HomeMy WebLinkAboutFSC 2023-12-06 Agenda PacketCITY OF TUKWILA
FINANCIAL SUSTAINABILITY PLAN
FINANCIAL SUSTAINABILITY COMMITTEE MEETING #2 1 DECEMBER 6, 2023
MEETING AGENDA
■ Welcome and Recap of Meeting 1 (30 mins)
■ Community Vision and Priorities (15 mins)
■ Financial Overview (60 mins)
■ Meeting Recap and Close (15 mins)
11
2
MEETING 1 RECAP
PROJECT PURPOSE AND FRAMEWORK
:ill
PROJECT FRAMEWORK: PURPOSE
Key questions to be answered include:
• How can the City best use its limited financial resources to meet the
priorities of the community? Is the City using the right tools to
achieve long-term financial sustainability?
• How should the City's programs and services be calibrated with the
community members' desires and willingness to pay?
• How can impacts to residents and businesses be most equitably
balanced, including consideration of the range of household wealth
and business size present in Tukwila?
The City is implementing two interrelated planning processes to answer
these questions and establish the City's long-range financial strategy: a
Financial Sustainability Plan and a Utility Rate Study.
PROJECT
PURPOSE
[What
does the
Whatis�a community
willing to pay?
How should programs and senores he
bbnlanced with
community values.
Community
Values
Projected How can the City best
1 e in financial
Operating resneRee'1
and Capital
Needs
Projected
Financial Revenues
Sustainability and
Plan Revenue
Mix
Impact on
Taxpayers
___{I Is the City using the
right roofs?
�bHowand
most
iden impactscan a d
businesses Ere mart
qurtabiy balanced.
4
CITY FINANCES AND SERVICES
Macro context
• Economic conditions (inflation, resident and business ability to pay)
• Demographics and social conditions (service needs and demands)
• Regional role (revenues and costs)
• Legal context (mandated services, revenue options)
Community
Context
Revenues = Expenses
City revenues are (mostly) paid
for by residents and businesses
through taxes, fees, and rates.
Considerations
• Revenue tools in use.
• Rate compared to neighbors
and peers.
• Distribution of burden
between residents and
businesses.
• Nexus between payment and
benefit.
Projected
Revenues
and
Revenue
Mix
.'I
Impact on
Taxpayers
Pi
11Community
Values
and
Priorities
City expenses are directly or
indirectly incurred in delivering
services to residents and
businesses. Some services help
residents and businesses do well,
supporting their ability to
contribute to City revenues.
Considerations
• Service mix and levels of
service.
• Inflation (labor and capital).
Capital needs.
Projected
Operating
and Capital
Needs
Financial
Sustainabilty
A city can't run a deficit
for long. Levels of
service are adjusted to
match revenues.
There is almost always a
gap in actual and desired
services. This gap is not
visible in the City's
forecast.
Considerations
• Unmet operating
needs and capital
investments.
• Impacts of population
growth and inflation.
Revenue and
service mix that
is sustainable
and equitable.
Financial
Sustainability
Plan
PROJECT ARC
Meeting 1
Meeting 2
Meeting 3
Meeting 4
Meeting 5
Meeting 6
Community
Context
Who lives here?
What kind of
businesses?
What is the composition
of the Tukwila
economy?
:►111
Community
Values and
Priorities
Revenue
Mix
General
Spending
What does the community desire?
What are the City's biggest costs?
How do City revenue tools compare to
others?
City Programs and Services
Gather Potential Principles and Recommendations in meetings 1-4
Financial
forecast
with
revenue /
service gap
What are the City's greatest needs? How
might efficiencies be gained?
What programs and services best align
with community priorities?
Full Set of Recommendations
How can we best balance the City's financial
sustainability, the provision of City services that meet
community expectations, and equity in costs and
services?
ALTITUDES OF ENGAGEMENT
Financial
Sustainability
Committee
City
Council
City
Staff
Principles
Recommended
Directions
Policy Setting
Budget
Adoption
Program
Design
Program
Delivery
7
MEETING 1 RECAP
ADDITIONAL INFORMATION AND KEY TAKEAWAYS
:ill
ADDITIONAL INFORMATION
The Community Profile and Peer Benchmarking document has
been updated with the following information and posted to
the City's website:
• Additional detail was provided about the range of
languages spoken in Tukwila on page 6.
■ An exhibit was added to page 6 showing the proportion of
residents who identify as Hispanic or Latino.
■ Corrections were made to housing and income statistics
on page 10.
■ Additional wage -related exhibits were added on pages 16
and 17.
9
ADDITIONAL INFORMATION
Almost 20% of the Tukwila population identifies as Hispanic or
Latino, which is nearly double the King County average.
