HomeMy WebLinkAbout2018-09-11 Special Minutes - 2019-2020 Biennial Budget Work SessionCity of Tukwila
City Council
Work Session - 2019-2020 Budget
Location: Council Chamber
Date: September 11, 2018
Start: 6:03 p.m.
End: 8:04 p.m.
PRESENT
City Council: Verna Seal, Dennis Robertson, Kathy Hougardy, De'Sean Quinn, Kate Kruller,Thomas
McLeod, Zak Idan
Staff: David Cline, Laurel Humphrey, Peggy McCarthy, Vicky Carlsen,Jeff Friend, Rick Still, Rachel
Bianchi, Joseph Todd, Mia Navarro, Henry Hash, Bruce Linton, Derek Speck, Nora Gierloff
Welcome
Finance Committee Chair Quinn called the meeting to order and welcomed attendees, explaining
that the purpose of the meeting is to surface information needed forthe Council to fulfill its role in
budget oversight.
Overview & Status of Priority -Based Budgeting
Staff provided an overview of Priority Based Budgeting (PBB), which is a new approach forthe City
and is expected to be a multiyear process to work through. PBB is a system in which departments
inventory their work by programs, then evaluate the relevance of those programs based on
community priorities. The City Council recently updated the Strategic Plan that was first created
in 2012 and the programs that have been identified will be compared with those strategic goals.
Program scoring is expected to be complete by the M ayor's formal budget delivery on October 1.
Currently staff is working on PBB with the General Fund, but in the next biennium will apply the
concepts to other funds as well as incorporate performance measures. Staff distributed a draft list
of programs. Councilmember Quinn asked what the City Council should be doing to prepare for
PBB implementation and staff replied active engagement will benefit everyone.
Budget Process
Staff presented a budget process calendar which reflects activities driven by staff, Administration,
City Council, PBB workgroups, and the community. State requirements were provided for
reference, and staff noted that the City of Tukwila goes above what is required by the state. The
City Council will have many opportunities to discuss budget policy decisions. The Mayor is
delivering the budget on October 1, and the Council will have additional workshops, Committee
of the Whole discussions, and a public hearing.
City Council - 2019-2020 Budget Work Session September 11, 2018- Page 2
Mid -Year Sales and Miscellaneous Tax Report
Staff presented the2nd Quarter Sales and Miscellaneous Revenue Report to the Council. Second
Quarter sales tax collections increased $584 thousand, or 13%, over the same period last year.
Construction related sales tax accounted for an increased 28%while all other industries
accounted for an increase of 12%when compared to the same period in 2017. Actual sales tax
collected was $162 thousand greater than anticipated, representinga 3% positive variance from
budget. Sales tax collections in May and June exceeded budget expectations largely attributed to
a manufacture of buses.
2018, 2019, 2020 General Fund Preview
Due to the flattening of sales tax revenues, the Administration committed to a 3% underspend in
2018 to align expenditures and revenues, largely achieved through vacancies. The General Fund is
expected to balance with reserve and contingency policies met in 2018.
For2019 and 2020, Administration is planningfor a $3 million shortfall due to flattening sales tax
and loss of streamlined sales tax mitigation payments from the State. The Mayor's budget will
propose to align revenues and expenditures by reducingexpenditures and increasing revenues.
Department budgets (excluding Police, Fire and Court) will be reduced by 3%, Fire and Police will
be reduced by 1.5%, and department spendinggrowth will be limited to 0.5%. Revenue options
include increasing gambling tax by 1% and generating 1.5 million through an increase to the
business license fee. A B&O tax was also investigated, but initial feedback suggested that it might
not be right for the Tukwila community. If new revenues are not implemented, service levels will
be decreased.
Chair Quinn described the work the Finance Committee has done this year to address budget
deficiencies associated with the Public Safety Plan, which included initial review and discussion
of revenue opportunities. The Committee's work led to a recommendation to the Councilto
modify the Public Safety Plan financingframework to remove construction ofa new Station 54
and reduce fundingfor apparatus and equipment by half. Discussion of a B&O tax surfaced
concerns about timing and impact on businesses. Revenues are a key policy decision that the
City Council will undertake in the coming months.
Councilmembers discussed these concepts at length. Councilmember Kruller asked how 3%was
arrived at for department savings. Staff replied that departments have historically been 2-3%
underspentanyway and this would retain some flexibility. This amount also mitigates the
immediate impact of the flattening sales tax. Councilmember McLeod stated he would like to
understand the cost of operating a small business in Tukwila compared with adjacent cities.
Councilmember Robertson pointed out that the proposed capital budget also reflects a
reduction. Councilmember Quinn asked about the timeline for considering a revenue source that
impacts businesses. lithe Council chooses one of these options, new rates would ideally be sent
out by Thanksgiving. Councilmember Quinn stated that if new revenue is pursued it i s important
to be transparent about its purpose, and to explain what funds used to be available to cities that
no longer exist, such as the Public Works Trust Fund. The loss of streamlined sales tax mitigation
City Council — 2019-2020 Budget Work Session September 11, 2018— Page 3
is also a significant impact to the City. Councilmember Krullerwould like to understand the
baseline cost of runningthe City as well as what increases have occurred over time.
Councilmember Robertson mentioned the detriment of the 1% propertytax levy limit.
Next Steps
The Mayor is going to deliver the budget address on October 1. Finance Chair Quinn expects
additional work sessions in addition to scheduled meetings. Councilmember McLeod mentioned
that he learned about the "Office of Economic Empowerment" in the City of St. Louis, Missouri,
which exists to raise the financial literacy of residents. He is interested in learning more about this
idea and asked if a Council Committee could do further review. Councilmember Kruller said she
likes the idea but feels this is a subject suited to a retreat. Councilmember Quinn asked if there
was interest in further research, and there was consensus to do so.
Summary by LH