HomeMy WebLinkAboutFIN 2018-07-17 COMPLETE AGENDA PACKETCity of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Finance Committee
FROM: Peggy McCarthy, Finance Director
BY: Laura Crandall, Finance Staff
CC: Mayor Ekberg
DATE: July 11,2018
SUBJECT: Revisions to Tukwila Municipal Code 3.48— Commercial Parking Tax
ISSUE
Recommendation for Council to modify Tukwila Municipal Code (TMC) 3.48 to: 1) Increase the
Commercial Parking Tax Rate and 2) add a penalty for late payment.
BACKGROUND
In 1998, the Tukwila City Council adopted Ordinance 1852 which provided for a five percent tax
to be levied on gross revenues generated by commercial parking lots in the City. Since the
adoption of the Ordinance, the taxation rate has remained unchanged. A public hearing on
proposed revisions was held on November 21, 2017 and the draft ordinance has been further
revised based upon comments at the hearing.
TMC requires that parking taxes be remitted on or before the last day of the month following the
month during which the taxes were collected. However, the Municipal Code does not outline a
penalty for late payments, and so there is no incentive for payments to be made on time.
DISCUSSION
The initial proposed revision included a rate change from 5% to 15%, with the new rate effective
January 1,2018. That Ordinance has been revised to include a more gradual schedule of
increase, shown below.
• January 1, 2019 8`3/0 tax
• January 1, 2020 11% tax
• January 1, 2021 15% tax
•
This change alleviates most of the concerns heard from the business community.
In addition, over 50% of parking taxes in Tukwila were paid late. Implementing a 10% late fee
would encourage businesses to submit taxes on time, improving the predictability of cash flow,
and bringing the parking tax penalty in line with penalties assessed for other City taxes.
FINANCIAL IMPACT
The following projected revenues are based on 2017 tax revenues collected at the 5% rate.
Projected Annual Commercial Parking Tax Revenue
2017 Actuals January 2019, 8% 2020, 11% 2021, 15%
214,493 $ 343,189 $ 471,885 $ 643,479 1
INFORMATIONAL MEMO
Page 2
RECOMMENDATION
The City Council is being asked to approve the parking tax ordinance and fee resolution and
consider these items at the July 23, 2018 Committee of the Whole meeting and subsequent
August 6, 2018 Regular Meeting.
ATTACHMENTS
Comparison of Cities Levying Commercial Parking Tax
Comparison of Tukwila Taxes and Late Fees
Draft Ordinance Repealing Ordinance 1852 and re-enacting TMC Chapter 3.48
Resolution Adding Appeal Fee
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AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, REPEALING ORDINANCE NO.
1852; REENACTING TUKWILA MUNICIPAL CODE CHAPTER
3.48, "COMMERCIAL PARKING TAX," RELATING TO THE
LOCAL OPTION TRANSPORTATION TAX TO INCREASE THE
TAX RATE AND ADOPT A PENALTY FOR LATE PAYMENT;
PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN
EFFECTIVE DATE.
WHEREAS, pursuant to RCW 82.80.030, the City of Tukwila is authorized to fix and
impose a parking tax on all persons engaged in a commercial parking business within its
respective jurisdiction; and
WHEREAS, in 1998 the Tukwila City Council adopted Ordinance No. 1852, pursuant
to RCW 82.80.030, to levy a 5% parking tax on all commercial parking businesses within
the City; and
WHEREAS, the City Council has determined that a rate increase is warranted as the
City has a substantial need to increase tax revenue in order to discharge the expected
expenses and obligations of the City, and based on review of neighboring cities' tax rates,
and noting that the current tax rate has not been altered since its adoption 20 years ago;
and
WHEREAS, in addition to a rate increase, the Council desires the adoption of a
penalty for late payment, as the timely payment of the tax is difficult to enforce absent a
late penalty and nearly 50% of parking taxes in 2016 were remitted to the City after the
due date, and it is standard practice for City taxes to include a penalty for late payment in
order to provide stability for the City's budgeting purposes; and
WHEREAS, the City held a duly noticed public hearing on this tax increase on
November 27, 2017;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
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Section 1. Repealer. Ordinance No. 1852, as codified at Tukwila Municipal Code
Chapter 3.48, is hereby repealed in its entirety.
