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Home My WebLink About2018-08-21 Finance Minutes City of Tukwila City Council Finance Committee FINANCE COMMITTEE Meeting Minutes August 21, 2018 5:30 p.m. Hazelnut Conference Room, City Hall Councilmembers: , Chair; Dennis Robertson, Kate Kruller Staff: David Cline, Brandon Miles, Stephanie Brown, Erika Eddins, Peggy McCarthy, Vicky Carlsen, Jeff Friend, Wynetta Bivens, Bruce Linton, Chris Flores Guests: Andrea Reay, Seattle Southside Chamber of Commerce; Becky Smith, Unibail- Rodamco-Westfield Southcenter CALL TO ORDER: Committee Chair Quinn called the meeting to order at 5:30 p.m. I. PRESENTATIONS II.BUSINESS AGENDA A. Business & Occupation (B&O) Tax Revenue Considerations Staff presented additional information about a B&O tax as requested by the Committee in July. Because sales tax revenue is flattening and sales tax mitigation payments are ending, the City is facing revenue shortfalls with a potential budget gap of more than $2 million. Of options previously discussed, a B&O tax would provide the greatest additional revenue. B&O tax rates are calculated on gross receipts and a city can provide an exemption threshold. 43 cities in Washington State have a B&O tax with varying approaches, and varying costs associated with staffing and implementation. Staff estimates that a B&O tax could provide revenue between $700K - $3 million. Staff presented answers to questions previously raised, outreach efforts to date, draft ordinances, other options, an implementation timeline, and a draft communications plan. Chair Quinn reiterated that the Committee is still investigating this topic and may or not make a recommendation to move forward. Councilmember Robertson asked for an example of how the City of Kent handles warehousing with its B&O tax, and he is interested in this because of heavy truck impact to roads. One of the alternative options proposed is to raise the gambling tax by 1%, and he wonders if that would drive out those establishments. Staff indicated that they would do outreach to find out. Councilmember Kruller stated that she opposes a B&O tax. Chair Quinn would like information about providing different rates for nonprofits and small businesses. Councilmember Robertson pointed out that Renton dedicates its B&O revenue to the arterial street fund. Chair Quinn invited public comment, and Ms. Reay stated that she feels optimistic about the work the Chamber is doing toward the streamlined sales tax issue and finding relief for impacted cities. She noted that business outreach takes time and the Chamber could be a partner in this. Ms. Smith stated that the proposed timeline is very aggressive and is concerned about the impacts as the mall is experiencing its highest retail traffic in its history. She appreciates that the City is also considering alternatives. Chair Quinn stated that the discussion will continue in committee and in a work session and he thinks looking at sales tax revenues by categories will help with decision making. RETURN TO COMMITTEE. FinanceCommittee Minutes...................................................................................................................................August 21,2018 B. Ordinance and Resolution: Updating Commercial Parking Tax Staff is seeking Council approval of an ordinance and resolution to amend Tukwila Municipal Code 3.48 to gradually increase the commercial parking tax from 5% to 15% and impose a late penalty of 10% per month. The Committee of the Whole sent the legislation back to Committee, asking for information on the legality of exempting nonprofits based upon public comment received. Staff presented an option that would retain the 5% rate for nonprofits operating on City property, which would currently apply only to Starfire Sports. Doing so would reduce projected revenue by approximately $10K in 2019, $21K in 2020, and $36K in 2021. To offset this revenue loss, the tax could be increased in two steps rather than three, going to 10% in 2019 and 15% in 2020. Councilmember Robertson spoke in favor of exempting Starfire with the two- step increase. Councilmembers Quinn and Kruller supported exempting Starfire with the three- step increase. Staff will draft the ordinance reflecting this majority recommendation and present it to the Committee of the Whole. MAJORITY APPROVAL. FORWARD TO AUGUST 27, 2018 COMMITTEE OF THE WHOLE. C. Employee Compensation Policy Staff presented policy recommendations in the areas of above and below market adjustments, comparable cities, compression, recruitment incentives, and compensation review process for non-represented employees. Staff also performed a market study with the newly released 2018 salary data from AWC and the results show that the City is still close to the market and considered competitive. Councilmember Robertson requested that the table in Exhibit A be updated to include cities +60% assessed valuation. He requested that the table in Exhibit B include columns showing population and percentage change. Chair Quinn said these should be additional tables not to replace those already in the Exhibits. DISCUSSION ONLY. RETURN TO COMMITTEE D. 2018 2nd Quarter Financial Report nd 2018 2 Quarter Financial Report which captures the general state of financial affairs and highlights significant items and trends. General Fund results are positive with an increase in fund balance of $3.2 million, and revenues of $32.7 million coming in close to budget. Sales tax collected through May reflects a 4% year over year increase, and admission tax and building permit fees are both strong. Departmental under expenditures reached almost $2 million. Councilmember Robertson asked that the revenue table on page 75 call out retail sales tax by itself in a new line or a footnote. Chair Quinn would like a better understanding of the 3% departmental reductions to be discussed at the upcoming budget work session. Committee members also asked for an explanation of the decline in utility tax. DISCUSSION ONLY. E. 2019-2020 Biennial Budget: City Council Staff presented the proposal for the 2019-2020 City Council departmental budget, which includes salaries and wages, benefits, supplies, and services. As the City is transitioning to islative OversightBudget Oversight may be pulled out into its own category for the purpose of scoring s. The proposed Council budget includes reductions FinanceCommittee Minutes...................................................................................................................................August 21,2018 in travel and supplies. Councilmember Robertson asked why Profession Services increased significantly after 2016, and staff replied this is to cover the Public Safety Plan Program Management Quality Assurance consultant, Steve Goldblatt. The Committee asked for a note in the document to explain that. DISCUSSION ONLY. FORWARD TO AUGUST 27, 2018 COMMITTEE OF THE WHOLE. III.MISCELLANEOUS Adjourned at 7:21 p.m. Committee Chair Approval Minutes by LH