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10/01/2019 02 Council Review of Proposed 2020 Budget - 1 of 4 a\'4\lyy bxk ik 1 I-71 PPPPPP+Pd s' lii it tYlltYlA.\ta. BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEM ENT Item No. 2. For Meeting of: October 1, 2019 ITEM TITLE: Council Review of Proposed 2020 Budget- 1 of 4 SUBMITTED BY: Cynthia Martinez, Interim City Manager Steve Groom, Director of Finance & Budget SUMMARY EXPLANATION: The proposed 2020 Preliminary Budget will be reviewed with Council in four study sessions scheduled as follows: Tuesday, October 1, 2019 from 10:00 am to Noon Thursday, October 3, 2019 from 10:00 am to Noon Two study session dates are in the process of rescheduling ITEM BUDGETED: NA STRATEGIC PRIORITY: Public Trust and Accountability m ® , APPROVED FOR Interim Cit Mana er SUBMITTAL: y 9 STAFF RECOMMENDATION: BOARD/COMMITTEE RECOMMENDATION: ATTACHMENTS: Description Upload Date Type D 2020 pre i m budget 9/26/2019 r Me o 2020 hey issues 9/ / 019 r Memo 2 20 budget study session No 1 9/27/2019 ( r Memo 2 .......-4.-t,4,...„ : - .:.,„:.,,........F.,....m..s :'iim...if.2::'f..':','-"III ..ago.:::::iligglIFIRRittibiNgilP.AVItlinit.4...-40i.kiiiiiNtglIimyfti**iiii7:54444!..*:'.....t. 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Achieve a balanced budget in every fund 2. Assure appropriately-prioritized service delivery 3. Achieve improvement in General Fund's fund balance Department directors and managers begin a continuous review of ongoing current year budget-to-actual expense management,formulate 2019 year-end estimates and project 2020 proposed budget figures based on known circumstances that pertain to each program under their management. The City relies on budgetary controls,with multiple levels of review,in large part as part of the overall systems of checks and balances to manage service delivery and monitor that the underlying funding is being received as budgeted. Finance staff meet with managers quarterly and inform both the public and city council through quarterly financial reports in regularly-scheduled public meetings. The budget process starts at the beginning of the year,with strategic planning. City of Yakima's Strategic Priorities for 2019-2021, as affirmed in January 2019,are: 1. Fiscal sustainability 2. Main/Arterial street development 3. Community policing 4. Safe routes to schools 5. Youth development 6. Mill Site development 7. Homelessness / Affordable housing S. Airport expansion 9. City facilities (pools and community centers) 10. Downtown destination 2020 Budget Challenges The statutory 1%cap on Property Tax does not keep pace with 1)inflationary effects on materials and services nor 2) the personnel costs required by collective bargaining agreements(CBA's). This forces us every year to have conversations with our community prioritizing general fund expenditures. An informed and engaged community is critical to resident understanding of challenges,opportunities and the difficulties inherent in allocating very limited revenue changes year over year. 2020 City of Yakima Preliminary Budget-1 7 The 2019 5-Year Financial Plan,developed in September of 2018,helped the City of Yakima understand the revenue and expenditure forecast and its impact on the City's financial reserves. A primary purpose of the document was to provide context for present and future budget decisions and to understand the long-term financial impacts. The main points of this document were used as foundations for the 2019 and 2020 budget. Specifically,the 2020 Budget needs to be sensitive to: • Reserves which are below the City's policy target of 16.7% (2 months) of expenditures. • Capital expenditures and the cost of deferring where applicable. • New debt service fitting in to existing revenue streams and service levels. • The framework adopted for the 2019 continues to serve as the blueprint for the 2020 budget: • Expenses in 2020 minor 2019's plus obligations (contracts) • Factor in new known realities. • Expenses in 2020 may not exceed Revenues in 2020. In January 2019,City Council resolved to make General Fund's fund balance the top strategic priority. Recognizing the inter-relationships across all funds,the following chart summarizes how the preliminary 2020 projected budget currently predicts resulting fund balances by category,pending further decision-making. In this table,negative Enterprise Construction figures largely reflect expenditures of balances carried forward from prior year. 2020 PRELIMINARY BUDGET FUND BALANCE IMPACT 2020 Projected Budget Surplus Revenues Expenditures (Deficit) General Fund $ 68,298,856 $ 68,260,361 $ 38,49E Parks and Streets 14,197,487 14,169,919 27,568 Restricted Funds(100's) 19,721,949 19,839,177 (117,228) Debt (200's) 5,232,400 5,231,943 457 Capital(300's) 7,716,340 5,670,316 2,046,024 Enterprise Construction(400's) 75,927,375 89,555,171 (13,627,796) Transfers(500's) 27,372,873 27,762,528 (389,655) Agency(600's) 658,057 658,057 Trust (700's) 24,000 12,000 12,000 Total Projected Budget $ 219,149,337 $ 231,159,472 $ (12,010,135) The following two charts compare the 2019 projected year-end estimate and preliminary proposed 2020 budget by fund groupings. The first chart showing expenditures and the second chart showing revenues. 2-2020 City of Yakima Preliminary Budget 8 2019 VS. 2020 EXPENDITURE BUDGET COMPARISON 2019 2020 19 vs.20 Year-End Proposed Budget Estimate Expenditures %Change General Fund $ 67,969,802 $ 68,260,361 0.4 Parks 5,187,195 5,507,995 6.2 Streets&Traffic 5,895,797 8,661,924 46.9 General Government Total 79,052,794 82,430,280 4.3 Utilities/Other Operating 87,254,800 82,492,995 (5.5)% Capital Improvement 57,488,927 37,030,514 (35.6)% Risk Management Reserves 4,301,306 5,042,889 17.2 Employee Benefit Reserves 15,656,317 16,360,096 4.5 Trust and Agency Funds 703,000 670,057 (4.7)% Debt Service 6,813,225 7,132,640 4.7 Total-Citywide Budget $ 251,270,369 $ 231,159,471 17.8 2019 VS. 2020 REVENUE BUDGET COMPARISON 2019 2020 19 vs.20 Year-End Proposed Budget Estimate Revenues %Change General Fund $ 67,302,462 $ 68,298,856 1.5 Parks 5,264,437 5,513,415 4.7 Streets&Traffic 5,407,731 8,684,071 60.6 General Government Total 77,974,630 82,496,342 5.8 Utilities/Other Operating 83,248,081 81,021,826 (2.7)% Capital Improvement 51,067,761 26,565,484 (48.0)% Risk Management Reserves 4,351,513 5,035,770 15.7 Employee Benefit Reserves 16,753,911 16,214,760 (3.2)% Trust and Agency Funds 715,000 682,057 (4.6)% Debt Service 6,805,467 7,133,097 4.8 Total-Citywide Budget $ 240,916,363 $ 219,149,336 (9.0)% 2020 City of Yakima Preliminary Budget-3 9 4-2020 City of Yakima Preliminary Budget 10 REVENUES As each of us understand in our personal lives,budgeting begins with an understanding of incoming revenues. The City has over fifty revenues, each with underlying dynamics to be considered. Finance staff began tracking and forecasting 2020 revenues as soon as actual January 2019 revenues were received. Revenue Projections Sources used in preparing revenue projections indude: • Analysis of ten-year trends, consumer price index, population and other demographic factors, and an awareness of current events within our city • Economic trends as reported from many sources along with an awareness of current business health within our own city. • Forecast data. • Economic and fiscal trends provided by the MRSC. • Communication with our revenue process partners,such as the Yakima County Tax Assessor and the City's franchise tax-paying utility providers. Ultimately,the revenue projections in the budget reflect staff's judgment about how the local economy will perform over the next several years and how it will affect the City's key revenues. Goal Setting Process for 2020 Major city goals represent the most important and the highest priority goals for the City to accomplish and therefore should be reflected in the budgetary decisions resulting in the 2020 budget. In general, this category represents the continuation or refinement of existing goals. These are "must-fund" objectives,even if they require multi-year processes. General revenue management-guiding principles: • The city will seek to maintain a diversified and stable revenue base to protect from short-term fluctuations and from cyclical economic downturns. • The city will make all current expenditures from current revenues,avoiding procedures that balance current budgets by postponing needed expenditures, accruing future revenues,or rolling over short-term debt. • Every fund in the City's accounting system exists for a reason;the purpose for every fund's segregation out of the general fund is to dedicate spending for restricted revenues. 2020 City of Yakima Preliminary Budget-5 11 REVENUE Sales Tax (Single Largest Revenue Source for General Fund) • General Sales Tax-Of the 8.2%sales and use tax collected within the City,the City of Yakima receives only 0.85% (or about 10.4%of the total) in general Sales Tax revenue. The General Government Funds receive the full amount of the City's share of general sales tax revenues. (Note:the City also receives 0.3%sales tax revenues which are restricted for transit purposes and a portion of the 0.4%sales tax revenues which are restricted for criminal justice purposes. The State receives 6.5%and Yakima County receives .15%of the remainder. The City of Yakima receives a 3.0%Lodging Tax credit from the State. • 0.1% Criminal Justice Sales Tax-A special 0.1%Criminal Justice Sales Tax was originally approved by the voters of Yakima County in the November, 1992,General Election and became effective January 1, 1993. The State allocates this 0.1%criminal justice sales tax revenue between the City and the County,based on a predefined formula. This revenue is restricted to providing criminal justice related services and is allocated based on operating vs. capital needs. This tax revenue is generally affected by the same regional economic factors that affect the General Sales Tax revenue. • 0.3% Criminal Justice Sales Tax-Another special sales tax of 0.3% dedicated to Criminal Justice expenditures was originally approved by the Yakima County voters in November,2004,and took effect on April 1st of 2005. (This tax was renewed for another 6 years on the November,2015 election for 2017-2022.) The tax is on sales inside the County only and the proceeds are divided between the County and Cities on a predefined formula under which the County receives 60% and all cities within the County share the remaining 40%. Sales tax provides 32.5%of all General Fund revenue,and 14.0%of total government revenue in the 2020 budget. SALES TAX $35,000,000 — $30,000,000 — $25,000,000 — $20,000,000 — $15,000,000 i 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual YE Est Projected Utility and Franchise Taxes These revenues are largely a function of weather conditions and utility rates in the Valley. Utility taxes are the only major revenue source historically keeping pace with the rate of inflation,primarily because of rate increases implemented by utility providers. 6-2020 City of Yakima Preliminary Budget 12 Utility and Franchise taxes are collectively the second largest category of General Fund revenues, comprising 27.5%of 2020 projected revenue and 8.9%of total government revenue. UTILITY AND FRANCHISE TAXES $22,000,000 — $20,000,000 — $18,000,000 — $16,000,000 — $14,000,000 — $12,000,000 $10,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual YE Est Projected Property Tax State law allows the City to impose the lesser of the rate of inflation (as measured by the Implicit Price Deflator(IPD))or 1%above the prior year levy,plus levies for new construction and annexations. State law also allows the City to increase the levy by more than 1%if approved by the majority of voters. State law allows an agency to levy up to the 1%maximum if City Council establishes substantial need by a super-majority (i.e. 5-2)vote. HISTORICAL IMPLICIT PRICE DEFLATOR(MRSC) 4.0 — 2.8% 1.5"k 1.6% ua 2.2% 2.0 1.3' 1.3.E 1.0% 1.6, _ --# 0.3% 0.0 48% -2.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual State limit property tax levy statutes limit the change in the dollars levied (1%would generate about $194,000 for 2020) -but do not limit growth in assessed value. Stated differently,the 1%limit affects the total dollars levied,and assessed valuation is used to allocate the levy ratably among the property owners. Since most consumer activity (i.e.,wages,equipment,etc.) is more closely tied to the Consumer Price Index (CPI),and the CPI is greater than 1%in almost all years (see chart below),the future effect of 1% or less growth in Property Tax is slowly reducing the percentage of revenue the City receives from this primary General Government revenue source. 2020 City of Yakima Preliminary Budget- 7 13 HISTORICAL SEATTLE CPI-U(MRSC) 4.0% — 3.1% 3.2% 2.7% 2.50,0 3.0% 2.2"1 1.8% 2.0% 1.2'1 1.4% 1.0% 0.6%, 0. r% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Property tax provides 15.2%of all General Fund revenue,and 9.7%of total government revenue in the 2020 budget. PROPERTY TAX $24,000,000 — $22,000,000 — $20,000,000 — ~ $18,000,000 $16,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual YE Est Projected Property Tax revenue is primary funding source for the City. Washington's "budget-based"property tax structure is complicated. The City establishes the dollar amount levy,subject to several restrictions. The County Assessor calculates the levy rate based on total assessed valuation. The following Property Value chart shows the historical trend of total city property valuation. It is important to know that the City's general fund levy is subject to a 1%annual cap (a levy lid),excluding new construction and annexation but the valuation itself is purely an assessed value of the true and fair value (market value). CITY OF YAKIMA PROPERTY VALUES $8,000,000,000 $7,000,000,000 — 6 000 000 000 5 000 000 000 AIIIIIIIIIIEEEMUEEEEEEEMOIEEEEEEEEMIEEEEEEEEEEEEE 4 000 000 000EzERBEETEREBBEERBErmatentrommogrommentrommentrammentrommentermstm7 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated 8-2020 City of Yakima Preliminary Budget 14 The following chart is a historical trend of the total dollar amount levy in past years,as well as the current 2020 forecast. It is important to know that the city establishes its desired levy amount based on budget need subject to statutory limits,and the levy rate itself is strictly the resulting mathematically relationship between the valuation and the levy amount. CITY OF YAKIMA ORIGINAL LEVY AMOUNTS-PROPERTY TAX $21,000,000 — $20,000,000 — 19 000 000 — .......::::::.: . 1&000 000 ...................................................................................................................................................... 17 000 000 ,................„02001111111111111111111111111111111111111111111111111111111111111 EIEBBEEEIBBEEEEEEIEEEEEEEEIEEEEEEEEIEEEEEEEESEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE $16,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimated Charges for Services This revenue category mainly consists of revenues from the sale of services such as water,wastewater, refuse,irrigation,transit and fire services,concessions and interfund services. The Charges for Services category provides 10.8%of all General Fund revenue,and is the top revenue for total government in the 2020 budget at 27.2%. of total revenue. CHARGES FOR SERVICES $65,000,000 $60,000,000 $55,000,000 — $50,000,000 — $45,000,000 $40,000,000 $35,000,000 I I I I 1 1 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual YE Est Projected Intergovernmental Revenues This category includes revenue received from other Government units,including Federal grants and entitlements,State and local grants and other intergovernmental resources. This category can fluctuate significantly due to the timing of the payments and the completion of major projects paid for by grants. Intergovernmental revenue accounts for 5.4%of General Fund revenue,and 11.8%of total government revenue in the 2020 Projected Budget. 