Section 2. TMC Chapter 3.48 Reenacted. Tukwila Municipal Code (TMC) Chapter
3.48 is hereby reenacted to read as follows:
CHAPTER 3.48
COMMERCIAL PARKING TAX
Sections:
3.48.010 Definitions
3.48.020 Exemptions
3.48.030 Local Option Transportation Tax Imposed
3.48.040 Tax in Addition to Other License Fees or Taxes
3.48.050 Exempt Vehicles
3.48.060 Taxes Collected by Business Operators
3.48.070 Late Penalty
3.48.080 Use of Fund
3.48.090 Application Liability and Reporting
3.48.100 Violation/Penalty
3.48.110 Appeal Procedure
Section 3. TMC Section 3.48.010 is hereby reenacted to read as follows.
3.48.010 Definitions
The following definitions shall apply throughout this chapter:
"Commercial parking business" means the ownership, lease, operation or
management of a commercial parking lot in which fees are charged for parking.
"Commercial parking" means any transaction or arrangement whereby a
vehicle is parked and a fee is charged for parking or allowing the vehicle to be parked.
Commercial parking shall include instances where a fee is charged specifically
for the parking of a vehicle. This shall include any business which uses part or all of its
area to park vehicles for a fee where no other service, lodging or business is being
provided or conducted in conjunction with the parking of the vehicle.
Commercial parking shall also include instances such as when a guest of a hotel,
motel or other lodging establishment is allowed to park or leave his/her vehicle before or
after his or her lodging or business stay there so that, for a fee, the guest's vehicle is
parked at the hotel, motel or other lodging establishment during days when the guest is
no longer staying there.
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Section 4. TMC Section 3.48.020 is hereby reenacted to read as follows:
3.48.020 Exemptions
The following exemptions to the commercial parking tax are allowed:
Local employee parking, with parking spaces provided or reserved for use
by an employee who works within the City, where the employee parks his or her vehicle
in connection with his or her employment, without regard to whether arrangements or
payment for the parking is made by the employee or by his or her employer.
Apartments and condominiums, where parking is provided in conjunction
with arrangements for residential living spaces.
Offices, retail establishments, warehouses and industrial buildings,
where parking is provided in association with tenant arrangements for the use of such
facilities.
Section 5. TMC Section 3.48.030 is hereby reenacted to read as follows:
3.48.030 Local Option Transportation Tax Imposed
There is hereby levied a special local option transportation tax to be imposed in
connection with commercial parking businesses within the City. The tax shall be imposed
at the rate of 544 8% of the gross revenues generated by non-exempt commercial parking
charges and fees effective January 1, 2019, and then as follows:
January 1, 2020: 11% of the gross revenues generated by non-exempt commercial
parking charges and fees
January 1, 2021 15% of the gross revenues generated by non-exempt commercial
parking charges and fees
Section 6. TMC Section 3.48.040 is hereby reenacted to read as follows:
3.48.040 Tax in Addition to Other License Fees or Taxes
The tax levied under this chapter shall be in addition to any license fee or tax imposed
or levied under any law, statute or ordinance whether imposed or levied by the City, State
or other governmental entity or political subdivision.
Section 7. TMC Section 3.48.050 is hereby reenacted to read as follows:
3.48.050 Exempt Vehicles
The tax shall not be levied on vehicles with official State disabled person decals,
government vehicles which are exempt from tax, and tax-exempt carpool vehicles.
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Section 8. TMC Section 3.48.060 is hereby reenacted to read as follows:
3.48.060 Taxes Collected by Business Operators
Taxes imposed herein shall be collected by the operators of the commercial parking
businesses, and shall be due and payable to the City in monthly installments. The
operators of the commercial parking businesses shall remit to the City the local option
transportation taxes collected on or before the last day of the month following the month
during which the taxes were collected. The City shall be authorized to review and inspect
financial records involving activities of businesses which are taxable by this tax, at least
quarterly each year.
Section 9. TMC Section 3.48.070 is hereby established to read as follows:
3.48.070 Late Penalty
If a Commercial Parking Business subject to this tax fails to pay any tax required by
this chapter within 15 days after the due date thereof, there shall be added to such tax a
penalty of 10% of the tax per month for each month overdue, which shall be added to the
amount of the tax due.
