City Council

CITY OF MOUNT VERNON CITY COUNCIL MEETING AGENDA November 13, 2019 7:00 p.m. (Police Court Campus) I. OPENING CEREMONIES A. Call to Order B. Pledge of Allegiance C. Roll Call of Councilmembers II. CONSENT AGENDA A. Approval of October 23, 2019 Regular Council Meeting Minutes B. Approval of October 30, 2019 Special Study Session Minutes C. Approval of October 30, 2019 Committee of the Whole Meeting Minutes D. Approval of November 5, 2019 payroll checks numbered 109684 - 109714 direct deposit checks numbered 73872 - 74113, and wire transfers numbered 789 – 793 in the amount of $950,039.67 E. Approval of November 13, 2019 Claims numbered 6218 – 6225 and 6230 - 6447 in the amount of $1,425,007.86 III. REPORTS A. Committees 1. Public Works and Library B. Community Comments (An opportunity for Mount Vernon residents to address their City Council. Please limit comments to 3 minutes or less. Under normal circumstances, the Mayor and Council will not respond immediately to Community Comments. If you would like someone to follow-up with you regarding the topic of your comments, please leave your name and contact information on the form at the entrance of the Council Chambers.) C. Councilmember Comments D. Mayor’s Report E. Committee Agenda Requests IV. UNFINISHED BUSINESS None V. NEW BUSINESS A. Approval of Agreement – Dude Solutions, Inc. (Staff is requesting that Council authorize the Mayor to enter into an agreement with Dude solutions for Asset Essentials Pro., an online asset management software, which will integrate with the City’s Geographic Information Systems {GIS}.) (required action – motion) (staff contact – Blaine Chesterfield) Mount Vernon City Council Agenda November 13, 2019 page 2 B. Public Hearing – 2020 City Budget (The City will hold a public hearing to present and take comment on the 2020 City budget.) (required action – none) (staff contact – Doug Volesky) COMMITTEE MEETINGS Public Works and Library 6:00 p.m. Next Ordinance 3795 Next Resolution 972  AGENDA ITEM: A DATE: November 13, 2019 TO: Mayor Boudreau and City Council FROM: Blaine Chesterfield, Engineering Manager SUBJECT: AGREEMENT – Dude Solutions, Inc., Asset Essentials, Asset Management Software RECOMMENDED ACTION: Staff requests the City Council approve the services agreement with Dude Solutions for Asset Essentials Pro., an online asset management software, which will integrate with the City’s Geographic Information System (GIS). The initial cost for Asset Essentials Pro would be for a total of $22,065. INTRODUCTION/BACKGROUND: • Over the last few years the Public Works (PW) Department has been successfully using Mobile311 to improve efficiencies and issues with work order and asset tracking processes. • In 2018, Dude Solutions, Inc., began offering Asset Essentials to new and existing clients. • In early 2020, Public Works staff would like to transition from Mobile311 to Asset Essentials which incorporates the tools of Mobile311. Mobile311 will continue to be supported as best as possible, but will no longer be improved. • Over several months the PW team has been considering this transition and with the added capabilities and the improvements to Asset Essentials it was ultimately decided to request this upgrade. FINDINGS/CONCLUSIONS: • Dude Solutions has been in business for over 13 years and currently serves more than 7,000 plus organizations in both the US and Canada. • Asset Essentials is an online asset management software (data will be located on their servers). There is no software to install on City computers which keep costs down. Dude Solutions provides unlimited training and support. • Of the asset management tools staff has considered Asset Essentials is the easiest and least costly to implement. • Staff feels that Asset Essentials is one of the most user friendly options in both the field and office environments. • This software will be used for work orders, maintenance records, staff time tracking, equipment tracking, routine project costs, manhole inspections/cleanings, drainage facility work order tracking, and stormwater citizen responses. This list of uses is continuing to expand as the staff becomes more familiar with the Dude Solutions software. • This subscription cost includes Streets/Signs/Sidewalks, Storm Water, and Waste Water Modules. It also includes a week of (four days) of onsite Asset Essentials training for field and office staff with two days of consultation services. • There is an initial one time added cost of approximately $5,000 for the transition of data and the training of staff. • The annual maintenance cost starting January 2021 will be $18,997. RECOMMENDATION: Approval of the proposed software services agreement for Asset Essentials is a continuing progression of the Public Works asset management which will improve efficiencies, track maintenance records, collect data on assets, and maintain records of citizen requests. ATTACHED: Dude Solutions, Inc., Subscription Agreement PREPARED FOR City Of Mount Vernon Blaine Chesterfield Engineering Manager 910 Cleveland Avenue Mount Vernon, WA 98273-4212 PREPARED BY Dude Solutions, Inc. PUBLISHED ON October 30, 2019 1 Pricing is based on... Solutions - Subscription Asset Essentials Pro - Pro Streets/Signs/Sidewalks Module - Pro Storm Water Module - Pro Water Distribution and Waste Water Collection Module Subscription Term: 12 months Subtotal: $12,664.88 4 months included at no additional cost Implementation & Services 1 Week (4 days) Onsite Consulting Package for 1Week(s) Virtual Consulting Service for 2 days Subtotal: $9,400.00 Total Initial Investment $22,064.88 USD 2 Legendary Support Team Your subscription entitles you to world class support from the Legendary Support Team. From 8 am – 6 pm EST, we're standing by ready to assist with any feature/functionality questions. We promise a live person will answer your call within 3 rings and quickly direct you to a knowledge Advisor. We're committed to responding to all emails sent to