-Good morning, everyone. I'd like to call to order this meeting of the King County Council Committee of the Whole, and we are also meeting with the City of Seattle's Council Select Committee on Federal Administration and Policy Changes. It's June 20th, 2025. I'm the chair of the King County Committee of the Whole, and I just want to offer a very warm welcome to our colleagues from the City of Seattle City Council who are with us in chambers and online. This is a very special occasion. I can only think of one time when we have done this before, and it was quite some time ago when we had a joint meeting of our transportation committees. Boy, that was probably over 10 years ago. So thank you so much for joining us. We're doing this -- for the purpose of the watching public, it's not typical for the King County Council and the Seattle Council to hold joint meetings, but, of course, we are not in typical times. We are both facing rollbacks and defunding and attacks from our federal government that are affecting our ability to do our job and to serve our joint constituents. And so we've been separately holding meetings talking about those impacts and what they mean and what to do about it. Here at King County, we've had a series of discussions at each of the Committee of the Whole meetings since the beginning of the year. We've had some special panels in other committees, most recently in the Health, Housing, and Human Services Committee, chaired by Councilmember Mosqueda, and with some panels facilitated by our county council chair, Councilmember Zahilay. And I know you all have had your special, our colleagues at Seattle have had their special Select Committee. So here we are trying to educate ourselves, be ready to take action if the federal government follows through on some of the threats to cut funding in order to force us to abandon our values as a progressive county and city. So when I learned that the city of Seattle was having this select committee, I reached out to Councilmember Rinck, the chair of that committee, and we have been in discussions for a while. And here we are today, finally, to have a first conversation together. On the agenda today, we have three briefings. For context, I know you all have been focusing on impacts. We have focused on impacts of potentially losing grants if we won't sign what I call the loyalty oaths and lawsuits that have come about because of that. We've been talking about threats due to potential changes to the federal budget, which would roll back Medicaid, HUD vouchers, and a number of other really critical services. And today we're here to talk about the economy. What are the Trump administration's economic moves, specifically tariffs, doing to our economy and therefore potentially affecting our community and our tax base? So the three briefings we have scheduled are a panel of businesses, then a panel on tourism and trade, and finally a briefing from the King County Office of Economic and Financial Analysis and Seattle's Office of Economic and Revenue Forecasts. And then we want to have a discussion on next steps to ensure the vitality of our joint regional economy. Just a quick request. This is, as I said, a very unusual meeting, so I want everybody to please pack their big patience, as I used to say to our kid when we went to the airport, and make sure that we just have a little grace if there's bumps in the road as we try to manage the meeting. Thank you so much. And now I would like to invite Councilmember Rinck to make some opening remarks. -Thank you. -It's hard to see with that light. -Okay noted. These are the bumps that we were just talking about. -That's right. Demonstration. -Thank you, Councilmember Balducci, and good morning. I'm Councilmember Alexis Mercedes Rinck, chair of the committee, and I also call to order this special joint meeting of the King County Council Special Committee and the Seattle City Council's Select Committee on Federal Administration and Policy Changes. Thank you, Councilmember Balducci, for your words and your coordination in bringing our local governments together on this critical issue of our regional economy. And while I'm thrilled to join forces to tackle these tough challenges collectively, I must verbalize again what Councilmember Balducci has stated. We are not in normal times. The last six months have been turbulent, to say the least. And the past two to three weeks, we've seen some really volatile activity happening across our communities. ICE and DHS continue to ramp up mass deportation efforts. And as on and off again, tariff and trade wars rattle economic markets and industries globally. Federal agencies and programs base major cuts by Congress and the Trump White House leaving Washington organizations facing existential questions about how people will stay fed and housed. And over the past few months, we've had robust discussions in committee of how we can respond. And I look forward to seeing how our panelists today, hearing from our panelists today, and seeing economically over the last few months how we can come together better as a region to shield our communities from harm. And with that, I believe we're going to move to calling for the roll. So will the committee clerk please call the roll and let the record reflect that Councilmembers Moore, Rivera, and Solomon are excused? Councilmember Hollingsworth. -Present. -Councilmember Kettle. -Here. -Councilmember Nelson. -Present. -Councilmember Saka. -Here. -Councilmember Strauss. -Present. -Councilmember Rinck. -Present. -Council Chair, there are five members of the City Council present. -Thank you. Thank you. Now I'd like to ask the King County Clerk to please call the role. -Thank you. Councilmember Baron. -Here. -Councilmember Dembowski. -Here. -Councilmember Dunn. -Here. -Councilmember Mosqueda. -Here. -Councilmember Perry. -Here. -Councilmember Quinn. -Here. -Councilmember Von Reichbauer. -Here. -Councilmember Zahilay. -Here. -Chair Balducci. -Here. -Thank you. -All right. Let's now move into public comment, and I'll ask our clerks, is there anyone in chambers or online signed up to provide public comment today? -Good morning. At this time, we only have one person in person, sorry. -All right. Just for purposes of our rolls, welcome. Public comment must be related to an item on the meeting agenda and not be used for the purpose of assisting a campaign for election of any person to any office nor opposition to any ballot proposition. We ask that it not include obscene speech. You'll have two minutes to speak, and I would please -- It seems like that went off. All right. Would you please invite the gentleman to give a comment? -Thank you, Chair. The first person we have, and the only one, David Haynes. -Why are we not having a conversation about all of the farmers who are weaponizing cheap labor and allowing cherries to go bad? Why isn't somebody organized in an effort to supply those cherries and other foods to the schools, to the farmers markets for more than one day a week, and maybe address Kroger still monopolize shelf space? -I apologize for interrupting you. Can you pause the timer, please? We do, by our rules, ask that you speak to an item on the agenda. Can you tie it to tariffs somehow, and then you'll be right on track, okay? -Yeah, I was trying to get to the fact that, you know, the trade seems to, like, deny us still access to the healthy foods unless we've got to pay an exorbitant price. And I was wondering, like, instead of just trying to distract from the fact that Seattle has a small business and large business suffering because of the public safety crisis that you all want to ignore because you continue to implement unconstitutional police reforms that make it unsafe for the tourists and for the locals, but yet you want to make the small business pay the exorbitant, double, triple, quadruple, inflated, dilapidated leases on these rundown pieces of real estate that had to be closed down during COVID, and all you do is oppress the small business that make it miserable for the customer to go in there. But the thing is, the Port of Seattle has sold out this country and forces the King County property taxes to be raided to cover their bond payments of the debt that's created to accommodate offshore industrialists who sometimes control parts of our port and water down the integrity of the customs inspections to expedite the supply chain that inadvertently brings drugs into the community that they always want to weaponize that comes from elsewhere. But I noticed that the progressives who've sabotaged the integrity of police reform that has ruined the economy and has sabotaged the integrity of the comprehensive plan are still blaming the white man and conducting a race war through the Office of Housing that has exacerbated the public safety crisis, the homeless crisis, the housing crisis, the small business crisis, and the workers crisis that are not being addressed proper with the unforeseen capital gains that you all want to ignore while you want to weaponize social issues to distract from -- -Thank you, sir. --- accommodate the chamber of commerce's slum real estate values. -Thank you, sir. Your time has expired. Thank you, sir. No one else signed up? Is there still not anyone online? All right. We'll close public comment, move on with our agenda. The first briefing will be chaired by Councilmember Rinck. We're going a little out of order because of timing of panelists, but let me just say for everyone who's in chambers, our microphones are wonky. What you're going to want to do is press the button and then wait a moment, and then it will turn on, because otherwise people end up pressing -- is this on? Is this on? So press it once, wait a moment, you'll be fine. All right. Please go ahead, Committee Chair Rinck. -Thank you. I think logistically I need to do this to adopt the agenda on our side. If there is no objection, the agenda will be adopted. Hearing no objection, the agenda is adopted. Moving towards that, we're going to move into item five on the agenda. Could the committee clerk please read item five on the agenda? -Impact on businesses, big and small. Briefing and discussion. -Wonderful. At this time, I'd like to invite our presenters to come up to the table, and please introduce yourself by stating your full name and organization into the microphone for the record. We will have around 40 minutes for this panel. -I'm David from Lam's Seafood Market, Iona, two grocery stores in International District and in Tukwila. -Thank you for being here. Do we also have Brian present today? -He's online. -Okay, wonderful. Brian, would you be able to introduce yourself for the record? -Yes. Good morning, everyone. Brian Surratt. I'm the president and CEO of Greater Seattle Partners. -Wonderful. Thank you for being here. And is Leeching available online? -Hi there. -You're a little quiet. -Oh, I'll speak up. Good morning, everybody. My name is Leeching Tran. I'm the president of Viet-Wah. We are a -- [inaudible] ' -Pause a second. Is it possible to increase -- Okay. Ms. Tran, when we get to you for your remarks, maybe you could try to increase your volume on your end. We're hearing you very soft in the chamber. Sorry. Thank you. -No problem. -Here we are. We'll start first with Brian. Please, if you'd like to take it away. -Great. Thanks again, everyone. Again, Brian Surratt with Greater Seattle Partners. We are a public-private partnership focused on economic development for King County, Pierce County, and Snohomish County. And our primary focus is attracting new business, particularly aligned with our key industry sectors for the three counties, marketing our region to the rest of the world on why our region remains an incredibly strong place for investment and attracting talent, and also trying to be just, frankly, better coordinated on economic development, on how the three counties and all the partners across the three counties can work together to support sustainable and equitable economic development going forward. Apologies for having to leave the conversation a little early after this presentation. I'm a board trustee with the Seattle College District, and today it's commencement. And so, you know, the topic of federal impact on our local community is real, and we feel it every single day. And even, frankly, at the educational level of higher ed. As you all know, Seattle College District has a really large population of international students. And just when the college district has been able to almost recover its percentage of international students, there's a chilling effect that we're having around our ability to attract some really talented folks from across the world to be a part of our community. And when it comes to tariffs, it's a similar chilling effect. I know, you know, folks are wanting to know, you know, what's the real impact happening on the ground. At this point, it's really hard to tell, to be honest with you, because we're in the middle of it. We've got some anecdotal evidence that the impact is real. Just a few weeks ago, the Port of Seattle mentioned that it's two ports, the Port of Tacoma and Port of Seattle, they're down about 33% from imported container volume inbound. And in the last week of May, the number of containers lifted off of the vessel was down 42% year-over-year. And so we're seeing some real, real impact. But at the same time, we're in the middle of this. And it's really hard to really unpack the impact until we have some distance. But we feel it. When you talk to any business person, the thing that they hate the most is uncertainty. You know, you can have all the best laid plans, but if you don't know if the policy is going to change tomorrow, a week from now, two weeks from now, 90 days from now, it is nearly impossible for any business person to make plans on purchasing, reinvesting in the company, reinvesting in the workers. It becomes really, really difficult. That being said, our organization, we in many ways, we are on the front line of dealing or engaging with international businesses who want to come to the U.S. One of our signature programs is called Select USA. Our region was selected by the U.S. Department of Commerce to basically have an invitation to host international companies interested in investing in this. Yeah, we've hosted international companies for the past three years to visit our region. And this year, I was really concerned. I was really concerned whether or not we would attract the same caliber of companies that were interested in investing in our region. You know, in a typical year, we vet between four or five hundred companies who are willing and ready to invest in in our region. And this year, our team went out and engaged. And I was pleasantly surprised, to be honest with you, that companies were still interested in our region, despite what was happening. In May, we hosted 23 different companies from seven different countries, Brazil, Finland, India, Japan, Poland, South Korea, Taiwan, and led them on a multi-day tour of Seattle. They still came because, one, they believe in our region, despite some of the national politics that we're dealing with and we're being impacted. But when you talk to the CEOs of these