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Home My WebLink AboutReg 2024-04-15 Item 7C - Budget - 2025-2026 Biennial Budget DiscussionCOUNCIL AGENDA SYNOPSIS Initials Meeting Date Prepared by Mayor's review Council review 4/15/24 VC ITEM INFORMATION ITEM NO. 7.C. STAFF SPONSOR: VICKY ORIGINAL AGENDA DATE: 4/15/24 AGENDA ITEM TITLE Continuation of the 2025-2026 Budget Development Process CATEGORY ® Discussion Mtg Date 4/15/24 ❑ Motion Mtg Date ❑ Resolution Mtg Date ❑ Ordinance Mtg Date ❑ Bid Award Mtg Date ❑ Public Hearing Mtg Date ❑ Other Altg Date SPONSOR ❑ Council ❑ Mayor ❑ Admin Svcs ❑ DCD ® Finance ❑ Fire ❑ P&R ❑ Police ❑ PW SPONSOR'S SUMMARY Continuation of the 2025-2026 Budget Development process and discussion. Items to be covered include: Budget Process Recap, Budget Building Framework, Introduction to Priority -Based Budgeting (PBB), Revenue Overview, and Capital Budget Overview REVIEWED BY ❑ Trans&Infrastructure Svcs ❑ Community Svcs/Safety ❑ Finance & Governance ❑ Planning & Community Dev. ❑ LTAC DATE: ❑ Arts Comm. ❑ Parks Comm. ❑ Planning Comm. COMMITTEE CHAIR: RECOMMENDATIONS: SPONSOR/ADMIN. Finance COMMITTEE COST IMPACT / FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION 4/15/24 MTG. DATE ATTACHMENTS 4/15/24 Power Point Presentation 85 86 CITY OF TUKWILA 2025-26 x 1 1 BUDGE DEVELOPMENT PROCESS te41 Ana it The City of opportunity, the community of choice. 00 CO CO 2025-26 Budget Development Marty Wine, Interim City Administrator Vicky Carlsen, Finance Director Pete Mayer, Parks & Rec Director Griffin Lerner, Fiscal Analyst, Public Works Today's Topics • Budget Process Recap • Budget Building Framework • Introduction to Priority Based Budgeting (PBB) • Revenue Overview • Capital Program Planning & Budget Overview • Next Steps ICity of Tukwila 2025-26 Budget Development 2 Key Milestones MARCH BUDGET KICK-OFF JULY Capital Improvement Program Briefing; City Comp Plan Briefings NOVEMBER Public Hearings & Final Budget Adoption RIL-MAY Financial Sustainability Plan Recommendations; Community outreach AUGUST 6 Year Financial Forecast; Budget Document Prep; City Comp Plan Briefings DECEMBER Final Adopted Budget Distributed APRIL-MAY Policy Reviews; Utility cost of service; Council Guidance SEPTEMBER Preliminary Budget Proposal Program Presentations; City Comp Plan Briefings MAY-JUNE City Comp Plan Briefings; Community Outreach Update OCTOBER Program Presentations Revised Proposed Budget City of Tukwila 2025-26 Budget Development 3 03 Budget Process Recap City of Tukwila 2025-26 Budget Development 4 What's New in 2025-26 • Creation of a single consolidated operating and capital budget document • Increased internal coordination & alignment • More robust community engagement and outreach • Early development of a 2025-26 Work Plan • Budget presented to Council by program; not Department • Focus on capital planning, O&M costing and project management City of Tukwila 2025-26 Budget Development 5 CO N Budget Outreach & Engagement Phase 1- Community Feedback • Financial Sustainability Committee • Website & social media • Display tables- ICC and City Hall Phase 3- Boards, Commissions, Communities of Focus • Boards & Commissions workshops • Focused outreach to hard -to -reach community members; language support Phase 2- Statistically Valid Survey • City Services & Needs and Priorities Phase 4- City Staff & Council • Staff Workshop • Budget Workshops and Presentations City of Tukwila 2025-26 Budget Development 6 Budget Building Framework City of Tukwila 2025-26 Budget Development 7 CO W CO Building blocks... Preliminary Budget Proposal Debt Service Estimate Strategic Plan Financial Forecast Department and Program Budget Proposals and Prioritization City Comp Plan System Plans & Capital Improvement Plan Mayor and Council Priorities Community Outreach, Input and Feedback State & Local Requirements & Policies City of Tukwila 2025-26 Budget Development 8 Demystifying the budget process... • City funds • Governmental • Proprietary • Fiduciary Reporting Entity Governmental Category — General Fund HSpecial Revenue Funds Capital Projects Fund Debt Service Funds Permanent Funds Proprietary Category Enterprise Funds Internal Service Funds Fiduciary Category Private Purpose Trust Funds Investment Trust Funds Pension Trust Funds LAgency Funds Page 6 - 9 City of Tukwila Financial Overview document City of Tukwila 2025-26 Budget Development 9 Demystifying the budget process... • Policies & practices (starting page 11) • Financial policies — Resolution 2014 • Debt policy — Resolution 1840 • Purchasing policy — Resolution 2015 • Bond Rating AA+ (starting page 51) City of Tukwila 2025-26 Budget Development 10 Budget Building Assumptions City of Tukwila 2025-26 Budget Development 11 CO v Included in Budget Presented to Council • Same level of service as today, plus • 9.75 frozen positions and supplies/services unfrozen, plus • Any new initiative, enhancement to existing programs, and/or streamlining effort approved by Mayor for inclusion in budget City of Tukwila 2025-26 Budget Development 12 What about the Financial Sustainability Plan? • Presentation to Council April 15th .Council priorities and guidance April 22nd .Guidance incorporated into proposed budget City of Tukwila 2025-26 Budget Development 13 O O How enhancement requests will be handled? • Staff presents proposal to Mayor and Department Heads by end of April • Proposals given the green light will be included in the budget that is presented to Council in September City of Tukwila 2025-26 Budget Development 14 Priority Based Budgeting (PBB) City of Tukwila 2025-26 Budget Development 15 O N Priority Based Budgeting (PBB) A priority -driven budgeting process that demonstrates how resources are allocated to the programs and services that provide the greatest value to our residents. PBB • Drives alignment between the City Strategic Plan and community priorities • Encourages strategic decision -making regarding funding, adding and/or eliminating programs and services Source: City of Tukwila, WA 2023-2024 Biennial Budget, P. 30. City of Tukwila 2025-26 Budget Development 16 Foundations of PBB • Prioritize services • Do the important things welt • Question past patterns of spending • Know the true cost of doing business • Provide transparency of community priorities • Provide transparency of service impact: • Demand accountability for results • Evaluating programs based on their influence in achieving the Strategic Goals Source: City of Tukwila, WA 2023-2024 Biennial Budget, P. 30. City of Tukwila 2025-26 Budget Development 17 W How the programs will be presented to Council: What to Expect • Programs presented by Tier within each category • Each program will show the following: • 4 years of budget (2023-2026) • FTE count • FTE, supplies/service budget • Revenue generated by program • Financial statement for each fund City of Tukwila 2025-26 Budget Development 18 Program Alignment & Categorization Aligned & Innovative Strategic & Responsive Services Engagement Accessible Healthy & Sustainable Mobility Networks Community adS **7• 8s Connected & Vital Infrastructure Integrated Operations Safety & Resiliency ICity of Tukwila 2025-26 Budget Development 19 O U1 O Q) Structure of Revenue Guide • Includes all major revenue sources • How the revenue is used • Description of revenue stream • Base • Collection method • Funds that receive the revenue source • Restrictions • Tukwila Municipal Code (TMC) • Revised Code of Washington (RCW) • Relevant historical data • 10-year history City of Tukwila 2025-26 Budget Development 20 Revenue Guide Overview City of Tukwila 2025-26 Budget Development 21 O CO Structure of Revenue Guide • Items of Note: • Pay attention to restrictions • Which funds receive the source • Notice volatility of some revenues • Notice some revenue sources are declining $1,800 m $1,700 $1,600 L F- $1,500 $1,400 $1,300 $1,200 $1,100 s1,o00 $270 C $250 L ~ $230 $210 $190 $170 $150 Electric Utility Taxes I....i-••"I•"•1....I....I....1... lI 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Cable Utility Taxes ......... .. .■. ..... I I 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 City of Tukwila 2025-26 Budget Development 22 Structure of Revenue Guide, continued • Items of Note: • Policy changes • Effects of COVID Thousands $700 $600 $500 $400 $300 $200 $100 $- Parks & Recreation Fees and Rentals Ii Ii liii Ii Ii.,,,,1 II 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 ■Parks & Recreation Fees ■Recreation Rentals City of Tukwila 2025-26 Budget Development 23 C CO 0 Structure of Revenue Guide Property Tax Description Property tax is a tax on all property within the City of Tukwila. This revenue is used to support general governmental purposes. Rates are expressed in "dollars per $1,000 of assessed value (AV)". Base Tax is levied on all land, buildings, residential homes, and personal property within the city