Section 10. TMC Section 3.48.080 is hereby reenacted to read as follows:
3.48.070080 Use of Fund
All revenues, assessments and other charges generated and collected as local option
transportation taxes shall be placed in the City's 104 Bridge and Arterial Street Fund, to
be used for transportation purposes within the Transportation Element of the Tukwila
Comprehensive Transportation Plan, in accordance with RCW 82.80.070; and to be used
for administration of the tax, including those activities of the City in keeping and tracking
records, financial reports and other documents, reviewing filings and compiling reports by
commercial parking businesses, and other activities involved in collection and
enforcement of the tax.
Section 11. TMC Section 3.48.090 is hereby reenacted to read as follows:
3.48.040090 Application-and-Liability and Reporting
A. Any commercial parking business shall procure from the City an annual
certificate of registration, the fee for which shall initially bc $1.00, and it shall be posted in
t- e e. e-e
without a fee.
with a completed application, and with the name and address of any owners or Icrocco
e •
All owners and lessees shall have joint liability for the collection and remittance to the City
of parking taxes and they shall bc notified of their joint liability for collection and remittance
of such tax.
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A. All officers, directors and managers of any organization or association operating
a Commercial Parking Business, including owners and lessees of a parking facility used
for Commercial Parking, shall be iointly and severally liable for the payment of said tax,
penalties, and any fine imposed under this chapter
GB. The Finance Director shall have the power to adopt rules and regulations not
inconsistent with the terms of this chapter for carrying out and enforcing the payment,
collection and remittance of the tax herein levied; and a copy of the rules and regulations
shall be on file and available for public examination in the City Clerk's officeCity of Tukwila
Finance Department.
Section 12. TMC Section 3.48.100 is hereby reenacted to read as follows:
3.48.040100 Violation/Penalty
It is unlawful for any person, firm or corporation engaged in a Ceommercial pParking
bBusiness to fail or refuse to collect and remit parking taxes as required by the provisions
of this chapter or to gain for himself or herself some advantage or benefit from the tax,
whether direct or indirect. Any such violation shall constitute a misdemeanor and shall
be punishable by a fine not to exceed $1,000 and/or by imprisonment not exceeding 90
days. Any such fine shall be in addition to any tax and penalties required.
Section 13. TMC Section 3.48.110 is hereby established to read as follows:
3.48.400110 Appeal Procedure
Any person aggrieved by the amount calculation of the tax determined to be due
to the City pursuant to this chapter may appeal to the Finance Director or his/her designee
from such determination by filing a written notice of appeal with the City Clerk within 20
calendar days from the date on which such person was given notice of the tax. The notice
of appeal must state the grounds for appeal, including a detailed explanation of why the
amount of the tax was incorrect. The Finance Director or designee shall, as coon ac
practicable, fix a time and place for the h aring for such appeal. Notice of the hearing
e -
the date of the hearing review the basis for the appeal, and may request clarification from
the appellant. After the review is complete, the Finance Director or designee shall issue
an administrative decision that may sustain or modify the amount of tax owed. Notice of
the administrative decision shall be sent to the appellant by certified mail within 10 days
of issuance.
The appellant, if aggrieved by the decision of the Finance Director or designee,
may then appeal to the City Hearing Examiner within 20 calendar days of the date of-the
administrative decision is mailed to the appellant. The notice of appeal must state the
grounds for appeal, including a detailed explanation of why the administrative decision is
incorrect. The notice of appeal must be accompanied by an Appeal Fee in accordance
with the fee schedule adopted by resolution of the City Council.
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Upon timely filing of a notice of appeal, the Finance Director shall schedule a
hearing on the appeal before the City's Hearing Examiner. The hearing shall be
conducted no later than 30 days from the date of the notice of appeal, unless an extension
is agreed to by the appellant or otherwise ordered by the Hearing Examiner for good
cause shown. Notice of the hearing and the appeal shall be given to the appellant by
certified mail at least five days prior to the date of the hearing.
The hearing shall be governed by the City of Tukwila Hearing Examiner's
procedural rules. The hearing shall be de novo. The decision of the City's Hearing
Examiner or other hearing body shall be based upon a preponderance of the evidence. The
burden of proof shall be on the appellant. The Hearing Examiner or other hearing body
may affirm, reverse or modify the Finance Director's decision.
Within 20 business days, excluding holidays recognized by the City of Tukwila,
from the date of the hearing on an appeal under this section, the Hearing Examiner shall
issue a written decision which shall set forth the reasons therefor.
