FEDRAC MINS 08-28-2012CITY OF
Federal Way
City Council
FINANCE/ECONOMIC DEVELOPMENT/REGIONAL AFFAIRS COMMITTEE
[FEDRACI
Tuesday, August 28 Federal Way City Hall
5:30 p.m. 2012 Hylebos Room
Meeting Summary
(Preliminary until approved- presented 9/25)
1. CALL TO ORDER
2. PUBLIC COMMENT
3. COMMITTEE BUSINESS
4. OTHER:
5. FUTURE AGENDA ITEMS:
6. NEXT MEETING: Tuesday, September 25, 2012
Committee Members:
Din! Duclos, Chair
Roger Freeman
Bob Celski
City Staff:
Tho Kraus, Finance Director 253 835 -2520
Steve Cain, Executive Assistant 253 835-2402
Action
Topic Title/Description
Presenter
Page*
or Discussion
A.
APPROVAL OF MINUTES: JULY 24,2012
S. CAIN
2
Action
Committee approval
B.
— - ---------- - ---- ------------
TACOMA PUBLIC UTILITIES (TPU) WATER FRANCHISE AGREEMENT
C. ROE
10
Ordinance
09/04 Council
1st Reading
C.
USE EXCESS REPLACEMENT RESERVE TO REPLACE 1992 SHUTTLE BUS
C. ROE
36
Action
09/04 Council Consent
D.
- ------ - ----------- -- - - - - -- -------- --- ------- I ---- ----
CONTRACT FOR STATE LOBBYIST /PUBLIC AFFAIRS
- --- - --------
C. CARREL
- -- ------ --
40
--
Action
09/04 Council Consent
E.
- --------- ----- ---------- ----- -- - ------- ------------
2013/14 BIENNIAL BUDGET UPDATE
- -- - -------
S. PRIEST
58
INFORMATION
Discussion only
------- -
F.
------ ---- - - - -----------
JULY 2012 MONTHLY FINANCIAL REPORT
T. KRAUS
59
Action
09/04 Council Consent
G.
------- - ------ - ------------------------------------ - - - - -- ------------- - - - - -- ---------------
VOUCHERS FOR JULY 2012
- ---
T. KRAUS
76
Action
-- - -------------------- - -------------- --- ----- - ------------ ------
09/04 Council Consent
*Additional materials may also be distributed for review/action during the meeting
4. OTHER:
5. FUTURE AGENDA ITEMS:
6. NEXT MEETING: Tuesday, September 25, 2012
Committee Members:
Din! Duclos, Chair
Roger Freeman
Bob Celski
City Staff:
Tho Kraus, Finance Director 253 835 -2520
Steve Cain, Executive Assistant 253 835-2402
FEDRAC August 28, 2012
1. CALL TO ORDER
CITY OF
Federal Way
By: Councilmember Duclos - Chair
Time: 5:31
Committee Members in attendance:
Dini Duclos _ _x_ Roger Freeman _x_ Bob Celski _x_
Other Council Members and /or elected officials in attendance:
Skip Priest (Mayor), Jeanne Burbidge, Linda Kochmar, Susan Honda
Staff in attendance (x):
x Tho Kraus
x Steve Cain
x Pat Richardson
Brian Wilson
x Thomas Fichtner
Jay Bennett
Patrick Doherty
x Cary Roe
• John Hutton
• David Schmidt
Jean Stanley
x Chris Carrel
Page 2 of 11
Finance Director
253 835 -2520
Executive Assistant
253 835 -2402
City Attorney
253 835 -2570
Chief of Police
253 835 -6711
IT Manager
253 835 -2547
Community Services Manager
253 835 -2650
Community & Economic Development Director
253 835 -2612
Director -PW, Parks, Recreation and Culture
253 835 -2710
Recreation Supervisor
253 835 -6928
Recreation Coordinator, SR Services
253 835 -6925
Human Resources Manager
253 835 -2532
Communications and Grant Coordinator
253 835 -2411
2. PUBLIC COMMENT 0:10to1:08
• Norma Blanchard
Ms Blanchard again voices her concern over the 90 day limit for gathering initiative signatures. She wants the
restriction removed so people can have more time to have their say. She asks the committee to take it under
consideration. Warns of problems if not changed.
• Derek Purton
Offered a short comment and the Mayor responded.