limits. Collection Method Funds Use of Revenue Property taxes are received daily from King County by electronic funds transfer. The majority is collected in the 2nd and 4th quarters. GF000100-311100 — Regular Property Tax Levy DS213100-311100 — Excess Property Tax Levy (Voter Approved Debt) PR301800-311137 — Land Acquisition, Recreation, and Park Development Supports general operations of city government and funds capital projects not funded by other sources. Excess levy in GL Key DS213100 is used to pay debt service costs on 2016 & 2019 UTGO bonds. Revenues for Land Acquisition, Recreation, and Park Development are Levied by King County, and a portion is passed thru to the City. City of Tukwila 2025-26 Budget Development 24 Structure of Revenue Guide Restrictions S10 Property Tax Limit In Washington TMC RCW O $0.50 $3.60 for sax additional purposes' O Preservation of open space O Emergency medical services O Affordable housing O Metropolitan parks O Criminal lushce O rerry seines Local Districts Counties. cities. and road districts ate known as "senor districts" and get first priority in levying the 55 90: O Countaes receive $180 fcr general fund O County road levy of S2.25 rs authortzed wl unincorporated areas O Cities recenw $3.375 O The remainder is allocated to -rumor cestricts" which include fare, water, park and recreation. cemetery. hospital. stadium. flood control. airport. and numerous other districts Note.. PUN aid pat bstruts are mew districts that are not salad to the SS.90 eggreqa!, k for local regular loots. Each has a hut of 50.45. Each year the City sets a property tax rate by ordinance 84.52.043: Establishes maximum levy rates for the various types of taxing districts (state, counties, cities, etc.). The maximum Statutory Levy Rate for the City of Tukwila, as allowed by RCW 84.52.043, is $3.825, which includes $0.225 for the Firemen's Pension Fund as allowed by RCW 41.16.060; City of Tukwila 2025-26 Budget Development 25 N Structure of Revenue Guide 525,000 523,000 521,000 519,000 - $17,000 to 515,000 2 513,000 511,000 59,000 57,000 55,000 Levy Rate Yea r Property Taxes 2014 2015 2016 2::17 2018 2019 2020 2021 2022 2023 City of Tukwila 2025-26 Budget Development 26 Structure of Revenue Guide Thousands $23,000 $21,000 $19,000 $17,000 $15,000 $13,000 $11,000 $9,000 $7,000 $5,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 ■ Excess PropTax Levy -Voted Debt ■Regular Property Tax Levy City of Tukwila 2025-26 Budget Development 27 Capital Planning & Budget Overview Pete Mayer, Parks and Recreation Director Griffin Lerner, Fiscal Analyst, Public Works City of Tukwila 2025-26 Budget Development 28 Context: Key Terms & Relationships • Capital Facilities Plan- 20 years • Transportation Improvement Program/Plan- 6 years • Capital Improvement Program/Plan- 6 years • Other System Plans- varies • Capital Budget- 2 years Capital Facilities Plan (GMA Requirement) CIP (GMA Requirement) TIP (GMA Requirement) System Plan - Sewer System Plan - Water System Plan - Surface Water System Plan - Parks & Trails City of Tukwila 2025-26 Budget Development 29 U1 Q) Comprehensive Planning and the CIP Capital Facilities Element • Growth Management Act requirement- part of Comp Plan • Inventory of existing capital facilities • Forecast of future needs • Proposed locations/capacities or new capital facilities • 6 year financial plan (aka CIP) • Reassessment process Capital Improvement Program (CIP) • Fulfills GMA requirement- 6 year financial plan • Includes roads, parks, trails, open space, sewer, water, storm drainage, buildings, technology and equipment • Flexible program- prioritized list of infrastructure maintenance & improvements with projected costs and sources of funding • Reflects projects from the Transportation Improvement Plan (TIP) & other system plans City of Tukwila 2025-26 Budget Development 30 Capital Improvement Program Overview • Six (6) Year Capital Improvement Program (CIP) • priority investments in infrastructure and facilities • Reviewed and updated every 2 years • The CIP is fiscally constrained: projects must have funding identified to be included in the CIP • Capital Budget = Reflects the first 2 years of the CIP • Revenue sources include grants, impact fees, taxes restricted to capital projects (e.g. Real Estate Excise Tax), and bond proceeds. Very little General Fund revenues (except for debt service repayment) are used to fund capital projects. tarty nl Washington FINANC 023-202g AP IAL PL4NNIN Y'_• NP+�aOVfryENTpROGR M 7. City of Tukwila 2025-26 Budget Development 31 CO CIP Planning Process 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2021-2026 CIP 2023-2028 CIP 2025-2030 CIP 2027-2032 CIP J City of Tukwila 2025-26 Budget Development 32 Building the CIP - What's in a CIP? 0.