2020 City of Yakima Preliminary Budget-9 15 INTERGOVERNMENTAL REVENUE $35,000,000 — $30,000,000 — $25,000,000 $20,000,000 — $15,000,000 — $10,000,000 1 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual YE Est Projected Other Taxes and Assessments This category includes excise taxes and other operating assessments,and includes Transit,Hotel/Motel, Real Estate Excise,Gambling and Transportation Benefit District Taxes. Real Estate Excise Taxes (REET) depend on the volume and value of real estate sales,and therefore fluctuate with economic cycles. REET is a restricted funding source that has two components which may be only used for statutorily-defined purposes,primarily capital facilities and authorized transportation,water/storm/sewer and park capital projects. Lodging (hotel/motel)tax is a restricted revenue, dedicated by statute to expenditures that further local tourism activities. The basic 2%lodging tax is supplemented by a share of state-shared lodging tax that currently totals 5%. Tourism Promotion Area (TPA) fees consists of a$2 per room per night and are restricted to expenditure that increases the tourism and convention business. The budget for 2020 is lower than 2017 and 2018 but higher than forecast in 2019 according to cyclical economic trends. Transportation Benefit District (TBD) revenue commenced in August,2018 and is forecast for its first full year in 2019 as a basis for the 2020 budget. This revenue is restricted to construction,maintenance and operational transportation improvements. The 2020 Budget is forecasted level with actual and projected 2019 monthly receipts. This revenue accounts for the major increases from 2018-2020 in the chart below. Other taxes provide 1.6%of all General Fund revenue,and 12.8%of total government revenue in the 2020 budget. OTHER TAXES AND ASSESSMENTS $8,000,000 — $6,000,000 — � $4,000,000 — $2,000,000 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual YE Est Projected 10-2020 City of Yakima Preliminary Budget 16 Licenses and Permits This category includes business licenses,building permits, dog licenses,gambling taxes and wastewater pretreatment and permits. All permit revenues increased in 2018 and are currently forecast to increase based on current actuals. Other Taxes revenue accounts for 2.8%of General Fund revenue,and 1.5%of total government revenue in the 2020 Projected Budget. LICENSES AND PERMITS $4,000,000 — $3,500,000 — $3,000,000 — $2,500,000 — $2,000,000 $1,500,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual YE Est Projected Fines&Forfeitures,Transfers &Miscellaneous Fines&Forfeitures come primarily from criminal fines and noncriminal penalties,assessed in the City of Yakima's Municipal Court,and parking violations. Parking revenue is budgeted substantially down from prior years due to recent court activity limiting enforcement of time-limit violations and due to increased staff time committed to citizen response. Fines and Forfeitures provide 2.5%of all General Fund revenue,and 0.8%of total government revenue in the 2020 budget. FINES&FORFEITURES $2,400,000 — $2,200,000 — $2,000,000 — $1,800,000 --i $1,600,000 $1,400,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual YE Est Projected Transfers set forth in the Budget are typically to accomplish the measured allocation of revenues and expenditures appropriate to the service delivery in each fund. There are many appropriate transfer mechanisms intended to efficiently and effectively account for complex arrangements. For example,all 2020 City of Yakima Preliminary Budget-11 17 funds are supported by administrative departments such as Accounting,Human Resources,Information Technology and general City Management. Transfers are intended to eliminate the time-intensive alternative of every administrative time sheet and invoice being split into a high number of small amounts. Any short-term transfers between funds for operating purposes within the year are not operating revenues. These operating transfers, under which financial resources are transferred from one fund to another,are distinctly different from interfund borrowings. Interfund borrowings that are not repayable within the year must be more formally planned and communicated. The most common use of interfund borrowing is for grant programs such as a Community Development Block Grant,where costs are incurred before reimbursement is received,and is therefore merely a short-term cash flow device. TRANSFERS $24,000,000 — $20,000,000 — $16,000,000 — $12,000,000 $8,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual YE Est Projected Miscellaneous Revenue Included in miscellaneous revenues are interfund benefit contributions,interest earnings,rents, assessments,sale of fixed assets,proceeds from long-term debt and other miscellaneous revenues. Significant spikes in this chart are generally due to the timing of bond proceeds. Miscellaneous Revenues account for 1.8%of General Fund revenue,and 17.1%of total government revenue in the 2020 Projected Budget. MISCELLANEOUS REVENUE $70,000,000 — $60,000,000 — $50,000,000 —�� .. . � $40,000,000 $30,000,000 — $20,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual YE Est Projected 12-2020 City of Yakima Preliminary Budget 18 Cash &Investments Interest revenue on the city's reserves is a function of execution on the City's investment policy. It is the policy of the City of Yakima to invest public funds in a manner that,giving first regard to safety, suitability and liquidity,will maximize long-term yield in conformance with State Statute,Federal Regulations and City Charter. As a current over-all indicator,the 5-year historic city-wide cash and investments balance trend, inclusive of all funds,showed June 2019 at$89.0 million;May reached an all-time high$92.9 million. While each month is best compared to the same month in previous years to account for seasonality and other annual events and a mid-year milestone doesn't compare well to prior year-end balances,2019 cash levels have consistently improved over prior year. The following graph incorporates only the city's primary bank and investment accounts to enable comparison to prior and future periods. CASH AND INVESTMENT HISTORY s100,000,000 - S80,000,000 S60,000,000 840,000,000 - $20,000,000 SO YE 2014 YE 2015 YE 2016 YE 2017 YE 2018 6/30/19 REVENUE TRENDS -OVERVIEW Total City of Yakima revenue grew by about$25.8 million or 13.1%from 2017 to 2018. For 2019,the year-end estimate of$240.9 million shows a growth of$18.3 million or 8.2%-mainly due to the proposed bond proceeds for the mill site and Convention Center expansion. These projects will be rolled forward into 2020 if not done in 2019. The current projected revenue for 2020 is$219.1 million,a$21.8 million or 9.0% decrease from the year- end estimate. BUDGET BY SOURCE The following charts shows revenue broken up by source,for both the General Fund and Citywide. 2020 City of Yakima Preliminary Budget-13 1 9 2020 GENERAL FUND REVENUE BUDGET BY SOURCE Sales Tax $22,197,850 32.5% Other Taxes&Assessments Fines Forfeits,Trans&Misc $1,080,000 $2,940,900 1.6% 4.3% Charges for Services S7,356,091 10.8% Utility&Franchise Tax $18,763,920 Intergov't 27.5 S3,671,942 5.4% Licenses&Permits $1,894,500 Property Tax 2.8% $10,393,653 15.2% 2020 CITYWIDE REVENUE BUDGET BY SOURCE Other Taxes&Assessments Utility&Franchise Tax S6,513,000 Sales Tax 3.0% $19,522,420 $31,702,000 8.9 14.5% Property Tax $21,303,000 9.7% Licenses&Permits S3,274,500 1.5"/0 Intergovernmental Fines,Forfeits,Trans&Misc $25,903,083 $51,422,033 11.8% 23.5% Charges for Services $59,509,301 27.2% 14-2020 City of Yakima Preliminary Budget 20 EXPENDITURES EXPENDITURE OVERVIEW General Fund Public Safety costs-Police,Fire and Criminal Justice -continue to consume an ever increasing share of total General Fund resources. All General Fund programs are necessarily balanced within available resources,which rely heavily on Sales Tax and Property Tax. Collective Bargaining Agreements that provide for salary and benefit increases that exceed the Property Tax rate cap create a squeeze that affects the entire General Fund's ability to maintain service delivery levels. The following chart indicates that the City of Yakima is currently proposing to spend 76.6%of General Fund expenditures on Fire and Police services in 2020. In comparison,this percentage was 75.9%in 2018,and is estimated to be 76.5%at year-end 2019. 2020 GENERAL FUND EXPENDITURES BY OPERATIONS Legal Fire $1,980,769 $15,548,762 2.9"/0 22.8% Municipal Court S1,784,590 All Other Operations $15,612,605 22.9% Police Code Administration $30,297,052 $1,986,584 44.4on 2.9% Indigent Defense $1,050,000 1.5% The data utilized in the following comparison was compiled from the State Auditor's Local Government Financial Reporting System(LGFRS) for the year 2017,the most recent year currently available. This chart includes the categories of Public Safety,Judicial Activities and Legal,and includes comparisons of the top 10 Cities in Washington State with a population between 75,000 and 130,000 (a range that Yakima falls roughly in the middle of) and services comparable to the City of Yakima. While the State Auditor pulls these numbers together slightly differently,the percentages shown are comparable to the above chart. 2020 City of Yakima Preliminary Budget-15 21 TOTAL EXPENDITURES SPENT ON PUBLIC SAFETY,LEGAL&MUNICIPAL COURT 80% 77.3 75% 71.8% 70% 64.5% 63.4% 65% 11 57.6% 57.4 0 60; 55.4% 55% 5l.4 49.6 45`>.- 45"6 all City of City of City of City of City of City of City of City of City of City of Yakima Federal Way Everett Kennewick Spokane Valley Kirkland Kent Auburn Bellingham Renton EXPENDITURE DETAIL Transfers This category generally includes transfers to from operating to capital funds,support for the debt service funds and subsidizing funds within the City,such as the Cemetery and Workers Compensation as needed. TRANSFERS $30,000,000 — $25,000,000 $20,000,000 $15,000,000 — • $10,000,000 $5,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual YE Est Projected Salaries,Wages and Personnel Benefits These expenses are the number one expenditure within the operating budget. The following chart, shows the ratios between budgeted employees and population and does not include temporary employees (numbers of employees are stated in full-time equivalents). These numbers have remained relatively stable over the last ten years. City-Wide Government 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Number of Employees 736.8 729.8 722.3 727.2 748.4 761.2 768.5 765.7 767.0 768.0 Employees Per Capita 8.1 8.0 7.9 7.9 8.0 8.2 8.2 8.2 8.1 8.1 Population 91,067 91,630 91,930 92,620 93,080 93,220 93,400 93,900 94,190 94,440 16-2020 City of Yakima Preliminary Budget 22 However,the cost of those same employees has escalated over that same time period,going up 39.5% over that last ten years SALARIES,WAGES AND PERSONNEL BENEFITS $110,000,000 — $100,000,000 $90,000,000 $80,000,000 — $70,000,000 — $60,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual YE Est Projected Operating Supplies This category includes any supplies that are not considered over the capitalization limit ($5,000). From paper to computer servers,and anything in between. It is also one of the hardest hit in recent years when funds are required in other categories,such as criminal justice. As seen in the next chart,the dollars available for operating supplies has actually decreased in the 10 years shown. OPERATING SUPPLIES $14,999,955 — $9,999,970 — • $4,999,985 $0 1 1 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual YE Est Projected There is currently no replacement funding for office computers and software,other than in this fund, and due to the lack of funding,computers and software are not getting replaced. Both the computers and the software that they run have a limited life,as much of the software becomes to old for support, and even if the software can be replaced,the aging computers do not have the resources to run these new programs. 2020 City of Yakima Preliminary Budget-17 23 Professional Services & Other Charges This category contains services rendered by sources outside the city,including engineering and construction type services,Dial-A-Ride services and intergovernmental services. Also included are items such as insurance,taxes and assessments and city service charges. This budget fluctuates mostly due to ongoing project needs. PROFESSIONAL SERVICES $70,000,000 — $60,000,000 e • • $40,000,000 $30,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual YE Est Projected Capital Outlays 2020 Capital Expenditures is not expected to materially increase due to large projects approved in 2019. As the graph below shows,2019 major budgeted capital items included: • $12.0 million for the Cascade Mill site,of which the first$6.0 million is expected to be funded by a 2020 bond issue • $12.5 million,funded by a 2020 bond issue,for the Convention Center expansion Projects included in prior-year adopted budgets but not completed,in any given year,are routinely rolled forward at year-end,brought to council for a non-lapsing appropriation. 2020 reflects a reduction partially due to deferred vehicle replacements. CAPITAL OUTLAYS $70,000,000 — $60,000,000 $50,000,000 — $40,000,000 — $30,000,000 — $20,000,000 $10,000,000 — $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual Actual Actual Actual Actual YE Est Projected 18-2020 City of Yakima Preliminary Budget 24 Debt Service The City pledges its full faith and credit for General Obligation (GO)Bonds which consists of general tax and some special revenues. Generally,interest payments on municipal bonds are not taxable to the bond holder (unless taxable bonds are issued due to private-public partnerships). The most common funding sources are property taxes,real estate excise tax (REET) or a special revenue source such as energy savings and rebates for the LED Street Light Project. The City has several debts payable to other governmental agencies-general tax and other special revenues are pledged as repayment. Intergovernmental debt tends to be less costly and is often obtained for lower interest costs. The Local Option Capital Asset Lending (LOCAL) Program is offered through the State of Washington,and the City is able to participate in the State's bond issues to take advantage of a lower rate. All issuance costs are included in the interest rate. Economic Development (SIED)loans are administered through the County and often accompanied by a grant. Community Economic Revitalization Board (CERB)loans offer lower cost alternatives as well. Public Works Trust Fund loans were obtained to assist with financing the Underpass Construction. Any increase to debt in 2020 would be due to issuance of: • $12M for Convention Center debt,financed from PFD and Lodging Tax • $6M for Millsite new street construction financed from State LIFT matching funds • $2.4M for LED energy-efficient street lighting,financed from electricity savings The following chart reflects the total debt the City of Yakima owes for various types of debt,showing all payments for the years 2019 through 2033. 