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HomeMy WebLinkAboutReg 2024-09-16 Item 6 - Budget - Mayor's Proposed 2025-2026 Biennial BudgetCOUNCIL AGENDA SYNOPSIS Initials Meeting Date Prepared by Mayor's review Council review 9/16/24 Tony ITEM INFORMATION ITEM NO. 6 STAFF SPONSOR: TONY ORIGINAL AGENDA DATE: 9/16/24 AGENDA ITEM TITLE 2025 - 2026 Introduction To Budget Discussions CATEGORY ® Discussion Mt Date 9/16/24 ❑ Motion Mtg Date ❑ Resolution Mtg Date ❑ Ordinance Mtg Date ❑ Bid Award Mtg Date ❑ Public Hearing Mtg Date ❑ Other Mtg Date SPONSOR ❑ Council ❑ Mayor ❑ Admin Svcs ❑ DCD Finance ❑ Fire ❑ P&R ❑ Police ❑ PW SPONSOR'S SUMMARY Leadership will be leading the 2025-26 Budget Development discussion. REVIEWED BY ❑ Trans&Infrastructure Svcs ❑ Community Svcs/Safety ❑ Finance & Governance ❑ Planning & Community Dev. ❑ LTAC DATE: ❑ Arts Comm. ❑ Parks Comm. ❑ Planning Comm. COMMITTEE CHAIR: N/A RECOMMENDATIONS: SPONSOR/ADMIN. Finance Report COMMITTEE Discussion only COST IMPACT / FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION MTG. DATE ATTACHMENTS 9/16/24 Informational Memorandum PowerPoint 125 126 City of Tukwila Tom McLeod, Mayor Finance Department INFORMATIONAL MEMORANDUM TO: City Council CC: Mayor McLeod FROM: Tony Cullerton, Deputy Finance Director DATE: September 16, 2024 SUBJECT: 2025-26 Budget Development Process Introduction Discussion Issue Present the introduction to an ongoing dialogue regarding the development of the 2025-26 biennial budget process, including an overview of major themes and priorities, factors informing a balanced budget proposal and what to expect over the next several weeks. Background Deliberation of the 2025-26 budget begins now. This budget cycle comes with additional complexities, including a shrinking of revenue streams and rising expenses across various sectors. Although the City is built on a strong core foundation that positions it for long-term financial stability, the immediate future will require thoughtful deliberations and challenging decisions. These decisions may involve trade-offs that could limit the City's ability to meet all desired outcomes. Discussion As the City embarks on the development of the 2025-2026 biennial budget, it does so with some new revenue capacity. This is largely attributed to the City's recent participation in the Regional Fire Authority and the introduction of a new Business & Occupation Tax, which is specifically designed to provide support for public safety services. Nonetheless, the City is also struggling with declining sales tax revenues as the Sales Tax Mitigation program continues to diminish, reducing a previously reliable income source. Moreover, the end of ARPA funding has left the City without additional financial resources to support ongoing expenses. Unfortunately, expenditures continue to grow at a faster rate than revenues, driven by factors such as rising contractual labor costs, increased inflation across the board, and escalating insurance liabilities. The Mayor and Administration will provide an overview of major themes and priorities, budget balancing factors and what to expect over the next several weeks in presenting the proposed 2025- 26 operation and capital budget. The conversation will also focus on outlining the next steps in the 1 127 budget development process, with an emphasis on navigating the financial complexities that lie ahead. Recommendation For information and discussion. Attachments Budget Development Process slide presentation. 128 September 16t" Regular City Council Meeting CITY OF TUKWILA 2025-26 x 1 i BUDGE DEVELOPMENT PROCESS Pripr )9N, The City of opportunity, the community of choice. W 0 Regular Council Meeting September 16, 2024 Tonight's Agenda • Mayor's Message • About Developing the 2025-26 Budget • The Headlines • Schedule and Next Steps • Questions and Discussion ICity of Tukwila 2025-26 Budget Development 2 Mayor's Priorities 2025-26 Budget Key Focus Areas • Community safety and security (Public Safety) • Celebrate Tukwila's diversity, community connections and tourism potential • Greater organizational accountability and efficiency • Establish greater fiscal constraints and spending controls • Leverage opportunities to deliver "next level" customer service • Re-examine our commitment to capital projects with an aging city infrastructure • Continue to invest in city staff with necessary tools and support • Create more housing opportunities, both affordable and market rate City of Tukwila 2025-26 Budget Development 3 W N dpr. Rim Trail seMatoter • .. nor.. r n.�iu .ma o.. City of Tukwila Financial Sustainability Plan April 2024 I Final Report Informing the 2025-26 Budget - Financial Sustainability Plan SOS Be Good Stewards of Public Resources. Build a culture of continuous improvement and implement approaches and tools to improve the City's efficiency and effectiveness2. 0 2. Invest in the Tukwila Community's Highest Priorities. Align services with community priorities and prudently manage the tax burden on residents and businesses. 