good evening and welcome to the council
committee work session for Monday
October 22nd this is the first of the
much-discussed long anticipated excited
budget 2019
budget deliberation conversations we
have three hours scheduled for this
evening we will be taking public comment
but because this is all sort of one big
presentation I am gonna take public
comment at the end so that's when that's
when we will be taking public comment
this evening so with that I am going to
turn it over to City Administrator moon
thank you happy to be here tonight was
so excited about talking about revenue
that I just jumped in on roofs public
hearing earlier to get right to the big
stuff we have two presentations that
we're gonna walk through tonight the
first is just to give some background on
council responsibilities are intense on
what we're going to present set the set
the table so to speak this is our
high-level schedule this is the schedule
that was presented in the budget and
brief document which is posted online
remind council that are more detailed
schedule was given to you on October 1st
and it attempts to lay out topics and
tentative if anticipated way for each
evening so you have a little bit more of
that information our ultimate goal is of
course we need to adopt the budget by
December 31st I also wanted to point out
on this slide that on November 5th where
it says first public hearing on
preliminary budget that we also
anticipate will include a moment in time
where we bring forward the salary
ordinance which will describe the
classifications and salary ranges and
we'd anticipate perhaps taking adoption
on that at the same date as the final
budget December 3rd
so a state law describes what we need to
give to you in the public in terms of a
budget on the revenue side we need to
provide actuals from the prior complete
year
that's 2017 we need to provide year an
estimate for the current year we're in
estimate for 2019 what we're
anticipating for revenues and we need to
more specifically include the ad valorem
and we reported on that earlier this
evening and also the unencumbered fund
balance on the expenditure side we are
required by state law to give you totals
for each fund and every department
within each fund and that data is to
include again actuals revised adopted
budget for the current year and the
proposed 2019 budget I mentioned we also
have to give you the salary or range of
costs for each classification and a
budget message which the mayor delivered
on last week
[Applause]
your key Birds that's gonna get me all
night long
state law also describes the final
budget as final form budget and that
style of budget needs to show the
estimated revenue and appropriations for
each separate fund and the aggregate
total the total city budget it includes
all funds and then at a high level it
describes the authority of the council
as being to approve the total amount
appropriated for each fund and that
that's what constitutes approved
expenditures and that's with regard
without regard to the individual items
that are within and so that's the
language that we're we often talk about
when we say that you have authority at
the fun level another term that we use
often yes I'm sorry to interrupt could
you please go back so the total amount
appropriated for each fund constitutes
the approved expenditures without regard
to the individual items contained
therein I want to make sure I understand
the intent of that comment I've always
viewed this as as there's really
multiple components to the budget of
course there is what you talked about
here in the appropriations per fund then
and of course we caná-- summarize that
in one page yes but our budget documents
are 190 pages correct and there is a lot
of background information but there's
also there's also there's workplane
information just staffing information
there are capital projects in there and
outside of the fund balance
appropriations I've always viewed all of
these other elements and many that I
didn't mention as as as as policy budget
policy and and so though there's a
technicality that we only approve an
appropriation at the fun level but in
essence though we are also adopting
quite a bit of policy absolutely
absolutely and and again this is just
what the state law says in this section
on the budget there are other
that require you to to actually approve
of different kinds of expenditures you
know land transactions those sorts of
things so there's other state laws of
reference individual Authority and
appropriations so this was overly
simplified and having said that yes we
still provide you with a whole lot more
information because we know in order to
make good decisions in the macro you
need to also understand the bits and
pieces that comprise the whole and it
sets direction for the city and our
delivery of services absolutely
so a couple terms if we talk about a
balanced budget there's a couple ways
state defines this term per state law
it's when appropriations are limited to
the total estimated revenues including
the unencumbered fund balance so it says
you may use savings from prior years and
if you do it still constitutes a
balanced budget however what we aim to
develop every year is what we would call
a structurally balanced budget and that
is also defined in state statute and
it's when all of our ongoing expenses
are met by recurring revenues so we
don't rely on fund balance still we have
opportunities to use fund balance for
one-time appropriations and that is an
absolutely fine way to fund many
one-time items and state law says you
should conduct a couple hearings three
hearings actually and establish our
property rate prove those salary ranges
and classifications and adopt that final
form budget however because it is policy
based as well we have desired actions
that we usually take you through every
budget season these are the desired
actions from the point of view of mayor
and city administration so the first is
we like to review in depth estimated
revenues this
plans for the funds and departments we
like to highlight the major changes
because we looked at every little detail
the budget there's changes in multiple
places and we have a policy question in
front of you in this budget and that's
what the operational model should be for
the senior center going forward we're
going to talk about that in a later
budget work session as well as the 2019
capital projects we have some unfunded
projects we have some projects that are
planned for year one in our CIP which
will now be 2019 and the mayor and I
have recommended an increase to the
Hart's Housing Trust Fund contribution
and I had said during budget
deliberations we'd come back to that and
have that conversation some other
desired actions are to review the work
plan we're going to cover items that are
in it and some items that were left out
this year we had a confined budget we
had a limited amount of new revenue and
that worst us to make some decisions
about which projects we would pursue
they're also asking to present the
staffing needs that we have and asking
for your support for our staffing
recommendations we're looking to review
the city gives funding that's Community
Fund Human Services grants some other
other ways in which we contribute to
local nonprofits in particular and
asking you to approve those
recommendations we will discuss the
possible use of general fund fund
balance and this budget did not utilize
any and we'll talk a little bit at the
end about our 2019 plan to analyze some
of the design of our funds move forward
on more cost allocation and move funds
in the direction of greater
sustainability so overall this is our
plan for the presentations going forward
we're going to spend time on revenues
we're going to review fund into
Herman totals and I highlight the big
things in the budget we're gonna talk
about the mayor's people and tools
strategy which was the framework for our
budget development and talk about 2019
let's plan and how that fits with our
long-range planning model and those
areas that it appears are going to need
more attention going forward into the
