Loading...
HomeMy WebLinkAbout2022.10.24 Council Workshop - City Manager Budget Message Handout BUDGET MESSAGE Honorable Mayor and City Council, Pasco residents, business owners/operators, and interested parties: I am pleased to present the City of Pasco’s proposed budget for the 2023-2024 biennium. As required by State law, revenues and expenses that compose the budget are balanced in all funds. Guiding staff in this budget planning effort were a myriad of inputs including completed comprehensive and master plans, the capital and operational plans embedded in rate studies, an approved Capital Improvement Plan for the years 2023-2028, City Council goals for the years of 2022-2023 and staff knowledge gained through operational and administrative experience. The 2023-2024 budget serves as a financial roadmap. This map assigns City resources toward a variety of services, programs, activities and projects. Ultimately, the result is a body of services, programs, activities and projects that form the collective effort of City staff. The aim of which is to meet Council Goals and the needs of our citizenry, including safety in the community, an enhanced quality of resident life and business community operations, and financial stewardship of resources. All these outcomes not only benefit our current community but also future generations of the City of Pasco. The intention of this message is to provide an overview of the elements included in the proposed 2023 – 2024 biennial budget. 2021-2022 OVERVIEW Pasco is a city coming into its own and positioned for future commercial, industrial and residential growth on a large scale. A once small Central Washington town along the Columbia River, Pasco has experienced rapid growth over a prolonged period of time that has transformed the City into a dynamic and vibrant community of over 80,000 people. Today Pasco is a regional hub of commerce with a diverse population, quickly rising education levels and household incomes. As part of this transformation, Pasco has experienced a changing demographic, infrastructure challenges, increased demands for services in all sectors: social, education, emergency response, utilities, transportation, etc. The elected leadership of the City have been responsive and strategic throughout these enormous changes, which has led to an impressive level of stability. Today those long-term strategies, as reflected in the City’s strategic investments in critical infrastructure, technology, people, quality of life and the community in general, are bearing fruit. The first half of the biennium remained heavily impacted by the various challenges from the COVID pandemic whereas 2022 began to return to pre-pandemic activity. There were notable highlights and successes of the biennium, despite challenges encountered during 2021. City Manager  (509) 545-3404  Fax (509) 545-3403 P.O. Box 293  525 N. Third Ave.  Pasco, WA 99301 • City-wide accomplishments: o Implementation of the ARPA program through the receipt of Coronavirus State and Local Fiscal Recovery Funds U.S. Department of the Treasury. Most of these efforts took place during 2021. The following actions were implemented to assist the community impacted by COVID.  Utility payment assistance for residents for utilities such as electricity, water/sewer and waste collection. This assistance to residents was made possible through partnerships with area utility service providers.  Business assistance grants for businesses within the city financially impacted by the COVID pandemic.  Beginning phases of multiple facility upgrades for the City-owned building occupied by the Boys & Girls Club.  Expansion of regional mental health services through the implementation of the Pasco Resource Navigator program. o The Pasco Public Facilities District successfully passed a ballot proposal in 2022 authorizing a new sales and use tax an additional 2/10th of one percent of as of January 2023. Tax proceeds will support debt service on a $40 million project for an aquatic center. This will allow Pasco to attract new visitors further cementing its growing reputation as an attractive recreational destination. It also set the stage for a new role on the part of the Pasco Facilities District Board. o Significant progress on the conversion of the City’s Utility Billing system. This conversion will offer the needed capacity for the anticipated growth while adding process efficiencies. o The position of Economic Development Manager was filled mid-2021. This position is instrumental in promoting Pasco as a place for tourism, commercial and industrial development. The position also serves to work collaboratively with community partners towards a comprehensive economic development plan. o Implementation of the “AskPasco” application to facilitate community engagement by allowing residents to complete a variety of actions such as submit requests or concerns, pay utility bills and obtain Parks and Recreation information. o Completion of the Comprehensive Police Strategic Master Plan o Completion of the Transportation System Master Plan o Completion of the Parks and Recreation Master Plan o Completion of the Fire Department Master Plan o Completion of the Butterfield Water Treatment Plant Facility Plan • Capital Projects Completed or Significant Progress Made: o Completion of the Northwest Area Sewer