xxxx) June 2020 Department Name Page Number Respond to immediate impacts of the COVID-19 emergency and preserve ability to react as the situation evolves​ COVID-19 Spending COVID-19 Supplies and Services Cloth facial coverings for employees and community groups Essential Workers - Hotel Essential Workers - Childcare COVID-19 Testing - public access sites and community test kits Social Distance Ambassadors and social distancing in parks Stay Healthy Streets/Street Closures Cleaning of public buildings COVID-19 Language Access Hospital transitions to care for elderly non-Medicaid patients Emergent COVID-19 response needs (June-Oct 2020) TOTAL* $2,470,000 $790,000 $3,070,000 $5,450,000 $8,790,000 $2,040,000 $190,000 $100,000 $80,000 $150,000 $15,350,000 $38,620,000 *Total may not match due to rounding. Date (xx/xx/xxxx) June 2020 Department Name Page Number Protect our most vulnerable neighbors experiencing homelessness and address housing insecurity COVID-19 Spending Hygiene Shower trailers, toilets and sinks Reopening bathrooms at libraries Purple bag program COVID-19 expansion Continue hygiene service after FEMA period (2 months) Emergency Shelter NEW: RFP for shelter needs and PSH Congregate sheltering Noncongregate sheltering Food at homeless shelters Facial coverings for people experiencing homelessness & others Shelter expansion ramp-down after FEMA period (2 months) Housing and Homelessness Prevention NEW: Food support for PSH Sites through December Rental Assistance: City-funded Affordable Housing (NEW: $4M) Rental Assistance: Community-based Organizations and Home Base (NEW: $5.4M) Rental Assistance: Housing for People living with HIV/AIDS Subtotal, Net New Homelessness Spending PSH Operations: Short-term Rental Tax Fund Swap Rental Assistance: Home for GOOD Pilot Fund Swap Total, COVID-19 Homelessness Spending Date (xx/xx/xxxx) June 2020 Department Name Page Number *Fund swap amounts are excluded from the net budget add total because they are already counted in the base 2020 Adopted Budget. Total 3,700,000 2,280,000 320,000 350,000 750,000 15,580,000 4,850,000 4,270,000 2,530,000 2,080,000 250,000 1,600,000 16,070,000 2,500,000 5,410,000 7,730,000 430,000 35,350,000 3,300,000 750,000 39,400,000 Protect our most vulnerable neighbors experiencing homelessness and address housing insecurity COVID-19 Spending Hygiene Shower trailers, toilets and sinks Reopening bathrooms at libraries Purple bag program COVID-19 expansion Continue hygiene service after FEMA period (2 months) Emergency Shelter NEW: RFP for shelter needs and PSH Congregate sheltering Noncongregate sheltering Food at homeless shelters Facial coverings for people experiencing homelessness & others Shelter expansion ramp-down after FEMA period (2 months) Housing and Homelessness Prevention NEW: Food support for PSH Sites through December Rental Assistance: City-funded Affordable Housing Rental Assistance: Community-based Organizations and Home Base Rental Assistance: Housing for People living with HIV/AIDS Subtotal, Net New Homelessness Spending by Funding Source PSH Operations: Short-term Rental Tax Fund Swap Rental Home for GOOD Pilot Fund Swap Date Assistance: (xx/xx/xxxx) Department Name Page Number June 2020 Total, by Funding Source FEMA 1,950,000 1,710,000 240,000 CDBG - 5,100,000 ESG HOPWA - 2,080,000 3,200,000 1,900,000 Housing Levy Commerce CRF - 750,000 1,000,000 570,000 80,000 350,000 750,000 6,450,000 1,950,000 4,850,000 1,070,000 630,000 2,080,000 250,000 4,230,000 430,000 1,410,000 2,820,000 430,000 7,050,0004,230,0002,080,000 430,000 750,000 7,050,0004,230,0002,830,000 430,000 1,600,000 910,000 2,500,000 8,000,000 2,500,000 4,000,000 910,000 4,000,000 910,000 9,700,00010,950,000 3,300,000 910,000 13,000,00010,950,000 Total 3,700,000 2,280,000 320,000 350,000 750,000 15,580,000 4,850,000 4,270,000 2,530,000 2,080,000 250,000 1,600,000 16,070,000 2,500,000 5,410,000 7,730,000 430,000 35,350,000 3,300,000 750,000 39,400,000 Support essential household and community needs COVID-19 Spending Grocery Vouchers Food for food banks and meal programs Supports for Food Security Food delivery for seniors Waiving interest charges on delinquent SPU and SCL accounts Expenses to facilitate distance learning TOTAL $14,500,000 $9,900,000 $3,000,000 $2,500,000 $4,044,000 $162,000 $34,106,000 Assist