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10/03/2019 02 Council Review of Proposed 2020 Budget - 2 of 4 a\'4\lyy bxk ik 1 1*-4,1 PPPPPP+Pd s' lii it tYlltYlA.\ta. BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEM ENT Item No. 2. For Meeting of: October 3, 2019 ITEM TITLE: Council Review of Proposed 2020 Budget-2 of 4 SUBMITTED BY: Cynthia Martinez, Interim City Manager Steve Groom, Director of Finance & Budget SUMMARY EXPLANATION: This is the second of four study sessions on the proposed 2020 Preliminary Budget. The two remaining study sessions are in the process of being rescheduled. ITEM BUDGETED: NA STRATEGIC PRIORITY: Public Trust and Accountability APPROVED FOR ; Interim City Manager er SUBMITTAL: STAFF RECOMMENDATION: BOARD/COMMITTEE RECOMMENDATION: ATTACHMENTS: Description Upload Date Type D ses 9/30/2019 ( r Memo 2020 Budget Oct. 3 Work Session top Yef"rks :IN • .. Clear — Reliable — Trustworthy ' �sa,`�kh»mug, is Recap from prior meeting �o:oo 2 Revenue Recap Every funding source has been forecasted Utility Tax ( Electricity) decrease acknowledged Property Tax up 1 . 9%, AV up 7% 3 Expense Recap Salaries & Wages Increasing cost on existing staff number Insurance issues Workers Comp — addressing past deficit General Liability — big rate increase Enterprise expenses essentially level x Today's Agenda 1 . Why Take a Long View? 2 . Fundamentals of Capital Budgeting 3 . Capital Project specifics Council Process 1 . Staff will present Policy Issue details, options 2 . Revenue options will then need to be considered 3 . 3rd and 4th Study Sessions will be for making decisions, weighing costs, and getting final budget balancing 6 Policy Issues �o: �o Staff Guidelines 1 . What can be managed within existing budget, absorbed or traded ? 2 . What can be deferred, at what cost? 3 . What MUST be dealt with now? Policy Issue Clean Cities Initiative • Previously presented • Revenue and service level options Policy Issue Vehicle Replacement • Departments have had flexibility • Funding replacement fund has been deferred • Charter requires specific budget formulas Policy Issue Fire Department • Fees proposed • Positions proposed • Potentially off-setting revenue and expenses 11 Policy Issue Police Department • Communications and data triangulation — cell phones • PT Community Response officers • Data analysis position 12 Policy Issue Parking Enforcement • License Plate Reading technology 13 Policy Issue Code Administration • Plans examiner position • Permit volume and associated revenue has increased substantially Policy Issue Community Centers Maintenance • Added in 2019 • Re-evaluating in 2020 15 Policy Issue Economic Development • Airline Service • Market research study, pursue partnerships, expand destinations 16 Policy Issue Parks & Recreation • Ball Field Maintenance position • Beyond the Bell program • Lions Pool Dehumidification system 17 City Manager / Council Discussion and Input 11 : 30 20 minutes Review 4- Day Checklist • Review placeholders to add to remaining meetings ? • Direction to staff? Sb� LL papaaN dn - Mollod pue deDaH anssi ADHod Next Study Session Revenue Options • Utility Tax options • Levy Lid Lift options given current updated Assessed Valuations • In - lieu rate options 21 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 - licy Issues avenue o ti ns - Fin in glance Nov — Public Hearings Dec — Adoption 22 2020 Budget Process An increasingly well - managed city r`4, Clear — Reliable — Trustworthy �sa,`,kh»mug, is Distributed at the Meeting 10-3- lei ..t("bilk- OFFICE OF THE CITY MANAGER " 129 North Second Street 1!i.74.,t, .. City Hall,Yakima,Washington 98901 S' `•'� ' " : ! ` Phone(509)575-6040 TO: Honorable Mayor and Council Members FROM: Cynthia Martinez, Interim City Manager DATE: October 1, 2019 RE: 2019 General Fund financial corrective action plan This memo is a follow up to Steve Groom's presentation last Tuesday, September 24th at the i Agenda Preview Meeting. Monthly revenue-monitoring and the quarterly financial review meetings that finance staff have been conducting with department directors and managers have indicated three negative budget forecast changes to the 2019 year-end estimate: Issue Response Utility Tax —electricity anticipated shortfall Staff contacted PacifiCorp to find out if ($700,000 or 12% by year-end). 2019 budget remittances were being calculated incorrectly is $5.8 million, a $577,000 increase over and to see if an audit was appropriate. They 2018 actual. confirmed that the 2018 caps had been eliminated but the 2018 tax reforms more than offset. They have offered a complete database of meters for us to compare to but in all likelihood there is little chance of more than the usual statistical probability of error. Fire Department general fund budget's year- Salaries and benefits are estimated to end estimate exceeds budget by $515,000 or exceed budget by $215,000 and overtime by 4% of total $14.4 million. $287,000. The 2019 budget anticipated a collective bargaining agreement increase but under-estimated the amount. Staff is evaluating opportunities to mitigate by managing overtime and expenses in the short-term, and evaluating rate increases to fee-related revenues, and interlocal agreements for the long-term. Yakima I01D1 1994 Workers Compensation contribution (city- Police and Fire departments, simply because portion) in all General Fund departments their proportional share of General Fund estimated to exceed budget by $500,000. salaries are the largest, are being impacted the greatest. The Workers Comp fund was historically negative, 2018 and prior. Increasing rates charged to departments solved the Workers Comp fund deficit and corrected the actual costs in each department but was underbudgeted in 2019. These costs are partially mitigated by the sale of one Tiger Mart property ($300,000) and increased investment income on city investable cash ($200,000). There are many more offsetting positive and negative variances that staff characterizes as being essentially off- setting, so those referenced in the table above are not the only variances. However, those represent the most material and unforeseeable. In short, 2019 current projections indicate a $1,092,000 budget deficit. With only one quarter left in the year, immediate course corrective measures will be initiated. Summary of financial corrective plan: 1. All general fund expenditures are being evaluated—nothing discretionary will be approved by Finance or the Interim City Manager the remainder of the year. 2. Overtime and hiring decisions are being reviewed. (Police and Fire positions will continue to be a priority) 3. Fire overtime usage has been reduced for September and Chief Markham is taking additional steps to manage overtime. The 2020 budget accounts for each one of these items—the Preliminary Budget has all current fire positions with 2020 rates, Workers Comp is being budgeted for 2020 more fully-informed, and Utility Tax revenue is being forecasted based on current actuals.