Local Improvement District (LID 151) which completed sewer infrastructure improvements to position the area for large-scale mixed use residential and commercial development. The development of this area is expected to positively impact revenue sources such as property taxes and sales tax in the future. This area is expected to further establish the city as an attractive destination. o Peanuts Park and Farmer’s Market project was completed which made significant improvements to the downtown area. o There has been significant private investment in the industrial area of the City by multiple companies such as Love’s Truck Stop, Reser’s Fine Foods, Darigold and Amazon. o Completion of the Road 68 Widening (south of I-182) o Completion of Wrigley Drive Extension o Completion of A Street Soccer Complex – Phase 1 During 2021, the City conducted its Community Survey, and later multiple Community Forums. Along with other ongoing Citizen input, the above mentioned opportunities guided the City Council in establishing the following overarching 2023-2024 goals which set the priorities and guide this biennial budget: Quality of Life Financial Sustainability Community Safety Community Transportation Network Economic Vitality Community Identity Promote a high- quality of life through quality programs, services and appropriate investment and reinvestment in community infrastructure. Enhance the long-term financial viability, value, and service levels of services and programs. Promote proactive approaches for the strategic investment of infrastructure, staffing and equipment. Promote a highly-functional multi-modal transportation network. Promote and encourage economic vitality. Identify opportunities to enhance community identity, cohesion, and image. 2023-2024 BIG PICTURE Over the past many years, population within the City of Pasco has steadily grown. At the time of the 2010 census, City population was 59,781. In July of 2021, the population estimate per the US Census was 78,871. Planning and preparation has been the intentional choice of staff to help steer decision making toward meeting Council Goals with the addition of new community members while enhancing the quality of life for longtime residents. The 2023 – 2024 biennial budget proposal focuses on the implementation of several long-range plans and projects. The completion of many of the City’s long-term planning efforts such as the Comprehensive Land Use Plan Update, Broadmoor Area Master Plan, Information Service Strategic Plan, Transportation System Master Plan, Downtown Master Plan, Police and Fire Strategic Plans and a Parks and Facilities Comprehensive Plan have informed budget planning. Other planning efforts will continue to advance during the biennium: Waterfront-Zoning District, Phased Sign Code Updates, Housing Action Plan, Economic Development Plan. With the goal of addressing necessary and beneficial actions to build a cohesive and connected community as well as provide consistent, reliable service, unique planning efforts have occurred. Each of the plans noted above serve to bring quality service and opportunity to community members while addressing the needs and impacts of growth. To be successful over the long-term, identification and implementation of alternative funding sources for major capital projects or service initiatives is imperative. Included in the consideration of funding for capital and quality service provision is the need to match cost creation with appropriate revenue sources. While capital infrastructure accompanies the addition of newly created areas of the City, concurrently necessary is the replacement of aging infrastructure. Accompanying the addition of new population is the ever-present desire to maintain service levels for existing community members. However, the additions of new opportunities in the form of private and public investment that accompany growth, allow long term residents new opportunities in the form of job creation, new recreation elements and a more diverse and dynamic community. Also, important is an expanding City tax base allowing for increased revenue. Careful analysis of cost cause and effect, while assessing resulting benefit will be necessary as the City moves into the next many years. Operationally, to position the organization toward sustainability, a continued focus on enhancing efficiencies through process design and technology application will be required. What follows is a high-level overview of each City Council goal and what is proposed in the preliminary budget to advance them. Quality of Life A consistent goal of Council has been the aim of influencing Citizen quality of life by the provision of quality programs, services and investment in infrastructure that makes Pasco a good place to live and visit, measured by ease of transportation, neighborhood cohesion, quality public spaces that are available to be enjoyed by all and variety in housing that appeals to many needs. This high-priority goal places significant resources toward the advancement of projects, initiatives, inter-agency collaboration, and strategic planning processes including: • Completion of the Animal Control Shelter through partnership with the City of Kennewick and City of Richland. • Transition to a city-led animal control services, with Pasco taking the lead and costs shared by ACA member