support@dudesolutions.com (mailto:support@dudesolutions.com), within one hour. If you prefer to keep a support dialogue open at your work station, our Advisors are also available via Chat. The Legendary Support Team is dedicated to your success. Our mission is to effectively communicate, efficiently resolve problems, and delight clients with every interaction. Client Success Team You have partnered with Dude Solutions because you believe we will deliver overwhelming value to you and your organization. Our Client Success team is dedicated to ensuring you meet the outcomes you and your organization expect by implementing our solutions. You will have the opportunity to work with a member of our Client Success team on an ongoing basis. Your Client Success Representative will be strategic in their efforts to drive results, keeping your success as their primary goal. One Week On-Site Implementation Services for Work Management System Configuration and planning • Develop organized plan that accelerates full implementation • Create a strategy for data collection, including preventive maintenance (PM) work orders, data transference and organization, naming conventions and more Work Order Management • Assist in creating a strategy that supports your work order management goals, such as request best practices and PM work order schedules • Design a plan for data collection Implementation Support • Interview key staff for goals • Identify objectives to focus on for best time to value Legendary Ongoing Support All Dude Solutions clients have ongoing support which includes: • Phone support answered within 3 rings • Email support responses within 1 hour (or less) during business hours • Immediate assistance available via chat 8 AM to 6 PM ET Travel and lodging for Dude Solutions consultants • Travel to your location 3  • Cost of lodging for Dude Solutions consultants during their stay at your location Terms of Service: • Proposal has been prepared for City Of Mount Vernon • Proposal expires in 60 days • Initial Term: 12 months • Payment: Terms are net 30 days • Billing frequency other than annual is subject to additional processing fees • Automatic invoicing of annual fee will occur at the end of each term unless request for non-renewal is received in writing 30 days prior to renewal date. • Applicable sales taxes are in addition to the quoted price. If your organization is tax exempt, please email a copy of your Tax Exemption Certificate to accountsreceivable@dudesolutions.com (mailto:accountsreceivable@dudesolutions.com) • Please address purchase order to: Dude Solutions, 11000 Regency Parkway, Suite 110, Cary, NC 27518 • Service dates are scheduled Monday-Friday • If a service day is rescheduled or cancelled by City Of Mount Vernon, then City Of Mount Vernon is responsible for any cancellation fees incurred by rescheduling or cancelling travel and living fees. • Onsite service days rescheduled less than 2 weeks before the scheduled delivery date will incur cancellation fees. • Services will be scheduled upon written acceptance of the terms and conditions of this proposal. • We must allow six weeks of lead time from the purchase date for booking service for travel and living purposes. • Dude Solutions, Inc. maintains the necessary liability coverage for their products and services. Proof of insurance can be provided upon request. • Asset Essentials is offered based upon the terms and conditions ("Terms") set forth in the Asset Essentials Online Subscription Agreement. (https://dudesolutions.com/aeterms.html) • Acceptance is expressly limited to these Terms. Any additional or different terms proposed by you (including, without limitation, any terms contained in any document incorporated by reference into the Purchase Order) are objected to and rejected and will be deemed a material alteration hereof. 4 Signature Presented to: Q-150253 October 30, 2019, 6:08:55 PM Accepted by: Printed Name Signed Name Title Date 5  AGENDA ITEM: B DATE: November 13, 2019 TO: Mayor Boudreau and City Council FROM: Doug Volesky, Finance Director SUBJECT: PUBLIC HEARING ON THE 2020 CITY BUDGET RECOMMENDED ACTION: The City will hold a public hearing to present and take comment on the 2020 City budget. INTRODUCTION/BACKGROUND: The City of Mount Vernon is required to hold a public hearing to discuss the 2020 proposed budget. Following a public hearing and discussion of the proposed budget, City Council may then adopt the budget which must be adopted prior to the beginning of the ensuing year. FINDINGS/CONCLUSIONS: The attached preliminary budget document with the Mayor’s submittal letter summarizes the detailed information Council has in their 2020 budget binders. During discussions with City Council there have been some adjustments to the preliminary budget document. These items include decreases in medical benefits to reflect the recently received rates, and adjustments in projected revenues to tie closer to the updated 2019 projected revenues. This public hearing will include the updated budget numbers. The City budget as proposed consists of 30 funds, and supports 235 full time and approximately 49 part- time employees. The total 2020 proposed budget for the City of Mount Vernon is $69,638,074, which is an 8.0% decrease compared to the 2019 budget. Total governmental operating fund budgets for 2020 total $36,183,179, a 4.5% increase compared to 2019. The preliminary budget will continue to be adjusted per Council’s direction prior to adoption, with a detailed list of these adjustments. The attached preliminary budget document has not been adjusted for these modifications. RECOMMENDATION: No action. ATTACHED: - 2020 Preliminary Budget Document 2020 Preliminary Budget  CITY OF MOUNT VERNON 2019 PRELIMINARY BUDGET Table of Contents Page No. Mayor’s Budget Message ....................................................................................................................1 Preliminary Budget Summary ..............................................................................................................2 Economic Environment ........................................................................................................................3 Employees Deliver Services .................................................................................................................3 Strategic Goals Infrastructure ..........................................................................................................................4 Healthy Neighborhoods ..........................................................................................................6 A Good Place for Investment ..................................................................................................8 Operations ............................................................................................................................10 Budget Development .........................................................................................................................11 Revenue Property Tax..........................................................................................................................11 Sales Tax................................................................................................................................12 Special Revenue Funds .........................................................................................................12 Reals Estate Excise Tax..........................................................................................................13 Capital Project Funds .........................................................................................................................13 Debt Service Funds ............................................................................................................................13 Proprietary Funds ..............................................................................................................................14 2020 Revenue Summary by Type ......................................................................................................15 2020 Revenue Estimates by Source ...................................................................................................15 Fund Balance Reconciliation ..............................................................................................................16 Conclusion..........................................................................................................................................17  2020 PRELIMINARY BUDGET NOVEMBER 4, 2019 Mayor’s Budget Message I present the 2020 preliminary (draft) budget for your consideration. The City of Mount Vernon adopts a highly complex and balanced budget by December 31st of each year in accordance with RCW 35A.33. This year I present a draft budget that reflects our needs and specifically leaves funding decisions to the collaboration between my office and the City Council. When I reflect on the City of Mount Vernon, I believe we have so much to be proud of and thankful for. Our small city has effectively demonstrated how government can take care of services and create transparency while engaging with residents. Our services are highly valued by residents. Departmental budgets in many instances are prepared for vastly different services – some services are 24-hour operations, while other Departments work 6 days a week, are on-call, or have a traditional 40 hour work schedule. Our employees are the City’s greatest asset. The 2020 budget was prepared to fulfill the goals agreed to by the City Council and “Budgeting is not just a Mayor. These broad goals include: Adequate Infrastructure, Healthy ‘math problem’. The process Neighborhoods, A Good Place for Investment, and Efficient and Professional determines if services will Operations. fulfill the goals and priorities of the community.” We budget for several unique services through 21 departmental budgets and a total of 30 different funds. The governmental operating fund budgets total $36,218,297, representing a 4.6% increase compared to the 2019 final budget. The 2020 preliminary budget for the City of Mount Vernon is $69,476,872 representing a 8.2% decrease as compared to the 2019 final budget. This decrease is due mainly to a decrease of $5,532,609 in intergovernmental revenue which included large funding amounts for capital projects budgeted in 2019. It is a privilege to work for the City of Mount Vernon; we are accountable for our City’s success. I believe this preliminary budget is a transparent and detailed document of the needs of each City department to successfully fulfill the goals of our Community in 2020. 1  2020 Preliminary Expenditure Budget Summary Fund 2019 2020 2019-2020 2019-2020 Dept Final Proposed Increase % No. Fund / Department Budget Budget (Decrease) Change 001 Current Expense Fund 01 City Council 203,617 231,656 28,039 13.8% 02 Municipal Court 535,810 573,462 37,652 7.0% 03 Mayor 425,244 451,778 26,534 6.2% 04 Finance 1,001,824 1,009,232 7,408 0.7% 05 City Attorney 680,713 679,831 (882) -0.1% 06 Human Resources 643,971 692,542 48,571 7.5% 07 General Facilities 857,033 859,294 2,261 0.3% 08 Police Department 10,114,443 10,529,671 415,228 4.1% 09 Fire Department 8,787,079 9,026,703 239,624 2.7% 11 Public Works/Engineering 889,633 891,209 1,576 0.2% 12 Development Services 2,095,644 2,079,068 (16,576) -0.8% 18 TV 10 - Public Access Cable 224,859 236,568 11,709 5.2% 97 CDBG Entitlement Grant 693,643 882,525 188,882 27.2% 98 Information Services 858,584 876,370 17,786 2.1% 99 Non-Departmental 751,501 902,398 150,897 20.1% Total Current Expense Fund 28,763,598 29,922,307 1,158,709 4.0% 101 City Street Fund 2,279,819 2,633,734 353,915 15.5% 103 Parks and Enrichment Services Fund 2,154,682 2,218,495 63,813 3.0% 104 Library Fund 1,415,926 1,443,761 27,835 2.0% Total Governmental Operating Funds 34,614,025 36,218,297 1,604,272 4.6% 102 