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Home My WebLink AboutFIN 2025-04-28 Item 1C - Report - 2025 Quarter 1: General Fund ReportCity of Tukwila Thomas 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: April 28, 2025 SUBJECT: 2025 First Quarter General Fund Financial Report SUMMARY The City of Tukwila's 2025 First Quarter (Q1) General Fund 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 In Q1 2025, General Fund revenues came in under budget by $1.1 million (5.6%) due to the timing of Property Tax collections, which are primarily received in April, while expenditures remained well - managed, trending 0.2% under budget. Taxes made up 69% of total revenues, with Sales Tax showing slight growth of 6.4% over the prior year, and Utility Tax up 7.4%. Property Tax reported early payments resulting in an increase of $323,029, although the majority of collections will be reflected in April and May. Other revenue highlights include large gains in Building Permits, which exceeded budget by $273,850, and Admission Tax, which increased 56% year -over -year. Declines in Grant and Intergovernmental Revenues were attributed to the expiration of Federal ARPA funding and the absence of Basic Life Services training income. On the expenditure side, all departments stayed within budget, with variations linked to timing issues, annual payments, and changes in contractual obligations, such as the termination of the Fire contract with the RFA. Total Q1 expenditures concluded at 24.9% of the annual budget. Recommendations: • Discussion only Attachments • 2025 First Quarter GF Financial Report 1 79 City of Tukwila Quarter 1 Financial Report January — March 2025 General Fund Overview General Fund Revenues Expenditures Net 2025 Beginning Fund Balance 2025 Projected Ending Fund Balance 2025 Budget 76,087,350 74,931,244 1,156,106 2025 Actual 17,955,453 18,691,567 (736,113) 24,121,326 23,385,213 General Fund - Required Ending Fund Balance Calculation 2025 Ongoing Revenues 18% of Ongoing Revenues 2025 GF Budgeted Unassigned FB Amount Over/(Under) 15,561,646 2,801,096 23,385,213 $20,584,116 Contingency Fund - Required Ending Fund Balance Calculation 10% of 2025 Ongonig Revenues Budgeted Contingency Fund Amount Over/(Under) 1,556,165 7,154,961 $5,598,796 % of Budget 23.6% 24.9% $ Diff ($1,066,384) (412) 2 81 2025 Quarter 1 (Q1) Financial Overview For Q1 2025, General Fund revenues are trailing the 2025 expectations by $1.1 million (5.6%), due to the timing of Property Tax collections, which are received in April. Q1 expenditures are on track, trending at 0.2% under budget. Thousands 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 General Fund 2025 Q1 Revenues & Expenditures Budget vs Actual 76,087 17,955 Revenues 74,931 ■ 2025 Budget ■ 2025 Actual 18,692 Expenditures 3 82 Revenue Analysis Taxes remain the primary revenue classification, comprising 69% of Q1 revenue. The remaining 31% consists of other revenue classifications, which are relatively evenly distributed. • Tax 2025 Q1 Revenues 8.4% 5.8% 7.1% 9.7%1100111' • Licenses and Permits ■ Charges for Services • Non -Operating Income 69.0% • Intergovernmental Revenue Classification Tax Licenses and Permits Intergovernmental Charges for Services Non -Operating Income Total Amount % 12,386,918 69.0% 1,746,501 9.7% 1,279,584 7.1% 1,038,393 5.8% 1,504,058 8.4% 17,955,453 100.0% 4 83 Taking a closer look at taxes, Sales Tax leads the category. Property Tax is substantially collected twice a year in April and October. We will see an increase in the Property Tax received in May, after the April payments are recorded. Taxes Amount % Sales Taxes -Retail $6,078,625 54% Property Tax $1,075,573 9% Utility Taxes $1,340,344 12% Gambling & Excise Taxes $421,492 4% Interfund Utility Taxes $1,313,835 12% Business & Occupation Tax $591,219 5% Admission Taxes $273,902 2% Use Taxes $246,712 2% Total Taxes $11,341,701 100% 84 General Fund Overview - Revenues by Category Below are General Fund revenues by category. Variances from the prior quarter that are greater than 10% AND $250k are further explained in the report. Year -to -Date as of March 31, 2025 SUMMARY BY REVENUE TYPE BUDGET ACTUAL COMPARISON OF RESULTS 2025 Budget 2023 2024 2025 YTD Budget vs Actuals OVER/(UNDER) % Change Received $ 2024/2025 % 2024/2025 Property Tax 11,999,227 677,329 752,544 1,075,573 (1,924,234) 9% 323,029 42.9% Sales Taxes -Retail 23,447,886 5,642,125 5,700,244 6,078,625 216,653 26% 378,381 6.6% Use Taxes 999,100 278,367 242,205 246,712 (3,063) 25% 4,507 1.9% Admission Taxes 859,235 213,217 176,122 273,902 59,094 32% 97,781 55.5% Utility Taxes 4,493,702 1,208,533 1,267,384 1,361,361 237,935 30% 93,976 7.4% Interfund Utility Taxes 3,167,729 1,178,350 1,221,373 1,313,835 521,902 41% 92,462 7.6% Gambling & Excise Taxes 4,609,500 1,306,159 1,060,091 1,317,791 165,416 29% 257,700 24.3% Business & Occupation Tax 2,400,000 0 0 719,121 119,121 30% 719,121 0.0% Total Tax Revenue 51,976,379 10,504,081 10,419,962 12,386,918 (607,177) 24% $1,966,956 18.9% Business Licenses 3,445,500 768,245 674,595 593,444 (267,931) 17% (81,151) -12.0% Rental Housing permits 44,700 36,012 37,110 47,329 36,154 106% 10,219 27.5% Building Permits 1,940,500 540,508 405,062 758,975 273,850 39% 353,913 87.4% Franchise Fees 651,372 123,683 131,962 346,752 183,909 53% 214,790 162.8% Total Licenses and Permits 6,082,072 1,468,448 1,248,729 1,746,501 225,983 29% $497,771 39.9% Sales Tax Mitigation Pyments 406,700 176,519 141,216 112,972 11,297 28% (28,243) -20.0% SCLAgreement 2,687,700 737,591 805,135 885,416 213,491 33% 80,282 10.0% Grant Revenues 877,372 212,243 1,275,786 157,667 (61,676) 18% (1,118,119) -87.6% State Entitlements 690,330 106,053 154,524 142,161 (30,422) 21% (12,363) -8.0% Intergovernmental Revenue 0 6,378 737,381 (18,633) (18,633) 0% (756,014) -102.5% Total Intergovernmental Revenue 4,662,102 1,238,784 3,114,041 1,279,584 114,058 27% ($1,834,458) -58.9% General Government Revenue 9,620 6,797 2,981 7,562 5,157 79% 4,582 153.7% Security revenue 1,139,456 163,730 279,271 317,223 32,359 28% 37,952 13.6% Transportation Revenue 20,000 288 0 0 (5,000) 0% 0 0.0% Plan Check and Review Fees 662,000 249,756 158,748 326,535 161,035 49% 167,787 105.7% Culture and Recreation Fees 781,045 37,184 65,958 79,845 (115,416) 10% 13,888 21.1% Fines and Penalties 404,505 87,967 78,791 250,985 149,859 62% 172,194 218.5% OTHER INCOME 190,075 137,246 193,165 56,242 8,723 30% (136,923) -70.9% Total Charges for Services 3,206,701 682,969 778,913 1,038,393 78,135 32% $259,480 33.3% TOTAL OPERATING REVENUE 65,927,254 13,894,281 15,561,646 16,451,395 (49,475,859) 25% $889,750 5.7% Indirect Cost Allocation 3,111,694 705,603 740,886 777,922 (2) 25% 37,036 5.0% Investment Earnings 470,000 67,107 66,806 97,706 (19,794) 21% 30,900 46.3% Rent & Concessions 383,783 35,493 293,816 298,724 202,778 78% 4,909 1.7% Transfers In 1,494,619 0 176,392 329,706 (43,949) 22% 153,314 86.9% Sale of Capital Assets 4,700,000 0 0 0 (1,175,000) 0% 0% 0.0% Total Non Operating Revenue 10,160,096 808,203 1,277,899 1,504,058 (1,035,966) 15% $226,159 17.7% TOTAL REVENUE 76,087,350 14,702,484 16,839,545 17,955,453 (1,066,384) 24% $1,115,908 6.6% %of Year 25% 6 85 Significant Changes Property Tax — First half payment is made in April. The increase of $323,029 is a representation of early first'/z payments. Gambling Tax — The Increase is due to the collection of past due gambling tax revenue. Business & Occupation Tax — Business & Occupation