companies, there is concern and their mindset has been almost to a person, you know, can we weather these next few years? Can we get engaged with this community and figure out, okay, if we get in early on, can we weather whatever storms may or may not happen? Because the fundamentals of our region remain really, really strong. But there is deep, deep, concern there. Two weeks ago, we led a delegation in partnership with the Seattle Metro Chamber to Germany. Part of that mission is to, again, pitch international companies to come to our region. And we were in Berlin and we met with executives and they're waiting too. They're waiting before making any major investments coming into the U.S. And they have a two-year time horizon, like, okay, well, will the political waters calm enough for me to make decisions to invest in the U.S.? But the tenor also was a little different, you know, and to be honest, more and more strident when hearing from some of the German companies saying well we may not wait for America to get its policy house in order. We actually need to start poaching American companies, poaching American talent, poaching folks who want to come to a more stable investment environment. We heard that in Germany. We heard that in recent conversations with our neighbors to the north in British Columbia who were really, really troubled by what they see happening. What was interesting, another program that we have is on the flip side of the trade conversation, where we're trying to help local companies export their products and ideas to international markets. And this is something we've been doing for the last several years as well. And we just graduated our third cohort for this export accelerator program. And we've had to be a lot more thoughtful, frankly, about which markets would be receptive to their products and having to come up with contingency plans on how to deal with any retaliatory tariffs that may or may not come with their products here. And so, again, it's a very, very challenging environment to be making any kind of business decisions on the import side or export side of the ledger. That being said, our region remains strong in so many ways. The fundamentals remain strong. The question becomes how deep are our foundations from an economic standpoint? Are we strong enough to weather whatever storms may be coming over the next several years for investors to continue wanting to look at our community and support our long-term growth? So we're in the middle of it. And, you know, my team is starting to look at some data that is coming. As you all know, data lags a little bit, especially when we're in real-time economic analysis. But, you know, the anecdotes say it all when business leaders are pausing or hesitating and at the same time still believe in it. So it's just a weird, weird place to be where we're holding a lot of contradiction. -Thank you for that overview, Mr. Surratt. And thank you again for being here this morning. Colleagues, I think we're going to facilitate this first panel today by allowing for questions in between presenters. So at this time, I'd like to invite if anyone has questions for Mr. Surratt and questions about Greater Seattle Partners, I invite you to chime in. -I'll ask a question. -Councilmember Balducci. Thank you, Chair. -Thank you for being here. It's really important. I think we're dealing with a similar feeling of uncertainty when it comes to government funding and government activities. And so the question that's always at the front of my mind, is there anything that you could think of that would be something that we should be looking for, keeping an eye on or acting out, acting in response to address the kinds of uncertainties that you're seeing in the trade sector? -So the message that we say, we've been telling the folks, and I think the business investors that we work with are sophisticated enough to know, like our region is not D.C., right? They know that there is a federal government over there. Their investment decision is more than a year, two-, four-year time horizon and that they're trying to put all that into their equation. I think what would be really, really helpful is when our local government leaders stand with us and when we do meet with these international companies, that that there is a measure of stability here, that you're not going to -- at least your local government partners are not going to be inconsistent, reactionary in decision making or policy changes. That level of stability is extremely important. It is no accident -- you know, we separate some of the state politics. But down in California, Governor Newsom created a fund at the state level focused on attracting international investment. And with a very explicit message, California is not Washington, D.C. We welcome international investment. We welcome international talent that want to make California their home. I would love to see something like that happen in Washington state, our local government. Short of that, a message of just stability is really, really important. And whenever we do host international companies, I would love to invite you all to participate in those conversations and indicate your willingness as local leaders to see them really be successful and contribute to our community. -Thank you so much. Council President Nelson. -Thank you very much. I'm going to turn this on. Getting the system down. Thank you very much for being here, Brian. I really trust your perspective. You're the former director of the Office of Economic Development here at the City of Seattle. And you have your pulse on what is going on, not just in the regional state economy, but also international. So here's my question. When you are in -- also, I want to say you hit the nail on the head when you talked about predictability as a small business owner. I know that that is the most important thing, because no matter what is happening, one needs to plan for increased costs and potentially increased revenue as well or decrease. So my question is, to what extent recently have you been getting questions about not necessarily the impacts of national policy changes on the regional or state economy, but just in general about the regulatory environment here? -No, it's a great question. I just had a call earlier this week about this exact question. You know, the state deficit that our state legislature and governor had to deal with, obviously, King County and Seattle are having to deal with its own budget issues. These are real. These are real challenges and strains to all of us. The questions around new revenue sources for state government. You know, those are really important policy debates that we need to have. And the question becomes, how do we balance filling gaps in funding to ensure basic essential government services while maintaining an environment that encourages investment? Those are really real tensions that we have to have. And so at GSP, we're trying to walk the line where at the end of the day, you know, we're boosters of this region. You know, our job is to say, you know, greater Seattle, the three-county area remains the best place for you to invest and build your company, whether you're an international company or you're a domestic company wanting to come in and expand in our region. This is the best place to be. And I still do believe that there are challenges that we have, whether it's changing the regulatory environment that a number of folks in this community are not happy with. Those are real that need to be dealt with. We also have an affordability challenge, rising cost of housing, broader cost of living. Those are real challenges to our long-term economic health. And until we get on the same page and the right page with our new regulatory environment, our affordability crisis, we put our long-term economic health at jeopardy. So I've heard directly from businesses that the new potential revenue policies will have an impact. And at the same time, I've heard from folks who believe that we've got to maintain our basic services in order to make our state, our region as competitive as possible. So I'm glad you are all in the leadership roles that you're in to help solve those problems. But those are real. -Thank you for that. I know that the topic of this conversation is federal policy, but we can never forget that it's always aggregate when you're in business and trying to struggle with everything coming down at once. Thanks. -Thank you, Council President. Colleagues, any additional questions? Looking at our colleagues online as well. All right. Well, with that, I do have one question for you all. Just mentioning, you spoke a little bit about data collection and looking towards the future. What kind of data points are you looking at? And particularly, what, from your perspective, will be some of the warning signs? What are the key data points where you would lift up a red flag and say, we're in trouble because of this particular indicator or change in our market? -Yeah. So obviously, some of the top line things that we look at. Actually, this past week, my staff just pulled a bunch of international trade data. And this, again, the data lags. And so, this captures up to 2024 of May. And on one hand, what's encouraging is from the trough of COVID where all of our numbers on trade from inbound, outbound, they were ticking back up. We had not quite got to pre-pandemic levels, but we were on that upward swing. My fear is when we look back a year from now, in 2025, we're going to have a massive dip again. And the question becomes, how long will it take for us to recover from that dip? So our economy, we all know we're the most trade-dependent state in the union. And the tariffs or threat of tariffs or the chilling effect of tariffs, they have an outsized impact on us as a community. And, you know, we all drive by and see the containers at the Port of Seattle every single day. And you feel it. You feel the energy at the port. And when we have this cloud hanging over us, the numbers will confirm that sentiment. So the things that we're going to be looking at, we're going to be looking at job creation, capital expenditures on the foreign side, trade to be the markers for us going forward. So I will, after I get off this call, forward to you all our recent set of data points on trade going back to 2014 to 2024, showing where we are on the trade side. But, again, we're in the middle of it, and so it's really, really hard to see. But all the anecdotal evidence point to people really pausing and frankly hoping that the tariffs aren't as painful as we think they may be. But, as you all know, hope is not a strategy. And you can't make decisions based off of what we hope that the federal administration is going to scale back on some of its threats on tariffs, that we hope that there will not be retaliation. That doesn't work in any business boardroom or, frankly, in council chambers when you're making decisions that impact people's lives. -Mr. Surratt, I want to thank you again for being here today in committee to share this information. And if there are no follow-ups from my colleagues, I think we're all looking forward to that information you'll provide as a follow-up to today's presentation. And I'd like to turn us to our next presenter, who is David Tran from Lam's Seafood, who's joining us here in person. I know Lam's Seafood is a beloved place here in town, and we're really grateful for you taking the time out today to speak with us. And with that, I will turn it over to you. -Thank you. I think I just want to comment, just like the whole country is seeing, right? As soon as the tariffs were announced, almost immediately we saw panic buying just kind of during COVID. Everybody started buying up a lot of stuff, which caused shortages of supply. Pricing increased almost immediately. And then by the time, you know, we started ordering again from our wholesaler suppliers, those prices are already increased, knowing that their next shipment coming in have essentially increased in price, you know, by 50% sometimes. And so that caused a really strain on our resources of trying to, you know, get more product and to sell and stuff like that. So at the end of the day, we are cautious of increasing our price, but we have to increase our price. And so we pass that along to our consumers. And unfortunately, you know, with the Asian community, there aren't many regional or local suppliers for Asian products besides, you know, importing these stuff. And so we're directly impacted by these tariffs almost immediately. And so I'm talking to suppliers now. And even though they've paused the tariffs, the suppliers are telling me that they're reluctant and they're, you know, not trying to import as much because they don't know what the next step's going to be. They don't know what's going to happen next. And so, you know, everyone's kind of on slow-mo. They're not bringing in as much as they normally would, even though they're on short supply. And so we're still having that price crunch even further exacerbated. And on top of that, being a retailer, we're trying to hedge our supplies. If we don't have supplies, we don't have a retail store. We don't have retail store, we don't have nothing to sell. So now we're trying to overstock as much as we can, even though we have been absorbing prices and thus, you know, further exacerbating the problem that we're having. So I think those are all my comments as far as, you know, tariffs and how it's affecting our businesses right now. -Thank you again for being here. Colleagues, any questions for our panelists? Councilmember Quinn. -Just really briefly, well, thank you for being here and thank you for your presentation. -Thank you. -Can you share with us, and I know this from Tukwila, that your customers come from all over the place. Can you talk about the draw and the impact that this is having as well? -Yeah. I mean, at the end of the day, like, the tariffs weren't all even, right? So different regions of Southeast Asia were impacted differently, right? China was, you know, 150. Thailand was, you know, 47%. Vietnam, 74%. So they're all uneven tariffs. And so it just made so much confusion on our end to try to keep up or else we would lose money at the end of the day, right? You can't bring in product at, you know, 50% higher and still sell at the same price. And so it really caused a lot of chaos on our business. And that's not something that we do just looking at prices every day. So that was, you know, we had to pause a lot of things to try to focus on that so we're not losing money. But at the end of the day, we're just, you know, trying to do our best. And, you know, our resources are pretty, you know, spread thin right now, just trying to keep up. -Just a quick follow-up. Are you seeing a decline in the customers? -Oh, for sure. For sure. I mean, customers' purchasing powers has gone way down. Our basket size has gone down. Customer count's going down. So everybody's being more cautious, whether it be, you know, maybe they overstocked because they, you know, they panic buy before, or they're just eating less now because prices are too high. They can't afford as much. Yeah, so. Thank you. -Councilmember Balducci. -I'm