next year so that's first presentation
we're moving to the second one any
questions so far
they're questions
should be a folder on the desktop okay
so the second presentation that we're
gonna make tonight is more meaty in
terms of turning our attention to
numbers and nope which one do I do close
master view where's that uh oops back
live master over on the right hand side
there's a red there nope okay good
thanks Lisa
thank you okay and as Christina gets
seated and the first thing that we're
gonna do is talk a little bit about
what's new and different this year in
terms of our process and budget formats
so I'm going to turn it over to
Christina eller I'm Christina eller one
of the financial operations managers I
wanted to take a moment to walk you
through what the budget process has look
like Moon's going to look like this is a
multi-step multi-year journey to improve
the budget process we are looking at
setting up a process with best practices
policies and procedures that contribute
to improve our government management
part of that has included the department
restructure which has aligned our
accounting division the revenue division
and budgeting division to better align
with some of those services to enhance
and utilize our expertise and it will
allow us to better align with the
strategic plan as that comes to
completion
early next year we've also implemented
new software that's included the
financial system and also in progress is
our new budget development system West
ouka and that will allow us in time to
also align with our strategic plan and
we'll be able to tie some of these new
strategic initiatives along with the
plan part of best practices has allowed
us the opportunity opportunity to
restructure our chart of accounts this
has been a two-fold process what we
started a few years ago with
restructuring from a long account to a
short account I believe that we went
from 10
and accounts down to three we still in
this last year went through another
restructuring and that was to align with
our reporting that is regulated by bars
our state mandate that allows us to it's
better reporting and we've been able to
follow the federal and state
requirements for cost allocation setting
up for cost allocation and the accrual
method of accounting was established
three or four years ago we went from
cash basis to accrual basis this new
format in finance has given us the
opportunity to have better perspective
with long range planning to work more
with the Finance Committee ad hoc
committee long range planning it's been
it allowed us time to comply with fiscal
policy allow more interdepartmental
collaboration and will allow us more
engagement with with the departments but
also with the community we've been able
to adopt a five-year CIP and including
the first two years in a biennial budget
that's allowed us in this off year to do
the chart of accounts and do some of
that extra work we were able to work
with IT to fund the IT this is the new
internal server and internal service
it's a new internal service fund for IT
and develop the cost allocation plan and
we'll further that development through
we'll talk about it later in the
workshops but with fleet and refined
some of those allocations with other
other areas part of what you'll see in
this new process is a new document our
previous historical documents have been
very manual and
although useful and we want to
contribute and continue some of those
informative pieces we're looking to use
the the system have the departments
utilize the system get the information
out to them faster help with management
decisions executive decisions and get
that turnaround time a little faster and
a little more deliberate a little more
strategic in many ways so you'll see
some of our standardization has included
terminology we're talking about the
preliminary budget which has had
different forms and terms in the past
like draft or proposed we've tried to
simplify it it may not look like it's
simplified but it is it's also allowing
us as we go through this process we will
have the opportunity to have what's
called open book it's more interactive
its outward facing and you can engage
different levels of the community
different levels of the organization so
we're looking forward to that it also
has a component of performance metrics
performance management we're looking
forward to that component and getting
that in but you know as part of our
normal city of Issaquah process it's
giving us a different level of
organizational reporting and feedback
and it's giving us a process for review
and part of that is here with counsel
and the workshops and being being able
to provide different levels of
information to you so we look forward to
this process and
questions so far remember winter Stein I
may be ahead of the game so I'm sure
you'll tell me if I am at what point are
you going to explain
I'll use the multi org summary structure
that's in the book preliminary budget
document so reading we can talk about
that a little bit would you like to do
that that is part of was the long
account went to a short account which is
the org code it's basically I don't want
to call it a costing center but it is an
organizational component it there can be
several organization codes in a
department amar it's it's the difference
between some our departments and some
our funds themselves but it is based on
funds there at that okay so the org
summary is is will align and help align
with a strategic plan so they should be
standalone okay no I think I might know
enough to understand that you change the
chart of accounts the we have a cost
Center and it sounds like you have a org
component as well maybe that's another
segment or not maybe it's within that
how it so but this is now what's
reflected in this reporting I can see
that you've done the budget using that
new structure yeah we don't even need to
compare it against its we can't it's you
can't and it go back and see the same
level of information now into you know
year-over-year comparison so I'm not
asking that you make that possible but
but I do we'll need as we go through
this some help on help because last few
years is the basis that we have and with
this new structure and the way this data
is now broken out
we can't go we don't have a ready
comparison to previous years at all
this level I leave you have something
pretty close so instead of looking at
the pages that are marked org
multiple org summary is a lovely
descriptive header that cuesta chi gave
us you can instead look at the budget
expenditure Harrison summary which is
organized in the same fashion that we
have done before so you can look at city
clerk city facilities there are if you
go back further than 2017 actuals that
we gave you then yes that will be a
little bit more complicated and I'll
give you an example of that we've
renamed some functions in order to get
them into sort of these cost allocation
buckets but we can help show you a map
for that but we've given you at least
the ability to compare the 2018 budget
and the 2017 actuals with what's
proposed for 2019 okay so thank you so
that's starting on page five titled the
budget expenditure comparison summary
and correct and and since you brought
that up
city of the V I don't know what you're
going to call these departments slash
funds but within these city facilities
I'm going to list a couple of them off
here and I can give them to you via
email city facilities non-departmental
emergency management streets and special
revenue funds debt service capital
projects internal service those don't
map back to last year correct that's
where you have different titles whether
they combine some groups and some pieces
emergency management for example was a
division or indirect Public Works ops
okay so so that that's the kind of help
I'm going to ask okay if you've I
recognize that there was some
reorganization restructure recoding that
was done we're seeing it all in the new
structure but I need even at this
summary level starting on page five
right but as I tried to go back and I