Tax: The City implemented the B&O Tax on January 1, 2024. Q1 2025 revenues, remitted in April, are not reflected in this report. Building Permits are a volatile revenue stream that is difficult to predict. At 25% of the year, the City has received 39% of the anticipated budget amount. Grant Revenues are down compared to the prior year is primarily due to the expiration of Federal ARPA grant funding as of December 31, 2024. Intergovernmental Revenue reported A notable decline is due to the absence of Basic Life Services (BLS) training funding in 2025, which contributed over $700,000 in revenue in 2024. Additionally, approximately $22,000 in invoiced revenue was reversed. 86 General Fund Revenue Charts Property Tax 2023 Actual 2024 Actual 2025 Actual 2025 vs 2024 $ Diff % Diff 677,329 752,544 1,075,573 323,029 42.9% Property Tax is primarily collected twice a year. This revenue will increase in April & May once payments are recorded. Q1 reflects early payments totaling $323,029. The 42% year -over -year increase is due to these early remittances. 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 677,329 2023 Actual Property Tax Jan -Mar 2023 - 2025 752,544 1,075,573 2024 Actual 2025 Actual 8 87 Sales Tax 2023 Actual 2024 Actual 2025 Actual 2025 vs 2024 $ Diff % Diff 5,920,492 5,942,449 6,325,337 382,888 6.4% Sales Tax leads all tax categories and has increased 6.4% compared to the same period in 2024. The growth is attributed to heightened economic activity. 6,400,000 6,300,000 6,200,000 6,100,000 6,000,000 5,900,000 5,800,000 5,700,000 5,920,492 2023 Actual Sales Tax Jan - Mar 2023 - 2025 5,942,449 6,325,337 2024 Actual 2025 Actual 9 88 Utility Tax 2023 Actual 2024 Actual 2025 Actual 2025 vs 2024 $ Diff % Diff 1,208,533 1,267,384 1,361,361 93,976 7.4% Utility Tax revenue rose by 7.4% over the prior year. Notable increases were observed in Gas, while Solid Waste reported a decrease due to an unprocessed March payment at the time of reporting. Utility 2023 2024 2025 $ Change ok Change Cable $58,211.04 $67,885.92 $62,544.56 (5,341) -7.9% Electric $480,434.58 $518,081.02 $552,524.24 34,443 6.6% Gas $288,501.03 $256,465.15 $328,508.68 72,044 28.1% Telecommunications $193,172.03 $167,184.57 $184,202.41 17,018 10.2% Solid Waste General $188,214.51 $257,767.53 $233,580.76 (24,187) -9.4% Total 1,208,533 1,267,384 1,361,361 93,976 7.41% 1,400,000 1,350,000 1,300,000 1,250,000 1,200,000 1,150,000 1,100,000 1,208,533 2023 Actual Utility Tax Jan - Mar 2023 - 2025 1,267,384 1,361,361 2024 Actual 2025 Actual 10 89 Interfund Utility Tax 2023 Actual 2024 Actual 2025 Actual 2025 vs 2024 $ Diff % Diff 1,178,350 1,221,373 1,313,835 92,462 7.6% Interfund Utility Tax revenue increased by 7.6% year -over -year, reflecting a $92,462 year -over -year rise. This tax represents the City's utility usage. 1,350,000 1,300,000 1,250,000 1,200,000 1,150,000 1,100,000 1,178, 350 2023 Actual Interfund Utility Tax Jan - Mar 2023 - 2025 1,221,373 1,313,835 2024 Actual 2025 Actual 11 90 Gambling Tax 2023 Actual 2024 Actual 2025 Actual 2025 vs 2024 $ Diff % Diff 1,306,159 1,060,091 1,317,791 257,700 24.3% Gambling Tax increase is attributed to the collection of past due revenues. 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1,306,159 2023 Actual Gambling Tax Jan - Mar 2023 - 2025 1,060,091 1,317,791 2024 Actual 2025 Actual 12 91 Admission Tax 2023 Actual 2024 Actual 2025 Actual 2025 vs 2024 $ Diff % Diff 213,217 176,122 273,902 97,781 55.5% Admission Tax revenue saw a significant 56% increase compared to the prior year, exceeding budget by $59,094, largely due to heightened economic activity. 