The URL can be used to link to this page

Home My WebLink About10/29/2024 04.E. Budget Wrap-Up Questions and Recommendations i4 �e+ i,i • 1.:4'" '�J; ,,J, BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 4.E. For Meeting of: October 29, 2024 ITEM TITLE: Budget Wrap-Up Questions and Recommendations SUBMITTED BY: Vicki Baker, City Manager *Viren Mayani, Director of Finance and Budget SUMMARY EXPLANATION: This is the presentation of the 2025-2026 Biennial Budget Wrap Up Session for The City of Yakima. ITEM BUDGETED: Yes STRATEGIC PRIORITY 24-25: A Resilient Yakima RECOMMENDATION: No action needed ATTACHMENTS: Mike Bailey- Priority Based Budgeting.pdf 2025-2026 Priority Based Budget Wrap Up.pptx 77 PRIORI A ED BUDGET IMPLEMENTATION in the City of Yakima Mike Bailey Aga BUDGET DEVELOPMENT .,:; WFUA PRESERVE YOUR CORE• VALUES GFOA Financial Foundations Framework 202 1 . Establish a Long-Term Vision • Promote collaboration; Balance long-term goals with short-term needs 2. Build Trust and Open Communication • Create open lines of communication; Cultivate trustworthy reputations 3. Use Collective Decision- Making • Engage stakeholders; collective choice arrangements; networked enterprises 4. Create Clear Rules • Boundaries; Monitoring; Maintain oversight; Sanctions and rewards 5. Treat Everyone Fairly • Proportional equivalence; Conflict resolution; Recognition of Rights 80 A "Team Sport" Council : .*` td 1. Sets policy direction •NZ AL 2. Defines "success" (55 i`'r 3. Reviews budgets & Vision, Mission &Values Long term quality of life contracts, etc. vision for King Township. 4. Adopts and monitors _ _ . _ _ . budgets , - Corporate Strategic Plan (2019-2020) - ' ` - - ` - Commitment to current council priorities ' . and key outcomes/objectives by .----..= •-.-� Staff: � �,,,' measuring success through performance. -... :•.., - - 1. Proposes budgets, • - _ contracts, etc. ' .- - , , , Departmental Action Plans, Initiatives & Policies 2. Executes on budgets Projects and initiatives that enhance quality of life, ` address municipal challenges and achieve results. ,A . 3. Provides accountability - _ i. _ , p" '{ - financial and operational . '* ,� l ' ". ' `r," „ 4 is:v Multi-Year Budgeting ,� ,; � Sets the financial foundation for putting objectives, plans, 1. o, ' - : projects and initiatives into action. An Example from , at King Township, ON .. 4 81 PRIORITY BASED BUDGETING • An innovative approach to align spending with priorities • Provides clarity around "programs" and their costs (especially clarifies tax subsidies which informs decision making ) • Communicates more clearly to the public • Clarifies how strategic priorities informed budget choices • Challenges • A big change for everyone • Requires time to "perfect" • Doesn't balance budgets for you - just illustrates options and c oices " Balancing budgets is supposed to be hard." 82 THE CONTEXT BUDGETS ARE GETTING EVER MORE DIFFICULT TO BALANCE • Property taxes make up 22% of city budgets in WA1 (including utilities) • Law limits growth to 1% of previous tax amount2 • Inflation has been 8.4% (2022), 4.4% (2023) • Compensation Costs track inflation (generally) and recruitment is a problem • Other costs track inflation • Not many other revenue options • B&O tax; utility tax; fees; Transportation Benefit Districts; etc. 1- Association of WA Cities "single largest revenue source for cities" 2 - can also add new properties to the tax base 84 TYPICAL PRIORITY- BASED BUDGETING APPROACH 