just pulled up last year's budget
document yes many those organizations
are there but this is clearly is a blend
of
as Christine mentioned some funds and
some departments sure so what we could
do is we could give you that we could
map these new units to where they were
budgeted before what may be more
difficult for us is to take past year's
budgets and then break them into these
new parts and and I know that's very
difficult to do when you've recoded
Thanks so I'm mapping at this point is
all I would ask for great thank you
other questions right now thank you
please proceed
all right so tonight we're gonna focus
on the general fund this is a year-end
kind of snapshot showing what we have is
the originally adopted budget and we
brought forward a budget amendment
amendment in August and that and then we
asked departments to estimate where
they're going to be at your end
I will tell you that is their best guess
we have some departments that do an
excellent job at that guesswork and we
have others that were growing their
sophistication and helping to create
those year-end estimates I tell you that
because we we then utilize a snapshot
like that to look at fund balance and
fund balances it changes every day it's
wholly dependent on what we are
receiving in revenue and what we're
expending and that does change over time
so right now in this budget we are
forecasting that our revenues are going
to be better than expected and budgeted
by 2.3 1 million dollars and our
expenditures are going to be less than
what we expected by four point four four
million dollars I will tell you that
four point four four is eight and a half
percent on top of the is eight and a
half percent of what the amended budget
was for expenditures that's a fairly
high return to fund balance
in my book and again still a product of
where departments believe they're going
to end the year I expect that will
change some can't say which way positive
or negatively but we are going to go
through an effort that's coming here to
again get better at doing those
estimations but also at looking at our
expenditures throughout the year so that
we're better able to understand what we
may need to bring back to you in a
budget amendment and what we may not
need to and there were things in the
August amendment that we held back
because we could clearly see that we had
the capacity to fund those things and so
they weren't part of the budget
amendments we're making progress if you
look at the bottom chart there we
started the year we I'm sorry in August
during the retreat we had estimated the
ending fund balance for 2018 to be
sixteen point seven million dollars if
you add on top of that the return to
fund balance that we're anticipating now
that would give us a beginning fund
balance for 2019 of twenty-three point
four six million dollars that is a multi
unbalanced I'm sorry
just to be clear that's kind of like a
positive name so the four point five
percent is an increase over expected
revenue and this eight point five
percent is a decrease in expenditures of
what was expected right yes so they're
both looking like positive numbers but
they're kind of in a sense it's two
different ends of the spectrum right
correct it's actually the it's taking in
the case of the four point four four
it's taking the 52 million dollars that
was amended budget and it's saying what
percent spend that is returning to fun
bounds and that's that's the eight point
five right so we spent eight point five
percent less than anticipated less we
got more revenue four point five percent
more than anticipated so that's where
that six million dollars got to be a
pretty big number because we're adding
those together that's all I'm just
trying to say so it doesn't look like
they're both pluses are both minuses
right no they don't balance each other
out
they actually crack to each other
correct that's why the two point three
and a four point four add up to six
point seven five correct
great thank you just clarify yeah we're
gonna spend more time in a subsequent
presentation on actually next Monday
talking about the return to fund balance
and we're gonna break that down for you
a little bit more on the expenditure
side what I can say about that two point
three one return to fund balance on the
revenue side it's largely from two
places its property tax so increased
valuations new construction additional
value in there for additional tax that's
coming to the city and sales and use tax
so higher than expected sales and use
tax revenue a little lesser extent
coming from utility tax and building
permanence this is just my graphic to
illustrate that fund balance does change
over time I wanted to give you just an
example of this at the end of the budget
season in 2016 as we were adopting the
2017 budget our beginning fund balance
was 15 million dollars a year from that
point we came back together and we're
ready to adopt the 2018 budget and at
that point we projected the 2017 ending
fund balance 1.5 million dollars higher
we had the retreat in August and we
looked at 2017 actual fund balance and
it was 18 million dollars
and and so on and so this is just meant
to illustrate that fund balance is on
the move
it's unmoving I think a good directions
going up that's it shows the health of
the city and our local economy but it's
a snapshot in time it changes every time
we take a look at it and do that math to
look at expenditures and revenues so
here's just a little bit more of that
general fund return to fund balance
broken down we look at the increased
revenue I spoke about this already
property tax sales and use one other
pieces I didn't mentioned earlier was
unanticipated grant revenue I think this
was the result of a parks capital
project that I believe probably was
anticipated but not fully recorded
within the budget at the time of
adoption and so we were off by that and
then on the under expenditures you can
see that half of that came from position
vacancies or as we filled positions if
we hired a less experienced more junior
person into a position where we had a
retirement of a more senior person they
may have started on the our pay scale at
a at a lower place we also had
professional services in our budget that
we under expended that sometimes is
because we got bids that were less we
were able to do the project for less
than we had thought or we didn't
complete a project and that project
either got done in-house or we may be
asking for it to be reappropriation 2019
and we'll we'll talk about those
projects in the next budget meeting I
think comes from a raise so can I just
get some clarification I don't need it
tonight but at some point I can find the
property tax change I can find the
retail sales
tax change I'm having a difficult time
in the detail finding the unanticipated
grant revenue and just like to be able
to understand where that's coming from
that would be very helpful thank you
absolutely next I'm sorry another
question from County Council deputy
president patisserie thank you
I just with the retail sales and use tax
just having that be a little bit
unexpected did you say that was sort of
on the use tax side of things was there
I was just wandering through it was any
more information and we can examine that
and see if we can get better detail I
just have it is the whole category okay
thank you
it's procedure thank you okay so this is
a breakdown of the entire budget by by
fund sort of the same same information
we've talked about with general fund and
you can see the amended budget for each
funds take water at the top there where
we're projecting to end the year that's
the variance and then on the right hand
side you can see bfb is beginning fund
balance so you can see where we started
with the fun at the beginning of this
budget year and then the projected
increase or decrease to that fund
balance based on revenues and
expenditures throughout the year and
also based on where we actually began
2018 year and fund balance as opposed to
maybe just the adopted anticipated start
of fund balance for that fund and then
you can see how that results in the 2019
