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COW 2018-11-13 Item 4E - Resolution - Compensation Policy for City Employees
COUNCIL AGENDA SYNOPSIS 10/22/18 LH 11 / 18 LH 11/19/18 LH ITEM INFORMATION ITEM No. 4.E. S 1 SPONSOR:: DAVID CLINE A resolution regarding employee compensation 10/22/18 19/18 The draft resolution adopts revisions to the compensation policy for city employees, reflecting amendments and direction from the Finance Committee over the past several months. The review process began in March and concluded with a Committee recommendation on October 16. A full Council work session was held on June 19, 2018. ® hins��as MARCH - OCToBER 2018 UINN RECOMM N1 ATIONS: tilt)NSO>R,r's\l HINL. Ca()a-Iyrl rrI II Majority Approval 10/16 COST IMPACT / FUND SOURCE AMOUNT BUDGETED APPROPRIATION REQUIRE© Fund Source: GENERAL FUND Comments: TG. DATE RECORD OF COUNCIL ACTION 0/22/18 Forward to 11,/./18 C.O.W. TG. DATE ATTACHMENTS Updated Informational Memo dated 11/7/ 18, based on Finance Committee Questions ©raft resolution Finance Committee minutes 8P20 22, 7/8, 7/18, 8/21, 9/6, 9; 18, 10/2, 10/16 53 54 TO: City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM Finance Comm FROM: David Cline, City Administrator Rachel Bianchi, Deputy City Administrator Erika Eddins, Human Resources AnaT,t CC: Mayor Allan Ekberg DATE: November 7, 2018 SUBJECT: Review of Compensation Policy Resolution No, 179..6 Update from October 16, Finance Committee. Meeting Note: This is a new informational memorandum with the intent to capture the compensation policy review and discussion outcomes in preparation for discussion with the full Council, At the July 17, Finance Committee meeting, Administration sought committee direction to 'Irzialiize the scope of the review of the City Council compensation policy. The committee requested that Administration bring back recommendations on thefollowing proposed policy change considerations of above and below market adjustments, comparable cities, compression, recruitment incentives, and the process for non -represented compensation review. In. addition., as directed by the Council, Aclminisira i n has conducted the extenal market study using the Association of Washington Cities and County Et pl.oyee Salary and. Benefit Survey for 2018. Once the regressions analysis was applied to the raw data, the results show we are still close to market and are considered very competitive (Exhibit A,1 and A,2). This was also the case when we did the regression analysis. for 2017. In future years, to address the potential for above and below market wage adjusttments, it is recommended thrtt Council adopt the Market Competitiveness standard provided by our Mr. Lawson, our compensation consultant as it provides an objective guide to address when positions are out of alignment with the market. Option 1 Market Competitiveness Stand +/.5% to +/-10% - Competitive wket a-10% to +/-15% - Possibly Misaligned with arket. +/-15% and above - Significantly Misaligned with marke For positions that ars data to ensure the ap placement. ibly and significaed with, the market would require review of the .ateness of market data. and rjob classifications to ensure appropriate 55 INFORMATIONAL MEMO Page 2 i s of a process Council could adapt trsrr a tyre Market Compet tiveness St nd rd: OPTION A - External Market Study • ©urial Mdfl e Study tfor evet rnbered y ars) Positions that are 5% or more below market and up to l d% above are considered conioetitive vvith the market and wijl receive a market adjustment the year the market adjustn e rt is to occur, • Those positions l O% to 15%above the market will not receive rs adi during, tyre year the market adjustmeioccur arrd will warrant further evaluation an possible reclassif�=rcation, If further analysis results ir�reclassification,rany adjustments will be made in alignment with City policy, OPTION 4 - .Internal Equity • Considerations foi cost of living adjus1(COLA) for odd numbered years be b -ed_lipon internal equity with represented groups to determine if an a.djustmcnt is warralrte Admstration will inform City Council if an adjustm-anted, prior to i OPTIION C - Written Justification for Misaligned I''os tions The other option would be to update the current language in Resolution No, 1 796 Section B.2, to state" I_ the City -spay schedule for any classification that does not represent the average of comparable salary ranges (+/-1 Cl%) written tustification must be provided to the City Council.' 2. Corm -es on As it relates to defining Compression, Council Resolution. No, 1796, states, "The goal of the City is to mitigate or avoidasalary compression issues wwhere possible. An example of salary eampr°ession would be a non -represented supervisor earns less car is projected to earn Less than those that he/she supervises due to contracted wage increase."'° wh During the Council work session ivlr. Lawson, our consultant expressed that compressiora cannot be totally mitigated. Therefore, Administration recommends that Council retain the current definition reflected in the resolution as it is referenced' above. it is furth,er recommended to review the salary structure more frequently preferably in the year a market study is done to ensure that wage a.djustrnents that occur over time do not create compression between salary bands, 3. Comp rtrability During even numbered, years when an external market study is conducted, the Administration uses Council Resolution No, 1796 parameters for comparability which looks at " Lll Frrget Sorrnd jurisdiction° with /-.50% ofTummkwila's annual assessed, valuation, based upon the Deparrtm.ent. of Revenue d.ata_, will be used to create the f comparable jurriisdictions .for evaluation of salary information." The issue of comparability has been discussed during the review of this resolution, specifically, do the parameters of +/-50% reflect the market to which we compare, or should the Committee also consider other factors to determine external market comparability. Mr, Lawson, our compensation consultant shared with the Council at their work session on Jul comparability factors could include employee- population, assessed valuation double or halfthr Tukwila, geography, and demographics. Whereas, Administration. would not recommend considering assessed valuation of double th,e size of 'Tukwila, consideration of going above +50% would provide more consistency where jurisdictions come in and out for comparison. For example, in the 2017 Market Study e 9. that 56 INFORMATIONAL MEMO Page 3 tion changes an la as reported by the Dep Issaquah and Sl oreline were included since they were within +50% of A.V. In the 2t 18 Market Study, these two cities increased to 54% and 57% of A.V. and therefore were excluded (see table below). Assessed val Table 30. City, Tukwila Shoreline lssa .,t rah Assessed Value re in addition, reviotus discussi the inconsistency th OPTION 1 2017 Assessed Assessed Value Value o"`""trkw,ila. S5©49 S7.426 S7.35 oils .00% .47% 46% evenue, Taxing Distri 2018 Assessed Assessed Value ©. of Tukwila Value 5.76 . 4 .989 54' 57 h.ese concerns (lave been raised by the Non -Represented Employees group and in ted options for your consideration that will mitigate urrent policy parameters irrrpose. le following are some s " Puget sound jurisdictions with +751�50°/a of Tu�kwila's annul assessed valuation, using* the rtr.ost "All current data from County Assessors, will be used to create the list of onl.parable jurisdictions for evaluation of salary: information As reflected in Exhibit B, the assessed valuation comparison table, this would serve to eliminate the in and out annually of comparator Jurisdictions. if consideration were given to this option, Administration recommends a "second criteria to assessed valuation, to include employee population of similar size". As Exhibit B also shows, by increasing to +75% of assessed valuation there would be more similar employee populations to compare to Tukwila. OPTION 2 Make no change and retain current policy statement of comparison to "All Puget Sound jurisdictions. of +1-50% of Tukwila's annual assessed valuation".. New Reci- nt Incentives The Finance Com.ruittee requested more information on what other cities do to recruit and retain employees, Twenty- 9"rve (25) Puget Sound Cities were surveyed and responded to our request on the attached Exhibit C. The data shows that some cities offer hiring bonuses specifically to Law enforcement positions, additional vacation hours, or the ability to use vacation sooner than the typical :six. months, Several cities did not offer any recruitment incentives. As has been discussed in previous committee meetings, Tukwila currently offers hiring bonuses to att raet applicants to highly competitive positions such as Building and Construction Inspector, or Law Enforcement positions. 