Arterial Street Fund 9,895,370 2,896,525 (6,998,845) -70.7% 105 Paths and Trails Fund 78,500 0 (78,500) -100.0% 106 Tourism Promotion Fund 307,000 367,700 60,700 19.8% 107 Little Mountain Improvements Reserve 635,750 46,500 (589,250) -92.7% 109 Crime Prevention Fund 12,400 12,400 0 0.0% 110 Government Access Fund 68,000 110,719 42,719 62.8% 112 Criminal Justice Assistance Fund 147,000 150,000 3,000 2.0% 113 Municipal Arts Fund 20,800 13,000 (7,800) -37.5% 115 Parks Capital Improvements Reserve 752,000 178,862 (573,138) -76.2% 117 TBD Fund 1,855,050 2,115,000 259,950 14.0% 118 Fiber Optic Fund 269,476 300,501 31,025 11.5% 119 Critical Areas Enhancement Fund 30,000 30,000 0 0.0% 120 Lincoln Commercial Properties Fund 135,149 35,632 (99,517) -73.6% 301 Library/Community Center/Parking Capital Fund 0 500,000 500,000 na 304 Capital Improvements Fund - REET I 912,021 786,770 (125,251) -13.7% 306 Fire Station Projects Capital Fund 131,000 118,544 (12,456) -9.5% 311 Parks Impact Fees 384,150 0 (384,150) -100.0% 312 Fire Impact Fees 75,804 50,000 (25,804) -34.0% 313 Transportation Impact Fees 624,240 0 (624,240) -100.0% 314 REET II - Streets Fund 1,133,751 925,000 (208,751) -18.4% 328 Public Works Facility Capital Fund 0 0 0 na 401 Wastewater Utility Fund 9,034,949 9,532,456 497,507 5.5% 402 Solid Waste Utility Fund 6,602,081 7,114,257 512,176 7.8% 403 Surfacewater Utility Fund 3,096,119 2,601,933 (494,186) -16.0% 411 Sewer Facility Expansion Fund 327,000 764,500 437,500 133.8% 412 Sewer Capital Reserve 1,150,000 1,537,500 387,500 33.7% 501 Equipment Rental Fund 2,853,129 2,819,776 (33,353) -1.2% 502 Facility Renewal Fund 372,815 100,000 (272,815) na 512 Leoff I Long-term Healthcare Reserve 40,000 40,000 0 0.0% 611 Firemen's Pension and Relief Fund 111,000 111,000 0 0.0% Total All Funds 75,668,579 69,476,872 -6,191,707 -8.2% 2 Primary Budget Guidelines: Fulfill Strategic Goals * Adhere to the City’s Financial Policy * Maintain the Current Level of Public Services Economic Environment: Funding for City infrastructure, equipment and technology were deferred during the recessionary years and the City continues to struggle to regain funding to meet City needs and services. The effects of the downturn had a protracted effect on the City’s revenues that inhibited the pace of recovery. It was not until 2016 that income, at least on a nominal basis, finally returned to pre-recession levels. The breakthrough was driven primarily by construction with real estate taxes showing the most growth, where in 2018 real estate taxes finally met the collections in 2007. We expect to maintain this level of performance in 2020. While the recent improvement in general government revenues is encouraging, there is more to consider when assessing funding public services. If we translate the revenues to constant dollars so that the impact of inflation is removed and present the results in a per capita format, the results show that we still have fewer resources available to serve our growing community. General government revenue per capita in constant dollars is shown in the graph to the left. Adjusted for inflation and population growth, we see that real general government revenues are still not fully recovered. Bottom line is that the City of Mount Vernon is spending less per capita to deliver essential services and accomplish capital projects than it did over a decade ago. Employees Deliver Services: The preliminary 2020 budget includes the following requests for employees: • 1 Records Specialist in the Police Department. Converting one part-time records specialist to full-time to assist with increased work load in public record requests, background checks for firearm purchases and concealed pistol license applications. • 1 Civil Engineering Tech II in the Surface Water Utility. This position is needed to perform increased inspections and maintenance of drainage facilities as well as other duties. In addition to full time employee requests, a part-time Fiber Optic Laborer is requested to help with the increased workload, the demand for fiber services and to prepare for anticipated future support. 3  Strategic Goal #1 Infrastructure Provide an adequate level of quality public facilities in a fiscally prudent manner. A City’s infrastructure is critical to the City’s health and safety as well as economic development and prosperity. The City will make a $11.7 million investment in capital projects in 2020. In many respects, the City’s ability to realize its competitive potential depends on making smart infrastructure choices. Capital Transportation Projects and the Transportation Benefit District The Transportation division is made up of the Street Department, Arterial Street Fund, and the Transportation Benefit District Fund. These divisions are responsible for the maintenance of the City’s 138 miles of road ways. The passage of a Transportation Benefit District sales tax of .2% in 2016 is providing critical funding for the maintenance of City streets that were delayed for many years during the recession. Examples of funded projects for 2020 include: • Widening of College Way (SR530) under Interstate 5 – fully funded and scheduled to complete in early 2020 • Design and engineer intersection improvements at College Way (SR530) and N 30th Street • Signal upgrades at College Way & Riverside Drive area • Increased overlay pavement preservation program, add ADA program, fund sidewalk gap program Fire Station 1 Replacement Continuing the funding for the conceptual design for the Fire Station 1 replacement. The current station, built in 1964, is inadequate to provide life safety to redevelopment planned in the entire downtown area. A Future Library Space Re-Imagined The City is continuing in the planning and funding options for the Mount Vernon Library Commons Project in collaboration with Skagit County, the Library Board of Trustees and the Mount Vernon Library Foundation. 