beginning fund balance which is shown in
your preliminary budget times I'm never
ray so just picking on water for just a
second so if I'm reading this correctly
and I'm not saying that I am we had one
point seven five seven million dollars
more in revenue than we anticipated and
we had
expenditures of $30,000 more than we
anticipated how did we end up with a
negative in projected increase or
decrease I would think we'd have a
positive yes again this is I think what
we probably should have given you is the
revised beginning fund balance for 2018
I think that's the difference that
perhaps that twelve million dollars was
the beginning fund balance where we were
when we adopted the budget and where
we're actually at now in the anticipated
fund balance for that fund then you
bring in those budget variances from
revenue and expenditures and you arrive
at the if you could just make the math
foot for me somehow weekly so we can
work on that sure and I appreciate this
new format in terms of where the
information is located and and I maybe
my fellow council members would disagree
but I personally would be easier if if
increases in a fund positive to fund is
positive and negative to fund is got
parentheses of it just charity okay
really really good yeah I think the the
big takeaway is that column on that for
our left of the amended budget it would
probably be helpful for us to show you
what the original adopted was because
that's that's a piece that's kind of
missing at this point of the story okay
and then we've also given you the big
macro views on these funds as well
street operating which is largely funded
through general fund type revenue
sources and a couple more utility funds
here sewer and stormwater you will see
and some of these funds where we have an
anticipated decrease to the fund balance
will be coming back to those funds in
your work session in Nova
to talk about what that means
long term some of these funds all the
sewer and stormwater for example on this
page are mixed operating in capital
funds now you'll recall we combined
those last year and so in some cases
we're taking from fund balance in order
to pre-fund projects on the capital side
yeah I would be particularly interested
when we have that conversation to
understand to what extent we've been
unable to execute our capital spend the
way that that we hope to and what's
going on with that and how it might look
different in 2019 questions all right
I'm moving from looking in the rearview
mirror I'm looking forward to 2019
mayor's budget focus at the start of the
budget was for us as staff to ensure
that we could maintain service levels
and quality of service and the direction
was to limit new requests and the reason
for that is because we're undertaking
strategic plan right at this moment and
we want to have that framework in mind
before we start major initiatives new
programs or service areas and so she she
said this is a maintenance budget this
is sort of a roll forward budget let's
do what we're doing and let's do it as
well as we can in 2019 but let's not
take on major new things
having said that mayor also became aware
of needs needs in terms of additional
staffing and additional resources for
staff so she called it her people in
tools focus and we'll talk more about
that particularly next workshop but that
was the framework that staff members
used as we developed the budget we
wanted to talk to you just a little bit
about the tool or the people side of
this framework and we wanted to share a
little staffing history with you this is
the reason why departments asked for
certain number of positions and why the
mayor chose to include some new staffing
in her proposed budget this is only
meant to illustrate history it's not
meant to describe what should have been
or what could have been and so
illustrative only the trend line versus
actual graph displays both the
authorized FTE numbers for city staff
and a projection based on historical
data authorized up T's does not equate
to the number that you might see in a
budget we've taken a look and tried to
combine in past years limited term
employees so LTS with FTEs and you'll
recall only a couple years ago we
started breaking out LTS from FTEs in a
way that you could track both pools
historical data we took from city's
budget documents 2005 to 2018 and that
contained into some FTE data as far back
as 1996 and you can go back and verify
what really happened in each of those
years
this is budget data not actuals so the
numbers from 1996 to 2009 were used to
create a pre recession trend line where
FTE growth averaged 3.6 percent a year
over that 14-year span he then projected
out that trend line until 2019
that's the dashed blue line to depict
what the FTE population could have been
without the Great Recession without
without without you know lots of caveats
there right actual FTE data from 2009 to
2010 is shown in red and it shows F T's
that were authorized in nature's budget
with an additional data point for what's
proposed in 2019
so then I had if you look at those two
trend lines had staffing trend continued
post recession and that growth and staff
would have been 26% during that time
instead you can see that we responded to
the Great Recession by reducing staff
and have largely kept those staffing
levels constant until just recently as
we added back some positions and we are
now roughly at where we were at that
recession comes remember right so I know
you said this and I just missed it so
lt's or limited term positions we're not
putting in this this calculation so some
there's some level of staffing above the
red line that is reflects the term limit
folk right let me let me explain that a
little bit differently better hopefully
lt's have been included in the most
recent years from let's say 2012 ish
i believe we may not have LTS broken out
in a way that was easy for us to pull
that data having said that we have gone
back and we've looked at some budget
data that shows that it would have been
only a handful of positions so we didn't
have in 2000 let's say an extra 200
LTE's it would have just would have been
a small number it would not have changed
this trendline significantly don't
remember winters time thank you
this chart is interesting that it may
tell a lot of different stories one way
to understand the data a little bit
better would be if we could see this
data by Department reason because I
think but if my memory serves me
not all departments have scaled with
city growth like others have for example
I know for a fact that parks have stayed
really flat for a long time has for a
uni easy to look at parks and saying how
are you keeping up with all these new
properties that you have but other areas
we've created new ones and we've done
some shifting around but someone like
but police has been one where we have
incrementally have been adding resources
over time so this is an aggregate story
about headcount yep
but I think the the story about our
ability to scale our services to meet a
growing community and where we're maybe
falling behind and where we're maybe are
up to date is more clear when we look at
the department level sure and that's an
excellent point it will also say as you
mentioned we've added different
divisions we've added different programs
we've consolidated staff in different
ways we've moved them across department
lines as we've moved programmatic areas
from one department to another that
analysis is complex to get to apples to
apples so that you could see those
changes there are departments where it's
easier Police Department is very very
easy to look at historically and I think
you make an excellent point of having
just been selective about which
departments we have added staff to in
which departments we have maybe
contracted and and you're right that's
not up on this slide this was just meant
to illustrate a total thank you for that
but just so you know that that whereas I
find this data interesting as one of the
council members I look at that and say
but I think the story lies elsewhere
because I know things happen with DSD
