Everett City Council

CITY OF EVERETT BUDGET & FINANCE COMMITTEE Date: September 4, 2024 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: 724 887 726#. View on YouTube: https://www.youtube.com/everettcity/live Agenda Items I. General Government Deficit Review II. Budget Variance Policy Review III. 2024 Year to Date Briefing Budget and Finance Committee September 4, 2024  Agenda • Year-to-date Budget Performance • CIP and Pension Reserve Funds Review • General Government Budget Deficit Review  July Financial Report General Government Revenues Amended Actual YTD% 200,000,000 Month 2024 Budget 2024 of Budget 180,000,000 Jan 11,131,313 11,608,646 104.29% 160,000,000 Feb 19,891,024 20,780,374 104.47% 140,000,000 Mar 27,963,705 28,861,064 103.21% 120,000,000 Apr 40,342,026 40,717,263 100.93% 100,000,000 May 68,591,581 68,430,805 99.77% 80,000,000 Jun 76,105,832 77,411,604 101.72% 60,000,000 J ul 90,318,916 90,474,133 100.17% 40,000,000 Aug 99,411,246 20,000,000 Sep 107,607,033 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Oct 120,416,980 Nov 147,166,817 2024 2023 Actual 2024 Budget Dec 161,563,921  July Financial Report Sales Tax 2024 Budget YTD Budget YTD Actual Variance $ Variance % Estimate Receipts $ 39,107,550 $ 21,992,799 $ 22,176,653 $ 183,856 0.8% 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 Cumulative Receipts 20,000,000 15,000,000 10,000,000 5,000,000 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2024 Actual 2023 Actual 2024 Budget  July Financial Report Sales Tax Top Sales Tax Sectors as of July 31, 2024 Cumulative $ Cumulative % % of Total Over/(Under) Over/(Under) Sales Tax Sector Sales Tax Budget Budget Retail 37.2% $ (321,590) -3.7% Construction 16.7% $ 389,988 11.8% Accommodation & Food Services 8.7% $ 43,169 2.3% Wholesale Trade 9.1% $ 244,973 13.9% Manufacturing 7.2% $ 182,393 12.8% Information 3.8% $ (45,605) -5.1%  July Financial Report B&O Tax 2024 Budget YTD Budget YTD Actual Variance $ Variance % Estimate Receipts $ 20,891,314 $ 14,760,550 $ 14,105,729 $ (654,821) -4.4% 25,000,000 20,000,000 15,000,000 Cumulative Receipts 10,000,000 5,000,000 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2024 Actual 2023 Actual 2024 Budget  July Financial Report General Government Expenditures Amended Actual YTD % 180,000,000 Month 2024 Budget 2024 of Budget 160,000,000 140,000,000 Jan 15,081,176 13,022,336 86.35% 120,000,000 Feb 27,325,618 25,431,149 93.07% Mar 41,333,957 38,180,197 92.37% 100,000,000 Apr 54,062,514 50,666,807 93.72% 80,000,000 May 67,257,922 64,247,069 95.52% 60,000,000 Jun 81,058,040 76,781,474 94.72% 40,000,000 J ul 94,483,033 92,730,071 98.14% 20,000,000 Aug 108,542,534 0 Sep 123,871,954 Oct 136,185,806 2024 Actual 2023 Actual 2024 Budget Nov 149,201,446 Dec 169,337,878  Reserves Capital Improvement Programs Fund Purpose Funding Source Annual Target Estimate Forecast 2024 2025 Ending Fund Balance Ending Fund Balance Accumulate resources for major repairs, General Fund renovations, and replacements of CIP 1 Contributions $3,000,000 $13,270,604 $2,564,182 existing General Government building and facilities. Capital investments included in the Real Estate Excise Tax CIP 2 Varies $14,554,215 $14,095,574 Comprehensive Plan (1st ¼ percent) Parks, streets, water/storm, sewer Real Estate Excise Tax CIP 3 Varies $6,809,816 $3,002,823 system capital investments (2nd ¼ percent) General government capital CIP 4 Lease Revenues Varies $1,103,107 $1,251,526 investments  Reserves LEOFF 1 Police Pension Fund Allowable Uses LEOFF 1 Police Pension and OPEB Payments Funding Source General Fund contributions, Medicare D reimbursements Annual General Fund Contributions Forecast Average (2025-2030): $2,148,202 Forecast 2024 2025 2026 2027 2028 2029 2030 2031 Ending Fund $ 17,054,790 $ 17,949,991 $ 18,825,193 $ 19,704,395 $ 20,611,597 $ 21,563,798 $ 22,582,000 $ 21,279,000 Balance • Closed plan • Current Target Full Funding Date: 2030 • Actuarial End Date: 2069  Reserves LEOFF 1 Fire Pension Fund Allowable Uses LEOFF 1 Fire Pension and OPEB Payments Funding Source General Fund contributions, Fire Insurance Premium share, Medicare D reimbursements Annual General Fund Contributions