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Home My WebLink AboutReg 2025-10-06 Item 6A - Budget - 2026 Mid-Biennium Budget Update DiscussionCOUNCIL AGENDA SYNOPSIS Initials Meeting Date Prepared by Mayor's review Council review 10/6/2025 AB 10/20/2025 AB ITEM INFORMATION ITEM No. 6.A. STAFF SPONSOR: AARON BEMILLER ORIGINAL AGENDA DATE: 10/6/25 AGENDA ITEM TITLE 2026 Mid -Biennium Update CATEGORY ® Discussion Mtg Date 10/6/25 ❑ Motion Mtg Date ❑ Resolution Mtg Date ® Ordinance Mtg Date 11/10/25 ❑ Bid Award Mtg Date ❑ Public Hearing Mtg Date 10/20/25 ❑ Other Mtg Date SPONSOR ❑ Council ® Mayor ❑ Admin Svcs ❑ DCD ❑ Finance ❑ Fire ❑ P&R ❑ Police ❑ PIV SPONSOR'S SUMMARY Adjusts the adopted 2026 budget for changes to the assumptions established in 2024 and used to create the 2026 budget. These include items such as CPI/COLA, PERS rates, medical rates, etc. It also allows for the inclusion of business decisions made in 2025 which affect 2026. REVIEWED BY ❑ Trans&Infrastructure Svcs ❑ Community Svcs/Safety ❑ Finance & Governance ❑ Planning & Community Dev. ❑ LTAC DATE: ❑ Arts Comm. ❑ Parks Comm. ❑ Planning Comm. COMMITTEE CHAIR: RECOMMENDATIONS: SPONSOR/ADMIN. Mayor's Office / Finance COMMIYIEE Discussion only COST IMPACT / FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED $ APPROPRIATION REQUIRED $ Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION MTG. DATE ATTACHMENTS 10/6/25 Informational Memorandum PowerPoint 41 42 City of Tukwila Thomas McLeod, Mayor INFORMATIONAL MEMORANDUM TO: Tukwila City Council FROM: Aaron BeMiller, Finance Director CC: Thomas McLeod, Mayor & Marty Wine, City Administrator DATE: October 6, 2025 SUBJECT: 2026 Mid -Biennium Adjustment ISSUE As provided in State law, the City Council adopts a biennial budget every two years, with the new biennial budget beginning on an odd numbered year. Like many Cities, the biennial budget adopted by City Council is constructed and viewed as two one-year budgets. Between the first year of the current budget (2025) and the second year (2026), the Mayor will propose changes to the 2026 budget. This process is called the Mid -biennium Adjustment and is important for adjusting the 2026 budget for any known and necessary changes from the time the 2026 budget was adopted in late 2024. These changes include but are not limited to adjusting CPI, healthcare, and retirement rate assumptions, carry-over or new initiatives that were unplanned at the time of adoption, and any other updates necessary for City operations/obligations. BACKGROUND The Mid -biennium adjustment is underway and below is a draft timeline for the Council process: 2026 Mid -Biennium Adjustment Ordinance 10/06/25 — Regular Meeting — Mayor's presents his 2026 Proposed budget changes 10/20/25 — Regular Meeting — 1st Public Hearing & discussion 10/27/25 — FIN Committee — Discussion only 11/03/25 — Regular Meeting — 2nd Public Hearing & discussion 11/10/25 — COW Meeting — Further discussion opportunity 11/17/25 — Regular Meeting — Further discussion opportunity & potential adoption 11/24/25 — Special Meeting (if necessary) — Budget adoption 2026 Property Tax Collection Ordinance 10/20/25 — Regular Meeting — Public Hearing 10/27/25 — FIN Committee — draft ordinance for review 11/10/25 — COW Meeting —Discussion 11/17/25 — Regular Meeting - Adoption DISCUSSION The Mayor is presenting his proposed changes to the adopted 2026 budget. The proposed changes reduces