18%
Tukwila
King County
Hispanic or Latino
Not Hispanic or Latino
Top languages groups spoken at home in
Tukwila:
1. English only (53.8%)
2. Asian and Pacific languages (17.3%)
3. Spanish (12.1%)
4. Other languages (11.4%)
5. Other Indo-European languages (5.4%)
Source: US Census Bureau, 2017-2021 American Community Survey 5-Year Estimates.
10
COMMUNITY PROFILE HIGHLIGHTS
• Tukwila is a growing community, with more diversity and younger residents than King County. Tukwila
School District has students that represent many cultures and speak more than 80 world languages.
• Tukwila has a higher share of low-income households than King County, particularly among renters.
• Tukwila residents identify as less healthy than residents in King County and Washington State.
• Tukwila has a very high jobs to population ratio, with a strong commercial sector that includes retail sales
and manufacturing. Employment growth in Tukwila has been slower than peer cities, but jobs are
projected to grow over the next two decades.
• Most businesses in Tukwila have 100 or fewer employees and most jobs are in the services, retail, and
manufacturing sectors. Most workers in Tukwila commute from outside the City. This influx of workers,
along with daytime visitors, may drive up the demand for public services.
• More than half of Tukwila's General Fund revenues are from property and sales taxes. With the
Southcenter mall, a majority of Tukwila's taxable retail sales are attributed to consumer shopping.
• Tukwila's largest General Fund expenditure is toward Police services, which is similar to peer cities.
111
11
COMMUNITYVISION AND PRIORITIES
11
SOURCES
■ City's Strategic Plan, which guides the
development of the budget.
■ Economic Development Strategy, which will
guide the City's efforts to strengthen Tukwila's
economic future.
■ Parks, Recreation and Open Space Plan, which
guides future investment in the City's parks and
recreation offerings.
■ Input for the 2023-2024 Budget, in the form of
meetings, conversations, and an online survey.
13
COMMUNITY PRIORITIES
Common themes across
the City's planning
documents.
COMMUNITY VISION
The city of opportunity,
the community of choice.
CITY MISSION
To provide superior services
that support a safe, inviting
and healthy environment for our
residents, businesses and guests.
Great neighborhoods
and quality public
spaces
Opportunity for all
Tukwila residents
Vibrant and diverse
economy
Positive community
identity
14
COMMUNITY BUDGET PRIORITIES
Common themes in the
feedback community
members shared on the
budget.
Public safety
Infrastructure
maintenance
Balance
between
raising
revenue and
reducing
services
Youth and
senior
services
Human
Services &
Rental
Assistance
15
COMMUNITY BUDGET PRIORITIES
Survey participants rated
public safety and
infrastructure
maintenance as the
highest service priorities
Service Priorities: Scores from 65 Respondents
Police services and public safety
Fire and emergency medical services
Utility infrastructure maintenance
Street surface maintenance
Sidewalk and crosswalk maintenance
Park and trail maintenance
Human services and rental assistance
Economic development activity
Community emergency preparedness
Code enforcement activity
Youth activities
City future planning
Communications/community outreach
Building permit issuance
Traffic calming measures
Municipal court services
Senior activities
Foster Golf Course operations
Public records accessibility
0 50 100 150 200 250 300 350
16
COMMUNITY BUDGET PRIORITIES
Participants at
community events and
meetings identified
youth activities, public
safety, and human
services as the highest
expenditure priorities
Youth Activities
Police Services & Public Safety
Human Services & Rental Assistance
City Future Planning
Economic Development Activity
Park & Trail Maintenance
Street Surface Maintenance
Public Records Accessibility
Foster Golf Course Operations
Building Permit Issuance
Middle School Programs
Expenditure Priorities: Dots
IMO
0
5 10 15 20 25 30 35 40 45 50
17
COMMUNITY BUDGET PRIORITIES
Most participating
community members
preferred to increase
existing tax rates
Some preferred to
reduce services instead
of increasing taxes
Increase gambling tax
No tax increase, reduce services
Add a Business & Occupation tax
Increase property tax
Increase fees for services
Increase sales tax
Increase sin taxes
Cannabis shops
Revenue Options: Number of Dots
0
5 10 15 20 25 30
18
FINANCIAL SUSTAINABILITY CONSIDERATIONS
Questions to consider:
■ What do you take away as the community's
values and priorities for City services?
■ How do these values and priorities inform
your work? Are there any potential Principles
or Recommendations you would suggest
based on this?
19
FINANCIAL OVERVIEW
DIFFERENT TYPES OF REVENUES
• Most taxes support general government
functions and are not tied to a particular
service.
• Fees are related to the cost of the service
provided and are paid by the person using
the service.
