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Home My WebLink AboutWS 2024-10-07 COMPLETE AGENDA PACKETTukwila City Council Agenda ❖ •WORK SESSION ❖ (..!--011-AJ 19OB ke.4 �y� -I1$ /3 / Thomas McLeod, Mayor Councilmembers: •:-De'Sean Quinn ❖ Tosh Sharp Marty Wine, City Administrator ❖ Armen Papyan ❖ Jovita McConnell Mohamed Abdi, Council President ❖ Dennis Martinez ❖ Hannah Hedrick ON -SITE PRESENCE: TUKWILA CITY HALL COUNCIL CHAMBERS 6200 SOUTHCENTER BOULEVARD REMOTE PARTICIPATION FOR THE PUBLIC: 1-253-292-9750, ACCESS CODE: 56095437# Click here to: Join Microsoft Teams Meeting For Technical Support: 1-206-433-7155 Monday, October 7, 2024; 5:30 PM 1. CALL TO ORDER 2. PUBLIC COMMENT Those wishing to provide public on -site at Tukwila City Hall 5 minutes for items both on To provide comment via phone citycouncil@tukwilawa.gov comments may verbally address the City Council both or via phone or Microsoft Teams for up to and not on the meeting agenda. or Microsoft Teams, please email with your name and topic by 5:00 PM on the meeting date. message is for public comment during the meeting, instructions. Please clearly indicate that your and you will receive further 3. BUSINESS ITEMS Continued Discussion on the 2025 - 2026 Biennial Budget: • Revenues & Expenses • Financial Policies & Reserves • Budget Balancing Factors Pg.1 4. ADJOURNMENT This agenda is available at www.tukwilawa.gov, and in alternate formats with advance notice for those with disabilities. are available at www.tukwilawa.gov Audio and video tapes of Tukwila Council meetings cc% If you are in need of translation or interpretation services at a Council meeting, Kirr please contact us at 206-433-1800 by 12:00 p.m. on the meeting date. City Council Work Session October 7, 2024 CITY OF TUKWILA 2025-26 DEVELOPMENT PROCESS 0 ,I. 7N, The City of opportunity, the community of choice. N Tonight's Agenda Work Session • Continued presentation of the 2025-26 Preliminary Proposed Biennial Budget • Revenues • Expenses • Financial Policies & Reserves • Factors Informing Budget Balancing • Continued presentation of the 2025-26 Preliminary Proposed Biennial Budget • Mayor's Budget Message • Fund 105 Contingency • Fund 502 Healthcare • Fund 503 Law Enforcement Officers & Fire Fighters (LEOFF) 1 Retirement • Fund 305 Public Safety Plan • Fund 411 Foster Golf Links • Fund 501 Equipment Rental & Replacement • Next Steps / Budget Calendar • Public Works Shop Phase 2 Update City of Tukwila 2025-26 Budget Development 2 "The Headlines"- Revenue & Expenditure Drivers 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 3 "The Headlines"- Mayor's Priorities 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. • Returning $6 million to Tukwila Taxpayers • Rescoping Public Works Shops Phase 2 • Investments in Public Safety City of Tukwila 2025-26 Budget Development 4 "The Headlines"- Significant Trade -Offs 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. • Use of one-time funds — not sustainable N increases future risk • Significant deferred maintenance and unmet infrastructure needs N increased failure rates & unplanned obsolescence • Ongoing lean staffing model " critical deficiencies ' reduced level of service • No new revenue ' ongoing expenses continue to outpace existing revenue City of Tukwila 2025-26 Budget Development 5 0) "The Bottom Line" 2025 Revenue Summary- All Funds • All revenues = $154.6M for 2025, $168.3M for 2026 Fund'03-Re' ud $1nreH Fend 10.1-BMWs & Alma, 51.15 Fund 7pl - Wnd Ac4 Rx pea DcrodoP Fund 302 . FxpdY Papaw^'. Fund 303 -Genog Goeffo ne. Ynp Fund 303 Fire yappremenIs Fund 305 - Pam Sol Rsn Fund 306 - C0.1 Fxpnes find 401 -Wit. Fund 602-Se.r Find d11-Fa"'Gap C.'"" Fund a12-Sudan W Farad Redd' S R � 0.d502- P' HealdKi•=P43" Fund 503 - LEOFF 1 Seltlns Healy Plan • 0.9% decrease from adopted 2024 revenues of $156.0M • Decrease is a result of returning property tax capacity to voters with Tukwila's annexation to PSF. • Even with the creation of new GF revenue sources in 2023-24, ongoing revenue sources will continue to decline or grow more slowly in the 25/26 biennium. City of Tukwila 2025-26 Budget Development 6 "The Bottom Line" 2026 Revenue Summary- All Funds • Use of/decreased fund balances across all funds (-$6M) City of Tukwila 2025-26 Budget Development 7 00 `The Bottom Line' 2025-26 Proposed General Fund Budget General Fund -Revenue Expenditures. and Fund Balance Pctali 1.4011 IS4.01.521 2022 Pmlecle4 2025 244 Atlople0 Anposed ProA.51 3524 1@25 Actual no** 2152•II 2573 21 35672 .516 R. 44 lreaalRwle Pr..) la Mai 98, Tax 9dress30mpia7Tas I152T.t 825.03 539y. 1165.735,28 Y16v8231aa 1xAryra. 0 -- liarxn* Penns 1.50633U76554 8 035m9 8212 Fpui191:aw 8.A41 Pwrnn a 4 F. 6m-65- Fee•. 5 17233.512 3 17536070 517.858A00 25023/37 26381507 22155,0 2030A00 959360 910,202 920300 619.332 6,2,362 1160200 3949.299 4125409 419930 2604.003 334793 2757.735 4..951 6.46690) 4533230 65.595545 05557338 56.856819 2339.096 64.695 1,799693 523.222 3293,1% 57,751 2435331 5,359 131000 45500 6631209 518.000 S 16124800 5 2,725.000 55w= 930000 675000 6% 000 2704300 4665.300 12203(00 5 22 s533n 2.410.960 925.200 050.000 4=50 24235330.314 4.603.533 564U40% 50/16439 3230.900 ♦5000 1813143 508100 3320.000 44310 1,,40.90 551505 iaal44.ray.altl P.wis aF1.n» 34313 205, 6125 5,451 eve 9.1 Nbever56r�7!sl P.'eae row 1.05839650ue Ch.1ea 813,15, Ttanuortalion Fie .rpacl Fmihee,. Fees 0847abIk0 Fess raa1 516a9est55.n65e4 r.143,re 0w3151 6555.037, 9653.6.1-35.4.0 Rba 4)403 ▪ *Ms Lu0 9a 779n8F4Pn PA.t 541MPbn 746b44084, 5)1 NEST) T4 75450 a. 31923 .7. Re) 155784-.5 i90aa Renew, Twly Own Oty 66355511. 5576555 6321,1417 5575203 794,337 53540 505375 245.079 2551,351 5550000 28132199 3009,912 2355,325 553.242 551. 575253 .5.979 704.463 779.714 7,561735 255141 978.752 »7 1 143.97 1155759 492.532 1♦0%6 W1%7 55,191,355 96®9 8521360 2143 7179,513 .8 125145 156..501 5627,118 3115 0 1y33,166 2322 337 74ffi,988 2661209 687IA51 16222 4223328 545570 361250 22502tl 328265 2347,931 2953.51: 75335028 1.354.051 2571;72 2453.957 5220 2255536 63%263 50595 2250215 2531503 310500 551000 5,565.0 105,750 2534. 