HomeMy WebLinkAboutReg 2026-06-15 Item 8A - Budget - Plans for 2027-2028 Proposed BudgetCity of Tukwila
Thomas McLeod, Mayor
Marty Wine, City Administrator
AGENDA BILL
ITEM NO.
8.A.
Agenda Item
Sponsor
Legislative History
Recommended Motion
Budget Discussion
Mayor Thomas McLeod
June 15, 2026
❑x Discussion Only
Committee of the Whole
❑ Action Requested
EXECUTIVE SUMMARY
Mayor McLeod will discuss plans for developing the 2027-28 Proposed Budget with the Council. The
goal is for a collaborative process; Council will have a chance to see Department Overviews in late
July -early August in advance of Mayor's Proposed Budget to be submitted in late September.
DISCUSSION
Council is invited to share their early ideas and set time for individual or small -group meetings with
Mayor and staff about developing the 2027-28 Budget.
ATTACHMENTS
PowerPoint presentation
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2027/2028 Budget
Development
Mayor and City Council Discussion
June 15, 2026
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Where We've Been
• 2025/2026 operating budget included one-time funds
(land sales), each year, to balance the budget.
• This budget balancing practice isn't sustainable over the long-term.
• We identified an operating gap of roughly $6 million.
• Commitment to our resident and business communities
was to address this gap by both increasing revenue and
reducing expenses.
• The Budget Sustainability workgroup focused
considerable attention in 2025 on finding solutions.
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Financial Forecast & Structural Deficit
• Tukwila, like many Washington cities, has a structural
deficit.
• Ongoing revenues are not keeping pace with ongoing
expenditures.
• The gap is projected to worsen over time.
• Changes will be needed in both revenues and
expenditures.
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One -Time vs. Ongoing
......_._....
• One-time resources are temporary and do not
continue each year
• One-time resources are best used for one-time needs or short-term
transitions
• Using one-time money for ongoing costs creates future budget
pressure
• Ongoing revenues are recurring and support recurring
costs
• Ongoing costs should be funded with ongoing revenues
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Major Cost Drivers
• Labor Costs
• Inflation / CPI-W adjustment
• Union negotiations
• Benefit (pension, medical, dental, vision, etc.) cost
• New or expanded community services add ongoing
costs
• Debt service is a fixed obligation and must be paid as
scheduled
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Three Major Budget Levers
• Reduce Expenditures
• Lower costs, delay spending, or reduce service levels
• May include staffing, program, or operational changes
• Increase revenues
• Increase existing revenues or identify new revenue sources
• May include taxes, fees, or other policy changes
• Use reserves / one-time funds carefully
• Can help manage short-term gaps or transition periods
• Not a long-term solution for ongoing costs
Structural deficits are typically solved through some
combination of all three
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Mayor's Budget Instructions
• Goal of the 2027/2028 budget is to achieve a balanced
and affordable budget for the long-term.
• No restrictions on submitting budget enhancement
requests but few if any will be approved without fully
funding revenue source or offsetting expense reduction.
• If budget reductions are necessary, the finance
department will assign a target reduction amount to
each department.
• Identify achievable savings while minimizing service impacts.
• Minimize impact to staffing.
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Summary of Progress
• Implemented the Public Safety Sales Tax providing an
estimated $2.7 million in on -going revenues.
• Identified $1.2 million in programmatic reductions.
• Increased tax revenue budget based on previous years
collections.
• Directed staff to "hold the line" on non -labor costs
(training, supplies, etc.) for 2027 & 2028.
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Current Status
• We are still early in the budgeting process.
• Operating budgets and any enhancement requests are due on June 11.
• COLA, medical, retirement, L&I, etc. rates are still
assumptions - we receive final rates in July/August.
• Optimistic that we can balance 2027 without further
reductions that may impact employees.
• We will know more about our balancing status for 2028
in the next few weeks.
• If reductions are necessary for 2028, minimizing staff impacts is still a
priority as we look at options.
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Key Upcoming Dates
• June 11: Departments submit operating budget and
enhancement requests.
• June 18: Capital departments submit six -year Capital
Improvement Plan.
• June 22 — July 20: General Fund reduction process, if
necessary.
• Department Overviews: Late July/early August.
• September 8: Mayor final budget decisions.
• September 28: Mayor presents Proposed Budget to City
Council.
• October — November: Council budget process.
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Thank You
Discussion & Questions?
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