Section 14. Corrections by City Clerk or Code Reviser. Upon approval of the
City Attorney, the City Clerk and the code reviser are authorized to make necessary
corrections to this ordinance, including the correction of clerical errors; references to other
local, state or federal laws, codes, rules, or regulations; or ordinance numbering and
section/subsection numbering.
Section 15. Severability. If any section, subsection, paragraph, sentence, clause or
phrase of this ordinance or its application to any person or situation should be held to be
invalid or unconstitutional for any reason by a court of competent jurisdiction, such
invalidity or unconstitutionality shall not affect the validity or constitutionality of the
remaining portions of this ordinance or its application to any other person or situation.
Section 16. Effective Date. This ordinance or a summary thereof shall be published
in the official newspaper of the City, and shall take effect and be in full force five days
after passage and publication as provided by law.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at
a Regular Meeting thereof this day of , 2018.
ATTEST/AUTHENTICATED:
Christy O'Flaherty, MMC, City Clerk
APPROVED AS TO FORM BY:
Allan Ekberg, Mayor
Filed with the City Clerk:
Passed by the City Council:
Published:
Effective Date:
Ordinance Number: Rachel B. Turpin, City Attorney
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RAFT
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, ADOPTING A FEE SCHEDULE FOR TUKWILA
MUNICIPAL CODE CHAPTER 3.48, "COMMERCIAL PARKING TAX."
WHEREAS, the City Council intends to remove specific amounts for fees and
charges from the Tukwila Municipal Code in favor of a City-wide fee resolution; and
WHEREAS, the updated commercial parking tax ordinance references an appeal
process, including an appeal fee, which will be included as part of the City-wide fee
resolution;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY RESOLVES AS FOLLOWS:
Fee Schedule. The following fee shall be charged to appellants by the City of
Tukwila Finance Department to appeal a commercial parking tax decision:
Type of appeal Fee
Hearing Examiner Appeal Fee
TMC 3.48.110
$250.00
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON,
at a Regular Meeting thereof this day of , 2018.
ATTEST/AUTHENTICATED:
Christy O'Flaherty, MMC, City Clerk Verna Seal, Council President
APPROVED AS TO FORM BY:
Filed with the City Clerk:
Passed by the City Council:
Resolution Number:
Rachel B. Turpin, City Attorney
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City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Finance Committee
FROM: Peggy McCarthy, Finance Director
CC: Mayor Ekberg
DATE: July 11, 2018
SUBJECT Business & Occupation (B&O) Tax Next Steps
ISSUE
During its review of the Public Safety Plan financing, the Committee requested additional
information on B&O taxes, ultimately deciding to re-evaluate with regard to the General Fund.
This is a follow up to the April 17, 2018 briefing where the Committee requested additional
information about scaling the tax to be higher for larger commercial businesses and the
personnel cost for various thresholds.
BACKGROUND
Sales tax revenue has not grown in the past two years at the rate anticipated or budgeted.
Additionally, the State's sales tax mitigation payments of approximately $1.1 million annually will
cease in 2019 based on a decision by the state legislature. These two revenue shortfalls have
the potential to create a more than $2 million annual budget gap. This budget gap was discussed
with the Finance Committee in February through May in connection with the Public Safety Plan
financing. Funding options comprise new and increased revenues in addition to expenditure
reductions, including:
Establish a B&O tax, $700K - $3 million
Increase the gambling tax rate by 1% - 5%, potential revenue $380K - $1.9 million
Transportation Benefit District car tabs, $200K to $500K
Increase other tax rates to the extent allowed without voter approval
Reduce General Fund operational expenditures across-the-board
Reduce General Fund operational expenditures based on Priority Based Budgeting
Reduce the General Fund contribution to the CIP by $500,000 annually
The B&O tax provides the greatest potential additional revenue. B&O Tax rates are calculated on
gross receipts multiplied by the tax rate set by government. The rate can be set at 0.2% or lower.
An exemption threshold exempts businesses with gross receipts below the threshold from B&O
tax. The lower the exemption threshold, the higher the number of returns to process since a
greater number of businesses are subject to the tax. The four major business sectors subject to
the tax are:
retailing, 3 manufacturing
wholesaling, 4 service and other activities.
Taxation rates can vary across sectors, but not within them. Out of the 43 cities in the State with
a B&O tax, 16 have varying rates from sector to sector; with the remainder having one rate for all
sectors. Some cities have structured their rates to encourage growth in a specific sector. Table 1
shows the rates and thresholds for some Puget Sound cities and for the State.