3. COMMITTEE BUSINESS
Order of business: At the request of the chair, agenda items were considered in the following order -
A,E,D,B,C,F and G
Action
Topic Title /Description Presenter Page* or Discussion
A. APPROVAL OF MINUTES /SUMMARY: JULY 24, 2012 S. CAIN 2 Action
2:05 Committee approval
Discussion /Changes: Steve Cain, Executive Assistant 253 835 -2402
Motion: Councilmember Celski moved acceptance of the minutes as presented, second and passed.
CITY OF
FEDRAC August 28 2012 Federal Way Page 3 of it
E. 2013/14 Biennial Budget update S. Priest 58 Information
2:25 Discussion only
Discussion /Changes: Skip Priest Mayor 253 835 -2410
g: \FEDRAC \1 - Road Show Presentation - DRAFT.pdf shows the entire draft budget presentation. FEDRAC received pages
1,2,12,17- 29,36 -41,44 (which are available to FEDRAC Committee).
Tho Kraus, Finance Director, prepared a draft budget packet for the FEDRAC committee. The packet contained 5 items:
1. Budget Road Show Presentation
2. FEDRAC Presentation
3. Long Range Financial Plan
4. Program Changes
5. Budget Calendar
The Mayor presented the slides in #2. FEDRAC Presentation (Original in color, B &W copy included with this summary).
The following items were elaborated on and /or discussed by committee during the presentation:
❖ Page 18 - Verified that the sales tax revenues 1% increase is over 2012.
❖ Page 20 - Chair questions $6.7M (two month) ending fund balance and a short discussion by the Mayor follows,
with caveat that there is more information later in the presentation
❖ Page 22 - Enumerates six steps to closing budget gap. The last being a realistic use of money for replacement of
items.
❖ Pages 26, 27 - Continues the discussion of Ending Fund Balance that answers the Chair's questions.
❖ Page 28 - Budget Challenges — considerable discussion of first two issues
❑ SCORE
• Required to use in 2013 but not after 2014, though probably not good idea not to continue
• Costs are above original estimates and our use has grown, while other partners' use diminished; i.e.
Renton and Auburn have reduced both use and costs.
o To makeup for the shortfalls, SCORE has embarked on a marketing program to other groups, e.g.
ICE, tribes, Washington State. That effort needs to continue.
❑ Public Defender is new challenge because of Supreme Court ruling on public defender guidelines.
• Met with State Office Of Public Defenders, re: confusion surrounding the order.
• Presented Chief Justice Madsen with our standards and request a meeting with her.
• Need to understand the order and what it entails for budget purposes, could incur heavy costs.
• We have interviewed liability insurance providers to the end of reducing costs
• Unfunded mandates and unintended consequences offer variables and unknown future costs.
o Civic Center is an ongoing project; we have a proposal but no money yet. Cost of our investment is
about $66K in annual debt service for every $1M
❖ Page 29 - Various funds
• Provide clarification on Strategic Reserve Funds - for natural disasters ??
• Snow and Ice Removal reserves— should have a $229K reimbursement.
• Pension reserve — ROI provide buffer for one year, currently spend $1.6M /year.
❖ Page 36 — For greater safety, we have installed addition lights and signs. Cary comments that additional school
zone camera signs put up in the last 3 weeks. Conversation with Mayor, Cary and Chair regarding cameras and
timing of the lights. Mayor emphasizes the need for safety, especially because of the proximity of apartments.
❖ Page 37 — Mayor comments that staff desire for all the latest gym equipment is a budget challenge.
❖ Page 38 — Several comments about the loss of the veterans business, the result of a federal rule. Comments
from Cary, Chair and Councilmember Burbidge. Discussed contact with Congressman Smith and Senator
Murray, including lobbyist addressing issue.
CITY OF
FEDRAC August 28, 2012 Federal Way Page 4 of 11
❖ Page 39 CDBG now use FW in house staff. We will probably see federal cuts. Human Services made a
presentation to council and Community Services Manager, Jay Bennett, sent information to council to highlight
any changes.
❖ Page 41- City has reached out to service clubs but there is not as great an interest as previous years, possibly
because there are not the layoffs, as announced with the last budget. Also, we have announced Town Hall
meeting to discuss the budget and process.
