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Home My WebLink AboutWS 2024-10-07 Item 3 - 2025-2026 Biennial Budget - Revenues & Expenses / Financial Policies & Reserves / Budget Balancing FactorsCity Council Work Session October 7, 2024 CITY OF TUKWILA 2025-26 DEVELOPMENT PROCESS IITO 11 The City of opportunity, the community of choice. I/ 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 4. "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 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 103-Resdunual $imeH Fund 106 -Bridges.6 Aden, 51eelz Fund 701 - Wnd Ac¢ Rx. pa* Oe+e1W Fund 302 - Facnrtf Repacen'em Fund 303 -General G0...T.e. Ynp Fund 303-"M ¢nt5 Fund 305 - Pam Sale11. Re11 Fund 305 - C0.Y FxpdaS Fund 401-W21. Fund 602-Sees. Fund e111 - FosiM Gap Caase Fund d12 - Suda. MU" Fud 5 Rudd' S Repla[nd'eN Fund 502 -P' HeaePa` Fond 503 - LEOFF I 544303 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 CO `The Bottom Line' 2025-26 Proposed General Fund Budget General Fund - Revenue. Expelldilures. and r and Balance 53061 1909. 16..1c1a1422. 2022 P:ojec1e6 203 2525 860010 2re054e5 Play Y6 2025 2025 2026 Actual 94201 ]III 252321 82425 .556 Baav Beaalh0nue Property iar S.D. 602:P2im1s00 I8er.4 641.560.ry. 1 .00 Y11p1a8 u5>zvT 244 .174004 Iu5e4* Dem. 11.7055.4n50 8 Pgmb Bart.l 0er91e0se 6.0 Pea. a. roes r-mmme Fees 3 11233.512 3 1153500 3 11,850.0. 227 157 262.507 2751630 2030500 552160 910202 910000 676.932 842327 66000 3945.759 4.125123 1.199916 2105 65 2567126 2707,130 4954.954 4.464.51 2663293 61350.49 52161936 45.492.13 2.939.066 51.635 1,759.01 3212,,5116 57,151 2430.331 50929 2220933 46500 3363209 61.33 S 16122000 3 24126000 100000 93E000 611000 3300500 216 300 5205100 42.106190 3 0391. 2406150 975100 540.002 1352.519 2930.954 6809.636 56,46500 50416655 2230.960 14050 1213.143 Sewn° 3.620.202 44A0 1,40.90 551500 im14'.n 47.. Pra3% 0f ry6. nenlalla 3.19CR91 Wean. 1. 0.0.1 n6.•p..�' Ina. row 55212.22 0404 24 12145e5410. as 6sM8 0.6.7. 4.10 Ran 4 Fie 0.05m1�Yee,. Fees 06.ad 42rea Rot Rage4655.330. 6n0 01 6t0x.4 Idrecl coat alecfm °Keno ria.64. Bad Rottffi5 1.193 30154100 63002.a 0Pyn 175401em 611 PEET) 1,05190 n 334 Fre 003 lees) 0e60 tan 1150 Tlwb 19.n 6I0F..55 ru.5 imlrMev 5,76555 632127 657500 794,337 535,00 5o8975 2,05219 2551,351 2555.002 I,8R,W9 3558,542 2350326 508242 551.. 676555 950,573 7.,153 119.114 7.162133 25..3 9}Si62 1,51 59410 1431. 1986103 48.052 148556 2557 S1 69,191,365 98.569 2244.351 8321450 12,703 609,543 258 120.3 166521 2527•NS eb 1 03,118 2822 337 7E539E0 2551,239 1540613 4,230 6.676051 15272 60315 361250 2}607tl 328256 134T•921 290917 145%528 2312122 2254536 21512515 7300.105 83166066 6366743 61651110 504375 406100 2350500 2550520 2451153 846572 514505 663.870 651000 8991A54 4394.742 11520 9,520 1739130 321v39,616 m 5 232810 181.043 2341111 2512*1 752215 1,111220 2503517 10356360 13r15.6 470050 10.655 06,565 3111.594 92273,193 4.703.333 603.01 76652205 74I01.338 Espe4M14es Ory200, 1.5.0 08a 4.000560 Son. Fagace Dew.. Cwm:uuly 09605,05163cq 10070510.1 • 12.01.1 Fn L 1.9512 w0.8a Chat 0▪ k4r46vw6Y01 0401 Mrwlns.74144 l Rest a 41141 n1448.7 TOUT IkpalM 41a.6syeMNes Tma595 . a4 5e.,0 Twain.ain. aPbamx,aa, 393,326 352136 2509,617 2575. 1461,102 1979559 5,1707 4219595 1112610 1834.889 4282457 1570258 6.223 2228219 21101170 26051309 1559/708 16018452 7,17105 7,653,359 • 6,155,328 2430. 5110.229 76242566 16249.52 7,3703 4.749, 95 4,199945 2257.113 625.913 1561503 534 391067 2106513 5621524 1R636i 480109 1053237 1653392 24212815 15003201 3002,142 • • 11527.00 42136345 ea9U2 403.653 9594.210 4.343250 6899.411 3,230.95 1250.555 28539.318 1.40002 9738,954 455 545 70780.06 3232530 ago 12.901 22,ex 15a 002 2.9150 660 63300 4.115419 10321090 /.521.500 2. tra vk uk , 66k 59k F}5 2. O 120 24. 