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HomeMy WebLinkAbout2006-08-03 Special Minutes - Mid-Year Budget Review Work SessionSpecial Meeting Work Session Tukwila Community Center August 3, 2006 4:00 p.m. Present: Dennis Robertson, Chair; and Joe Duffie, Joan Hernandez, Pam Carter, Jim Haggerton, Pam Linda, and Verna Griffin council members Steve Mullet, Mayor; Rhonda Berry, City Administrator; Kevin Fuhrer, Director of Finance; Derek Speck, Economic Development Administrator; Shelley Kerslake, City Attorney; Jim Morrow, Director of Public Works; Jack Pace, Deputy Director of Community Development; Viki Jessop, Director of Administrative Services; Nick Olivas, Fire Department Chief; David Haynes, Police Department Chief; Gail Labanara, Public Works Analyst; Kimberly Walden, Tukwila Municipal Court Judge; Trish Kinlow, Court Administrator; and Diane Jenkins, Administrative Assistant to the Council. Special Presentation 2006 Mid -Year Budget Review Mr. Kevin Fuhrer presented a status report on the 2006 Budget. He reviewed the 2007 budgetary process and highlighted the 2006 beginning fund balances, revenues, and expenditures. Mr. Fuhrer noted that all line items are analyzed to determine if they are at an appropriate level for this time of the year. For example, property and casualty insurance costs are incurred at the beginning of the year so it would be appropriate for that line item to be 100% expended while other activities may not have yet occurred. There is a projected increase in general fund revenues of $3.132 million resulting in 7.6% growth (this is primarily related to construction activity and increases in sales tax). The hotel /motel lodging tax is higher than the previous year and revenues from the golf course have increased. Mr. Fuhrer also noted that July, August, and September are peak times for both revenues and expenditures for the golf course. A budget amendment will need to be made at year end to reflect the Sound Transit mitigation valued at approximately $1.5 million. This mitigation payment will be used to purchase an aerial fire apparatus necessitated by Light Rail construction and operation Operations and Maintenance expenditures are expected to increase by $2.357 million or 6.4 The increase is partly the result of City initiatives such as proactive code enforcement, additional staffing, and abatement activities. At this point expenditures are on track; however, there are a couple areas to monitor. Budget adjustments may also be necessary to reflect unanticipated expenditures by the City Attorney for special matters and legal issues. Noting that the City of Tukwila is self- insured, our medical insurance fund is closely monitored. One or two large claims by an employee, dependent, or retiree could make a major impact on the fund. Right now, retiree medical costs are somewhat higher than expected and could possibly require a budget amendment. Mr. Fuhrer pointed out that the 2006 beginning fund balance was $1.2 million higher than budgeted. Mr. Fuhrer then reviewed the budget development process for 2007. Departmental allocations will be distributed to department directors who will work with their staff to develop a budget. Costs for current staff have been rolled over into next year's budget, with the appropriate cost of living adjustments and benefit increases incorporated into those "rollover" numbers. He noted that the State has significantly increased our employer contribution to the employee retirement systems; from June 30 -July 1, 2007, there will be a 146% increase in employer contributions. We are also looking at making a change to the method used to fund the replacement of aging fire equipment which may impact next year's budget. Budget analysis and projection will continue through October, and a budget amendment, if necessary, will be submitted to the Finance Safety Committee at the beginning of November then to the Council the latter part of November 2006. Mr. Robertson asked if it was felt that the City would end up in a similar position in 2007 as in 2006. Mr. Fuhrer noted that there are items which would impact the 2007 budget such as increased benefits and cost -of- living adjustments, inflation, etc. Mayor Mullet stated that the economy is slowly recovering. City revenues are increasing slightly along with expenditures. Mr. Haggerton reiterated his belief that the City should implement a two -year budget cycle. Ms. Hernandez asked about the impact on the new construction activity at Westfield Mall. Mr. Fuhrer provided an update, shared that closures necessitated by the remodel will result in approximately $45 million dollars in lost retail sales. Based on Westfield's projections, the City's share of sales tax is estimated at $390,000. On the construction side, it appears that there will be $400,000 to $600,000 generated in sales tax, a small net increase. Also, the Mon Wig development will generate additional revenues in related construction activities. Special Meeting Work Session 2 August 3, 2006 Mr. Robertson asked if any new taxes were being considered; if so, how much revenue would be generated and could models and scenarios be developed to provide some estimates for discussion. Mayor Mullet explained that that is one option, to consider increasing revenues to ensure that the budget is balanced. Also, the City will use local improvement districts (LIDs) for items such as utilities and sidewalks. He noted that there is a 1% increase in the utility tax planned. He remarked that it is difficult to raise taxes. Ms. Linder noted that if one of those alternatives were selected, then the Council and could look at options which would benefit the residents that can't be considered at this time. Ms. Hernandez asked what happened to the input submitted by council members on the development of the 2007 budget. Mayor Mullet indicated that the input was reviewed and that additional items are not being placed in the budget at this time. Mr. Robertson asked that copies of the input provided by council members be distributed. Mr. Speck provided an update on the purchase of Larry's stores. It appears that a buyer bought all of the stores except the Tukwila grocery store. The lease on the Tukwila store will revert to Associated Grocers (AG) who would like to place another grocery store at that site. Mayor Mullet noted that the City is gathering facts and figures that might be useful in helping Larry's and /or AG find an appropriate tenant. Mayor Mullet provided an update on the Tukwila South project. Ms. Linder asked for an estimate of costs expended by the City to date on this project. Adjournment: 6:00 p.m. Minutes by DJ, Reviewed by KF.