349.572 553.170 6991561 4594712 15525 9,520 1739135 501g415 331.481 222370 731.015 2811111 2512121 751216 1..555 1511220 958,568 2.3517 3111501 78,596365 4317,9 470000 68273,553 4.722.030 075.145 Cb3.m) Taal Rums• 71514.013 18.0105 81163.066 7565/205 74243338 Esperatha,s Wyo. 6a 0348 3 6,65Frgnce 9,603351, *-Dtp1 06705inilyu.31F.m142q 64,75,15055 P4530 155:144/owrl Fn 8\p.0.P5 P utftneqrs r5pa 11.44.14.vw6398 94w111140In360e043 R41 I%6.an.n4Fu5M9 7860 0032223 421952a1%iwes 7292116b . DM 94.. 5,6b1 Taal? nn .n real Fge:idi.lrts CmnR in Fuld Wan, Rua. ry 3,965 •Engrg 3ra6.18. 356.45 2176.555 4373.110 3055.211 4,335.292 427399 I.S55,112 188314H 15158.. 6958.143 125501 306,34 332334 2300611 2575.24 6.491,102 1929355 1127,417 4218.P93 5110,670 5526681 4582451 4970298 1623.83 222E418 21255100 26091,30E 15567108 15026452 7,171,056 7,551,359 4135,48 243030E 01361.026 71342386 76249.990 320.60 4,719,13 4,198&S 2357.119 5.318 1361023 10291/73 9348,158 609387 72315192 786.219 39,10925E 4572.638E 1!81.587 02440721 16917.31E 102/4550 17.130257 $ 142/4538 3 17238287 $ 1659150.E 3333107 2406313 3621324 4e23267 5302439 5053231 1,653]99 24212375 1550611 3005,142 • • 73532014 1206345 059A00 503.505 9094.315 4.N3.Ti0 5359.411 5.230,90 2290.290 22539.212 1,12223] 9,738,951 135201E 70]0625 3.592.0715 r46.m r46a4 638528E 6585551 79862.388 71372210 12.302.301 n,Ox e40 91500 510 4.33226% 3026 503 /.021.500 v% u% Ado 505 68% 2101. ELM 5.154 F3w 20, O 1111. inn 0.111. 515 015 1 General Fund 2025 2026 Revenue $ Expenditures $ 74, 471, 366 $ 74, 514, 552 $ Beg Fund Bal $ End Fund Bal $ (43,186) $ 16, 620, 642 $ 16,577,456 $ 76, 310, 768 78, 039, 042 (11728,274) 16, 577, 456 14, 849,182 1..551 10.255,851 i4021. ],r%317,]17 rm34w 56E 292 768M}50 9973179E 9925120 5..1.267) 13291095 65594.36 15.89434 3 12311414 3 15598.998 3 13.501)27 57.4 I ASS Ili 1315 36.115. 6059 Art art 71▪ , 1.0004. 5A% 41% fu% 4115 City of Tukwila 2025-26 Budget Development 8 'The Bottom Line' 2025-26 Proposed General Fund Budget General Fund REVENUES i 5.6% reduction in Revenue (2024 Adopted vs. Proposed 2025) EXPENDITURES i 5.65% reduction in Expense (2024 Adopted vs. Proposed 2025) i 8.5% reduction in Revenue i 9% reduction in Expense (2024 Projected vs. Proposed 2025) (2024 Projected vs. Proposed 2025) City of Tukwila 2025-26 Budget Development 9 2025-26 Preliminary Proposed Budget Department Snapshots Department Actual Budget R rcent change 2022 2023 Projected 2024 2024 2025 2026 2024-2025 2025-2026 City Counci $ 356,579 $ 366,378 $ 392,334 $ 393,067 $ 400,093 $ 431.254 1.8% 7.8% Mayors Office 2,176,566 2,308,617 2,575,808 Z405,513 9,573,099 9,833,090 298.0% 2,796 Administrative Services 4,873,136 6,491,702 5,950,512 5,621,624 - - -100.0% - Fnance 3,065,214 3.177,417 4,218,693 4,625,307 4,343,230 4,429,561 -6.1% 2.0% Parks & Recreation 4,839,292 5,110,670 5,834,889 5,808,439 6,769,151 7,050,622 16.5% 4.2% Con .irriyDeveloprnent 4,273,199 4,582457 4,870,298 5,063,237 5,732,921 5,978,627 13.2% 4.3% Court 1,565,412 1,623,823 2,226,378 1,859,399 2,260,676 2,281,143 21.6% 0.9% Poice 18,837.436 21,267,400 24,091,305 24.212,875 28,354,527 29,600,130 17.1% 4.4% *Fire 15,158,419 15,087,708 16,078,462 15,605,441 