Mayor references additional sheets in the packet, in draft form, with more precise numbers for the committee to
consider. For example: In program changes, employed one time funds for future use. The mention of future funds for
such items as wire theft, ignited a conversation, with the Chair and Cary Roe weighing in. Cary mentioned eight locations
and the costs. Even though laws were made governing scraping and /or purchasing of various metals the emphasis has
shifted back and forth, i.e., wire >gold >wire. We will spend more time examining business record keeping to hamper the
thefts.
Tho and Mayor will be please to entertain any questions from the committee.
Chair notes that the Mayor is correct, it is good to keep the staff informed. This year, the budget comments and
schedule are less because there is lots of information out in public and no surprises in this budget. We may schedule
additional Town halls for public interest, info, comments, perhaps a Saturday.
Council Member Freeman - Question on liquor dollars. Mayor explains that we keep revenue on profits ($460K ±) but
not excise tax (for at least 2 years).
Information only— no committee action required.
D. CONTRACT FOR STATE LOBBYIST/PUBLIC AFFAIRS C. CARREL 40 Action
1:06:20 09/04 Council Consent
Discussion /Changes: Chris Carrel Communications and Grant Coordinator 253 835 -2411
This item followed the Mayor's discussion of the Budget, though also out of agenda order.
This lobbying contract is the result of a June RFP, issued in anticipation of the expiration of the current contract. MJ Durkan was sole
respondent. The contract hybridized to provide for expansion of lobbying from just State to Federal and other city issues.
• Chair asks for further discussion of scope of contract. Explains additional expectations, for example, Durkan helped get FW
$24M and buses from Sound Transit
• Councilmember Kochmar comments on Dumas Bay issue with VA and Durkan spoke with Senator Murray. Durkin will
work with issues, bills or grants and other key areas.
• Councilmember Honda — why only one response? Sufficient outreach? Did have other responses but late or
thought that Levy was a shooin.
• Mayor comments on our track record with Durkan. ST activities taken on by Jamie. Good relationship with tribes
(Positive for SCORE and tribe use) and with Senator Murray — vets and tribes. He is well qualified and connected
and can fill the need to represent FW. Doug was more general in representing several cities. However, the city
changes approach and taken the lead on a number of issues.
• Councilmember Freeman —why now? Why not in November when we know more about issues and who will be
there? More than just Olympia, include the Federal. Mayor close to minority but not close to Speaker but Jamie
is close to the Democrat leadership. Next month will be a learning process for them if the Council approves the
contract:
CITY OF
FEDRAC Au g ust 28 2012 `` Federal Way
Page 5 of 11
Meeting with Durkan next week to see city. Economic development, he knows developers (Bellevue).
Durkan will consider the FW location, not just the view of Kemper- Freeman. There is also the Mayor's
transportation group —not just chats but something substantive, with a transportation plan and funding.
• Chair comments on Transportation issue and 9/5 meeting; Durkan will be involved in that.
Motion: Councilmember Celski moves to approve and forward the proposed Agreement to the 9/4 consent
agenda for approval, second and passed.
B. TACOMA PUBLIC UTILITIES (TPU) WATER FRANCHISE AGREEMENT C. ROE 10 Ordinance
1:31:00 09/04 Council
1st Reading
Discussion /Changes: Cary Roe Director -PW, Parks, Recreation and Culture 253 835 -2710
Cary discusses the memo and the ordinance:
Background on the franchise and the negotiation of the new.
Worked out language for abandoned pipes, communications (i.e., activity before overlays), relocations fees for
work in right of ways.
Councilmember Freeman questions the responsibility to damage to city property? Cary, explained that, e.g., TPU would
be responsible for a broken line and associated damage. It is pretty much a standard agreement.
Motion: Councilmember Celski moves forwarding Option 1. to the 9/4 Council Agenda for first reading, second
and passed.
C. USE EXCESS REPLACEMENT RESERVE TO REPLACE 1992 SHUTTLE BUS C. ROE 36 Action
1:37:35 09/04 Council Consent
Discussion /Changes: Cary Roe Director -PW, Parks, Recreation and Culture 253 835 -2710
Cary provided background on the buses, use, programs, requirements and reason for request.
Cited the breakdown of the bus at Hurricane Ridge last week (required a $3,500 transmission). Decided to make
the transmission repair because the wait for a new bus is 60 —120 days, for use for planned use and a running
vehicle is of greater value than a dead one.
Committee conversation ensues: Councilmembers Burbidge, Honda, Celski, Chair, Hutton;
How many shuttle buses do we have (only one), handicapped accessible? (yes and the new one will be slightly larger).
