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Home My WebLink AboutFIN 2025-03-24 Item 1D - Report - 2024 Year-End Financial ReportCity of Tukwila Tom McLeod, Mayor Finance Department —Aaron BeMiller, Director INFORMATIONAL MEMORANDUM TO: Finance & Governance Committee CC: Mayor McLeod FROM: Aaron Be Miller, Finance Director By: Tony Cullerton, Deputy Finance Director DATE: March 24, 2025 SUBJECT: 2024 Year -End Financial Report SUMMARY The City of Tukwila's 2024 Year -End Financial Report provides a comprehensive overview of the city's fiscal performance, detailing key revenue drivers, expenditure patterns, and budget variances. This report highlights the factors influencing financial outcomes, such as rising sales tax revenue and shifts in departmental spending, while offering insights into strategic adjustments made to balance growth and sustainability. By examining these financial dynamics, the report aims to inform stakeholders about the city's financial health and guide future budgeting decisions. Discussion The 2024 Annual Year -End Report provides an overview of the city's financial performance, highlighting key figures, significant trends, and notable items. While the financial data presented is largely complete, final year-end accruals and adjustments are still in progress to prepare the 2024 Annual Comprehensive Financial Report (ACFR). In 2024, revenues exceeded the budget by 2.6%, reflecting an increase of $2.1 million, primarily driven by higher -than -expected sales tax collections. Expenditures remained 0.3% below budget, resulting in savings of $241,884. The City successfully met the requirements of both the General Fund Balance Policy and the Contingency Fund Balance Policy. Attachments • Year -End 2024 Financial Report 47 City of Tukwila Year End Financial Report January — December 2024 General Fund Overview For 2024, the General Fund met both the General Fund Balance Policy and the Contingency Fund Balance Policy. General Fund Revenues Expenditures Net 2024 Beginning Fund Balance 2024 Ending Fund Balance 2024 Budget 78,683,209 81,863,699 (3,180,490) 2024 Actual $Diff % Diff 80,751,914 2,068,705 2.6% 81,621,815 (241,884) -0.3% (869,902) 24,991,228 24,121,326 General Fund - Required Ending Fund Balance Calculation 2023 Ongoing Revenues 18% of Ongoing Revenues 2024 GF Unassigned FB Amount Over/(Under) 70,536,362 12,696,545 17,836,267 $5,139,722 Contingency Fund - Required Ending Fund Balance Calculation 10% of 2022 Ongonig Revenues Contingency Fund Amount Over/(Under) 7,053,636 7,154,961 $101,325 49 83,000 82,000 81,000 80,000 79,000 78,000 General Fund 2024 Revenues & Expenditures Budget vs Actual 78,683 80,752 81,864 81,622 Revenues Expenditures ■ 2024 Budget ■ 2024 Actual Revenues came in 2.6% over budget. This represents an increase of $2.1 million. The key driver that led to the increase in revenues over budget was Sales Tax. General Fund expenditures finished the year 0.3% under budget. The top expenditure categories include Salaries, at 51 % of the total General Fund budget and Professional Services, at 40% of the total budget. 