• Intergovernmental revenues include state
and federal grants.
• Other financing includes sale of capital
assets and internal fund transfers.
• Charges for services includes utility rates,
which are paid by utility customers.
Across all Tukwila funds, taxes are the largest
category of revenues, followed by fees:
1%
2023 Revenue
$142.5 million
4 2 %
■ Taxes
■ Licenses & Permits
■ Intergovernmental
■ Charges for Services
■ Fines and Penalties
■ Miscellaneous
■ Other Financing
Sources: BERK, 2023; City of Tukwila, 2023.
21
PROPERTY TAX COMPARISON
Kingston
m,sh
Judge
and
f
Voshon
s -
Vashon Island
V
l 7�, Mill Creek
9
Edmonds
Mountlake
Terrace
Bothell
Kirkland Re1mOnd N•II
i
. MM.aina
Seattle' ir
ue . Sarr
J
IlL
Mercer Island 4
1 f
Newcaitle r
Vr`_•
White Center
IdaLry island
Q East Renton
rukwiiir Rer tones F♦ighlands+
Bwlen Q
Sea rac Cascade•Fauwood
v
K9
s
Maph
(bl
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Tukwila's total property tax rate is similar to rates in peer cities in King County:
Tukwila
SeaTac
Burien
Kent
Renton
Lynnwood
Eaa
$3.70
$4.04
S1.95 SO.5
52.24
$2.05
$1.40
$2.23
$1.07 $0.5-
$1.55 $1.40
$0.86 $1.70
$7.35
510.49
$10.47
$10.60
$9.94
$9.20
■ State Schools ■ City Schools ■ City Regular ■ County Regular ■ Fire ■ Other
Sources: BERK, 2023; King County Assessor's Office, 2023; Snohomish County Assessor's Office, 2023.
Cities that
contract for
fire service
Cities that are
part of a fire
authority
22
PROPERTY TAX REVENUE FROM DIFFERENT PROPERTY TYPES
Two-thirds of property tax revenue
comes from commercial property:
Residential, 25%
Apartments and
Mobile Homes
8 0/
Commercial,
67%
Sources: BERK, 2023; City of Tukwila, 2023.
23
EXAMPLE REVENUES COLLECTED FROM BUSINESSES
Tukwila has the second lowest business Tukwila has the lowest business and
license fee in the peer group:
Kent
Burien
Renton
Lynnwood
Tukwila
SeaTac
Mimi ail
$125
$112
$100
Note: These rates represent the minimum fee
assessed for general business activity.
$150
$180
$274
Burien
Tukwila
occupation tax rate in the peer group:
i i
0.121%
0.100%
0.085%
Notes: Tukwila's Business and Occupation Tax will begin January 1, 2024.
These rates represent the highest rate levied if the city has a range
depending on the type of business activity.
Sources: BERK, 2023; City of Burien, City of Kent, City of Lynnwood, City of Renton, City of SeaTac, City of Tukwila, 2023.
0.200%
24
EXAMPLES OF ADDITIONAL REVENUE TOOLS
The cities of Burien and Lynnwood collect additional revenues from transportation benefit
district charges, which are not currently used by Tukwila.
City
Lodging Tax
Transportation Benefit
District Fee
Transportation Benefit
District Sales Tax
Transportation
Impact Fees
Parks Impact
Fees
Burien
Not used
$20
Not used
$948
Not used
Kent
1.0%
Not used
Not used
$8,979
Not used
Lynnwood
2.0%
$40
0.10%
$6,525
$5,899
Renton
1.0%
Not used
Not used
$12,209
$3,276
SeaTac
1.0%
Not used
Not used
$3,733
Not used
Tukwila
1.0%
Not used
Not used
$3,726
$3,629
Sources: BERK, 2023; Municipal Research and Services Center, 2023; Washington State Department of Revenue, 2023.
25
GENERAL FUND BUDGET TRENDS
Annual Percent Growth
20%
15%
10%
5%
0%
-5%
-10%
2017 2018 2019 % 2020 / 2021 2022
GF Revenues
GF Expenditures
Inflation
Note: Inflation is based on the annual Consumer Price Index for Seattle -Bellevue -Tacoma.
Sources: BERK, 2023; City of Tukwila, 2023; US Bureau of Labor Statistics, 2023.
• The General Fund is the City's largest
and most flexible fund.
• Before the pandemic, revenues and
expenditures grew in line with
inflation. The City aligned service
levels with available revenues.
• Revenues grew as the economy
began to recover after 2020;
expenditures grew during these
years as well, though at a slower rate
in 2021.
