Loading...
HomeMy WebLinkAboutReg 2025-11-17 Item 4A - Presentation - Budget Sustainability UpdateCOUNCIL AGENDA SYNOPSIS Initials Meeting Date Prepared by Mayor's review Council review 11/17/25 MW ITEM INFORMATION ITEM No. 4.A. STAFF SPONSOR: MARTY WINE ORIGINAL AGENDA DATE: 11/17/25 AGENDA ITEM TITLE Budget Sustainability Project Update CATEGORY ® Discussion Mtg Date 11/17/25 ❑ Motion Mtg Date ❑ Resolution Mtg Date ❑ Ordinance Mtg Date ❑ Bid Award Mtg Date ❑ Public Hearing Mtg Date ❑ Other Mtg Date SPONSOR ❑ Council ® Mayor ❑ Adnain Svcs ❑ DCD ❑ Finance ❑ Fire ❑ P&R ❑ Police ❑ Pir SPONSOR'S SUM IARY Discussion Only: Council Briefing on Budget Sustainability Efforts and 2027/28 Budget Planning 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/Administration COMMIIIEE Discussion Only COST IMPACT / FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION 8/18/25 City Council Review of Budget Proviso Report (Revenues) 9/15/25 Budget Briefing and Discussion (Work Session) MTG. DATE ATTACHMENTS 11/17/25 Informational memo dated 11/10/25 Powerpoint presentation Expenditure Ideas List TO: City of Tukwila Thomas McLeod, Mayor INFORMATIONAL MEMORANDUM Tukwila City Council FROM: Marty Wine, City Administrator Department Directors CC: Mayor Thomas McLeod DATE: November 10, 2025 SUBJECT: Budget Sustainability Project Update ISSUE Consider a status report about the Budget Sustainability Project. BACKGROUND Overall the Budget Sustainability project was launched with the purpose of developing a General Fund Budget the city can maintain into the future. Specifically this is defined as: developing the Mayor's Proposed 2027-28 Budget including a 6-year plan so that the City's recurring general fund revenues exceed ongoing spending each year through 2032; and achieve yearly cost savings or net new revenues of about $5M. The last Council update about this effort was August 18, 2025 when the Revenue Proviso Report was presented to Council, and Council also had a discussion at a Work Sesson on September 15, 2025 on the topic of a Sustainable Budget and Future City Budgets. It was conveyed during the September briefing that in planning the next biennial budget, the Administration needed to show not only revenue- but also expenditure -side and cost reduction options to balance the budget for the long term. Tonight's briefing is intended to share the work- in -progress of what is being considered for the expenditure side of the equation, and the cost reduction ideas being considered in planning for the next biennial budget. Since the adoption of the 2025-26 Biennial Budget in late 2024, it is acknowledged that Tukwila, like most cities, has a challenge in balancing the General Fund budget for the long term. There are multiple contributors to this situation, including expenditures that grow at a faster pace than the rate of our revenue growth, some taxes that are capped below the rates that costs grow, and inflationary pressures on some cost drivers. All cities face this challenge. Over time the erosion of a balanced budget will continually need to be corrected. The out -year, out -of -balance condition can be adjusted through spending reductions or slowing cost growth, or increasing revenues and their growth keeping up with expenditures; and most likely, a combination of those two strategies. The Administration committed in early 2025 to review our overall spending, services and programs, and to build future budgets without using one-time revenues (such as from property sales). Since early in 2025, we have been working to develop and contribute ideas to both reduce costs and expenditures, and also generate new revenue sources to balance the budget for the long term. Five working groups were formed that focused on: salaries and benefits; overall program 2 INFORMATIONAL MEMO Page 2 or expenditure changes; revenue changes (that resulted in the July 2025 council proviso report); capital & utilities (general fund O&M) changes; and "out of the box" or efficiency changes. The Mayor also asked City departments to look at operations more closely to see if, even after all of past spending reductions, there are additional ways departments could permanently reduce costs. From the work of those groups, a list of ideas was brainstormed, identified and prioritized over 50 cost or expenditure -side ideas that could potentially contribute to the city's future financial sustainability. The list was generated to explore the question: What could the city do on the expenditure side of the equation to reduce General Fund costs, reduce long-term spending, and contribute meaningfully to balancing the budget over the long term (next 6 years or permanently)? Ideas were evaluated by rating them according to mandates; risk; cost-effectiveness; level of service to the community; priority; level of impact and equity. After this ranking, ideas were categorized as recommended for action, be explored further, not recommended, or pursue not as part of the budget, but as another way to achieve efficiencies. Over the next few months, this list will be further refined and the Mayor plans to bring recommendations to the City Council for creating a sustainable budget in early 2026. The City's planning for the next biennial budget will begin in Spring 2026. Decisions about changes to expenditures and programs will not be made until early 2026 during the development of the '27/28 budget. DISCUSSION Council is asked to consider and discuss the evolving list of expenditure ideas. FINANCIAL IMPACT This topic is focused on the long-term sustainability of the City's