Backup bus available? Hired replacement, completed the trip and towed the bus home.
Motion: Councilmember Freeman moved to forward Option 1. to the 9/4 consent agenda for approval,
second and passed.
CITY OF
FEDRAC ,
August 28 2012 Federal Way
g
-_ ----- -_ ---------- - - - - - -
F. JULY 2012 MONTHLY FINANCIAL REPORT T. KRAUS
1:46:30
- -- - - - - -- --- - - - - -. _..._. - ----- ...- -_- -- - - - - -- _ - - - -- __ --- ------ --- - - - - --
Discussion /Changes: Tho Kraus, Finance Director 253 835 -2520
IDLY 2012 MONTHLY FINANCIAL REPORT— HIGHLIGHTS
General & Street Fund Summary— page 60
• Revenues are above budget by $550K or 2.5% with major variances in:
Page 6 of 11
59 Action
09/04 Council Consent
Above Budget:
$164K property tax; $39K criminal justice sales tax; $193K Intergovernmental; $257K building permits & fees;
$12K right -of -way permits & development fees;
Below Budget:
$121K sales tax; $40K court revenue; $19K general recreation
• Expenditures are below budget $1.61M or 6.4% (timing of payments, 1 -time not spent, some true savings)
Property Tax
■ Above YTD budget by $164K or 3.2%
■ Above YTD 2011 by $234K or 4.6%
Sales Tax — pages 62 & 63
YTD 2012 revenue of $5.14M
• Below YTD budget by $121K or 2%
• Below YTD 2011 by $177K or 2.9%
• Projected 2012 annual sales tax is $10.6M ($272K or 2.5% below 2011 actual)
YTD 2012 Compared to YTD 2011 by Category:
• Retail up $19K or 0.6%
■ Up $83K — building material /garden, furniture /home furnishings, health /personal care store,
motor vehicle /parks dealer, and nonstore retailers.
■ Down $63K — clothing/accessories, electronics /appliances, food /beverage stores, general
merchandise stores, miscellaneous store retailers, and sporting goods /hobby /books.
• Services down $32K or 2.3%
■ Up $63K —food services /drinking places, and personal /laundry services.
■ Down $95K — professional /scientific /tech, administrative /support services, hospitals,
nursing /residential care, amusement /gambling /recreation
• Construction down $84K or 14.7%
• Up $18K — specialty trade contractors
• Down $102K — heavy & civil construction and construction of building
• Information down $5K or 1.7%
• Up $9K — Publishing and broadcasting
• Down $12K— telecommunications and internet programs
• Government down $108K or 63.0% ($86K is due to no amnesty payments)
• Manufacturing up $14K or 15.7% (wood product manufacturing)
■ Sales Tax Comparison by Area - YTD 2012 Compared to YTD 2011 by Area:
o S 348`h Retail Block up $6K (building materials & garden up, electronic & wholesale down)
CITY OF
FEDRAC August 28 2012 A�AL Federal Way Page 7 of 11
• The Commons down $35K (clothing & accessories, book store closure, general merchandise stores down)
• S 312" to S 316th down $13K (discount retailer down)
• Pavilion Center down $15K (electronics & appliance down, video rental closed, book store increase)
Preliminary August Sales Tax (for June Activity)
o August 2012 sales tax of $917K is $48K or 5% below August 2011($38K or 4% below budget)
• Total decrease of $74K or 40% primarily in construction and government
• Construction (down $39K or 55 %)
• Government (down $32K or 73% due to receiving $30K as result of state audit)
• Offset by total increase of $26K primarily in retail, services and information and manufacturing
• Home furnishings increased $6K or 60%
■ Services up $4K or 2%
• No change in accommodation
• Food Services & Drinking places up $8K or 7% (too soon to tell on new restaurant)
o YTD Aug 2012 sales tax of $6.92M is $226K or 3.2% below YTD Aug 2011($159K or 2.2% below budget)
• Retail sales up $36K or 1%
• Manufacturing up $16K or 17%
• Wholesaling up $7K or 2%
• Finance, Insurance, Real Estate up $5K or 3%
• Other up $4K or 29%
• Services down $31K (received $60K from hospital audit in 2010, state reversed in 2012)
