FIN 2017-05-02 Item 2A - Ordinance - TMC Section 3.32.040 "Unbdgeted Equipment or Fixed Asset Items"

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City of Tukwila Allan Ekberg, Mayor TO: Allan Ekberg Finance Committee FROM: Peggy McCarthy, Finance Director BY: Craig Zellerhoff, Fiscal Coordinator DATE: April 26, 2017 SUBJECT: Update Tukwila Municipal Code by removing section 3.32.040 "Unbudgeted Equipment or Fixed Assets" ISSUE At the April 24, 2017 Committee of the Whole, the City Council referred the discussion of TMC 3.32.040 back to the Finance Committee for further discussion. BACKGROUND Staff is seeking Committee direction on how to appropriately streamline purchasing practices. Options that could be considered include: -- 1. removing section 3.32.040 "Unbudgeted Equipment or Fixed Assets" from the Tukwila Municipal Code (TMC) and repealing Ordinance No. 2245, (original staff proposal) 2. taking the action described in 1 above and reporting quarterly fixed asset purchases in the quarterly financial report, 3. taking the action described in 2 above and codifying the fixed asset reporting requirement. 4. leaving section 3.32.040, "Unbudgeted Equipment or Fixed Assets" in the Tukwila Municipal Code but increasing the cost threshold to $10,000 from $5,000, 5. taking the action described in 4 above except increasing the cost threshold to an amount other than $10,000, or 6. revising the interpretation of "unbudgeted" such that if an amount has been appropriated in the budget for capital or fixed asset items and sufficient appropriation exists to cover the proposed fixed asset purchase, the purchase then is deemed "budgeted" rather than "unbudgeted ". Council controls over procurement. Fixed Assets -- In November 1997, City Council adopted Ordinance No. 1817 establishing Chapter 3.32, Budget Provisions, which included section 3.32.040 "Unbudgeted Equipment or Fixed Assets". TMC 3.32.040 requires the approval of the Mayor and three affirmative votes of the respective Council Committee to approve the purchase of unbudgeted capital equipment or fixed assets, including components or services of items related to capital equipment or fixed assets. Fixed asset items were defined as costing at least $1,000 and having a useful life of at least two years. Ordinance No. 2010, adopted in December 2002, changed the minimum limit for capital equipment from $1,000 to $5,000. Other Goods and Services -- TMC section 3.32.030 "Bids" requires Council approval of all purchases $40 thousand and above. Interpretation of the term "unbudgeted". The term "unbudgeted" as it is used in Chapter 3.32.040 has been interpreted to mean any item that is not specifically identified and listed in the budget. It has been the City's practice to list in the budget only the anticipated vehicle purchases