52k 43k 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 $ (1, 728, 274) $ 16, 577, 456 $ 14, 849,182 4W,061 162m,851 2331810 2 16121/91 3,191, 347 r02.4. 2201. 71▪ . 2311 510 2022. 1,01. f515 Taal E040iex.. C.. in rind Balm 6_y�n-q Do.9.0ze •rnen5 Ann Ba4ne 10231.323 55001 405607 72316152 16531019 62409159 2122.438) 601.331 i72415221 15977.316 1621481 17130/57 $ 1252650 $ 1710.37 $ 1610106 6 5269]65 75252. 5566654 6.1757 14922210 28641,324 17141141 7122 52, R 2.251) 13291095 15.501.05 15.556 994 S/2511016 $ 15566,51 $ 19.127 Ulna a. 310 41% 211.. 41111 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 Act ua I Budget Percent charge 2022 2023 Projected 2024 2024 2025 2025 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 2575,808 2405,513 9,573,099 9.833.090 298.0% 2.7% Administrative Services 4,873,136 6,491,702 5,950,512 5,621,624 - - -100.0% - Finance 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% ConxnurriyDeveloprnent 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% Poke 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% Public Worts 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 2430,806 - 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 $72,516,452 $ 76,888,719 $ 82,380,711 $79,462,388 $74,514,552 $ 78,039,042 -6.2% 4.7% 'Effective January 1, 2025, the Fre Department wil no longer be under contract wth 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% • UtilityTax7.7% • Gambling Tax7.5% • 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 2%_ 2% ■ 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 C) 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, 409 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, 301, 3-8-2, 303, 304, 305, 306 *Presented tonight PROPRIETARY FUND TYPES previously 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 OD Financial Policies Resolution 2014 Highlights • rriority-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 N O 80M 60M 40M 20M OM --- S+ P Tax Collections vs. Dept. Exp (Minus FD) by Year • Sales Tax • Property Tax • Dept. Exp in Excess of S+P 9.8M 8.7M 9.9M 10.8 M 6.5 M 8.1M Projected imbalance 9.0 M 17.0 M n 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Proj. Est. Est. 22M 20M 18M 16M Property & Sales Tax Actuals by Year • Property Tax ♦ Sales Tax 14.0M 14M -- 12M 14.2M 14.5M 14.9M 10 Year History Annual Sales and Property Tax Collections 2014-2023 19.9M 19.9M 19.9M 21.7M 15.2M r 18.6M 17.1M 20.9M 22.8M 22.2M 22.6M 17.5M 17.9M Return of $6 i million in property taxes 12.3M 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Proj. Est. Est. N 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 O. - - 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 ActualProjecteRroposd%hoposed 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 Change 10.0 5.0 Median C 0.0 -5.0 -15.0 Annual CPI-W % Change vs Annual S+P Tax % Change •Annual CPI-W % Change Annual S+P Tax % Change % Change: 3.4 x % Change: 2.6 10 Year History Sales and Property Tax vs. Inflation 2014-2023 Return of $6 million in property taxes 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Proj. Est. Est. N O) $85,000,000 $80,000,000 $75,000,000 $70,000,000 $65,000,000 $60,000,000 $55,000,000 2020 A 2021 A General Fund Rev vs. Exp History & Forecast 2020-2026 Revenues —Expenditures 2022 A 2023 A 2024 P tructural 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 :,� ' uti D. tt• .:040` 1 ot'�.0 NEB^d g � -6,!V �, 1,13:i.^ Nv 'Y , s 40. ' "Wi ,h..°°P, fi n! T1. - Cc; ...�:. i c0. %• gy▪ p... ` tHCG OE�get ++ �,+�+� dar ,M,�sy, y G,yd 0 �,�aa4+ 4 V7 4,O" Gpap Pit 40�SH• E��µ• 9�SNEHi POPayFy.! h0.M000p C yOopiY�,•5�U s°a5y ye'p s sE �� akgh E,h P.• 1 6y Ppa4,d.tt.tE '� • }PPE� 1 ti`�'`d, �y �tCP"" d0��"'y��a ,�rtyt' a„" ew'"Wye e{+ 000, 00v-�►� ue' _�,eaA �,.�nnp yi"«K"d�' sP �,�.per d,00. wcF" .07,0 `04;7 P eo woos▪ ,' 006. r' 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