the overall expense budget by $682.7 thousand and includes a General Fund expense reduction of $843.2 thousand. Once the Mayor concludes his remarks on his 2026 Proposed Budget, staff will walk through his proposed changes in more detail. FINANCIAL IMPACT Discussion item only. There is no financial impact associated with this agenda item. However, a formal Ordinance will be brought forward adjusting the adopted 2026 budget based on the Mayor's Proposed budget and any adjustments resulting from the Council budget approval process. INFORMATIONAL MEMO Page 2 RECOM MENDATION Information Only. There is no recommendation currently for future action. An Ordinance will be brought forward for the October 20th regular Council meeting. ATTACH MENTS PowerPoint presentation https://tukwilawa.sharepoint.com/sites/mayorsoffice/cc/Council Agenda Items/Finance/Info Memo_2026 Mid -Biennium Adjustment.docx 43 Proposed 2026 Mid - Biennium Adjustment Tukwila City Council Meeting October 6, 2025 Mid -Biennium Adjustment • City uses a biennial budget process. • As required, the first year of biennium begins on an odd year. • The assumptions for our adopted 2026 budget were estimated in the summer and fall of 2024. • The mid -biennium adjustment process allows the City to amend our assumptions using known or updated information. • It also provides an opportunity to correct the 2026 budget for known changes based on decisions made in 2025 which affect the 2026 budget. Thkv to City Council, Oct 6= 2025, 2026 Mid -Biennium Adjustment All Funds Changes Revenues and Transfers In Fund 2026 Adopted 2026 Proposed Difference Resources - Difference Notes Fund 000 - General $ 78,205,129 $ 78,322,596 $ 117,467 0.2% +113,000 Grant Funds - $800,000 Property Sale Fund 105 - Contingency 120,000 120,000 - 0.0% +$731,250 Fund 302 Closure and Transfer $175,000 Cannabis Tax Estimate -$102,000 Fewer Transfers from Fund 301 Total General & Contingency 78,325,129 78,442,596 117,467 0.2% In original budget, REET was collected in 301 and Fund 301 - Land Acq, Rec, Park Develop 6,165,690 5,665,690 (500,000) -8.1 % transferred to 305. Amendment corrects this by collecting REET in 305 directly. Fund 306 - City Facilities 846,937 5,000 (841,937) -99.4% T-Force No Longer Rents City Property Included Replacement, Operations, and Maintenance Fund 501 - Equip Rental & Replacement 6,084,081 6,093,106 9,025 0.1% Costs for Park Ranger Truck mistakenly omitted from original budget Fund 502 - Self -Insured Healthcare Plan 8,955,150 8,346,309 (608,841) -6.8% Medical Plan Cost Reductions Fund 503 - LEOFF I Self -Ins Health Plan 519,152 474,514 (44,638) -8.6% Medical Plan Cost Reductions TOTAL CHANGE $ (1,868,925) Tukwita City Councit, Oct 6, 2025, 2026 Mid -Biennium Adjustment All Funds Changes Expenditures and Transfers Out Fund 2026 Adopted 2026 Proposed Difference ($) Difference (%) Notes Fund 000 - General $ 78,611,612 $ 77,768,407 $ (843,205) -1.1% Fund 105 - Contingency - - - 0.0% See separate General Fund Tracker Total General & Contingency 78,611,612 77,768,407 (843,205) -1.1% Fund 101 - Hotel/Motel Tax 1,656,409 1,644,765 (11,644) -0.7% Revised labor costs Fund 104 - Bridges & Arterial Streets 10,440,651 10,537,131 96,480 0.9% Contract position extended Fund 301 - Land Acq, Rec, Park Develop 7,237,236 6,663,000 (574,236) -7.9/ $500,000 REET collected in 305 instead $74,236 fewer transfers out Fund 302 — Urban Renewal - 731,255 731,255 0.0% Transfer