Everett City Council

CITY OF EVERETT BUDGET & FINANCE COMMITTEE Date: August 30, 2023 Time: 5:00 p.m. – 6:00 p.m. Location: Everett City Council Chambers The public is welcome to attend in person or remotely. There will be no public comment during committee meetings. To watch remotely: You may call in or listen to the meeting by dialing: 425-616-3920, Conference ID: 724 88 726 View on YouTube: https://www.youtube.com/everettcity/live Agenda Items I. FY23 year-to-date budget performance II. Revenue Forecast III. Budget Balancing Update Budget and Finance Committee August 30, 2023 Agenda • July Financial Report • General Government Revenue Forecast Update • General Government Budget Development Update 2 JULY FINANCIAL REPORT 3  June Financial Report General Govt. Revenues 2023 Amended YTD% Month Budget Actual of Budget 180,000,000 Jan 10,337,834 12,321,237 119.19% 160,000,000 Feb 18,529,838 20,732,888 111.89% 140,000,000 Mar 26,009,081 28,396,176 109.18% 120,000,000 Apr 37,564,012 41,074,051 109.34% 100,000,000 May 64,492,080 68,626,386 106.41% 80,000,000 Jun 89,997,088 95,140,478 105.72% 60,000,000 Jul 102,355,896 108,880,442 106.37% 40,000,000 Aug 111,298,808 20,000,000 Sep 118,759,733 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Oct 131,031,179 Nov 157,017,472 2023 Actual 2022 Actual 2023 Budget Dec 167,642,271 4  Sales Tax 2023 Budget YTD Budget YTD Actual Variance $ Variance % Estimate Receipts $36,085,400 $20,309,311 $21,983,566 $1,674,255 8.2% Cumulative 40,000,000 Receipts 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5 2023 Actual 2022 Actual 2023 Budget  B&O Tax 2023 Budget YTD Budget YTD Actual Variance $ Variance % Estimate Receipts $18,724,050 $13,188,120 $14,409,575 $1,221,455 9.3% Cumulative 20,000,000 Receipts 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 6 2023 Actual 2022 Actual 2023 Budget  Utility Taxes 2023 Budget YTD Budget YTD Actual Variance $ Variance % Estimate Receipts $13,388,900 $8,385,418 $9,107,109 $721,691 8.6% Cumulative 16,000,000 Receipts 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 7 2023 Actual 2022 Actual 2023 Budget  June Financial Report General Government Expenditures 2023 Amended YTD % Month Budget Actual of Budget 160,000,000 140,000,000 Jan 12,757,268 12,075,168 94.65% 120,000,000 Feb 23,960,027 22,879,184 95.49% 100,000,000 Mar 36,681,423 35,436,943 96.61% 80,000,000 Apr 49,417,673 47,507,069 96.13% May 63,210,644 59,813,369 94.63% 60,000,000 Jun 75,911,804 72,469,487 95.47% 40,000,000 Jul 89,080,968 85,608,608 96.10% 20,000,000 Aug 102,180,252 0 Sep 115,322,901 Oct 128,405,966 2023 Actual 2022 Actual 2023 Budget Nov 140,380,662 Dec 158,797,504 8 REVENUE FORECAST UPDATE 9 Revenue Forecast Update Economic Factors: Broad Everett-specific Inflation New businesses Unemployment Business closures Personal Income Current trends – Everett businesses Fed actions Population change Consumer debt Service fee updates 10 Revenue Forecast Update • 2023 General Government Revised Forecast: $157.8 million o Includes an $8 million increase over the original budget • Key line items impacting forecast: o Sales tax o B&O Tax o Plan check fees & construction permits 11 Revenue Forecast Update • 2024 Proposed General Government Revenue Forecast: $161.5 million o $11.7 million increase over the original 2023 budget o $3.5 million increase over 2023 revised forecast o Average growth 2025 – 2030: 1.5% Key Line Items (Millions) $39.1 $20.9 $14.3 $4.9 Sales Tax B&O Tax Utility Taxes Construction Fees 12 Revenue Forecast Update Upside Possibilities Downside Risks Inflation retreats--boosts consumer and