4 Parks Infrastructure The 2020 budget allocates $238,362 for projects in our parks system to include continued funding for the completion of the Little Mountain Park Bike Skills Center access road and parking area and for other recurring park projects. Infrastructure Operations Wastewater, Surfacewater and Collections services provide sewer services in our City and often are unnoticed to our general public. These crucial departments invest significant money into compliance with Federal and State Clean Water Act and other complex regulations. Included in $2.66 million funded projects for 2020 include: • Sewer and Storm Water restoration programs (annual) • Wastewater treatment upgrade • Addition to the Wastewater administration building • Kulshan pump station debris removal system • South 19th Street Culvert removal • Freeway Drive stormwater force main improvements 5  Strategic Goal #2 Healthy Neighborhoods Create an action plan to address the health of our neighborhoods, including public safety, public health, and appearance. Homelessness The City continues to collaborate with partner agencies to address effects of homelessness and poverty on our City streets. The City’s full time social worker position was added to the Mount Vernon Police Department in 2017. The City has dedicated over $250,000 in efforts to address the impacts of homelessness. Continued efforts funded in the 2020 preliminary budget include: • Continue to dedicate more focus in areas affected by encampments and vandalism. • Continue collaboration with Skagit County government and Catholic Housing Services for procurement of property for a permanent supportive housing project. • Continue engaging the local faith community in an effort to provide an opportunity for service and a partnership in proposing solutions. Crime Prevention & Code Enforcement The City continues the goal of updating our municipal codes dealing with nuisances including noise, overgrown vegetation, parked junk vehicles, broken fencing and general disarray. • Rewrote City Parks Ordinance to include a code of conduct for parks and public space in the vicinity of parks. • Created a Park Ranger Position in 2019 within the Mount Vernon Police Department to enforce park codes and to mitigate negative impacts of crimes associated with some members of the homeless population. • GIS mapping for coordinated encampment inspections, work with property owners to minimize trespassing and work with business owners to unify approach. • Support Blockwatch program. Housing The City is funding continued work to update land use codes around multi-family housing as adopted in the 2016 Comprehensive Plan. Staff continues work to bring forward codes for City Council to consider in a very thoughtful manner as to not affect the health of our existing neighborhoods. The focus on ‘missing middle’ housing stock continues to be the logical and realistic way to increase affordable options in the City of Mount Vernon. The City received $125,000 from a state grant to continue code revisions for affordable housing work plan that includes: 6 • Funding for consultants to assist in code development and revision including density bonuses for residential developments providing affordable housing for those earning less than 80% of the area median income (AMI), and promoting in-fill development. • Present options to City Council for downtown 2nd floor residential codes including possible tax deferment programs. Maintenance The 2020 budget places emphasis in funding to maintain our parks, trails and public spaces to the level to which our Community expects; which encourages more users and reduces crime and the perception of crime. 7  Strategic Goal #3 A Good Place for Investment Maintain a strong proactive position toward prosperity to promote a vibrant business community, retain & recruit a talented workforce, a positive civic image, and establish the City as a good place for investment. Redevelopment With the completion and certification of the waterfront flood protection project in 2019, the City stands at a critical stage in the evolution of commercial and residential development in the downtown core. It is the responsibility of City leadership to attract and work with potential development to realize the vision of our Community. To that end the City will continue to work in the following areas: • Work with property owners to realize benefits of FEMA Letter of Map Revision designation. • Historic downtown revitalization development – collaborate for parking garage, residential, hotel and mixed use. • Coordinate between historic downtown and south of Kincaid subarea opportunities. • Opportunity zones – The City was awarded 3 census tracts for the Federal Government Program to incentivize investment. The City is working with the Federal Government and Washington State Department of Commerce to attract investment in our commercial corridor. Development Services Department Commercial and residential developers must work together and partner with the City Development Services Department to ensure compliance with municipal code (law) and Federal and State requirements. This regulatory department provides expert analysis and advice to the City Council in the reform or enactment of municipal code. The following are examples of work funded in the 2020 budget: • Continue to realize the benefits of the fastest permit center in the State of Washington through the use of new integrated permit software. • Conduct a subarea plan extending the South Kincaid subarea to Blackburn Road, including redevelopment of the Skagit County Fairgrounds at the County’s request. Fiber Optics The Fiber Optic Network, managed by the City’s Information Services Department, has developed a fiber optic system that encompasses over 135 public entities and more than 280 businesses in Mount Vernon, Burlington and the Port of Skagit. The City manages the fiber and contracts with internet service providers to manage the service. This encourages competition in the marketplace. The fiber optic network has successfully