things happen with Public Works
engineering and there's stories behind
all of those and so what this doesn't do
for me and I don't know I don't know if
this was the intent or not but it's like
hey we've been very conservative there
has been growth we haven't kept pace
from a staffing perspective
I'm not saying you were intended this or
not but it you know it's like okay
here's kind of a we're setting things up
for the ask that's in here I don't know
but for me the better story is when we
look at the department level so I'm not
this the only thing that I would add to
that is I'm I'm not aware and I have
shorter tenure than you do but I'm not
aware of departments that we have
stopped doing are certain major services
that we have stopped providing either I
hear your point and if at some point as
we do make that ask if there's a need to
look at apples to apples staffing growth
in a particular department or service
area we can we can talk about providing
that information we can go back I was
remembering so the other thing that
strikes me and this will just skew the
numbers but did you factor out a site
fire and rescue when we ended our fire
department because we actually did in
our fire department so and you see a dip
in 99 that's correct
yeah so I just want to make sure that we
accounted for that too absolutely other
questions right now all right thank you
so next we're just gonna overlay that on
on population as well and masoor story
here in terms of population has grown 40
percent since that that same moment in
time in the last decade and again
staffing level has stayed roughly the
same again this is just meant to
illustrate that the trends on staffing
against population growth and how that
that ratio has not kept pace with
population growth over that time but
we can look at it at service levels and
and toxic talk about units of service
that were attempting to deliver in each
group
all right so departments are feeling
that it's more difficult each year to
keep up with service demands and that
resulted in for all the years of my
tenure here quite a few asks in the
budget development process this year we
had nearly or approximately 30 positions
new positions that were requested during
budget development we have significantly
reduced that and what's shown in your
preliminary budget those totaled nearly
five million dollars of cost that is not
what we ended up in the preliminary
budget we're going to cover that in
greater detail next Monday on the tools
side of the people and tools framework
for the budget there were 50 projects
that were submitted these are all
technology-based projects we certainly
had other small equipment fleet requests
as well and we reduced that so we
started with a budget ask of over a
million dollars and we are only able to
afford a fraction of that and we'll talk
more about that on the 29th as well so
as we look to build the budget we do go
back and take a look at what our
long-term financial forecasts had to say
about where we thought we would be in
2019 and this slide illustrates that the
baseline scenario that we utilized in
August for our financial retreat had
estimated the total general fund revenue
at fifty two point six million dollars
and a use of fund balance
as you can see from the preliminary
budget were pretty close to what that
financial forecast had estimated but
between the different categories are
slight differences and then we are not
utilizing any fund balance in this
preliminary budget on the expenditure
side again a pretty similar picture
baseline scenario had us at fifty two
point eight million dollars and
preliminary has this just a shade under
that again a little bit of deviation in
categories in particular some of our
transfer categories like Street and
capital projects are up and our other
operating is the bulk of the budget it's
all the staffing its supplies its
services dollars this is the way that we
showed it in the baseline scenario to
model it and so that's the way is shown
here we will be showing you the budget
in greater detail and in different ways
as we go forward other transfers in case
you're wondering includes transfers to
the sustainability fund unemployment
fund and water utility fund for the Main
Street tax program
the other thing that we do is we develop
the budget is we look back to our
financial management policies and we do
a little check to make sure that our
proposed budget is meeting those policy
targets or that we're identifying places
where we are going to need to spend more
time and effort to get in line with
those policy targets so these are the
big ones general fund balance target
policy is that we have 15 to 20 percent
of our expenditures and we are
significantly over that as projected now
you also have a financial management
policy that our ongoing expenditures are
funded by ongoing revenues and we've
done that by not using fund balance in
this preliminary budget next we have a
goal around debt that we limited to one
point five percent of the city's total
assessed value and at the end of the
last year and this is data that was
presented to you at the financial
retreat city had about eight million
dollars of outstanding council Manek
debt that's non voted debt and so
therefore we have still 144 million
dollars available in Cal sematic debt
capacity having said that that's not
necessarily sustainable not something
that we can afford but we're meeting
that target very easily and then we put
one up here to be transparent about the
fact that we do have some work to get in
line with our financial management
policies particularly as they relate to
internal service funds the policy says
that we shall have a reserve target but
staff has not brought forward a
suggestion for what those reserve
targets should be and Council has not
adopted a reserve level for those
internal service funds in order to do
that we also have some operating budget
work to do in order to establish what
capital replacement plans are going to
look like and a few of these funds we
give two examples here or the overall
struck
the fund or the cost allocation cost
accounting between funds that sets up
the structure for those funds so we have
a bunch of work to do better budgeting
in some of our smaller funds and in
particular those funds that help us to
keep our infrastructure going so I have
a question around that so as I look at
this a lot of this I think is great in
terms of the kinds of things that we
want to look at year over the the thing
that is maybe missing or not missing I'm
not sure when you talk about capital
replacement I think I mean you mentioned
IT and fleet I think back to former
accounts remember share who was always
talked about you know our our drain our
drained play services right and the fact
that at some point they're gonna have to
be replaced and the mechanism you know
yep to drive towards a goal of being
able to say you know we are you know
depreciating these assets by a certain
amount each year and understanding where
that is and that's the only piece of
this that I think as a as a dashboard of
wellness I that's the piece I feel like
is missing so when you talk about
capital depreciation you're talking
about some very specific smaller fun
things but I think there's also a
conversation about things that are in
the general fund or in some of the
larger funds you agree sure and I think
you're talking about the turf
replacement that type of a large ongoing
things that were wonderful that we put
in but that we don't presently budget
their replacements right right and so
some of those were tackling through our
capital budget others I'll explain these
two a little bit better detail for
example both IT in fleet cost
allocations right now their budgets are
built around the operating expenses for
the next year so we look at
in eyeties case what's the operating
budget for our IT staff and for the
repairs and maintenance work that we may
need to do and the special projects for
that year but if we look at PC
replacement we have not fully built out
a replacement plan that then adds an
increment to every year's budget in