'Mr. Lawson, our compensation consultant, shared with the Council that a market premium may be appropriate to implement specifically when you want to attract and retain Jobs that are competitive in the labor market. Administration recommends the Committee define ii97 it- policy a stateme-sit: that reflects its philosophy of providing above average benefits, hiring incentives and competitive pay to attract, and retain a highly skilled, qualified and trained workforce, 57 INFORMATIONAL MEMO Page 4 Non -Represented Compensation Review Process Thee final item for discussion is should the process for non -represented compensation review change. Currently Resolution No, 1796, provides that non -represented employee compensation be reviewed annually to consider external market or a cost of living adjustment. Unlike represented groups, the non - represented compensation review typically is presented in the fall prior to the year of implementation. This is a more public process, Administration recommends adopting review of non -represented compensation at the time the budget is being adopted so that external market and cola wage ad,justments are a more efficient and seamless transition covering a two-year period versus an annual review process The remainder of schedule for review of the City Council Resolution No. 1.796 is as follows September 5 — Finalize fee ornrmaendations for City Council consideration September 10- Bring recommendation to the City Council for review and discussion September 17 — Adoption of changes to Resolution No, 1796 forimplementation We look forward to discussing these recommendations and options at ti me Finance Committee tmmeeting on. August 21, 2018, Follow Up from the August 21, Finance Committee Meetir At the August 21, Finance Committee Meeting, Adrmministratian reviewed the following recommendations vwith the Committee members: • Reviewed results of the 2018 External Market Study for Non -Represented Employees; • Recomm.endations and options for consideration, on above and below market acljtrstmmments; • Recommendations regarding how to address compression; • Recommendations and options for consideration on comparability; and • Recommendation on new recruitment incentives and the process for review of Non -represented compensation. The Committee reviewed time recommendations, provided input, and asked these recommend.atiorns be discussed further at the Sept 5 Finance Committee meeting, In addition, based upon the results from. both time 2017 and 2018 external market studies, the regression shows that we are competitive with the market, It was requested that Administration continue the current policy of conducting the external market study. The Finance Committee asked for Administration to supplermnermt tl'he tables in Exhibits A.1 and. A.2 to show the 2018 market study regression results based upon +60 of Assessed Valuation to include the two cities that were excluded from the original study based upon the 4/-50% Assessed Valuation criteria. Those cities are Issaquah and Shoreline and the Committee can see the impact of this change now. reflected in Exhibits A.1.1 and A.2,1. This analysis shows that the City remains competitive within the market averages. It was also requested that the table in Exhibit 13 be updated to include columns showing City poptr1ations as a percentage of Tukwila's. Exhibit B.1 includes the population information as well as a column. showing the 2018 Assessed Values by County data. The County data provides the most current assessed 58 INFORMATIONAL MEMO Page 5 valua whiccl gores available for cities and is included for omparison to the State Department of Revenue a year behind. tuber 5, Finance Cornrnittee 1Vleetin Following the September 5 Finance Committee meeting, staff updated the resol.rrtion to reflect the following changes from Committee members: • Increase timeliness of information _ edits to A.2 ccand addition of i4,3 • Update comparability definitions — edits to B..1 o Use most current data from. the County Assessors Q Update the policy to +75% in order to maintain stability in the comparable cities year after year to mitigate changes in assessed valuation o Includ.e a secondary criteria of FIE count as a refining factor to provide a manageable number of comparable jurisdictions • Include policy direction on what snakes a position considered to be in market — addition cif B.3 • Include policy direction on what would happen if positions are found to be above the market during a market survey year — addition c?f B.3 Provide policy language on internal equity between non -represented and represented employees duiring COLA years -- edits to .13.4 After the September 5 meeting, staff learned that effective January 2018 the Bureau of Labor Statistics introduced the first changes to CPI since 1998, The former Seattle -•Tacoma Bremerton index, which included. I<ing, Pierce, Island, Kitsap and Thurston Counties, is now the Seattle -Tacoma -Bellevue index, which includes King, Pierce and Snohomish Counties only. Staff recommends that the policy be updated to reflect this new index and use this definition for "Puget Sound jurisdictions" referenced in section B.1. This change would remove Bainbridge Island as a comparable jurisdiction. Edits to. B.4. Staff was asked to provide inf©rraaation on the market effect. of these changes on non -represented employees. Analysis shows that raising the assessed value to +75% keeps all City employees consistent sv th ti e rt�arl et. There is no significant variance between what was presented when just Issaquah. and Shoreline were added. The attached tables provide this analysis for non -represented employees. The remainder of the schedule for review of the City Council Resolution No, 1796 is as follows September 1, 8 — Finalize recommendation s for City Council consideration September 24 - Bring recommendation to the City Council for review and discussion October 1 — Adoption of changes to Resolution No. 1796 .for implementation Follow Up from the September 18, Finance Committee Meeting Following the September 18 Finance Committee meeting, staff updated tlac resolution to reflect the following changes from. Committee members: • Updated timeliness of information — edits to .4.2 card deletion of.4.3 • Provided a defnitio•n for comparable employee population based on city police departments — edits to 13.1 • 'Updated, documentation and process for positions above ra arket—• edits to 13.3 • Updated documentation and process for adjustments to COLA — edits to 13. 4 • Provided a new definition for com..pression —• edits to B. F 59 INFORMATIONAL MEMO Page 6 o "An example of salary compression is when there is only a small difference in pay between employees regardless of their skills, level, seniority or experience." Updated process to have an annual review of the compensation policy, if warranted — edits to .B,7 A revised schedule is provided :for your review October 2. -- Finalize recommendations for City Council consideration October 8 or 22 - Forward recommendation to the City Council for review and discussion October 15 or Nov 5 — Adoption of changes to Resolution No, 1796, .for implementation Follow Up from the October 2nd, Finance Committee Meeting Following the October 2nd. Finance Committee meeting, staff was asked to provide updated market study. data (Exhibit D) reflecting the proposed second set of criteria for defining comparable jurisdictions based on having a city police department. The proposed language is unchanged: • "A second criteria to be used to refine comparable jurisdictions is to include citiescilies with their own police departments." The justification for this additional criteria. was to better match comparable cities. For example, in Exhibit B.1, it shows several cities that have comparable