3. Invest in Tukwila's Future. Make targeted investments to achieve long-term cost savings and improved outcomes for the Tukwila community. City of Tukwila 2025-26 Budget Development 4 How & Why We're Developing the Budget Differently This Year.... • 2023-24 Bridge Budget - "3-legged stool" 1) Use of One -Time Funds 2) New revenues - B&O Tax; Contingency Fund - one time use 3) Attrition and vacancies - held open positions (frozen) • Staff Turnover & Transitions • Inflationary forces • Post pandemic reconciliations • Collective Bargaining Agreements • Salaries and Wages - remaining competitive • ARPA • B&O Tax • Minimum Wage • Puget Sound Regional Fire Authority transition • Equity lens - ensuring all voices heard • Multi -faceted community outreach City of Tukwila 2025-26 Budget Development 5 "The Headlines" Returning tax capacity to Tukwila taxpayers, while retaining necessary resources to mitigate the City's structural imbalance and investing in key service level enhancements benefiting the community. Revenues • Sales Tax Mitigation Payments conclude • ARPA funding concludes • B&O Tax set at minimum level • Reduced grant levels Expenses • Labor & Personnel Costs • Inflation • Fleet reform • Increased insurance liability City of Tukwila 2025-26 Budget Development 6 Major Issues Driving Fiscal Policy Decisions • Public Safety Investments • Southcenter Mall Officers • Mental Health Co -Responders • Neighborhood Safety • Repair & Replacement of Critical City Infrastructure • Public Works Shop • Other City Facilities and Infrastructure • Organizational Efficiencies & Financial Sustainability • Increased fiscal responsibility & accountability City of Tukwila 2025-26 Budget Development 7 Budget Calendar & Next Steps City of Tukwila 2025-26 Budget Development 8 Budget Calendar (Sept -Oct) September 23 Committee of the Whole & Special Meeting - Overview of Public Engagement & Outreach Results: Community liaisons presentation; community survey results; Financial Sustainability Committee recommendations; Community events & advisory committee meetings Presentation of Other Funds Part 1: (Special Revenues: Fund 109- Drug Seizure Fund; Fund 101- Lodging Tax); (Debt Service: Fund 2XX LTGO Debt Service Fund; Fund 213- UTGO Bonds; Fund 206- LID Guaranty; Fund 233- 2013 Local Improvement District); (Internal Service: Fund 501- Equipment Rental; Fund 502- Employee Healthcare Insurance Fund; Fund 503- LEOFF 1 Retiree; Fund 611- Firemen's Pension); Fund 302 Urban Renewal*; Fund 305 Public Safety Fund*; October 1 Estimates filed by department heads with complete financial program (RCW 35A.33) Tentative/Optional - Special Meeting - Presentation of Other Funds Part 2: (Proprietary Funds: Fund 401- Water; Fund 402 Sewer; Fund 412 Surface Water; Fund 411 Foster Golf Course) City of Tukwila 2025-26 Budget Development 9 Budget Calendar (Oct) October 7 Mayor provides council with estimates of revenues from all sources for consideration of setting property tax levy (RCW 35A.33) Work Session Overview of General and Contingency Funds (Fund 000- General Fund)- revenue and expense history; 6 year financial forecast; revenue and expenditure drivers (Fund 105- Contingency Fund) - policy levels and triggers Department Snapshots (Part 1)- overview of revenue and expenses, and work plan highlights Regular Meeting Department Snapshots (Part 2)- overview of revenue and expenses and work plan highlights Preliminary Council Questions/Discussion/Deliberations City of Tukwila 2025-26 Budget Development 10 Budget Calendar (Oct) October 14 Estimates filed by department heads with complete financial program (RCW 35A.33) Committee of the Whole Capital Budget Overview (Fund 301 Parks, Trails & Open Space; Fund 103 Residential Streets; Fund 104- Bridges & Arterial Streets; Fund 401- Water; Fund 402 Sewer; Fund 412 Surface Water; Fund 303 General Improvements; Fund 304 Fire Improvements) October21 Work Session Council Deliberations and Policy Discussions Regular Meeting Mid -October to mid -November (approx.) Public hearing on revenue sources including possible changes in property tax (RCW 35A.33) City of Tukwila 2025-26 Budget Development 11 Budget Calendar (Oct -Nov) October 28 Committee of the Whole Public Hearing- Tax Levy Legislation: ordinance increasing regular levy; ordinance levying general taxes. Special Issues- Tax Levy Legislation: ordinance increasing regular levy; ordinance levying general taxes; Resolution adopting PW Consolidated Fee Schedule; Ordinance adopting Park and Fire Impact Fees November 2 Mayor prepares preliminary budget, budget messages, files with clerk pnr-1 council (RCW35A.33) Nov. 1-18 (approx.) Publication notice of preliminary budget and final hearing (RCW 35A.33) Nov. 1-25 (approx.) Public hearing(s) on preliminary budget (RCW 35A.33) City of Tukwila 2025-26 Budget Development 12 Budget Calendar (Nov) Work Session Regular Meeting Public Hearing: 2025-26 Biennial Budget: Ordinance adopting 2025- November 4 26 Budget; Ordinance amending 2023-24 Budget Unfinished Business: 2025-26 Biennial Budget: Ordinance adopting 2025-26 Budget; Ordinance amending 2023-24 Budget; Tax Levy Legislation- ordinance increasing regular levy; ordinance levying general taxes. Work Session Tentative Budget November 18 Adoption Regular Meeting Unfinished Business: 2025-26 Biennial Budget: Ordinance adopting 2025-26 Budget & Financial Planning Model & CIP; Ordinance amending 2023-24 Budget City of Tukwila 2025-26 Budget Development 13 Budget Calendar (Nov -Dec) November21 Copies of the Budget available to the public (RCW 35A.33) November 25 Committee of the Whole November 30 Property tax levies set by ordinance and filed with county (RCW 35A.33) December 2 Final budget hearing (RCW 35A.33) Regular Meeting December 9 Committee of the Whole & Special Meeting December 16 Work Session Regular Meeting December 31 Budget adoption deadline (RCW 35A.33) City of Tukwila 2025-26 Budget Development 14 Questions & Discussion City of Tukwila 2025-26 Budget Development 15 CITY OF TUKWILA 2025-26 x 1 1 BUDGE DEVELOPMENT PROCESS te41 Ana it The City of opportunity, the community of choice.