probably going to ask the same question to everybody, because I think it's really important to hear from you all, if there's anything that you think that we, as local elected officials, should be keeping our eye on, learning about, and doing that could help the situation, please feel free to share. -I mean, as far as on the federal level, I don't know, you know, how much sway do we have on the federal policies, right? So I don't know about that, but, you know, there are different things on the local level that we could always do, you know, to help us just curb this right now. So I mean, just off the top of my head right now, like, we have a lot of homeless issues in the international district that's really negatively impacting our store down in Seattle. And, you know, prior to these tariffs are happening, our sales have gone down first ever that we've been in business because of the homeless issues right in front of, you know, right in front of our door. And without you guys' help, there's nothing that we can do to get our customers to come back into the international district if we don't clean that up. And we don't have any authority to do that, to kick people off the streets, to get the homeless away from our businesses. -Thank you. I think we may be hearing a theme, which is local government's got to do our job and we need the federal government to do their job if we're going to support our local businesses. -Correct. -Thank you. -Thank you. -If you wanted to add something, please go ahead. You seem like you might be. -No, no, no. I mean, that's it. I mean, we're doing as best as we can, and any help that we can get from local level, federal level is welcome, you know. So business is not easy, especially during these times, the uncertainty times, right? So yeah, any help is welcome. -Colleagues, any additional questions? All right. Well, I want to thank you again for being here today and sharing this information with us. That's enormously helpful. I know my thinking is aligned with Councilmember Balducci's thinking about what can we do right now to support. I suppose my final question for you today is just what do you think is most misunderstood about the situation that small businesses are facing right now in light of everything that's going on? -I mean, I don't know if there's anything that's misunderstood. Everybody sees the trend, right? It's impacting everybody. I think, you know, now everybody understands that these costs are passed down to the consumers. Everybody understands that, right? It's a tax on the people. It's not a tax on China or any other countries. This is tax on the people because when we get these added costs, we add that to the end price. And so that's it. -Thank you. And thank you again for being here. -Thank you. -And with that, we're going to turn to our final panelist as a part of this panel and turning to, let's see, Vice President Leeching Tran. I know you're joining us online. Hopefully, your audio is a little bit better and we're able to hear you. Can we do a quick sound check? -Yeah. Is this better? I'll try to speak up. -Okay. Much better. Thank you. -All right. Good morning, everyone. Thank you again for having me here today. My name is Leeching Tran. I'm the president of Viet-Wah Group, a company that my dad founded in 1975. We are an Asian grocer. We provide food from all over Asia. -Excuse me. Sorry to interrupt, Ms. Tran. -Yeah. -Could you try speaking just a little bit louder? -Sure. No problem. -Okay. Thank you. -I could slow down a little, too, if that helps. I just think too fast. Our products are primarily imported from Vietnam, Thailand, also products from China, Taiwan, Korea. Most of our fresh products are domestically sourced locally here in the U.S. and around the Pacific Northwest. But the vast majority of our grocery products are imported from Asia. So we've been feeling direct impacts of these tariffs ever since they were implemented. I think Brian really nailed it that the hardest part for us has been the uncertainty of it all. Not knowing how much the rates are going to change, when they're going to change, how much we'll be paying for the same product that we've been selling for years. It makes it very hard to plan ahead for our future, plan ahead for, you know, future expansions, stocking inventory, how much our pricing is going to change over the next couple of weeks and even years. It's very difficult to do right now. The back and forth and the ever-changing rates, it's making it hard for us to do our jobs. And like David mentioned too, those costs are ultimately passed on to our consumers, so we've been trying our best to keep costs down. We know that everyone is very price-sensitive right now because of the tariffs and because of just inflation. People's dollars are not going as far as they used to. We see that in our sales that our numbers are not where they usually are this time of year and throughout the first half of the year. Yeah, people are just becoming more sensitive. They're still coming in. They're still stopping, but they're buying less. They're getting less for their dollar because of the rising cost. And we're doing what we can to keep it down. But we can only do so much before, you know, we're eating into our own profits as well and cutting into the cost of doing our business and doing what we need to keep our stores open and keep our employees paid and paying off all our vendors. And this doesn't just affect inventory as well. It also affects the equipment that we purchase. The supplies that we use in our store often comes from China because that's the cheapest, but overseas. We recently bought a new cutting machine that we ordered before the tariffs were implemented. But by the time it came to our door, the vendor had put on a 10% tariff on our invoice that we weren't expecting to pay for. And that issue came from Korea, which is not even a relatively high-tariff country, but just having that extra unexpected cost definitely made us second-guess how long are we going to keep our equipment? How quickly can we replace the things that are aging in our store? We also, unfortunately, suffered from a fire on January 1st at our store. So having to replace all the equipment that was damaged in our fire, replace all our inventory and supplies in the first half of this year has also been very challenging. Keeping up with the cost and all that stuff that's rising is again, putting a strain on our business and how we planned for the year and what we thought we would be spending money on versus what we're actually spending our money on and how much we're spending. It's definitely making it a lot more challenging for us to do the things that we want to do and are not able to do right now. We have to put a pause on it. We have to scale back, you know, improvements to our store or expansions or increasing our inventory and things like that. Things that help the business grow, right, are not being able to be implemented right now because of all these rising costs. That is the major part of it. I think Brian touched on a lot of what I was going to say, David, as well. It's regional. It's very local. It's regional. It's across the whole country. It's international. I think people don't realize how much of local business really is international. The sourcing that we have, you know, where our employees come from, everything. It's all tied together. It's all global. And so these tariffs, even though it's a federal issue, that's affected very strongly here. -Great. Thank you. Colleagues, any question for our panelist? Councilmember Balducci? -I will go ahead and ask my -- it's going to be a standing question. Is there anything that you would recommend that we as local government representatives be tracking, keeping an eye on and/or doing to support your business or local businesses generally during the uncertainty that you're going through right now? -Yeah. You know, unfortunately, the tariffs, the inflation, the federal issue is bigger than, I think, anything that we could legislate locally here. But supporting the small businesses is always appreciated and necessary. I think, without small businesses thriving in the region, the economy would collapse. We need that. We need relief for our consumers, too. Like, they're feeling the pinch. They're not able to spend money the way that they used to and the way that we need them to to keep our industries going. So I think, yeah, consumer relief is a big one. I think relief for our small businesses, too. -Thank you so much. -Council President Nelson. -Thank you very much for coming and presenting today. I was fortunate enough to celebrate Viet-Wah's 50th anniversary earlier this year, and you are a venerable institution in the region. So I really do appreciate you speaking for the small business community and also thank you very much for everything that you do for the region. So what I'm hearing each person say is that supporting small businesses. And I do believe that we need to, to the extent that we can possibly control any factor that impacts our small business community, we should be doubling down on it. And that is what I've always said when, you know, shortly after it became clear what the results of the election would mean for this region. I made a pact with myself to focus on not getting distracted with things I cannot control and to double down on the things that I can. And so always as economic development chair, I've recognized that public safety is first and foremost when it comes -- it's not access to capital necessarily. It's not other those businessy type decisions or issues. It's really public safety. So that is one area that we need to continue to focus on. And again, regulatory environment is very important, considering what happened in Olympia this past session and what our individual cities and counties are contemplating that would have an impact on small, medium and large businesses. We just received an email this morning from Don Blakeney, who's the director of the district partnership, one of our BIAs, talking about concern about a B&O tax increase that is floating around. And so, again, colleagues, for the sake of the small businesses and medium and large businesses that are represented in this meeting, I would suggest that we really do focus on doing everything we can under our control to help them. Thank you, knowing that the federal policy will make everything worse. Thanks. -Thank you, Council President Nelson. And I am seeing a hand from one of our panelists we heard from. Mr. Surratt, would you like to chime in? -Yes, I just wanted to make one last point. So this tariff crisis and some of the federal policies, these are political decisions that are being made. You know, when we think about the pandemic that impacted the world, that impacted all of our supply chains, we were able, you know, fits and spurts, to rally as a globe to kind of get through that pandemic through the help of massive federal dollars to help communities stay afloat. This one feels -- this one is fundamentally different because our supply chains have been disrupted and we don't know what the way out is at the federal level at this point. And the leadership that you all are exhibiting at the local level will go a long way in helping provide some measure of stability for local businesses and investors who are looking at our region. So just wanted to double down on your comments around figuring out and doubling down on what local government does really, really well. And again, providing a sense of stability for our community going forward. So that's the message I'm trying to take every single day. We're recruiting businesses to come to our region. And I appreciate your partnership and hope to bring you in even closer. -Thank you for that. And if there are no final questions or comments, I'm going to move us towards closing out this panel and just thank our panelists again for coming and sharing your expertise, your perspectives. We're all trying to find ways to navigate this. But hearing loud and clear the need for local government to be delivering on critical services and understanding that these federal policy changes are also having huge impacts to our small and large businesses, but also impacting affordability in the region, which we've already known to be a challenge for us. And so I want to thank you all again for being a part of this panel and certainly expect follow up from us and work together as we solve this. So thank you. -Thank you, Chair Rinck. I will now move us into our second panel. This is agenda item number six, briefing on the impacts of tariffs on tourism and trade. And I'd like to invite our panelists to join us. We have Mark Everton, CEO of Seattle Southside, Steve Balaski, director of business development with the Northwest Seaport Alliance, and Peter Friedman, Executive Director, Agriculture and Transportation Coalition. Thank you all for being here with us today. Really appreciate you taking the time to help us learn about what's going on in your sector. Mr. Everton, if you're ready, I know you have a presentation. Please go ahead. Can we get that projected for him? There we go. And while we're transitioning, I just want to say I was smiling at Councilmember Nelson before, because I've been using the serenity prayer as a verb myself. We're serenity prayering this thing, so thank you. All right. Welcome. Please go ahead. -Wonderful. I've got a PowerPoint up. I hope it's visible. That was one of those little bumps that we talked about earlier, so thank you so much for your help. Good morning, and thank you for inviting me to speak with you today. I'm Mark Everton. I'm the CEO of the Seattle Southside Regional Tourism Authority. We're the destination marketing organization that represents the region right around SEA Airport, and primarily the three cities of SeaTac, Tukwila, and Des Moines. We're very similar to Visit Seattle or Visit Bellevue that I'm sure you're very familiar with. I wish to speak with you this morning to provide a perspective on the current state of the hospitality industry in King County. My focus today will be on hotels. King County has approximately 43,000 hotel rooms available for sale each day, which represents roughly 41% of the total number of hotel rooms in the state of Washington. Year-to-date King County hotels have sold roughly 65% of their rooms at an average rate of $167. Year-to-date occupancy in King County is actually down by 1%, and the rate is down slightly to last year. The state has sold 60% of its rooms at a lower rate than King County, and the state's rate is averaging $142. The state's hotel occupancy is actually down 1.5% from last year, and the rate is off about a half of a percent. The challenge that hotels are facing, and particularly those in the Puget Sound metro area, is that the flat occupancy and the average rate growth are not keeping pace with the cost of operating a hotel. So I'd like to go through some slides to help show you some statistics that may help clarify the challenges that our hotels are facing. And as we go through these, I'm going to provide some comparisons back to 2019. 