out into General Fund with Fund Closure Fund 401 -Water 11,116,611 11,023,093 (93,518) O.g Revised Labor Costs, Insurance Costs, Reallocated Utilities Manager Fund 402 - Sewer 16,030,741 15,917,066 (113,675) 0.7 Revised Labor Costs, Insurance Costs, Reallocated Utilities Manager Fund 411 - Foster Golf Course 3,300,595 3,287,832 (12,763) -0.4% Revised Labor Costs Fund 412 - Surface Water 17,208,282 17,088,102 (120,180) 0.7 Revised Labor Costs, Insurance Costs, Reallocated Utilities Manager Fund 501 - Equip Rental & Replacement 4,968,756 4,946,807 (21,950) -0.4% Revised Labor costs Fund 502 - Self -Insured Healthcare Plan 6,831,880 7,031,880 200,000 2.9% Revised Excess Loss Fund 503 - LEOFF I Self -Ins Health Plan 519,152 599,903 80,751 15.6% Revised Medical Costs TOTAL CHANGE $ (682,684) Tukwila C tyc 2025,2026 Adjtmerat ienniurn FTE Count By Fund / Department Occurred in 2025 To Occur in 2026 FUND/Department 2025 Adopted FTE 2026 Adopted FTE 2025 Current FTE 2026 Projected FTE Difference 2026 Adopted vs Projected Notes General Fund 249.44 249.44 250.44 250.44 1 City Council 8 8 8 8 0 Mayor 30.29 30.29 31.29 31.29 1 New Term -Limited Senior HR Analyst Position Added (contracted in 2025) Finance 15 15 15 15 0 Parks and Recreation 25.75 25.75 24.75 24.75 -1 Park Ranger moved from Parks and Recreation to Police Community Development 28.75 28.75 28.75 28.75 0 Municipal Court 11.9 11.9 11.9 11.9 0 Police 100 100 101 101 1 Park Ranger moved from Parks and Recreation to Police Public Works 29.75 29.75 29.75 29.75 0 Hotel/Motel Tax Special Rev Fd 0.25 0.25 0.25 0.25 0 Arterial Street Fund 6.1 5.5 6.1 6.1 0.64/30/2025, EIS Project Director Contract Budgeted through but contract was renewed through 1/31/2026 Water 8.56 8.56 8.56 8.76 0.2 Reallocation of Utilities Project Manager Sewer 5.87 5.87 5.87 6.17 0.3 Reallocation of Utilities Project Manager Golf Course 10.5 10.5 10.5 10.5 0 Surface Water 18.28 18.28 18.28 17.78 -0.5 Reallocation of Utilities Project Manager Equipment Rental 5 5 5 5 0 Total 304 303.4 305 305 1.6 y Counc , Oct 6, 2025, 2026 Mid -Biennium Adjustment General Fund Proposed revenue changes by type Budget Percent Change Adopted 2025 Adopted 2026 Proposed 2026 Difference 2026 Budget 2025- 2026- 2026 2026 Revenue General Revenue Property Taxes $ 11,999,227 $ 12,215,213 $ 12,215,213 $ - 1.8% 0.0% Retail Sales Tax 23,447,886 24,497,095 24,497,095 - 4.5% 0.0% Business & Occupartion Taxes 2,400,000 2,424,000 2,424,000 - 1.0% 0.0% Use Tax 999,100 1,041,820 1,041,820 - 4.3% 0.0% Admissions Tax 859,235 885,012 885,012 - 3.0% 0.0% Utility Taxes 4,493,702 4,702,390 4,702,390 - 4.6% 0.0% Interfund Utility Tax 3,167,729 3,364,735 3,364,735 - 6.2% 0.0% Gambling/Excise Taxes 4,609,500 4,724,500 4,724,500 - 2.5% 0.0% Total General Revenue 51,976,379 53,854,765 53,854,765 - 3.6% 0.0% Licenses and Permits Business Licenses & Permits 3,445,500 3,479,655 3,479,655 - 1.0% 0.0% Rental Housing License 44,700 63,000 63,000 - 40.9% 0.0% Building Permits and Fees 1,940,500 1,998,800 1,998,800 - 3.0% 0.0% Frachise Fees 651,372 688,696 688,696 - 5.7% 0.0% Total Licenses and Permits 6,082,072 6,230,151 6,230,151 - 2.4% 0.0% Intergovernmental Revenue Sales Tax Mitigation 406,700 180,756 180,756 - -55.6% 0.0% Seattle City Light Agreement 2,687,700 2,832,836 2,832,836 - 5.4% 0.0% Grants 877,372 824,177 899,177 75,000 -6.1% 9.1% State Entitlements 690,330 705,555 880,555 175,000 2.2% 24.8% Total Intergov't