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INFORMATIONAL MEMO
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Table 1. B&O Tax Rates, Puget Sound Cities and Washington State
Location
Burien
Des Moines
Kent
Renton
Shoreline
WA State
Year
Implemented
2007
2004
2013
2016
2019
Manufacturing
Rate
0.001
0.002
0.00046
0.00085
0.001
0.00484
Retail Rate
0.001
0.002
0.00046
0.00050
0.001
0.00471
Services
Rate
0.001
0.002
0.00152
0.00085
0.002
0.015
Wholesale
Rate
0,001
0.002
0.00152
0.00085
0.001
0.00484
Exemption
Threshold
(Annual)
$ 200,000
$ 75,000
$ 250,000
$ 500,000
$ 500,000
$20,000
Administering a B&O tax can be complex. Some businesses may engage in multiple activities,
requiring them to report in more than one classification. Depending on whether a business is
required to file quarterly or annually, a business may be subject to taxation in one quarter, but not
in others.
Cities surveyed by staff — Kent, Renton and Shoreline - established a revenue target and set
taxation rates and threshold based on their projections. Both Kent and Renton collected more tax
than projected; Shoreline's tax goes into effect in 2019. Once the cities had been through a budget
cycle, projections became more accurate. One city's initial target revenue was $5 million, and
their actual collected was over $9 million. Another city's target revenue of $3 million resulted in
over $4 million collected.
All cities queried hired additional staff for implementation and ongoing administration. The City of
Kent has the highest number of returns and employs four full time B&O tax staff: two field auditors,
one customer service specialist, and another in-house auditor. Table 2 shows number of staff,
program costs, and number of filings for three cities.
Table 2: Staffing, Costs, and # of Filings by City
City FTE Program Cost # of Filings
Quarterly Annual
Kent $780,000 4,000 N/A
Renton 1 $250,000 N/A 1,200
Shoreline 1 $245,000' N/A N/A
1 Estimated. Source: 12/4/2017 City of Shoreline Staff Report.
DISCUSSION
Adoption of a B&O tax could close the budget gap created by the sales tax and sales tax mitigation
revenue shortfall and continue to diversify and stabilize revenues. Additional revenue could reach
$3 million or more. See Table 3 provides a range of revenue estimates.
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INFORMATIONAL MEMO
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Table 3. Annual Projections for Tukwila based on 2017 Sales Tax
Receipts*
Rate $200,000 Threshold $500,000 Threshold
0.00050 $807,398 $760,720
0.00085 $1,372,577 $1,293,224
0.001 $1,614,796 $1,521,440
0.002 $3,229,593 $3,042,881
Estimated # of
Taxpayers 941 575
*Tukwila 2017 sales tax data set. Assumes 80% of total subject to the tax.
Based on initial analysis and research, staff recommends the following should Council decide to
pursue a B&O tax:
apply the same rate among all sectors for simplicity in filing,
establish a $500,000 threshold to exempt smaller businesses and reduce the number of
returns to be processed,
adopt a rate of .15% to .2% to ensure budgetary goals are met and,
collect the tax on a quarterly basis to enhance the City's cash flow.
A potential timeline and action plan follows should work on implementing a B&O tax in the City of
Tukwila continue:
Timeframe Action Item By Whom
July and August, 2018 Outreach to businesses Staff
August 21, 2018 Finance
Committee Meeting
Ordinance review, policy decisions on:
Tax rates,
Exemption threshold,
Reporting frequency
Council Finance
Committee
September 4, Council
Regular Meeting
Ordinance approval Full City Council
September through
December 2018
FileLocal Agreement — taxpayer portal Staff
Acquire software for interface between FileLocal
and EDEN accounting system
Staff
Recruit for B&O tax analyst Staff
Continue outreach and communication with
business community
Staff and City
Council
January 1,2019 Legislation becomes effective. nia
RECOMMENDATION
The Committee is being asked to provide direction on the next steps that should be undertaken,
if any, to establish and institute a Business & Occupation tax for the City.
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City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Finance Committee
FROM: Stephanie Brown, Human Resources Director
CC: Mayor Allan Ekberg
DATE: July 11, 2018
SUBJECT: Review of Compensation Policy Resolution No. 1796
Note: Because this topic is building on previous Committee meetings, the original memo has
been updated in underline font below. This intent is to continue to preserve the information from
one meeting to the next given that each discussion will build upon the previous.