1. Start with existing line- item data 2. Define program inventory (can be a subset of city funds) 3. Program costing (both expenditures and revenues) 4. Program scoring (can be staff, other staff and community) 1. Based on strategic plan and "program attributes" 5. Evaluate results (stratifies programs based on scoring ) 1. Fully fund highest priorities 2. Make adjustments to lower priorities 6. Implement the budget 85 YAKIMA' S CONTEXT • New City Manager and Finance Director • Inherited a traditional budget process • Inherited " legacy issues" and one-time fixes • No time to implement supporting software • No time to work with leadership team on new budget appro • ch 86 YAKIMA' S ACCOMPLISHMENTS • Council developed policy direction (strategic plan) • Staff identified programs (from traditional line- item budgets) • Programs are prioritized ( by staff at this point) • Programs alignment with strategic priorities is identified • The stage is set to continue implementing Priority Based Bu • • eting 87 THANK YOU Mike Bailey, Finance Consultant baileyno6@msn.com Linkedln: mike-bailey-5521b430/ 88 �� IOW MOW 2025 - 2026 Priority- Based Budget Wrap Up Vicki Baker, City Manager Viren Mayani, Director of Finance & Budget 89 Predicted 2025 General Fund REVENUES BY SOURCE EXPENDITURES BY CATEGORY $74,5261814 $81,632,654.85 Utility&Franchise Taxes 29.2% Salaries&Wages 57.9% Sales Tax 40.7% Personnel Benefits Property Tax 22.3% 11.7% Transfers _ Supplies for Fines&Forf,Transfers, Charges for Services 2. e �L Cansiunption& / Misc ` 4.5'k Debt Service& Resale 5 8% Services&Pass- 2.7% Licenses and Other Taxes Intergovernmental Capital Outlays Through Payments Permits Assessments Revenues 0 4�0 13.9°f 2.4% 2.0% 3.7% 2025-26 Biennial Budget Wrap Up 10/29/24 2 b' �A 90 Predicted 2026 General Fund REVENUES BY SOURCE EXPENDITURES BY CATEGORY $76,465,497 $85,425,580 Salaries&Wages 58.5%'o Utility&Franchise Taxes —~ 29.0% Sales Tax 41.4% Transfers 2.7% Property Tax Debt Service& 11.5% Capital Outlays Fines&Forf,Transfers, -71111 Charges for Services Mist / 4.4% Services&Pass- 5.7% Intergovernmental Through Payments Personnel Benefits Licenses and Other Taxes& p. Revenues 1 7 22.1% Permits Assessments Supplies for 2.4% 1,9% 3.7°6 Consumption& Resale 2025-26 Biennial Budget Wrap Up 10/29/24 3 v 91 Public Safety Costs/General Fund 2025 2026 Other Other Departments Departments 18% 13% F"J :Safety Public Safety Public Safety ■Other Depa rt-. 82 t, 32% n,. 2025-26 Biennial Budget Wrap Up 10/29/24 4 < `: � 4 lA 92 General Fund EndingFund Balance vs PolicyReserve (Fund 001 Only - With Transfers) With ARPA Revenue Replacement $30,000,000 $20,000,000 • $10,000,000 $— ($10,000,0001 ($20,000,0001 ($30,0(X,000) ($40,000,0001 ($50,000,0001 2023 2024 2025 2026 2027 2028 2029 Actual YE Est Budget Budget Projected Projected Projected - 1- GF End Balance - Policy RSV Ault-16.7% 2025-26 Biennial Budget Wrap Up 10/29/24 5 c 93 Structurally Balanced Budget vs Balanced Budget • Beginning Fund Balance + Revenue = Expenditures + Ending Fund Balance Not sustainable; uses reserves to fund ongoing expenditures • Recurring Revenues = or exceed recurring expenditures More sustainable; reserves are intact 2025-26 Biennial Budget Wrap Up 10/29/24 6 y<;.v: � lA 94 Internal Controls 1. Review collection of receivables 2. Resource pooling i.e... fuel, vehicles, and office supplies 3. Consolidate earned interest from all funds into the General Fund 4. Implement credit card fees on all credit