50 General Fund Overview - Revenues by Category Below are General Fund revenues by category. Variances from the prior year that are greater than 10% AND $250k are listed below and further explained in the report. Year -to -Date as of December 31, 2024 SUMMARY BY REVENUE TYPE BUDGET ACTUAL COMPARISON OF RESULTS 2024 Budget 2022 2023 2024 Allocated Budget vsActuals OVER/(UNDER) % Change Received $ 2023/2024 % 2023/2024 Property Tax 18,124,000 17,233,512 17,536,670 17,510,903 (613,097) 97% (25,767) -0.1% Sales Taxes -Retail 21,725,000 21,023,287 21,881,507 23,905,762 2,180,762 110% 2,024,255 9.3% Use Taxes 930,000 953,890 970,202 940,689 10,689 101% (29,514) -3.0% Admission Taxes 875,000 819,932 842,387 904,888 29,888 103% 62,500 7.4% Utility Taxes 4,300,000 3,949,799 4,125,408 4,412,082 112,082 103% 286,674 6.9% Business & Occupation Tax 3,000,000 0 0 2,100,831 (899,169) 70% 2,100,831 0.0% Interfund Utility Taxes 2,784,300 2,404,685 2,567,243 2,684,965 (99,335) 96% 117,722 4.6% Gambling & Excise Taxes 4,665,700 4,964,964 4,464,521 4,294,934 (370,766) 92% (169,587) -3.8% Total Tax Revenue 56,404,000 51,350,070 52,387,938 56,755,053 351,053 101% $4,367,114 8.3% Business Licenses 3,230,000 2,939,066 3,243,556 2,691,302 (538,698) 83% (552,254) -17.0% Rental Housing permits 45,000 64,605 57,751 43,233 (1,767) 96% (14,518) -25.1% Building Permits 1,813,743 1,799,493 2,430,331 2,279,459 465,716 126% (150,872) -6.2% Franchise Fees 508,000 573,391 589,509 802,094 294,094 158% 212,584 36.1% Total Licenses and Permits 5,596,743 5,376,555 6,321,147 5,816,088 219 345 104% ($505,059) -8.0% Sales Tax Mitigation Pyments 508,376 794,337 635,470 508,376 (0) 100% (127,094) -20.0% SCLAgreement 2,300,000 2,416,079 2,651,351 3,033,985 733,985 132% 382,634 14.4% Grant Revenues 2,951,608 2,882,099 3,668,912 2,904,336 (47,272) 98% (764,576) -20.8% State Entitlements 510,500 503,242 661,534 664,806 154,306 130% 3,272 0.5% Intergovernmental Revenue 654,000 566,979 704,493 764,287 110,287 117% 59,794 8.5% Total Intergovernmental Revenue 6,924,484 7,162,736 8,321,760 7,875,790 951,306 114% ($445,971) -5.4% General Government Revenue 16,620 26,040 22,703 16,594 (26) 100% (6,110) -26.9% Security revenue 1,739,150 978,782 1,179,543 1,408,513 (330,637) 81% 228,971 19.4% Transportation Revenue 20,000 1,961 288 450 (19,550) 2% 162 56.3% Plan Check and Review Fees 832,481 834,728 1,258,163 795,012 (37,469) 95% (463,151) -36.8% Culture and Recreation Fees 232,870 143,197 166,621 298,439 65,569 128% 131,817 79.1% Fines and Penalties 754,275 480,632 311,630 426,805 (327,470) 57% 115,176 37.0% OTHER INCOME 125,650 450,568 566,570 674,485 548,835 537% 107,915 19.0% Total Charges for Services 3,721,046 2,915,909 3,505,517 3,620,298 (322,113) 97% $114,781 3.3% TOTAL OPERATING REVENUE 72,646,273 66,805,270 70,536,362 74,067,228 1,420,955 102% $3,530,866 5.0% Indirect Cost Allocation 2,963,517 2,687,997 2,822,397 2,963,517 0 100% 141,120 5.0% Investment Earnings 250,000 (494,257) 770,383 953,322 703,322 381% 182,939 23.7% Rent & Concessions 1,035,570 192,355 466,505 1,224,107 188,537 118% 757,602 162.4% Transfers In 1,787,849 2,553,951 1,323,249 1,543,740 (244,109) 86% 220,491 16.7% Bond Proceeds 0 98,699 2,561,209 0 0 #DIV/0! (2,561,209) -100.0% Sale of Capital Assets 0 0 0 0 0 #DIV/0! 