Forecast Average (2025-2030): $2,163,115 Forecast 2024 2025 2026 2027 2028 2029 2030 2031 Ending Fund $ 28,261,710 $ 29,058,925 $ 29,807,140 $ 30,532,355 $ 31,250,570 $ 32,016,785 $ 32,839,000 $ 31,016,000 Balance • Closed plan • Current Target Full Funding Date: 2030 • Actuarial End Date: 2069  General Government Six-Year Forecast as of July 21, 2024 General Government Deficit Forecast (in millions) $- $(5.0) Revised $(10.0) $(12.6) Annual Budget Annual $(16.8) Deficit Variance Deficit $(15.0) 2025 Forecast $ (19.6) $ 7.0 $ (12.6) $(21.5) $(20.0) 2026 Forecast $ (23.8) $ 7.0 $ (16.8) $(25.8) 2027 Forecast $ (28.5) $ 7.0 $ (21.5) $(25.0) $(30.4) 2028 Forecast $ (32.8) $ 7.0 $ (25.8) $(30.0) 2029 Forecast $ (37.4) $ 7.0 $ (30.4) $(35.4) $(35.0) 2030 Forecast $ (42.4) $ 7.0 $ (35.4) $(40.0) FORECAST FORECAST FORECAST FORECAST FORECAST FORECAST 2025 2026 2027 2028 2029 2030  Budget Variance Budget variance represents the net of revenues over/under budget and under-expenditures, after accounting for the ending fund balance requirement (20% of revenues) and budget reappropriations.  Budget Variance Year Budget Variance is Year Budget Applied to Assist in Year End Budget Variance Variance Occurred Addressing the Budget Deficit 2021 $ 5,515,300 2023 2022 $ 6,868,795 2024 2023 $ 7,014,685 2025  Vacancy Offset The vacancy offset is a budgeting tool used to estimate vacancy savings. Mid-year, through a budget amendment, the vacancy offset is distributed by reducing department labor budgets where the vacancies have occurred.  Vacancy Offset Number of Vacancies Budget Year Vacancy Offset Included in the Vacancy Offset 2022 $ (4,165,440) 43 2023 $ (5,512,500) 45 2024 $ (5,294,000) 40 Effect of 1% limit on Property Tax Buying Power of a Property Tax Dollar $1.00 $0.94 $0.85 $0.81 $0.74 $0.57 2001 2005 2009 2014 2019 2023  Comparison of Property Tax Levies for General City, Fire-EMS, and Library Services Based on Average Value Home – 2024 Taxes Lake Mt Lake Arlington Bothell Edmonds Everett Stevens Lynnwood Marysville Mill Creek Monroe Terrace Mukilteo Population 21,740 49,550 43,370 114,200 41,260 40,790 73,780 21,630 20,590 23,810 21,690 Average Value Home $ 467,800 $ 806,200 $ 895,700 $ 520,600 $ 589,500 $ 613,800 $ 489,200 $ 863,700 $ 591,500 $ 596,600 $ 814,000 Levy Rates $ 3.17 $ 2.09 $ 1.35 $ 1.90 2.863 $ 1.94 $ 2.75 $ 2.17 $ 2.98 $ 2.10 $ 1.40 Fire Benefit Charge $ - $ - $ - $ - $ - $ 66.50 $ - $ 66.50 $ - $ 66.50 $ - 2024 Taxes: General City, Fire-EMS, Library Services • To compare, must consider what other levies cities have for Fire/ Library $1,942 $1,687 $1,687 $1,761 $1,482 $1,259 $1,348 $1,320 • Everett’s levy covers core services $1,208 $988 $1,143 including Fire and Library Services; other cities have regionalized. Arlington Bothell Edmonds Everett Lake Lynnwood Marysville Mill Creek Monroe Mt Lake Mukilteo Stevens Terrace Source: Snohomish County Assessor 2024 Annual Report; South Snohomish County RFA Fire Benefit Charge formula  Budget Pressures Leading to the Deficit • Rising costs from inflation • Unfunded mandates • Salary compression and pressure • Changes in service needs as the community grows and changes  Balancing the Budget Significant budget cuts Streamlining, improving Increased revenues efficiency, deferring • Voluntary separations expenses • Utility taxes • Cutting nearly all • Align service fees with recreation & the • Eliminated positions; peer cities Bookmobile reorganized staff • $20 car tabs for street • Closing the Swim Center resources paving • Soliciting ideas from staff • Increased efficiency of • Added fundraising & the community programs and services, positions • Public-private including automation • Annual renewals for partnerships • Deferred capital projects business licenses • Changes to staff benefits General Government Revenues  General Taxing Authority Existing Tax Rates Tax Existing Tax Rate Maximum Rate Sales Tax 0.85% 0.85% Business & Occupation Tax 0.10% 0.20% Utility Taxes 6.00% 6.00% Water & Sewer PILOT 6.00% 6.00%* Admissions Tax 5.00% 5.00% Leasehold Excise Tax 4.00% 4.00% Gambling Taxes 5% - 10% Up to 20% *No legal limit, but restricted to 6% through wholesaler contracts Discussion