26
GENERAL FUND EXPENDITURES AND STAFFINAG
As a service provider, approximately 70% of General Fund
expenditures are spent on staff salaries and benefits :
Total Expenditures
$80M
$70M
$60M
$50M
$40M
$30M
$20M
$10M
$OM
6%
24%
69%
6%
25%
69%
6%
27%
67%
7%
25%
68%
6%
23%
71%
6%
23%
71%
11%
23%
66%
2016 2017 2018 2019 2020 2021 2022
=MI Salaries and Benefits Operations
Debt Service and Transfers Total FTE
Sources: BERK, 2023; City of Tukwila, 2023.
350
3d5
340
335
330
325
320
315
310
305
300
w
1-
1-
City services are labor intensive.
Service needs are driven by:
• Location and role in the region
• Residential population
• Daytime population
• Community makeup
• Demands on infrastructure
Labor costs are driven by:
• Regional labor market
• Competition for high quality staff
• Minimum wage policy
• Council policy direction
27
FINANCIAL SUSTAINABILITY CONSIDERATIONS
■ The City has made significant investments in
infrastructure and systems, which need ongoing
operational support.
■ The cost of providing existing services is
increasing.
■ The Tukwila community needs a high level of
service.
■ Growth is a driver of staff workload and will
drive the demand on the City's infrastructure.
These considerations will impact the
City's financial forecast, which we will
discuss in a future meeting.
28
FINANCIAL OVERVIEW HIGHLIGHTS
What would you
add or change?
■ The City collects different types of revenues from different groups. The City's largest revenue
sources are taxes and fees.
■ Tukwila's total property tax rate is similar to peer cities in King County. Compared to peer cities,
Tukwila has lower rates for taxes and fees assessed on businesses.
■ General Fund revenues decreased significantly at the onset of the pandemic and increased as the
economy began to recover. The City has aligned service levels to match expenditures with available
revenues.
■ As a service provider, the City spends the largest percentage of General Fund expenditures on
salaries and benefits. Labor costs are driven by the regional employment market and City policies.
■ Total City staffing has decreased slightly since 2016, during which time the City's population has
continued to grow.
■ Increased service needs and the growing cost of providing existing services will impact the City's
financial forecast.
29
MEETING CLOSE
THANK YOU!
Focus of Next Meeting
■ City Programs and Services part 1
■ Department programs and services, priorities, and needs
11
31
SCHEDULING
■ Meeting 1: Kickoff and Context (November)
■ Meeting 2: Community Priorities and Financial Overview (December 6)
■ Meeting 3: City Programs and Services (January 9, Tuesday)
4 Update to City Council (mid -January)
■ Meeting 4: City Programs and Services and Financial Forecast (February 7,
Wednesday)
4 Update to City Council
■ Meeting 5: Options Discussion (March 5, Tuesday)
■ Meeting 6: Recommendations Discussion (April 3, Wednesday)
4 Final delivery of recommendations to City Council (April)
Between Meeting 4 and
Meeting 5, the City could
offer opportunities for
broader community
engagement and/or
additional business
engagement.
32
ROUNDTABLE CLOSING COMMENTS
December 1, 2023
City of Tukwila Financial Overview
Tukwila Financial Sustainability Plan I December 2023
Overview
This document provides an overview of the City of Tukwila's revenue tools, comparisons to revenue tools in
peer cities, General Fund budget trends, and staffing levels. This information can be used to provide a
basis for understanding the City's financial status and to guide the City's financial sustainability plan.
Key Points
■ The City collects different types of revenues from different groups, such as residents and businesses.
• Tukwila's total property tax rate is similar to peer cities in King County. Compared to peer cities,
Tukwila has lower rates for taxes and fees assessed on businesses.
■ The cities of Burien and Lynnwood collect additional revenues from transportation benefit district
charges, which are not currently used by Tukwila.
• General Fund revenues decreased significantly at the onset of the pandemic and increased as the
economy began to recover. As part of the budget and budget amendment processes, the City aligns
service levels to match expenditures with available revenues.
■ As a service provider, the City spends the largest percentage of General Fund expenditures on
salaries and benefits. Labor costs are driven by the regional employment market and City policies.
■ Total City staffing has decreased slightly since 2016, during which time the City's population has
continued to grow.
■ Increased service needs and the growing cost of providing existing services will impact the City's
financial forecast.
1
Revenue Tools
Exhibit 1 shows the City's budgeted revenue mix across all funds in 2023 and 2024. Taxes are the
largest category of revenue, followed by fees which include charges for service, licenses, permits, fines,
and penalties. The City also receives intergovernmental revenues, such as state and federal grants, and
other financing, such as sale of capital assets and internal fund transfers.