assessed values by percentages, but significantly lower total FTE's, For example, based on Tukwila's assessed value, SeaTac is at 100% and Burien is at l03(l/ci, When compared with the number of Tukwila's FTE's, SeaTac is at 35% and Burien is at 24%, mainly due to not having a city police department, Most other comparable cities with similar assessed values and a police department had much closer percentages of FTE's, The effect of this criteria removes Burien, Shoreline, Maple, Valley, and SeaTac. The overall impact of removing these jurisdictions did not significantly change the analysis. In preparing the updated data, staff noted and corrected a data error with the regression line at the lower bands., Staff updated the resolution to reflect the following changes .from. Com.mittee .mem.bers: • Clarified the first sentence to remove the words "or more" — edits to B.3 • Added to .the definition for compression to include a process to follow when it is observed and action to be taken for council - edits to B. o "Administration will provide a written justification for the City Council's review d.ocumenting that an adjustment is 'warranted prior to implementation." A revised schedule is provided for your review: October 1,6 — Finalize recommendations for City Council consideration October :22,— Forward recommendation to the City Council .for review and discussion November 5 — Adoption of changes to Resolution No, 1796 for implementation Follow Uo from the October loth Finance Committee Meeting At the October 16' Finance Committee m.eeting_s afficscritedtIieadditionI edits to the resolution as suggested from the October 2' meeting and reviewed the ustjllcation for havino a cit °lice c as a second criteria for comparabjurisdictions F her discussion on the proposed policy edits took. place and the committee requested the following wording changes: "A second. criteria .to be ised tc• own police, department." —ediis .Amend sentences at the end of B4 and B5 to read the same: ".Administration ‘vill provide a written tification documentino that at • i.en is warranted for he City Council's review sand qaproval prior to implementation." - edits to B4 and B5 omparable jurisdictions is o to include cities, vith their 60 INFORMATIONAL MEMO Page 7 Staff receivedaddif%rat al questions from iCo znber Robertson after tine October Comi 'flee meeting and has responded in writing to those questions, see attachment. Majority recomn .ndation from the Fin rancemmConn n-ittee existed to forward this topic to t1ae t ct Sher 22, 2018 Committee of the Whole Council n ect ng. A revised schedulprovided for your review: • October 22 Foi w4ar i°'commendation to the Cite Council for review and discussion • Update ak er tlae 1 122 f Q" Icy Council consensus, this item was moved to the Comm! Whole m • November • November l ® City Coo 9 ® Adoption. on November 12 cil rMe riew and discussion ofproposed changes to Resolution No, 1796 to Resolution No, 1796f©r impleancntation 61 62 10/22/18 STAFF RESPONSE TO COUNCILMEMBER ROBERTSON'S QUESTIONS CONCERNING PROPOSED RESOLUTION 1796 (1) Will COLA's be included in the Even Year Market Rate Adjustment? The Resolution (A.2) states the "previous year's Wash City & County Employee Salary & Benefit for Comparable jurisdictions will be used in the salary market survey." It does not mention COLA's but if previous years data is used doesn't at least a COLA for the current year have to be included? ANSWER: NO. For example, for 2020 the City will do a market study based upon the AWC Salary and Benefit study that will be published in July of 2019. Staff will then prepare the Market Study by September of 2019 to forward to the Finance Committee and later full Council for final action. COLA is NOT included when adjustments are made via the Market Study. (2) If a COLA is included is it multiplied against whatever (positive only) Market Adjustment. is needed after or before the Market Adjustment is applied? It appears to me it should be applied after the Market Adjustment is applied. ANSWER: COLA is NOT included when adjustments are made via the Market Study. (3) Will COLA's be given to all positions (whatever their status is to Comp's) in odd numbered years? ANSWER: Yes. The COLA is applied to the entire salary schedule. (4) Exactly how are the following Market Rate Adjustments calculated? Please provide examples. ANSWER: All market rate adjustments include two steps. The first step is to review comparable cities' salaries based on benchmarked positions, averaged at the top step compared to Tukwila's top step. Step two involves applying the best -fit regression line to smooth out the differences between the various comparables. That regression line is what is compared to the market for the entire salary structure. A. Market Adjustment if the Tukwila Position Rate is >= 5% below the Comp's Market Rate? ANSWER: In this scenario, according to the proposed policy, there would be an adjustment to this nand to bring it up closer to the market. (aver) 63 B. Market Adjustment if the Tukwila Position Rate is < 5% below the Comp's Market Rate? ANSWER: In this scenario, according to the proposed policy, this scenario would be considered competitive with the market. No change would be needed. C. Market Adjust rr ent if the Tukwila Position Rate is = to the Comp's Market Rate? ANSWER: In this scenario, according to the proposed policy, this scenario would be considered competitive with the market. No change would be needed. D. Market Adjustment i Mar<et Rate? e Tukwila Position Rate is <= 5% above the Comp's ANSWER: In t-is scenario, according to the proposed policy, this scenario would be considered competitive with the market. No change would be needed. E. Market Adjustment if the Tukwila Position is > 5% above but <= 10% above the Comp's Market Rate? ANSWER: In this scenario, according to the proposed policy, this scenario would be considered competitive with the market. No change would be needed. F. Market Adjustment if the Tukwila Position Rate is > 10% above the Market Rate? ANSWER: In this scenario, according to the proposed policy the position would NOT receive an adjustment during the year a market adjustment is to occur. Per the proposed policy, this position would warrant further evaluation and report to Council found in section B.3. 64 16000 14000 12000 10000 8000 6000 4000 2000 City of Tukwila, WA Market Data Regression y 1.1162e + 3376 R.2= 0.9851 A 0 2000 4000 6000 8000 10000 12000 Max Avg Max Median • •• Linear (Max Median} 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 City of Tukwila, WA Market Data Regression - Revised Analysis 2000 4000 6000 8000 • Max Median Tukwilla ------- Linear {Max Median) y 1.229x * 3178.3 09836 10000 New Exhibit 9/12/18 16000 14000 12000 10000 8000 6000 4000 2000 0 0 +75/-50% AV City of Tukwila, WA Market Data Regression y = 1.1758x + 3171A = 0.9816 EXHIBIT k1.2 2000 4000 6000 8000 10000 12000 Max Ave Wiedian Linear ( x Median) ructure Comparison. Max Compar Market Median Market Median Hrly Max Based on Current Max Regression % EDiff Results All N/A N/A $27.1.2 $2.3.77 12% Al2 N/A N/A $29.30 $25.92 -12% A13 N/A N/A $31.47 $28.06 11% 821 N/A N/A $33.65 $30.21 10% B22 N/A N/A $35,83 $32.36 823 $5,975 C41 N/A C42 $7,276 C43 N/A C51 N/A C52 N/A 061 $10,071 D62, N/A ,639 072 N/A 1,45 $34.47 N/A $41.97 N/A N/A N/A $58.10 N/A NA $38,00 $46.26 $48.89 $51.06 $53.79 $57.06 $58,04 $59.07 $61.15 $63.77 1 $66,88 81 N/A N A $69.48 2,932 $74.6. $71.58 $73.66 $34.50 $43,09 $4.5.24 $47.38 $50.07 3.28 .97 IF101. F102 3,302 $76.74 $76.23 N/A N/A $79.40 N/A N/A $82.56 4,163 $81.71 $83.65 $85.48 60,26 62.94 66 70,99 73.14 75.82 79.04 0 2.26 0% Negative % r leading market Positive % = lagging market Average % Difference There are no current. Non -Represented positions in Bands All, Al2, A -4,8% ©bservations; Current maximums for DBM ranges All - C52 currently lead the market Beginning with D61, the ranges are aligned with market in a highly competitive manner EXHIBIT A.2 68 A11 Al2 A13 821 822 623 C41 C42 C43 C51 C52 062 D63 071 D72 E81 E82 Structure Comparison: Max Comparisons - Rev Analysis w/Issaquah Se Shoreline arket. edian Current Max Hrly N/A N/A N/A N/A N/A $36.61 N/A $43.19 N/A N/A N/A $57,89 N/A $60,26 N/A $66.77 N/A $74,26 $76.31 E91 577. $27.12 $29.30 $31.47 $33,65 $35.83 $38.00 $46,26 $48,89 $51,06 $53.79 557.06 $58,04 $59,07 $61.15 $63.77 $66,88 $69.48 7 7.b6 76.23 kax Rased 0 Regression Results: Original $22.87 $25,14 $27,40 $ 29.68 $31.94 $34,21 $43,28 $45,54 $47.81 $50.65 $54.05 $56.88 $59.15 $61,41 $64.25. $67.65 $70.49 5.02. a77,85 E92 N/A $79.40 $81,25 F101 N/A $82.56 $84.66 F102 $84,25 $83,65 $88.06 Average % nifference There are no current Non -Represented position Negative % = leading market Positive % lagging market Observations Pay structure better aligned with market with inclusion of Issaquah and Shoreline % Qiff 2% 2% 3% 5% n ds All, Al2, A13 EXHIBI'TA.2.1 69 New Exhibit 9/12/18 EXHIBIT A.2.2 ucture Com par Market Median Hrly n ax Comparisons 475% Max Based on Current Max Regression Results N/A $27,12 $22,82 -16% N/A $29.30 $25.08 -14% N/A $31.47 $27,34 -'13% N/A $33.65 $29.60 -12% N/A $35.83 $31.86 -11% $36.61 $38.00 $34.12 N/A $46,26 $43.17 -7% $42.61 $48.89 $45,43 -7% i 5L06 $47.69 -7% N/A$53.79 $50.52 -6% 2 $97.06 $53.91 -6% $56,74 -2% D62$59.07 $59. 