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Home My WebLink AboutCOW 2018-11-13 Item 4C - Resolution - Financial Planning Model and General Financial Policies UpdateCOUNCIL AGENDA SYNOPSIS MeetiqDate Prepared by Mayor's review Council review 11/13/18 LH e,t- 11/19/18 LH ITEM INFORMATION ITEM No. 4.C. STAFF SPONSoit: LAUREL HUMPHREY ORIGINAL AGENDA DATE: 11/13/18 AGENDA ITEM Mix, Resolution adopting updated financial planning and other general policies. CATI X3( )RY Discussion Ails Date 11/13/18 E Motion Mtg Date Z Resolution Mtg Date 11/19/18 E Ordinance Mtg Date E Bid Award Mtg Date El Public Hearing Mtg Date [1] Other Mtg Date SPONSOR U, Council EMuyor EHR DCD ZFinance Fire ETS MIP&R PoIice EPW Cowl SPoNSoR'S The draft resolution adopts revisions to the financial planning model and other general SUMMARY financial policies. These policies are published in the adopted Budget and Capital Improvement Program. I FA/FAX/Ft) BY E C.O.W. Mtg. CDN Comm Trans &Infrastructure Arts Comm. DATE: 11/6/18 Finance Comm. Ell Public Safety Comm. Comm. E Planning Comm. CHAIR: QUINN [11 Parks COMMITIEE RECOMMENDATIONS: SPoNsoit/ADmIN. commumE COST IMPACT / FUND SOURCE EXPINDITURE REQUIRIM AMOUNT BUDGETED APPROPRIATION REQUIRED $ $ $ Fund Source: GENERAL FUND Comments: MTG. DATE RECORD OF COUNCIL ACTION 11/13/18 MTG. DATE ATTACHMENTS 11/13/18 Informational Memo dated 10/24/18 Draft resolution, with police Minutes from the Finance Com. meeting of 11/6/18 11/19/18 29 30 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. 31 INFORMATIONAL MEMO Page 2 Proposed New Policy: GF-6 The City Council shall receive an updated list of all contracts every quarter, including the amount, responsible department, scope of work, and expiration date. At the October 15, 2018 Regular Meeting, Council President Seal received Council consensus to consider adding a policy similar to the City of Renton's wherein the City Council receives a quarterly report listing all contracts. Staff recommends that all Councilmembers receive this report at the same time rather than linking it to the individual Councilmember voucher review process. The City Clerk's Office manages all contracts for the City and would be responsible for generating this report on a quarterly basis within 10 days of the end of each quarter. The report could be delivered electronically and in hard copy. Staff proposes implementing this practice beginning with the 1st Quarter of 2019. All of the proposed changes are described as follows: Policy FP-1 Updates title of referenced document Policy FP-2 Updates title of referenced document Policy FP-3 Updates title of referenced document Policy FP-4 Revises to align with current Council preferred practice of Council Committees approving capital grant applications requiring a local match. Adds requirement that exceptions to Capital Improvement Program projects require Committee approval. Policy FP-7 New policy requested by 2017 Finance Committee to streamline the process required by Tukwila Municipal Code 3.32.040, "Unbudgeted Equipment or Fixed Asset Items." Policy FP-8 Renumbered Policy FP-9 Renumbered and clarifies Enterprise Fund Policy FP-10 Renumbered and clarifies Enterprise Fund Policy GF-6 New policy requested by City Council on October 15, 2018 RECOMMENDATION Staff is seeking discussion and feedback on the proposed revisions, particularly the new Policy FP-7. While this was originally discussed in November 2017, this resolution is updated on the biennial budget schedule and can be added now if there is still Committee and Council support. If the Committee is ready to move forward, a recommendation on this item can go to the November 13 Committee of the Whole meeting for further discussion. ATTACHMENTS Draft Resolution 32 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, ADOPTING UPDATED POLICIES RELATED TO THE FINANCIAL PLANNING MODEL AND OTHER GENERAL FINANCIAL POLICIES; AND REPEALING RESOLUTION NO. 1897. WHEREAS, the City Council and Mayor are committed to high standards of financial management; and WHEREAS, adopting and periodically updating and revising financial policies are important steps toward ensuring consistent and rational financial management; and WHEREAS, policies related to the Financial Planning Model and other general financial policies are essential components of an overall financial management policy; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Section 1. Financial policies related to the Financial Planning Model and policies of a general nature, as evidenced in Exhibit A, are adopted. Section 2. The financial policies related to the Financial Planning Model and other general financial policies shall be reviewed on a regular basis and updated as necessary. Section 3. Repealer. Resolution No. 1897 is hereby repealed. W:\Word Processing\Financial Planning Model policies and other general financial policies 10-19-18 LH:bjs Page 1 of 2 33 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: Rachel B. Turpin, City Attorney Filed with the City Clerk: Passed by the City Council: Resolution Number: Attachment: Exhibit A — Financial Planning Model Policies and Other General Financial Policies W:\Word Processing\Financial Planning Model policies and other general financial policies 10-19-18 LH:bjs Page 2 of 2 34 EXHIBIT A City of Tukwila Financial Planning Model Policies The six -year "Financial Planning Model and Capital Improvement Program" is the primary financial policy document. It represents the culmination of all financial policies. Revenues Policy FP-1: Revenues will be estimated on a conservative basis. Increases greater than inflation in the schedule known as the 6-Year Financial Plan "Attachment A," General Fund Revenues and Expenditures, will require additional documentation. Policy FP-2: Major revenue sources will require explanation in the document known as "Attachment A 1," Notes to 6-Year Financial Plan - Revenues, Expenditures and Fund Balance. Operating Expenditures Policy FP-3: Expenditures for the General Fund operations (schedule known as "Attachment B," General Fund Operating Maintenance and Operations DetailExpenditures) will only include basic inflationary increases at the beginning of the