0% 0.0% Total Non Operating Revenue 6,036,936 5,038,744 I 7,943,744 ,84,686 647,750 111% ($1,259,058) -15.8% TOTAL REVENUE 78,683,209 71,844,015 78,480,106 80,751,914 5,502,407 103% $2,271,808 2.9% %of Year 100% 51 Revenue Category Table and Chart Revenue Category Tax Licenses and Permits Intergovernmental Charges for Services Non -Operating Income Total Amount % 56,755,053 70.3% 5,816,088 7.2% 7,875,790 9.8% 3,620,298 4.5% 6,684,686 8.3% 80,751,914 100.0% 2024 Revenues 8.3% 4.5% 9.8% 7.2% 0111.11In'- 70.3% ■ Tax ■ Licenses and Permits ■ Intergovernmental ■ Charges for Services ■ Non Operating Income 52 Business Licenses - Business licensing revenue decreased 17% in 2024 compared to 2023. The decrease in revenue is because of a lower employee count in 2024 as well as, there was a timing issue where one large business renewed their business license one week after the 2024 cutoff, resulting in those revenues being reported in 2025. Franchise Fees Franchise Fees are up 36% over the prior year. Sales Tax Mitigation Payments are on a declining schedule. Sales Tax Mitigation will end on June 30, 2026. SCL Agreement — Received large back pay of $192k. Grant Revenues finished the year $746,576 less than the prior year. Plan Check and Review Fees are a function of charges for services pertaining to the work of permitting in DCD. This is a volatile revenue that is difficult to tie to market conditions. Culture and Recreation Fees are up significantly as a result of an increase in participation in Recreation programing. Rent & Concessions — Short -Term facility rentals in TCC and TFORCE Freight Long -Term Lease. Business & Occupation Tax — We budgeted $3 million, prior to understanding the timing of the revenues. Quarter 4 revenues are received in the first quarter of the following year. 53 General Fund Revenue Charts Property Tax 2024 Budget 2022 Actual 2023 Actual 2024 Actual Actual less Budget 2024 vs 2023 $ Diff % Diff 18,124,000 17,233,512 17,536,670 17,510,903 (613,097) (25,767) -0.1 % Property tax is the most stable and predictable revenues. 2024 had a 0.1 % decrease from the prior year. The decrease represents $25,767. 17,600 7 17,550 17,500 0 17,450 ~ 17,400 17,350 17,300 17,250 17,200 17,150 17,100 17,050 17,234 2022 Actual Property Tax Jan -Dec 2022 - 2024 17,537 17,511 2023 Actual 2024 Actual 54 Sales Tax 2024 Budget 2022 Actual 2023 Actual 2024 Actual Actual Tess Budget 2024 vs 2023 $ Diff % Diff 22,655,000 21,977,177 22,851,709 24,846,451 2,191,451 1,994,742 8.7% Sales Tax increased 8.7% over the prior year. Inflation played a significant role. Increases in prices, resulting in increased sales tax. Thousands 25,500 25,000 24,500 24,000 23,500 23,000 22,500 22,000 21,500 21,000 20,500 21,977 2022 Actual Sales Tax Jan - Dec 2022 - 2024 22,852 24,846 2023 Actual 2024 Actual 55 Utility Tax 2024 Budget 2022 Actual 2023 Actual 2024 Actual Actual less Budget 2024 vs 2023 $ Diff % Diff 4,300,000 3,949,799 4,125,408 4,412,082 112,082 286,674 6.9% Utility Tax increases 6.9%, representing $286,674 over the previous year. The largest increases were in Gas and Electricity. Decreases were in Cable and Telecom. Utility 2022 2023 2024 $ Change % Change Cable 241,837 221,303 189,404 (31,899) -14.4% Electric 1,684,968 1,744,101 1,903,993 159,892 9.2% Gas 641,496 659,959 758,798 98,839 15.0% Telecommunications 669,210 715,237 666,377 (48,860) -6.8% Solid Waste General 712,704 785,009 893,509 108,500 13.8% Total 3,950,216 4,125,610 4,412,082 286,472 6.94% Thousands 4,500 4,400 4,300 4,200 4,100 4,000 3,900 3,800 3,700 3,950 2022 Actual Utility Tax Jan - Dec 2022 - 2024 4,125 4,412 2023 Actual 2024 Actual 56 Interfund Utility Tax 2024 Budget 2022 Actual 2023 Actual 2024 Actual Actual Tess Budget 2024 vs 2023 $ Diff % Diff 2,784,300 2,404,685 2,567,243 