ISSUE
The City Council and Administration have committed to review and discuss Resolution No. 1796, which
sets policy for compensation and benefits for City employees.
BACKGROUND
Beginning in the 1980's, the City Council adopted various resolutions regarding compensation policy.
These resolutions focused on several common themes including:
An overarching goal to maintain a competitive position in the market place;
The desire to select and to retain a competent and productive work force;
The compensation system should reflect average compensation among the various employment
markets in which the City competes for qualified labor;
Provides that classifications shall be based upon the Decision Band Method (DBM), for the
represented and non-represented employees;
A comparative analysis for all positions shall be determined based upon internal and external
factors;
A mix of wages and benefits shall be provided based on the average or above average of the
defined market.
These resolutions have since been updated and replaced over time, with many of these provisions carrying
forward over the years.
In 2013, Resolution No, 1796, was adopted which sets core value statements, specifically that the City
desires to utilize standardized policies, procedures and processes whenever possible for compensating all
employee groups, both non-represented and represented.
From the Human Resources perspective, since the adoption of this policy in 2013, it has been effectively
used as a guide and serves to establish criteria for use when conducting analysis for salary and benefits. In
the Collective Bargaining process, it has been objective; manageable, fair, representative of the market to
which you chose to compare; used in good faith under our bargaining statue RCW 41.56; reduces the
comparisons to those groups that are represented; sets parameters for pay and benefit considerations; it
guides the pit-collective bargaining process as to what the City expects to receive for consideration in
preparation for labor negotiations.
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INFORMATIONAL MEMO
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As it relates to the classification of new positions and the reclassification of existing positions, it provides
the external market criteria based upon assessed valuation +1- 50% that we have been able to benchmark
our positions to fairly consistently; provides consideration for internal comparability; identifies the data
collection resources to use when conducting external market analysis; sets parameters for when a market
study will be conducted and when a cost of living adjustment will be considered.
The challenges we have experienced have generally been when we have positions that we are not able to
find benchmark comparators for based upon the duties of the position (standard for a valid match is 5
positions). In addition, recently when the market for a certain position was highly competitive, we were
not able to attract qualified applicants.
During these times we look for creative, innovative and strategic ways to attract qualified applicants such
as offering hiring bonuses. This has also been an effective recruitment strategy with our Civil Service
positions.
Given that some areas of Resolution No. 1796 are silent, addressing those silent areas would provide
more clarity and an objective methodology to use for anomalies that may occur. Administration proposes
consideration of the following for discussion with the Council. This list is not all inclusive as there could
be other items the Council wants to consider.
I. Above and Below Market adjustments - specifically define what compensation standard would be used
to set parameters for adjustment of wages when positions are above or below market.
Compression — establish a definition within the resolution that defines what it means, and what
methodology will be used to address compression when it occurs.
Comparability — review the current methodology specifically as it applies to the external market for
non-represented positions.
Recruitment — review what barriers exist when it is a highly competitive external market, and ways to
attract and retain future employees.
Follow Up from the March 20, Finance Committee Meeting:
At the March 20, Finance Committee meeting, Committee members requested the following components
be included in the analysis and review
An updated market study;
Input and recommendations from the non-represented employee groups;
Background and evaluation of decision band methodology;
Analysis on gender neutrality, desk audits, and appeal process, performance reviews and
Merit pay;
Understanding of compression and when it has been an issue.
In addition, the Council committee requested that Administration provide a revised timeline for review
and adoption of changes to Resolution No. 1796 by the full City Council: The schedule below meets the
Council requests for a compensation workshop for the Council and for a deadline of September.
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May 22 -
June (TBD)
July 3
July 17 -
August 7-
August 21 -
September 4-
September 10-
September 17-
Review the revised timeline with the Committee and address any additional
considerations to Resolution 1796;
Conduct a compensation workshop for the City Council
Committee discussion:
review Compensation workshop and next steps
review non-represented employee input
Review and discuss 2017 data of the external market study
Finalize scope of policy review of Resolution 1796
Review and discuss updated 2018 data for the external market study
(Note AWC 2018 Data results are published end of July)
Review and discuss committee considerations
Review and discuss committee considerations (if necessary)
Finalize recommendations for City Council consideration
Bring recommendations to the City Council for review and discussion;
Adoption of changes to Resolution No. 1796 for implementation
Update from Compensation Work Session- 6/19/18:
A work session was held with the City Council on June 19. Mr. Bruce Lawson, Compensation
Consultant from Gallagher Benefit Services, Inc provided a presentation on Methods of Job Evaluation
Alternatives, How to Determine Salaries. The purpose of this work session was to provide background
on compensation philosophies to new Council members and to receive feedback from the full Council to
inform the Finance Committee's ongoing review of the City's compensation policy as established by
Resolution No. 1796.