2020 City of Yakima Preliminary Budget-19 25 Maturity Principal and Interest Payments Type Description Date 2019 2020 2021 2022 2023 GO Bond01 Aquatic Center 12/01/42 $ 420,000 $ 420,000 $ 420,000 $ 420,000 $ 420,000 GO Bond01 Sports Complex-City Fields 06/01/35 400,000 400,000 400,000 400,000 400,000 GO Bond" City Comm Ctr Relocation 05/01/34 119,150 117,663 119,863 121,863 118,663 PWTF Loan 2010 RR Grade Separation 06/01/34 84,448 84,448 84,448 84,448 84,448 GO Bond01 Capitol Theatre Expansion 12/01/32 571,130 571,570 566,170 565,210 558,410 SIED Loan River Road 06/01/29 62,797 62,800 62,800 62,800 GO Bond01 2013 Street Restoration 12/01/28 399,664 399,664 399,664 399,664 399,664 PWTF Loan 2009 RR Grade Separation 07/01/28 173,355 172,530 171,704 170,879 170,053 SIED Loan SOZO Park Street Impr. 06/01/27 106,197 106,197 106,197 106,197 106,197 LOCAL LED Street Light Project 06/01/27 111,532 111,433 111,329 111,220 111,106 LOCAL Fire Aerial&Pump App 06/01/27 153,445 153,309 153,167 153,017 152,859 GO Bond0) Convention Center Add 05/01/26 459,795 455,995 456,695 456,700 455,908 SIED Loan Yakima Valley Brewing 06/01/24 14,158 14,158 14,158 14,158 GO Bond01 2014 Street Restoration 06/01/24 1,646,650 1,648,750 1,650,750 1,648,375 1,648,750 GO Bond SunDome Expansion 12/01/23 150,000 147,796 145,746 147,934 150,000 LOCAL Fire-One Apparatus 06/01/23 39,215 39,216 39,216 39,216 39,216 SIED Loan 21st Ave ext/Airport Lane 06/01/23 58,090 58,090 58,090 58,090 58,090 GO Bond Downtown Revitalization 05/01/22 132,365 132,665 132,765 132,633 GO Bond Fire Station-West Valley 05/01/22 74,535 71,935 74,235 71,418 GO Bond Fire Ladder Apparatus 12/01/21 73,200 75,600 72,800 LOCAL Fire-Two Apparatus 12/01/20 69,959 69,959 GO Bond Convention Center Exp 11/01/19 349,070 GO Bond Street/Pedestrian Impr 12/01/19 239,200 LOCAL Fire-Air Packs 06/01/19 86,898 LOCAL Police-Vehicles 06/01/19 789,037 Total Non-Enterprise 6,706,935 5,313,775 5,239,797 5,163,822 4,950,322 GO Bond Irrigation Revenue Bonds 09/01/34 320,154 318,760 322,160 319,510 321,635 GO Bond 2008 Wastewater Rev Bonds 11/01/27 415,063 412,738 414,988 411,600 413,600 GO Bond 2012 Wastewater Rev Bonds 11/01/23 1,162,400 1,169,200 1,164,200 1,162,800 1,164,800 Total Enterprise Loans 1,897,617 1,900,698 1,901,348 1,893,910 1,900,035 Revenue WW Long-Term Debt 2021-2037 775,360 772,665 769,971 689,650 687,341 Revenue Water Long-Term Debt 2023-2034 804,305 799,499 794,688 789,879 785,071 Total Enterprise LT Debt 1,579,665 1,572,164 1,564,659 1,479,529 1,472,412 Total City-Wide Debt E,184,217 $8,786,637 $8,705,804 $8,537,261 $8,322,769 Potential New Debt for 2020 Convention Center Exp $12,500,000 LED Project 2,400,000 Mill Site 6,000,000 (1) Charter Amendment (2) Bonded through County (3) Taxable bond 20-2020 City of Yakima Preliminary Budget 26 Principal and Interest Payments 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033+ $ 450,000 $ 450,000 $ 450,000 $ 450,000 $ 450,000 $ 410,000 $ 410,000 $ 410,000 $ 410,000 $ 410,000 450,000 450,000 450,000 450,000 450,000 490,000 490,000 490,000 490,000 490,000 120,463 117,063 119,513 121,813 118,963 121,113 118,113 119,863 121,450 117,875 84,448 84,448 84,448 84,448 84,448 84,448 84,448 84,448 84,448 84,448 556,050 552,850 545,410 541,980 532,230 526,490 519,430 511,050 506,350 62,800 62,800 62,800 62,800 62,800 62,803 399,664 399,664 399,664 399,664 399,664 169,228 168,402 167,577 166,751 165,926 106,197 106,197 106,197 106,197 110,986 111,919 112,417 112,395 152,694 153,978 154,663 154,633 449,508 457,336 454,234 14,158 1,650,250 4,776,446 3,114,657 3,106,923 2,650,681 2,264,031 1,694,854 1,621,991 1,615,361 1,612,248 1,102,323 318,310 319,760 320,160 320,080 319,520 318,480 321,960 319,720 322,000 318,560 415,000 415,800 411,000 410,800 733,310 735,560 731,160 730,880 319,520 318,480 321,960 319,720 322,000 318,560 685,034 596,100 469,953 468,674 346,005 345,332 344,660 343,987 74,235 56,822 645,537 641,402 590,194 586,294 582,395 457,346 454,052 450,758 447,464 181,012 1,330,571 1,237,502 1,060,147 1,054,968 928,400 802,678 798,712 794,745 521,699 237,834 $6,840,327 $5,087,719 $4,898,230 $4,436,529 $3,511,951 $2,816,012 $2,742,663 $2,729,826 $2,455,947 $1,658,717 2020 City of Yakima Preliminary Budget-21 27 2020 GENERAL FUND EXPENDITURE BUDGET GENERALIZED CATEGORIES Personnel Benefits $13,595,419 19.9% , Supplies, Equip,Misc $1,426,269 2J% Services&Charges $12,310,696 18.0% Salaries&Wages $38,690,096 Capital Outlays&Debt Service $376,641 0,6% Transfers $1,861,240 2.7% 2020 CITYWIDE EXPENDITURE BUDGET GENERALIZED CATEGORIES Supplies, Personnel Benefits Equip,Misc $38,349,229 $7,988,893 16.6% 3.5% 110, Services&Charges S62,895,814 27.2% Salaries&Wages S65,023,390 28,1% Capital Outlays Transfers S33,196,157 $13,797,260 Debt Service 14.4% 6.0% $9,908,730 4.3% 22-2020 City of Yakima Preliminary Budget 28 GENERAL FUND FINANCIAL HEALTH/ FUND BALANCE CURRENT AND PROJECTED RESERVES The statutory cap on Property Tax forces a conversation every year to prioritize expenditures,evaluate the balance between services and infrastructure,and challenges the preservation of general fund reserves. GENERAL FUND-FUND BALANCE AS A% OF TOTAL EXPENDITURES (Without Transfers-as shown in the CAFR) 25.0% 20.0% 15 8% 139% 14.2% 14.2% o 15.0% 0 12.1 13.11�10.0% 5.0% 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual YE Est Prop The chart above depicts the historical fund balance trend as reported in the City's audited Comprehensive Annual Financial Report (CAFR) and shows that in the last two years,that following significant declines in 2014-2016,the City has stabilized but recovering has proven difficult every year during budget formulation. At the same time,the Assessed Valuation of properties in the city increased at substantially rates than the capped property tax rate,exerting pressure on General Fund services, which saw costs increase roughly in line with CPI. Nevertheless,through difficult budgeting decisions, expenditures that could be deferred or reduced were managed to achieve a balanced budget in each year. The single most influential moment at policy level to affect fund balance is at the time of budget adoption. The table below depicts the projected ending fund balance for years 2018 through 2023 reflecting the current budget numbers,extrapolating the percentages from the most recent 5-Year Plan,and without reflecting any effect that a potential Levy Lid Lift could have. GENERAL FUND RESERVE FORECAST VS POLICY LEVEL REQUIREMENTS 2019 2018 Year End 2020 2021 2022 2023 2024 General Fund Actual Estimate Projected Forecast Forecast Forecast Forecast General Fund Reserve Forecast $ 8,750,725 $ 9,061,873 $ 8,394,532 $ 8,433,027 $ 7,789,535 $ 6,573,535 $ 4,759,023 Policy Level Requires©16.7% 10,977,946 11,350,957 11,399,480 11,695,867 12,011,655 12,335,970 12,681,377 Net Increase(Deficit) ($2,227,221) ($2,289,084) ($3,004,948) ($3,262,840) ($4,222,120) ($5,762,435) ($7,922,354) 2020 City of Yakima Preliminary Budget-23 29 The following chart shows the forecast for the next five years using current known or estimated growth rates,however at every budget adoption decisions would be made in each year to explore revenue and/ or expense options. GENERAL FUND OPERATING INCOME/LOSS ANALYSIS 2019 2018 Year End 2020 2021 2022 2023 2023 General Fund Actual Estimate Projected Forecast Forecast Forecast Forecast Operating Revenues $66,047,349 $67,302,462 $68,298,856 $69,391,638 $70,710,079 $72,053,571 $73,422,589 Operating Expenditures 65,736,201 67,969,802 68,260,361 70,035,130 71,926,079 73,868,083 75,936,389 Net Operating Gain/(Loss) $ 311,148 $ (667,340) $ 38,495 $ (643,492) $ (1,216,000) $ (1,814,512) $ (2,513,800) Key Reminders • Projected revenues do NOT take into account a possible 2021 Levy Lid Lift currently being discussed. • The City is committed to achieving a balanced budget in every fund. • Service delivery across all city programs are re-evaluated annually to prioritize the most urgent and important within available funding. • The City Council affirmed in January 2019 that improving the General Fund's fund balance to 16.7% of General Fund expenses over the next three years is their top strategic priority. 24-2020 City of Yakima Preliminary Budget 30 CITY-WIDE FINANCIAL HEALTH/ FUND BALANCES The following table recaps city-wide fund balances by fund groupings showing the effect of proposed revenues and expenditures. 2020 RESERVE BALANCE SUMMARY Estimated 2020 2020 Increase in Estimated 2020 Beg. Projected Proposed (Decrease in) 2020 Ending Fund Balance Revenues Expenditures Reserves Balance General Fund $ 8,394,532 $ 68,298,856 $ 68,260,361 $ 38,495 $ 8,433,027 Parks and Recreation 360,670 5,513,415 5,507,995 5,420 366,090 Street&Traffic Operations (17,815) 8,684,071 8,661,924 22,147 4,332 General Government Subtotal 8,737,387 82,496,342 82,430,280 66,062 8,803,449 Other Governmental Operating Funds 5,790,726 13,811,005 13,729,199 81,806 5,872,532 Government Capital Funds 14,208,534 13,627,284 11,780,293 1,846,991 16,055,525 Enterprise Operating Funds 10,931,768 61,088,477 62,404,252 (1,315,775) 9,615,993 Enterprise Capital Funds 33,925,280 12,938,200 25,250,221 (12,312,021) 21,613,259 Internal Service Funds 1,116,940 6,122,344 6,359,543 (237,199) 879,741 Employee Benefit Reserve 4,008,252 16,214,760 16,360,096 (145,336) 3,862,916 Risk Management Reserves 1,906,861 5,035,770 5,042,889 (7,119) 1,899,742 Debt Service&Agency Funds 4,456,689 7,815,154 7,802,697 12,457 4,469,146 Total $ 85,082,437 $ 219,149,336 $ 231,159,470 $ (12,010,134) $ 73,072,303 2020 City of Yakima Preliminary Budget-25 31 A . 26-2020 City of Yakima Preliminary Budget 32 GENERAL FUND CHALLENGES l RECOMMENDATIONS The Preliminary 2020 Budget,as in most years at this phase of the process,has a General Fund (001) that is not yet balanced. Staff has met with multiple departments over multiple iterations to explore possible options to stay within forecasted funding levels. City Council has signaled a commitment to strong financial governance. A long-term approach is imperative to restoration of General Fund fund balance is critical in the demonstration of improved financial position and staff has left no revenue nor expenditure possibility out of consideration for potential manageable opportunities. Challenges identified during 2019 that must be accommodated in 2020 • Sales Tax flattening,rather than hoped-for economic increase • Reduced Utility Tax (Electricity)Revenue reduction ($700,000) due to 2018 tax reform which more than offset an expected revenue increase from cap removal. • Greater-than-budgeted salaries and wages due to Fire Department CBA • Greater-than-budgeted workers compensation rates allocated across all payroll-participating department budgets to maintain that fund's fund balance • General Fund vehicles have historically been increasingly deferred as departmental decision- making has allowed deferring contribution to Vehicle Replacement Fund. This is not sustainable. • A preliminary 2020 liability insurance rate increase (potentially$650,000 city-wide) communicated in annual renewal discussions Immediate Recommendations • Staff anticipates that Council will not accept the proposed deficit and will consider options and measures staff has identified for policy-level prioritizing discussion. • Council has signaled an intent to pursue a Levy Lid Lift for 2021's budget,therefore staff has undertaken to identify costs which can be deferred for one year but no longer. • Council may ratify proposed deferrals or may direct staff to de-prioritize other policy-level areas. Long-term Recommendations Past bond-rating analysis has cited the local economy as an impediment to the City's fiscal health. Longer-term solutions include many efforts through normal service delivery that allows the City's private sector to thrive,which leads to the improved Sales Tax Revenue that a healthy,thriving economy and an expanding population produces naturally Further,the City's normal service delivery that furthers the City's property owners to thrive and enjoy improved property values will similarly produce an improved Property Tax Revenue over time. 2020 City of Yakima Preliminary Budget-27 33 • Debt incurred for Convention Center expansion is an investment in future Lodging Tax revenue which has a multiplier effect on the local economy. • Debt incurred for Millsite road construction is an investment in future Property and Sales Tax revenue. • Council has already had several discussions exploring a Levy Lid Lift that could help in the 2021 budget,and staff will be updating council with Assessed Valuation during October 2019,prior to adoption of the 2020 budget. Staff recommends that restoration of deferred existing needs in addition to restoration of General Fund fund balance would both justify and match restoring a levy rate. 2S-2020 City of Yakima Preliminary Budget 34 Appendix 1 l7!ffi a\ fir PRELIMINARY BUDGET BY FUNCTIONAL GROUPING All figures in the following pages, as in most of the preceding pages'tables and graphs, are directly imported from the City's automated accounting system. Department directors and managers take part in continuous review of 2019 (current-year) budget-to-actual expense management, 2019 year-end estimates and 2020 proposed budget figures. The City relies on budgetary controls, with multiple levels of review, in large part as part of the overall systems of checks and balances to manage service delivery and monitor that the underlying funding is being received as budgeted. 2020 City of Yakima Preliminary Budget-29 35 2020 CURRENT BUDGET BY CITY FUNCTIONAL GROUPING The following provides department-level comparison of General Fund expenditures year over year: 2018 2019 2019 2020 2020 Actual Amended Year-End Proposed vs 2019 Expenditures Expenditures Budget Estimate Expenditures Est General Government City Management $ 424,018 $ 554,681 $ 554,681 $ 496,929 (10.4)% Indigent Defense 1,015,983 1,050,000 1,050,000 1,050,000 City Council 252,979 275,686 273,686 275,790 0.8 Clean City Program n/a City Clerk/Records 622,093 717,207 717,207 728,815 1.6 Human Resources 685,227 768,113 765,038 770,990 0.8 Legal 1,656,089 1,938,043 1,938,055 1,980,769 2.2 Municipal Court 1,601,371 1,711,215 1,707,072 1,784,590 4.5 Planning 610,984 707,117 707,116 728,443 3.0 Code Administration 1,934,180 1,974,496 1,974,496 1,986,584 0.6% City Hall Facility 495,872 602,352 602,353 564,586 (6.3)% Economic Development 399,622 313,243 313,243 240,110 (23.3)% Police 29,260,677 30,325,940 30,418,829 30,297,052 (0.4)% Fire 14,403,116 14,413,022 14,927,981 15,548,762 4.2 Information Technology 3,343,615 3,711,761 3,719,702 3,847,129 3.4 Intergovernmental 150,680 162,689 162,689 162,689 Transfers 2,085,575 2,143,060 2,456,549 2,169,760 (11.7)% Financial Services 1,553,518 1,787,366 1,787,366 1,776,294 (0.6)% State Examiner 116,180 130,000 130,000 130,000 Police Pension 798,375 929,497 929,497 867,197 (6.7)% Firemen's Relief&Pension 1,123,935 1,216,963 1,216,963 1,176,376 (3.3)% Utility Services 1,738,277 n/a Parking 176,663 186,854 186,354 193,072 3.6 Purchasing 600,219 647,613 647,613 686,985 6.1 Engineering 686,953 778,311 783,311 797,440 1.8 Total General Fund 65,736,201 67,045,229 67,969,801 68,260,362 0.4 Parks&Recreation 4,931,743 5,169,394 5,187,195 5,507,995 6.2 Street&Traffic Operations 6,665,852 7,662,384 5,895,797 8,661,924 46.9 Total General Government Funds $ 77,333,796 $ 79,877,007 $ 79,052,793 $ 82,430,281 4.3 30-2020 City of Yakima Preliminary Budget 36 2020 CURRENT BUDGET BY CITY FUNCTIONAL GROUPING 2020 Estimated Increase 2020 Beginning Ending (Decrease) Projected Fund Fund In Fund Revenues Revenue Balance Balance Balance General Fund $ 68,298,856 $ 8,394,532 $ 8,433,028 $ 38,496 Parks&Recreation 5,513,415 360,670 366,090 5,420 Street&Traffic Operations 8,684,071 (17,815) 4,332 22,147 Total General Government Funds $ 82,496,342 $ 8,737,387 $ 8,803,450 $ 66,063 2020 City of Yakima Preliminary Budget-31 37 2020 CURRENT BUDGET BY CITY FUNCTIONAL GROUPING 2018 2019 2019 2020 2020 Actual Amended Year-End Proposed vs 2019 Expenditures Expenditures Budget Estimate Expenditures Est Other Governmental Operating Funds Economic Development $ 106,292 $ 133,400 $ 131,905 $ 124,439 (5.7)% Community Development 1,060,643 4,760,562 4,668,874 1,512,275 (67.6)% Community Relations 614,888 670,519 656,490 747,511 13.9 Cemetery 267,588 293,002 301,135 325,073 7.9 Emergency Services 1,444,094 1,357,829 1,357,275 1,440,679 6.1 Public Safety Communications 3,699,231 4,528,567 4,378,567 4,517,210 3.2 Police Grants 354,938 417,918 417,418 427,188 2.3 Downtown Improvement District 188,106 193,924 193,924 194,267 0.2 Trolley(Yakima Interurban Lines) 13,871 31,699 31,697 9,400 (70.3)% Front St Business Impr Area 2,200 3,500 3,500 3,500 Tourist Promotion(Cony Ctr) 1,666,608 1,768,274 1,702,874 1,697,511 (0.3)% Capitol Theatre 441,612 471,911 471,911 481,192 2.0 PFD Revenue-Convention Center 731,796 958,395 958,395 871,000 (9.1)% Tourist Promotion Area 621,963 690,000 690,000 660,000 (4.3)% PFD Revenue-Capitol Theatre 680,888 712,955 712,955 717,955 0.7 Total Other Governmental Operating Funds $ 11,894,718 $ 16,992,455 $ 16,676,920 $ 13,729,200 (17.7)% Government Capital Funds Arterial Street $ 953,470 $ 12,077,639 $ 5,793,374 $ 6,109,978 5.5 C.B.D. Capital Improvement 1,820,001 21,100 10,100 10,000 (1.0)% Capitol Theatre Construction 13,705 60,000 60,000 60,000 Yakima Rev Development Area 463,736 11,500,142 11,500,142 1,372,140 (88.1)% Parks&Recreation Capital 9,255,532 3,773,713 3,816,986 151,078 (96.0)% Fire Capital 62,198 80,000 80,000 80,000 Law&Justice Capital 629,237 570,000 570,000 370,000 (35.1)% Public Works Trust Construction 468,843 1,568,583 1,568,583 754,179 (51.9)% REET 2 Capital Construction 777,646 779,315 779,315 855,195 9.7 Street Capital Fund 3,548,193 1,526,545 1,526,545 1,582,724 3.7 Convention Center Capital Impr 305,750 13,513,600 13,513,600 435,000 (96.8)% Cum. Reserve for Capital Impr 80,068 33,620 33,620 (100.0)% Total Government Capital Funds $ 18,378,379 $ 45,504,257 $ 39,252,265 $ 11,780,294 (70.0)% 32-2020 City of Yakima Preliminary Budget 38 2020 CURRENT BUDGET BY CITY FUNCTIONAL GROUPING 2020 Estimated Increase 2020 Beginning Ending (Decrease) Projected Fund Fund In Fund Revenues Revenue Balance Balance Balance Other Governmental Operating Funds Economic Development $ 114,000 $ 52,400 $ 41,961 $ (10,439) Community Development 1,672,309 1,153,816 1,313,850 160,034 Community Relations 724,785 738,536 715,810 (22,726) Cemetery 325,700 116,012 116,639 627 Emergency Services 1,453,750 63,899 76,970 13,071 Public Safety Communications 4,365,636 550,044 398,469 (151,575) Police Grants 430,000 1,257,271 1,260,082 2,811 Downtown Improvement District 201,475 70,698 77,906 7,208 Trolley(Yakima Interurban Lines) 11,275 19,863 21,738 1,875 Front St Business Impr Area 3,700 1,325 1,525 200 Tourist Promotion(Cony Ctr) 1,687,910 385,213 375,612 (9,601) Capitol Theatre 475,365 44,508 38,681 (5,827) PFD Revenue-Convention Center 957,000 1,019,380 1,105,380 86,000 Tourist Promotion Area 660,350 70,252 70,602 350 PFD Revenue-Capitol Theatre 727,750 247,511 257,306 9,795 Total Other Governmental Operating Funds $ 13,811,005 $ 5,790,728 $ 5,872,531 $ 81,803 Government Capital Funds Arterial Street $ 5,910,944 $ 1,042,764 $ 843,730 $ (199,034) C.B.D.Capital Improvement 21,450 1,750 13,200 11,450 Capitol Theatre Construction 62,500 149,087 151,587 2,500 Yakima Rev Development Area 1,023,600 4,580,247 4,231,707 (348,540) Parks&Recreation Capital 151,078 296,003 296,003 Fire Capital 153,000 497,056 570,056 73,000 Law&Justice Capital 649,809 516,934 796,743 279,809 Public Works Trust Construction 1,710,848 2,935,383 3,892,052 956,669 REET 2 Capital Construction 1,598,400 1,720,481 2,463,686 743,205 Street Capital Fund 1,893,625 1,073,605 1,384,506 310,901 Convention Center Capital Impr 452,030 802,492 819,522 17,030 Cum.Reserve for Capital Impr 592,733 592,733 Total Government Capital Funds $ 13,627,284 $ 14,208,535 $ 16,055,525 $ 1,846,990 2020 City of Yakima Preliminary Budget-33 39 2020 CURRENT BUDGET BY CITY FUNCTIONAL GROUPING 2018 2019 2019 2020 2020 Actual Amended Year-End Proposed vs 2019 Expenditures Expenditures Budget Estimate Expenditures Est Enterprise Operating Funds Airport Operating Fund $ 1,260,957 $ 1,390,426 $ 1,382,167 $ 1,456,963 5.4 Stormwater Operating 3,379,812 4,107,469 4,072,080 4,098,408 0.6 Transit 8,156,069 9,523,904 9,523,904 9,736,984 2.2 Refuse 7,023,074 7,740,255 7,744,079 7,863,843 1.5 Wastewater Operating 22,117,549 25,312,547 24,914,243 24,394,858 (2.1)% Water Operating 10,321,948 10,362,553 10,350,008 10,963,914 5.9 Irrigation Operating 1,804,753 1,912,529 1,894,483 1,927,039 1.7 Utility Services 1,871,700 1,860,550 1,962,242 n/a Total Enterprise Operating Funds $ 54,064,162 $ 62,221,383 $ 61,741,514 $ 62,404,251 1.1 Enterprise Capital Funds Airport FAA $ 1,223,115 $ 4,829,589 $ 4,829,589 $ 3,490,000 (27.7)% Stormwater Capital 406,691 4,285,000 2,800,000 3,650,000 30.4 Transit Capital Reserve 200,524 1,372,381 1,245,919 936,461 (24.8)% Wastewater Facilities Capital Rsv 658,788 1,250,000 1,250,000 2,750,000 120.0 Wastewater Construction 3,212,501 5,060,000 2,960,000 5,210,000 76.0 Water Capital 433,286 2,135,000 2,001,000 3,945,000 97.2 Wastewater Capital 162,617 3,025,000 2,105,000 3,600,000 71.0 Irrigation Capital 321,219 5,370,154 1,045,154 1,668,760 n/a Total Enterprise Capital Funds $ 6,618,741 $ 27,327,124 $ 18,236,662 $ 25,250,221 38.5 Internal Service Funds Equipment Rental $ 3,533,329 $ 7,751,157 $ 7,199,111 $ 4,644,062 (35.5)% Environmental Fund 213,798 222,950 222,950 122,950 (44.9)% Public Works Administration 1,053,241 1,264,743 1,414,305 1,592,532 12.6 Total Internal Service Funds $ 4,800,368 $ 9,238,850 $ 8,836,366 $ 6,359,544 (28.0)% Employee Benefit Reserves Unemployment Compensation $ 170,014 $ 188,629 $ 188,179 $ 191,141 1.6 Employees Health Benefit 10,824,144 13,649,443 13,648,343 13,864,629 1.6 Workers'Compensation 2,094,689 2,223,444 1,752,895 2,237,427 27.6 Wellness/EAP Fund 69,825 66,900 66,900 66,900 Total Employee Benefit Reserves $ 13,158,672 $ 16,128,416 $ 15,656,317 $ 16,360,097 4.5 Risk Management Reserve Risk Management $ 3,679,290 $ 4,301,306 $ 4,301,306 $ 5,042,889 17.2 Total Risk Management Reserve $ 3,679,290 $ 4,301,306 $ 4,301,306 $ 5,042,889 17.2 34-2020 City of Yakima Preliminary Budget 40 2020 CURRENT BUDGET BY CITY FUNCTIONAL GROUPING 2020 Estimated Increase 2020 Beginning Ending (Decrease) Projected Fund Fund In Fund Revenues Revenue Balance Balance Balance Enterprise Operating Funds Airport Operating Fund $ 1,488,295 $ 279,803 $ 311,134 $ 31,331 Stormwater Operating 3,953,737 899,251 754,580 (144,671) Transit 9,678,976 4,022,777 3,964,769 (58,008) Refuse 7,683,732 1,319,860 1,139,749 (180,111) Wastewater Operating 23,398,472 2,060,616 1,064,230 (996,386) Water Operating 11,013,300 1,745,064 1,794,451 49,387 Irrigation Operating 1,908,700 593,250 574,911 (18,339) Utility Services 1,963,265 11,147 12,169 1,022 Total Enterprise Operating Funds $ 61,088,477 $ 10,931,768 $ 9,615,993 $ (1,315,775) Enterprise Capital Funds Airport FAA $ 3,820,500 $ 1,100,824 $ 1,431,324 $ 330,500 Stormwater Capital 1,200,000 4,005,362 1,555,362 (2,450,000) Transit Capital Reserve 534,000 5,391,289 4,988,828 (402,461) Wastewater Facilities Capital Rsv 1,000,000 2,883,277 1,133,277 (1,750,000) Wastewater Construction 300,000 8,832,317 3,922,317 (4,910,000) Water Capital 2,527,100 4,405,084 2,987,184 (1,417,900) Wastewater Capital 1,900,000 2,721,104 1,021,104 (1,700,000) Irrigation Capital 1,656,600 4,586,022 4,573,862 (12,160) Total Enterprise Capital Funds $ 12,938,200 $ 33,925,279 $ 21,613,258 $ (12,312,021) Internal Service Funds Equipment Rental $ 4,837,143 $ 215,480 $ 408,561 $ 193,081 Environmental Fund 45,000 449,968 372,018 (77,950) Public Works Administration 1,240,201 451,492 99,161 (352,331) Total Internal Service Funds $ 6,122,344 $ 1,116,940 $ 879,740 $ (237,200) Employee Benefit Reserves Unemployment Compensation $ 228,626 $ 226,904 $ 264,390 $ 37,486 Employees Health Benefit 14,015,332 3,225,142 3,375,846 150,704 Workers'Compensation 1,870,802 487,989 121,364 (366,625) Wellness/EAP Fund 100,000 68,216 101,316 33,100 Total Employee Benefit Reserves $ 16,214,760 $ 4,008,251 $ 3,862,916 $ (145,335) Risk Management Reserve Risk Management $ 5,035,770 $ 1,906,861 $ 1,899,741 $ (7,120) Total Risk Management Reserve $ 5,035,770 $ 1,906,861 $ 1,899,741 $ (7,120) 2020 City of Yakima Preliminary Budget-35 41 2020 CURRENT BUDGET BY CITY FUNCTIONAL GROUPING 2018 2019 2019 2020 2020 Actual Amended Year-End Proposed vs 2019 Expenditures Expenditures Budget Estimate Expenditures Est Debt Service Public Facility District PFD Debt Service $ 1,029,850 $ 1,030,925 $ 1,030,925 $ 1,077,570 4.5 General Obligation Misc LTGO Bonds 10,930,676 3,535,614 3,535,614 3,668,400 3.8 1996 LTGO Bonds 425,265 349,070 349,070 485,973 39.2 Utility Bonds 2008 Water Bond $ 229,167 $ $ $ n/a 2008 Wastewater Bond 390,677 415,063 415,063 412,738 (0.6) 2004 Irrigation Bond 264,228 320,154 320,154 318,760 (0.4)% 2003 Wastewater Bond 1,126,083 1,162,400 1,162,400 1,169,200 0.6 Total Debt Service $ 14,395,946 $ 6,813,226 $ 6,813,226 $ 7,132,641 4.7 Trust and Agency Funds YakCorps Agency Fund 691,000 691,000 658,057 (4.8)% Cemetery Trust 12,000 12,000 12,000 12,000 Total Trust and Agency Funds $ 12,000 $ 703,000 $ 703,000 $ 670,057 (4.7) Total City Budget $ 204,336,070 $ 269,420,512 $ 251,270,369 $ 231,159,472 (8.0)% 36-2020 City of Yakima Preliminary Budget 42 2020 CURRENT BUDGET BY CITY FUNCTIONAL GROUPING 2020 Estimated Increase 2020 Beginning Ending (Decrease) Projected Fund Fund In Fund Revenues Revenue Balance Balance Balance Debt Service Public Facility District PFD Debt Service $ 1,078,000 $ 161,310 $ 161,740 $ 430 General Obligation Misc LTGO Bonds 3,668,400 1996 LTGO Bonds 486,000 77,972 77,999 27 Utility Bonds 2008 Water Bond 590,003 590,003 2008 Wastewater Bond 412,738 260,822 260,822 2004 Irrigation Bond 318,760 120,276 120,276 2003 Wastewater Bond 1,169,200 2,549,911 2,549,911 Total Debt Service $ 7,133,098 $ 3,760,294 $ 3,760,751 $ 457 Trust and Agency Funds YakCorps Agency Fund $ 658,057 $ $ $ Cemetery Trust 24,000 696,396 708,396 12,000 Total Trust and Agency Funds $ 682,057 $ 696,396 $ 708,396 $ 12,000 Total City Budget $ 219,149,337 $ 85,082,438 $ 73,072,303 $ (12,010,135) 2020 City of Yakima Preliminary Budget-37 43 • 38-2020 City of Yakima Preliminary Budget : v..t. •a ammatattatzte, fet;f..Y4',4'4!'\., nift•it••;777tPlat;Mg•iiiiig;F:.;•t::::::';:;;;;;attaetWatTattr.477:245:2:::::*:;:'rK:i'fami•ataititiatn.'*,'""•flg...grgzgariWietartd4igii1P.AVRAMItailaivOtagaitaktignpfliMtigi.aligiFt:54.444!:'."•?.. 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Decisions requiring policy decisions involving weighing service levels from one program or another impact community expectations. Similarly, decisions that weigh service delivery versus short-term fiscal sustainability are also policy-level.This section outlines and discusses various policy issues brought forward during the budget process for consideration. Discussion is required on these or other options for inclusion in the 2020 Budget. Further study or amendment of budget options may be considered until council adoption of the 2020 Budget in December. At the point in time of Preliminary Budget,most policy issues are NOT incorporated into the Preliminary Budget, subject to evaluation by the governing body,direction to staff,for further possible action. In the case of Enterprise Funds,some policy issues that staff has found to be feasible under existing funding has been incorporated and are noted with a a "Yes" under Budgeted 2020: POLICY ISSUE SUMMARY Expenditure Budgeted Budgeted Fund Revenue 2020 Page City-Wide Vehicle Replacement Policy City-wide Unknown No 3 General Fund Utility Tax Increase-Clean City Program (3 Yr Req) 001 Neutral No 4 Fire-Inspection Report Filing Fee 001 $ 50,000 No 7 Fire-Two-Tier Hazardous Materials Fee 001 291,000 No 8 Fire-Inspection Fee Increase 001 12,250 No 10 Fire-Special Event Fee Increase 001 10,000 No 11 Fire-Add One FTE-Day Investigator 001 112,360 No 12 Fire-Add One FTE-Comm Risk Reduction Spec 001 95,000 No 13 Police-Cell Phones 001 44,000 No 14 Police-Add 4 PT FTE's-Comm Response Officers 001 125,000 No 15 Police -Add One FTE Admin-Systems Analyst 001 102,000 No 16 Parking-License Plate Recognition Technology 001 100,000 No 17 Code Administration-Plans Examiner I Position 001 68,000 No 18 Public Works-Community Centers Maintenance 001 40,000 No 19 Economic Development-Airline Service Dev 001 75,000 No 20 Parks&Recreation Add One 9 Month Perm Pos-Ball Field Maintenance 131 15,000 No 21 Second Beyond the Bell Program 131 75,000 No 22 Lions Pool Dehumidification System 331 150,000 No 23 2020 City of Yakima Preliminary Budget-1 47 POLICY ISSUE SUMMARY Expenditure Budgeted Budgeted Fund Revenue 2020 Page Streets Traffic Calming (3 year request) 342 50,000 No 24 Other Funds Public Works-Community Centers Capital Repair 342 60,000 No 25 Public Works-Security Cameras (3 year request) 560 30,000 Yes 26 Public Works-Roof Replacement 560 300,000 Yes 27 Public Works-Fuel Management Software 555 95,000 No 28 Public Works-Reorganization 551 Neutral No 29 Engineering-Pavement Condition Index Update 142 50,000 No 30 Enterprise Funds-All Budgeted except TV System Airport-Runway Lights / Crack Seal 422 1,700,000 Yes 31 Airport-Aviation Apron Design($1.9 million/2021) 422 170,000 Yes 32 Airport-Beacon Replacement 422 25,000 Yes 33 Airport-Closed Caption TV System 515 35,000 No 34 Airport-Passenger Boarding Stairs 422 35,000 Yes 35 Airport-Vehicle Replacement 422 50,000 Yes 36 Airport-Fuel Pump Replacement 421 25,000 Yes 37 Airport-Rate Increase 421 6,957 No 38 Transit-Heaters/Solar Panels 464 110,000 Yes 39 Refuse-Rate&Cost of Service Study 471 40,000 Yes 40 $ 3,205,750 2-2020 City of Yakima Preliminary Budget 48 2020 POLICY ISSUE General Government-City-Wide VEHICLE REPLACEMENT POLICY COUNCIL PRIORITY • Fiscal Sustainability • Public Trust and Accountability NARRATIVE This is to note that a material improvement is needed in the funding of replacement vehides,city-wide, and to transparently inform current budget decision-making as it impacts future budgets and planning. Deferring vehicle replacements in recent past years is not sustainable and deferring in the 2020 budget is a one-time strategy only possible if future possibilities are identified now. In past years,some vehide replacement has been deferred as a transfer from operating departments. As expenses have been squeezed every year,vehicle replacement transfers have decreased,stretching the useful lives of vehicles. Police Department vehides were segregated into a separate replacement fund, and debt has largely funded replacements. Per City Charter§3.15.030,the Equipment Rental Fund is required to replace all vehicles except airport and fire. The funding formulas defined in§3.15.030 have been de-prioritized,deferred,so the plan to correct is currently engaging all departments with quantifying the correction needed. A multi-department vehide replacement task force has begun meeting to ascertain the gap in replacement funding for all existing vehides in all funds in all departments. This large math exercise requires a complete inventory of vehicles,by fund,by department, with acquisition dates,estimating the real-life number of years each vehide will last,and maintaining extended-life vehides. Compounding the problem are complications such as the total number of vehides fluctuating with staffing,usage, and when vehides are kept as "spare." PROPOSED BUDGET Expenditure Title (Revenue) Vehicle Replacement Policy Unknown POSTPONEMENT/OTHER COSTS $225,000 from General Fund for PD Vehicles is proposed to be deferred one year only, due to the extended useful life of vehides purchased at the time of instituting a take-home policy (insurance reimbursement is budgeted to replace vehicles that are completely damaged through collisions which occurs with sufficient statistical frequency to justify including in budget). BUDGET FUND City-wide 2020 City of Yakima Preliminary Budget-3 49 2020 POLICY ISSUE General Government UTILITY TAX INCREASE/ CLEAN CITY PROGRAM (471) COUNCIL PRIORITY • Public Safety • Healthy Communities and Neighborhood Building • Partnership Development NARRATIVE Part I -Utility Tax Increase Over the last 12 months the City collected $694,060 in utility tax payments from Yakima Waste. At the current tax rate of 16%,it is estimated that Yakima Waste invoiced $4,337,878 ($694,060 / 16%) to business customers within the City. Utility tax is collected in the General Fund. General Funds are allowed to be utilized for various city-wide activities,including clean ups of illegal dumps and abandoned homeless camps. Increasing the utility tax from 16%to 20%on commercial refuse collection could generate an additional $173,515 ($4,337,878 x 20%)in utility tax revenue to implement the Clean City program as presented since the funding would be earmarked in the general fund for this specific purpose. The following table summarizes the estimated revenue generated at a 20%tax rate as well as the collection rate impact to Yakima Waste commercial customers that have a 3-yard or 4 yard container collected weekly or a one-time service for a 20 yard drop box. ESTIMATED TAX REVENUE &COMMERCIAL RATE IMPACT 4% INCREASE Tax 30 yd drop Utility Tax Revenue 3yd weekly 4yd weekly box Current Rate @ 16%. $ 694,060 $ 84.78 $ 110.25 $ 112.52 Increased Rate @ 20% 867,576 87.70 114.05 116.40 $Change from 16%.to 20%. 173,515 2.92 3.80 3.88 If the utility tax was increased by 9%from 16%to 25%, the following table compares the expected increase in revenue and the impact on collection rates. 