budget preparation process. Proposed increases in programs or personnel will require an issues and options paper and Council approval before being added to the operating expenditures estimate. Capital Expenditures Policy FP-4: Project capital grants with local matching requirements can only be applied for with express approval by the City Councilappropriate City Council Committee. Grant applications should generally be shall be made only for projects listed in the six -year Capital Improvement Program, although exceptions can be made with approval by the appropriate City Council Committee, Policy FP-5: If the proposed grants or mitigation are either not funded or are reduced, the respective project will be reevaluated on the basis of its value and priority level placement in the Capital Improvement Program. Policy FP-6: The financing of limited benefit capital improvements (Le. private development) should be borne by the primary beneficiaries of the improvement. The principle underlying limited benefit is that the property is peculiarly benefited and therefore the owners do not in fact pay anything in excess of what they receive by reason of such improvement. Page 1 of 2 35 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. Enterprise Funds Policy FP-87: Each Enterprise Fund shall be reviewed annually and it must have a rate structure adequate to meet its operations and maintenance and long-term capital requirements. Policy FP-98: Enterprise Fund rRate increases shall be small, applied frequently, and staggered to avoid an overly burdensome increase and undue impact in any given year. Policy FP-10g: Enterprise Fund rRate increases of external agencies (i.e. King County secondary wastewater treatment fees) will be passed through to the users of the utility. Other General Financial Policies Policy GF-1: The City's various user charges and fees shall be reviewed at least every three years for proposed adjustments based on services provided and comparisons with other jurisdictions. Policy GF-2: The Finance Director shall provide a financial status update at least quarterly. Policy GF-3: Budget amendments during the year may be approved by budget motion until the end of the budget year, at which time a formal comprehensive budget amendment is submitted. Policy GF-4: The City shall, whenever practical and advantageous, take advantage of grants, loans, or other external financial sources. With the exception of capital improvement program grants requiring a local match, staff shall report to and seek the approval of the appropriate Council Committee before finalizing the grant. Policy GF-5: Funds exceeding the Mayor's allocated signature authority shall not be moved between City departments without prior approval of the City Council. Policy GF-6: The City Council shall receive an updated list of all contracts every quarter, including the amount, responsible department, scope of work, and expiration date. Page 2 of 2 36 Finance Committee Minutes November 6, 2018 B. TAX LEVY LEGISLATION Staff is seeking Council approval of two ordinances relating to property tax: one that would increase the City's Regular Property Tax Levy from 2018, and one that would levy general and excess property taxes. These ordinances are presented to the Council on an annual basis. According to the King County Assessor, the projected assessed value for Tukwila is $6,709,378,301. The ordinance to set the general tax levy also includes the excess levy related to the Public Safety Plan, which will be assessed as long as the bonds are outstanding. The total excess levy requirement for 2019 is $2,840,000 with an approximate levy rate of $0.43 per thousand. The maximum allowable levy is estimated to be $3.49003, but due to the 1% limitation, the preliminary levy rate is estimated to be $2.37331. UNANIMOUS APPROVAL. FORWARD TO NOVEMBER 13, 2018 COMMITTEE OF THE WHOLE. C. BUDGET LEGISLATION Staff is seeking Council approval of an ordinance to adopt the 2019-2020 Biennial Budget and a resolution to adopt the 2019-2020 Financial Planning Model and Capital Improvement Program. These are the legislative mechanisms to adopt the budget and CIP but the Council still has budget discussion scheduled for the next several Council meetings. FORWARD TO NOVEMBER 13, 2018 COMMITTEE OF THE WHOLE FOR PUBLIC HEARING. D. RESOLUTION: FINANCIAL POLICIES Staff is seeking Council approval of a resolution that would amend the General Financial Policies that are included as appendices to the adopted Budget and Capital Improvement Program. The policies represent values and expectations for financial planning, budging, accounting, report and other management practices. Revisions for the next biennium include two new policies and minor adjustments to the others. Proposed new policy FP-7 would clarify the interpretation of TMC 3.32.040 to mean that if sufficient appropriation exists to cover a capital purchase within the Mayor's signing authority, it is deemed budgeted and does not require Committee approval. Proposed new policy GF-6 states that the City Council will receive a list of contracts on a quarterly basis, proposed to begin in 1st Quarter 2019. Councilmember Kruller questioned whether the proposed interpretation of "unbudgeted" in TMC 3.32.040 would reduce Council's visibility to certain transactions. Councilmember Robertson expressed that Council time could be better spent on more impactful issues and he supports the interpretation. Committee Chair Quinn indicated this interpretation, along with the new policy on contract reporting, would move the Council forward. Policy GF-5 was also discussed, though no revisions to this policy were proposed. UNANIMOUS APPROVAL. FORWARD TO NOVEMBER 13, 2018 COMMITTEE OF THE WHOLE. E. AGREEMENT: BUSINESS LICENSING Staff is seeking Council approval of an agreement with the Washington State Department of Revenue Business License Services (BLS) to establish the terms under which BLS will act as the City's agent for processing business licenses. Engrossed House Bill 2005 requires any city with a general business license to partner with the state on a combined license service. UNANIMOUS APPROVAL. FORWARD TO NOVEMBER 19, 2018 REGULAR CONSENT AGENDA. 37