�ECT SUp4MW` C1.(y pFtUMM1ACPPttW-PR xoxe pon••• o. • Es' 0 ,020 Gxo ,9 • Estimated overall cost of each project • Estimated operational and maintenance cost for each project • Estimated project timelines • Funding sources • Project prioritization IV O Consideration Factors fool Financial factors Grant availability; Fund balance; Cost versus benefit; Sunk costs; Avoided costs; Stewardship Maintenance feedback Subject matter experts in the field everyday Continue Existing CIP Existing projects carry over year-to-year it Public Effectiveness feedback Part of planning and design process Alignment with City mission and values Mandates Timing/ Urgency Meet new Project requirements readiness; or law (comp linkage to plans, etc.) other high priority projects Scaling Level of Service (LOS); Engineer availability; Right project at this time City of Tukwila 2025-26 Budget Development 34 General Fund vs Enterprise Fund Projects Tukwila's General Fund • Residential Streets (103 Fund) • Bridges & Arterial Streets (104 Fund) • Parks & Recreation (301 Fund) • Facility Improvements (303 Fund) • Public Safety Plan (305 & 306 Fund) Tukwila's Enterprise Funds • Water (401 Fund) • Sewer (402 Fund) • Foster Golf Improvements (411 Fund) • Surface Water (412 Fund) N N Funding of Capital Projects • Impact Fees • Concurrency fees • Solid Waste Utility Tax • Franchise fees • Land Sales • Grants • Bonds (dedicated revenues) City of Tukwila 2025-26 Budget Development 36 Funding of Capital Projects- Grants Grants • Grant • Federal vs. non-federal grants • Grant eligibility and restrictions • Grant match requirements • Example grant funded projects Bonds • Voter -approved bonds • Councilmanic bonds • General Fund • Grants City of Tukwila 2025-26 Budget Development 37 N W N Investment Profile: CIP Spending over time first two years of adopted CIP 2017-2022 CIP 2021-2026 CIP Capital expenditures vary greatly, depending on funding, needs, & council priorities • Residential Streets • Bridges & Arterial Streets • Parks • Urban Renewal ❑ General Government ❑ Public Safety • City Facilities • Water Utility ■ Sewer Utility • Surface Water Utility • Foster Golf 2019-2024 CIP 2023-2028 CIP City of Tukwila 2025-26 Budget Development 38 How We Fund Capital Projects: 2023-2028 CIP at -a -glance (first zyears ofCIP) Residential Streets Surface Water City Facilities U' Total: 48% $8.1 M 82% Bridges & Arterial Streets Parks 21% 02% fTotal: l $24.8M 77% ro%p Total: 56% 34% $2.1 MNois 14°/ 1 5% Total: $5.9M 28% 43% ' Water & Sewer • Grants • Capital Funds • Enterprise Funds • Other City of Tukwila 2025-26 Budget Development 39 N 01 N 0) Looking Ahead: 2025-26 CIP Preview Key Issues & Projects Issues/Challenges • Accounting for O&M costs • Deferred Maintenance/Backlog • Facility Condition & Planning • ADA Projects & Transition Plan • Cost Escalation & Inflation • Permitting and Consultations • Dedicated funding for capital facilities • Annual Street Maintenance & Reconstruction Highlighted Projects • Water Reservoir • 42nd Avenue Bridge Replacement • Public Works Shop Phase II • Allen Town Truck Re-routing • 152nd Avenue improvements • Boeing Access Road Bridge Deck • Strander Boulevard Extension • City Hall 16300 Building I TCC • Park & Trail Master Plans • FGL Irrigation System Replacement City of Tukwila 2025-26 Budget Development 40 Next Steps April -June • Updates on System Plans and Projects • Annual Overlay Program • Neighborhood Traffic Calming • Intro to TIP • Surface Water Comp Plan • Financial Sustainability Plan • Utility Cost of Service/Rates • City Comp Plan Updates • Community Outreach • Department & Program Budget Development • Current level of service • New initiatives/investments July -September • Overview of Proposed 2025-26 CIP • City Comp Plan Updates • Overview of Funds • Preliminary 2025-26 Budget released - Operating & Capital • Priority Based Budgeting Presentations City of Tukwila 2025-26 Budget Development 41 N N CO Discussion & Questions ICity of Tukwila 2025-26 Budget Development 42 CITY OF TUKWILA 2025-26 x 1 1 BUDGE DEVELOPMENT PROCESS te41 Ana • it The City of opportunity, the community of choice. N CO