4-2020 City of Yakima Preliminary Budget 50 ESTIMATED TAX REVENUE &COMMERCIAL RATE IMPACT 9% INCREASE Tax 30 yd drop Utility Tax Revenue 3yd weekly 4yd weekly box Current Rate @ 16% $ 694,060 $ 84.78 $ 110.25 $ 112.52 Increased Rate @ 25% 1,084,469 91.35 118.80 121.25 $Change from 16%to 25% 390,409 6.58 8.55 8.73 Part 2-Clean City Campaign- Community Cleanup Strategy One of the core objectives of the proposed "Clean City Campaign"is health,safety,and appearance of the community. Illegal dumping and general litter along arterial streets and in parks have become a significant challenge for current staffing levels and budgets. This policy issue proposes to create a method of supporting community dean-up operations and a response to illegal dumping which is properly funded and not supported by refuse rate payers. Funding this strategy would allow contracting with non-profit or religious organizations to assist in the clean-up programs,as well as provide a source of funds to support disposal fees or other quantifiable expenses necessary for the timely response of dean-up issues. The current proposed program is limited;however,the full community deanup program is comprised of the following services: • Ongoing dean-up of litter and weeds from major thoroughfares in the City • Clean up of illegal dumps on public property • Clean up of abandoned homeless camps • Bulky waste pick-up • Request for clean-up of private property in violation of city ordinances • Coordinate local neighborhood clean-ups The full program would be a combination of City employees and subcontractors. Contracted services would include weed and litter patrols,illegal dump dean-up,and bulky waste collection. Temporary workers would be hired to supplement City project teams during the busy summer months,special events, and during periods of high work loads. Equipment would include a mid-size truck for regular clean-ups,two of the division's rear load packer trucks, and a box truck to store and transport the equipment for special clean-ups. The proposed cost of providing the necessary response is summarized in the table below. 2020 Estimated Program Expense Cost Labor $ 110,000 Supplies 20,000 Equipment 22,500 Landfill 17,500 Total Program $ 170,000 2020 City of Yakima Preliminary Budget-5 51 PROPOSED BUDGET Expenditure Title (Revenue) Revenue Options Utility Tax Increase-4% $ 173,515 Utility Tax Increase-9% 390,409 Expenditures Clean City Campaign-Community Clean-up 170,000 POSTPONEMENT/OTHER COSTS The Refuse Division has expended $96,244 YTD (Jan 1 to Sep 10)and is on pace to spend approximately $140,000 in FY19 deaning up illegal dumps,homeless camps,litter complaints, and other areas of the City where litter and debris have accumulated. While this is a significant amount,the Refuse Division is limited in their response due to staffing and funding shortages. In addition,it is prohibited to utilize refuse rates for such activities. BUDGET FUND 001 8951606 /471 2020 City of Yakima Preliminary Budget-6 52 2020 POLICY ISSUE General Government-Fire INSPECTION REPORT FILING FEES COUNCIL PRIORITY • Fiscal Sustainability • Public Safety NARRATIVE This policy issue request is to implement an inspection report filing fee associated with required maintenance and system inspection records for fire protection systems. Examples of fire protection systems indude automatic sprinkler systems,hood and duct suppression systems,fire alarm systems, paint booths,and fire doors. These fees are paid for by certified contractors trained in the design and maintenance of these systems. The International Fire Code requires all reports to be submitted to the Authority Having Jurisdiction (AHJ),which in this case is the fire department inspection division. The fee for each report would be$15.00. The total number of reports reviewed annually is approximately 4,000. This is a conservative estimate of the total revenue potential. PROPOSED BUDGET Expenditure Title (Revenue) Inspection Report Filing Fees $ 50,000 POSTPONEMENT/OTHER COSTS None BUDGET FUND 001 8954253 2020 City of Yakima Preliminary Budget-7 53 2020 POLICY ISSUE General Government-Fire TWO-HER HAZARDOUS MATERIALS FEE COUNCIL PRIORITY • Fiscal sustainability • Public Safety NARRATIVE The fire department,by Yakima Municipal Code Chapter 6.90,is tasked to mitigate Hazardous Materials Incidents,and as a result of this,impacts the City's General Fund which incurs the cost to mitigate these types of incidents. The State of Washington mandates all those that have a business that maintains reportable quantities of hazardous materials on their premises to send reports (Tier 2 hazardous material reports) to the local fire department-it is also mandated by the state to maintain the reports for seven years. In addition,the State,as of 2019,mandates the local fire department to maintain these reports. Creating a new fee schedule (Tier 2 fee) and increasing expenditures for the fire department will help support hazardous materials incidents record retention,response and mitigation. This fee would specifically impact 97 businesses within the City of Yakima that have threshold levels of hazardous materials that require reporting of those chemicals stored onsite at any one time. The reportable quantities of 10,000 pounds for hazardous substances;or 500 pounds(the threshold planning quantity)for an Extremely Hazardous Substances (EHS). The annual fee for each business would be$3,000 and would generate an annual revenue of$291,000. These fees reduce the impacts on the City's general fund, and would allow the Fire Department to hire an individual to maintain the reports with annual salary and benefits of$98,000. Additionally,the annual fee would provide the$75,000 needed to maintain the annual firefighters training(overtime and backfill) that is required by Washington Administrative Codes. The membership cost for the Tri- Counties Haz-Mat Consortium is$12,000. The fee would also offset the maintenance and replacement cost for apparatus,equipment and supplies required for response and mitigation ($106,000). The implementation of this fee would allow the City of Yakima and the Fire Department access to grants from the Washington Department of Ecology and from BNSF Railway for hazardous materials mitigation training and equipment. PROPOSED BUDGET Expenditure Title (Revenue) Two-Tier Hazardous Materials Fee $ 291,000 POSTPONEMENT/OTHER COSTS S-2020 City of Yakima Preliminary Budget 54 The City of Yakima Fire Department is currently a member of the Tri-County Hazardous Materials Consortium and the annually cost is$12,000 for membership. The Consortium will disband due to the rising cost that the team members are incurring and Yakima will be forced to ensure its own personnel are trained to meet Yakima Municipal Code Chapter 6.90. Additionally,the fee would cover the annual cost of$75,000 to cover the overtime and backfill (outlined in the 2018-2021 CBA)for members to maintain qualifications that are required by the Washington Administrative Codes. The Yakima Fire Department will have a maintenance and replacement cost for equipment this year of$62,000 which is required by the WAC's and EPA Laws 1910.120. BUDGET FUND 001 8954220 2020 City of Yakima Preliminary Budget-9 55 2020 POLICY ISSUE General Government-Fire INSPECTION FEE INCREASE COUNCIL PRIORITY • Fiscal Sustainability • Public Safety NARRATIVE This is a proposed increase to the fire inspection fees by five dollars across all occupancies types along with the compliance re-inspection fee schedule. The annual fire and life safety fee schedule would reflect the following changes: • E,I,F,H,M and S occupancies 0-5.000 sq. ft. = $80.00,5,001 - 10,000 sq. ft. = $105.00 and 10,001 and over sq. ft. = $130.00. • A,B,R occupancies 0-5,000 sq. ft. = $55.00,5,001 - 10,000 sq. ft. = $80.00 and 10,001 and over = $105.00 Compliance reinspections would reflect the following changes: 1st reinspection $0.00 2nd reinspection $55.00 3rd reinspection $105.00 4th reinspection $155.00 5th reinspection $205.00 6th reinspection $250.00 There were no fee increases for year 2019. These increases will help offset the salary increase for the fire inspectors for 2019 and 2020. PROPOSED BUDGET Expenditure Title (Revenue) Inspection Fee Increase $ 12,250 POSTPONEMENT/OTHER COSTS The increase in the cost of living adjustments for the three fire inspectors over 2019 and 2020 will impact the bottom line of the general fund more without a gradual increase to inspection fees. Although the fire and life safety division is not a true enterprise fund,a slight increase to the fee schedule helps lessen the impact to the general fund. As more occupancies come in to compliance there is also the potential for a decrease in compliance re-inspection fee revenue because occupants are correcting their violations earlier or do not have any at all because they know what is required of them. BUDGET FUND 001 8954253 10-2020 City of Yakima Preliminary Budget 56 2020 POLICY ISSUE General Government-Fire SPECIAL EVENT FEE INCREASE COUNCIL PRIORITY • Fiscal Sustainability • Public Safety NARRATIVE The fire department,by Yakima Municipal Code Chapter 9.70.190,is tasked to recover incurred cost for supporting Special Events within the City limits. The Yakima Fire Department supports numerous Special Events within the City Limits annually and this support will not decline. Permit the Fire Department an expenditure increase to offset the incurred operational cost. During the 2018 budget cycle YFD Administration was given direction to find revenue that would offset impacts on the City's General Fund. The Special Events fees were created based on the 2017 salaries and operational cost for apparatus and equipment. Because there has been a direct cost increase for both labor cost/salaries and apparatus operational cost the Fire Department is proposing a 12 percent increase to the current published fees. The fee would specifically impact those Special Events in the City that request Fire Department support. Currently there are ten events that request this support. Increasing the fees would lesson the financial impacts on the City's General Fund. The intent of the fee increase is to offset the labor cost and operational cost, to lesson the burden on the City's General Fund and allow the Fire Departments budget appropriations to be spent on emergency incident response and mitigation. PROPOSED BUDGET Expenditure Title (Revenue) Special Event Fee Increase $ 10,000 POSTPONEMENT/OTHER COSTS The City of Yakima Fire Department will continue to support Special Events and incur the cost to support the Special Events which impact the City's General Fund. The City has a direct cost increase because of settling a CBA with the Firefighters Union that increased labor cost and operational cost. BUDGET FUND 001 8954252 2020 City of Yakima Preliminary Budget-11 57 2020 POLICY ISSUE General Government-Fire ADD ONE FTE - DAY INVESTIGATOR COUNCIL PRIORITY • Public Safety • Public Trust and Accountability NARRATIVE According to RCW 43.44.050 it is the responsibility of the Fire Chief to determine the origin, cause,and circumstances of all fires within the City of Yakima. In 2011,the City of Yakima eliminated funding for the Assistant Fire Marshal position within the Fire Dept. due to budget constraints. This position was responsible for investigating intentional and suspicious fires as well as following up and assisting in the prosecution of arsonists within our community For the last 3 years,Yakima has experienced a significant number of known arson fires and suspicious fires. In 2017,54%of the fires were deemed to be Intentional,Under Investigation,or Undetermined. In 2018,we experienced 56%of our fires in those categories and in 2019 (year to date),we are at 53%. 2018 and 2019 both have over 24% of total fires deemed as being intentionally set. Currently,YFD is using firefighters assigned to active duty apparatus to investigate possible arson fires. These individuals primary responsibility is emergency response which makes their ability to follow up on possible arson investigations very difficult. The City of Yakima is experiencing an annual estimated fire loss of over$7 million with limited ability to investigate and prosecute arsonists. The Assistant Fire Marshal position reinstates a full time investigator whose primary responsibility is to investigate fires,determine if they are the result of arson,and to find and prosecute those that are responsible for intentionally starting fires to damage property and harm those people that we serve. PROPOSED BUDGET Expenditure Title (Revenue) Fire Day Investigator $ 112,360 POSTPONEMENT/OTHER COSTS Last year the City of Yakima experienced more than $11,000,000 in estimated lost property from fire. In order to reduce the City's fire loss we must have and maintain 3 programs. We must have a prevention program, an emergency response capability,and an ability to investigate and prosecute (as appropriate) arsonists. This position will provide the City with that third ability and will, over time,help reduce the financial costs from fires experienced by our community. BUDGET FUND 001 3231100 2020 City of Yakima Preliminary Budget-12 58 2020 POLICY ISSUE General Government-Fire ADD ONE FTE - COMMUNITY RISK REDUCTION SPECIALIST COUNCIL PRIORITY • Public Safety NARRATIVE New position: Community Risk Reduction Specialist. As the result of necessary budget cuts in 2019,the fire department reduced funding through the elimination of the department's Public Education Captain's position assignment. This proposal is to bring forward a new classification for a non- commissioned FTE in the fire prevention division. This position can be partially funded by the new fire inspection filing fees and also conduct fire inspections of ordinary hazard occupancies as a non-certified International Code Council (ICC)inspector to provide additional revenue. This position will create a dedicated person to provide fire prevention education in the Yakima School District and assist with the juvenile fire setter intake and intervention program. It will also assist with fire and life safety inspections during the time between education programs and interventions. PROPOSED BUDGET Expenditure Title (Revenue) Community Risk Reduction Specialist $ 95,000 POSTPONEMENT/OTHER COSTS The risk to the City is an increase in an already high juvenile fire setting activity that has the potential to increase without dedicated public education in the school district. Temporary assignments can be made to fire inspectors;however,that affects their time dedicated to conduct annual fire and life safety inspections. BUDGET FUND 001 3231100 2020 City of Yakima Preliminary Budget-13 59 2020 POLICY ISSUE General Government-Police POLICE CELL PHONES COUNCIL PRIORITY • Public Safety NARRATIVE The Patrol Division would like to issue department cellular phones to all police officers assigned to the Patrol Division. Currently, only patrol officers who are not assigned to specialty units are not issued department cellular phones. The issuance of cellular devices to all patrol officers will increase the ability for officers to engage with community members while on duty and in the field. This is directly related to the department's focus on community policing. In addition to the community policing aspect, the cellular devices will increase communication between department members and supervisors. As the department moves forward with issuing laptops to patrol officers for use in their assigned vehicles, each officer will need to be issued a cellular phone as part of the authentication process for the laptops. Currently approximately 90 officers have cellular devices issued. The department would need approximately 40 more devices. These are estimates based on positions that are filled. The additional 54 phones should be budgeted in the event all positions are filled. The requested funds are an estimate for this request. The numbers used for this estimate were from the last cell phone proposal. This is an increase of about$44,000 per year for this proposal. PROPOSED BUDGET Expenditure Title (Revenue) Cell Phones $ 44,000 POSTPONEMENT/OTHER COSTS The department will be transitioning to a second authentication method for laptop computers that will be put into new patrol cars and issued to patrol officers. The community policing efforts of officers will be enhanced. By implementing the cellular devices issued to all officers,the department can eliminate the majority of the desk phones within the police department. This cost savings can help to offset the cost of the cellular phones that will be issued to patrol officers. BUDGET FUND 001 14-2020 City of Yakima Preliminary Budget 60 2020 POLICY ISSUE General Government-Police ADD 4 PART-TIME COMMUNITY RESPONSE OFFICERS COUNCIL PRIORITY • Public Safety NARRATIVE The Police Department is experiencing increases in service response requests while struggling to maintain authorized strength due to the number of officers on disability or