2,684,965 (99,335) 117,722 4.6% Interfund Utility Tax is a tax imposed upon the City for our use of utilities. This has increased 4.6% over the prior year, coming in approximately $99,000 under budget and an increase over the prior year of approximately $117,772. Thousands 2,800 2,700 2,600 2,500 2,400 2,300 2,200 Interfund Utility Tax Jan - Dec 2022 - 2024 2,405 2022 Actual 2,685 2,567 2023 Actual 2024 Actual 57 Gambling Tax 2024 Budget 2022 Actual 2023 Actual 2024 Actual Actual less Budget 2024 vs 2023 $ Diff % Diff 4,665,700 4,964,964 4,464,521 4,294,934 (370,766) (169,587) -3.8% The City of Tukwila has five casinos/card rooms within the city limits. One card room has been closed for renovations, resulting in a slight decline in revenues when compared to the prior year. Thousands 5,200 5,000 4,800 4,600 4,400 4,200 4,000 3,800 4,965 2022 Actual Gambling Tax Jan - Dec 2022 - 2024 4,465 4,295 2023 Actual 2024 Actual 11 58 Admission Tax 2024 Budget 2022 Actual 2023 Actual 2024 Actual Actual Tess Budget 2024 vs 2023 $ Diff % Diff 875,000 819,932 842,387 904,888 29,888 62,500 7.4% Admission Tax revenue finished the year slightly above budget and 7.4% over the same period last year. 920,000 900,000 880,000 860,000 840,000 820,000 800,000 780,000 760,000 819,932 2022 Actual Admission Tax Jan - Dec 2022 - 2024 842,387 904,888 2023 Actual 2024 Actual 59 Business Licenses Actual 2024 2022 2023 2024 Tess 2024 vs 2023 Budget Actual Actual Actual Budget $ Diff % Diff 3,230,000 2,939,066 3,243,556 2,691,302 (538,698) (552,254) -17.0% The reduction in Business License is a result of reduced employee count reported by businesses and a timing issue where one large business renewed their business license after the 2024 cutoff. N 3,500 g 3,000 vi t • 2,500 i- 2,000 1,500 1,000 500 0 2,939 2022 Actual Business Licenses Jan - Dec 2022 - 2024 3,244 2,691 2023 Actual 2024 Actual 60 Building Permits 2024 Budget 2022 Actual 2023 Actual 2024 Actual Actual less Budget 2024 vs 2023 $ Diff % Diff 1,813,743 1,799,493 2,430,331 2,279,459 465,716 (150,872) -6.2% Building Permits is volatile and difficult to forecast due to numerous external factors that affect the economy and the region. Building Permits ended the year, 6.2% lower than last year. This percentage represents a decline of $150,872 from the previous year. 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 1,799,493 2022 Actual Building Permits Jan - Dec 2022 - 2024 2,430,331 2,279,459 1 2023 Actual 2024 Actual 61 General Fund Overview — Expenditures by Department General Fund expenditures ended the year 0.3% under budget. The majority of departments ended the year with their expected department budget. A few departments came in slightly higher than anticipated. Those increases have been identified and further explained below. DEPARTMENT BUDGET ACTUAL 2024 Budget 2022 2023 2024 Budget vs Actual OVER/(UNDER) % Expended $ Change % Change 2023/2024 City Council 393,067 356,579 366,378 379,671 (13,396) _ 96.6% 13,293 3.6% Mayor's Office 2,405,513 2,176,819 2,308,617 2,691,788 286,275 111.9% 383,171 16.6% Administrative Services 5,621,624 4,873,710 6,491,702 5,715,582 93,958 101.7% (776,120) -12.0% Finance Department 4,625,307 3,065,214 3,177,417 3,899,112 (726,195) 84.3% 721,695 22.7% Rec Dept/ Parks Maint 5,808,439 4,846,653 5,110,670 5,357,225 (451,214) 92.2% 246,555 4.8% Community Dev 5,063,237 4,273,322 4,582,457 