• Construction down $124K or 18%
• Government down $140K or 65% (Received amnesty $86K and audit $30K in 2011)
Utility Tax — Paees 64 & 65
• YTD 2012 revenues total $8.23 M
• Below YTD 2011 by $5K or 0.1%
• Above YTD budget by $357K or 4.5%
- HOWEVER — timing difference of $196K resulting in greater revenues in 2012; adjusted variance below:
o YTD 2012 revenues total $8.0 M
■ Below YTD 2011 by $201K or 2.4%
■ Above YTD budget by $160K or 2.0%
Adjusted YTD 2012 compared to YTD 2011 as shown on monthly financial report:
• Electricity down $73K or 2.4%
• Gas down $103K or 7.0%
• Solid Waste up $19K or 4.1%
• Cable up $2K or 0.3%
• Phone down $11K or 1.8%
• Cellular down $51K or 3.3%
• Storm Drainage up $16K or 11.2%
Projected 2012 revenues to come in $648K or 5.0% below 2011, with projected changes from 2011 as follows:
• Electricity down $183K or 3.7%
• Gas down $95K or 4.9%
• Solid Waste up $29K or 3.7%
• Cable down $7K or 0.5%
• Phone down $229K or 21.5%
• Cellular down $170K or 6.3%
CITY OF
FEDRAC ,
August 28 2012 ` Federal Way
g
o Storm Drainage up $8K or 3.0%
Lodging Tax — Page 65
❖ Chair questions Dive Trials revenue —it will show up in next month's numbers.
• YTD revenues (thru May tax reporting period) on target with 2011
• July 2012 is below July 2011 by $5.3K or 26%
o $3500 is due to State over remitting by $3.5K
• Adjusted July 2012 vs July 2011= down 13K or 10.6%
• Adjusted YTD July 2012 vs YTD July 2011= Up $3.5K or 3.8%
• Preliminary August (thru June tax reporting period)
• August 2012 is above August 2011 by $1.3K or 7.6%
• YTD August 2012 vs YTD August July 2011 = Up $5K or 4.4%
Page 8 of 11
REET — Page 65
■ YTD 2012 revenues of $683K is:
• Below YTD 2011 by $435K or 38.9%
• Below YTD Budget by $294K or 30.1%
■ 2012 annual budget estimate of $1.4M is consistent with 2009, 2010 & 2011 revenues $1.4M to $1.5M.
o Absent any significant transactions remainder of year, revenues could fall short of estimates
YTD Significant Transactions:
YTD 2012:
Centerpoint Management Inc (sold for $2.9M / $14K tax)
Lowe's Home Improvement (sold for $5M / $25K tax)
The View at Redondo Apartments (sold for $5.1M / $25K tax)
Office Building So 333`d (sold for $1.4M / $7K tax)
Garden Depot (sold for $1.5M / $7K tax)
Weyerhaeuser IT Center (sold for $17M / $84K tax)
Vacant Retail store (sold for $2M / $10K tax)
YTD 2011:
Palisades Apartment (sold for $67.5M / $334K tax)
Woodmark Retirement (sold for $9.2M / $45K tax)
Vacant Business Building (sold for $4.4M / $22K tax)
Vacant Lot (sold for $2.OM / $10K tax)
The Lodge Apartments (sold for $52M / $256K tax)
Animal Services — 68 Comments cost of licenses
❖ Chair comments regarding our cost and King County cost. Followed by a short conversation on notices.
■ 2012 Budget is comprised of $153K revenue and $332K expenditure for a net cost of $179K
o Budgeted net cost is lower than the $400K - $500K estimated cost had City stayed w /King Co.
■ YTD 2012 license revenues total $38K or 25% of annual license revenue estimate
• Below YTD 2011 by $24K or 39.0%
• Below YTD budget by $62K or 61.9%
■ YTD 2012 expenditures total $136K
• Above YTD 2011 by $3K or 2.2%
• Below YTD budget by $33K or 19.4%
YTD 2012 net cost is $92K
• Above YTD 2011 by $25K or 37.6%
• Above YTD budget by $23K or 33.6%
Red Light Photo — Pape 69
■ YTD 2012 net revenues total $1.4M
o Above YTD 2011 by $746K or 116.5 %, increase is due to improving safety in the school zones
CITY OF
FEDRAC August 28 2012 A�4L Federal Way Page 9 of 11
Court Revenue — Page 70
■ Annual revenue estimate $1.5M
YTD 2012 net revenues total $864K
• Below YTD 2011 by $34K or 3.8%
• Below YTD budget by $40K or 4.4%
YTD 2012 vs YTD 2011 highlights:
o Traffic & non - parking down $50K or 9.3%
❖ Committee discussion of issuance of tickets and why it is down, officers are out for various reasons.