other extended leaves. In an effort to manage lower priority and general information service calls,the department would like to use four (4) part-time,non-commissioned Community Response Officers to respond and report to required incidents during peak hours of service demand. These officers would be issued limited-authority commissions for the purposes of issuing civil infractions and the authority to impound cars. PROPOSED BUDGET Expenditure Title (Revenue) 4 Part-Time Community Response Officers $ 125,000 POSTPONEMENT/OTHER COSTS The department does not anticipate filling all commissioned vacancies or having no disabilities or leaves. Additionally, any probationary police officers hired will need to complete several months of initial training before being considered part of staffing levels. In 2018, the department responded to over 53,000 incidents with an average of a 12%shortage of available staff. BUDGET FUND 001 2020 City of Yakima Preliminary Budget-15 61 2020 POLICY ISSUE General Government-Police ADD ONE FTE - ADMINISTRATIVE SYSTEMS ANALYST COUNCIL PRIORITY • Public Safety NARRATIVE The Police Department has identified the need to research,analyze, and evaluate current practices and processes extracted from multi-discipline data that can improve cost effectiveness, efficiency,and productivity This will indude a variety of administrative avenues,induding budget and examining the totality of the impact. An Administrative Systems Analyst, through the use of established business algorithms,can develop data driven investigations that can improve or validate processes and practices. This can include examinations of all resources including personnel,equipment,training/education and facilities. PROPOSED BUDGET Expenditure Title (Revenue) Administrative Systems Analyst $ 102,000 POSTPONEMENT/OTHER COSTS The Department has long depended on estimations,mostly determined by previous financial activity Little analysis has been incorporated into budget priorities or forecasting changes. Continuing this methodology will bring a "best guess"result without the benefit of data proven decision-making and reductions in areas of affordability,or the ability to define specific needs in those contemplations. BUDGET FUND 001 16-2020 City of Yakima Preliminary Budget 62 2020 POLICY ISSUE General Government-Parking LICENSE PLATE RECOGNITION (LPR) TECHNOLOGY COUNCIL PRIORITY • Public Safety NARRATIVE Due to a recent court ruling the parking enforcement division has had to reevaluate its current enforcement practice. The ruling by the 6th Circuit Court that chalk marking a tire for the purpose of monitoring a vehide for time limited parking enforcement is unconstitutional has made enforcement virtually impossible. The basis of this request is to install mobile license plate reader technology to efficiently administer time limited parking enforcement. The amount requested would cover all hardware, software and installation cost for the LPR solution in 2 parking enforcement vehides. The solution is currently offered by several companies including our current vendor who provides our administration, citation issuance and collection platform. PROPOSED BUDGET Expenditure Title (Revenue) License Plate Recognition Technology $ 100,000 POSTPONEMENT/OTHER COSTS None. BUDGET FUND 001 6536420 2020 City of Yakima Preliminary Budget-17 63 2020 POLICY ISSUE General Government-Code Administration ADD ONE FTE - PLANS EXAMINER I COUNCIL PRIORITY • Public Trust and Accountability NARRATIVE The number of building permits issued has increased annually since 2014 and the permit counter staff has remained constant at three Permit Technicians. Since 2015,the total FTE's for the Code Administration Division has remained constant at 17 FTE's. A comparison of permit and license fee revenue to actual expenditures on staff shows a net gain of$173,000 from fees in excess of costs in 2017 and$459,000 revenue gain in 2018. In 2019,the projection is$171,000 in revenue after expenses. The current staffing level is significantly strained to provide adequate customer service. The permit counter is not designed to be a revenue generator,but is gauged to cover costs. Staff requests the authority to hire one additional staff member for a two-year pilot program(2020 and 2021). The position will be evaluated in the 2022 budget cycle to determine ability to maintain the staff position. We request a Plans Examiner I position which provides cross-over help to the front counter,as well as plan review. BUILDING PERMITS AND REVENUE 750,000 1,400 700,000 1,350 1,300 650,000 1,250 600,000 1,200 1,150 550,000 1,100 50000 1,050 2014 2015 2016 2017 2018 2019 —S— Building Permit Revenue Permits PROPOSED BUDGET 2020 2021 Expenditure Expenditure Title (Revenue) (Revenue) Plans Examiner I Position $ 68,000 $ 68,000 POSTPONEMENT/OTHER COSTS Employee would be working out of class and not being paid what comparable jobs are in other entities. BUDGET FUNDS 001 229 18-2020 City of Yakima Preliminary Budget 64 2020 POLICY ISSUE General Fund -Public Works COMMUNITY CENTERS MAINTENANCE COUNCIL PRIORITY • Healthy Communities and Neighborhood Building • Public Trust and Accountability NARRATIVE The Henry Beauchamp Jr. Community Center (HBCC) and Washington Fruit Community Center (WFCC) are City-owned facilities operated and managed by Opportunities Industriali7afion Center (OIC) of Washington and Yakima Police Activities League (YPAL). Programs offered to the community through both community centers are geared mainly toward youth development which is a City Council Strategic Priority;keeping kids off of the streets and focusing on gang prevention and intervention. The HBCC and WFCC are aging facilities built in the late '60s/early'70s and are in need of restoration. Based on the type of construction,evidence of minimal wear and adequacy of electrical,gas, and water systems, the buildings appears to have at least 20 years life expectancy with proper maintenance. It is the desire of Public Works Administration to budget$20,000 per facility in 2020 to address the necessary maintenance ufili7ing General Funds. This would be half of what was allocated in the 2019 Budget. PROPOSED BUDGET Expenditure Title (Revenue) Community Centers Maintenance $ 40,000 POSTPONEMENT/OTHER COSTS Potential usage loss of the building and the ability to conduct and provide vital programs and services for Youth Development. BUDGET FUND 001 2244824 (YPAL) $40,000 001 2244825 (HBCC)$40,000 2020 City of Yakima Preliminary Budget-19 65 2020 POLICY ISSUE General Fund -Economic Development AIRLINE SERVICE DEVELOPMENT COUNCIL PRIORITY • Economic Development NARRATIVE In 2017, City Council adopted the Economic Development Strategic Plan where air service development at the Yakima Air Terminal-McAllister Field has been identified as one of the twelve priorities. Given this high priority, the City conducted a market study and identified approximately 70%of passenger traffic were driving to surrounding airports,versus utilizing the Yakima Air Terminal-McAllister Field. Due to this concern, City Council launched a FLY YKM marketing program to reduce the passenger leakage and increase ridership out of the airport. In conjunction with a Department of Transportation Small Community Air Service Development(SCASD)grant and Alaska Airlines adding an additional flight to Seattle-Tacoma International Airport,the airport's passenger ridership has increased by 31%. Since the airport has retained additional air service to/from Seattle-Tacoma International Airport,the next step is to explore and pursue alternative airlines or destinations to service the Yakima community. These funds will initiate a market research study in order to collect data and evaluate potential alternative airline destinations. Upon gathering this data,the funds will enable the City's air service consultant to meet with the FLY YKM Alliance and identify a pathway forward in seeking public-private partnerships in order to attract additional airlines or expand destinations serviced by Alaska Airlines. Finally,funds will assist with the development and submission of a SCASD grant application in order to enhance the City's opportunities to expand air service. PROPOSED BUDGET Expenditure Title (Revenue) Airline Service Development $ 75,000 POSTPONEMENT/OTHER COSTS Air service may remain stagnant and adding an additional destination or airlines will most likely not occur. BUDGET FUND 001 2514100 20-2020 City of Yakima Preliminary Budget 66 2020 POLICY ISSUE Parks& Recreation ELIMINATE 2 TEMPS/ADD ONE 9 MONTH BALL FIELD MAINTENENCE COUNCIL PRIORITY • Fiscal Sustainability • Public Trust and Accountability NARRATIVE Minimum wage is increasing from $12.00 per hour to$13.50 per hour in 2020,and with the increased difficulty in finding,hiring,training and retaining temporary workers,the Parks& Recreation Division would like to eliminate 2 temporary workers that can only work up to 866 hours per year and create a 9 month seasonal employee position for ball field maintenance. The position is semi-skilled and the individual in the position must be able to operate heavy machinery,like large commercial mowers,field graders and backhoes and tractors. They must also be able to make irrigation repairs and perform general park maintenance duties which include graffiti removal and vandalism repair. In 2020,the City of Yakima will increase wages for temporary employees,but will also need to pay for additional benefits for temporary employees. It is becoming more of a benefit to hire 9 month seasonal employees that will return year after year instead of temporary employees that can only work up to 866 hours per year. These trained temporary employees often leave the City for full time positions with other organizations. PROPOSED BUDGET Expenditure Title (Revenue) 2 Temps to One 9 Month Seasonal Position $ 15,000 POSTPONEMENT/OTHER COSTS None. BUDGET FUND 131 2020 City of Yakima Preliminary Budget-21 67 2020 POLICY ISSUE Parks&Recreation SECOND BEYOND THE BELL PROGRAM COUNCIL PRIORITY • Healthy Communities and Neighborhood Building • Partnership Developments NARRATIVE One of the Yakima City Council priorities is Youth Development, and additional recreation programs for youth is one way to provide for children in our community and also assist with gang prevention. The Parks&Recreation Division currently operates an after school program called Beyond the Bell,for approximately 100 children at Roosevelt Elementary School. The cost for families to have a child enrolled in the program is$20.00 per week. This covers only a portion of the cost to operate the program. Discussions have been started about the possibility of a second after school program at another location. The cost to operate the program is approximately$75,000. The current program operates Monday through Friday from 3:00 pm to 6:00 pm during the entire school year. This 40 week program is very beneficial for families where both parents work or for a single parent home. The recreation staff members lead activities,help with homework,provide structured craft activities and provide an afternoon snack each day The staff also provide positive role modeling for the children in the program. PROPOSED BUDGET Expenditure Title (Revenue) Second Beyond the Bell Program $ 75,000 POSTPONEMENT/OTHER COSTS None. BUDGET FUND 131 22-2020 City of Yakima Preliminary Budget 68 2020 POLICY ISSUE Parks& Recreation LIONS POOL DEHUMIDIFICATION SYSTEM COUNCIL PRIORITY • Fiscal Sustainability • Healthy Communities and Neighborhood Building • Public Trust and Accountability NARRATIVE Lions Pool has had ongoing issues with humidification control over the past years. An Engineering Firm,Hultz Engineering,has been hired to design a new de-humidification system for Lions Pool. The new system will be incorporated into the renovation and modernization plan currently in process with KDA Architects. Continued issues with humidity will cause further deterioration to the facility if not addressed in the future. During the cold months,condensation within the roof becomes an issue. The new system will be designed to control the environment and create an improved experience for the swimmers and visitors in addition to the prevention of humidity problems. PROPOSED BUDGET Expenditure Title (Revenue) Lions Pool Dehumidification System $ 150,000 POSTPONEMENT/OTHER COSTS The problems that can be caused by excess humidity can be costly. BUDGET FUND 331 5436300 2020 City of Yakima Preliminary Budget-23 69 2020 POLICY ISSUE Streets TRAFFIC CALMING COUNCIL PRIORITY • Public Safety NARRATIVE Public Works,under its Street&Traffic Division,currently has twenty-two pending petitions requesting traffic calming from City residents. Many of these requests will be funded ufili7ing REET II funds allocated from the 2019 budget specifically for traffic-calming measures. However, new petitions continue to be submitted. With a new Traffic-Calming Procedure in place,data is collected to determine if traffic-calming measures are actually necessary for the requested area. If so,staff will proceed through the three components of the new Traffic-Calming Procedure: Education, Enforcement and then possible Engineering. In the end, if a traffic-calming measure needs to be engineered,it is our goal to determine what type would be the most effective -speed humps being one option,at resolving the issue with the least impact to the neighborhood. Costs escalate quickly for traffic calming measures other than speed humps. This request is for$50,000 annually to be funded from REET II. The Street&Traffic Division received $130,000 last year from REET II to cover the back log of previous requests. Prior to the use of REET II funding,traffic-calming projects were funded out of the Streets Road Maintenance fund at the expense of road maintenance projects. PROPOSED BUDGET 2020 2021 2022 Expenditure Expenditure Expenditure Title (Revenue) (Revenue) (Revenue) Traffic Calming-3 years $ 50,000 $ 50,000 $ 50,000 POSTPONEMENT/OTHER COSTS If allocated funding for traffic calming is not provided,the Street& Traffic Division will either not implement traffic-calming measures, or will be forced to utilize the Streets Road Maintenance funds at the expense of necessary road maintenance projects. BUDGET FUND 342 7146310 24-2020 City of Yakima Preliminary Budget 70 2020 POLICY ISSUE Other Funds-Public Works COMMUNITY CENTERS CAPITAL REPAIR & REPLACEMENT COUNCIL PRIORITY • Healthy Communities and Neighborhood Building • Public Trust and Accountability NARRATIVE The Henry Beauchamp Jr. Community Center (HBCC) and Washington Fruit Community Center (WFCC) are City-owned facilities operated and managed by Opportunities Industriali7afion Center (OIC) of Washington and Yakima Police Activities League (YPAL). Programs offered to the community through both community centers are geared mainly toward youth development which is a City Council Strategic Priority;keeping kids off of the streets and focusing on gang prevention and intervention. The HBCC and WFCC are aging facilities built in the late '60s/early'70s and are in need of restoration. Based on the type of construction,evidence of minimal wear and adequacy of electrical,gas, and water systems, the buildings appear to have at least 20 years life expectancy with proper maintenance. It is the desire of Public Works Administration to budget$30,000 per facility in 2020 to address necessary capital repair/replacements ufili7ing REET II Funds. This would be consistent with what was allocated in the 2019 Budget. PROPOSED BUDGET Expenditure Title (Revenue) Community Center Repair&Replacement $ 60,000 POSTPONEMENT/OTHER COSTS Potential usage loss of the building and the ability to conduct and provide vital programs and services for Youth Development. BUDGET FUND 342 7146300 (REET) 2020 City of Yakima Preliminary Budget-25 71 2020 BUDGETED POLICY ISSUE Other Funds-Public Works SECURITY CAMERAS COUNCIL PRIORITY • Public Safety NARRATIVE It is the desire of Public Works Administration to install additional security cameras to its existing system around the facility to assist with the overall safety of both employees and the public. Several break-ins and other"incidents"have occurred on the complex without the ability to properly identify due to blind spots and/or low resolution of existing cameras. An evaluation was conducted resulting in the need for fourteen (14) additional cameras to overcome several "blind spots" which would drastically improve security. Due to the significant cost for both the purchase and installation of the necessary cameras which exceeds$80,000, this will be a phased project by obligating$30,000 per year over the next three (3)years. PROPOSED BUDGET Expenditure Expenditure Expenditure Title (Revenue) (Revenue) (Revenue) Security Cameras-3 years $ 30,000 $ 30,000 $ 30,000 POSTPONEMENT/OTHER COSTS Inadequate security for the safety of City employees and the public at the Public Works Facility BUDGET FUND 560 26-2020 City of Yakima Preliminary Budget 72 2020 BUDGETED POLICY ISSUE Other Funds-Public Works ROOF REPLACEMENT COUNCIL PRIORITY • Fiscal Sustainability • Public Safety • Public Trust and Accountability NARRATIVE The roofs of Buildings 3,4,and 5 at the Public Works facility are in need of replacement. The roofs were originally installed in 1974 and are beyond their useful life expectancy;requiring replacement. Constant leaking of the flat roofs have been experienced resulting in equipment damage. Further leaking continues to endanger assets within the buildings. PROPOSED BUDGET Expenditure Title (Revenue) Roof Replacement $ 300,000 POSTPONEMENT/OTHER COSTS Postponement of the necessary project will incur additional costs due to inflation and the further threat of damaging internal contents and the integrity of the roofs. BUDGET FUND 560 2020 City of Yakima Preliminary Budget-27 73 2020 POLICY ISSUE Other Funds-Public Works FUEL MANAGEMENT SOFTWARE COUNCIL PRIORITY • Fiscal Sustainability • Public Safety • Public Trust and Accountability NARRATIVE The current computerized fuel management system at Public Works is old,inefficient,and replacement parts are becoming difficult to locate. This system controls the City's fuel deliveries and distribution. Records are maintained for inventory purposes,including payments and distribution costs by vehide and division. Daily accurate data must be downloaded. This is a very cumbersome,time consuming process. A new system must be purchased and installed. Funding is available in the 2019 Environment Fund (555)in the amount of$100,000. The remaining $95,000 will be funded in 2020 again from the Environmental Fund. Funds into the Environment Fund are provided by the fuel surcharge applied to every gallon of gasoline and diesel distributed. These funds are set aside strictly for maintenance and operation of the Public Works fuel distribution system. PROPOSED BUDGET Expenditure Title (Revenue) Fuel Management Software $ 95,000 POSTPONEMENT/OTHER COSTS Should the system fail and replacement parts were not available, the entire fuel system at Public Works would be inoperable,shutting down the distribution of fuel to City divisions. BUDGET FUND 555 2S-2020 City of Yakima Preliminary Budget 74 2020 POLICY ISSUE Other Funds-Public Works REORGANIZATION COUNCIL PRIORITY • Fiscal Sustainability • Public Trust and Accountability NARRATIVE In an effort to recruit and keep qualified mechanics it is proposed to: • Change the current Mechanic 2 position title to Lead Mechanic,to better reflect the supervisory nature of the position. Add some of the advanced mechanic duties and a requirement to be certified with the appropriate ASE certification. Adjust salary up by$1.00 per hour. • Modify the current Mechanic 2 duties. Remove all supervisory elements, add some of the advanced mechanic duties and a requirement to be certified with the appropriate ASE certification. Adjust the salary down by about$1.50 per hour. Allow for promotions with ASE certification and internal performance test. • Eliminate the Fleet Maintenance Technician position. PROPOSED BUDGET Expenditure Title (Revenue) Public Works Reorganization Neutral POSTPONEMENT/OTHER COSTS Continued loss of qualified mechanics and difficulty in recruiting BUDGET FUND 551 2020 City of Yakima Preliminary Budget-29 75 2020 POLICY ISSUE Other Funds-Arterial Street Capital PAVEMENT CONDITION INDEX UPDATE COUNCIL PRIORITY • Economic Development • Public Safety • Public Trust and Accountability NARRATIVE The Pavement Condition Index (PCI) provides a numerical rating for the condition of road segments within the road network, where 0 is the worst possible condition and 100 is the best. The PCI measures two conditions: the type, extent and severity of pavement surface distresses (cracks and rutting),and the smoothness and ride comfort of the road. The PCI is a subjective method of evaluation based on inspection and observation by a specialist. Knowledgeable and experienced professionals drive the road network and evaluate its condition in a systematic way The observations are then entered into a database for evaluation and use. The PCI details the current condition of the road network and the rate of deterioration of the road network over time. It can be used to identify maintenance and rehabilitation needs, monitor pavement condition over time,develop a network preventive maintenance strategy, develop road maintenance budgets and evaluate pavement materials and designs. The last PCI performed on the City streets was conducted in 2015. Standard practice is to update the ratings every two years for principal, minor and collector arterials,and every five years for residential streets. The City is required to establish PCI ratings for City streets to determine the cost of Excavation Permits and to prioritize street repair. The City no longer has staff available to perform such a PCI Study and is needing to rely on consultants specializing in PCI evaluations. PROPOSED BUDGET Expenditure Title (Revenue) Pavement Condition Index Update $ 50,000 POSTPONEMENT/OTHER COSTS Postponement will result in higher street repair costs leading to high frequency of road failure; jeopardizing public safety. BUDGET FUNDS 142 4100 30-2020 City of Yakima Preliminary Budget 76 2020 BUDGETED POLICY ISSUE Enterprise Funds-Airport RUNWAY LIGHTS / CRACK SEAL COUNCIL PRIORITY • Public Safety NARRATIVE In 2015,City Council adopted the Airport Master Plan where it identified a variety of capital improvement projects to meet the growth of the aviation industry. One improvement project identified is the replacement of the airport's High Intensity Runway Edge Lighting(HIRL) system. The HIRL system along Runway 9/27 are required during indement weather as well as hours of darkness to allow Alaska Airlines,corporate,and general aviation aircraft to operate at the airport. Based on the Federal Aviation Administration (FAA) guidelines,it's recommended the airport replace the HIRL system as it approaches the end of its useful life. Additionally,Runway 9/27 was rehabilitated with new asphalt and markings in 2010 and is starting to witness longitudinal cracking in the surface. In order to preserve the airport's most valuable asset(its runway pavement),the airport will crack and fog seal the pavement during the replacement of the runway HIRL system. This will extend the pavement life expectancy by 20 percent or roughly 7 years, of which ultimately reduces the City's cost of maintenance. The airport's engineer will work dosely with the FAA and airport management to develop engineered drawings in 2019 and conduct construction activities during summer 2020. Funding sources for both projects will be 90 percent through a Federal Aviation Administration grant and remaining 10 percent from a Passenger Facility Charge. This project will not impact the general or reserve funds at the City. PROPOSED BUDGET Expenditure Title (Revenue) Runway Lights/Crack Seal $ 1,700,000 POSTPONEMENT/OTHER COSTS Potential impacts to airline service as the Runway HIRL system requires additional maintenance. BUDGET FUND 422 2916530 2020 City of Yakima Preliminary Budget-31 77 2020 BUDGETED POLICY ISSUE Enterprise Funds-Airport AVIATION APRON DESIGN COUNCIL PRIORITY • Public Safety NARRATIVE The Yakima Air Terminal-McAllister Field encompasses approximately 5,573,055 square feet of asphalt to accommodate aircraft operations and aircraft parking areas. The Airport Master Plan update, adopted by City Council in 2015,identifies areas of asphalt that require rehabilitation using a Pavement Condition Index (PCI)rating between 0 and 100 (0 meaning failed pavement and 100 meaning excellent pavement). The East General Aviation Apron is included on the airport's Capital Improvement Plan (CIP) to be rehabilitated due to the pavement's poor conditions. This apron is utilized by general aviation,corporate aviation,commercial airlines,military aircraft,and for airline diversions,due to inclement weather at Seattle-Tacoma International Airport or other neighboring commercial airports. In 2020, the airport will contract with an engineer in order to provide design,engineering,and environmental services in preparation to rehabilitate the East General Aviation Apron in 2021. Funding will originate from the Federal Aviation Administration (FAA)in the form of a grant where 90 percent will be paid by the FAA. The remaining 10 percent will originate from the Passenger Facility Charge program. This project will not impact the City's general or reserve funds. PROPOSED BUDGET Expenditure Expenditure Title (Revenue) (Revenue) Aviation Apron Design $ 170,000 1,900,000 POSTPONEMENT/OTHER COSTS Improving the apron will further preserve the airport's ability to accommodate general and cooperate aviation,commercial airlines,military aircraft, and any aircraft diversions due to indement weather at Seattle-Tacoma International Airport. The new apron will decrease the liability for potential foreign object debris from deteriorating asphalt. BUDGET FUND 422 2916512 32-2020 City of Yakima Preliminary Budget 78 2020 BUDGETED POLICY ISSUE Enterprise Funds-Airport BEACON REPLACEMENT COUNCIL PRIORITY • Public Safety NARRATIVE In 2015,City Council adopted the Airport Master Plan where it identified a variety of capital improvement projects to meet the growth of the aviation industry. One improvement project identified is the replacement of the airport's rotating beacon. This navigation instrument is located on top of the Air Traffic Control Tower and alerts pilots during inclement weather and hours of darkness the location of the airport. This instrument is required be Federal Aviation Administration regulations. The current beacon continues to require maintenance and has outlived its useful life. Funding was approved under Passenger Facility Charge application# 19-1S-C-00-YKM on April 2,2019. This funding source will not impact the City's general fund or reserves. PROPOSED BUDGET Expenditure Title (Revenue) Beacon Replacement $ 25,000 POSTPONEMENT/OTHER COSTS Continued maintenance will be required as well as an overall increase to the budget to ensure the current navigation aid is operating. BUDGET FUND 422 2916450 2020 City of Yakima Preliminary Budget-33 79 2020 POLICY ISSUE Enterprise Funds-Airport CLOSED CAPTION TV SYSTEM COUNCIL PRIORITY • Public Safety NARRATIVE The airport terminal encompasses airline service,passenger security screening and ground transportation for the local community As security measures continue to adapt to ever changing threats in the transportation industry,it's been identified that the original analog Closed Caption Television (CCTV)is outdated and requires replacement. Furthermore,the current system only covers the original building design in 1950,and cannot be expanded to the current footprint of the terminal building. Given these complications,it's recommended we replace the CCTV system to allow adequate monitoring capabilities in a high traffic facility. Replacing this system will enhance the airport's access control security system which was slated to be upgraded in 2019. Funds are requested from the general fund to update and install the CCTV system. PROPOSED BUDGET Expenditure Title (Revenue) Closed Caption TV System $ 35,000 POSTPONEMENT/OTHER COSTS The current CCTV is inadequate and does not provide the needed level of security in the terminal building. BUDGET FUND 515 34-2020 City of Yakima Preliminary Budget 80 2020 BUDGETED POLICY ISSUE Enterprise Funds-Airport PASSENGER BOARDING STAIRS COUNCIL PRIORITY • Public Safety NARRATIVE In 2015,City Council adopted the Airport Master Plan,which identified a variety of capital improvement projects to meet the growth of the aviation industry in the Yakima Valley. One improvement project identified is the replacement of the airport's passenger boarding stairs. As the airport continues to observe an increase in airline diverts from Seattle-Tacoma International Airport,it's imperative that airport staff have necessary passenger boarding stairs to accommodate them. The airport's current passenger boarding stairs have outlived their useful life and it has become challenging to locate replacement parts. Additionally,the stairs do not meet current American Disabilities Act requirements to ensure passengers can safely board various types of aircraft that operate at the Yakima Air Terminal-McAllister Field. Funding to replace these stairs was approved under Passenger Facility Charge application# 19-1S-C-00-YKM on April 2,2019. This funding source will not impact the City's general fund or reserves. PROPOSED BUDGET Expenditure Title (Revenue) Passenger Boarding Stairs $ 35,000 POSTPONEMENT/OTHER COSTS Original passenger boarding stairs will require additional maintenance and overall costs to operate will increase. BUDGET FUND 422 2916400 2020 City of Yakima Preliminary Budget-35 81 2020 BUDGETED POLICY ISSUE Enterprise Funds-Airport VEHICLE REPLACMENT COUNCIL PRIORITY • Public Safety NARRATIVE Yakima Air Terminal-McAllister Field staff provides the aviation industry a variety of services, which include airport management/administration,airfield/terminal maintenance,snow removal operations, hazardous wildlife management, airport security,and heavy equipment repairs. In order to provide these services,the airport is required to maintain an appropriate fleet of equipment to ensure the airport remains operational within Federal Aviation Administration standards. In 2018, the airport identified two vehides that have outlived their useful life, which were to be replaced under the 2019 budget. Unfortunately,due to unforeseen infrastructure expenses airport staff deferred these upgrades to be considered under the proposed 2020 budget. The vehides to be replaced are a 1996 Dodge pickup and a 2001 Ford Expedition. The proceeds from the sale of each vehide will assist with the replacement cost. PROPOSED BUDGET Expenditure Title (Revenue) Vehicle Replacement $ 50,000 POSTPONEMENT/OTHER COSTS The current vehicles will continue to be utilized and require increased maintenance costs to operate. BUDGET FUND 421 2816400 36-2020 City of Yakima Preliminary Budget 82 2020 BUDGETED POLICY ISSUE Enterprise Funds-Airport FUEL PUMP REPLACEMENT COUNCIL PRIORITY • Public Safety NARRATIVE In 2015,City Council adopted the Airport Master Plan where it identified a variety of capital improvement projects to meet the growth of the aviation industry. One improvement project identified is the replacement of the airport's fueling facilities,as this equipment has outlived its useful life. The unleaded and diesel fuel pumps are utilized by a variety of users for airport equipment and maintenance vehides,Alaska Airlines deicing equipment,and fire apparatuses utilized by the Yakima Fire Department. All users are restricted to access fuel on airport property due to the size of the equipment that prohibits operations on City streets. The airport fueling pumps continue to experience mechanical issues and replacement parts are challenging to acquire,often leading to extensive downtime awaiting parts. These maintenance concerns impact the airport's ability to fuel snow removal equipment in a timely manner in order to meet Federal Aviation Administration safety requirements. It is recommended both the unleaded and diesel pumps be replaced to ensure fueling stations are available to service airport specific equipment. Funds to replace these pumps will originate from the airport's operations fund. PROPOSED BUDGET Expenditure Title (Revenue) Fuel Pump Replacement $ 25,000 POSTPONEMENT/OTHER COSTS Current fueling facilities will not be adequate to sustain continued operations and may impact the airport's ability to meet Federal Aviation Administration safety regulations. BUDGET FUND 421 2916400 2020 City of Yakima Preliminary