The presentation covered the follow objectives:
The history ofjob evaluation
The role of job evaluation
Selecting a job evaluation tool
Alternative job evaluation approaches
Whole Job Ranking
Market Pricing
Point Factor
Factor Comparison
Decision Band
Market Premiums
Pay Compression
Market Competitiveness
The consultant reviewed with the City Council the process used to evaluate jobs under whole job ranking,
market pricing, point factor, factor comparison, and the Decision Band Method the current system used
by the City. Job Evaluation under the Decision Band Method is based upon six broad band decisions. Mr.
Lawson explained that the advantage of this type of evaluation method is to determine job content, and to
create a hierarchy of jobs for internal equity, and of skill, effort, responsibility and working conditions.
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In addition, Mr. Lawson addressed the issue of pay compression, when it occurs, and that compression
cannot be totally mitigated. He added that pay compression call be managed by the ratio percentage
allocated in the pay structure. He concluded the presentation with discussion on when a market premium
is appropriate to implement, specifically when you want to attract and retain jobs that are competitive in
the labor market. Given the current construction climate occurring in this region and that it is hard to
attract positions such as Building and Construction Inspectors, he suggested it may be a good option.
Mr. Lawson reviewed with the Council the definitions of market competitiveness and that is occurs when
your external market data reflects when your pay is highly competitive, possibly misaligned; or
significantly misaligned requiring review to determine if the job evaluation is appropriate.
Councilmember Quinn lead the discussion of the review and discussion of Resolution No. 1796
requesting input from the City Council. Council members have requested that the Finance Committee
consider and discuss COLA and market adjustments; compression; positions above and below market,
and new incentives.
At the Finance Committee meeting on July 5, the committee will review non-represented employee input,
the external market study data for 2017, and next steps for further review of Resolution No. 1796.
Follow up from the July 5th , Finance Committee Meeting:
At the July 5, Finance Committee meeting, a summary review of the topics covered at the compensation
workshop with the consultant on June 19, was provided. The Finance Committee agreed with the
outcomes from the work session and for the following topics to go forward for further discussion in
review of Compensation Resolution No. 1796:
Compression
Above and Below Market Adjustments
Comparability
Recruitment incentives
Review of non-represented employees' input was provided. They would like the Finance Committee to
consider the following areas in their review of the compensation policy:
Comparability based on cities with similar services, number of employees, and assessed values
double or 1/2 the size of Tukwila.
Process for improving non-represented compensation changes, for example, review possibility of
making changes as part of the budget process.
Compression — agreed that this should be an area of review.
Conduct a full market survey of all non-represented positions.
Review incentives at hiring to attract and retain qualified applicants.
The Finance Committee discussed the non-represented employee input, appreciated the ongoing input
and stated the committee would take the information provided into consideration.
The Finance Committee would like more information on what other cities do to recruit and retain
employees. Staff will work to have this information available with the updated 2018 external market
study at the August 7, meeting for review and discussion.
As requested at the March 20, Finance Committee meeting, Human Resources staff conducted a market
study for non-represented positions on 2017 data. The data was collected in line with Resolution 1796's
process of using comparable Puget Sound jurisdictions of +1-50% AV and are the same cities that were
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used in represented negotiations. Benchmark non-represented positions were chosen for a representative
sample of the range of DBM bands from low to high. The regression analysis run on the data by the
compensation consultant showed a strong correlation between the market data and City data and resulted
in a trend line that indicates non-represented wages are overall in alignment with the market. The COLA
adjustments in the past two years have kept us on pace with the market. For 2018 the average general
wage increase provided by the chosen assessed valuation cities ranged between 2.5% to 3.0%. Tukwila
provided a 2.7% COLA in 2018.
At the Finance Committee meeting on July 17, the committee will finalize the scope of policy review of
Resolution 1796.
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