Exhibit 1: Tukwila Revenue Mix for All Funds, 2023-2024
4
2023 Revenue
$142.5 million
Sources: BERK, 2023; City of Tukwila, 2023.
0.5%
■ Taxes
■ Licenses & Permits
• Intergovernmental
• Charges for Services
• Fines and Penalties
■ Miscellaneous
• Other Financing
2024 Revenue
$156.1 million
Most taxes support all government functions and are not tied to a particular service. Some taxes are
collected for a specific purpose or are restricted by State law. Fees are related to the cost of the service
provided and are paid by the person using the service. To illustrate the difference, all property owners
pay property tax, and the amount does not depend on how much a resident uses City services. Property
owners only pay permit fees if applying for a permit and the fee is intended to offset all or a portion of
the cost of providing the service. Utility rates, which are categorized as a charge for service, support
operating and capital needs for the utility. These are paid by customers of the utility and may be based
the type of customer or consumption.
Exhibit 2 lists examples of the City's major revenue collections, who pays them, how they are used, and
the 2024 budgeted amount from all funds. Some revenues are collected from multiple groups, such as
residents and businesses, and some are collected from only one group, such as users of a service or just
businesses. The revenues listed do not include all revenues collected by the City but include the City's
largest sources or the most common taxes, fees, and rates paid by members of the community.
r lI� December 1, 2023 City of Tukwila Financial Overview
2
Exhibit 2: Examples of Tukwila Major Revenue Sources with Groups Impacted and Uses
Revenue Source
Received From
Use of Revenue
2024 Budget
Taxes
Property Tax Residents, businesses
General operations
$23.1 million
Retail Sales Tax Residents, visitors
General operations
$21.4 million
Utility Tax Private utility providers
General operations, though a
portion of solid waste tax revenue
is dedicated to streets projects
$5.6 million
Business & Businesses
Occupation Tax
General operations
$3 million
Gambling and
Admissions Tax
Visitors to gambling/
entertainment venues
Gambling tax must first be used $5.4 million
for public safety
Fees
Business License Fees Businesses
General operations
$3.2 million
Impact Fees Developers
Capital improvements
$900,000
Parks & Recreation Users of parks &
Activity Fees recreation programs
General operations
$1.6 million
Building Permit Fees
Residents, organizations, General operations
businesses
$1.7 million
Utility Rates
Water Utility
Charges
Residents, businesses
Water operations and capital;
cannot be used for general fund
operations
$8.2 million
Sewer Utility
Charges
Residents, businesses
Sewer operations and capital;
cannot be used for general fund
operations
$11.1 million
Surface Water
Utility Charges
Residents, businesses
Surface water operations and
capital; cannot be used for
general fund operations
$8.1 million
Note: 2024 budgeted revenue amounts are from all City funds. The City dedicated some of the Business & Occupation tax to
restoring police positions that had been frozen during the pandemic.
Sources: BERK, 2023; City of Tukwila, 2023.
r lI� December 1, 2023 City of Tukwila Financial Overview
3
Property tax is a large source of revenue for the City. Over two-thirds of the City's property tax revenue
comes from commercial property and one quarter comes from residential property (Exhibit 3).
Exhibit 3: Property Tax Revenue by Property Type, 2022
Residential, 25%
Apartments and
Mobile Home
8°/
Source: City of Tukwila; BERK 2023.
Commercial,
67%
Comparison to peer cities
The peer group in this analysis includes the City of Burien, City of Kent, City of Lynnwood, City of Renton,
and City of SeaTac. These cities are near Tukwila, serve similar populations, and in the case of Lynnwood
(located in Snohomish County) also have a large shopping center. Exhibit 4 shows that Tukwila and peer
cities generally have a higher share of the population than King County that is Black or African American,
Asian, and Hispanic or Latino. Exhibit 5 shows that Tukwila and peer cities have a greater share of the
population than King County that is below the area median family income.
Exhibit 4: Racial Composition of Tukwila, Peer Cities, and King County, 2021
Population
White alone
Black or African American alone
American Indian and Alaska Native alone
Asian alone
Native Hawaiian and Other Pacific Islander alone
Some other race alone
Two or more races
Hispanic or Latino
Not Hispanic or Latino
Tukwila
21,545
33%
19%
1%
24%
4%
13%
6%
18%
82%
Burien
51,646
53%
9%
0%
15%
1%
13%
9%
23%
77%
Kent
134,890
43%
12%
0%
22%
2%
10%
10%
16%
84%
Lynnwood
38,812
58%
9%
0%
17%
0%
4%
12%
14%
86%
Source: US Census Bureau, 2017-2021 American Community Survey 5-Year Estimates.