order to make sure that we're keeping up
with the replacement schedule we have
periodically over the last few years put
a chunk of cash into the budget in order
to get caught up on replacements or to
begin a fund but we we have an every
year put aside the the right increment
of money that we need to keep on pace
with that the same is true with fleet
replacement we have not done a robust
replacement plan and where we're dealing
with replacements on a annual basis
you know what's due that year and can we
afford it this year any other questions
right now
okay we also wanted to take a look at
revenue overtime
this is revenue per capita in 2018
dollars the source of this data is the
annual financial statement from each
year from 2003 to 2006 teen and for 2017
through 2019 data we use information
from budget since we don't have
certified annual reports yet for those
years we provide this in the aggregate
as opposed to individual department
totals because we think that's that's a
it's a simplified way to look at it to
produce this actual curve we took the
the revenue in each of those years and
converted it to 2018 dollars we did that
using the Consumer Price Index from
Bureau of Labor Statistics for Seattle
and we used the August 2018 CPI let's
see what else so while our total
revenues have grown over time the our
population has also changed and that's
what causes this curve to peak around
2004 when there were only about fifteen
thousand five hundred people in Issaquah
and today there are over 37,000 however
one important takeaway from this graph
is that the revenues per capita have
been relatively flat from 2010 to 2013
19 projection uses the the budget data
that we have in the preliminary budget
but also factors in a 2.2 percent
increase in inflation and a 3 percent
growth in population that's what we've
averaged over the last six years so
there have been significant revenue
impacts statewide
since 1999 some examples of that have
been an initial repeal of the motor
vehicle excise tax property tax
limitation and of course the Great
Recession City property tax collection
has been below the rate of inflation
city has not added a new significant
revenue source during that time period
either although we have made adjustments
of course to find and fee structures we
had an increase in a B&O tax rate and
we've certainly had special bond levies
for example question
that's very interesting what revenues
are you talking about
I believe these are total revenues but
not from the enterprise funds don't
believe so total general fund just
general fund mm-hmm
okay likewise expenditure per capita
here same methodology that I explained
earlier spend ensures have a similar
drop from the early peak around 2004
when our population growth took off but
our spending
stayed relatively flat proportionally
from 2010 to 2013 this curve and
expenditure management has always been a
priority of this city but those
macroeconomic conditions and a need to
provide services for a growing
population and the fact that we are
service organizations so a huge chunk of
our budget is related to personnel costs
and we all know those haven't stayed
flat particularly when you look at the
cost of providing health benefits so
city governments just like ours are
always challenged with expenditures that
grow faster than revenues and in
Washington state municipalities like its
acquire particularly dependent on
economic development to drive increase
in revenue that therefore can support
increased need on the expenditure side
remember right so it really would be
helpful for me and again noting tonight
but if you give me the actual numbers
the table of the numbers inside of the
chart that would be super helpful okay
thank you don't remember we just diner
then comes going on tonight or
councilmember hunt and then comes under
winter's day on 2017 you mentioned that
that one is from the budget it's not the
actual right is it just 2018 okay 2017
because it was it's not certified yet in
our Kaffir financial report okay so if
even though it's not certified and we we
know for 2018 for example that the
difference in the revenue is going
there's going to be some
difference in the revenue versus what
was budgeted because 2017 it would be
good to know what it what it is although
it's not certified to get a sense for
how much that varies for the budgeted
this is the actual sure interest at two
comments first both this slide in the
previous one I think those are amazing
curves actually the fact that the
per-capita numbers could stay flat and
my second comment is it's not
coincidental that's when the
longest-tenured members of this council
actually started serving the last
clearly clearly you can see it before an
enacting right then we just put them
together because they look nice together
yes I like to comment on this a couple
things first of all I completely agree
come from Blair weirdness tine suppose
I'm the one who asked for these numbers
but this really does when people ask you
know are you just spending as much money
as you know government they just want to
spend all of our money well no you know
we provide services and over time those
services in real dollars as we scale the
organization have have you know been
flat for sometimes the second thing is
that of course that there's no hockey
stick for 2018 2019 and that this
maintenance budget that the mayor has
submitted is in fact you know it tells
that story here and then I want to
mention that an important factor is that
by by defining real dollars on CPI it
also sort of takes out the the benefit
that the community has seen by increased
housing prices now there is a CPI is not
driven off of housing prices right so if
we if we were doing this on the back of
the increase in housing value then we
would see this number trending up right
this is this is real by making it on
di and then the final thing that that I
really like about this is there's only
really one year where expenditures
exceed revenues right generally speaking
we've been able to you know keep
expenditures at or below revenue and
that one year was you know in the midst
is we were as we were diving into the
the Great Recession so I I really like
the fiscal restraint that this that this
chart shows that was that was before I
was on council other other questions see
a quizzical look anything no all right
okay and then we wanted to give you just
the big picture look on the general fund
this is the revenue side or what we've
referred to as resources often this is
the same pie chart that which was in the
budget in brief you can see it's a big
slice of purple up there that comes from
taxes next largest increment is from
charges for service charges for service
are you can think of that as the user
fees that participants or users of
different services pay directly for
those services and and I'm gonna take
that biggest slice of pie that's taxes
we're going to break that out a little
bit
Ruth talked about this in her
presentation as well you can see the our
biggest portion of taxes is coming from
sales and use which that's opposed with
local and regional and even national
economic conditions
it's a quick question
so do we find I mean I just don't know
historically that property taxes are
more stable and retail sales and use
more volatile or they both fairly
volatile both fairly stable I mean those
mean that makes up the lion's share of
the plan I I can't speak historically
for this community I can say my
experience elsewhere is that property
tax is considered a stable source for
sales and uses less so I asked how we
made a hundred and ten thousand dollars
off gambling it's a really good question
there's revenue share that's based on
what yeah sound like scratch tickets yes
Kristi is telling me pull tabs and
scratch games like lottery receipts yeah
that must be a lot of there must be a
lot more of that than I realized all
right thank you lastly we wanted to show
you the same sort of pie for expenditure
side of the general fund you can see
salary and wages is the biggest slice of
the pie I'm having the management