transaction 5. Reduction in the number of procurement cards 6. Review insurance coverage and risk exposure 2025-26 Biennial Budget Wrap Up 10/29/24 7 95 Revenue Options 1. Engineering fees rolled into grants (Administrative) 2. Hire consultant to analyze/maximize Cost Allocation Plans (Administrative) 3. Technology User Fees 4. Business License Fee Update 5. In Lieu Tax 6. Transportation Benefit District 7. Transportation Benefit District Sales Tax 8. Impact Fees 9. Sales Tax additional 0.1% - restricted to public safety 10. EMS Levy 11. Fire District 12. Metropolitan Parks District 13. Levy Lid Lifts 14. Business and Operation Tax 15. CPI adjustment to City Charter 2025-26 Biennial Budget Wrap Up 10/29/24 8 96 01*- -; 97 Distributed at the - Meeting /C/,7 /;2 4! `lt Utility Tax (In-Lieu Tax) Funding to General Fund 6% 6% Current 2025 Earmark General Fund Current 2026 Earmark General Fund Rate Projected Clean City Total _ Rate Projected Clean City Total Wastewater 20% $5,038,254 - $5,038,254 Wastewater 20% $5,205,871 - $5,205,871 Stormwater 15% $652,488 - $652,488 Stormwater 15% $698,001 - $698,001 Water 20% $2,846,058 - $2,846,058 Water 20% $2,991,700 - $2,991,700 Refuse 20% $1,998,434 $599,530 $1,398,904 Refuse 20% $2,058,387 $617,516 $1,440,871 General Fund: $9,935,704 General Fund: $10,336,443 Clean City: $599,530 Clean City: $617,516 Proposal to Increase Stormwater In-Lieu Tax 15%to 20% Earmark the 5%for MLK Jr. Pool Funding (Operation) Prior 5% 2025 Proposed New Amount Earmark New Rate Amount at 15% Pool Stormwater 20% $869,984 $652,488 $217,496 Proposed In-Lieu Tax Increase-Funding to General Fund 21%to 25% (Based on all Utilities starting at 20%) 6% 5% Proposed 2025 Earmark Earmark General Fund 21% Rate Projected Clean City MLK Jr Pool Total Wastewater 21% $5,290,167 - - $ 5,290,167 Stormwater 21% $913,483 - $217,496 $695,987 Water 21% $2,988,361 - - $ 2,988,361 Refuse 21% $2,098,356 $599,530 - $1,498,826 Additonal to GF General Fund: $ 10,473,341 $ 537,637 Clean City: $599,530 MLK Jr. Pool: $217,496 6% 5% Proposed 2025 Earmark Earmark General Fund 22% Rate Projected Clean City MLK Jr Pool Total Wastewater 22% $5,542,080 - - $ 5,542,080 Stormwater 22% $956,982 - $217,496 $739,486 Water 22% $3,130,664 - - $ 3,130,664 Refuse 22% $2,198,277 $599,530 - $1,598,747 Additonal to GF General Fund: $ 11,010,977 $ 1,075,273 Clean City: $599,530 MLK Jr. Pool: $217,496 6% 5% Proposed 2025 Earmark Earmark General Fund 23% Rate Projected Clean City MLK Jr Pool Total Wastewater 23% $5,793,992 - - $ 5,793,992 Stormwater 23% $1,000,481 - $217,496 $782,985 Water 23% $3,272,967 - - $ 3,272,967 Refuse 23% $2,298,199 $599,530 - $1,698,669 Additonal to GF General Fund: $ 11,548,613 $ 1,612,909 Clean City: $599,530 MLK Jr. Pool: $217,496 6% 5% Proposed 2025 Earmark Earmark General Fund 24% Rate Projected Clean City MLK Jr Pool Total Wastewater 24% $6,045,905 - - $ 6,045,905 Stormwater 24% $1,043,980 - $217,496 $826,484 Water 24% $3,415,270 - - $ 3,415,270 Refuse 24% $2,398,121 $599,530 - $1,798,591 Additonal to GF General Fund: $ 12,086,250 $ 2,150,546 Clean City: $599,530 MLK Jr. Pool: $217,496 6% 5% Proposed 2025 Earmark Earmark General Fund 25% Rate Projected Clean City MLK Jr Pool Total Wastewater 25% $6,297,818 - - $ 6,297,818 Stormwater 25% $1,087,480 - $217,496 $869,984 Water 25% $3,557,573 - - $ 3,557,573 Refuse 25% $2,498,043 $599,530 - $1,898,513 Additonal to GF General Fund: $ 12,623,888 $ 2,688,184 Clean City: $599,530 MLK Jr. Pool: $217,496