General Fund. The recommended '27/28 Budget will incorporate expenditure- and revenue -side options for budget sustainability. RECOMMENDATION Information Only. The Council will receive an update and additional forecast briefing in early 2026. ATTACHMENTS Powerpoint List of Expenditure Ideas https://tukwilawa.sharepoint.com/sites/mayorsoffice/cc/CC Docs/2025 AGENDAS/2025 Agenda Packets/2025 COUNCIL - Agenda Packets/11-17-25 Regular/Info Memo Budget Sustainability 111725.docx 3 4, BUDGET SUSTAINABILITY PROJECT City Council Briefing November 17, 2025 The City of opportunity, the community of choice. Briefing & Discussion • Purpose: Status Report, Plan for'27/28 Biennial Budget • What's the Budget Sustainability effort? • A General Fund budget the city can maintain into the future • Develop Mayor's Proposed 2027-28 Budget including a 6-year plan through 2032 so that: • City recurring general fund revenues exceed ongoing spending each year through 2032 • Yearly cost savings or net new revenues is about $5M • What are ways we can make the city's budget more sustainable long term? • Combination of revenue and expenditure changes will be proposed • Past briefings • July 2025: Revenue Ideas • August 2025: Budget Sustainability Discussion • Tonight — How Expenditure/Cost side changes to contribute to the equation — "the List" 01 Background: Budget Sustainability Challenge • Expenditure growth (3.6%) outpaces normally occurring revenue growth (2.7%) • Main tax revenues (sales & property) do not keep up with inflation • City must adopt a balanced budget • '25/26 budget used one-time revenues to cover operational expenses • General Fund would have been out of balance with a forecasted gap, increasing by about $1.OM annually • Not sustainable over more than just a few years • Budget balance erodes without increased revenue, reduced expenses, or a combination. Recap from 2024: 2025-2030 Forecast Showed Expenditures Exceed Revenues — Includes Property Sales QT- uexe $90 o The first two years _ adopted budget Forecast Looks forward to e`# e egg -term sustai, $85 * 1 on status uo © orations = erne or revenue charges �=t ire` iou years' actuaLs known changes C ate: e ra f 2026 $80 $75 $70 $65 2025 2026 eve $6M 2027 e Excess of Revenues $6M 2028 $7M 2029 $7M 2030 co Commitments for Future Budgets The '25/26 Adopted Budget Things to Review in 2025 • Avoid use of one-time revenues for ongoing expenses • Council Revenue Proviso (July): new/expanded revenue options • Review all city services and programs • Describe trade-offs: service levels and new investment • Financial policies, indirect cost allocation model • Review compensation policy (Res 1951) Revenue Options (Proviso Report) Salary Et Benefit Policies Capital Et Utilities (GF OEtM) Budget Sustainability —Brainstorming Ideas (Groups) • 1 Operating Expense or Program Changes Out of the Box or Efficiency Improvements O Budget Sustainability Expenditures AND Revenues Likely '27/28 Recommendation $3M in spending, $3M in revenues Examples of Expenditure Changes • Changes or reductions to programs or services • Cost of Service & Fee studies • Efficiencies • Review of salary & benefit policies • Other cost control ideas rb if±',, Examples: Revenue Changes • B & O Tax Changes • Public Safety Sales Tax (HB 2015) • 13 Others: Revenue Proviso Report Unlikely to Recommend • Property tax changes e feet • el from Lease to Purchase Consolidate Communications Improve - ecre.ti st - ec • very Property Sales Strategy t- izi feet a icles Update Compensation/Classification Policy e • .rt e t ervice Level rr cti Reduce/Share Printers and Copiers Recommended Expenditure Ideas Employee Benefits Review st - r • if • rs - :Modify I perations Structure Organizational alignment (consolidate departments, streamline management structure, have others provide services) licrt _ t icl_s Transition Emergency Management to Puget Sound Fire Voluntary Separation Incentive Program Expenditure Ideas to Explore Further eek o pensation from Port - ental ousing • rogra of Seattle Consolidate Front Counter Services Exit Leased Parks (Crestview, Duwamish) Foster Golf Course - Redevelop Review Supplemental & Additional Pay Explore yan ay Annexation Salary Freeze & Variations Sell Fort ' ent Park Furloughs Join with neighboring utility districts Provide services to other cities as Fee -for -Service Reduce Non -Police Overtime Usage educe TCC + perating ours/Services (close on weekends) Sell or Lease Tukwila Community Center Streets Service -Level eductions Transfer trail maintenance to agreement with King County Transition Police Services to King County Sheriff Eliminate Non -mandatory Travel Not Recommended Business process re -designs to save/reduce staffing Contract . rt - rvic _ s t • t 'strict Court Cost of Service Studies to Adjust Fees Contain drivers of personnel costs Foster Golf Course as General Fund Ideas with No or Limited Savings elay c. • it.l i • r• - - t • r• j - cts; eli inate eneral Fund CIP projects; build a reserve fund for projects, facility aintenance and future repairs; set aside aintenance and lifecycle costs for capital assets Increase Individual Employee Capacity and Performance Increase f • tr•l anager-Subordinate ratios) Evaluate position vacancies Pursue but not for Budget Sustainability Next Steps & Timeline • Review and cost out ideas • Evaluate how ideas help to meet the budget sustainability problem • Complete report of expenditure ideas • Mayor to City Council: recommendations for creating a sustainable budget early 2026 • City's budget process and planning for '27/28 Budget: April/May 2026 EXTRA SLIDE Revenue Proviso Report (July 2025) "...The City cannot depend exclusively on cost-cutting measures to address future budget deficits. To ensure long-term financial stability... imperative to identify new revenue sources and strengthen existing revenue streams..." Finance Department to present potential revenue options. Report is a starting point, not a recommendation. Highlights • 15 revenue options available in current law. • Builds on community Financial Sustainability Committee report (2023) • Options are analyzed using a standard framework • One component of the larger city-wide effort aimed at creating a sustainable budget. • Report is a technical resource designed to support informed policy deliberation. Budget Sustainability: Expenditure Ideas Sustainable Budget definition: Draft the Proposed 2027-28 budget so that general fund revenues annually exceed generalfund expenditures for operations and capital maintenance for 2027-2032. • Both changes to spending and revenues will be considered, with over 100 ideas for change suggested. • Target range of cost savings and net new revenues is $6M per year. • Any labor impacts would require consultation and bargaining with our labor partners. Ideas were generated by five staff working groups focused on: operating expenditures, out -of -the - box or efficiencyideas, salaries & benefits, revenues, maintaini ngcapital& utilities, and developing department proposals. The list of revenue options was presented to the City Council in July 2025. This expenditure list was generated to explore the question: What could the city do on the expenditure side of the equation to reduce General Fund costs, reduce long-term spending, and contribute meaningfully to balancing the budget over the longterm (next 6years or permanently)? Ideas were evaluated by scoring and ranking them according to: • Mandate: is the service required by law or policy? • Risk: does the idea have liability, safety, financial, environmental risk? • Fiscal impact and cost-effectiveness: what is the 6-year net cost, savings, change in revenue, or change in operating cost? • Efficiency: is the service duplicated elsewhere? • Level of Service: is there an increase or decrease in level of service? • Priority: is it in the city's strategic plan, survey, recent financial sustainability committee recommendations? • Proportionality: what portion of the community is impacted by the idea? • Equity: how does the idea affect vulnerable populations? Afterthis ranking, ideas were categorized as recommended for action, should be explored further, not recommended, or removed from the list due to limited savings but could be considered as process improvements. Here is the list sorted by category: Idea .,Change�Fleet�„Modelfrom„��Lease��to�Purc,f ase.�As„„lea„ses��exp�ire��over„the��, next 5 years, return to a model where city owns and replaces vehicles. This could result in significant savings; negotiate existing vehicle purchases with Enterprise. Consolidate Communications Services currently housed in Police ............... Parks, and the Mayor's Office to a central program for greater efficiency. ............................................................................................................................................................................................................................................................................................................................................................................ Improve Recreation Cost Recovery. Raise cost recovery of various recreation programs, rentals, and/or other services to a minimum level DRAFT 10/16/25 - p. 1 Category Recommended Recommended ............................................................................ Recommended 18 of at least 90% and in some cases to 100% or more. Likely more revenue generator than savings. Property Sales Strategy: Sell Properties not needed for city purposes (not including Foster Golf or Fort Dent) to generate revenue and reduce maintenance and insurance costs. In some cases this would involve costs to relocate City operations or temporarily maintain vacant space. ....................................................................................................................................................................................................................................................................................................................................................................... Right -Sizing Fleet Vehicles. The fleet manager will work with each department to identify the needed technical requirements for vehicles and match the appropriate vehicle type to those functions. Update Compensation/ClassificationPolicy- Resolution 1951.This ...... would re -set comparable jurisdictions and market analyses. It is likely to slow the growth of labor costs rather than create actual savings but could be a significant contri bution to longterm sustainability. If Tukwila's pay and benefits lag other employers, increased turnover resulting in higher recruitment and training costs may occur. Department Service Level Reduction. Achieve General Fund savings in each city department by reducing or changing programs or level of service to customers. Printers and Copiers. Reduce the number of and Copiers. printerscopiersby sharing between different work groups or