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11/01/2021 08. First public hearing on the 2022 Preliminary Budget for the City of Yakima • l'41 rr 11.coor i i�O enc u nrry 1 BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 8. For Meeting of: November 1, 2021 ITEM TITLE: First public hearing on the 2022 Preliminary Budget for the City of Yakima SUBMITTED BY: Bob Harrison, City Manager Jennifer Ferrer Santa Ines, Director of Finance and Budget SUMMARY EXPLANATION: This is the first public hearing prior to adoption of the 2022 Preliminary Budget. The second hearing is scheduled for November 16, 2021. The Preliminary 2022 Budget, was submitted to City Council and reviewed and discussed in Study Sessions on Oct. 5, 7, 12 and 14th. ITEM BUDGETED: NA STRATEGIC PRIORITY: Public Trust and Accountability APPROVED FOR SUBMITTAL BY THE CITY MANAGER RECOMMENDATION: Conduct the Public Hearing and accept public testimony. ATTACHMENTS: Description Upload Date Type Memo 10/22/2021 Corer Memo CI Presentation 10/22/2021 Presentation 2 FINANCE DATE: October 22, 2021 TO: Honorable Mayor and Members of City Council FROM: Bob Harrison, City Manager Jennifer Ferrer Santa-Ines, Director of Finance & Budget Kimberly Domine, Finance Division Manager RE: 2022 Proposed Budget Staff respectfully submits the revised 2022 Budget for consideration, following publicly-noticed Study Sessions held on October 5th, 7th 12th and 14th, for public hearings on November 1st and 16th. The revised Preliminary 2022 Budget incorporates direction given by Council during the October 2021 Budget Study Sessions, as detailed on the last page of this document. The 2022 Budget forecasts a balanced General Fund and maintains a conservative $27,000 contribution to the ending balance. We are hopeful that the economy continues to recover from the effects of COVID, and that we continue to make progress toward fiscal sustainability. Achievements. The City Council made policy decisions, enabling Finance to finalize ordinances, reports, narratives and other documents that must all agree with each other at final adoption on December 7th. Council and staff have worked hard throughout a challenging process exploring creative options and alternatives to maintain current service levels. As discussed in the City Council's public study sessions, the 2022 Budget goals include the following: > Achieve a balanced budget in every fund > Assure prioritized services citywide > Preserve General Fund's reserve > Establish replacement funding for public safety equipment Priorities. The budget process requires us to evaluate annually the city's priorities, between immediate services and infrastructure, across many funds, being mindful of long-term fiscal sustainability. The Yakima Council Strategic Priorities for 2022 are: 1. Public Safety 2. Fiscal sustainability 3. Housing 4. Strengthening Partnership 5. Investment in infrastructure Substantive Funding decisions. Council is considering an increase in the in-lieu tax from 15% to 20% for refuse utility and stormwater utility at its November 1st business meeting. For 2022, Council is supportive of a $1,000,000 investment for future replacement of police vehicles and $800,000 for fire apparatus. 3 FINANCE Process input. Staff participates year-round providing service delivery and managing the budget through unforeseen surprises. Next year's budget is largely based on what we know today. City Council exercises governance year-round and makes policy decisions. Citizens had the opportunity to provide study session input and will have additional opportunities at this hearing and the hearing on November 16th. Property Tax, Sales Tax and Utility & Franchise Tax are the largest sources of revenue for the General Fund, the most material forecasting assumptions. When property owners thrive, property values increase; property tax is a significant funding source for city services. When businesses thrive, our sales tax increases. The City serves the people who, in turn, fund the services provided by city government. The following table summarizes the proposed budget across all funds. Some