small businesses, artists, and cultural organizations as they struggle for survival COVID-19 Spending Grants to artists and arts organizations for business interruptions due to public health measures Grants to small businesses for business interruption caused by required closures TOTAL Date (xx/xx/xxxx) June 2020 Department Name Page Number $1,295,000 $3,910,000 $5,205,000 Continue critical supports for first responders COVID-19 Spending First responder costs substantially shifted to COVID-19 Response Personal Protective Equipment (PPE) $26,509,000 $8,267,000 Testing - First responders $612,000 Hotel - First responders $325,000 City’s COVID-19 expenses at King County jail TOTAL* $22,000 $35,735,000 *Total may not match due to rounding. Date (xx/xx/xxxx) June 2020 Department Name Page Number Maintain City services and support the City employees who provide them COVID-19 Spending Department staff redeployed to emergency response Overtime for staff redeployed to emergency response Temp labor for emergency response Expenses to improve telework capabilities Paid Leave and Unemployment Insurance for at-risk workers Adapting City facilities/Operations for Reopening Requirements TOTAL* $45,694,000 $8,411,000 $2,334,000 $1,718,000 $11,987,000 $10,000,000 $80,145,000 *Total may not match due to rounding. Date (xx/xx/xxxx) June 2020 Department Name Page Number Total Expenditures for COVID-19 Response COVID-19 Spending Respond to Emergency COVID-19 impacts Protect our most vulnerable neighbors experiencing homelessness and address housing insecurity​ $38,620,000 Support essential household and community needs ​Assist small businesses, artists, and cultural organizations as they struggle for survival $34,110,000 Continue critical supports for First Responders $35,740,000 Maintain city services and support City employees who provide them $80,150,000 TOTAL (Of this total, approx. $65 million is reprioritized General Fund) $39,400,000 $5,210,000 $233,200,000 *Total may not match due to rounding. Date (xx/xx/xxxx) June 2020 Department Name Page Number Proposed State Dept. of Commerce Grant - $13M Three-part approach: Proposed Use 1. Sustain Emergency Response for the period after FEMA “ends” the emergency 2. Continue support for existing PSH contracts whose funding source has dried up 3. Fund new critical needs • New funding to provide 2,600 daily meals at City’s PSH locations through the end of the year • New Funding for Shelter and PSH Needs ($4.85m): • Equitable approach for existing contractors • Identifies provider expenses that are FEMA eligible Date (xx/xx/xxxx) June 2020 Department Name Page Number Amount Sustain COVID-19 Response for 2 months Beyond FEMA Emergency Designation Hygiene Interventions Shelter De-densification Operations $750,000 $1,600,000 Continue Support for Critical Existing Program Permanent Supportive Housing STRT Fund Swap $3,300,000 New Programs Food support for PSH Sites through December $2,500,000 Shelter and PSH enhancements necessitated by COVID $4,850,000 Total $13,000,000 Proposal for CRF - $131.5 million Emergency Response using Coronavirus Relief Fund Local Match for FEMA Emergency Homelessness Shelter and Hygiene $2,350,000 Cleaning of public buildings and testing for pubilc $2,220,000 Food for Food banks and economic instability $2,480,000 PPE / Testing / Quarantine for First Responders $2,240,000 Temporary and Overtime Labor for Emergency COVID-19 Response $1,960,000 Non-FEMA Eligible Emergency Response Measures Face Masks $9,390,000 $1,040,000 Stay Healthy Streets/Street Closures $190,000 Social Distance Ambassador Program $2,040,000 Hotel - Essential Workers $3,070,000 Purple bag program COVID-19 expansion $350,000 Community testing kits $150,000 COVID Language Access $80,000 COVID-19 Supplies and Services Emergent Response Needs in July through October Adapting City Facilities and Managing "Re-entry" of the City's Workforce Food Security Measures and Grocery Vouchers through October - $2.5M/Month Rental Assistance - $1.6M/Month through October Redeploying City Staff and Resources for Emergency Response (Non-OT/Temp) Total Date (xx/xx/xxxx) June 2020 Amount $11,250,000 Department Name Page Number $2,470,000 $15,350,000 $10,000,000 $12,500,000 $8,000,000 $65,000,000 $131,500,000 Emerging State and Federal Sources for Addressing Homelessness 