analysts do a little bit of research on
this I actually was quite surprised to
see this below 50%
and so I'm posing some questions about
whether why that's whether or not that's
the norm for similar municipalities it's
lower than then I've experienced I think
in part if you look at combining other
personnel maybe a chunk from services
where we're contracting out instead we
get closer to a number that I would have
expected helped understand a few these
labels services is professional services
so again contractual services it
includes our legal budget it includes
some of our communications
insurance and utilities payments from
the general fund supplies its office
supplies small tools and equipment
computer hardware and software a cost
allocation right now we have to cost
allocations that's IT and fleet
intergovernmental is our funding a fire
marshal position King County shoreline
Patrol Eastside Fire Rescue Arch workers
compensation Services election costs a
whole bucket of many small things other
operating costs includes travel rentals
and leases repairs and maintenance
scholarships and grants training
registration dues and subscriptions and
then other personnel is over time and
part time non regular wages so our
part-time staff
again a different way of looking at it
looking at our preliminary budget and
you'll see us use we're still not using
the right lingo everywhere will say
propose sometimes some preliminary other
times I mean the same thing so the
preliminary budget versus 2018 adopted
and I'm stressing that charges for
service taxes and transfers we are
projecting an increase or have built
into the budget an increase in revenue
but intergovernmental licenses and
permits we are projecting to be down
some budget to budget and here the in
taxes as we talked about that's mainly
coming from sales and use and a little
bit from business and occupancy charges
and services that increase is mainly
from plan check review services and
recreation fees so you can finish the
slide ok we're projecting a slight
decrease as you've seen on your revenue
summary in building permits it's a
conservative estimate we tend to be
conservative in that category because
sometimes permits come in earlier than
expected sometimes they come in later
and so that's really about timing and
but we we do analysis every year to look
at what's in the pipeline and try to
judge what permits they're going to
apply for what that will result in terms
of permit revenue and what's the timing
on all of that we're we're in a
particularly challenging time a good
time to try to project revenue but it is
challenging because this is a period of
unprecedented growth but we do see some
slight signs that
some things are slowing down and so we
do tend to be conservative prudent on
estimating our revenues have somewhat
understand
thank you since you came back to revenue
and I was one slide slow Cristina
whomever is driving could you go back to
slides thank you this this was the taxes
one okay that's fine
earlier this evening we had a public
hearing on revenue sources and I've
always found that a little bit
misleading so I just want to say this
publicly you can look at that you can
see we have components that are property
tax there's a component on sales tax
there's component being another big one
on business and occupation tax there are
other ways that we get for criminal
justice utility rates that that are
added to our bills for our utilities
like phone for example there's many
different ways that we as a city can
impact the numbers and the site the
slices of each of these pies but the
only question in front of us in this
budget season at all is the levy rate
that the city charges for property taxes
that's it right because I just want that
should be a very I mean the public
hearing was titled revenue sources right
and and and that's I don't know if it's
intended to cover all the potential
changes we could have as I can look at
there's many ways that we could affect
revenue but the only one we're
addressing is a potential 1% in property
tax that's correct
haven't we so I'm trying to remember in
pre there are years that we have looked
at being out but that wasn't part of the
budget process that was separate from
the budget or was that part of the
budget so some years it's been part
sometimes it's been separate there's no
rhyme or reason we can do it either way
other years in addition to you mentioned
bno as an example we have offered
suggestions to change
not on this slide I'll show you this
slide some new policy and therefore new
rate structures and fines and fees so we
have presented those options and the in
the past this particular budget we don't
have those recommendations in front of
you we lay out in the in the IMC there's
different rules governing these
different sources and the time at which
you can present recommendations to make
changes so we're choosing this here the
administration is choosing to make that
1% recommendation and choosing not to
suggest to change in Vienna correct at
this point in the year I will also say
just be fully transparent that the mayor
has some level of authority as well to
make some adjustments on rates for
example I think if you look at rec fees
she has the ability to adjust
non-resident rates up to a certain
percent increase so it depends on the
revenue source so if we really give in a
jam you know those pool fees okay as an
example
thank you for that explanation sure
other questions right now okay okay so
that leads to the punchline you have one
question on this one why are
intergovernmental revenues down so
significantly in 2019 s preliminary
budget I in part they're due
they're down due to state law changing
on the streamline sales tax that's the
biggest chunk great things did we get
was there disadvantage rule change does
it disadvantageous rule change
yes I think cities lobbyists had spoken
about that Doug levy over the course of
the legislative session it's a it's a
multi-year
faizon plan to reduce our revenue and I
can get you more information about how
much is expected each year I think I
think this is the second to last year of
that reduction if I recall correctly so
that does lead us to punchline here
and this sets up the conversation for
our next budget work session where we
will talk in greater depth about the
expenditure side of the general fund
that 1.7 million dollars of new revenue
is the amount that we had to work with
in the budget
so after departments came and presented
their 30 new staffing positions and
their five million dollars of IT
requests we then had to turn back to
them and say ok and we have 1.7 million
dollars of ongoing recurring revenue
that can support any new adds to the
budget and this year we worked very very
hard to get expenditures in line with
that revenue forecast so 1.7 million
dollars is not a lot for the the needs
that I think we were trying to meet this
year questions
right that's it I thought it would be on
the quick side
I don't think next Monday will be quite
as fast hopefully you'll hear from other
people besides me next week I feel bad
that members of the public left maybe
only 15 or 20 minutes before how they
stayed a little longer they could have
overcome it but oh well
alright well thank you very much do you
want to talk a little bit of give us a
little bit of a heads up for the next
one
sure so we will be spending more time
talking about expenditures we will be
covering the new staffing requests you
pull that up real quick take a look at
that first page the 29th
oh yeah the calendar will work that
annotated one so we'll be talking about
that that the biggest changes on the
expenditure sites will talk about
staffing costs
well there were very limited number of
regulatory changes that dictated
additions to the budget so we won't have
much to report on that front we're past
years we have we will be also down one
more 29th
we're gonna cover Department work plans
so you'll get a sense of what we put in
the budget in particular where we're
we've also included professional
services in order to support those tasks
we're gonna cover some of the things
