FIN 2018-11-06 Item 2D - Resolution - Update Financial Planning Model and Other General Financial Policies

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City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Committee FROM: Laurel Humphrey, Council Analyst CC: Mayor Ekberg DATE: October 24, 2019 SUBJECT: Resolution updating Financial Planning Model and other General Financial Policies ISSUE Financial Policies are adopted by Council Resolution and included as appendices in the adopted Budget and Capital Improvement Program. Policies are reviewed on a regular basis and updated as needed. DISCUSSION The City's Financial Policies represent values and expectations for financial planning, budgeting, accounting, reporting and other management practices. Revisions for the 2019-2020 biennium are proposed to include two new policies and housekeeping adjustments to the others. Proposed New Policy: FP-7 For the purpose of compliance with Tukwila Municipal Code Section 3.32.040, "Unbudgeted Equipment or Fixed Assets," "unbudgeted" shall mean when a department's capital asset line item has insufficient budget for the desired purchase. Capital equipment or fixed asset purchases between $5, 000 - $39, 999 are not subject to TMC 3.32.040 and do not require Council Committee approval if there is sufficient budget, unless there is a policy implication. This policy was requested by the 2017 Finance Committee. Last year, in an effort to streamline purchasing practices, Administration proposed removing Tukwila Municipal Code 3.32.040, "Unbudgeted Equipment or Fixed Assets." TMC 3.32.040: Unbudgeted Equipment or Fixed Assets Any unbudgeted capital equipment or fixed asset item, including components or services of items, shall be approved by the Mayor and three affirmative votes of the respective Council committee assigned to the requesting department. "Fixed asset" items are defined as costing at least $5,000 and having a useful life of at least two years." This provision requires Committee approval of certain purchases costing between $5,000 - $39,999 that have not been specifically listed in the budget, and has included items such as replacement treadmills, a striping machine, and a mobile evidence device. The Committee was not comfortable ceding this authority and did not support removing that section from the TMC. However, they did support streamlining processes and making efficient use of Council time, and so requested a financial policy that clarifies the interpretation of TMC 3.32.040 to mean that if sufficient appropriation exists to cover the purchase, it is deemed budgeted. Unbudgeted will mean that the department's capital asset line item has insufficient budget for the desired purchase. Again, this will only apply to items under $40, 000 as anything above that requires Council approval. The Committee was also clear that any purchase with a policy implication should be reviewed by Council. An example of this would be the Police Department's $39,000 purchase of unmanned aircraft systems in 2017. 73