04-21-2020 Financial ReportCity of Federal Way
Financial Update
April 21, 2020
Presented by:
Ade Ariwoola, Finance Director
These are the things we know
▪Impact on Dumas Bay Centre
▪Impact on Federal Way Community Center
▪Impact on Performing Arts & Event Center
▪Impact of the three on the City
▪City’s Financial Strength
2
What we do not know
▪March sales tax revenue
▪How long the lockdown will last
▪What recovery looks like
▪Impact on Property taxes
▪Impact of Oil price
3
Impact on Dumas Bay Centre
4
Dumas Bay Expenditures
January February March
2019 45,560$ 55,343$ 78,771$
2020 64,882$ 71,972$ 77,028$
Difference 19,322$ 16,629$ (1,743)$
Dumas Bay Revenue Growth Dumas Bay Expenditures
January February March
2019 63,506$ 41,133$ 124,586$
2020 52,545$ 44,520$ 31,147$
Difference (10,961)$ 3,387$ (93,439)$
Impact on Community Center
5
Community Center Expenditures
January February March
2019 143,912$ 169,033$ 268,994$
2020 148,665$ 190,081$ 206,332$
Difference 4,753$ 21,048$ (62,662)$
Community Center Revenue Growth Community Center Expenditures
January February March
2019 183,256$ 133,001$ 135,892$
2020 146,547$ 158,567$ 60,585$
Difference (36,709)$ 25,566$ (75,307)$
Impact on Hotel/Motel
6
Hotel/Motel Revenue Growth Community Center Expenditures
January February March
2019 -$ 22,862$ 17,340$
2020 -$ 20,477$ 18,201$
Difference -$ (2,385)$ 861$
•The reporting is two months behind like
Sales tax.
•No impact on General fund but may
affect project funding.
Impact of FWCC, DBC, and PAEC
on General Fund
Since a Fund cannot go negative, it will have to
borrow from another Fund or get money from
the General Fund.
7
Impact on General Fund
FWCC DBC PAEC Total
Revenue 365,699$ 128,212$ 85,775$ 579,686$
Expenditures 545,078$ 213,882$ 147,474$ 906,434$
Net (179,379)$ (85,670)$ (61,699)$ (326,748)$
Impact through the end of March
March Sales Tax
▪Businesses will report their sales tax to the
State the month following the sale
▪The State will pay the taxing authority the
month following the report
▪Retail activities of March will be paid to
the City in May
8
Sales Tax Activities So Far
9
Sales Tax
January February March
2019 -$ 1,501,715$ 1,104,726$
2020 -$ 1,632,836$ 1,192,563$
Difference -$ 131,121$ 87,837$
Sales Tax Activities So Far
10
•2019 Actual and 2020 Budget were kept
relatively the same, expecting ST
construction to kick in for the expected
slow retail.
•We will know more in May.
REET Activities So Far
11
REET
January February March
2019 242,395$ 588,487$ 253,664$
2020 193,226$ 273,266$ 164,884$
Difference (49,169)$ (315,221)$ (88,780)$
•Mainly for Debt Service and Capital Projects
•Construction will be affected and be reduced
•The Debt payment must be made
•General Fund will service the debts
REET Activities So Far
12
•2019 Actual -$5.17 million
•2020 Budget -$3.64 million
•2020 REET Spending:
•Overlay $1.01 million
•Debt $1.32 million
•Capital $1.96 million
•Spending includes projected Beg. Fund Bal
•GOOD NEWS -WE SAW THIS COMING
Other Affected Revenues
13
Permits
•2019 Actual -$5.67 million
•2020 Budget -$4.10 million
•2020 YTD Budget -$0.83 million
•2020 YTD Revenue -$0.65 million
Others that may be affected:
•Parks & General Rec.
•Prop 1
What We Know
▪Lockdown half of March and all of April
▪Potential loss for 1 ½ months $1.4 -$4.2 m
▪Costco, Wal Mart, & Online shopping
▪Restaurants and carryout
▪Staying home people are remodeling
14
What We Know (Continued)
▪We will not go back to full business in May
▪The best calculation is a gradual unlock
▪May lose up to $3.2 m in sales tax in 2020
▪Support for Dumas Bay and FWCC may
exceed $1.2 m in 2020
15
City’s Financial Health
▪Contingency Reserve $1.00 million
▪City’s individual Funds reserves
▪SCORE Savings $2.10 million
▪Average Daily Population (ADP)
▪Supreme Court on UT-$1.00 million
▪No B&O Tax
▪No Income Tax
16
Other Cities
▪Kent:
▪Sales tax $21.8/19.9 million
▪Utility tax $19.6/19.6 million
▪B & O $11.5/14.9 million
▪Auburn:
▪Sales tax $18.5/18.9 million
▪Utility tax $12.4/12.5 million
▪No B&O
▪Federal Way:
▪Sales tax $15.9/15.9 million(ST)
▪Utility tax $8.6/9.2 million (New garbage)
▪No B&O
17
When Do We Adjust/Brake
▪When annual estimated revenue loss
exceeds $2.10 million.
▪Supreme Court case-up to $3.10 million.
▪Reserve is for short-term NOT long-term.
▪The end is not insight.
18
DON’T GET ME WRONG
▪We Need to pay attention –Thank you for
requesting REGULAR BRIEFING.
▪BUT:
▪Make deliberate and calculated decisions
▪Avoid “Knee-jerk Reactions”
▪Understand the storm, its strength, our strength, and maximize
our response by using our strength, and
▪Yes, we have reduced TEMPORARY-STAFF.
▪No current permanent employee layoff.
▪We are monitoring, and we will know more in May.
▪When needed we will recommend changes.
19
QUESTIONS
20
Questions?
Thank You