cities. • Initiate a robust public engagement process to identify and advance Community Center needs. • Based on Parks and Facilities Comprehensive Plan, identify areas for revitalization and opportunities for community gathering spaces, and provision of recreational services, including improvements that provide benefits for all to play. • Provide administrative and organizational support for the implementation of the Pasco Public Facilities District’s approved ballot measure for a regional aquatics center. • Identify and implement additional organizational cultural competency training of City staff and officials. • Completion of the Equity Plan. • Support of the newly formed Arts and Culture Commission and their involvement in public art and arts and culture related initiatives. • Development of a Housing Action Plan. • Complete Northwest Community Park land purchase. • Complete Martin Luther King Center Refurbishment and Construction Project. Financial Sustainability A thorough understanding of City-owned assets, programs, and services is central to the City’s financial sustainability. Considerable effort has been expended over the past few years to analyze these items and make that information available to the City Council and public in a transparent, understandable format. Through diligent planning, City staff will work to provide policy options for Council designed to enhance the long-term financial viability, value and service levels that currently exist over this biennium. Additionally, City staff will continue to instill and promote an organizational culture of customer service through all business lines. • Support of funding for long term assets including maintenance of Local Improvement Districts and Debt Issuance, as well as actively seeking low-cost funding in the form of low interest loans and grants. • Support and integrate permitting software replacement. • Complete Utility Billing System replacement. • Complete long-term financial plan for General Fund. • Consideration of new, and updated, impact fees to assure the impacts of growth are appropriately mitigated. Community Safety To ensure police and fire services continue to meet the needs of the growing community, the following have been included in the 2023-2024 proposed budget: • Implementation of Comprehensive Police Strategic Master Plan, including the District Policing Model. • Expansion of homelessness and behavioral health services through; enhanced contract for Resource Navigator program, identify sustainable funding opportunities to continue Mobile Outreach Professionals program, and first- responder training. • Participation on the recently approved 1 percent sales tax steering committee and programming for behavioral health services. • Long-term planning and efforts to maintain Class 3 Community Fire rating, including the completion of Fire Station 85 and addition of associated staff. • Continued improvement in utility and roadway infrastructure to provide quality service and eliminate infrastructure needs and inequities. Community Transportation Network This biennium the City will see the completion of several long-standing transportation projects and supporting the City Council’s desire to improve connectivity, mobility, multi-modal systems, accessibility, and safety through the following: • Completion of the Lewis Street Overpass. • Creation of a new transportation system in the Broadmoor Area of Pasco. • Completion of Court and Road 68 intersection improvements. • Completion of Sylvester Street Safety Improvements. Economic Vitality The proposed biennial budget provides for significant investment to increase Pasco’s economic and community development in key areas of the City, in particular, revitalizing Downtown and the development of the Broadmoor Area. • With the completion of the Downtown Master Plan, begin initiation of plan initiatives. • Completion of Broadmoor Master Plan and accompanying code revisions. • Complete Housing Capacity Plan. • Complete code revisions associated with Residential Design Standards • Complete the Economic Development Strategy Plan Community Identity Additionally, City staff will continue to capitalize on inter-agency partnerships and: • Develop Public Art Policy in coordination with newly established Arts and Culture Commission. • Enhanced support of community events highlighting the diversity of Pasco. • Develop a Community Engagement Plan that encourages and provides opportunities for citizens to gather. Staffing Creation of the proposed 2023 -2024 biennial budget presented opportunity and exposed need in the area of staffing. An increasing workload and growing community for many years have communicated the need for the addition of staff. Supporting this day-to-day recognition of many demands on staff time and talent has been the results of various studies including the Information Systems Plan, the Fire and Police strategic plans. Awareness of new demands on City staff, including the addition of needed accounting support for the Pasco Public Facilities Aquatic Center, assuming an operational role in the Animal Control Shelter, and the City-wide impact of anticipated growth in the Broadmoor and Industrial areas has resulted in a notable increase in staff requests. Further, the successful implementation of an aggressive capital improvement plan will require areas additional staffing. To meet the needs of the future, investment in human capital is necessary in the near term. Accordingly, the proposed budget recommends the following additional FTEs: Department 1 No. of Staff 2 Expense Funding Funding Source Net Impact Information Systems 3.4 805,984$ -$ 805,984$ Executive 3 716,151$ -$ 716,151$ Finance 2 384,021$ 103,696$ PFD Management Reimbursement 280,325$ ACS 10 2,655,429$ 237,816$ Blvd Maint. 