1,398,192 1,410,125 -91.0% 0.9% PublicWorl6 6,968.443 7,171,066 7,651.359 8,002142 9.738,964 10.205.851 21.7% 4.8% Non Departmental Expense 171,534 4,155,328 2,430,806 - 1,362,046 2,331,840 - 71.2% Departmental Total 62,285,229 71,342,566 76,320,843 73,597,044 69,932,898 73,552,245 -5,0% 5.2% Transfers to other funds 10,231,223 5,546,153 6,059,867 5,865,345 4,581,654 4,486,797 -21.9% -2.1% General Fund Total S72,516,452 S 76,888,719 S 82,380,711 S79,462,388 S74,514,552 S 78,039,042 -6.2% 4.7% 'Effective January 1, 2025, the Fre Department wil no longer be under contract with Puget Sound Regional Fre Authority, Fre services annexed wih PSRFA City of Tukwila 2025-26 Budget Development 10 General Fund Revenues 2025-26 Proposed Budget- General Fund City of Tukwila 2025-26 Budget Development 11 Revenue Profile- General Fund % of Total Revenues to the City • Sales Tax 38% • Property Tax 31% • Utility Tax 7.7% • Gambling Tax 7.5% • Bus Licenses & Permits 6% • Interfund Utility Tax 5% • SCL Agreement 4.6% • Sales Tax and Property Tax account for 70% of the City's total revenues. • All other revenues combined make up 30% of the City's total revenues. • Property Tax is capped at 1.0% + new construction annually. City of Tukwila 2025-26 Budget Development 12 Sources of Taxes- General Fund 2% 2024 2% Budget ■ Property Taxes ■ Retail Sales Tax ■ Business & Occupartion Taxes ■ Use Tax ■ Admissions Tax ■ Utility Taxes ■ Interfund Utility Tax ■ Property Taxes ■ Retail Sales Tax ■ Business & Occupartion Taxes ■ Use Tax ■ Admissions Tax ■ Utility Taxes ■ Interfund Utility Tax 2025-26 Proposed City of Tukwila 2025-26 Budget Development 13 Revenues by Type- General Fund 2024 Budget ■ Taxes ■ Intergovernmental ■ Fines and Penalties ■ Licenses and Permits ■ Charges for Services ■ Miscellaneous ■ Taxes ■ Intergovernmental ■ Fines and Penalties ■ Licenses and Permits ■ Charges for Services ■ Miscellaneous 2025-26 Budget City of Tukwila 2025-26 Budget Development 14 Business & Occupation Tax i Annual revenue estimates reduced • $3 million to $2.4 million • $2 million received in 2024, remainder received in 2025. Q1 2024 B&O Revenues $390,864 • Compliance rate of 84% • Quarterly filers are approximately 533 Q2 2024 B&O Revenue $444,911 • Compliance rate of 79% City of Tukwila 2025-26 Budget Development 15 0) Financial Structure & Policies 2025-26 Proposed Budget City of Tukwila 2025-26 Budget Development 16 Financial Structure of the City Budget GOVERNMENTAL FUND TYPES General Fund Supports general operations of the City. Taxes are the principal source. Accounts for all City resources except those required to be accounted for in a different fund. Special Revenue Funds: Revenues which are legally or administratively restricted for special purposes. Fund 101, 105, 40-9 Debt Service Funds: Account for resources necessary to pay principal and interest on general long-term debt. Fund 2XX Capital Projects Funds: Accounts for financial resources to be used for the acquisition or construction of capital items, facilities, or infrastructure. Not to be used for maintenance or repairs. Fund 103, 