• Criminal costs down $16K or 20.2%
• Criminal Conviction Fees up $10K or 32.8%
• DUI & Misdemeanors up $23K or 59.6%
Federal Way Community Center— Page 72
■ YTD 2012 Revenues total $1.07K
• Above YTD budget by $105K or 10.9%
• Above YTD 2011 by $67K or 6.6%
• Shift from daily drop in to membership passes
• Net increase of $79K compared to YTD budget
• Net increase of $41K compared to YTD 2011
• Fitness classes /fitness training
(Silver Sneakers enrollment, specialty fitness training classes, personal training programs)
• Increase of $15K compared to YTD budget
• Increase of $2K compared to YTD 2011
Youth Athletic Programs (Passholder P.E., Kidz Love Soccer, Basketball Life)
• Increase of $8K compared to YTD budget
• Increase of $2K compared to YTD 2011
Aquatic Programs (Lessons)
• Increase of $13K compared to YTD budget
• Increase of $2K compared to YTD 2011
Rentals (Return of long -term meeting group and church rental clients, special event bookings)
• Decrease of $3K compared to YTD budget
• Increase of $16K compared to YTD 2011
YTD 2012 Expenditures total $1.2M
• Above YTD budget by $28K or 2.4%
• Above YTD 2011 by $35K or 3.0%
o Increased instructor and program costs for various programs offset by increased revenue,
Utility Tax Contribution
• Reserves= Annual Budget $87K / YTD Actual $OK (Transfer from Utility Tax by year -end)
• Operations= Annual Budget $619K/YTD Actual $186K or 30% of budget
Ending Fund Balance (Reserved for capital maintenance & replacement)
o End of Year Budget $992K/YTD Actual $932K
CITY OF
FEDRAC August 28 2012 Federal Way Page 10 of 11
Dumas Bay Centre — Page73
■ YTD 2012 Revenues of $368K
• Above YTD Budget by $28K or 8.4%
• Above YTD 2011 by $43K or 13.3%
• Increase in number of larger retreats and use of in -house food service
■ YTD 2012 Expenditures of $360K
• Below YTD Budget by $36K or 9.1%
• Below YTD 2011 by $14K or 3.7%
■ YTD Operating Income is $8K
• YTD budget anticipated $56K operating loss
• YTD 2011 actual was $49K operating loss
■ Ending Fund Balance
• End of year Budget $OK / YTD Actual $227K
• Roof repair and capital maintenance not all spent, any balances will roll over to 2013
Comments by committee: Not bad that traffic citations are down. Goal of the cameras, to make streets safer.
Motion: Councilmember Celski moves to forward approval of July 2012 Financial report to 9/4 consent agenda
for approval, second and passed.
G. VOUCHERS FOR JULY 2012 T. KRAUS 76 Action
1:56:25 09/04 Council Consent
Discussion /Changes: Tho Kraus, Finance Director 253 835 -2520
Chair calls for questions:
Page 87 — payment to Seattle Sports Commission for Dive event
Page 78 — check #230789 to Christian Faith Center — refund for upfront payment
Page 80 — Ernie's fuel — discussion of fuel costs; $.12 /gal discount if paid in two week. Questions regarding lowest
price and posted price, staff will look into it. City exempt from federal tax and it is not included in price. We are also
looking at fueling options with the Federal Way Public Schools.
Motion: Councilmember Celski moves approval and forward to 9/4 Council Meeting for approval.
CITY OF
FEDRAC ,
August 28 2012 Federal Way
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Page 11 of 11
4. OTHER: Councilmember Burbidge reports that the state audit reported no findings for the 18th year in a row!
Started a short discussing about findings and no findings is GOOD. City worked all year to have paperwork in order,
in compliance with state requirements. Not just finance, all departments worked at it. [Round of applause]
Short discussion of auditors and process, planning and hours.
5. FUTURE AGENDA ITEMS:
6. NEXT MEETING: Tuesday, September 25, 2012
Meeting adjourned 7:36 p.m.