departments. ....................................................................................................................................................................................................................................................................................................................................................................... Centralize Procurement Services to create potential cost savings through volume purchasing and standardization. It is likely that this would do more to increase efficiency rather than produce significant savings. Employee Benefits Review. This is likely to slow the growth of labor ............. p Y Y costs rather than create actual savings, however that is a significant contribution to longterm sustainability. If Tukwila's benefits lag other employers, we may see increased turnover resulting in higher recruitment and training costs. ....................................................................................................................................................................................................................................................................................................................................................................... Foster Golf Course: Modify Operations Structure to a contract or eliminate General Fund subsidy. Golf is currently managed in an enterprise fund; its operations are to be self-supporting. Organizational alignment ((multiple options: consolidate departments, streamline management structure, others provide services) Police Department Take -Home Vehicles. Use a shared pool of police vehicles rather than assigning them to officers who can drive them to and from work. Two options: either move Patrol back to a hybrid take- home model with 32 vehicles on assigned use only during the workweek or return to a full pooled -vehicle model of 26 units with only on -shift vehicle use. Take-home vehicles are a recruitment and retention advantage. Transition Emergencyto Sound Fire. Request the Emergency ManagementPugetq Regional Fire Authority to provide this service for Tukwila; they may be DRAFT 10/16/25 - p. 2 Recommended Recommended Recommended Recommend or Explore Further Recommended but limited savings Explore Further Explore Further Explore Further Explore Further ............................................................................ Explore Further Explore Further 19 able to provide this service more efficiently with greater regional coordination. Transition Parks & Rec to Tukwila Metro Parks District. With voter approval, expand or enhance Tukwi la Metropolitan Pool District services to include Parks & Rec. Voluntary Separation Incentive Program. A financial incentive of p g combined salary (severance) and/or equivalent benefits to encourage employees to separate from the city. The resulting position vacancy would not be filled to allow for managing staffing levels; manage budget constraints (reduce personnel costs without resorting to layoffs); and allow for workforce restructuring. ....................................................................................................................................................................................................................................................................................................................................................................... Cities Jointly Seek Compensation from Port of Seattle (for airport impacts) ConsolidateFront Counter Services..................................................................................................................................................................... ....................................................................................................................................................................................................................................................................................................................................................................... Exit Leased Parks (examples: Crestview, Duwamish) Foster Golf Course: Redevelop or gin Use.The 77-acre Redevelop Changegolf course could be redeveloped into approximately 26 acres of residential, 34 acres of shoreline buffer, trail, park and flood zone, and 17 acres of off -channel habitat. If the project is feasible, implementation funding would be needed to move the trail along the river, create a park, and create off -channel habitat. ....................................................................................................................................................................................................................................................................................................................................................................... Furloughs. Temporary measure to bridge to longer -term reductions. Our utilities don't cover the whole city; join with neighboring utility districts Provide services to other cities as Fee -for -Service (examples - police for SeaTac, court services to others, Fleet for SeaTac) Reduce Non -Police Overtime Usage. Management of city departments to eliminate Overtime and/or Comp Time in allowable parameters and per labor agreements. This may affect service levels or require hiring additional staff. ....................................................................................................................................................................................................................................................................................................................................................................... Reduce TCC Operating Hours/Services (close