5,066,216 2,979 100.1% 483,760 10.6% Municipal Court 1,859,399 1,565,412 1,623,823 2,109,368 249,968 113.4% 485,544 29.9% Police Department 24,212,875 18,868,518 21,267,400 24,054,433 (158,442) 99.3% 2,787,033 13.1% Fire Department 16,605,441 15,158,419 15,087,708 16,661,942 56,501 100.3% 1,574,234 10.4% PW Dept / Street Maint 8,002,142 7,000,206 7,171,066 7,338,932 (663,210) 91.7% 167,866 2.3% Subtotal 74,597,044 62,184,851 67,187,238 73,274,269 (1,322,775) 98.2% 6,087,031 9.1% Non Departmental 7,266,656 10,176,398 8,846,463 8,347,547 1,080,891 114.9% (498,916) N/A Total Expenditures 81,863,699 72,361,249 76,033,701 81,621,815 (241,884) 99.7% 5,588,115 7.3% % of Year 100.04 Mayor's Office • Employee separation package • Increase in Professional Development Administrative Services • 2024 Budget miscalculation with Online Services — NeoGov. Municipal Court • Revenue backed expense (Blake Court decision) • Court received approval for a 1.25 FTE increase. Fire • Contracted services Non Departmental • Asylees expenditures prior to July 2024, related to Riverton Park United Methodist Church. 15 62 General Fund Overview - Expenditures by Category Year -to -Date as of December 31, 2024 BUDGET ACTUAL COMPARISON OF RESULTS Budget % $ Change %Change 2024 2022 2023 2024 vs Allocated Expended Annual OVER/(UNDER) 2023/2024 2023/2024 Salaries 28,083,897 30,114,781 23,711,940 27,990,130 (93,767) 99.7% 4,278,190 18.0% Extra Labor 794,977 404,565 636,214 778,690 (16,287) 98.0% 142,476 22.4% Overtime 797,180 2,603,186 1,538,172 1,534,204 737,024 192.5% (3,969) (0.3%) Holiday Pay 250,000 490,172 248,642 282,335 32,335 112.9% 33,694 13.6% FICA 2,299,308 1,917,780 1,897,933 2,225,890 (73,418) 96.8% 327,957 17.3% Pension-LEOFF 690,494 1,022,802 627,753 606,665 (83,829) 87.9% (21,088) (3.4%) Pension-PERS/PSERS 1,877,476 1,469,268 1,502,228 1,664,610 (212,866) 88.7% 162,382 10.8% Industrial Insurance 616,066 689,029 417,744 458,121 (157,945) 74.4% 40,377 9.7% Medical & Dental 5,818,916 7,312,010 5,407,414 5,833,058 14,142 100.2% 425,644 7.9% Unemployment 0 37,205 34,230 39,741 39,741 #DIV/0! 5,510 16.1% Uniform/Clothing 33,504 9,085 4,926 8,158 (25,346) 24.3% 3,232 65.6% Total Salaries & Benefits 41,261,818 46,069,8841 36,027,1951 41,421,601 159,783 100.4% 5,394,406 15.0% Supplies 640,401 612,325 547,604 505,130 (135,270) 78.9% (42,474) (7.8%) Repairs & Maint Supplies 420,705 383,135 461,096 547,865 127,160 130.2% 86,769 18.8% Resale Supplies 2,580 859 0 2,247 (333) 87.1% 2,247 #DIV/0! Small Tools 228,078 179,442 270,919 263,224 35,145 115.4% (7,695) (2.8%) Technology Supplies 112,364 96,274 323,566 86,430 (25,934) 76.9% (237,137) (73.3%) Fleet Supplies 7,260 6,687 7,738 6,596 (664) 90.8% (1,142) (14.8%) Total Supplies 1,411,387 1,278,7211 1,610,9231 1,411,491 104 100.0% (199,432) (12.4%) Professional Services 25,694,051 6,904,463 22,255,045 25,327,858 (366,193) 98.6% 3,072,813 13.8% Communications 468,177 515,789 473,134 519,202 51,024 110.9% 46,068 9.7% Professional Development 532,851 395,311 452,144 501,534 (31,317) 94.1% 49,389 10.9% Advertising 66,716 44,856 46,861 35,744 (30,972) 53.6% (11,117) (23.7%) Rentals 319,003 188,473 1,003,426 215,714 (103,289) 67.6% (787,712) (78.5%) Technology Services 1,081,907 786,143 610,245 1,426,529 344,622 131.9% 816,285 133.8% Utilities 2,387,484 2,366,955 2,345,382 2,266,029 (121,455) 94.9% (79,353) (3.4%) Repairs & Maint