072 E83 E91 E92 F101 6 70 572.56 73,66 $74,82 4 $76,23 $77.6 N/A $79.40 $81,04 N/A $82.56 $84.44 2% F102 $84.25 583.65 $87.83 5% Negative % leading market Positive % tagging market Average % Difference -4.09% There are no current Non•Represented positions in Bands All, Al2, A13 Observations: Current maximums for f?BM ranges All - C52 currently lead the market 8eginning with 061, the ranges are aligned with market in a highly competitive manner 70 Puget Sound City Comparisons within +75%/-50% AV EXHIBIT 8 Des Moines Maple Valley Lake Stevens Mukilteo Puyallup SeaTac Lakewood 8urien Lynnwood Tukwila Marysville Bainbridge Island Edmonds Bothell Shoreline Issaquah Federal Way Auburn Assessed Valuation Comparisons King King Snohomish Snohomish Pierce King Pierce King Snohomish King Snohomish Kitsap Snohomish King/Snohomish Snohomish King King King/Pierce 3,194,299,789 3,268,616,351 3,324,196, 683 4,354,213,237 5,148,032,791 5,405,585,665 5,410,414,843 5,608,165,807 5,654,422,666 5,736,568,228 6,425,149,097 6,898,602, 203 8,177,283,180 8,760,887,474 8,848,561,852 8,989,557,112 9,420,224,291 9,555,039,113 0.55 132 0.56 46 0.57 93 0.75 124 0.89 269 0.94 112 0.94 209 0.97 78 0.98 350 1,00 321 X 1.12 277 1.20 122 1.42 220 1.52 328 1.54 176 1.56 248 1.64 323 1.66 437 -1 \ t 3 71 J REVISEO9/12 N A AV Maple Valley Lake Stevens Mukilteo Puyallup Lakewood SeaTac Tukwila _ Lynnwood 8urien Marysville Snohomish Pierce Pierce King King Snohomish King Snohomish Bainbridge Island Kitsa Edmonds Snohomish Bothe9l King/Snohomish Issaqua King h X Shoreline x Federal Way Auburn Mercer Island King Renton King Kent Redmond King King Assessed Valuation Comparisons -Value 56% 4,196,683 57% 3,194,299,789 55 % 4,354,213.237 75% 5,148,032,791 89% 5,410,414,843 94% 5,465,585,665 94% 5,736,568,228 100% 5,654,422,666 98% 5,608,165,807 97 6,425,149,097 6,898,602,203 8,177,283,180 8,760,887,474 8,989,557,112 8,848,561.852 9,420,224,291 9,555,039,113� 5 12,083,477,559 5 15.035,333,726 262% 5 16,335,686,545 285% $ 18,631,080,894 325% 41% 124 39% 269 84% 209 65% 112 35% 321 100% 300 109% 78 24%.. 86% 38% 0 69% 102% 77%� 176 55% 323 101% 437 136% 46 14% 132 277 205 64% . _ 540 168% 691 215% 642 200% t EXHIBIT B.1 7 ` suit Has -%s uit€itlf 20111 ettit}A Seth > 6 tt ytu = hake > pp 24,900 1273b 31,740 30,860 157% 21,240 108% 40,500 206% 59,280 302% 28,850 147% 19.660 100% 36,950 188% 50,680 65,900 23,950 122% 41,260 210% 44,370 226% 36,030 183 % 55,060 280% 96,350 490% 78,960 402% 24,210 _ 102,700 127,100 62,110 ' WA State Department of Revenue (DOR) data was used for the 2018 Market Survey, The most recent 0OR data available at the time of survey is 2017 figures (data lags by one year,) FTE = Full Time Equivalent Employees County Assessed Values from County Assessor Data current 2018 values Sorted by 2018 County Assessed Values 6 3,784,529,975 3,823,309,451 4,745,542,557 77% 5,666 549,214 9254 6,002,783,089 97% 6,165,328,557 100% 6,184,943,263 100% 6,272,081,312 101% 6,385.711,481 103% 7,1.44,089,843 116% 7,542,154,879 122% 9,107,284,679 147% 9,900,884,044 41, 4 10,228,874,349 10,301,293,691 10,600,014,202 314,672 2 6,909,050,051 27354 97,339,729 301% ,770,064,850 336% 165°d 167% 171% 0 0 EXHIBIT C Surveyed 25 Puget Sound Cities below are the responses received. no Cities Recruiting Incentives Offered Auburn iNon Bainbridge Island Bremerton Burien Edmonds Federal Way Issaquah Kirklan Lynnwood Maple Valley Cru ng {ncantives g Incentives Policy for difficult to fill positions, Bonus up to $5k At times offer a bank of vac Hiring bonus offered to lateral police officers; Director level positions receive 40 hours vac upon hire; have paid up to $5k in relocation expenses when applicable Can offer vacation immediately upon hire; signing bonuses for P0; may advance to next salary step after 6 months instead of one year, Have paid for travel to and from for final interviews g bonus for police officer May provide more vacation to non-reis at hire Management level non -reps may receive initial leave upon hire, and an on occasion a higher vacation accrual rate Mt. Lake Terrace Can o. Mukilteo & Directors may negotiate for additional vacation higher vacation accruals and/or abHity to use accrued vacation before 6 months On occasion have offered higher management positions vacation {2-3 weeks) upfront Hiring bonus to lateral police officers; on occasion have given lump sum vacation or accelerated vacation accrual rate., n 74 EXHIBIT Exhibit D Al 22 B23 C41 C42 C43 C51 C52 p61 D62 D63 D71 D72 E81 E82 E83 Structure Comparison. Max Comparisons+'75%/-50% AV Market Median Market Max Based on Median Current Max Regression Hrly Results N/A N/A $27.12 N/A N/A N/A N/A N/A N/A N/A N/A $6,307 $36.38 #N/A N/A $7,201 41.54 #N/A N/A #N/A N/A #N/A N/A $9,739 $56.19 #N/A N/A 11,333 $65.38 #N/A. $29.30 $31.47 $33.65 0 46.26 $48.89 $51.06 $53,79 $57.©6 $58,04 $59.07 $61.15 N/A $63,77 $24.10 % Diff $26,32 -10% $28,54 -9% $3©.76 -9% $32.98 -8% $35.19 -7% $44.0$o/© $46,29 -5% $48.51 -5% $51.2.9 -5% $54.62 -4% $57.39 $59.61 $61.83 $64.66 $12,114 $69.89 $66.88 $67.93 #N/A N/A $69.48 $70.71 $13,074 $75.43 $71,58 $72.93 $12,932 $74.61 $73.66 575.14 E91 $12,961 $74.78 $76.23 $77.92 E92 #N/A N/A $79.40 $81,25 F101 #N/A N/A $82.56 $84.58 F102 $14,604 $84.25 583.65 $87.91 Negative % leading market Positive % = lagging market :% 2% 2% 2% 2% 2% 2% 5% 2018 data with proposed criteria for comparable cities with police departments. excludes Burien, Seatac, Shorline, Maple Valley 75 76 NOTE: Shaded text in various locations reflects changes made after review by the Finance Committee on October '1.6, 2018. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, ESTABLISHING A. COMPENSATION POLICY FOR CITY OF TUKWILA EMPLOYEES AND REPEALING RESOLUTION NO. 1796. WHEREAS, the City believes that the purpose of a compensation program is to facilitate recruiting, retention, development and productivity of employees; and WHEREAS, the City desires to utilize standardized policies, procedures and processes, wherever possible, for compensating all employee groups, both represented and non -represented; and WHEREAS, the City recognizes that current economic conditions and forecasts, long-range City budget forecasts, and position rates for comparable jurisdictions, as well as internal equity considerations, should assist in guiding the compensation of employees; and WHEREAS, the City has made a determination to, when economic conditions allow, review and adjust non -represented employee salaries via a market analysis to that of the average of comparable jurisdictions in even -numbered years, and to provide a cost -of -living (COLA) allowance in odd -numbered years; and WHEREAS, the City has made a determination to, when economic conditions and negotiations allow, provide represented employees with salaries that reflect the average of comparable jurisdictions; and WHEREAS, the City has made a determination to, when economic conditions allow, provide benefits to represented and non -represented employees that are slightly above the average of comparable jurisdictions; and WHEREAS, the City Council will participate in setting negotiation expectations and reviewing and approving represented employee group contracts; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: '11vvord Processing \ResolutGons\Cornpensat on policy for City employees strike-thru 10-17-10 Page 1 of 3 77 Section 1. The following statements and processes are adopted for the purpose of guiding compensation programs for employees of the City of Tukwila. A. Information to be provided to the City Council. 