been marketed to technology companies as the place where they can have the technology they need in a small city atmosphere where parking is free, office space is less expensive and yet it is in close proximity to both Seattle and Vancouver, B.C. The ability to communicate and quickly transfer large amounts of data has been crucial for attracting and keeping businesses and manufacturers in the area. 8 Tourism Promotion The Tourism Promotion funding is derived from a tax imposed on hotel/motel guests. During the course of a year, applicants who have received funding are required to provide documentation that their activities brought tourists to the area. The scope of activities that are funded include various items such as the Celtic Arts-Highland Games, 4th of July Celebration, performing arts, festivals, and of course the Tulip Festival. First Impressions Projects Support increasing public art projects such as the Mount Vernon Downtown Association Art in the Alleys initiative, hanging flower baskets and fully support full funding of transportation projects, parks maintenance and online presence. 9  Strategic Goal #4 Operations Achieve efficiencies and professional services to meet our community’s expectations through innovative management and governance. The City staff works toward achieving efficiencies and professional services designed to meet our community expectations through innovative management and governance. Focusing on operating strategically, not in a reactionary manner. Each Department is expected to participate as a team in meeting the goals of the City and community. The City’s leadership aims to provide efficient and high-quality service to all customers and citizens by deploying best practices in the management of personnel, finances and physical assets. Any team accomplishes more when the goals and mission are clear and measured. Our community should expect the most qualified employees to serve them. With the increasing competition for good talent, the City has been working to improve employee wellness, competitive wages, streamline and standardize administrative processes, and engage with our public. Professional Development Administration encourages continuing professional development at all levels. The 2020 budget funds employee skill building such as: • Fire fighter on-going skills and emergency management leadership; • Police training; and • Professional organization membership for all Director level roles. Union Groups There are five union groups within the City of Mount Vernon’s 235 full time employees. Police commissioned officers, Police non-commissioned staff, Fire Department battalion chiefs, Firefighters, and Teamsters (employees of public works and parks). The City is committed to good working relationships with our union groups, and engages in regular communication and relationship building. City Shop For the past decade the City has planned to update the city shop complex located on Cameron Way. This facility hosts the Solid Waste Division, Streets Department, Yard Waste Facility, and Equipment Department in addition to storage of the flood wall components, salt and sand storage for inclement weather and miscellaneous public work functions. The City will continue planning for a more consolidated shop to increase efficiencies in operations of this facility. Strategic Planning 2019 – 2021 City Council adopted broad strategic goals for 2019-2021 on October 10, 2018. Annual work plans are developed each year by the Mayor and Department Directors. The public can view these strategic goals online at www.mountvernonwa.gov. 10 Budget Development: At the beginning of the budget process, the departmental requests projected a large operating deficit for 2020. Subsequent revisions to the revenue forecast and cuts to the expenditures budget eliminated this deficit. The preliminary budget still has a short fall and is forced to utilize fund reserve to balance the budget. The City of Mount Vernon strives to maintain a diverse and stable revenue base to mitigate public services from short term fluctuations in any one revenue source. The following graph depicts the composition of the general government’s revenue sources. 2019 Property Tax Distribution Funding our Services: in Mount Vernon $4.50 Property Tax & Other Revenue The City’s two largest sources of tax revenue are property tax $4.00 and sales tax. Property tax increases are limited to a 1% $3.50 annual growth adjustment in Washington State. Mount Vernon’s City Council has not taken the allowable tax levy $3.00 adjustment in 12 of the past 15 years. $2.50 Property Tax $2.00 City of Mount Vernon is one of 8 taxing jurisdictions that assess taxes on our residents’ property tax bills. Each $1.50 jurisdiction makes decisions on tax rates each year with some taxing jurisdictions requiring voter approval to establish $1.00 revenue amounts. The combination of these 8 taxing $0.50 jurisdictions, of which Mount Vernon is one, account for the total property taxes paid by an individual property owner. Total $0.00 aggregate tax is $11.449 per $1,000 of assessed valuation. $2.446 $1.344 $2.224 $3.830 $ .794 $ .325 $ .047 $ .440 State of Skagit City of MV Hospital Port 2 Cons Medic I The City receives $2.224 or 19% of that total. WA County MV Schools District Futures 11 Sales Tax During the past several years, the City has recovered from the down turn that occurred during the previous recession. The City did finally surpass the 2007 collections in 2016 and has realized a steady increase since then. The City is projecting a leveling off of expected sales tax receipts in the 2020 budget. The chart below breaks out sales tax into major categories and shows variances in activity between 2017 and 2018, the most recent years with complete data. The largest percent dollar gain was in the wholesale category while retail sales continue to represent the largest portion of sales tax revenue collected. Sales Tax Revenue Category as a % of % $ Change