2019 was a high watermark for many of our hospitality businesses. During that period of time, they'd seen year-over-year steady occupancy and rate growth, low interest rates, and relatively low inflation. So with that, this is a recap of the hotel financial challenges, and we're going to talk a little bit about the declining profit margin and our hotels' inability to increase revenue to keep pace with expenses. So I'm comparing the SEA area, and again, the SEA area consists of the region that I represent or my organization represents, which is Sea Tech, Tukwila, and Des Moines. And then we've got downtown Seattle, the central business district, and then King County as a whole. For reference, the SEA area makes up about 21% of the King County hotel inventory. Seattle CBD makes up an additional 40%. So between the two areas, we make up about 61%, 62% of the overall King County hotel inventory. From 2019 to 2024, while King County occupancies gained 5%, as you can see from the slide, both SEA and Seattle occupancies have not gotten back to their 2019 levels. In terms of average daily rate, the bottom portion of the screen, all three areas are comparable with a modest 12% to 13% gain. This is over five years, so the gain in average rate is averaging just about 2% a year. When you combine the occupancy and the rate, it generates, obviously, revenue. And so I've summarized the revenue change from 2019 to '24 for the three areas. Overall hotel revenues have now surpassed the 2019 revenue levels, with SEA showing about a 9% increase, about half of what King County overall increased, while Seattle shows minimal growth of about 1.2%. Again, this is over a five-year period. The bottom part of the screen shows some of the primary hotel costs relative to 2019. As we're well aware, the Washington minimum wage has increased almost 40%, went from $12 in 2019 to $16.66. Medical insurance rates, and I'm using this from our own policies, and we're covered through the Association of Washington Cities, and we've seen about a 42% increase in the single medical coverage. Liability insurance. For my organization, the liability insurance has more than doubled in the last five years. And CBMS interest is commercial-backed mortgage securities. This is how hotels mortgage their property, and they're typically in a three- to five-year window, and so most of them are facing refinancing going on. And those rates have actually gone up 92%. With a lot of the hotels refinancing in the early post-COVID, when interest rates were down in the 2% range, they're looking at a 200% increase. The tariffs -- many hotels, let me just summarize this. Many hotels are facing looming refinancing issues, and in the case of some of the San Francisco Bay Area's largest hotels, they've either closed or handed their keys back to their lenders simply because they can't afford to refinance. King County hotels may be facing some similar situation in the near future. So some of the international or the financial challenges that we're facing with international travelers. The tariffs that have either been imposed or are anticipated, have not yet affected our hotels due to the inventories on hand. But what we're anticipating is a drop-off in travel, primarily on an international level, which is going to exasperate the situation that they're facing. So as I mentioned earlier, our hotels in the SEA area in Seattle have actually experienced negative growth in occupancy. Inbound international travel is of a concern. Canadian travelers that typically stay longer and spend more money than domestic travelers are not crossing the border this year. Bellingham and Whatcom County are experiencing declines in occupancy, while actually King County is experiencing an increase, which is indicative that it's the Canadian travelers that's driving down Whatcom County's occupancy. While SEA Airport is introducing new and exciting international routes, Oxford Economics is forecasting a decline in international travelers to the U.S., with travel from Canada and Mexico particularly concerning. This chart is interesting in that it shows the change in travelers passing through TSA and/or Customs and Border Protection at 16 major U.S. airports. The blue line, and again this is year-over-year change by month, the blue line is domestic travelers, while you can see the declining and actually negative line is the non-U.S. travelers. And the last slide I want to share with you is kind of a snapshot, and this is put together by U.S. Travel, of where are we with domestic travel? And on a positive note, 92% of Americans have a trip planned in the next six months. And there's a very strong desire for experiences, and that's great for the Puget Sound region and King County in particular because we're known for our experiences, and that's one of the reasons that people return and want to travel to Seattle and the surrounding area. The area that's concerning on this, though, is that 70% of travelers are choosing more affordable options, which doesn't bode well for an opportunity to increase rates. So while there's no crystal ball, what's pretty certain is that our hotels are struggling and will continue to struggle for some time. One of the things that they, as I've mentioned, they need to do is drive rate, and one of the things that drives rate is compression. We need to get more travelers, more visitors, more tourists, more business travel, more corporations coming, more conventions. And a positive note is we have 57 different destination marketing organizations and an amazing statewide organization, the State of Washington Tourism, that are supporting our hotels and helping to market the amazing experiences that travelers to Washington and to Seattle and King County can have. So with that, I'll conclude. -Thank you very much. Questions for this speaker? Okay, we'll start with Councilmember Baron followed by Councilmember Saka. -Thank you very much, Chair. Thank you, Mr. Everton, for your presentation. I know we were focused a little bit on kind of travel and tariffs, but I wanted to see if you could talk a little bit about any impacts that you're concerned about regarding immigration policy. I know immigrant workers are a significant share of the workforce in the hospitality industry, and, of course, we're seeing an administration that is changing federal policy on a very strict level and actually taking away work authorization from people who are currently here and might be working already in a number of industries, including the hospitality industry. Are you seeing any impacts, or is there concerns from your members about what that might mean for the future? -Well, one of the challenges that the hospitality industry has experienced since COVID is just a need for additional workers. So it has been a constant problem. In fact, we still, in our area, we still have some hotels that are limiting occupancy at times because they simply don't have enough workers to be able to service those rooms. We also experienced that in some of our restaurants in that they can't put enough people on the floor to serve the customers. They don't open fully. And we've seen that when we go out and you think, well, half the restaurant is empty. Why do I have to wait 20 minutes for a table? It's because there's simply not enough staff there. J-1 visas are a concern. We've got quite a few J-1 visas that support the hospitality industry across the state. And I think, as you heard from our earlier speakers today, there's an infrastructure that's feeding the hospitality industry through outside laundries, through produce, through all kinds of suppliers, and those in turn are being impacted by both immigration and the tariffs. And so I think it's a snowball effect. While a hotel may not have a particular challenge today, it may have a day or two delay in getting its laundry done, if it's outsourcing its laundry, simply because the outside laundry can't find enough staff to support that. And so one of the challenges that hoteliers, when I ask them what's keeping you up at night, they say it's everything that I can't control and I'm not aware of what's going on behind the scenes that's affecting me. -Thank you. -Thank you. Councilmember Saka. -Thank you, Madam Chair. And thank you, Mr. Everton, for joining us today. And thank you for sharing your insights with us on the situation at hand. It sounds like, with respect to international travel, our Canadian friends and neighbors up north are a top source of revenue for the industry. As you noted, they generally stay longer and they sometimes apparently spend a little more money while they're here, which makes sense because it's a border community. And I'd be curious to better understand, I heard anecdotally that this year when -- so every year when the Toronto Blue Jays play the Seattle Mariners here, it essentially transforms T-Mobile Park into a home game for the Blue Jays. But hearing anecdotal evidence, I didn't go to that particular set of games, but I hear anecdotal evidence that the crowd at least wasn't quite as blue as it typically is in terms of like the volume. But in any event, there is clearly some sort of impact as indicated in part by some of the data you share today. Curious to better understand -- so Canada is one of the top originating locations international for a lot of the tourism we experience from a hospitality perspective across our region. What are some of the other locations, I guess, domestically? And I note that you shared on your slide earlier there's a cause for concern and potentially to monitor and also a glimmer of hope with respect to the data in terms of domestic travel. But my first question is, what are some of the top destinations that people are coming from domestically in the United States to our region? -Well, we've moved most of our marketing, obviously, away from Canada because of the kind of the negativity that we were receiving from the Canadian travelers, at least today. And we've reallocated that marketing to our feeder markets. And our feeder markets for the Seattle area are primarily California, both the Bay Area and Los Angeles, Dallas, Phoenix, and then obviously Chicago, New York, and Boston because of the tech and the pharma business that comes here. And so we've moved our efforts to those areas. The other thing that we've put a big push on is to the cruise passengers that are coming to make sure that they're aware that there's a there here, that it's not just the big, beautiful ship, but it's come a day earlier, stay a few days later, and go and experience all that the region has to offer, whether it's the falls in the mountains or even taking a ferry out to the islands. But more importantly, come and experience adventures that they can do here in Seattle and in King County and in our region. So that's what we've done is move that effort. And Councilmember I know that the King County Council has put some grant money forth this year for some of the local DMOs to be able to expand their reach and talk to more domestic destinations about why they should come and visit us here. And I think we're seeing good results from that. We really need that international market to top off the bucket, right? So if our group and our crews or our base and that we can get some leisure travelers on top of that, boy, it's really nice to get some German or some French or UK visitors to come in and stay for, you know, seven or ten days. And we're just not seeing that this year. It's unfortunate, that's kind of the cream at the top that we're looking for. -Yeah. No, very helpful. Thank you. Thank you so much. My second and final question is concerns like the rough apportionment or breakout between business travel and, like, personal or leisure travel. And irrespective of whether folks come from Canada for business travel or Brussels, you know, we need to have that sort of balance. But is there any indication about the data sort of where we're at on the business travel locally here versus some of the personal leisure travel sort of where we're at? -We've not seen business travel return to the level it was. I've been to meetings and conferences with Delta Airlines and with United Airlines, and they're both saying the same thing. They haven't seen that, you know, million-miler business traveler come back yet. And it's the advent to a big degree of the technology improvements that we saw during COVID. For a lot of the business travel, it needed to be, you know, I would pick up the phone or, you know, I would come out and see you. So now we can do that on a Tuesday afternoon over a Zoom or over a Teams call. So we're still struggling to get that back. One thing that we have done is really push the leisure component to mix the two of them. And we're seeing a bit more of that, especially with some of our international travelers. If somebody is going to come out here for a tech or a pharma meeting in Bellevue, they're bringing their spouse along and being able to accentuate that meeting by having that extra day or two, which is great for us because that's exactly what we're looking for. -Thank you. And well put on the aspect related to, you know, the advent of remote technologies that enable some but not all collaboration remotely. I'll say as a non-practicing technology lawyer and someone who was a product lawyer for Microsoft and helped support Microsoft Teams, for example, the engineers that build those innovations and the intangibles that help connect us remotely, very, very smart people. And they enabled a lot in terms of the business community and obviated the need for some, but not all, in-person gatherings. But no one has quite cracked the nut. No one has ever figured it out. I don't think they will, to be honest. There's no direct substitute for looking someone directly in the eye, face-to-face, in-person, and earning trust and understanding where someone is, understanding people's mutual positions and being able to close an important transaction or deal. There's no substitute. So come on to Seattle. In our region, we are open and welcome for that opportunity. Thank you. -Thank you, Councilmember. I feel like that's the perfect note to move on. But I do have two quick questions I want to check first of all. Councilmember Mosqueda has a question. Please go ahead. -Oh, thanks so much. I just wanted to follow up on Councilmember Baron's question and appreciate that there's constantly a need to ensure that folks are getting access to good living-wage jobs, especially union jobs, in the hotel sector and hospitality sector. We know that we have the union training fund that Unite Here Local 8 helps to run, and to help place people within hotels in our region. I just wonder if you could speak to how and whether you are using the union training fund to help place folks. And the second question I have is about making sure that folks feel comfortable continuing to return to work. One of the things that we are exploring and encouraging local employers to do is to post a sign at entry places saying that a warrant must be signed by a judge, it must be an official federal court request and signed by a judge. And we're putting information out to ensure that people know what an actual image looks like. There are some examples on our social media as well from just yesterday. I'm wondering if that's