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11/16/2021 07. Second public hearing on the 2022 Preliminary Budget for the City of Yakima HEci. rr 11 , or i�O enc u nrry 1 BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 7. For Meeting of: November 16, 2021 ITEM TITLE: Second 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 second public hearing prior to adoption of the 2022 Preliminary Budget and provides members of the public an opportunity to provide input. The Preliminary Budget is located here: https://www.yakimawa.goviservices/finance/budget-documents-2/ 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 11/4/2021 Corer Memo 2 FINANCE DATE: November 4, 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. At the November 1, 2021 business meeting, Council considered and approved the in-lieu tax from 15% to 20%for refuse utility. At its November 16, 2021 business meeting, Council will consider the passage of this increase to refuse utility customers. 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 16t''. 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 (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 yea) 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 2'3,785,352 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 5,548,673 277,902 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% The table below will be adjusted to reflect the decision made by Council to consider the additional 6% increase in in-lieu tax to be passed on to refuse utility customers at its November 16t' business meeting. In addition, the budget ordinance for adoption on December 7tt' will also reflect the increase in 2022 healthcare premiums communicated to Council during the November 1' budget public hearing.