1. For Represented Employees. A written presentation of current internal and local external public agency salary and benefit trends, including a salary and benefits market survey of comparable jurisdictions, as defined herein, will be provided to the City Council. This presentation must be made to the Council prior to the commencement of negotiations with the bargaining units regarding salary and benefits. The City Council and Administration will discuss represented employee group negotiation expectations, negotiating points, salary and benefit change floors and/or ceilings prior to the beginning of, and at appropriate points during, negotiation sessions. 2. For Non -Represented Employees. A written presentation of current internal and local external public agency salary and benefit trends, including a salary and benefits market survey of comparable jurisdictions, as defined herein, will be provided to the City Council by Administration every year by the end of the third quarter that a non -represented salary increase is due. Relevant Association of Washington Cities (AWC) data from the previous year's Washington City and County Employee Salary and Benefit Survey, for the comparable jurisdictions, will be used in the salary market survey. B. Compensation Policy. 1. All Puget Sound jurisdictions with +75/-50% of Tukwila's annual assessed valuation, Revenue data using the most current data. from County Assessors, will be used to create the list of comparable jurisdictions for evaluation of salary information. A second criteria to be used to refine comparable jurisdictions is to Oitki include cities with their own police departments . It is desirable to use the same comparable jurisdictions for both represented and non -represented employee groups. 2. For non -represented employees, the City desires to pay the average salary for the particular pay scale, as derived from the comparable jurisdiction data described in Section B.1, if the City's pay scale for any classification does not represent the average of comparable salary ranges (+/-5°/0), written justification must be provided to the City Council. For represented employees, the City desires to pay salaries that are competitive to the City's comparable jurisdictions. 3. Positions that are 5°/0 eer more below the market and up to 1 O% above the market are considered com etitive with the market and will receive a market adjustment the year the stuelysurveyis to occur. Those positions more than 1Q°/© above the market will not receive an adjustment durin the ear the market adjustment is to occur and will warrant further evaluation Documented justification of potential reclassification will be provided to the City Council for review and approval. if "�mAx the documented justification results in reclassification, an v adjustments wiII be made in alignment with City policy. rd Processing\Resolutions\Compensaton policy for City employees strike-thru 10-17-10 Page 2 of 3 78 43. The cost -of -living adjustment (COLA) in odd -numbered years for non - represented employees shall be based upon 90% of the Seattle -Tacoma --Bellevue Consumer Price Index (CPI-W) Average (June to June). It is desirable to calculate represented cost -of -living adjustments the same way, unless a different method is authorized by the Council. Considerations for cost -of -living adjustment for odd -numbered years will be based upon internal e uit with re resented rou s to determine if an adjustment is warranted. Administration will inform provide a written justification documenting that an adjustment is: warranted for the ;City Council's review and approval prior to implementation.. 54. The goal of the City is to establish parity between represented and non - represented employees' benefits. The City desires to provide employee benefits that are competitive to the comparable cities described herein. The City will endeavor to keep increases to annual health care costs under market averages. If costs exceed market averages, adjustments will be made to reduce benefit costs. 65. The goal of the City is to mitigate or avoid salary compression issues where possible. An example of salary compression is when there is only a small difference in a between em loyees regardless of their skills, level„ seniority or experience -we 4d be when a non represented supervisor earns less, or is projected to earn Tess than those Administration will provide a written justification 1 documenting that an adjustment is warranted for the Ci prior to implementation. 76. The City Council shall review the compensation policy described herein on an annual basis to assess efficacy and make adjustments if warranted. If the Administration determines that a deviation from the above process (in its entirety or for individual positions) is necessary, it will provide justification to the City Council for review and approval prior to the adoption of any process change. Section 2. Resolution No. 1796 is hereby repealed. C uncil's revie end approval 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 W:\Word Processing\Resolutions\Compensation policy for City employees strike-thru 10-17r -10 Page 3 of 3 79 80 Finance Committee Minut..�..March20, 2018 Employee Compensation Policy The current policy for compensation and benefits for City employees is directed in Resolution 1796, and the City Council has expressed intent to review and possibly update this policy in 2018. Staff presented a proposed timeline for the Committee's review, culminating in final. Council decision making by June. Staff also suggested that policy considerations could include above and below market adjustments, compression, comparability, and recruitment. Committee members discussed the proposals and requested the following components be included in the analysis and review process: • An updated market study, as one has not been completed since 2015 • Input and recommendations from the non -represented employee group • 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 The Committee would like to have a full Council workshop or Committee of the Whole session devoted to the contents and background of Resolution 1796, past studies, and information about benefits, compression, and decision band methodology. Chair Quinn stressed the importance of providing high quality and comprehensive background information to educate all members of the Council and to help the Committee arrive at a recommendation. The Committee indicated that June may not be possible to arrive at a thoroughly vetted recommendation and would be willing to carry this work into September so it us more in alignment with the 2019-2020 budget. RETURN TO COMMITTEE. MISCELLANEOUS Adjourned at 6:55 p.m. Committee Chair Approval Summary by LH 81 City of Tukwila City Council Finance Committee FINANCE COMMITTEE Meeting Minutes May 22, 2018 - 5:30 p,m. - Hazelnut Conference Room, City Hall Council members: De'Sean Quinn, Chair; Dennis Robertson, Kate Kruller Staff: David Cline, Stephanie Brown, Erika Eddins, Gail Labanara, Jay Wittwer, Vicky Carlsen, Laura Crandall, Rachel Bianchi Guest: Mohamed Ahmed, student CALL TO ORDER: Committee Chair Quinn called the meeting to order at 5:30 p.m. PRESENTATIONS II. BUSINESS AGENDA A. Compensation Policy Proposed Timeline *Staff updated the Committee on a proposed process and timeline for the review and potential amendment to Resolution 1796, which sets the policy for compensation and benefits for employees. At the March 20, 201.8 meeting, the Finance Committee requested that the process include an updated market study, input from non -represented employees, background on decision band methodology, analysis on gender neutrality, desk audits, performance reviews, appeals, merit pay and compression, and a full Council work session to understand the background. The Committee agreed with the proposed timeline, which includes a June Council work session, Committee review over July and August, and potential action in September. Staff will work with the Chair on the work session agenda. DISCUSSION ONLY. B. Preliminary Six -Year Financial