300,000 250,000 200,000 150,000 100,000 50,000 0 213,217 2023 Actual Admission Tax Jan - Mar 2023 - 2025 176,122 273,902 2024 Actual 2025 Actual 13 92 Business Licenses 2023 Actual 2024 Actual 2025 Actual 2025 vs 2024 $ Diff % Diff 768,245 674,595 593,444 (81,151) -12.0% Business Licenses reported a decline in revenue and is linked to reduced employee counts reported by businesses. 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 768,245 2023 Actual Business Licenses Jan - Mar 2023 - 2025 674,595 593,444 2024 Actual 2025 Actual 14 93 Building Permits 2023 Actual 2024 Actual 2025 Actual 2025 vs 2024 $ Diff % Diff 540,508 405,062 758,975 353,913 87.4% Building Permits, a volatile revenue source, are challenging to forecast. At 25% into the year, the City has received 39% of the anticipated budget, representing an 87.4% increase year -over -year. 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 540,508 2023 Actual Building Permits Jan - Mar 2023 - 2025 405,062 758,975 8 2024 Actual 2025 Actual 15 94 General Fund Overview — Expenditures by Department General Fund expenditures ended the quarter 0.2% under budget. All General Fund departments are in good shape at the end of Q1. DEPARTMENT BUDGET ACTUAL Actual Year -Over -Year 2025 Budget 2025 YTD 2023 2024 2025 Budget vs Actual (OVER)/UNDER % Expended $ Change % Change 2024/2025 City Council 400,093 100,023 96,072 97,391 93,126 6,897 23.3% (4,264) -4.4% Mayor's Office 9,748,218 2,437,054 1,774,748 1,942,520 2,186,489 250,565 22.4% 243,970 12.6% Finance Department 4,343,230 1,085,808 1,067,540 1,605,401 1,630,839 (545,031) 37.5% 25,438 1.6% Rec Dept/ Parks Maint 6,768,451 1,692,113 1,207,525 1,399,744 1,445,419 246,693 21.4% 45,675 3.3% Community Dev 5,732,921 1,433,230 1,022,598 1,141,190 1,261,467 171,764 22.0% 120,277 10.5% Municipal Court 2,329,525 582,381 401,318 488,704 533,182 49,199 22.9% 44,478 9.1% Police Department 28,411,330 7,102,833 5,485,672 6,277,623 7,453,580 (350,747) 26.2% 1,175,957 18.7% Fire Department 1,398,192 349,548 4,003,969 4,364,426 214,788 134,760 15.4% (4,149,639) -95.1% PW Dept / Street Maint 9,738,964 2,434,741 2,666,068 3,031,939 2,111,807 322,934 21.7% (920,131) -30.3% Subtotal 68,870,925 17,217,731 17,725,510 20,348,937 16,930,697 287,034 24.6% (3,418,240) -16.8% Non Departmental 6,060,319 1,515,080 1,508,158 1,207,487 1,760,870 245,790 29.1% 553,383 45.8% Total Expenditures 74,931,244 18,732,811 19,233,668 21,556,424 18,691,567 532,824 24.9% (2,864,857) -13.3% % of Year 25.0%I • No departments reported exceeding their budgets in Q1 2025. The increase over budget for Finance and Police reflects annual insurance payments. If the insurance payment was annualized, both departments would be reflected as under budget. • Police: Additional costs are associated with Fleet Dispatch Services and SCORE Jail. • Fire: A significant decline is due to the termination of the City's contract with the RFA as of December 31, 2024. • Street Maintenance: Reduced expenditures in anticipation of an annual payment to King County for Storm Water payment. • Non -Departmental: Increased costs are attributed to temporary housing for asylum seekers. 16 95 General Fund Overview - Expenditures by Category Year -to -Date as of March 31, 2025 BUDGET ACTUAL COMPARISON OF RESULTS % $ Change %Change 2025 2023 2024 2025 Expended Annual 2024/2025 2024/2025 Salaries 30,318,363 5,768,477 6,472,190 7,308,638 24.1% 836,449 12.9% Extra Labor 1,176,493 85,173 117,528 142,978 12.2% 25,450 21.7% Overtime 1,648,520 395,104 427,596 433,416 26.3% 5,820 1.4% Holiday Pay 323,000 1,935 11,658 7,350 2.3% (4,308) (37.0%) FICA 2,570,059 471,530 530,681 589,658 22.9% 58,976 11.1% Pension-LEOFF 690,278 128,764 148,751 165,326 24.0% 16,575 11.1% Pension-PERS/PSERS 1,778,634 381,460 384,165 414,604 23.3% 30,439 7.9% Industrial Insurance 583,512 98,829 108,726 155,311 26.6% 46,584 