on weekends) Remote work policy. Explore how a revised remote work policy may reduce office space, vehicle requirements, recruitment & retention Rental Housing Program. Endingthis proactive licensing and inspection program would likely result in deteriorating rental housing conditions which would be addressed by the Building Division. Review Supplemental &AdditionalPay. ............................................................................................................................ ....................................................................................................................................................................................................................................................................................................................................................................... Ryan Way Annexation. Tukwila provides all services to this neighborhood that is geographically separate from the rest of the city. If Ryan Way were annexed to Seattle, Tukwila would lose $1.2 M in property taxes and utility fees but would save expenses includingthe cost to extend the water main under 1-5 and construct roadway improvements. DRAFT 10/16/25 - p. 3 Explore Further Explore Further Not Recommended Not Recommended .................................................................................................. Not Recommended Not Recommended Not Recommended Not Recommended Not Recommended Not Recommended Not Recommended Not Recommended Not Recommended Not Recommended Not Recommended 20 Salary Freeze & Variations: forego COLA, step increases ........................................................................................................................................................................................................................................................................................................................................................................ Sell Fort Dent Park. While the City receives no lease revenue from Starfire, it does incur maintenance costs. There are 18 years left on the concessionaire agreement limiting the City's ability to sell the property. SeLL or Lease Tukwila Community ................................................................................................................................................ ........................................................................................................................................................................................................................................................................................................................................................................ Streets Service -Level Reductions. Reduce or eliminate discretionary services in Public Works Streets maintenance program to allow a phase- out of staffing by attrition while preservi ng essential services. Eliminated work could include ornamental landscaping, litter pickup, pressure washing, bus stop cleaning and low priority complaints in See -Click -Fix such as graffiti removal, illegal dumping, vegetation control, etc. Transfer trail maintenance to interlocal County agreement with King g County Transition Police Services to King CountySheriff's Office. Cost savings would be modest with future cost increases unknown. Eliminate Non -mandatory Travel. Repeal Resolution and replace Repeal p it with a more restrictive travel policy; only authorized if required by an external authoritative source. No impact to Council travel policy. ........................................................................................................................................................................................................................................................................................................................................................................ Printers and Copiers. Reduce the number of printers and copiers by sharing between different work groups or departments. Alternative Work Week - 4/32,9/80 days/hours.Explore alternative p work schedules, reduced workweek; facility and utility cost savings Are there business process re -designs that will save funds or reduce staffing? Help from State Auditor's Office Contract Court Services to King County District Court. Studied prior. Based on the costs assessed to the City of Auburn for 2024 by KCDC, there would be no cost savings. ................................................................................................................................................................................................................................................................................................................................................................... Cost of Service Studies to Adjust Fees. Perform studies to determine program costs, identify opportunities for efficiencies, recommend fee adjustments for cost recovery. Examples: Recreation, facility rentals, Rental Housing Program Delay�� Public Works Shops Phase 2 Project. Interim lease revenue for Shops several years. ................................................................................................................................................................................................................................................................................................................................................................... Determine drivers of personnel costs Eliminate Transportation Demand Management Program (grant - funded) Host the TDM Program through another agency. While the 3 FTE are completely grant -supported Tukwila does provide office space, HR support, and management for the team. Only overhead cost savings are expected. ...................................................................................................................................................................................................................................................................................................................................................................... Foster Golf Course - Reclassify Golf Fund as General Fund DRAFT 10/16/25 - p. 4 Not Recommended Not recommended Not Recommended ................................................................................................. Not Recommended Not Recommended Not Recommended Not Recommended but review policy Recommended but limited savings Remove due to no or Limited Savings Remove due to no or Limited Savings Remove due to no or Limited Savings Remove due to no or Limited Savings Remove due to no or Limited Savings Remove due to no or Limited Savings Remove due to no or Limited Savings emove due to no or Limited Savings 21 Grants for water and sewer projects Police Department Attrition Management. Evaluate job vacancies as they occur; would temporarily result in salary savings but would be offset by training and management costs. Police Overtime Reductions. Highest overtime use.. is due to mandatory. training, case completion, and minimum staffing requirements. ....................................................................................................................................................................................................................................................................................................................................................................... Reciprocal Franchise Fee Administration Stormwater and utility fee increases Transition Electrical Inspections to State Labor & Industries. Tukwila could stop providing electrical permits and inspections and let L&I cover Tukwila. Most years have full cost recovery for these permits so that would not generate savings other than overhead. Tukwila can provide faster and more responsive service to contractors than L&I. Provide Police Services to Another CityThe city would recruit and train Y additional officers over a period of years. It's unknown whether we could charge a rate that would compensate for this upfront cost and the ongoing overhead of managing a larger department. ....................................................................................................................................................................................................................................................................................................................................................................... Volunteer Management to Offset Staffing Needs. Develop a comprehensive, citywide volunteer program to supplement limited staffing. While not a direct cost savings in the short term, the program could build a foundation for long-term operational and fiscal sustainability. Delay capital improvement projects; eliminate General Fund CAP projects; build a reserve fund for projects, facility maintenance and future repairs; set aside maintenance and lifecycle costs for capital assets ....................................................................................................................................................................................................................................................................................................................................................................... Increase Individual Employee Capacity and Performance. Through reallocation of duties, refining work plans, and reducing time spent on lower -priority tasks, the City may gain operational efficiencies that increase existing staff capacity and delay workforce expansion. Increase Span of Control (Manager -to -Subordinate ratios) Broadening Span ( g ) g the span of control may yield cost savings through consolidation of supervisory roles, reclassification of non -supervisory managers, or streamlining of job families. However, any changes must be balanced with service delivery needs and union bargaining obligations. ....................................................................................................................................................................................................................................................................................................................................................................... Evaluate position vacancies. Delay, defer, or choose not to fill jobs that become vacant. The City is currently reviewing all vacancies to determine whether and how they should be filled. DRAFT 10/16/25 - p. 5 Remove due to no or Limited Savings Remove due to no or Limited Savings Remove due to no or Limited Savings ..................................................................................................... Remove due to no or Limited Savings Remove due to no or Limited Savings ........................................................................................... Remove due to no or Limited Savings Remove due to no or Limited Savings Remove due to no or limited savings Remove due to no or Limited Savings but pursue Remove from list but pursue Remove from list but pursue Remove from list but pursue 22