something the hotel industry has been able to do in places of employment to really ensure that the rights of their workers are being respected and that that might encourage more people to stay within that industry and to continue to show up, especially when there's such toxic rhetoric from the federal administration. Thanks so much. -Sure. Our focus is on the marketing side. So some of the items that you mentioned, we really rely on our partnership with our chamber to help provide that information. That's really more of the B2B component. So our focus is really more on talking the B2C, trying to talk to those travelers and tourists and meeting planners to bring their groups here. From an actual hotel operation standpoint, that's really more of a chamber or with their brands themselves. So a lot of our hotels have brand representation from Marriott and Hilton to help provide them with that direction. -Thank you. -Thank you, Councilmember. Council Chair Zahilay, please go ahead. -Thank you so much, Madam Chair. Thank you all so much for this really helpful information. You know, as I review the cost centers and the trends that you have provided us, I noticed that a lot of the costs are things that, again, are local level dynamics, maybe national or global, but maybe predates this administration. Could you just give us maybe a ratio of how much of these expected costs you're seeing coming from things like new tariffs and other federal government administration policies versus local or state level policies? Do you have a sense for that, just so we have a sense for what you're experiencing? -Yeah. Given the nature of our topic today, I did a deep dive into the tariff with a number of my hoteliers, and they're not actually experiencing the effect of that yet. They know it's coming. A lot of them are relying on their current inventory or the inventory of their suppliers. But as the reorders start to occur and the items coming out of those tariffed countries, primarily China, which is the primary producer of a lot of the disposable products that you find in hotel rooms, the soap and shampoo and conditioner, those, if the tariffs continue, will have an effect on them. The other component is a lot of hotels have decided to pause renovations and improvements to their FF&E, their furniture, fixture, and equipment, because a lot of those case goods come out of tariffed countries. And they're budget busters for a lot of them. While they expected to spend X dollars and have gotten approval from owners or from their capital providers, they're now finding that those numbers could be substantially higher. And so they're pausing that. So it's kind of that storm that you see off on the horizon. You know it's going to rain. You know you're going to get lashed. You just don't know exactly when. And so that's kind of the sentiment that a lot of the hoteliers have. They know it's coming. They just can't predict, is it July, is it August? But they definitely feel that we'll be here before the end of the year. -Yeah, thank you for that. I just kind of wanted to take a step back and look at the dynamic that you're experiencing, because this dynamic of costs outpacing revenues is something that we're seeing across many different agencies and departments, even at our local government levels, whether it's King County Metro or Sound Transit or wastewater systems. This seems to be a big across-the-board issue that we're all experiencing. What do you see as the long-term solution? These tariffs will likely go away at some point once we get a new administration, but a lot of the issues that you're showing us might persist. What do you see as the long-term solutions for your industry and your sector? -I think you're right. They will persist. And when you look at the minimum wage and the cost of labor increase, that's not going to roll back. Thankfully, that's here to stay. The additional cost of insurance, I don't think any of us have any anticipation that what Kaiser or Blue Shield is going to charge, you know, in January of 2026 is going to be any less than what they're charging currently. So we don't anticipate that. The only positive thing on there could be interest if we see a rollback of interest rates. If we get back to kind of where interest rates were four, five, six years ago, that may be a benefit for them. But hotels, it's the new norm. It's the new reality for them. They can't sit back and think, oh, well, these are extraordinary one-time expenses. These are going to roll back. They're going to be there. They need to plan around that. And what can they do differently? And a lot of their models have changed. And you experience that. When you go into a hotel, there is no concierge. A lot of them don't have bellmen. A lot of the times, you know, there may be a long line at the desk if you want to be checked in by a live person. But if you want to go check in at a kiosk or on your phone, you can get into your room. Those were all cost-saving measures that hotels were forced to put into place. And I think we're going to see more of those continue. -Thank you so much. -Yeah. -Thank you. I do want to make sure we get to our other panelists, but I will just note that you've already offered, I think, at least one potential answer to my question of what could local government, what role could we have. And I heard you speak about grants for the marketing opportunities and how that really helps. And then you get to do your work and bring more business here, and that helps us all. -Yes. -So that's what I've noted down as one takeaway. And I also, Councilmember Mosqueda, noted down the idea of potentially partnering with the chambers with regard to know-your-rights type information and protection of employees. I think that's another good takeaway of potential action that we could have here. All right. I'd like to move on to our second speaker on this panel. That's Mr. Balaski, Director of Business Development for the Northwest Seaport Alliance. Welcome. Thank you for being here. Please go ahead. -Good morning. Thank you. Again, my name is Steve Balaski. I'm the Director of Business Development at the Northwest Seaport Alliance. I'd like to thank you, Chair Balducci, Seattle Chair Rinck, for this opportunity to participate today. I'm going to go through my comments briefly, as I'd like to leave as much time as possible for our guest, Peter Friedman. I do have a PowerPoint presentation. I'm not sure if it's available electronically, but I do have hard copies. -Yeah, we'll need a couple minutes to get it set up. -Okay. -Would you like to speak while we do that, or we can wait. We'll be at recess for two minutes. That's how much time you have. Thanks. All right. We'll be back in session after our brief break. Thank you, everyone, for your patience, and now I'll turn it over to Councilman -- oh, no, no, I'm sorry. I'm still on the same panel. It just feels like we're ready for a different panel. Okay. We're moving on to Mr. Balaski, Director of Business Development for the Northwest Seaport Alliance. Welcome. Thanks for being here. -Thank you, and thank you again for the opportunity to participate this morning. I'm planning to keep my comments brief. Again, as I mentioned earlier, I'd like to allow as much time as possible for our guest, Peter Friedman. But, again, I'm with the Northwest Seaport Alliance, and next slide, please. Just as a reminder for those who may not be as familiar with our organization, the Northwest Seaport Alliance is a marine cargo operating partnership of the ports of Seattle and Tacoma. And among our key goals, this joint venture allows us to act as a single port gateway so that we can better serve the region and more effectively operate in a very highly competitive industry. And we're excited. Actually, this August, we will be celebrating our 10-year anniversary as an organization, so we're looking forward to that recognition. Next slide, please. This slide provides a snapshot of our regional impact in terms of jobs and economic activity. And just two key takeaways from this slide. The 52,000 jobs that are up there, if you took that in aggregate, that would make our industry the sixth largest employer in Washington State, just behind the University of Washington. Over 12,000 of those jobs are generated in King County. And, as a matter of fact, the top three employers in the state, Amazon, Microsoft, and Boeing, all use Northwest Seaport Alliance facilities in their supply chains. So we hope that we are supporting their businesses as well. Next slide, please. So this slide provides a visual representation of some of those jobs and economic activity from the prior slide. The left side of the slide includes logos of companies that actually have physical import and distribution operations in our state, and many of those are in King County. Hopefully, many of those logos are familiar to you. All of these companies use our port facilities for import activity. And I would say all of this activity is at some degree of risk due to the current tariffs and trade policy. The right side of this slide represents key agricultural commodities grown in Washington State and their growing regions. And these commodities and their related companies rely on exports for growth. And I believe that bears repeating. These commodities and related companies rely on exports for growth. Agricultural commodities also rely on the companies on the left side of the screen because the imports bring the containers to our region that the exporters then use to export their goods. Without the companies on the left side of the screen, the agricultural commodities would not be able to export. And, again, all of this activity, we believe, is at some degree of risk based on the current trade and tariff policies. Next slide, please. So moving from activity at risk to actual impacts of the tariffs. This week we reported our May volume statistics. And as you can see, loaded imports were down 30% versus last month, or April, and they were down 21% versus May of last year. Similarly, exports were also down 30% versus the prior month and down 11% versus May of last year. And total international, as you can see, is down as well. And those include our empty lifting, which is just as important. So what happened? So in April, there was an executive order signed implementing additional tariffs on almost all U.S. trading partners. And the highest tariff was placed on China. So as a result, which was widely reported in various press outlets, most major importers paused orders from China. And China is the largest origin country for containerized imports moving through the Northwest Seaport Alliance. So given the transit time of the vessels moving across the Pacific, the decline in volume is now showing up in our May volumes. So there was a lag. But I wanted to put some context to these numbers. So on the import side, I received an e-mail from a local transload company whose major customer is one of the largest containerized importers into the U.S. And he shared that he had been his company had been severely impacted by this downturn. And what he shared was that they typically run operations Sunday through Saturday, seven days a week. And they handle at each shift anywhere from 50 to 70 containers per shift, unloading those containers and making them ready for distribution. He said with this pause in the China ordering, they've been forced to reduce operations to roughly Tuesday through Friday and are only processing 20 to 35 containers per shift. So basically a 50% reduction. And they shared that this negatively impacted over 100 employees that they have at their facility. So just to give you one example. On the export side, some of our export customers shared that they literally brought trucks into the terminal to pick up containers that had been delivered to board on the next vessel because the order in China had been canceled. Or because of the tariff, that product was uncompetitive. And that's very rare and additional cost. Fortunately for us, some of our key export markets remain countries like Japan, South Korea, Vietnam. So that helped mitigate some of the downturn that we saw in China. However, it remains uncertain what trade arrangements will ultimately occur with those countries. So again, just an impact. It's had a direct impact to local jobs, local activity. And as has been pointed out already, the uncertainty is really, really a challenge. And final slide for my comments. And this is all -- I guess I'll preempt the question, what can our government partners and agency do? Again, it's already been stated, but that certainty. And for us specifically, it's that certainty around things like access to our terminals, land use policies. The graphic up here on this slide represents the key freight corridors within Seattle that provide access to our marine terminals. So if our partners know that this land is going to be protected, this land is going to be invested in, we need efficient, rapid access to and from our marine terminals. We need protection of this industrial land. And then secondly, just the ability to collaborate is even more important. How do we have aligned strategies? How do we have aligned policies working together to find common solutions to some of these challenges? And so with that, I'd like to introduce our other speaker, Mr. Friedman. So among his many roles, Peter is the executive director of the Agricultural Transportation Coalition, or AgTC. AgTC is the largest shipper association representing agricultural exports in the United States. It has become the principal voice of agriculture exporters on U.S. transportation policy. His members include both the largest and some of the smallest companies exporting agricultural goods. He is in town this week because he held his annual meeting in Tacoma, bringing over 600 attendees and their economic activity to our region, and we were very excited that he was here. He is a -- I would call him an institution in Washington, D.C. He's based there now, but Peter is a native son. He grew up on Mercer Island, and we are really excited that he had the opportunity to be here and share his comments. So I will turn over to Peter. Thank you. -Well, just allow me to interject, and as the representative of District 6 and Mercer Island, welcome home. -Thank you. You will all be encouraged to learn that my parents were living around Yesler, and they wanted to buy their first house before I was born. They wanted to buy their first house, and they couldn't afford going up to View Ridge, Blue Ridge. They couldn't buy near the university, Rainier Valley, Seward Park. So they went way out to King County. Nobody was going out there to an unincorporated place called Mercer Island, and there they could afford to buy a house because they couldn't afford to buy in Seattle. So maybe things change over time, but there they still reside, my sister and brother and so forth. Before I go any further, Mr. Saka, would you rent your vocal cords, you know, just for a few minutes? For all the public speaking I do, you know, I could use them. If we could work out some subscription program or something. Thank you. So initially I was going to come here and talk only about who's watching