COMMITTEE APPROVAL:
Attest: tf fut� &4
Steve Cain, Executive Assistant
Dint Duclos T.-e-r-Fr-eeman Bob Celski
Committee Chair Committee Member Committee Member
City of Federal Way
2013 -14 Draft Budget
August 28, 2012
Pathway to Sustainability
Mayor Skip Priest
206.510.7810
skip.priest @cityoffederalway.com
Mudget Updats
o Focus on General & Street Fund (main operating funds)
Highlight other operating funds
• Dumas Bay Centre
• Federal Way Community Center
• Community Development Block Grant
Highlight capital funds
z
Revenue Trends
2012 Estimate compared to 2011
o Sales Tax — $273K or 2.5% decrease from 2011
■ Currently down $178K or 2.9%
® Building Permits & Fees — $36K or 3.4% increase from 2011
■ Currently up $330K or 54%
Liquor Excise Tax- Temporary suspension $450K in 2012/2013, permanent?
* Gambling Tax — no major establishment, minimal revenue source
® Utility Tax — $648K or 5% decrease from 2011
■ Currently down $202K or 2.5%
❑ Electricity projected to be down $183K or 3.7% - currently down $73K or 2.4%
• Gas projected to be down $95K or 4.9% - currently down $103K or 7.0%
• Phone projected to be down $229K or 21.5% - currently down $11K or 1.8%
• Cellular projected to be down $170K or 6.3% -currently down $51K or 3.3%
12
Needed Steps for Sustainability
o Maintain high - quality service levels
Control costs
® Fund ongoing expenditures with ongoing revenues
® Protect taxpayers and continue providing accountability
Maintain reserve accounts
17
2013/2014 Revenue Assumptions
o Sales tax revenues - 1% increase projected
Property tax - I% increase as authorized by legislation
Continue redirection of $60OK/year of utility tax funding from
overlay to General Fund — anticipate $ LOM PSRC Grant
Liquor Revenue
■ Liquor Profits - equivalent funding prior to privatization
• Liquor Excise Tax — $0
• Additional Liquor Revenue - $0
Minor increases in permit and development fees
18
2013/2014 Expenditure Assumptions
® Maintain current staffing levels
13 No cost of living adjustments
® Allow for performance -based step increases
® No salary or wage reductions
No furloughs
0 10% medical cost increase
SCORE cost increase
Pension increases according to State estimates
® Workers compensation 19% rate surcharge
® Labor negotiations in progress 19
Budget Philosophy /Direction
o Balanced budget that addresses past structural deficits
Prioritize core services given available funding
Conservative revenue projections
Choose efficiencies over new taxes /fees
Distinguish ongoing funding from one -time revenue
Obtain & incorporate public feedback into the budget
recommendation
Pathway to Sustainability
2013/2014 Budget
20
21
General Fund
2013/14 Operating Gap Comparison
� m iaiahoag)
543.0
$42.0
$41.0
540.0
$39.0
C+°Q
$35.0
537.0
536.0
$35.0
2013 Original
2014 Original 2013 Revised 2014 Revised 2013 Proposed 2014 Proposed
—t— Revenue (Expenditure
20
21
0
Closing the 2013/14 Budget Gap
13 Frugal innovation, total $2.5M (roughly $1.3M ongoing/year)
Continue redirecting $600K/year of overlay funding
Move $177K/year of ongoing expenditures to 1 -time funded
Continue $800K/year 1 -time funding of 8 FTEs
® Reduce /eliminate $188K of various ongoing line items
Temporarily suspend $88K/year of reserves collections
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General & Street Fund Revenues & Sources
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General & Street Fund Expenditures & Uses
Year 2013 Total Expenditures & Uses $43.3M
Pubic Works
(sheets), 10%
Parka &
Rec>ee6on, 9%
Admimishation &
Support Services,
community &
Economic
Development, 7%
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General & Street Fund Expenditures & Uses
Year 2013 Total Expenditures & Uses by Category
supplies, 2a /o
services &
Chwgm, 90%
InterBovemmeutal,
15%
It W&md Cbatges,
12%
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Preliminary General Fund Ending Fund Balance
2013 = $6.3M or 17% of operating expenditures
2014 = $2.7M or 7% of operating expenditures
Projected to deplete ending fund balance at end of 2015
Negative $3M ending fund balance at end of 2016
® Importance of ending fund balance
■ Mitigate current & future risks (revenue shortage, unanticipated expenditures)
• Ensure stable tax rates
• Long -term financial planning
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General Fund Unrestricted Fund Balance
o What is the appropriate ending fund balance level?