Total Receipts 2017-2018 2017 2018 Retail 52.8% 53.2% 8.4% Construction 13.2% 12.7% 3.6% Food Services/Accommodations 8.7% 8.4% 4.2% Wholesale 6.3% 6.5% 11.1% Information 3.5% 3.1% -6.2% All Other Categories 15.5% 16.0% 10.6% 100.0% 100.0% 7.4% The Retail Sales category can be divided to assess the major sub-categories. Motor vehicle & parts showed the largest percentage of gain from 2017 to 2018, but all categories except non-store retailers showed an overall increase in tax revenues for the same period. Retail Sales Only Category as a % of % $ Change Total Receipts 2017-2018 2017 2018 Health & Personal Care 3.1% 3.0% 7.2% Electronic & Appliances 4.3% 3.7% -6.6% Gas Stations 2.4% 2.3% 2.3% Clothing 1.1% 1.1% 6.4% Non-Store Retailers 3.7% 2.7% -21.4% Motor Vehicle & Parts 35.1% 37.6% 16.0% Food & Beverage Stores 7.7% 7.5% 5.7% Building Materials 14.0% 13.0% 0.3% Furniture & Home Furnishings 2.5% 2.4% 1.2% General Merchandise 26.1% 26.8% 11.3% 100.0% 100.0% 8.4% Special Revenue Funds The City has thirteen Special Revenue Funds which account for proceeds of revenue sources that are restricted for specific expenditure purposes. These funds are related to General Government operations. Items of note include: • The Hotel/Motel tax fund will make $367,700 in grants available to support and promote tourism within the City. This is a $60,700 increase from the 2019 budget. 12  • The Transportation Benefit District (TBD) Fund has a $2.1 million budget for 2020 to support transportation projects. This is an increase from the 2019 budget of almost $260,000. • The Fiber Optics Fund has a $300,501 budget for 2020 to support the fiber needs of the City and surrounding area. This is an increase of about $69,000 from the 2019 budget. • The Arterial Street Fund has a budget of $2.9 million to fund the various projects like the continual improvements at College Way & I-5, the 30th & College Signal Project, the College/Riverside Signal Upgrade, and improvements to Freeway Drive (Cameron to College). Real Estate Excise Tax Revenue Monthly real estate excise tax (REET) receipts (0.5% of the value of real estate transactions) represent a vital funding source for debt service, various road projects and other capital projects. The following chart illustrates the impact of the previous recession on REET revenues, beginning with a precipitous drop in 2008 with 2011 representing the bottom of the decline. Collections began improving in 2012 and have continued through 2017. Estimates for 2020 are estimated within a conservative range and do not account for any large sales that could potentially happen. Real Estate Excise Tax Revenue 2,000,000 1,794,496 1,800,000 1,600,000 1,373,270 1,400,000 1,400,000 1,153,308 1,200,000 1,000,000 790,094 800,000 416,642 600,000 400,000 200,000 - 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 est. est. Capital Project Funds The total budgeted capital expenditures is $11.67 million for 2020. Major items include: • Equipment Rental and Reserve Fund - $1.8 million to purchase capital equipment included in the City’s equipment replacement schedule. • Arterial Street Fund - $2.9 million to fund major transportation projects throughout the City. • Transportation Benefit District (TBD) - $2.1M also to support major transportation projects. • REET I - $686,770 budget includes debt service payments for the Riverside Bridge and $500,000 for the Local Infrastructure Financing Tool (LIFT) program matching funds for the Library/Community Center/Parking structure project. • REET II – includes $925,000 for City street improvements. • Parks Capital Funds - $238,362 for parks related capital projects. • Utility Capital Funds - $2.78 million for capital projects related to the City’s Wastewater, Solid Waste and Surface Water utilities. Debt Service Funds The City will not have any expense in the Debt Service Funds in 2020 as the debt that was incurred by the UTGO/LTGO bond levy in 1998 was paid off in 2017. 13 The City does pay debt service amounts for the Wastewater Treatment Plant upgrade but these amounts are included in the Utilities operating budgets and are not a separate debt service fund. The Riverside Bridge debt payments are allocated out of the revenue that the City receives from REET I. Proprietary Funds The City has three enterprise funds and two capital sub-funds that are self-supporting and expected to operate like private businesses, and two internal service funds that provide maintenance and repairs for the City’s fleet and City’s facilities. Items of note include: • The Wastewater, Solid Waste and Surface Water Utilities budgets increased by $515,497. This is due mainly to increases in operating costs, the Solid Waste recycling contract of $240,000, the Skagit County Solid Waste Disposal Fee increase of $91,000 and contributions to the Equipment Rental and Reserve Fund for all utilities for the future replacement of capital items per the replacement schedule. • The two Wastewater Utility capital sub-funds have $2.3 million budgeted for 2020 Wastewater projects. • The Equipment Rental and Reserve Fund will purchase (replace) 10 vehicles or pieces of equipment per the equipment replacement schedule. This fund is also used to accumulate funds to purchase servers, computers and work stations. The Utility departments strive to preserve essential services for their customers and maintain regulatory compliance, while minimizing the cost of services. 