2,417,613$ CED 4 772,963$ 382,690$ Permit Fees 390,273$ Municipal Court 2 250,002$ 116,645$ Grant 133,357$ Police 14 4,102,090$ 1,263,279$ Grant & Criminal Justice Tax 2,838,811$ Fire 9 2,043,638$ 1,397,999$ Grant 645,639$ Human Resources 0.5 113,518$ -$ 113,518$ Engineering 3 992,199$ -$ 992,199$ Total 50.9 12,835,995$ 3,502,125$ 9,333,870$ General Fund Overview of Carry-Overs The 2023-2024 proposed biennium budget is prepared with the accounting practice of carry overs in place. This practice was implemented in the 2021-2022 budget. The technical accounting definition of a carryover is an amount that moved from an earlier accounting period to a later one. Project schedules shift for multiple reasons, permitting, funding, property acquisition, etc., and the implementation of a carry-over system will provide a continuation of funding to a project as schedules vary. In terms of Council oversight, all funds expended during the current biennium would still require Council authorization. The carry-over process simply provides a process by which Council can authorize carry-over funding of a project(s) into the new biennium. This practice adds a layer of sophistication to the budget process and provides clarity with respect to the true capital budget for the given biennium, and avoids the confusion created by including projects that have been approved in prior budgets (like a Lewis Street Overpass project) into the new biennium, which overstates the City’s capital budget. Balancing General Fund The past few years have been dynamic at the City of Pasco. With the uncertainty of pandemic effects, budgeting was cautious during the previous biennium. However, in spite of the nationwide uncertainties, Pasco recognized healthy revenues and ended 2020 and 2021 with available, termed unassigned, ending fund balances of $25.8M and $21.7M, respectively. The anticipate ending fund balance as of the end of 2022 is $28.5M. Fund 1 No. of Staff 2 Expense Funding Funding Source Net Impact Ambulance 12.6 2,869,445$ 2,096,996$ Grant 772,449$ Fleet 3 707,441$ 707,441$ Rates Animal Shelter 20 2,786,167$ 1,857,445$ 2/3 funded from cities 928,722$ Equipment Replacement 0.5 103,696$ 103,696$ Interfund charges -$ Water 8 1,780,969$ 1,780,969$ Rates -$ Sewer 4 871,301$ 871,301$ Rates -$ PWRF 2.5 300,095$ 300,095$ Rates -$ Medical Insurance 0.5 113,517$ 113,517$ Rates Total 51.1 9,532,631$ 7,831,460$ 1,701,171$ Other Funds Planning for coming 2023 -2024 biennium revenue remains challenging. While there is recognition of our past years’ robust sales tax revenues, a large percentage of the sales tax revenue, 51%, is tied to construction activity in the years of 2019 – 2022. Based on the potential for growth in the City’s economic base in the Broadmoor Area, the long-term prognosis is a more diverse and strengthened tax base. However, the timing of construction and resulting community is largely dependent on private investment. The City of Pasco has completed an analysis and anticipates the adoption of a Tax Incremental Financing (TIF) Broadmoor Area. Adoption, and subsequent related debt issuance, will allow for substantial infrastructure improvements in the Broadmoor Area that are to be made to augment private development. Based on the “101 limitation” for property tax revenue growth new construction, and the accompanying growth in sales and utility tax base, is an important facet of the City’s financial wherewithal to fund improvement in City services and community amenities. The City has grown substantially in population over the past decade both in population and complexity. This trend is anticipated to continue. For example, the proposed budget includes new staff to support animal shelter operations, an additional fire station, innovative police staffing in the form of district policing, administrative support for the construction of the Pasco Public Facilities District’s aquatic center, and a plethora of sizable capital improvement projects that demand much in both staff time and financial equity. Considering the impact of coming biennial demands, the General Fund is expected to reduce in fund balance by approximately $10M by the end of the 2023 - 2024 biennium. Accounting for a significant portion of this reduction are the addition of annual debt service in the amount of $5.2M for the TIF area. As development occurs and property tax assessments grow, and utility and sales tax accrue, the resulting revenue will supplant this payment. The remaining difference between annual revenues and expenses are the result of one-time spending on capital projects in the amount of $3M, most of which are small in dollar value. Most notable in the list are one-time improvements to City Hall to provide space for staffing needs, regional wayfinding project improvements, and improvements to the antiquated police training facility. Other one-time expenses included in the proposed 