Revenue 4,662,102 4,543,324 4,793,324 250,000 -2.5% 5.5% umi a ,sty uoul vet b, 01 O General Fund Proposed revenue changes by type (continued) Budget Percent Change Adopted 2025 Adopted 2026 Proposed 2026 Difference 2026 Budget 2025- 2026- 2026 2026 Revenue Charges for Services General Government 9,620 9,720 9,720 - 1.0% 0.0% Security 1,139,456 988,255 988,255 - -13.3% 0.0% Transportation 20,000 20,000 20,000 - 0.0% 0.0% Plan Check and Review Fees 662,000 662,000 662,000 - 0.0% 0.0% Culture and Rec Fees 781,045 781,045 756,045 (25,000) 0.0% -3.2% Total Charges for Services 2,612,121 2,461,020 2,436,020 (25,000) -5.8% -1.0% Fines and Penalties 404,505 384,405 384,405 - -5.0% 0.0% Miscellaneous Revenue 1,043,858 1,044,549 1,107,549 63,000 0.1% 6.0% Indirect cost allocation 3,111,694 3,267,278 3,267,278 - 5.0% 0.0% Ongoing Revenue 69,892,731 71,785,492 72,073,492 288,000 2.7% 0.4% Sale of Land 4,700,000 5,000,000 4,200,000 (800,000) 6.4% -16.0% Transfer from Public Safety Plan 1,318,824 1,317,849 1,317,849 - -0.1% 0.0% Transfer from Land, Rec, & Park Dev 175,795 101,788 - (101,788) -42.1% -100.0% Transfer from Urban Renewal - - 731,255 731,255 0.0% 0.0% Total Revenue 76,087,350 78,205,129 78,322,596 117,467 2.8% 0.2% Tukw to City Counct Oct 6= 2025= 2026 Mid -Biennium Adjustment General Fund Expenditure changes by Department Budget Percent Change Adopted 2025 Adopted 2026 Proposed 2026 Difference 2026 Budget 2025 - 2026 - 2026 2026 Expenditures City Council Mayor's Office Finance Department Recreation Department Community Development (DCD) Municipal Court Police Department Fire Department Public Works Dept Non -Departmental 400,093 9,748,218 4.343.230 6.769.151 5,732,921 2.329,525 28,411,330 1.398.192 9.738,964 1,427,046 431,254 10,015,887 4,429,561 7,050,622 5,978,627 2,445,958 29,659.883 1,410,125 10,205.851 2,497.046 456.810 10,077.137 4,666,108 6,761,199 5,854,564 2.459.217 29,515.597 1,309.887 10,176,496 2,007.046 25.556 61.249 236.547 (289.423) (124,063) 13 259 (144,287) (100 238) (29,355) (490,000) 78% 2,7% 2.0% 4,2% 4. 3% 5.0°/. 4.4% 0.9% 4.8% 75,0% 5.9% 0.6% 5.3% 0.5% -0.5% -7,1% -0.3% -19.6% Total Department Expenditures Transfers - Debt Service Transfers - Capital. Other Transfers - Contingency Total Transfers Total Expend itu res 70,298,671 74,124.816 73,284,061 (840,755) 3.692,390 3,784,347 3,784,347 740.450 702.450 700.000 (2.450) 230,639 - - 4,663,479 74,962,150 4,486,797 4,484,347 78,611,612 77,768,407 (2,450) (843,205) Change in Fund Balance Beginning Fund Balance 1,125.201 17.284,816 (406.483) 22,145,352 554,189 21,738,868 960 672 (406,483) *Ending Fund Balance $ 18,410,016 $ 21,738,868 $ 22,293.057 $ 554,189 5.4% 2.5% -5.1% -100,0% -3.8% -1.1% 0.0% -0,3% 0.0% -0.1% 4.9% -1.1% -136.1% -236.3% 28.1% -1.8% 18.1% 2.5% Tukwila City Council, Oct 6, 2025, 2026 Mid -Biennium Adjustment General Fund Labor Cost Changes Adopted Proposed Difference Wages 35,463,815 35,374,289 (89,526) Benefits 13,637,253 13,090,090 (547,163) Total $49,101,068 $48,464,379 ($636,689) Thk i a City Council, Oct 6, 2025, 2026 Mid -Biennium Adjustment General Fund Labor Cost Changes Adopted Proposed Difference Community Development 5,063,107 4,939,044 (124,063) City Council 373,505 379,801 6,296 Fire Department 374,238 274,000 (100,238) Finance 2,886,387 2,865,252 (21,135) Municipal Court 2,130,933 2,144,192 13,259 Mayor's Office 6,005,028 5,923,777 (81,251) Police Department 21,952,930 21,996,911 43,981 