this. It's not a local issue. It's not a national issue always. People are watching what you are going to do with regard to what Steve just mentioned about marine terminal access, about properties that are industrial now for waterfront in Seattle and whether you zone them for industrial use as-is, or whether you move them to other uses, housing, entertainment, and so forth. That's a debate that's been undergoing all over the West Coast. And who's watching it? Well, you're being watched from Singapore. That's who cares about what you're deciding here. Singapore Copenhagen, Shanghai Geneva Hamburg. Why? There are about 11 major steamship lines, ocean carriers, in the world and that's where they're based. None of them are here. They're all based over there. And they can go to any port they want where they see there's enough cargo flowing through. And if anything starts impeding the flow, because they also have higher costs thanks to the tariffs, there's less cargo flowing because of the tariffs. They are watching every penny. If it becomes slightly more difficult, as Oakland made it, that steamship line will say, L.A., Long Beach, Vancouver, Prince Rupert, Seattle maybe, you know, we'll go there. It doesn't cost them anything to shift. And once they leave, they don't come back because they've got to spend millions of dollars on marine terminals. So you've got to be careful here because what's being done here and what you will do is going to impact decisions being made all over the world. And the other group that's watching you, they're in Chicago, they're in New York, all over the country, Dallas, Kansas City, Miami. If it becomes more expensive to move cargo through Seattle-Tacoma ports because maybe trucks have to go a few blocks further, doesn't take much, or can't go 24 hours a day, doesn't take much, and the steamship line reduces its service, those exporters and importers, they've got plenty of other places to go. And there is vigorous competition, and I hear it all the time when we do our workshops in the Midwest. Oh, we really like Prince Rupert. Why? Because the Canadian Railroad goes up there, because it's a few days faster getting to the Midwest. This is the competition, and this is the impact, that the decisions that you make will determine whether they're going to keep calling here. This isn't some Federal Maritime Commission. These are local zoning decisions that have that impact, and I want to emphasize that, and I can more. To give you an idea of perspective, a couple years ago we had a workshop, and we had the regional, listen to this, the regional executive for one of the global steamship lines. What was her region? The Western Hemisphere. Not just part of the United States, the entire Western Hemisphere. There are about five regions for each of these steamship lines. So somebody said, when are you going to bring some additional service from your line to the Pacific Northwest? She said, I'm surprised you say that, because just a month ago, we announced additional service into Prince Rupert. And this week, we are announcing, and she chastised the fellow who asked -- he was a local. I just announced we're putting another steamship line into Vancouver. Now, they don't say Vancouver, B.C. They say Vancouver. They don't know about any other Vancouver's. So that's the view when she sees the Pacific Northwest. It's from Prince Rupert, Vancouver, Seattle, Tacoma, Portland, and even down to Oakland. That's the competition you've got. And a bad decision by the city council and the mayor in Oakland is making life very difficult and may result in Restoration Hardware moving its entire North American distribution facility out of Northern California. They're going to move it down, like everybody else, down to L.A., Long Beach, that distribution hub down there. Lots of jobs, really good jobs. They're all going down there. They're not coming back. That's a big, expensive move, and it doesn't come back. But that's a zoning decision, a zoning decision made by the mayor and city council of Oakland, and that's the impact it can have. I would say that I thought -- at first I was wondering about, you know, tariffs, why are these guys talking about tariffs? You know, I talked to Jameson Greer, and I talked to other Trump appointees, I'll leave it at that, about tariff. What can they do? But I'm very encouraged. But what I hear, I think it was Mr. Tran said, there are things that we can do, and I think there are things you can do to avoid compounding the injury of the tariffs. And something that was just said by the fellow that was there, don't presume these tariffs are going away with a new administration. Don't presume it. President Trump imposed the first group of tariffs, we'll recall, in the middle of his term, first term. By law, those 301 tariffs expire after five years, right in the middle of President Biden's term. And what did he do? He renewed them. In fact, made them a little tougher because there's this exclusion process. But he renewed them. And that's what we're living under now. So I get everybody aggravated wherever I go in the country. It could be in Boise or it could be in Seattle. Everybody gets aggravated. I call them the Trump-Biden tariffs. And that's what we're under now. And why? Tariffs are very popular. In the now eight or nine years that we've had that first batch of tariffs, not one Republican, not one Democrat, not House member, not Senator, has ever advocated for the rescission of that first batch of tariffs that we've been living under. They just realized that tariffs is a trade policy that's been around for a long time. We have import duties. Those were slightly higher. And they stayed. Now, the more recent ones, these 146 ridiculous things, you know, that has generated a lot of partisan. But I think that was a very smart point that he made -- I won't try to pronounce his last name. But a smart point, you've got to prepare for tariffs being around. This administration, the next administration, they could still be around. They may be hopefully ratcheted down. We're doing our part to help the hotel industry, the agriculture, the manufacturing. We need the personnel here in this country. Can't conduct those businesses without them. But nonetheless, just look back since the Trump-Biden tariffs were imposed and are still there. Be prepared for them. So you've got to do your part. And I thought Mr. Tran made some excellent points. You've got to see what you can do. That's zoning, all regulation. I've got an idea of something you could do. You may not like it, but it will go to -- I'd wait until -- well, the weather's not going to cool down fast enough to do this. But this is my suggestion. We just had a presentation at our annual meeting, which Steve mentioned. We used to do it in California. I wanted to support my hometown, home team, so we moved it to Tacoma. We take every hotel room that all the hotels down there will give us. And if we can get more, we take more. But we fill them all up for a week. There's a presentation from the Port of Savannah. When you're talking about local port competition, Port of Savannah is a local port. There's trains that go back and forth across the country, and you can ship. We have many people there, as you know, big exporters. They choose between the West Coast, East Coast, depending on little things that you will decide, zoning and so forth. So they were there. They were talking, these exporters, about where we go. And the Port of Savannah put out a slide that I think I need to look at again, but I take their word for it. The six fastest-growing states in the country are all down in that region, the southeast. And they have fastest populations. So as you said, people vote with their feet, right? So it's a fast-growing population. And fastest-growing in terms of blue-collar jobs and manufacturing, all the automobile plants and so forth. Virginia, down around to Louisiana. So what's the key? I mean, they're subject to all the tariffs as well. What's the key? And the Port of Savannah pushes that to say, see, that's why we're growing so fast. Mobile, Alabama, growing so fast. Why? I think I'd take a field trip or at least start looking at this slide. What are they doing locally that is creating an environment where people in those countries that I just mentioned, overseas, are making decisions? You know what? We're going to put extra ships down here because there's more cargo down here, import and export. What are they doing? And I think it would be interesting. I don't know what it all is. It might be wages, but it might be regulation and so forth. We can learn something about it, and I would say it's not entirely just partisan, because I was looking at some of the data where those plants are being built. It's not necessarily, you know, are just red or blue. You know, take a look at that. But your decision on South Seattle zoning of traffic, how frequently the lights will work, whether it's 24 hours a day this way or whether we want to shut it down for the ballpark, that's a decision that you're making or that the city makes that has the impact in Hamburg, Germany, and Geneva, all over the world. -If I may, I'm sorry to rush you, but we really want to make sure we have enough time remaining for the final panel and some discussion. And I will just observe that there has been a theme throughout today about how local actions can compound the challenges that we're feeling or can improve the challenges that we're feeling. But I do continue to feel that it is very important that we be educated about what the tariff decisions are doing to our economy and that we then collaborate with partners across the spectrum to advocate because that's important as well. -Very important. And, you know, unfortunately, these were rushed into effect very early. And even now we were just talking about some of them are being rolled back because of the negative impact. All policy, immigration policy, tariff policy, they're being rolled back. I only wish they would have thought about it a little bit in January '20 rather than now. But it is changing, and you do need to keep the pressure on. -Thank you so much. Thank you for that big zoom-out kind of perspective for us. Questions for the remainder of this panel? I'm not seeing any. Councilmember Nelson, please go ahead. -I can also take this answer offline, too. My question is for you. I hear loud and clear that it would be great to follow the best practices of other states. And when we're talking about tourism, I'm looking at the East Coast border states. And so Vermont, New York, New Hampshire, Maine, if they're doing anything to accommodate or mitigate for a potential drop in Canadian tourism, I'd be interested in knowing. -Yeah, I can get some of that information and get back with you, Councilmember Nelson. -Thank you. Thanks. -Thank you all very much. We could probably do a whole session on this topic. And we really appreciate you coming, spending your time, sharing your expertise with us, answering our questions. And hopefully it will be the beginning of ongoing work on our part. Thank you so much. All right. For our final panel, I'll turn the microphone back over to Committee Chair Rinck. -Thank you, Committee Chair Balducci. And with that, we're going to move on to our, I believe, item four. Will the clerk please read item four into the record? -Impact of Trump administration tariffs on Seattle-King County regional economy, economic overview, briefing, and discussion. -Wonderful. And for this briefing, we're joined by Chief Economist, King County Office of Economic and Financial Analysis. And then similarly, we have our City of Seattle Office of Economic Revenue and Forecast, Jan, joining us. I believe both of our presenters are joining us virtually. Wonderful. And with that, if you can take a moment to introduce yourselves by using your name into the microphone for the record. Perhaps starting with Dr. Lizbeth. -Yeah, I just didn't know if you wanted to start with me or Jan. So yeah, I'm Lizbeth Martin-Mahar. I'm Chief Economist with King County's Office of Economic and Financial Analysis. So I'm going to go through some slides today. And then I just -- -Can I pause you right there just one second? Your audio is coming in a little off. It's hard to hear you. Could you try speaking more directly into your microphone? -Can you hear me a little bit better? Or is it still gibing you trouble? -That's better when you face towards the computer. It sounds good. -Yeah. So let me share my screen and get the slides. Okay, so are you able to see them okay? Are we good there? -Yes. -Okay great. Now, this first slide here, I just kind of wanted to touch on, since we are going to now kind of switch gears and touch a little bit about the economy. I just wanted to kind of go through and give you just some key highlights of where kind of economists view tariffs and how they're going to be impacting, you know, our work as far as being able to forecast your revenues for you, as well as just understanding, as well as just understanding kind of the different things that we're looking at. I know that was kind of one of the questions and stuff that people were touching on. So here, basically, with the tariffs and stuff, we're going to see, you know, an increase in prices, you know, nationally as well as locally to businesses and consumers. I think the main thing to recognize is, you know, at this point, there's still a lot of uncertainty in terms of businesses, you know, are going to have to pay more for certain imports that they're getting from certain countries. But we don't know yet how much they're going to be passing on to consumers. So that really is the decision of the manufacturer or the supplier or, you know, all the different people that are touching and having that product that is tariffed. So realizing that is one key piece still that is really not -- it's uncertain. And it really is going to depend, too, on how long we have these tariffs embedded into the economy as well. Also, one thing that obviously we heard a lot of in the April period was just all the news and the threats of tariffs and stuff. All of that has an impact for the consumers in particular and businesses on just, you know, what to do with all these tariffs. It adds to the uncertainty. This uncertainty then gets transferred into different behavior that we wouldn't normally see without the tariffs. So the threat of tariffs really caused some people then to purchase early. We call them kind of like front-loading their purchases. So we see some of that now beginning to show up in the data. We also really see to then that leads in certain months an increase in demand. But then you see it drop off then later. So this is all kind of things that we kind of have to look for when we're starting to look at the data. Also, when we then begin to see a trade war, if that's what we begin to see with different countries where they will be retaliating, we call them retaliatory tariffs and stuff. So those kind of things will also then be increasing prices for our consumers and businesses. So all of that kind of then leads to a reduction in the U.S. GDP. So that's the kind of thing we're also seeing is, you know, the first quarter