Lacey presents investment portfolio, budget calendar

The City of Lacey Finance & Economic Development Committee held a meeting via Zoom this morning July 26, to discuss the second quarter investment report and 2023 budget calendar.

Finance Director Troy Woo presented financial reports to the committee and mayor.

“We have a very detailed report that has been prepared by the city’s investment advisor, Government Portfolio Advisors,” (GPA), based in Portland, Oregon, according to Woo. “The report includes a market outlook, it includes a section that shows our compliance with the adopted policy. Also, it shows all of the economic activity happening throughout the quarter,” Woo stated.

The committee received a summary of the city's total investment portfolio for the reporting period, and included the impacts of delayed financial processes on government projects.

“We need to be aware of the economic slowdown and lots of delayed projects. The Council knows as we've watched your supply chain issues and labor issues, and we've had our own internal staff turnover and labor issues. So the message is, let's try to catch up with all those projects that are kind of waiting in the queue for supplies and staff to get on board,” Woo added.

The core fund portfolio of Lacey slightly outperformed the benchmark for the investment strategy, giving the core fund's a net total return of -0.58% for the quarter, and the benchmark total return of -0.65% for the time period. The total portfolio is standing at an unrealized loss of $5,899,808 after the quarter. The JOLT is seeking further clarification on the significance of this potential loss.

Tax receipts and fee collections showed that, with a few exceptions, the local economy is resilient to the effects of the ongoing COVID-19 pandemic, owing to a strong second half of 2021 and ongoing signs of a reviving local economy, Woo reported.

For the development of the 2023 Budget calendar, the following statistics were released in a memo from City Manager Scott Spence, and Finance Director Troy Woo to the city of Lacey:

• The United States' national inflation rate was 8.3 percent in April and was lower than the previous month.
• When it increased interest rates by 0.50 percent at its meeting in May, the Federal Reserve made a serious effort to lower inflation. This rate increase's objective is to make the economy less dynamic. The objective of raising interest rates is to reduce borrowing and spending. The entire year 2022 is expected to see rates rise.
• Numerous supply constraints are still present in the US, which has an adverse effect on availability and raises inflation.
• The job market remained incredibly tight, which increased pressure on inflation and salaries. Despite continued job growth, the economy as a whole has yet to replace 1.2 million of the 22.3 million jobs lost during the pandemic's height in 2020.

According to the memo, while the 2023 Budget is being drafted, the economic situation is expected to change and become difficult to interpret due to geopolitical, inflation, workforce, supply, interest rate, inverted yield curves, and recession concerns.