Budget-37 83 2020 POLICY ISSUE Enterprise Funds-Airport RATE INCREASES COUNCIL PRIORITY • Economic Development NARRATIVE The Yakima Air Terminal-McAllister Field is operated as an enterprise fund,as all revenues collected from tenants and users help fund the maintenance and operations of the airfield. The airport has been successful in attracting businesses and tenants,and also in expanding airline services to increase the overall revenues to the airport. Tenants throughout the airfield have been fortunate the City of Yakima has not increased rates and charges since 2011,due to the efficiencies of staff maintaining a minimal maintenance and operations budget. However, due to the continued increase in expenses to operate the airport,and to ensure the safety standards of the Federal Aviation Administration are upheld,it is recommended the airport implement a minimal increase to its rates and charges. This offsets the increased expenses with the mandated additional snow removal equipment and deicing capabilities. The following rates and charges are recommended to be increased in the 2020 budget,which is below the average threshold of airports surveyed throughout the Pacific Northwest. Additional Line Item 2019 2020 Difference Revenue Boeing Test Flight Landing Fees01 $ 70 $ 80 14% $ 284 Airline Charters Terminal Fees" 250 300 20% 600 Airline Diverts Terminal Fees" 300 350 17% 250 Fuel Flowage Fee 11% 5,823 Total Annual Revenue"' $ 6,957 (1)Landing fees are assessed on per landing as outlined in Boeing's agreement. (2)Terminal fees are assessed based on a per use(average 12 charters/year). (3)Fuel Flowage Fees are assessed based on per gallon delivered to fuel storage tanks. (4)0.47%increase in 2020 Budget. PROPOSED BUDGET Expenditure Title (Revenue) Rate Increases $ 6,957 POSTPONEMENT/OTHER COSTS Expenses will increase upon the receipt of new snow removal and deice equipment due to updated safety standards administered by the Federal Aviation Administration. Airport budget would absorb increased expenses and might have the potential of impacting other services provided to the aviation industry. BUDGET FUND 421 8954421 2020 City of Yakima Preliminary Budget-3S 84 2020 BUDGETED POLICY ISSUE Enterprise Funds-Transit HEATERS AND SOLAR PANELS COUNCIL PRIORITY • Healthy Communities and Neighborhood Building NARRATIVE Transit received a 5339 Federal Small Urban Grant for approximately$223,242 to be used for equipment projects and facility upgrades. The 5339 grant requires an 80/20 match,whereas,Yakima Transit must provide 20% of matching funds towards the intended purpose of the grant. Of the$223,242 available from this grant, Transit will dedicate$88,000 of the 5339 funding and $22,000 from Transit Capital for a total of$110,000,to be used towards upgrading bus infrastructure. Transit is planning to use these funds towards purchasing and installing: • Engine heating systems for buses to reduce idle time,emissions,and engine wear. • Solar mounted panels to keep bus batteries charged. PROPOSED BUDGET Expenditure Title (Revenue) Heaters and Solar Panels $ 110,000 POSTPONEMENT/OTHER COSTS Loss of Small Urban 5339 Grant monies dedicated for this purpose. BUDGET FUND 464 4516300 2020 City of Yakima Preliminary Budget-39 85 2020 BUDGETED POLICY ISSUE Enterprise Funds-Refuse RATE AND COST OF SERVICE STUDY COUNCIL PRIORITY • Fiscal Sustainability • Public Safety • Public Trust and Accountability NARRATIVE This project involves evaluating the City's waste management collection operations and proposing changes to current and future collection system,a financial analysis of the proposed changes,and an update of the service rates over the next five years. It entails a cost assessment of the City's collection operations,impact of growth in resident and collection areas,and program and personnel changes. The project would be completed in the following tasks: 1. Prepare an assessment report regarding scheduling, collected carts / containers per route,and recommendations for any existing and future modifications. 2. Conduct an assessment of existing personnel,equipment and future needs as the system expands. Analyze general growth in the City and the solid waste system through development and growth in annexation areas and additional services. 3. Prepare financial analysis that will include estimates/projections of needed operating revenue and expenses and a rate structure to support the system changes over a 5-year period. PROPOSED BUDGET(S) Expenditure Title (Revenue) Rate and Cost of Service Study $ 40,000 POSTPONEMENT/OTHER COSTS The current rate structure for the Solid Waste Division which covers the cost of service,runs through December of 2020. The rate study and cost of service analysis will allow the Division to project costs for the next five years,beginning 2021 through 2026. Postponing the rate and service study will result in insufficient funding to sustain the level of service for the Solid Waste Division. BUDGET FUND 4714784100 40-2020 City of Yakima Preliminary Budget 2020 Budget Oct. 1 Work Session e. z ,14 Is, ,CI' i. !, 4 ...4 LL Clear — Reliable — Trustworthy Where We Start 2020 Budget Goals 1 . Achieve a balanced budget in every fund 2 . Assure appropriately- prioritized service delivery 3 . Achieve improvement in General Fund reserve Getting to 16 . 7 % City of Yatirna ,nnratPo i t d haanco. as a w .f }n?a( xpenses z .uu< ma .... a... ....�... . .....v, A_ ou5 'rti x.a.. . ...................p..............,...xi N7 .rovt $1 6M ARCS( Lee tDCS( 34 , 14:G 36! IG eni3 FCSq. +S IC 6 i]II 3Cia Strategic Priorities ❑ Fiscal sustainability ❑ Main/Arterial street development ❑ Community policing ❑ Safe routes to schools ❑ Youth development ❑ Mill Site Development ❑ Homelessness / Affordable housing ❑ Airport expansion ❑ City facilities ( pools and community centers) ❑ Downtown destination Preliminary Budget 2020 RESERVE BALANCE SUMMARY Estimated 2020 2020 Increase in Estimated 21320 Beg. Ptejeeted Ptopesed iD ventein) 2020Ending Fund Balance Revenues Expenditines Balance General F d 332 9 iati,2173,354 5 63,260,361 3,4955 S 3,4313,027 Fatrcs and Re^ration :L,.,ofJ saioz.5 l . ".+ 30,O ,tieet& Tafic Operations 117 3151 3634,071 3to1924 22,147 4,3:32 Genei_ti Gevannimt Subtotai 37,:337 32,4e6242 Se140 DO. 56032 24303,443 OtherMoveannieritslcp i g Runde .9p 7.26 ,, a, t Our ?p1451 131:40,5 0372 U2 Goventment Ciprtt Funds la,20s,534 13E27,264 11,7513 '93. 1,14e4191 15,355,525 Erteryttee OpetatingFunds 10 331,743 31,065,477 67404,2E2 11 e- 3 4 313 se3 Enterpltse Camtal Funds 33 9274263 12,438200 75,250,221 32,32I 21 613,254 Internal Bertuca Fonds 1,II3,940 0,11„44 6, 79, 4 374,741 F.iploe Gne:it Remit 400;2552• 6,214,76t7 16,360,063 'i4;3,:5 33652411lb Erb T..1. rg mzt.t Reserves 1436,861. a.043r0 3:42,Y8n7 (7,119) 1,394,742 Debt Sae vice &Agency 09ruie 445374 a . e:3,1.'=4 . SC3t97. 11457 4,464,145 Total I 36x002;137 9 219,149 i& 5 21,159,470 S 013,134t S 7172203 General Fund Good News and Bad News Preliminary Budget Report Process Goals & Outcome Goals City-wide Summary table Comparison 2019 v. 2020 Revenues Expenses Fund Balances Challenges & Recommendations What Could Be Cut ? • Positions previously frozen • Additional General Fund staff • Vehicles • Workstations • Street projects • Park projects • Facilities Preliminary Budget Report • The starting place • 2020 Salaries are uploaded Staff has evaluated what : 1 . Can be managed 2 . MUST be addressed 3 . Could be deferred Budgeting Fundamentals What have other cities found to be NOT best practices ? Capped Revenue ( 1 % ) forces us to have conversations with our community prioritizing expenditures every year 10-YearFcrecast r r r _ 2 a 4 5 _ I & 9 10 Revenue - - Expense Taxes ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... ............................................... Service Infra- Deliveryr r structure Enterprise Funds General rcapital .IIM ": lilt St Streets +1 ` Police '� ' ait Fund Parks Capital 40 •>»»<>>> ► � 'Fire <»»<»>>' ►- Facilities Streets :::::::::::: +M :>»»»><:�.► PD Capital 14 ::: ....f Parks FD Capital 411101 Administra ive Codes/Plan g Reserve? Workers Comp Risk Management Vehicle Replacement Health Benefit Reserve Funds are intricately inter- related All "Other " funds are restricted for something Balancing : • Each fund • All funds • Over time Capital Budgeting Budgeting for Infrastructure 1 . Save up 2 . Debt 3 . Pay as we go :ii . i:< Y Y"4 ?'r�`.::::itop ±c4J?'! ' E:Es 4i iiti;4: 3 •iki3 ti ' 'h'Y•i • • • v is { d u , y di Arid ii ji • •1 it .u' • y[ MT K . I. k. i i%'."#. .S,Ski.. ...ii ;ii4yi. • • • • Si ;1j EW • 1• : u �: > ! SS4 7....::::......::.:1a......:.!.....1.: i.i Yv ...-.u.....u. 4 4114 . i^ ii £ „Y- '..1....::11611 t4: . i :.kj: i Y : Siii:' ig id .I: 4 tali 1 ar' t. '. ixI:OR ; '.1!..iir:iikYkY • e 1/4W4a` ' ' �y. ".S?i i! ii ____ 1 6 • k .S�. !!.;!''` i<�'Iti�� n I is �.• Yi' • F. :}'°iEr 10; g Asttamtv tit } %l�{iakiii.ryiwY9 t 5'4: is .. .... .. ... .;� .. .. ..:. Y'u''luY: Y'::•i'u"':•Yi:.uu"luiiYi::.::.iiiui_:u:._.:i :i;^.^:.^:::::ii:: ........... .._._. _. w.. . - ... uu u.uu uu uuu>Yuvu. Property Tax Supported General Fund and Capital Funds -a1cs& staL LCasital ' '73n 3 �% 450,CCO . O6 Streets Capital =i-e Caaita , I526,.545 fiO,CDC . ;Na ktteral Streefs, 12,5:7:639 C, Debi, 3,1C4,624 , 3°m Commtr'.ity Dove e-.) ent. 16431:b Y=i -ask: .-rcr�..:"rrrrrrrrrrrrrrrrrrrrrrrrrr�: .D,i6'Y.NA , tii • ctteE t,A E ngi-pet nt' C ty4dro n, Po ice Co ts& 2019 Budget 1.481,950,8% ... ... .. y-e, figures ssssso.4sfi , 7ia Average Home value $ 240, 000 x Property Tax Rate / $ 1, 000 $ 3. 00 = tax $ peryear $ 720 How much does a street cost ? How long does the neighborhood 's property tax pay for the 1/ 10 mile cul - de -sac ? Capital Budgeting Viewed through an equity lens, assets are an obligation : 1 . Streets 2 . Vehicles 3 . IT infrastructure 4 . Buildings 5 . Water projects, etc . Infrastructure 1 . Fiscal sustainability requires balancing current-year and long-term 2 . Deferring has a compounding cost 3 . Debt is one way to match spending with useful life 4 . Declining Property Tax rate Infrastructure 1 . Cutting Infrastructure spending is a short-sighted strategy 2 . Must have a plan to restore annual capital funding Debt is not a funding source Municipal Debt is fundamentally different than personal debt Matching Funding : One-time expenses with one-time revenues One-going operations with on -going revenues 2020 Budget Balancing One-times Vehicle Debt extinguished $ 700, 000 Sale of property $ 300, 000 Vehicle replacement tbd Hurdles 10:40 Challenges to overcome : 1 . Restoring General Fund reserves 2 . Property Tax capped vs increase to salaries & benefits in CBAs 3 . Understaffed service departments 4 . Restoring Workers Comp fund 5 . Insurance rate increases 6 . Vehicle Replacement Funding 7 . Prior year budget surprises 2019 In - process Surprises / budget unknowns _ Utility Tax — Electricity ($700, 000) 2018 federal tax reform lowering the corporate tax rate from 35 to 21% was passed on to customers reducing base electric rates _ Fire Department Collective Bargaining Agreement increase _ Workers Comp increase ($500,000) Forecasting Revenue 11. Complete Revenue forecasts for 57 different revenues were done using uniform methodology. The following are the most material revenues °Nall Property Value 5 CC,CC 8C8C UCJ UCJAN 2C06 2C91 2638 2209 2C13 2011 2C12 2313 2911 203 2316 2911 2318 2919 292C Property Value 6,IXF ,CCO CCO3 ,CC3,C3J .4,31)( C1C3,C3 3.0:x13C23m2139 2.0:M:C 20,tl`J:3 2C36 23237 2; 211.0 2C9 ?:31 : II2 2313 23 n5 21116 -t : 7 ?313 2C19 2C2CC Total Annual Levy ?GCVJJ:M: b,mc3y icracknor ;CCJ,CJ@ 28o' 21 r 280H ?cog ?Q C 2Cil 2ci2 2C3 2C14 131b 1316 1311 'C18 ?Olt: 2C'C Property Tax Revenue • Forecast . . 1 . 9A) Increase or $ 472 000 2014 Act 2015 PROPERTY TAX $17,317,211 $17,627,347 $18,013,573 $18,292,209 $18,492,413 $19,275,200 $19,646,000 102% 102% 102% 101% 104% 102% Property Tax $20,000,000 ,„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„ iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii. 1..8 000 000 mom nown 11 mnnnmmmmn I 1 YYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYY EME 11111111111111111111111111111111111111111 1 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EEEEEIEB 1 $750,000 ENEENEEN „„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„,, ________________________________________________=,„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„ $500,000 III! """ iltitill II 111111111111$250,000 1101111011 $0 2014 Act 2015 Act 2016 Act 2017 Act 2018 Act 2019 Est 2020 Bud Revenue Recap Every funding source has been forecasted Utility Tax ( Electricity) decrease acknowledged Property Tax up 2 . 4%, AV up 7% or ' rr sesuedxi ui1seJeJod Economic Assumptions • No 2020 recession, or "technical" recession • Low unemployment • Low interest rates • Largely thriving private sector • Concerns — Ag sector? For Annual CPI Percent Year at June 30 Increase 2014 236.227 • CPI is at 2 . 7% 2015 241.616 2.28% 2016 244.332 1.12% 2017 248.228 1.59% 2018 254.469 2.51% 2019 263.732 3.64% 2020 270.957 2.74% Challenges to Overcome 1 . Restoring General Fund reserves 2 . Property Tax capped vs increase to salaries & benefits in CBAs 3 . Understaffed service departments 4 . Restoring Workers Comp fund 5 . Insurance rate increases 6 . Vehicle Replacement Funding 7 . Prior year budget surprises 2020 GENERAL FUND EXPENDITURES BY OPERATIONS Legal Fire S1,980,769 $15,54S 762 2280., Municipal Court $1,784,090 26s, All Other Operations Sl5,612,605 • _2.97: • Pe Me • Code Administration S3U,257,i)52 SI 986,584 44.40:: Indigent Odense 61pw0A00 Salaries & Benefits Trend # of Employees stable since about 2015 SALARIES.,WAGES AND PERSONNEL BENEFITS: S110, 1N 000 .. 0100,000,Oa0 C70,000,000. 2011 2012 201 .k 2014 2015 2016. 2047 2018 2019 2020 A ttial •Att ni actual Actual A.cfiial 3<ti_ial Aival 'Vital IF Lit Projected Workers Compensation • WC Fund was negative in prior years • Rates increased in 2019 to restore fund • Principally Public Safety (where the most salaries are) • Budget not increased adequately — actual is correct • WC Fund now positive but General Fund budget is difficult — but more accurate General Liability • Preliminary report from advisor is 40%+ increase citywide $ 650, 000 ? • Awaiting shopping options • If we don't have budget, our options ? 201 . 201 2019 2020 2020 Actual ended 'year-End Proposed vs 2019 E ;. nditures Expenditures Budget Estimate Expenditures es. Eat Risk lefanagement Reserve Risk Management , b-9 290 1.301, 1b ..301,306 5,042,339 192 Total Rack Management. ern :4 9,290 4,301406 4 301,306 5.Q 039 1-2 Enterprise funds 2013 2019 2019 2020 2020 Actual Amended Bear-End Proposed es 2019 Expenditures Expenditures Bridget Estimate . redditures Est En% * Sie Operating - *on Operating Fund $ I, 760,957 S 2,392426 $ 1,332,16,7 $ 1,456,963 5.4•% Stormwater Operating 36379,012 6107,469 4,072,080 4690403 013 ri Transit 32 56669 9,523,t* 6523,924 9,7366'34 2.2 % RAMP 7623,074 •7,740,2.55 7 744 0470 7663E43 Wastewater Operating 22417,549 25512647 24,914243 24,394653 (2$11% Water Operating 10)321643 10,362,5.53 13,352,003 10 963 914„ s, 5.9 % Irrigation Operands •1,804,753 1612,529 1,094633 1927,039 1.7 Utility fierrires — 1,0711700 1560,550 1662242 mu T. Enterprise Operating Funds $ .54664,162 $ 62621,333 $ 61.741,514 $ 6.2,'* 251 a Expense Recap Salaries & Wages Increasing cost on existing staff number Insurance issues Work Comp — addressing past deficit General Liability — big rate increase Enterprise expenses essentially level City Manager / Council Discussion and Input 20 minutes Review 4- Day Checklist • Review placeholders to add to remaining meetings ? • Direction to staff? Key Dates 1 Preliminary Budget presented to City Clerk, Website, City Council 1 Council Study Session 1 Oct 3 Council Study Session 2 8 Council Study Session 3 10 Council Study Session 4 5 Public Hearing and Ordinances on Ad Valorem Tax Rate Nov 5 1st Budget Public Hearing 19 2nd Budget Public hearing Dec 3 Council passes Budget Ordinances adopting Budget and tax rate 2020 Budget Process Sept — Preliminary Citywide budget — Final Property Valuation from County Oct — C uncil stu y sessions - Fun a entals an no n ur les - olicy Issues - evenue o ti ns - Fin in glance Nov — Public Hearings Dec — Adoption 2020 Budget Process An increasingly well - managed city