U.S. real GDP is negative. It's like about 0.2% growth. And that's just, you know, a lot due to all this change in the dynamics going on in the tariff discussions that were going on. The news made everyone quite cautious in wanting to purchase, wanting to invest in different types of new productions and stuff for their companies. It also raised expectations for consumers that in the future, they're going to have higher prices. And then what we saw with all the expectations, because we have different -- we call our different consumer surveys and stuff. Those just started really tanking and stuff at the beginning of 2025 and things. And so that kind of showed up as far as expectations. And then what we've been seeing here recently, as well as just this week and having the Federal Reserve not have any changes at all in their federal funds rate. So there's a lot of uncertainty. They have concern over inflation growing. So then the Fed is not going to lower any interest rates. And then that leads to the interest rates then on mortgages and also consumer loans and stuff remaining high. So these are all different pieces that we're kind of watching and that they all kind of feed into each other in many respects. So we anticipate King County's inflation to be growing in the future here. But right now it's still pretty low. And so that's kind of one of the things we kind of have to help everyone understand that there are delays sometimes in seeing these effects of tariffs on our economic variables and stuff. We have seen taxable sales, though, be very weak. Employment has been very weak. So that's kind of things that we're already being able to see those impacts. So when I look at this, this is basically something we basically are tracking all the Seattle metro area ports and air cargo exports and imports, similar to what your last group just discussed. So I won't really touch on this a whole lot, except for to recognize that over here on the far right, you'll see here in April, these are the big drops we started to see because of basically having the tariffs in place at that point. But we saw also front loading a little bit here with, you know, imports going up and then going down and going up again. The month before, we actually had the tariffs put in place. So you can see that, you know, we've got a lot of uncertainty right now in both exports and imports as far as the volume. But do recognize, you know, the first Trump tariffs went into effect about halfway through, you know, the Trump administration. So you saw those drops in exports and imports. And that is kind of interesting to see that they did have an impact. Obviously, then we ran into COVID in that pandemic, that lowered demand tremendously. So there was, you know, double impacts going on here in 2020. But then the post-pandemic period, you can see that both exports and imports have improved due to having a better economy post-pandemic. But you can see we haven't gone back to the pre-pandemic level for exports at all. And then this one, basically, I'll just kind of say that they already kind of touched on a lot of it. But, you know, for just kind of an understanding of our own area. And this is Seattle. It's got the Seattle port and the Tacoma port and also the Everett port and then also bringing in SeaTac. But basically, this is just showing you your top 10 Seattle area exports, which is basically like aircraft, electrical machinery. And then you've got the ag exports and stuff here as well. And then by country, where is basically most of our exports going? Well, we already mentioned it, it's China. But, you know, you can see all the different Asian countries. The first six here are all Asian countries. So we are heavily dependent on Asia as far as our exports. And then when we look at our imports, quite similar, except the number one import here is autos. And then you can see we've got a lot of machinery and things that are used for various businesses and their production of different goods. And then you've got all the things that basically from China and things like the toys and the games and the sporting equipment and the furniture. You already kind of heard mention of that in the hotel industry. And again, when you look over where is it coming from, our imports are coming from Asia. And the first six countries there are all from Asia. And then when we look at pay, so as far as what we're tracking, besides tracking the actual exports and imports, then what else are we kind of targeting? Well, boy, King County, we saw a really weak taxable sales last year, even before we had any tariffs or anything. So that is really, our taxable sales is the thing that we're most concerned with and that we're tracking to look at consistently to see where are the weak points and stuff that we're seeing. So when you look recently here, and this is monthly since January of 2023, but you can just see here, the green line is total. So overall taxable sales here in the last month that we have, which is March, we can see here we were down 0.8% for that one month. But you can see we haven't been doing all that well. You know, we had one particular month back here, you know, at the end of the year, that was almost a year-over-year of 5%. But, you know, we really have been declining in recent months. So we are to the point now of not even having a year-over-year positive in the particular month. So when we look at other pieces, what's been down, well, obviously, the big purple one here at the bottom is construction. This construction sector has been hurting a lot. And basically since about November, you can see those sharp declines. It almost was on a year-over-year of positive growth, but it didn't quite get there. But then now we're down to a year-over-year of almost 13% decline. Now, obviously, some of that has to do with the uncertainty in the economy. It has to do with the higher interest rates. So all of that is causing pause now in the construction industry. That's a big drag for us in our taxable sales. And then when we also look at retail, retail, at least last month, again, in April was 2.8% year-over-year. That's great. But the prior month was a decline. So you know, we're just kind of oscillating, you know, back and forth from month to month with retail. And a lot of that has to do with consumers' expectations of the future and things. So we really are, you know, feeling like when we have these different -- we still haven't gotten April in here in which, you know, again, it's bound to be lower in the retail sector for next month. So just recognize all of these different pieces are all different aspects that are pretty weak for the most part. And then just know that last year, you know, year-over-year in 2024 for the entire year for King County was a negative 0.5% growth in taxable sales. So just that's not anything that we're -- you know, know that that's just we already were declining. And then now we have tariffs and all these other aspects that can make it harder for consumers to even want to spend more. And so then when we look at some other just key economic indicators, obviously employment growth, nearly no employment growth when you look at the first four months for King County. So this is just pretty flat. Last year, it was a little bit of growth, 0.6%, and that's something. But you can see, you know, when you look over 20 years, King County had like a 1.5% average annual growth in employment. So we are way below what we've had over a longer period of time. So we just have to recognize maybe these are some changes that we need to be realistic about in our area as far as employment not growing like it has in the past. When we look at house prices, that's the next one there. You can see that we did quite well last year in 2024 at 6% growth, but now we're at about 4.8%. But that's still reasonably good, given that we have high interest rates. So our home prices still seem to be hanging in there. Again, this is only for the first four months and stuff. And then when we move over to taxable sales, like I was saying, we look at the three-month period as a whole. That first quarter was a positive growth, at least 0.5%, but it's nothing that's too extravagant. And then we don't have April in there, in which April could be worse, because that's the first month in which tariffs would have been in place. And then when we can see last year, like I said, it was, you know, pretty much nearly negative for taxable sales. But now when we look at inflation, I think it's just important to recognize, you know, when we've been talking about the tariffs, we understand they're going to come forward in higher prices. But right now we're still at 2%. So just recognize we haven't quite seen the impacts yet of tariffs and inflation. So this is something that we will be looking hard on in terms of when it wins exactly. We can see those increases come forward. But right now we're basically kind of wait and see kind of a thing. And we just have a lot of different -- you know, some people mentioned about inventory. So some companies may not be raising their prices right now because they do have inventories that they can draw from. And then they don't have to have the tariffs incorporated yet into the cost of the goods. But recognize that is something that will be coming in the future. And then also we need to think about fuel prices and stuff. That also has an impact on inflation. And we do anticipate those going up, not only because of our fuel tax rate increase statewide, but also this now due to some geopolitical concerns about oil supplies and stuff. So I think I'll leave it there. I don't know. Did you want Jan to go next or did you want to do questions? -Thank you so much. I think to keep us on schedule, we're going to move to the next presentation and hold questions together to be held in a group. And with that, I will turn it over to Director Duras. -Thank you very much. Good morning, council members. Let me share my screen. So it has been already mentioned a couple of times, there is just a remarkable amount of economic uncertainty. And primarily, it's coming from the trade policy and from tariffs. But there are other policies that have been either put in place or are being considered. And it's important to take all of them into account when evaluating the overall impact on the economic outlook. Those impacts are going to be hard to predict, very difficult to predict because of, again, that overall uncertainty about the timing, about the magnitude of tariffs, for example. But the overall notion is that there is going to be an increase of costs for households, for businesses. And in addition, these policies will weigh down on job growth. Since April, the situation has settled down a little bit. Certain tariffs are on pause. Overall, the economy still sees the likelihood of a recession in the next 12 months to be quite high, around 40 to 50%. So uncomfortably high. Regional economy, in addition to that, it's more in a weaker position. We saw several risks that are emerging and I'll try to address where we see those concerns coming from. This chart here summarizes the effective tariff rate, the historical effective tariff rate and the outlook, given again what has been announced and the amount of uncertainty around them. The effective tariff rate is essentially calculated as the overall amount of tariff revenue divided by the imports, the value of the imports. As you can see, it was somewhere around 3% prior to January. There is a quite remarkable spike that occurred in a matter of a couple of weeks, essentially. The outlook is for these tariffs to come down a little bit. But again, as you can see, the difference between the worst-case scenario and the best-case scenario. And this is the outlook from Oxford Economics and the economies that produce forecasts for U.S. economy as a whole. And they have several scenarios when it comes to tariffs that get between the worst-case scenario and the best-case scenario is rather large with very little upside. So the best-case scenario is not that much better than the baseline and the worst-case scenario can be really quite seriously worse than the baseline. Looking at the regional economy, over the first four months of the year, the regional employment has actually declined year-over-year. Unlike in the nation, there has been a significant drop in employment in the construction sector and manufacturing. That's layoffs in the aerospace manufacturing in particular. There has been some growth in education and health services, leisure and hospitality and government. But again, overall, in the Seattle metro area, King County and Snohomish County combined, the employment has declined by about 0.3%. So that's one part where we see these concerning impacts and concerning effects in starting position, which is weaker. So any sort of downturn will be potentially much worse in the region than in the national economy. Looking at the office vacancy rate, the demand for office space is very low. That, again, has impact on the construction sector, low demand for new construction in combination with the immigration policy, which would lower the labor supply in construction sector, pushing up wages, increasing the cost, combined with the tariffs, which increase the cost of material. So they all just create a lot of headwind for construction sector as a whole. And that sector has, as you have seen, declined quite considerably overall. From the consumer side and the household side, there is, in general, limited data available. The chart here shows the consumer credit and debit card spending in Seattle metro area and in the U.S. It shows the spending as a change year-over-year. So how much has it grown compared to the prior year? The blue line, that's the United States, the red line, Seattle metro area. And I would point to, in particular, I'll point you to look at the last couple of data points. So starting January, we have actually seen a decline in the consumer spending in the Seattle metro area. In the U.S. as a whole, it's still growing, very modestly, but growing. But in Seattle metro area, there have been about 4% lower. So consumers are spending less. That has implications for things like sales tax, for example. And then finally, it has been already mentioned in certain context here. The outlook for tourism, the outlook for leisure and hospitality sector is, again, quite concerning for Seattle metro area. The outlook and the data is now coming from Tourism Economics, which is essentially a branch of Oxford Economics. What they are predicting is a decline in the overnight visits to the Seattle area of the international visits that, again, to a large extent, visitors from Canada. The decline there between 2024 and 2045, it's about 18% for visitors in Canada. The recovery in 2026 partially is only a partial recovery. So it will take about one extra year. The 2024 level would be only reached in next year in 2027. So again, creating headwinds for leisure and hospitality sector with implications for the job growth there, which, again, has shown some growth this year. But given the potential downturn, given the uncertainty, there is just a lot to be concerned about. And that's actually my last slide, so