Forecast/Public Safety Plan Financing Staff presented the first preliminary six -year financial forecast using the new financial modeling tool. Whitebirch, which was previewed for the Committee at the last meeting. The new tool provides greater predictive accuracy, monitors for structural deficits, and models flexible scenarios. As before with "Attachment A," the projections show a decrease in the third biennium, which the City addresses through course corrections each year via the budget. The preliminary results show that 2018 is balanced and meets our financial policies. As expected, ongoing revenues are not in alignment with ongoing expenses due to decreasing sales tax and capital project. Staff included an unidentified new revenue source beginning in 2019 to address the flattening sales tax and elimination of sales tax mitigation. Committee members discussed the forecast and requested the following changes: Update the History of Six -Year Plan Forecasts vs. Actuals graph to include 2017. Expand the forecast to the next level of detail (for example, open the Business Tax line to show the sub categories and amounts) 82 Finance Committee Minutes . July 5, 2018 C. Compensation Policy Committee members continued discussing the compensation policy for City employees. The City Council held a work session on June 19, 2018 where there was consensus for the Finance Committee to continue discussing COLA and market adjustments, compression, positions above and below market, and new incentives. On July 2, the City Council received a letter from a coalition of non -represented employees asking for reconsideration of comparable cities, salary process, recruitment and retention, and compression. Chair Quinn asked for comment from those in the room. Staff stated that the main concern for non -represented employees is the comparable cities. Resolution No. 1796 currently states that comparable cities will be all Puget Sound jurisdictions with +/- 500/© of Tukwila's annual assessed valuation. However, cities like Burien and Shoreline that appear on that list do not provide the same services, such as police, fire, and utilities. Tukwila's staffing reflects service levels for the daytime population of 150k+, It may be more appropriate to compare salaries to cities with the same number of employees and/or that offer the same levels of service. Many non -rep employees would also like a full salary study and would like retention and incentives to be re-evaluated. Committee members requested copies of the full Association of Washington Cities Salary and Benefit Survey for both 2017 and 2018. Councilmember Krutler asked that the desired criteria for comparable cities be provided in writing, Staff presented the results of the 2017 market study for the positions of City Administrator, Public Works Director, Police Chief, Parks Director, Deputy Police Chief, Deputy Public Works Director, Deputy Finance Director, Building Official, Human Resources Analyst, Deputy City Clerk, and Administrative Assistant. The regression analysis results show that the City is in alignment overall and that COLA adjustments have kept salaries on pace. Councilmember Robertson requested a column showing how the comparable cities classify jobs, be it decision band methodology or something &se, Councilmember Quinn commented on the delay in doing the market study and stated that in the future they should be done on schedule per the policy regardless of what else is going on. Although none of the comparable cities have a Fire Chief, Councilmember Robertson asked that a column be added for that position, listing cities that have it. He also asked that staff provide a list of jobs deemed not benchmarkable. Councilmember Kruller asked that the salaries be listed in annual, not monthly, amounts. The Committee also asked for more information on benefits that other cities provide for recruitment, motivation, and retention. DISCUSSION ONLY. D. 2018 lst Quarter Sales Tax and Miscellaneous Revenue Report Staff presented the 2018 First Quarter Sales Tax and Miscellaneous Revenue Report, including details on retail sales tax, gambling tax, and admissions tax revenues with sales tax broken out by industry classifications. Total sales tax collections for the 1st quarter were $33,000, or 1%, above those for the same period last year. Construction sales tax is up 15% compared with the same period last year, and sales tax from other industries decreased by $17,000. It is possible that the 2018 budget for sales tax revenue will not be met. Committee members discussed concerns about flattening sales tax and asked that the full Council receive the report. Councilmember Kruller stated that she has asked several times if Administration is aware of other cities that have built as many construction projects in the same time frame as the Public Safety Plan Projects, and staff will follow up. DISCUSSION ONLY. 83 Finance Comee Minutes .. July 17, 2018 allocated budget by $506K and expenditures are below budget by $169K. There is strong development activity, bringing in permit revenue. Committee members asked clarifying questions and made comments. Because a large percentage of the departmental savings is in labor costs due to retirements and transfers, the Council should be prepared to consider what savings are planned and sustainable. FORWARD TO JULY 23, 2018 COMMITTEE OF THE WHOLE. C. Business & Occupation. Tax Next Steps Staff is seeking Committee direction on next steps for consideration of a Business & Occupation (B&O) Tax. The Committee previously discussed this topic with regard to the Public Safety Plan financing and decided to set it aside to potentially be part of the biennial budget discussions. 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 of $3 million or more. Councilmember Robertson asked if there could be more business sector categories than just retail, wholesale, manufacturing and service. He would also like more information about the logic used by neighboring cities in setting their rates. He suggested that Finance and Police/Fire collaborate to determine service impacts from different sectors. Councilmember Seal stated that the City needs to be dear on why it is considering a B&O tax and how the money would fund City services, Chair Quinn stated that the Council needs to have enough information in order to make a sound, data -driven, policy decision. The Committee agreed that staff should bring forward additional research and a future budget work session should include this item. DISCUSSION ONLY. D. Compensation Policy Update Staff its seeking Committee direction to finalize the scope of the review of the compensation policy as formalized in Resolution 1796. The City Council had previously requested that. compression, above and below market adjustments, comparable cities, and recruitment incentives be discussed. Non -represented employees asked the Committee to focus on comparable cities, the process for setting non -represented position compensation, compression, incentives, and direct staff to do a full market survey of all non -rep positions. The Committee requested that staff bring at least 2-3 of these topics forward at a time at future meetings. DISCUSSION ONLY. 84 Finance Committee 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 toss, 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 Staff presented the Committee with the City's 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 40/0year 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 sates tax by itself in a new line or a footnote. Chair Quinn would like a better understanding of the 30/0 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 Priority Based Budgeting, staff defined the City Council's programs as "Community Engagement and Events," "Governmental Affairs and Appointments," and "Legislative Oversight." Budget Oversight may be pulled out into its own category for the purpose of scoring accurately against the City's strategic goals. The proposed Council budget includes reductions 85 City of Tukwila City Council Finance Committee FINANCE COMMITTEE Meeting Minutes September 5, 2©18 - 5:30 p.m. - Hazelnut Conference Room, City Hall Council rnembers: De'Sean Quinn, Chair; Dennis Robertson, Kate Kruller Staff: David Cline, Brandon Miles, Rachel Bianchi, Leon Richardson, Jay