Renton
105,313
48%
8%
1%
24%
1%
6%
11%
16%
84%
SeaTac
30,867
38%
22%
1%
14%
3%
14%
8%
22%
78%
King County
2,240,876
61%
6%
1%
19%
1%
4%
9%
10%
90%
riII December 1, 2023 City of Tukwila 1 Financial Overview
4
Exhibit 5: Households by Median Family Income in Tukwila, Peer Cities, and King County, 2020
Wil
30%
14%
18%
20%
IN
38%
la.
11%
16%
16%
Tukwila Burien
38
III
13%
14%
17%
Kent
43%
IL
13%
16%
13%
11%
16%
15%
33%
13%
18%
21%
II
Renton Lynnwood SeaTac King County
■ Above Median Income (>100%)
Moderate Income (80-100%)
Low -Income (50-80%)
Very Low -Income (30-50%)
• Extremely Low -Income (<30% MFI)
Note: Median family income refers to the HUD Area Median Family Income for the Seattle -Tacoma -Bellevue Metropolitan
Statistical Area, which is adjusted based on household size.
Source: US HUD Comprehensive Housing Affordability Strategy (CHAS) data, 2016-2020.
Exhibit 6 compares property tax rates for Tukwila and peer cities. The total property tax is similar for
Tukwila and peer cities in King County. Tukwila and SeaTac both pay for fire services through a contract,
so use local property tax revenue to pay for this and have a higher city levy rate. The other cities are
annexed into a fire district, so do not collect property tax revenue to pay for fire service. Across all peer
cities, a large share of property tax goes to other taxing districts.
Exhibit 7 and Exhibit 8 compare the business and occupation tax rate and business license fee in Tukwila
and peer cities. Tukwila has the lowest business and occupation tax rate and the second lowest business
license fee.
riII December 1, 2023 City of Tukwila 1 Financial Overview
5
Exhibit 6: Property Tax Levy Rate for Tukwila and Peer Cities, 2023
Tukwila
Sea Tac
Burien
Kent
Renton
Lynnwood
$2.31
$2.31
5
$2.05
$1.40
$2.31
$2.31
$2.31
.61 $1.70
$7.35
$10.49
$10.47
$1.40 $10.60
$ 9.94
$9.20
■ State Schools =City Schools ■City Regular • County Regular ■ Fire ■ Other
Note: "Other" includes other taxing districts and excess city levies.
Sources: BERK, 2023; King County Assessor's Office, 2023; Snohomish County Assessor's Office, 2023.
Exhibit 7: Business and Occupation Tax Rate for Tukwila and Peer Cities, 2023
Kent
Renton
Burien
Tukwila
0.121%
0.100%
0.085%
0.200%
Cities that
contract for
fire service
Cities that are
part of a fire
authority
Notes: Tukwila's Business and Occupation Tax will begin January 1, 2024. These rates represent the highest rate levied if the city
has a range depending on the type of business activity.
Sources: BERK, 2023; City of Burien, City of Kent, City of Renton, City of Tukwila, 2023.
r lI� December 1, 2023 City of Tukwila Financial Overview
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Exhibit 8: Business License Fee for Tukwila and Peer Cities, 2023
Kent
Burien
Renton
Lynnwood
Tukwila
SeaTac
$125
$112
$100
$150
$180
Note: These rates represent the minimum fee assessed for general business activity.
$274
Sources: BERK, 2023; City of Burien, City of Kent, City of Lynnwood, City of Renton, City of SeaTac, City of Tukwila, 2023.
Other revenue tools that are commonly used by cities include a transportation benefit district fee or tax,
which pays for street maintenance, or impact fees, which pay for capital improvement projects. Exhibit 9
shows these tools and which peer cities currently use them. Tukwila assesses a lodging tax, along with
most other cities. Tukwila also assesses impact fees, which are below some rates of peer cities. Only two
cities in this group charge fees for a transportation benefit district.
Exhibit 9: Other Revenue Tools and Current Rates for Tukwila and Peer Cities, 2023
Transportation Transportation Benefit Transportation Parks
City Lodging Tax Benefit District Fee District Sales Tax Impact Fees Impact Fees
Burien Not used $20
Not used
$948 Not used
Kent 1.0% Not used Not used $8,979 Not used
Lynnwood 2.0% $40 0.10% $6,525 $5,899
Renton 1.0% Not used Not used
$12,209 $3,276
SeaTac 1.0% Not used Not used $3,733 Not used
Tukwila 1.0%
Not used Not used
$3,726 $3,629
Sources: BERK, 2023; Municipal Research and Services Center, 2023; Washington State Department of Revenue, 2023.
r lI� December 1, 2023 City of Tukwila Financial Overview
General Fund Budget and Staffing Trends
The General Fund is the City's largest and most flexible fund. Exhibit 10 shows that prior to the
pandemic, between 2017 and 2019, revenues and expenditures grew in line with inflation. The City
aligned service levels and expenditures with available revenues. Revenues declined during the pandemic,
in 2020, and expenditures decreased to match. Revenues grew after the pandemic, in 2021 and 2022,
as the economy began to recover during the pandemic. Expenditures grew during 2021 and 2022 as
well, though at a slower rate in 2021.