I'm happy to answer any questions. -Thank you, Jan. Colleagues, any questions? Councilmember Baron? -Yeah actually I wanted to go back to Dr. Martin-Mahar's presentation. Dr., I think you mentioned that the taxable sales had declined in 2024 in King County by 0.5%, I believe was what you shared. I'm curious, does that take into account inflation? Because, of course, you know, prices went up about 3%. So I would expect that, like, you know, if everybody had exactly the same amount of stuff, it would be an increase of 3%, right, if we're talking about nominal terms. So I'm not sure if that accounts for inflation or not, because if it's a 0.5% decrease, that would tell me that it's an even steeper decline if it's on nominal terms. Could you elaborate on that? -Yeah. No, you're right. It does not take into consideration inflation. So basically, it is a larger decline if you're going to look at it in terms of how much prices and everything went up. So the other thing that's quite interesting about it is just that when you look at the history, because we did this and went back, oh, well over 40 years, to just see one of the different periods when we saw King County with a year-over-year negative growth there for taxable sales. And you really only found a few times, and they were all around a recession. So it was either before a recession, we were going to get hit, or it was after a recession. So it was quite fascinating to realize that we just experienced in 2024 a year-over-year decline that really wasn't connected with a recession. I'm not saying, you know, that we're going to go into one this year, but just recognize that that's pretty unusual to have a year-over-year decline for taxable sales for the county. We will have it in a given, you know, month. And like I showed you, there's lots of volatility each and every sector as well. But just not to have all goods have that with the year-over-year decline. And even at the state level, they didn't have that. It was low, but it wasn't like ours. -Thank you. -Colleagues, any final questions? Chair Balducci. -Thank you, Chair. It's more of a comment. I know that both of your offices are working steadily towards our next economic forecast to help inform our respective budget deliberations at the city and the county. And so, and it's a little maybe premature, but I would be really interested when it's an appropriate time to hear what you think or will be projecting the tax revenue impacts will be. -Yeah, I think we'll just -- I would just share my last slide. So for you guys, you know, just to look at that, you know, basically, we have not been doing real well in taxable sales, or I should say our second to last slide when it shows you the details of taxable sales. We were hoping to be better for the first few months, at least before we even had all the tariff news and everything. So we really haven't seen the impact yet from the tariff news, and we will get one more month of taxable sales data, but I don't have real high hopes. So we had a 2% growth in taxable sales for 2025 in our last forecast, and I just don't know that that's going to hold. And we'll just get one more month of data here to see, but, you know, like I was showing you, for the whole quarter, we're basically only a 0.5% growth, and that's below 2%. -Yep. Thank you. So it's predictable and challenging for some of our basic services, especially things like Metro Transit. All right. Thank you. -Thank you. And I will just close this out with a comment for the listening public. And in reference to some of the data points you presented on the impacts to the construction sector, looking at almost a 13% decline in the construction sector over the past year or so, wanting to note that I know this has been something that has been notable concern for my office, and it was an intention to ensure that we had a representative from the construction sector as a part of one of our earlier panels. That was an aspiration we had. We couldn't achieve it, unfortunately, given the holiday, but we are really keenly focused on working with the building trades to try and address this. It's a particularly concerning trend line to see, and so I want to make sure for any of the listening public that we want to ensure that we are engaging with the building trades moving forward as we navigate this time. And with that, I'm going to close out this agenda item and turn it back to Chair Balducci. -Thank you so much. The last agenda item, we have a few minutes remaining, is to open it up now to discussion for the panel on next steps. I'm going to take a brief privilege and just share my thoughts and then open it to everyone else. Obviously, given how heavily reliant our county and region are on trade and tourism, what we're hearing today is bound to start to show up in our tax revenue collections, in our economy. It's going to show up in ways that, as we heard today, it is already showing up in ways that impact the people who live here in terms of the cost of living. And so I think it's critical that we continue to understand these potentially profound negative impacts and that we prepare and work together. And this is just added on to the earlier discussions that I mentioned and that Chair Rinck mentioned about the ways in which grant funding, the federal government policies, the fact of layoffs, and just the sort of dynamic of we need to work with our federal partners in many ways, and sometimes there's nobody to pick up the phone when we call to work with them. And so the sort of compounding effect of federal activity is going to place an ever heavier weight, I think, on our ability to serve our people. And so I want to propose that we continue to work together as our county and our largest city, that we build a larger coalition, inviting in our other city partners and other organizations, maybe AWC, Association of Washington Cities, National League of Cities, Washington Association of Counties, National Association of Counties, red and blue partners, as I said before, and with business and labor partners. We have seen, as was mentioned earlier, that when certain economic sectors band together and speak to the federal government, they listen. So I think that we have the ability to be more effective. And then I think we should set the groundwork for our bases to act together by creating a set of guiding principles, things that we all agree and believe in, like we follow the rule of law, we speak together with a unified voice, we protect our immigrant neighbors because it's the right thing to do and because it's important for our economy and our workforce. We value data and research, and we understand the levers we have to respond, and we step in when we can. And I think that that is a good next step that I would like to propose. I'd like to put together some kind of a what-if draft of maybe some principles. We don't have to make them up. There are already these things being developed out there in the world, and I'd like to share them around with all of you afterward. That's my comment. I saw Councilmember Baron would like to add something. Please go ahead. -Thank you, Chair Balducci. Well, first of all, I want to thank both Chair Balducci and Chair Rinck for convening this. And I actually was somewhat surprised that it's been so long that we've come together, but I just want to say that this was really helpful, just having the two bodies here next to each other. We're close geographically in terms of where we meet, but we don't often come together physically to discuss these topics. So I hope this is the start of a new collaborative -- and I think we have been collaborative, but I just think it's helpful to actually have us be kind of directly next to each other. So I really appreciate the time. I agree with a lot of the comments that the Chair made. I would just add I think there's one aspect that we didn't get a chance to discuss, and of course there's so much to discuss that it is difficult to capture at all, but I wanted to just mention it because I'm seeing it here in community, and I would say it's kind of this, like, micro-impact, kind of micro-business impact, and especially just the disparities in terms of the potential economic impact of some policies that are happening at the federal level as well that are being felt locally. And part of the reason that I thought about this was just because yesterday I saw an announcement. There's an annual celebration of Colombian Independence Day. As some of you know, I'm originally from Colombia, so the Colombian community gets together to celebrate Colombian Independence Day. Last year it was in my district in Wendlet Park. This year's celebration, unfortunately, is being canceled. The Duwamish River Festival in Councilman Mosqueda's district is being canceled this year, and the reason for that is concerns about immigration enforcement, in part. I mean, there's concerns about other things, but that's part of the driver of these things. And so I just worry about, you know, it's a little hidden, right? It's not huge in the scheme of things of the billions of dollars that we talked about, but I just worry about, you know, the vendors who are planning to participate there. And I'm just hearing a lot from, you know, immigrant businesses, the reduction in impact. And so they're, of course, having to deal with all the other issues of tariffs and stuff like that, but that there is, when we were talking about sort of supporting those entities and the ways that the local governments can support those entities, just a recognition that there may be, you know, particular areas of our communities that are going to be disproportionately impacted because of the compounding effect of all the federal policies. And so I just wanted to highlight that because it gave me concern to see those, you know, not only because of, like, the community, you know, aspect of it, of coming together, but also just the economic impact for those folks who might be, that's a significant part of their business to be able to sell in these festivals. So I just wanted to highlight that as another issue that I hope we kind of keep track of as we see the impacts of the federal policies affecting us here locally. -Yeah, very, very true. It should be a principle that we all agree on that people who are peaceful and hardworking should be left to work and live in peace as opposed to be terrified into hiding, not cooperating with court orders and dates, not going to work, I mean, not going to school. We want people doing these things, and right now they're being scared out of doing them, and I think I agree 100%. Anyone else, final remarks? Final remarks, Chair Rinck, before we wrap. -Thank you for that, and thank you, Councilmember Baron, also for centering that because it's certainly something my office continues to hear about and see directly happening. The fear is so real, and there is a real feeling of helplessness happening right now as well about what we do about it, and so it will certainly involve some creative thinking, but I'm deeply concerned about the impact that this deportation agenda is having on our region and to our collective psyche, frankly. But thank you, Chair Balducci. I know when we had talked about prepping this meeting and thinking about, you know, we're both action-oriented people, so what next? How are we going to continue our work together? And the idea of developing kind of guiding principles is one that we've seen play out well in supporting regional coordination, like with our Affordable Housing Committee. And so I love the notion and the idea that we as two local governments work together on what are our kind of guiding principles and thinking about also what is our breaking point. When do we really sound the alarms and start developing an action plan or a course of action? I'd love if we could define that together and work on that together, because a lot is coming our way. And I also want to note that the convening of this meeting is very special. I know it's titled as a special meeting, but it really is special. According to the City of Seattle clerk, the last joint meeting between the two bodies of Seattle City Council and King County Council was over a decade ago, and it was concerning the viaduct replacement plan. So it's been a while. We should get together more often. And we are neighbors, and we're facing so many similar challenges. And I want to -- when thinking about topics for this meeting, you know, I think Councilmember Balducci framed this really well. You know, we wanted to have a dedicated session focused on regional economy, given that we are a port city, given that we are a trade-dependent state. There are so many jobs, so many union jobs, so many tourism-dependent jobs for our region that are now being impacted by federal policy changes and our local government revenues are deeply tied to all of those things. And so as our revenues are declining, coupled with cuts in federal funding, and we know just off the top, there's a few that come immediately to mind, SNAP, Medicaid, Continuum of Care funds, LIHEAP, and so many more. And so we really need to be working together as local governments, not only because we're stronger together, but for the sake of our residents. And the average resident may not know if something is funded by federal money, state money, county money, city money, but they will know when a food bank closes, when a health clinic closes, and we're going to be the first folks that they're coming to. And so as local government officials, I'm hoping that we can really spend some time problem-solving and working together as we weather this time, and I think today's committee meeting was a great start to that work. And so I want to thank Chair Balducci for your work with my office. I also want to thank Jeannie from your team for working so well with my team, and thank you to my policy director, Rachel, who's also clerking the meeting. Thank you, Rachel. Thank you to IT, who may not be in the room, but helped make all this possible. It was a lot of work on the technical front to make this possible. And I want to also thank our panelists for coming on out and being a part of this discussion and bringing your expertise. And lastly, I want to thank all of our colleagues that are here in person and online for participating in this session. I know it's the day after a holiday, and it was a big ask to make it happen, but deeply appreciate your participation. And again, thank you for coming in today. -Thank you so much. Thank you for doing the appreciation. I want to echo all of the thanks for everyone who participated in and made this meeting possible. I want to also just call out one more time my chief of staff, Jeannie McNabb, your policy director, Rachel Alger. You all worked so hard, I know, to pull this together, and we really appreciate you very much in all your efforts. That is the end of our agenda, and if there's no other business, we have two adjournments. I'll do the first adjournment. The King County Committee of the Whole is now adjourned. -Well, thank you. And we have reached the end of the City Council agenda. Hearing no further business to come before the committee, the Seattle City Council is adjourned.