Enterprise and Construction Funds are budgeting to spend expenditures over current-year revenues for current and previous year projects, some of which comes from prior-year project approvals or savings in those funds. Estimated 2022 2022 Inc in Estimated %of 2022 Beg. Projected Proposed (Dec in) 2022 Ending Prop Fund Balance Revenues Expenditur Reserves Balance Exp General Fund S 14,096,372 S 69,446,077 S 69,419,316 S 26,761 S 14,123,133 20.3% Parks and Recreation 913,962 5,565,769 6,214,139 (618,370) 265,592 4.3% Street&Traffic Operations 1,133,950 6,478,808 6,481,452 (2,644) 1,131,306 175% General Government Subtotal 16,144,284 81,490,654 82,114,907 (624,S3) 15,520,031 18.9% Other Governmental Operating Funds 12,831,025 29,248,958 18,739,559 10,509,399 23,340,424 124.6% Government Capital Funds 11,733,709 34,512,287 29,785,352 4,726,935 16,460,644 55.3% Enterprise Operating Funds 29,598,868 66,959,553 74,425,352 (7,465,799) 22,133,069 29.7% Enterprise Capital Funds 32,186,736 35,539,541 49,407,226 (13,867,685) 18,319,051 37.1% Internal Senice Funds 3,223,023 9,987,480 8,613,143 1,374,337 4,597,360 53.4% Employee Benefit Reserve 5,304,968 16,799,465 16,930,138 (130,673) 5,174,295 30.6% Risk Management Reserves 3,555,419 5,826,575 5,548,673 277,902 3,833,321 69.1% Debt Service&Agency Funds 2,560,778 7,100,227 7,100,485 (258) 2,560,520 36.1% Total S 117,138,810 S287,464,740 S 292,664,835 S(5,200,095) S111,938,715 382% 4 FINANCE As a result of Study Session Discussions, revisions as outlined below have been made to the 2022 Preliminary Budget originally submitted on October 1st, and will be included in the budget ordinance on December 7tn Additional budgetary items - not 2022 included in the Preliminary Budget Budget Workers compensation rate increase $ 25,000 Minimum Wage Increase $ 37,000 Axon in car video system annual service fee $ 150,000 Clean City Enhancements $ 423,500 Total Additions $ 635,500 City of Yakima Preliminary 2022 Budget 1st Public Hearing November 1, 2021 3 II Clear — Reliable — Trustworthy °� - Study Sessions October 5 October 7 • Preliminary Budget Book • General Fund Expenses- • Financial Policies — Fund Balance Community Development, • American Rescue Plan Act Economic Development, Parks and Police • Vehicle Replacement • Mill Site Phase II • Major Revenues • Equipment Rental • Clean City • Cyber Security • Tourism, Convention Center, Capitol Theatre October 12 October 14 • General Fund Expenses-Fire • LTAC comparison • Capital Funds (REET 1, REET 2 and • Clean City Program TBD) Enhancement • Enterprise Funds- Airport, Water, • Additional Budgetary Items Irrigation, Wastewater, Stormwater, Transit and Refuse Key Dates 5 Council Study Session 1 7 Council Study Session 2 Oct 12 Council Study Session 3 14 Council Study Session 4 + Additional Considerations 1 Public Hearing and Ordinances on Ad Valorem Tax Rate t Nov 1 1st Budget Public Hearing 16 2nd Budget Public hearing Dec 7 Public Hearing and Ordinance Adopting the Budget �C;p■ Yakima Council Strategic Priorities 1 . Public Safety 2 . Fiscal Sustainability 3 . Housing 4 . Strengthening Partnership 5 . Investment in Infrastructure 2022 Budget Goals ➢ Achieve a balanced budget in every fund ➢ Assure prioritized services citywide ➢ Preserve General Fund's reserve ➢ Establish replacement funding for public safety equipment FundReserve Fund General BalancePolicy City Population Minimum Reserve Bellevue 148,164 15% of General Fund revenues Everett 111,475 20% of operating revenues Kent 132,319 18% of current year budgeted expenses Pasco 75,432 90 days worth of expenditures Renton 101,751 12% of operating expenditures Richland 58,225 16.7% of operating expenditures Tukwila 20,347 18% of previous year revenues Yakima 93,637 16.7% of expenditures *Goal is to establish reserves at 25% of expenditures 6 Public f 1/ hi I R I m nySa et e ce e ace e t.... . ,. - ,,,_ __ .__ _.,_ __ (. • , .0_ _____....._,... ......_ ...