2023 – 2024 biennial budget are information technology ($2.6) and equipment or service purchases ($600K), totaling $3.2M. Infrastructure Funding As the City’s infrastructure ages and the City grows, systems are faced with two different kinds of financial pressures. While in concept new growth is expected to mitigate its impacts, this process does not happen prior to or even during development. The City a imposes a variety of impact, mitigation, latecomer’s fees and other development-related charges and costs. However, the current fee schedules do not always meet the growing cost. Therefore, the coming biennial budget includes plans to review and reevaluate fire impact fees, traffic impact fees, the rates charged when new customers join the utilities and park development fees. These exactions are, as a function of State law, often recouped over many years following the time a commercial or residential development starts its operation. Additionally, the City has the obligation to develop capital facilities necessary to support basic services. Council approved the 2022 - 2028 Capital Improvement Plan (CIP) totaling $833M in October of this year. Of that value, projects valued at $470M are planned to be completed by the end of the 2023-2024 biennium. City staff remains committed and in active pursuit of low-interest loans and grants to help fund capital projects. GENERAL FUND Revenue The chart below portrays budgeted General Fund revenues, by source, projected for the 2023-2024 biennium. Total general revenues, excluding sources that are one-time in nature, of $143.7 M are projected for the biennium. This is an increase of 9.3% from the 2019-2020 adopted budget due primarily to several factors: • Strong sales tax receipts fueled by new, and large project, construction. • Growth related increase in assessed valuation and associated property tax revenues. • Accounting change in receipting of utility taxes – receipted into General Fund then transferred out. • Increased utility tax receipts due to large part to additional customers and less so to rate changes. • A continued focus on efficiency has resulted in greater revenues through: o Business Licensing Program o Engineering overhead recovery, development and a more robust list of budgeted capital projects. - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 Property TaxesSales TaxesUtility TaxesOther TaxesLicense & PermitsIntergovernmentalFees & ChargesFines & ForfeitsOther Sources2023-2024 Budgeted General Fund Revenues 2023 Budget2024 Budget The three major revenue sources to the General Fund are the City’s share of sales tax, utility tax, and property tax. A brief synopsis of each major revenue source is as follows: Sales Tax – Sales tax is the General Fund’s largest revenue stream and includes regular Retail Sales Tax, as well as Criminal Justice and Public Safety Sales Tax. The latter two taxes are mandated to provide public safety services to the citizens of Pasco, while the regular retail tax funds all general services. Since 2014, sales tax revenues have trended upward, averaging more than 5% growth annually. This growth has been fueled by new construction and supported by a modestly expanding commercial inventory, auto, and large equipment sales. Even during the COVID pandemic, the City has received strong sales revenue due to increased activity in construction and vehicles sales. Utility Tax – An 8.5% tax on gross revenues of all public utilities is paid to the City on a monthly basis by system users. The City’s Water, Sewer, Irrigation, Stormwater, and Reuse utilities are subject to utility tax, as well as companies who provide natural gas, electricity, phone, cable, and garbage services in the City limits. The General Fund receives 88.23% of utility tax revenue, while the Street Fund receives 2.35% and the Overlay Fund receives 9.42%. While new home construction creates more accounts and revenue, extreme cold and hot weather are big factors in overall revenue from this source. This impact is especially true where electric utility tax is concerned. The City has seen a steady decline in telephone utility tax since 2014. This is likely due to the competition of many service providers and the diminishing use of landlines. Although utility tax revenue reflects very measured growth, it is a stable source of recurrent revenue to the City. Property Tax – A major challenge faced by the City is to manage the real world increases in the costs of providing essential services and increasing demands with the limitations of Initiative 747 (I-747). I-747 limits yearly property tax increases to the lessor of 1% (excluding new construction) or the Implicit Price Deflator (IPD). This means that even though the City’s assessed valuation has been increasing significantly, the increase in property tax revenue across the City cannot follow the same trajectory. Property tax revenue for the City has been increasing higher than 1% due to new construction; however, a recession can significantly affect such revenue source. For 2023, Council has decided to forego collection of the statutorily allowed 1% annual increase and banked the capacity for possible future use. Other Tax – About 2% of the total tax revenue is comprised of Gambling, Leasehold and Admission Tax. Taxes make up 74% of the 2023-2024 General Fund revenue, excluding debt