42.8% Medical & Dental 7,184,514 1,342,590 1,480,011 1,611,353 22.4% 131,342 8.9% Uniform/Clothing 44,721 470 1,090 795 1.8% (295) (27.1%) Total Salaries & Benefits 46,318,094 8,674,331 9,682,397 10,829,429 23.4% 1,147,032 11.8% Supplies 697,785 67,836 100,592 137,268 19.7% 36,676 36.5% Repairs & Maint Supplies 506,030 57,508 197,591 77,317 15.3% (120,274) (60.9%) Small Tools 340,445 21,421 34,337 57,662 16.9% 23,324 67.9% Technology Supplies 86,454 2,764 18,874 3,973 4.6% (14,900) (78.9%) FleetSupplies 9,500 1,004 3,113 632 6.7% (2,481) (79.7%) Total Supplies 1,640,214 150,533 354,507 276,853 16.9% (77,655) (21.9%) Professional Services 9,810,795 6,531,930 7,503,563 3,860,056 39.3% (3,643,508) (48.6%) Communications 584,227 71,665 115,665 142,622 24.4% 26,957 23.3% Professional Development 884,823 175,169 207,374 196,302 22.2% (11,072) (5.3%) Advertising 45,416 1,750 9,754 2,174 4.8% (7,581) (77.7%) Rentals 3,468,463 261,690 28,614 805,118 23.2% 776,503 2,713.7% Technology Services 1,320,046 355,823 400,141 568,893 43.1% 168,752 42.2% Utilities 2,571,089 1,351,216 1,424,436 245,592 9.6% (1,178,844) (82.8%) Repairs & Maint Services 2,597,922 300,744 455,140 573,070 22.1% 117,930 25.9% Miscellaneous 826,676 96,361 64,836 82,940 10.0% 18,105 27.9% Total Services 22,109,457 9,146,347 10,209,524 6,476,766 29.3% (3,732,758) (36.6%) Machinery&Equipment 200,000 0 176,392 920 0.5% (175,472) (99.5%) Total Capital Outlay 200,000 0 176,392 920 0.5% (175,472) (99.5%) Transfers Out 4,663,479 1,262,457 1,133,603 1,107,599 23.8% (26,004) (2.3%) Total Non Operating Expens 4,663,479 1,262,457 1,133,603 1,107,599 23.8% (26,004) (2.3%) Total Expenditures 74,931,244 19,233,668 21,556,424 18,691,567 24.9% (2,864,857) (13.3%) 25.0% 17 96 Salaries: Higher salary expenditures compared to the prior year are due to retroactive labor negotiation payments made in August 2024. Professional Services: Lower expenditures correspond to the termination of the Fire contract as of December 31, 2024. Rentals: Increased costs are related to fleet expenses. Utilities do not reflect annual Surface Water payment to KC. Q1 expenditures concluded at 24.9% of the annual budget, aligning with expectations. General Fund Category Table and Chart Q1 Expenditures by Category I 35% 1% • Salaries & Benefits • Supplies • Services • Capital Outlay • Transfers Out Salaries & Benefits 58% Salaries & Benefits 10,829,429 58% Supplies 276,853 1% Services 6,476,766 35% Capital Outlay 920 0% Transfers Out 1,107,599 6% Total Expenses 18,691,567 100.0% Services Professional Services 3,860,056 59.6% Communications 142,622 2.2% Professional Development 196,302 3.0% Advertising 2,174 0.0% Rentals 805,118 12.4% Technology Services 568,893 8.8% Utilities 245,592 3.8% Repairs & Manit Services 573,070 8.8% Miscellaneous 82,940 1.3% 18 97 Total Services 6,476,766 100.0% Professional Services Insurance -Liability 1,432,354 37.1% Dispatch 495,449 12.8% Insurance -Property 492,575 12.8% Contracted Services 423,326 11.0% Miscellaneous Prof Services 200,559 5.2% Jail Services 187,389 4.9% Consulting Services 154,224 4.0% Public Defense 101,100 2.6% Attorney Services 86,815 2.2% Security/Safety Svcs 53,628 1.4% Prosecution Services 43,350 1.1% V SWAT 40,000 1.0% Government Affairs 30,000 0.8% Revenue Backed Services 21,813 0.6% Translation & Interpretation 21,131 0.5% Human Services Contracts 20,761 0.5% Instructors 13,299 0.3% Special Matters (legal) 11,914 0.3% Inspection Services & Permits 11,255 0.3% Contracted Towing Services 10,379 0.3% ProTem Judges 4,160 0.1% Hearing Examiners 1,275 0.0% Employee screening/testing 1,130 0.0% Employee Assistance Prg EAP 1,104 0.0% Recruitment 615 0.0% Performers/Entertainment Svcs 450 0.0% Grand Total 3,860,056 100% 98