2020 Proprietary Fund Expense $21,550,646 Debt $2,156,475 Capital $2,944,100 Interfund Charges for Solid Waste Services $1,444,970 $3,606,443 Salaries $3,781,432 Surface Water Wastewater $477,047 Operations & $1,859,415 Supplies $9,062,196 14  2020 Revenue Summary: Revenue by Type 2019 to 2019 to Revenue 2018 2019 2020 2020 2020 Source Budget Budget Budget Change % Change Property Tax 7,602,182 7,810,741 8,021,524 210,783 2.7% Sales Tax 7,070,000 7,600,000 7,650,000 50,000 0.7% Utility Tax 4,292,250 4,364,857 4,218,537 (146,320) -3.4% Transportation Benefit District 1,400,000 1,600,000 1,600,000 0 0.0% Real Estate Excise Tax 1,200,000 1,600,000 1,400,000 (200,000) -12.5% EMS - 1,446,000 1,489,380 43,380 N/A Public Safety Sales Tax 1,360,000 1,394,000 1,394,000 0 0.0% Criminal Justice 740,000 777,000 800,000 23,000 3.0% LIFT 0 0 500,000 500,000 NA Hotel/Motel 274,000 295,000 295,000 0 0.0% Total Taxes 23,938,432 26,887,598 27,368,441 480,843 1.8% Licenses & Permits 1,445,000 1,546,200 1,506,250 (39,950) -2.6% Charges for Services 20,233,500 22,423,647 22,844,050 420,403 1.9% Intergov't (State & Local Sources) 4,508,892 11,487,458 5,954,849 (5,532,609) -48.2% Fines & Forfeits 310,800 281,800 286,300 4,500 1.6% Miscellaneous Revenue 4,404,706 6,356,581 6,171,425 (185,156) -2.9% Interfund Transfers 2,888,700 3,731,865 3,864,362 132,497 3.6% -6.5% Budgeted Totals 57,730,030 72,715,149 67,995,677 (4,719,472) Budgeted Fund Balance 1,503,610 2,506,156 1,481,195 (1,024,961) -40.9% Total 59,233,640 75,221,305 69,476,872 -5,744,433 -7.6% Charges for Services include: • Sewer, Garbage & Storm Water Utilities • Ambulance Transports • Zoning/Subdivision & Engineering Fees • Overhead and Interfund Charges 15  Fund Balance Reconciliation - Summary of All Funds Estim ates Budget Fund Bal. Fund Fund Balance 2019 2019 Est Fund Bal 2020 2020 Est. Balance Budgeted Dept No. City Fund Dec 31, 2018 Revenue Expenditures Dec 31, 2019 Revenue Expenditures Dec 31, 2020 in 2020 001 General Fund 4,911,234 28,035,048 27,511,685 5,434,597 28,988,113 29,922,307 4,500,403 934,194 101 City Street 193,006 2,278,689 2,070,643 401,052 2,634,060 2,633,734 401,378 (326) 103 Parks/Recreation 175,965 2,133,213 2,082,675 226,503 2,214,061 2,218,495 222,069 4,434 104 Library 200,170 1,387,177 1,381,489 205,858 1,388,796 1,443,761 150,893 54,965 Total Gov't Op. Funds 5,480,375 33,834,127 33,046,492 6,268,010 35,225,030 36,218,297 5,274,743 993,267 102 Arterial Street 758,638 9,223,566 9,943,410 38,794 2,931,525 2,896,525 73,794 (35,000) 105 Paths and Trails 94,023 4,381 78,500 19,904 4,287 - 24,191 (4,287) 106 Tourism Promotion 171,456 296,000 307,000 160,456 296,500 367,700 89,256 71,200 107 Little Mountain Cap Res 120,368 443,000 562,850 518 46,000 46,500 18 500 109 Crime Prevention 47,646 12,400 5,900 54,146 12,400 12,400 54,146 - 110 Government Access TV 282,538 68,000 53,224 297,314 73,000 110,719 259,595 37,719 112 Criminal Justice Assistance 2,651 147,055 147,000 2,706 151,208 150,000 3,914 (1,208) 113 Municipal Arts Fund - 20,800 17,800 3,000 10,000 13,000 - 3,000 115 Parks Capital Reserve 32,995 188,000 218,000 2,995 420,235 178,862 244,368 (241,373) 117 TBD Fund 329,954 1,802,645 1,966,228 166,371 1,952,645 2,115,000 4,016 162,355 118 Fiber Optics Fund 194,837 309,904 253,016 251,725 364,550 300,501 315,774 (64,049) 119 Critical Area Enhancement 113,160 5,656 25,000 93,816 5,650 30,000 69,466 24,350 120 Lincoln Commercial Block 190,799 68,000 135,149 123,650 68,000 35,632 156,018 (32,368) 301 Library/CC/Parking 178,826 796,746 76,052 899,520 1,000,750 500,000 1,400,270 (500,750) 304 REET I - Capital Improvement 781,008 712,021 1,060,005 433,024 710,800 786,770 357,054 75,970 306 Fire Station Projects 131,000 - 12,456 118,544 - 118,544 - 118,544 311 Park Impact Fees 455,230 106,272 535,150 26,352 91,200 - 117,552 (91,200) 312 Fire Impact Fees 182,038 70,585 50,000 202,623 70,500 50,000 223,123 (20,500) 313 Traffic Impact Fees 628,061 171,863 679,001 120,923 161,500 - 282,423 (161,500) 314 REET II - Streets 284,775 704,000 758,751 230,024 704,000 925,000 9,024 221,000 328 PW Facility Fund 15,044 100,000 - 115,044 100,000 - 215,044 (100,000) 401 Wastewater Utility (WC) 4,875,703 8,909,427 8,588,037 5,197,093 8,886,516 9,532,456 4,551,153 645,940 402 Solid Waste Utility (WC) 2,026,354 6,129,450 6,349,162 1,806,642 6,296,450 7,114,257 988,835 817,807 403 Surface Water Utility (WC) 965,310 2,532,742 3,088,260 409,792 2,584,200 2,601,933 392,059 17,733 411 Sewer Facility Expansion 2,265,496 580,443 315,000 2,530,939 575,500 764,500 2,341,939 189,000 412 Sewer Capital Reserve 2,895,874 1,006,814 1,150,000 2,752,688 1,006,000 1,537,500 2,221,188 531,500 501 Equipment Rental (WC) 5,991,910 3,397,799 2,762,256 6,627,453 4,078,187 2,819,776 7,885,864 (1,258,411) 502 Facility Renewal Fund - 372,815 372,815 - 100,000 100,000 - - 512 LEOFF I Health Care Res 424,928 12,800 40,000 397,728 13,000 40,000 370,728 27,000 611 FR&P 378,635 54,519 111,000 322,154 56,044 111,000 267,198 54,956 Totals 30,299,634 72,081,830 72,707,514 29,673,950 67,995,677 69,476,872 28,192,755 1,481,195 16 Conclusion Our City is grateful for residents’ support and excellent partnerships that help us achieve quality of life for our region. Specific thank you to Skagit County Public Health for their role in addressing homelessness; WSDOT and Skagit PUD #1 for partnership in improvements in the College Way (SR538) corridor; Skagit County for their partnership in the Mount Vernon Library Commons Project. You are encouraged to participate in the budget discussions to include attending the City Council discussion: • Wednesday, November 13, 2019 – Council committee at 6:00 pm with formal public budget presentation at the 7:00 pm Council Meeting As Mayor, I sincerely appreciate all of our City staff that have fulfilled our mission this past year. We believe that our example of good government will influence others to join us in an attitude of integrity and vitality. I would like to extend special gratitude to Mr. Doug Volesky, Finance Director, for his critical and professional guidance in the preparation of this budget and accomplishments in the finance department during this past year with the City. We hope you will choose to partner with us, as we continue to create a lifetime positive difference for our community. Please participate in our weekly Mayor’s Coffee Hours, sign up for electronic newsletters and email or call with questions, concerns or ideas. Sincerely, Jill Boudreau, Mayor mvmayor@mountvernonwa.gov 360-336-6211 17