104, 304, 302, 303, 304, 305, 306 *Presented tonight PROPRIETARY FUND TYPES previousty Enterprise Funds: Accounts for operations that are financed and operated in a manner similar to business enterprises. Fund 401, 402, 411, 412 Internal Service Funds: Used to account for operations or services to other departments on a cost reimbursement basis. Fund 501, 502, 503 FIDUCIARY FUNDS Account for assets held by the City in a trustee capacity and cannot be used to support the City's own programs. Fund 611 Source: City of Tukwila, WA 2023-2024 Biennial Budget, P. 25. City of Tukwila 2025-26 Budget Development 17 Financial Policies Resolution 2014 Highlights • rrioriiy-based, biennial budget with services of highest value to community • Structurally balanced (one-time revenues for one-time costs) unless authorized • Prepare 6-year Plan & forecast • Expenditures: procurement, purchasing, reimbursement policies • Pursue Grants • CIP Priorities, coordination, external funding; REET dedication • Enterprise Funds: unrestricted balance Reserves • 18% of prior year revenues held in GF • Contingency Fund: 10% of prior year ongoing GF revenues held & 10% of one-time revenues held as surplus allows • Plan to restore minimum balances if drawn down • Investments • Reporting Debt policy: resolution 1840 City of Tukwila 2025-26 Budget Development 18 Context Setting - Revenue History & Forecast City of Tukwila 2025-26 Budget Development 19 80M 60M 40M 20M OM 7.0 M S+P Tax Collections vs. Dept. Exp (Minus FD) by Year • Sales Tax • Property Tax • Dept. Exp in Excess of S+P 7.4M 9:8M- ® OA ir! aLr- III MO 71 14.0M r 2014 2015 2016 1 1 9.9M 15.2M 6.5 M lb II 1 Projected imbalance 9.0 M 2017 2018 2019 2020 2021 2022 12.2M PEP 12.3M 2023 2024 2025 2026 Proj. Est. Est. Property & Sales Tax Actuals by Year • Property Tax Sales Tax 18.7M 18.0 M 16.3M 19.4M 10 Year History Annual Sales and Property Tax Collections 2014-2023 19:91VI- 14.5M 2014 2015 2016 19.9M 19.9M 15.2M 18.6M 17.1M 22.8M 22.2M 22.6M 17.9M Return of $6 / million in ` property taxes 12.3M 2n17 2018 2019 2n2n 2021 2022 2023 2024 2025 2026 Proj. Est. Est. N $90,000,000.00 $80,000,000.00 $70,000,000.00 $60,000,000.00 $50,000,000.00 $40,000,000.00 $30,000,000.00 $20,000,000.00 $10,000,000.00 $- 20 Year General Fund Revenue History 2007-2026 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Budget Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual ActualProjecteRroposd2hoposed Expenditures 2025-26 Proposed Budget- General Fund City of Tukwila 2025-26 Budget Development 23 Expenditure Profile- General Fund % of Total City Expenditures • Salaries & Benefits 62% • Supplies 2% • Services 22% • Capital Outlay 5% • Transfers Out 8% • Influenced by inflation & labor costs • Estimated salary & benefit costs increasing • 6.4% ('24 proj - '25 proposed) • 5.8% ('25 - '26 proposed) • Overall expenditures & transfers • Decreasing 6.2%'24-'25 • Contract with Puget Sound Fire ending • Increasing 4.7%'25-26 City of Tukwila 2025-26 Budget Development 24 Annual CPI-W % Change vs Annual S+P Tax % Change •Annual CPI-W % Change Annual S+P Tax % Change 10.0 5.0 Median CPI-W % Change: 3.4 -15.0 x % Change: 2.6 10 Year History Sales and Property Tax vs. Inflation 2014-2023 Return of $6 million in property taxes 2014 2015 201( 2017 201R 2019 2020 2021 2022 20231 2024 2025 ?026 Proj. Est. Est. d) $85,000,000 $80,000,000 $75,000,000 $70,000,000 $65,000,000 $60,000,000 $55,000,000 2020 A General Fund Rev vs. Exp History & Forecast 2020-2026 Revenues — Expenditures 2021 A 2022 A 2023 A 2024 P Structural Imbalance 2025 Est 2026 Est Budget Balancing Strategies 2025-26 Proposed Budget City of Tukwila 2025-26 Budget Development 27 Expenditure Control Strategies Current Actions • Applying cost controls & accounting strategies • Reduced Supplies -Materials -Services • Shifted some GF burden to other funds • Suspended some GF transfers to Capital • Deferred utility rate -funded capital projects • Return to Fleet/Equip. replacement model • Eliminated previously 'frozen' positions • Revisiting PW Shops Phase 2 • Rescoping the project • Collect lease revenue in'25 &'26 • Implementing Financial Sustainability Plan Recommendations Additional Considerations • Suspend GF subsidy of Foster Golf (Fund 411) (^'$300-600K) • Amend Fund Balance policy (28% to 25%) • Amend Reserves policy • Attrition savings - capture select savings from some position vacancies • Other City of Tukwila 2025-26 Budget Development 28 Maximizing Revenue Opportunities Current Actions • Use of Fund Balance • More aggressive grant development • Land Sales • George Long • Fire Station 51 (Former HQ) • Cost of Service & Fee Studies • Recreation Programs & Rentals • Building Permit Fees • Indirect Cost Allocation Plan • Lease Revenues • T-Force (future site of PW Shops) - monthly lease revenues Additional Considerations • Surplus & sell additional properties • Star Nursery (42nd & S. 140th) • Fire Station 53 (Allentown) • Fire Station 51 (Former HQ) • Newporter Site (TIB & S. 150th) • Revisit return of property tax capacity • 2025 • 2026 • Revisit Reserves & Fund Balance policies • Additional new revenues • Other City of Tukwila 2025-26 Budget Development 29 W O P'„ a iee. Ds• . s4`9A GNEµ „.rov � a• aw` 0te,°71" E11,-"' 10 70, "ate`° �.,so`.,,•, �.. Goi%ii pP "1 G,tGtF# Ni °,ir" �!i MS� c, 1 <eNo iWOG.1,. ePnti�t o'6`Rndt1j°t11fi o ° Wid {pFap .09 tNtS464y:6;,f01:tr�a`P' ,vi eo qi P�i.° t ,�i� yieaPtp%l'I'%Gt Wti 1,•t gsg �p vs' to Nt5 oP`R E ° f� a w /� RAN EyG s oP ?"P a• °°'tE 44 - ° p, a may. ..1F� 1% gbh 4 4 9'� °F *.Cgd 10041 �" t-kip .i''' �'° A M J _.�b Q' o-a �H .,050^' r0 14 �{FAW p ChM 07 , 0 7d01:. iM" e`°' ° NRMtl: pay �yf .p d,t •1 w°� °�0_''''''''' .60:0may° C,04 ,�AdS V''',$pg`%'@4 .tt. �N P."' P� 01: fw'f dye .o6,p. :r.:S a°IR' 1"" w „mom �1. Syr oI'�r Setting the Levy Rates Regular Tax Levy Excess Tax Levy Rate $1.27 $0.52 Amount $12,153,000 $ 4,931,725 October 28th Committee of the Whole • Public Hearing: Tax Levy Legislation • Ordinance setting the City's regular and excess levies • Ordinance levying general taxes City of Tukwila 2025-26 Budget Development 30 Questions & Discussion City of Tukwila 2025-26 Budget Development 31 32