1. Emergency Solutions Grant (ESG) with new COVID allocation formula - $26 million. • Funds can be used through September 30, 2022 • 100% Match Requirement has been waived 2. New formula grant from the State Commerce Department. A joint application with the County is likely to be awarded ~$11 million. • Funds will be available August 2020 to June 2023 Date (xx/xx/xxxx) June 2020 Department Name Page Number COVID-19 Impact on City Resources Date (xx/xx/xxxx) June 2020 2020 Department Name Page Number Rebalancing the 2020 Budget $378M $233M Total COVID Response $210M Total Budget Shortfall Date (xx/xx/xxxx) June 2020 Department Name Page Number One Time Resources, Reserves and the CRF Source Amount 2019 Year-End Fund Balance and Other One-time Resources $36,000,000 Emergency Fund and Rainy Day Fund $29,000,000 Coronavirus Relief Fund $65,000,000 Total $130,000,000 • Strong financial finish to 2019 will help mitigate 2020 financial impacts • Proposal for balancing 2020 and 2021 uses a portion of Emergency Funds for 2020 (~25%), but saves a significant share (~75%) for 2021 to mitigate impacts in 2021 • The CRF provides a means to pay for the existing City resources now being used to respond the COVID-19 crisis at a time the General Fund cannot sustain those services. Date (xx/xx/xxxx) June 2020 Department Name Page Number Budget Reductions and Reprioritization of Levy & MPD Resources Source Amount Hold vacancies, delay hiring, reduce overtime ($26,500,000) Reprioritization of Levy/MPD Resources (Details on following slide) ($24,500,000) Travel, training, supplies, etc. ($6,100,000) Consultants and Contracts ($5,500,000) Neighborhood Matching Fund (NMF) ($1,500,000) Other – including GF-funded technology and capital projects ($5,200,000) Total Date (xx/xx/xxxx) June 2020 ($69,300,000) Department Name Page Number Reprioritization of Levy and MPD Resources - Detail Source Amount Move Seattle Levy $10,000,000 Metropolitan Parks District $10,000,000 Families, Education, Preschool and Promise Levy $2,000,000 Library Levy $1,600,000 Reprioritize Grant Funding $900,000 Total $24,500,000 • For each of the affected departments, the revenues earned by the City will no longer provide the funding needed to pay for the base operations which the levies were intended to supplement. • The basic budget approach is redirect funding that was to pay for capital projects or expanded programmatic funding to support these base operational costs. • The capital projects will be deferred but could be funded again in the future. Date (xx/xx/xxxx) June 2020 Department Name Page Number Departmental Highlights – SPD Seattle Police Department • $16 million reduction directed to rebalancing • Pause the allocation of planning resources in the 2020 budget for a new North Precinct facility - $4 million • Freeze spending on vehicles and IT investments • Immediately we will freeze hiring of sworn officers in 2021 until a new staffing model and plan is developed reflecting community priorities for public safety • Mayor has asked for the SPD to prepare models of 20% - 30% - 50% budget reductions for community engagement CPC, OIG and OPA • No reductions. Date (xx/xx/xxxx) June 2020 Department Name Page Number Budget Changes – Departmental Highlights Human Services Department • Only reductions are to travel, training and vacancies. • Services are being expanded in response to COVID-19, including food, shelter, and rental assistance, per our earlier description of the City’s response COVID-19 response. Department of Neighborhoods and Office of Economic Development • DON and OED are working together to lead efforts on community outreach and small business assistance. • Proposed reductions do include decreasing 2020 Neighborhood Matching (NMF) fund by $1.5 million. A portion of NMF staff are on-loan to OED to support small business. Office of Planning and Community Development • Preserved full $15 million of Mega-block proceeds for EDI projects. • Preserve full $5 million for 2020 EDI grants, by supplementing declining Short-term Rental Tax revenues with ~$2 million of General Fund support. • Shifting near-term focus of EDI toward COVID-19 response and relief to BIPOC communities from effects of pandemic. Library • Total General Fund reductions of $2.9 million, but mitigated by $1.6 million of Levy funding