„ -., . _ . _ ._ __. s __ ___ ___ _., _ ,4�.4 , a .., ❑ Fiscally Responsible -'�� �" *µ� ❑ Public Safety ❑ Investment in infrastructure ❑ Avoid the need to purchase large quantities of vehicles at once ❑ Stop spending money on expensive repairs ✓ Investment of $1,000,000 for future am equipment replacement of police - 'i` ; vehicles and $800,000 for fire apparatus = -7 if s , Subsequent Changes Additional budgetary items - not 2022 included in the Preliminary Budget Budget Workers compensation rate increase $ 25,000 Minimum Wage I ncrease $ 37,000 Axon in car video system annual service fee $ 150,000 Clean City Enhancements $ 423,500 Total Additions $ 635,500 Revenues by Source General %of %of Fund Total Citywide Total Sales Tax S 27,087,000 39.0% S 37,334,000 13.0% Utility&Franchise Taxes 20,301,908 29.2% 21,830,065 7.6% Property Tax 9,335,615 13.4% 22,228,251 7.7% Charges for Services 3,449,776 5.0% 57,897,630 20.1% Intergovernmental Revenues 3,865,141 5.6% 55,974,377 19.5% Other Taxes&Assessments 1,082,000 1.6% 7,176,000 2.5% Licenses and Permits 1,704,700 2.5% 3,181,700 1.1% Fines and Forfeitures 1,418,000 2.0% 1,518,000 0.5% Transfers — —% 28212,706 9.8% Miscellaneous Revenue 1,201,937 1.8% 52,112,011 18.1% 5 69,446,077 S 287,464,740 S �s 9 Expenditures by Category General 4.o of o of Fund Total C:its--wide Total Transfers $ 3,876,705 5.6 % $ 28,212,706 9.6 Salaries&Wages 40,554,432 58.4 % 68,381,202 23.4 % Personnel Benefits 13,668,M0 19.7 % 39,081,220 i3.4 % Operating Sr.:Tr: ie= 1,774,869 2.6 % 7,167,3n 2.4 ' ?rofessior.al Services 9,234,890 13.3 % 70,113,827 24.0% Capiral i _ays 104,000 0.1 % 70,629,061 24.1 % Debt Ser;r ce 206,390 0.2% 9,079,440 3.1 % $ 69,419,316 $ 292,664,83,E --. MONTHLYEXPENSES FOOD _NJ 4 0 7 1: e•WARER o 10 Citywide Sales Tax $37,334,000 13.0% Other Taxes&Assessments Fines,Forfeits,Trans&Misc $7,176,000 $81,842,717 2.5% 28.5% Utility&Franchise Tax $21,830,065 7.6% Property Tax $22,228,251 7.7% Licenses&Permits $3,181,700 1.1% Charges for Services $57,897,630 Intergovernmental 20.1% $55,974,377 19.5% 11 C t wi e Expenditurescrt Personnel Benefits Supplies,Equip,Misc $39,081,220 $7,167,379 13.4% 2.4% Services&Charges $70,113,827 24.0% Salaries&Wages $68,381,202 23.4% Transfers $28,212,706 9.6% Capital Outlays $70,629,061 Debt Service 24.1% $9,079,440 3.1% 12 Property Yakima County Tax District Levy 2021 Yakima Valley Regional Library $0.39 Yakima County 3% Yakima School $1.52 County Flood Control Bonds 13% $0.07 $1.33... 1% County EMS $0.20 2% Yakima School $2.45 21% Yakima City $2.53 22% State School Levy Part 2 $1.03 9% State School Levy $1.92 17% 13 City of Y Levy Rates 4.000 3.000 - qi I lilt' 11 0.0a0 .. •City of Yakima Levy Rate •City of Yakima Bonds Lievy P ate- 14 Ongoing Fiscal Challenges ■ Pandemic Recovery ■ Property tax 1% Cap ■ Healthcare Costs increases ■ Labor Contracts ■ Equipment Replacement ■ Economic Development ■ Housing Challenges ■ Many others ahead Citywide Fund Balance Summary Estimated 2022 2022 Inc in Estimated %of 2022 Beg. Projected Proposed (Dec in) 2022 Ending Prop Fund Balance Revenues Expenditures Reserves Balance Exp General Fund S 14,096,372 S 69,446,077 S 69,419,316 S 26,761 S 14,123,133 20.3% Parks and Recreation 913,962 5,565,769 6,214,139 (648,370) 265,592 4.3% Street&Traffic Operations 1,133,950 6,478,808 6,481,452 (2,644) 1,131,306 175% General Government Subtotal 16,144,284 81,490,654 82,114,907 (624,2S ) 15,520,031 18.9% Other Governmental Operating Funds 12,831,025 29,248,958 18,739,559 10,509,399 23,340,424 124.6% Government Capital Funds 11,733,709 34,512,287 29,785,352 4,726,935 16,460,644 55.3% Enterprise Operating Funds 29,598,868 66,959,553 74,425,352 (7,465,799) 22,133,069 29.7% Enterprise Capital Funds 32,186,736 35,539,541 49,407,226 (13,867,685) 18,319,051 37.1% Internal Service Funds 3,223,023 9,987,480 8,613,143 1,374,337 4,597,360 53.4% Employee Benefit Reserve 5,304,968 16,799,465 16,930,138 (130,673) 5,174,295 30.6% Risk Management Reserves 3,555,419 5,826,575 5,518,673 277,902 3,833,321 69.1% Debt Service&Agency Funds 2,560,778 7,100,227 7,100,485 (258) 2,560,520 36.1% Total S 117,138,810 S287,464,740 S 292,664,835 S(5,200,095) S111,938,715 382% 16 Questions? Thank you for your time. 0 1, • calms.) 7'11 Clear — Reliable — Trustworthy ''