that weren't included in the base budget
we're going to maybe talk a little bit
about if those are high priorities for
council and community ways that we could
do some of those by utilization and fund
balance and we will start to scratch the
service I believe on capital projects
and debt assumptions I expect that
conversation and carry over to the next
work session because we have some
significant gaps in our capital planning
comes up every winters time yeah one
comment one one question my comment is
there's a lot to like in this
budget as proposed and I do appreciate
the very clear policy objective of
making sure that our ongoing
expenditures are covered by ongoing
revenues and then to deliver something
that meets that objective that makes
things a lot easier and so I'm pleased
with that my question is and you started
to address it Emily right here at the
end and I feel like I should know the
answer to this so it's a little bit
revealing a little bit embarrassing I
guess we start by saying at the state
level we know they do an operational
budget and completely separate they do a
capital budget and ours are rather
weaved in between it seems that we have
a capital plan that has projects
expenditures timelines and revenue
sources but then it's every year I think
within our this operational budget that
we take a slice out part of the what we
call this operational budget there's a
slice of it as oh by the way this is the
part that's going to implement this
year's capital plan right and and I
guess I just I guess I do understand it
my ass then would be would be that the
more clear that delineation could be
made the better it would be great to be
able to if I could say clearly like okay
so in front of us right now is the
question of approval for a capital plan
for this part of our for the 2019
whatever that is now even if there's
some carryover from 2018 or whatever I
can say in front of us here's a part
that's for capital for 2019 and I can
then open up that capital budget book at
any time and say this is what we're
talking about funding unless there may
be some changes of course but but that I
guess so that's my as much as anything
because I know historically we've taken
capital and we will see those plans
would at a department level for example
or there might be and then streets might
be off by itself and some other things
but it was never been easy to see all of
capital
one place I think with the capital plan
that we have with seeing the funding
part that we work on right now it should
be hopefully should be just very easy to
line things up and say here's the
question in front of us for funding to
do this part of our capital plan yeah so
I think it's easy to see the picture I
think it will be a much more difficult
conversation to have about how we're
going to proceed with the capital plan
for 2019 so let me give you an example
when we adopted the capital improvement
plan there were three projects shown in
2019 which at that point was year 2 of
the plan that were unfunded in whole or
in part
so those projects have not technically
been included in this proposed budget
because they were unfunded and then just
that added a layer of complexity so an
idea of why I think it's gonna take a
couple meetings at least and why we I'm
gonna suggest we may even have to extend
the conversation on the capital
component of the budget beyond budgeted
option perhaps is because we've also had
things have happened between now and
adoption of the capital budget so for
example we have a project where we had
anticipated it would be fully funded
maybe but that was dependent upon
getting a grant a grant that we did not
get so now that gets added to the
unfunded list and the work plan in that
implementing Department included you
know work on that project and so we need
to decide are we gonna are we gonna
allocate to that and also both in terms
of dollars in staff time and and to what
end because we didn't receive the grant
that really enables that whole next
phase of that project to go so it I'm
sharing this only because where I said
it it looks fairly complex and it's
seems like we could probably get bogged
down in a conversation about how to go
about funding capital some of those gaps
are quite large and may not be able to
be satisfied through a single funding
source or a funding source that would
not require voter approval for example
thank you
we did have the financial retreat right
so the picture of having a capital plan
that's not fully funded is not news to
anybody so I didn't so my dad for not
saying that earlier I certainly I
recognize I know that with this
operational budget word there are not
going to be capped they're not going to
be capital dollars in this budget to do
everything that we had adopted in our
capital plan and I but I did try to slip
in there and changes because I know
change is happening but that so aside
from this exercise we're going through
now I am anticipating and I don't think
this is news at all that there will be
another stream in which we do make a
decision or not about another funding
source to cover the known gap for at
least for just for transportation
projects so so I know that so I don't
expect those there to be revenue to line
up for every all the anticipated
expenditures and I do expect there to be
potential changes I'll leave it up for
you to how to package and deliver that
but but i but it would be good this is a
good marker and a good place at which to
have a nice summary of the capital
picture yes there are planned projects
there's expenditures there are things
relative to budget that they've already
done and then here's the revenue we have
in this budget and here's our maybe our
updated forecast of what the gap would
be that would be very helpful
sorry thank you for that what you're
saying come to member Ramos yes thank
you so just kind of clear it in clarity
in other words so positions that we
approve like the slashers such as
additional police officers and so forth
those are all included in this base
budget if you have a preliminary budget
and with all those changes then where's
the 1.7 million in additional revenue
that that then we're gonna see when you
bring it is additional things mainly to
the operating budget additional
positions you talked about staffing
average tools those people tools thing
are going to come into this 1.7 million
all right and then to lead off on that
and then we're gonna look at that
capital side because that's these those
are the ongoing costs and revenue and
then looking at ending fund balance or
other ways to fund some of those capital
things that we talked about such as
things that might have gotten unfunded
place if we may got grants who didn't
expect whatever all those pictures into
the capital side will be digging into
another side of that not including the
1.7 because that's more towards the
operational tools and people side
correct correct yes Clara from recurring
yeah other comments questions a couple
things first off thank you and your
staff this is a good start there's a lot
of new faces involved in the budget this
year and it's just one person's opinion
that it's going very smoothly given all
the other new people involved in the
budget but of course see how these go I
also want to mention that our next
meeting for the council is tomorrow
we've got a council Committee of the
Whole meeting at 6:30 p.m. here in
Council Chambers it's not projected to
be a super long meeting but you never
know till it ain't over till it's over
thank you the only thing that you
trigger a memory for me I had hoped as
we were kind of talking about new format
and new process and multi-year
multi-step improvements that we're
undertaking part part of how we are
going to get better at this each year is
of course getting this feedback from all
of you about what you would like to see
how you would like to see it or
councilmember Ray had offered previously
a couple of suggestions on report
formatting any of that will take and as
we're able to implement them we shall
thank you that we are adjourned
Thanks
you
you