In response to the decrease in revenues in 2020, the City froze positions, implemented employee
furloughs, and reduced service levels in areas such as street maintenance and recreation. In the 2021 -
2022 biennium, federal funds allowed the City to reinstate key positions in Parks and Recreation,
Community Development, and the Streets Division to continue to provide services in these areas. However,
this did not return the City to previous service levels as several positions continue to be frozen. Exhibit 11
depicts the impact to the City's total position count, which declined between 201 6 and 2022.
Exhibit 10: Tukwila General Fund Revenue and Expenditure Annual Growth Compared to Inflation, 2017-
2022
Annual Percent Growth
20%
15%
10%
5%
2017 2018 2019 % 2020 2021 2022
GF Revenues
GF Expenditures — Inflation
Note: Inflation is based on the annual Consumer Price Index for Seattle -Bellevue -Tacoma.
Sources: BERK, 2023; City of Tukwila, 2023; US Bureau of Labor Statistics, 2023.
11IDecember 1, 2023 City of Tukwila I Financial Overview
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The City's General Fund expenditures are made up of the following categories:
• Salaries and benefits include overtime, extra labor, holiday pay, insurance, pensions, uniforms, and
unemployment compensation.
• Operations include supplies, professional development, communication, advertising, rentals, leases,
technology services, public utilities, repairs, and maintenance.
• Debt service and transfers include principal and interest payments on debt and internal transfers
from the General Fund to other City funds.
Exhibit 11 shows that approximately 70% of General Fund expenditures are spent on salaries and
benefits. A city provides services to the community, which require employees to deliver, so it is standard
that most of a city's budget is spent on salaries and benefits. Labor costs are driven by the regional labor
market, competition for high quality staff, and City and organizational policies.
Exhibit 11 also shows the number of full-time positions over this period. The total number of positions has
been consistent, though there was a decline in 2020 as the City reduced service levels.
Exhibit 11: Tukwila General Fund Expenditures by Category and Total FTEs, 2016-2022
$80M
a
S70M
uxi S60M
15
- S50M
$40M
$ 30M
$ 20M
$1OM
SOM
6%
24%
69%
6%
23%
69%
27%
67%
25 %
68%
6%
23%
71%
6%
23%
71%
11%
23%
66%
2016 2017 2018 2019 2020 2021 2022
Salaries and Benefits
Debt Service and Transfers
Operations
Total FTE
Note: The City had a large one-time debt service payment in 2022.
Sources: BERK, 2023; City of Tukwila, 2023.
350
345
340
335
330
325
320
315
310
305
Total FTEs
Financial Sustainability Considerations
As noted above, the City has not yet returned to its previous service levels and some positions remain
frozen. The City will need to balance the desire to return to previous service levels, or enhance service
levels, with available resources.
61 December 1, 2023 City of Tukwila I Financial Overview
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Some additional considerations include:
The City has made significant investments in infrastructure and systems. These investments need
ongoing operational support.
The cost of providing existing services is increasing. Some costs are outside of a department's control,
such as new technology or participating in mandated training.
The Tukwila community needs a high level of service. The City has various social service needs. There
are many new residents, including refugees and people seeking asylum. The consumers of City services
may need individualized support. Departments have to staff for a larger population because of the high
number of daytime visitors.
Growth is a driver of staff workload and will drive the demand on the City's infrastructure. As the
City grows, it will have new projects and new employees, which adds to the workload of internal service
departments. With more residents, jobs, and daytime visitors, some departments will need to add staff to
provide the same level of service.
it December 1, 2023 City of Tukwila I Financial Overview
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December 1, 2023
City of Tukwila Community
Priorities Overview
Tukwila Financial Sustainability Plan I December 2023
Overview
This document provides an overview of the Tukwila community's values and priorities as expressed in City
documents and plans. This information provides context for understanding what the community's priorities
are and how they inform City priorities and service delivery. Common themes reflect the community's
desire to have:
• great neighborhoods and quality public spaces,
• a vibrant and diverse economy,
• a positive community identity,
• and opportunity for all Tukwila residents.
Strategic Plan
The City's budget document references the City's strategic priorities, which were articulated in the Tukwila
Strategic Plan. These priorities are used to align resources so that the City funds programs and services
that align with community desires. The Strategic Plan establishes the City's Vision and Mission:
COMMUNITY VISION
The city of opportunity,
the community of choice.