Inflation remains high and drives down business confidence consumer and business confidence Fed actions slow inflation without causing a Fed deploys more aggressive policy actions that recession result in a recession COVID infections continue to remain low New variants cause COVID infections/deaths to rise Supply chain issues improve faster than Supply chain issues do not improve or worsen anticipated Global economies grow faster than expected Global growth weakens, reducing exports 13 BUDGET BALANCING UPDATE 14 Budget Balancing Update Investments in Public Safety Budget Item 2024 Budget 2024 Revenue Net 2024 Cost Offset Add seven (7) remaining COPS grant- $1,190,413 $858,256 $332,157 supported police officers Add one (1) lieutenant and one (1) police 410,113 410,113 0 officer- backfill for officers drafted by the new Skagit Police Academy Add one (1) wellness coordinator 135,091 0 135,091 Add one (1) public disclosure specialist 104,000 0 104,000 Add 2024 – 2025 Lateral Incentive Hiring 90,000 0 90,000 Program 15 Budget Balancing Update Investments in Recruitment and Retention Budget Item 2024 Budget 2024 Revenue Net 2024 Cost Offset Market rate adjustments $163,023 $0 $163,023 Reclass positions to align with 212,234 0 212,234 assignments 16 Budget Balancing Update Investments in Human Needs Related Programs Total: $1,040,709 Budget Item 2024 Budget 2024 Revenue Net 2024 Cost Offset Gen Govt COVID Recovery Human Needs grants $556,800 $556,800 $0 Clare’s Place support 200,000 200,000 0 VOA Sr. Center contract 300,000 300,000 0 Bezos Academy rent support 69,120 69,120 0 Alliance for Housing Affordability dues 14,789 14,789 0 17 Budget Balancing Update Staffing additions to meet service demands (Does not include public safety positions) Budget Item 2024 Budget 2024 Revenue Net 2024 Cost Offset 2023 Mid-Year Additions [9.35 FTEs] $1,064,854 $634,730 $430,124 2024 Proposed Additions [3.5 FTEs] 378,818 0 378,818 18 Budget Balancing Update Notable Cost Escalations Budget Item 2024 Budget 2024 Revenue Net 2024 Cost Offset Jail fees $1,168,372 $0 $1,168,372 Tort, general insurance premiums, and 975,908 0 975,908 workers’ compensation IT software maintenance costs 198,801 0 198,801 Library security services 174,638 0 174,638 19 Budget Balancing Update Unsustainable balancing measures: $9,553,504 Budget Item 2024 Budget Suspend LEOFF 1 contribution $4,898,567 Suspend contribution to CIP 1 – increase size of 2025 bond issue 3,000,000 Support Human Needs programs with COVID Relief fund – 2024 1,140,709 only Rainy Day Fund draw 559,735 20 6-Year General Government Forecast 2024 2025 2026 2027 2028 2029 2030 Proposed Budget Forecast Forecast Forecast Forecast Forecast Forecast Annual Revenues $ 161,536,656 $ 160,072,847 $ 163,209,584 $ 164,756,539 $ 166,619,336 $ 169,017,113 $ 172,233,264 Prior Year Budget Variance 5,351,909 7,000,000 7,000,000 7,000,000 7,000,000 7,000,000 7,000,000 Total Resources $ 166,888,565 $ 167,072,847 $ 170,209,584 $ 171,756,539 $ 173,619,336 $ 176,017,113 $ 179,233,264 Annual Expenditures $ 166,888,565 $ 178,804,422 $ 185,222,510 $ 191,562,867 $ 197,995,183 $ 204,861,390 $ 211,755,186 Annual Surplus/(Deficit) $ 0 $ (11,731,575) $ (15,012,927) $ (19,806,328) $ (24,375,847) $ (28,844,277) $ (32,521,922) Annual Deficit Forecast $5,000,000 $0 $- $(5,000,000) $(11,731,575) $(10,000,000) $(15,012,927) $(15,000,000) $(19,806,328) $(20,000,000) $(24,375,847) $(25,000,000) $(28,844,277) $(32,521,922) $(30,000,000) $(35,000,000) Proposed Budget Forecast Forecast Forecast Forecast Forecast Forecast 2024 2025 2026 2027 2028 2029 2030 21 Discussion