■ National government finance organization recommends a minimum
of 2 months operating expenditures (17% or $6.4M)
■ And even higher depending on City's particular situation
c3 Goal Ending Fund Balance $6.4M
• Meet target at the end of 2013
• $3.7M short of target at end of 2014
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MMMIMM =4W
SCORE Jail
o Public Defender
Healthcare Costs, Healthcare Reform
General Liability Insurance Costs
State /Federal budget cuts
o Unfunded mandates or unintended consequences, e.g.
■ Liquor initiative impact on public safety
Civic Center ?.....
Policy on Contingent /Reserve Accounts
a 3% General Fund Contingency Reserves - $1.1M
Strategic Reserve Funds - $2.OM
Self- Insurance Reserves - $2.9M
Replacement Reserve Fund - $12.OM
* Snow & Ice Removal Reserves - $ l OOK
E3 Pension Reserves - $450K
Ability and flexibility in operations helps the City maintain its
high bond rating.
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Red Light Photo
o Initiated to address public safety problems and most dangerous
intersections and school zones
■ Cameras only at high volume, high violation locations
• At 3 of City's 78 signaled intersections
• At 3 of the City's 23 schools
Serious speeding issues at the 3 schools where cameras are located
61% (6,000 violations) of the 9,853 school zone camera citations for the 1" half
of 2012 took place in front of Panther Lake Elementary School
Installed extra flashers and additional school zone signage to get drivers to slow
down
2012 revenue estimate of $1.5M exceeds 2011 revenue of $945K
■ Technical problems with school zone cameras in 2011 have been fixed
o Continue $830K revenue estimate
■ Goal is to improve safety; expect decrease in violations over time 36
Federal Way Community Center Fund
1 % utility tax dedicated to FWCC debt & operations
• Current 1 % =roughly $1.6M
• $915K for debt service
■ $685K balance for operations subsidy and capital reserves
Improved financial performance
■ 2008 — Used $528K UTax subsidy + $65K loan from General Fund
■ 2009 — Used $563K UTax subsidy, repaid $65K loan, $240K ending fund balance
■ 2010 —Used $443K Utax subsidy, increased ending fund balance to $781K
■ 2011 — Used $503K Utax subsidy, increased ending fund balance to $967K
■ 2012 —Project $521K Utax subsidy, increase ending fund balance to $1,080K
o Approach - increase revenues (marketing efforts) and control costs
c3 Accumulate ending fund balance for capital reserves 37
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Dumas Bay Centre Fund
® Accounts for theatre and retreat center
® Receives roughly $115K utility tax subsidy for management
contract, other operational costs, and capital maintenance
c3 Improved financial performance
■ 2008 operating deficit of $150K
■ 2009 operating deficit of $100K
■ 2010 operating deficit reduced to $25K
■ 2011 operating income of $25K
■ 2012 operating income of $12K projected
a Approach - increase revenues (marketing efforts) and control costs
Community Development Block Grant
& Human Services
CDBG
o Direct entitlement city in 2012 - $576K
® More $ stays in Federal Way
• No administration fee to King County
• Control over allocation of capital dollars
® Other Funding
• Neighborhood Stabilization Program 1 (NSP1) - $345K
• Neighborhood Stabilization Program 3 (NSP3) - $1.69M
• Street lights - $107K
C3 Federal cuts
Human Services
o $430K base + $86K additional = $516K
■ Maintained 2011/2012 additional funding
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Capital Improvement Projects
Arterial Streets Overlay
■ Continues to be high priority
■ 1 % dedicated utility tax, roughly $1.6M /year
❑ Redirected $600K/year to General Fund, restored by grant
Parks CIP
■ Allocate $300K/year from REET
o Transportation CIP
• I% dedicated utility tax, roughly $1.6M /year
• Grant sources
a Council prioritization of projects during budget study sessions
o
Next Steps
J September — Community & Committee Meetings
C3 October 2nd — Proposed budget to Council
® October 24th & 25th — Special Budget Meeting
® November 6th — Special Budget Meeting & Public Hearing
r3 November 20th — Special Meeting, Public Hearing, Introduction Ordinances
n December 4th — Enactment Ordinances, Fee Resolution
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End of Presentation
oQuestions?
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