CITY MISSION
To provide superior services
that support a safe, inviting
and healthy environment for our
residents, businesses and guests.
:iil 1
The Strategic Plan's five Goals that inform budget priorities are:
1. A community of inviting neighborhoods and vibrant business districts.
2. A solid foundation for all Tukwila residents.
3. A diverse and regionally competitive economy.
4. A high performing and effective organization.
5. A positive community identity and image.
Economic Development Strategy
The City has developed an Economic Development Strategy to guide its efforts to strengthen Tukwila's
economic future. The primary purpose of the Economic Development Strategy is to describe Tukwila's
vision for sustainable and inclusive economic prosperity and to identify strategies and actions to achieve
that vision. The vision in the strategy is: "Tukwila is a vibrant community with a strong and sustainable
economy that celebrates and empowers its diversity, supports economic prosperity for all residents,
and sustains a foundation for businesses of all sizes."
The Economic Development Strategy's Goals are:
1. A vibrant, diverse, and resilient economy.
2. A safe and desirable community with a positive identity.
3. Prosperity and opportunity for businesses, workers, and residents.
4. A supportive environment for small business and entrepreneurs.
5. A community that celebrates and invites diversity.
Parks, Recreation and Open Space Plan
Another planning document that incorporates the community's priorities is the City's Parks, Recreation and
Open Space Plan (PROS Plan), which was adopted in 2020. This PROS Plan guides future investments for
the City's parks and recreation system. Plan recommendations
during the planning process:
■ Close interaction with nature.
■ Cultural heritage inspiration.
■ Vibrant urban water centerpiece.
■ Lively park -adjacent commerce.
■ Expanded parks/preserved open space.
■ Reinvigorated quality of existing parks and facilities.
■ Fun fitness opportunities.
■ Affordable, stimulating experiences for all ages.
■ Convenient, accessible system.
■ Safe, family -friendly places.
The Plan's Goals are focused as follows:
1. Safe, convenient, and connected system.
2. A network of green spaces.
3. A sense of community.
address priorities and key needs identified
•j December 1, 2023 City of Tukwila I Community Priorities Overview
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4. Opportunities for all.
5. Safe, inviting, and affordable.
b. Healthy people and places.
Budget Engagement
The City engaged with community members in 2022 to gather feedback on priorities and ideas for the
2023-2024 biennial budget. Staff attended meetings, events, and gatherings to listen to community
members. Staff met with the City's advisory boards and commissions, attended the farmers' market and
park events, and held community stakeholder meetings with seniors, Black community members, and high
school students. Staff also offered an online survey and an online budget tool that allowed individuals to
propose ways to balance the budget.
Community members who participated in engagement placed a high priority on:
• public safety,
• infrastructure maintenance,
• and social services such as youth and senior activities.
Regarding service levels, participating community members preferred to increase existing tax rates, such
as the gambling tax or property tax, or add a business and occupation tax, to maintain existing services
rather than reduce services.
Service Priorities
During community events and meetings, community members reviewed information on City services and
revenue options prepared by staff and identified their service priorities and revenue ideas in a dot
exercise. Listed below are the expenditure priorities in order with the total number of dots:
Youth Activities
Police Services & Public Safety
Human Services & Rental Assistance
City Future Planning
Economic Development Activity
Park & Trail Maintenance
Street Surface Maintenance
Public Records Accessibility
Foster Golf Course Operations
Building Permit Issuance
Middle School Programs
Expenditure Priorities: Dots
0 5 10 15 20 25 30 35 40 45 50
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The City received 65 responses to the online survey. Individuals who participated in the online survey also
identified service priorities. Listed below are the rank of service priorities from the online survey.
Service Priorities: Scores from 65 Respondents
Police services and public safety
Fire and emergency medical services
Utility infrastructure maintenance
Street surface maintenance
Sidewalk and crosswalk maintenance
Park and trail maintenance
Human services and rental assistance
Economic development activity
Community emergency preparedness
Code enforcement activity
Youth activities
City future planning
Communications/community outreach
Building permit issuance
Traffic calming measures
Municipal court services
Senior activities
Foster Golf Course operations
Public records accessibility
Revenue Ideas
0 50 100 150 200 250 300 350
During community events and meetings, community members identified their top ideas for revenues
through a dot exercise. Listed below are the revenue ideas in order with total number of dots:
Revenue Options: Number of Dots
Increase gambling tax
No tax increase, reduce services
Add a Business & Occupation tax
Increase property tax
Increase fees for services
Increase sales tax
Increase sin taxes
Cannabis shops
0 5 10 15 20 25 30
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