Wittwer, Peggy McCarthy, Vicky Carlsen, Aaron Williams, Wynetta Bivens, Richard Takechi, Jeff Friend, Derek Speck, Olin Johansen, Anthony Murietta, Laurel Humphrey Guest: Andrea Reay, Seattle Southside Chamber of Commerce CALL TO ORDER: Committee Chair Quinn called the meeting to order at 5:30 p.m. PRESENTATIONS II. BUSINESS AGENDA A. Ordinance: Amending Gambling Tax Staff is proposing an amendment to the Tukwila Municipal Code to increase the gambling activities tax on cardrooms from 100/0 to 11%. There are currently four cardrooms in Tukwila, and there is a provision in the code that the rate would become 150/0 when more than five are operating. Gambling taxes are used primarily for public safety, and state law caps the tax at 200/0. Jurisdictions vary on regulation of card rooms. Auburn has a rate of 4% and Redmond has 120/0. Kent and King County are at 11%. The proposed 10/0 increase would generate approximately $350,000 in additional revenue. Committee members briefly discussed the proposal and decided to forward the item for full Council discussion with no recommendation. NO RECOMMENDATION. FORWARD TO SEPTEMBER 10, 2018 COMMITTEE OF THE WHOLE. B. Employee Compenation Policy Staff returned with policy recommendations in the areas of above and below market adjustments, comparable cities, compression, recruitment incentives, and compensation review process for non -represented employees. The committee discussed these items and requested the policy return to committee with additional information as follows: Market Competitiveness: No recommendation. The three proposals will be discussed at a future meeting. Compression: Retain current language in Resolution 1.796, Comparability: Prepare resolution showing both options 1 and 2 in context. Update Table B-1 with the following: 86 Finance Committee Minutes ,...... . September5, 2018 Rename "State DOR Assessed Value %" column to "Percent of Tukwila's A/V" Rename "Population Value 0/©" column to "Percent of Tukwila's Population" Asterisk cities that do not have Police or Fire Information to be Provided to the City Council: Add language to the draft resolution clarifying that it is the responsibility of the Finance Committee to ensure the information specified in A(1) and A(2) is received by staff on the expected schedule, unless a decision is made by a rnajority of the Council to deviate from that schedule, DISCUSSION ONLY. RETURN TO COMMITTEE C. 2018 2nd Quarter Sales Tax and Miscellaneous Revenue Report Staff presented the 2018 Second Quarter Sales Tax and Miscellaneous Revenue Report, including details on retail sales tax, gambling tax, and admissions tax revenues with sales tax broken out by industry classifications. Sales tax collections increased $584 thousand or 13% over the same period last year. Construction related sates tax accounted for 28%while all other industries accounted for 12% when compared to the same period in 2017..DISCUSSION ONLY. D. Interlocal Agreement: Transfer of Surface Water Billing to King County Staff is seeking Council approval of an interlocal agreement with King County authorizing the County to bill Tukwila property owners for the City's surface water services beginning in 2019. Finance staff currently bills and maintains 5,286 accounts. Transferring the billing and receipting to King County will allow staff to devote time add capacity to other existing and potential work items. This could also be a convenience to property owners as they could pay both surface water and property tax with one payment. In addition, King County's low income and age threshold are broader than Tukwila's, so more customers will qualify. King County's one-time setup fee and annual charge (based on number of accounts) will be paid by the Surface Water Fund. Committee members expressed support but would like to know more detail about the increased staff capacity created since the intent is not to reduce or eliminate positions. UNANIMOUS APPROVAL. FORWARD TO SEPTEMBER 10, 2018 COMMITTEE OF THE WHOLE. E. 2019-2020 Biennial Budget Staff presented the proposals for the Finance Department, Contingency Fund (105 Fund), Urban Renewal (302 Fund), and General Improvements (303 Fund) Finance The proposed Finance Department budget reflects a decrease of 2.26A for 2019 and a 2.84% increase for 2020, yielding a net biennial increase of less than 10/0. Staffing levels remain at 12, and the additional capacity resulting from the transfer of business licenses to the State and the potential transfer of surface water billing to King County will be redirected to other work as discussed above. Reductions occurred in extra labor and claims and judgements based upon actual usage. 87 City of Tu w a C "y Council Finance Committee FINANCE COMMITTEE Meeting Minutes September 18, 2018 - 5:30 p. M. Hazelnut Conference Room, City Hall Councilmembers: De'Sean Quinn, Chair; Dennis Robertson, Kate Kruller Staff: David Cline, Joseph Todd, Joel Bush, Jay Wittwer, Gail Labanara, Wynetta Bivens, Christy ©'Flaherty, Vicky Carlsen, Olin Johansen, Bill Kolden, Laurel Humphrey CALL TO ORDER: Committee Chair Quinn called the meeting to order at 5:30 p.m. PRESENTATIONS Bill Kolden, the City's interim Hu r on Resources Director, introduced himself to the Cornrnittee. Ii.BUSINESS AGENDA A. Resolution: Employee CompensatiQn Policy Staff presented a draft resolution incorporating feedback given in previous Committee meetings and containing policy items relating to timeliness, comparability, market ranking, and internal equity. The draft also includes a change from the former Seattle -Tacoma -Bremerton CPI index to the Seattle -Tacoma -Bellevue index introduced by the Bureau of Labor Statistics. Analysis shows that raising the assessed value for comparable cities to +750/0 keeps all employees consistent with the market. Mr. Kolden shared his perspective that Tukwila is to be commended for having a methodology in place, and that he recommends keeping flexibility within the salary schedule so there is discretion for market analysis. There are a lot of variables to consider with smaller organizations as employees often have a broad range of duties that are difficult to compare with other jurisdictions. Councilrember Robertson expressed concern with raising the market competitiveness standard to include up to 10% above, as he believes the number of employees at this level will increase. Chair Quinn noted that the Committee was tasked with addressing positions significantly above market, Mr. Kolden again encouraged flexibility so that highly skilled people are compensated fairly, Councilmember Kruller stated that Administration has a lot more flexibility with positions than certain other cities, and that once budgets are approved the Council does not have a lot of awareness of what goes on with positions. She would like the Council to have more awareness, including when positions become obsolete or change titles. Committee discussion outcomes include the following amendments and requests: Section 1(A)(1): "A written presentation of current internal and local external public agency salary and benefit trends, including a salary and benefits market survey of comparable jurisdictions, as defined herein, will be provided to the City Council by the Administration every year by the end of the third quarter that a non -represented salary increase is due." Section 1(A)(2): remove sentence 88 Finance Committee i uses Septernber 18, 201.8 Section 1(B)(3): "Those positions more than 16% above the market will not receive an adjustment during the year the market adjustment is to occur and will warrant further evaluation l-ii°, Documented justification of potential reclassification will be provided totheCity Council for review and approval. If the documented justification results in reclassification any adjustments wilt be made in alignment with City policy. Section 1(B)(4): Add language that strengthens the role of the City Council in. reclassifications. Section 1(B)(1): Add language further defining how the employee population of other cities in relation to Tukwila will be used as a second criteria. Section 1(B)(6): Add language further defining compression. Section 1(B)(7): Add language requiring annual review by the City Council. Non -represented employees in attendance were given the opportunity to address the