Parks & Recreation 5,337,960 5,051,537 (286,423) Public Works 4,976,980 4,889,865 (87,115) Total General Fund $49,101,068 $48,464,379 ($636,689) Tukwila City Council, Oct 6= 2025, 2026 Mid -Biennium Adjustment City Council Proposed increase totaling $25,556 • Council Salaries and Benefits changes (net) - $6,296 • Council Pro-tem Position - $19,260 Thk ita City Council, Oct 6= 2025, 2026 Mid -Biennium Adjustment Mayor's Office Proposed increase totaling $61,249 • Salaries and Benefits changes (net) ($81,251) • Strategic Plan update - $50,000 • Minor Home Repair - $25,000 • Foster Government Relations, LLC - $21 ,500 • State of the City Community Event - $15,000 • Hazelnut Newsletter - $11,000 • Tukwila Community Leadership Initiative - $1O,000 • People's Project - $1O,000 Thk ita City Council, Oct 6= 2025, 2026 Mid -Biennium Adjustment Finance Proposed increase totaling $236,547 • Salaries and Benefits changes (net)—($21,135) • OpenGov Subscription - $151,800 • WCIA Liability Insurance - $103,403 • WCIA Crime/Fidelity Insurance - $2,479 Thk ita City Council, Oct 6= 2025, 2026 Mid -Biennium Adjustment Parks & Recreation Proposed decrease totaling ($289,423) • Salaries and Benefits changes (net) - ($286,423) • Includes transfer of Park Ranger FTE to Police • Youth Amateur Sports Grant - $75,000 • 4 Culture Grant - $38,000 • B-Force Security Contract Canceled - ($96,000) • Duties assumed by Park Ranger & Other Police Staff • Park Ranger position ancillary costs moved to Police - ($20,000) Thk ita City Council, Oct 6= 2025, 2026 Mid -Biennium Adjustment Community Development Proposed decrease totaling ($124,063) • Salaries and Benefits changes (net) - ($124,063) Thk ita City Council, Oct 6= 2025, 2026 Mid -Biennium Adjustment Municipal Court Proposed increase totaling $13,259 • Salaries and Benefits changes (net)-$13,259 Thk ita City Council, Oct 6= 2025, 2026 Mid -Biennium Adjustment Police Proposed decrease totaling ($144,287) • Salaries and Benefits changes (net) —$431981 • Includes transfer of Park Ranger FTE from Parks • SCORE Jail Services = ($215,370) • Park Ranger -Related Changes • Park Ranger ancillary costs - $20,000 • Park Ranger Truck replacement & O&M costs - $9,030 • Absorb remaining costs of Park Ranger to keep Park Ranger neutral to the General Fund — ($78,538) • Additional WCIA Insurance Costs: $76,610 Thk ita City Council, Oct 6= 2025, 2026 Mid -Biennium Adjustment Fire Proposed decrease totaling ($100,238) • Salaries and Benefits changes (net) - ($100,238) • Changes to LEOFF contributions Thk ita City Council, Oct 6= 2025, 2026 Mid -Biennium Adjustment Public Works Proposed decrease totaling ($29,355) • Salaries and Benefits Change - ($87,1 15) • Surface Water Utility for Building No Longer Rented - $76,000 • Increased Repair and Maintenance Costs-$28,860 • WCIA Insurance Changes - ($33,51 1.92) Thk ita City Council, Oct 6= 2025, 2026 Mid -Biennium Adjustment Non -Departmental Proposed decrease totaling ($490,000) • $1 M originally budgeted for costs related to dealing with PD vehicle and large item storage necessary to sell Fire Station property • Estimate for costs revised down to $51 0,000 Thk ita City Council, Oct 6= 2025, 2026 Mid -Biennium Adjustment Q&A / Next Steps • Review planned budget approval process/dates • Review planned Property Tax process/dates • Requests for October 20th budget agenda item Thk ita City Council, Oct 6= 2025, 2026 Mid -Biennium Adjustment