Services 1,483,739 2,567,904 1,535,753 1,801,703 317,964 121.4% 265,950 17.3% Miscellaneous 701,220 626,722 472,941 508,647 (192,574) 72.5% 35,706 7.5% Total Services 32,735,150 14,396,616 29,194,9301 32,602,959 (132,191) 99.6% 3,408,028 11.7% Capital Outlay -Land 0 98,699 2,561,209 0 0 - (2,561,209) (100.0%) Other Improvements 0 0 0 0 0 - 0 #DIV/0! Machinery & Equipment 590,000 289,145 1,093,290 334,066 (255,934) 56.6% (759,224) (69.4%) Construction Projects 0 0 0 0 0 0 #DIV/0! Total Capital Outlay 590,000 387,843 3,654,4991 334,066 (255,934) 56.6% (3,320,433) (90.9%) Transfers Out 5,865,345 10,228,184 5,546,153 5,851,699 (13,646) 99.8% 305,546 5.5% Total Non Operating Expens 5,865,345 10,228,184 5,546,153 5,851,699 (13,646) 99.8% 305,546 5.5% Total Expenditures 81,863,700 72,361,249 76,033,701 81,621,815 (241,884) 99.7% 5,588,115 7.3% % of Year 100.0% 63 General Fund Category Table and Chart Salaries & Benefits 41,421,601 50.7% Supplies 1,411,491 1.7% Services 32, 602, 959 39.9% Capital Outlay 334,066 0.4% Transfers Out 5,851,699 7.2% Total Expenses 81,621,815 100.0% 2024 Expenditures 0.4% 39.9%10 1.7% 50.7% ■ Salaries & Benefits ■ Supplies ■ Services ■ Capital Outlay 64 Thousands 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 46,070 General Fund Expenditure Categories Salaries & Benefits Jan - Dec 2022 - 2024 36,027 41,422 2022 2023 2024 Increase of 15% • Salary adjustments • Separation package • Retro Pay • Increase benefit rates (medical/dental) • FICA increases as Salaries increase 65 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1,278,721 Supplies Jan - Dec 2022 - 2024 1,610,923 1,411,491 2022 2023 2024 Reduction of 12% over the prior year. • Conversation about saving money towards end of biennium 66 35,000 co • 30,000 0 t H 25,000 20,000 15,000 10,000 5,000 0 14,397 Professional Services Jan - Dec 2022 - 2024 29,195 32,603 2022 2023 2024 Increase of 11.7% • Regional Fire Authority Contract • Repairs & Maintenance Services o RPUMC Parking Lot Clean up o Valley Com Dispatch Svs. Radios/Telemetry o TCC HVAC Replacement 67 Thousands 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 388 Capital Outlay Jan - Dec 2022 - 2024 3,654 334 2022 2023 2024 Down 91 % from prior year • TIS Network infrastructure purchases in 2023. 68 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 10, 228,184 Transfers Out Jan - Dec 2022 - 2024 5,546,153 5,851,699 2022 2023 2024 • 2024 is consistent with the prior year. • Debt Service paid in 2022 (LTGO) • Capital Transfers in 2022 (Fund 104 — Bridges & Arterial Street) Conclusion The City of Tukwila's 2024 Year -End Financial Report highlights a significant sales tax revenue increase of $2,024,255 (9.3%) above budget projections, contributing to overall revenue growth. Salaries and services accounted for the largest expenditure categories, comprising 51 % and 40% of the General Fund budget, respectively. Notable financial changes include revenue fluctuations across various categories, such as a 17% decline in certain fees and a 7.4% rise in rental and concession income. Expenditures rose in areas like the Regional Fire Authority contract and technology services, while some departments achieved cost reductions toward the biennium's end. The City navigated evolving costs with adjustments for market rate studies, retroactive pay, and increased benefit rates, reflecting a dynamic fiscal landscape. 69