Committee, and the following comments were shared: • Appreciates the A/V adjustment to +75%, but still concerned that the new language doesn't capture the proper comparability. Second criteria regarding number of employees should be more clearly defined. It may be worthwhile to call out cities with over 100 employees. Concerned about the number of non -represented employees whose pay will be frozen with the proposed market competitiveness language. Represented employees will not be bound by this policy and the internal inequity will get worse. Consider the consequences and impacts - certain positions will be frozen for 3 years or more. Consider the distinction between classifications and positions. Would like opportunity to continue to submit comments to the Committee. Chair Quinn recognized these concerns and stated that the Council intends to continuously review the policy and its impacts. Councilmember Kruller stated that employees need to work with Administration when they feel classifications are not accurate. Chair Quinn said employees are always welcome to share with the Council how those conversations go. RETURN TO COMMITTEE. B. 2019-2020 Biennial. Budget: Technology & Innovation Services Department Staff presented the proposed 2019-2020 budget for the Technology & Innovation Services Department, including descriptions of the programs identified as part of the Priority -Based Budgeting project. Proposed reductions are in the area of professional services, specifically cancelling the Dimensional contract for City Council video recording services and reducing the Tier 1 help desk service contract by 50°/n. The Committee requested removing reference to a new City Hall from the information memo, as no new City Hall is planned or budgeted. Councilmember Kruller inquired about the travel budget. Staff said that budget is used to send staff to relevant trainings and the department prioritizes local opportunities. FORWARD TO SEPTEMBER 24, 2018 COMMITTEE OF THE WHOLE. 89 FinanceCommittee Minutes...................r.......,,.,.,,.,..,.,.,,......,....,.a,,.....,,,...................................P............,....,.........0ctober2, 2018 C. Ordinance: Amending Business License Regulations Staff is seeking Council approval of a code -amending ordinance that would be compliant with the new State -required model licensing ordinance that includes a minimum threshold to require a business License. Legislation passed by the State in 2017 requires cities to partner with a combined licensing service or no longer issue licenses after December 2022. The City has agreed in principle to partner with Washington State's Business Licensing Service and now must amend Tukwila Municipal Code Title 5 with the model licensing language. UNANIMOUS APPROVAL. FORWARD TO OCTOBER 8, 2018 COMMITTEE OF THE WHOLE. D. Ernployee Compensation Policy Staff returned with a draft resolution incorporating feedback given in previous Committee meetings and containing policy items relating to timeliness, comparability, market ranking, and internal equity. The draft now proposes a second criteria for comparability being whether or not a city has its own police department, as that is a fairly predictable gauge of a city's service and employee levels. The draft also proposes a new definition of compression, "when there is only a small difference in pay between employees regardless of their skills, level, seniority or experience." The Committee discussed the proposed revisions, focusing on how to treat positions significantly under market. One possibility would be for the Finance Committee to review all positions out of alignment on a regular schedule. The Committee requested the resolution return to committee with additional information as follows: Comparable Cities • Return with results of the market study using the updated proposed criteria. Market Competitiveness • Correct typo in B(3): "Positions that are 50/0 or more below the market...". Compression • Add "Administration will provide a written justification for the City Council's review documenting that an adjustment is warranted prior to implementation." Non -represented employees in attendance addressed the Committee and comments included the following: • Changing B(3) to fixed dollar amounts instead of percentage would create a depreciating band as you move up the position scale. • Anything below 30/0 of market rate is probably not competitive. in labor negotiations, 3% is considered a significant move. • Employees are not familiar with the methology used in the market study. Accuracy of the market study will be extremely important if Council is considering a wage freeze based upon its results.. • True comparability includes more than just base wage. 90 Finance Committee Minutes October 2, 2018 • There is a morale problem when non -rep and union are in the same decision band and have different rates of pay. Compression exists between coworkers. Discrepancies between employees in the same band should be further researched. Chair Quinn stated that the Committee is always open to these comments and he atso stated that Administration should communicate the methodology used in the market study to employees. III. MISCELLANEOUS Adjourned at 6:48 p.m. Committee Chair Approval Minutes by LH 91 Finonce Committee Minutes Octobe 6, 2018 C. Ordinance: Business License Fees Staff is seeking Council approval of a resolution that would increase the business license fee from $70 to $112 per full time employee and from $35 to $56 per part time employee, resulting in a revenue increase of $1.5 million, The City is facing a budget shortfall due to flattening sales tax and the loss of streamlined sales tax mitigation payments. The Mayor's proposed budget includes $1.8 million in departmental reductions and additional revenues in the form of increases to gambling tax and business license fees. The proposed resolution adopts a revised business license fee schedule, changes outside contractors to a flat fee of $100, and will remove reference to the archaic "panoram" category. Committee members discussed the proposal for contractors based outside of Tukwila and decided the flat rate should be evaluated after one year. Councilmember Kruller asked for rates for neighboring jurisdictions inctuding whether they have B&O tax. Chair Quinn stressed the importance of ongoing communication with the business community, with consistent and clear messaging around why the City is considering this change. Staff has already conducted business outreach and is working on a communications plan in the event of Council passage. NO RECOMMENDATION. FORWARD TO OCTOBER 22, 2018 COMMITTEE OF THE WHOLE, D. Resolution: Employee Compensation Policy *Staff presented the draft resolution incorporating feedback given in previous Committee meetings, which containing policy items relating to timeliness, comparability, market ranking, and internal equity. Committee members discussed the current proposal and requested the following changes: • Amend B(1): "A second criteria to be used to refine comparable jurisdictions is to only include cities with their own police department." • Amend sentence at end of B(41 "Administration will provide a written justification documenting that an adjustment is warranted for the City Council's review and approval prior to implementation." • Amend sentence at end of B 5): "Administration will provide a written justification documenting that an adjustment is warranted for the City Council's review and approval prior to implementation." Councilmember Robertson stated that he believes 10%© above is too high for market competitiveness. The City should be paying the average of current comparabtes. Chair Quinn and Councilmember Kruller noted that the policy revisions add more opportunities to review anomalies as well as overall review of the policy itself. MAJORITY RECOMMENDATION. FORWARD TO OCTOBER 22, 2018 COMMITTEE OF THE WHOLE. . Contract Amendment: Interim Human Resources Director Staff is seeking an amendment to Contract 18-132 with Prothman Company for an additional $40,000 to allow the interim Human Resources Director to remain through January. The City is initiating a search for a new HR Director and anticipates having someone begin in January. UNANIMOUS APPROVAL. FORWARD TO NOVEMBER 5, 2018 REGULAR CONSENT AGENDA. 92