and $500,000 from the Library Foundation. Seattle Center • Center’s “earned” revenues have collapsed and basic maintenance and operations cannot be sustained without additional support. • Rebalancing proposal thus increases 2020 General Fund support by $9 million. Date (xx/xx/xxxx) June 2020 Department Name Page Number Budget Changes – Departmental Highlights Department of Parks and Recreation • Parks Department staff and facilities are playing a critical role in COVID-19 response. • “Earned” revenues could fall short by $23 million, if facilities remain closed through September; more if longer. • Proposing to redirect $10 million if MPD resources to help address this shortfall and to offset reduced General Fund support to the department. This will reduce funding for and lead to deferral of capital projects, including the development of land-bank parks sites and athletic field replacements. • Decreased REET funding will further reduce resources available for capital projects. • Parks Department is also reducing discretionary operational costs – for example reduced seasonal hiring for nonessential maintenance such as mowing, weeding, and picnic shelter cleaning. Seattle Department of Transportation • Overall revenue shortfall of $50+ million, including a proposed General Fund reduction of $13 million, a $20 million decline in parking tax revenues, and a $7+ million loss of street use fees. • At the same time, SDOT is facing the unanticipated costs of the West Seattle Bridge. • This is forcing a significant reprioritization of capital projects, and a number of projects have been “paused” while this reprioritization review is completed. This includes stopping work on the Center City Connector, and redirecting $6 million of Mega-block proceeds to preserve funding for other transportation priorities. Date (xx/xx/xxxx) June 2020 Department Name Page Number Rebalancing the 2020 Budget $378M $233M Total COVID Response $210M Total Budget Shortfall Date (xx/xx/xxxx) June 2020 Department Name Page Number Legislative Action Needed for 2020 Rebalancing • Ordinances to reprioritize Levy and MPD resources • Ordinance to authorize spending from the Emergency and Rainy Day Funds, and resolution to defer repayment • Resolution to temporarily expand use of REET dollars to pay for debt service • Second quarter supplemental and grant acceptance ordinances • Grant acceptance and appropriation of State Commerce funding • Grant acceptance and appropriation of Federal Coronavirus Relief Fund (CRF) • 2020 Budget revision ordinance • 2019 Carry Forward and Exception ordinances Date (xx/xx/xxxx) June 2020 Department Name Page Number 2021 Outlook City of Seattle June 2020 Balancing the General Fund in 2021 $300,000,000 $200,000,000 $100,000,000 $0 Revenue Shortfall $293,000,000 2021 Budget Challenge Rainy Day Emergency Funds, and One-Time Resources, $129,000,000 Remaining Gap: Spending Reductions or New Revenues, $164,000,000 2021 Balancing Strategy City of Seattle Key Components of 2021 Strategy • Advocacy for new state and federal resources. • Draw down remainder of Rainy Day and Emergency Funds, and other one-time resources. • Remaining 2021 budget gap exceeds $160 million. New revenues may address some of this shortfall, but economic impact of COVID will still force deep reductions in City spending, and thus in City services. • Labor costs are roughly 65% of overall General Fund spending, so impacts to the City workforce are unavoidable. Layoffs will be the most direct impacts, but negotiations with the City’s unions may also provide alternative cost-savings strategies. • Departments have been requested to develop proposals to reduce their 2021 budgets by 5%-10% relative to what would be their baseline spending. CBO will review opportunities to again redirect Levy and MPD resources. • These strategies alone will be insufficient to rebalance. New revenues or additional cost savings will be needed to balance the 2021 budget. Likely it need to be a combination of both. • Forecasts indicate that the economic impacts of COVID-19 will last for several years. Approach budget needs to acknowledge that this is not a short-run crisis. • $100 million investments in BIPOC communities will be led by community engagement process this summer. Date (xx/xx/xxxx) June 2020 Department Name Page Number