proceeds. Grants – The City often receives grants for one-time purchases or temporary funding of positions. During the 2023 -2024 biennium, the addition of 15 new staff members in the Fire (6) and Ambulance Funds (9) by a Staffing for Adequate Fire and Emergency Response (SAFER) grant that was awarded to the City in the last quarter of 2022. The grant period extends for a period of three years. The grant does not cover related equipment, supplies or overtime. Ultimately, a contingent of staff similarly sized will operate at the currently under construction Fire Station 85. During the coming biennium, staff will assess potential revenue sources to absorb the cost of the SAFER funded employees. Expense Before addition of new requests, composed of items like capital, staffing and one time information technology purchases, the General Fund expenses for the 2023 -2024 biennium are proposed to be $132M, an increase of 9%. As compared to the expense change between the 2019 – 2020 and 2021-2022 budget totals this increase is following the trend. When reporting the 2021 – 2022 proposed biennial budget the increase was also 9%. With the addition of proposed new on-going type requests, the expense budget increases another 10%. Additional staff needs are a combination of actual and planned growth. For example, Fire Station 85 construction and service area need. The new staffing also reflects community needs outlined in plans and studies. A few relative positions include an policy analyst to help foster implementation of the Downtown Master Plan and added Police Department staffing to implement District Policing. Also driving staff additions are new community amenities and improvements like the Aquatic Center and improvements by way of Local Improvement Districts and at the PWRF. In order to well service the administrative needs the come with new areas of accounting and record keeping, existing staff is unable to keep pace and new staff is needed. Also impactful is the City’s experience based on state legislation regarding Paid Family Medical Leave which was available for use beginning in 2020. Since 2020, the City has experienced an increase in overtime and unpredictable extended leave trends at the city-wide level. To avoid underserving citizens or staff burnout, the City staff levels cannot remain as lean as past practices have allowed. Supplies from last biennium to proposed 2023 – 2024 have increased approximately 7%. As always with the growth in population both our supplies and services budgets increase. However, not unexpectedly, with recent inflation impacts, the 2023 – 2024 budget also reflect inflationary implications greater than typical. During our mid-biennium review, it will be necessary to see if the budgeted items may have benefitted from a cooling in inflation. UTILITY SERVICES The greatest challenge for the Utility Fund is to ensure financial self-sufficiency; that the infrastructure is kept in good service and that new capital needs or large maintenance or improvement requirements are anticipated, planned and communicated in a timely manner to Council. Council has approved the City’s 2023-2028 CIP which accounts for the majority of the key issues this fund is facing. Needed upgrades or replacement of aging infrastructure that has reached or is nearing the end of its useful life, as well as the Growth Management Act (GMA), which requires the City to have capital facilities in place and readily available when new development occurs or a service area population grows, drives the capital project aspects of this fund. The City expects to expend close to $148.5M in capital projects in this biennium cycle. Staff will pursue grants, low interest loans, and finally, revenue bonds, as funding options for these projects. This significant investment to the backbone of the City will require modest rate increases in Water and Sewer services in the future. As utilities require significant infrastructure investment, anticipating necessary improvements in a proactive fashion is critical to provide safe, reliable, and efficient vital services to our residents. To reflect the significant capital project load, (3) additional FTEs, a traffic engineer, CIP inspector and a grant/loan & bond administrator, are proposed. As the result of system growth, the City has added the following (12) FTE’s in utilities, (3) FTE maintenance workers (7) plant operators and (1) pump mechanic in 2023 & (1) additional in 2024. - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 TransfersWagesBenefitsSuppliesServicesNew Ongoing Requests2023-2024 Budgeted General Fund Operating Expenses 2023 Budget 2024 Budget AMBULANCE SERVICES Access to sustainable, reliable, and efficient ambulance service for its residents, businesses and visitors has been a top priority for the Council and the community. To that end, the Council has put considerable effort and investment into fiscally stabilizing the fund. Council has supported the concept of growth by approving the construction of two replacement stations (Fire Stations 83 and 84) along with the relocation of Station 83 north of Interstate 182 to address increased call volumes in the area. The next phase of the increased capability is the addition of Station 85 which will be possible due to a Federal Emergency Management Agency (FEMA) Staffing For Adequate Fire and Emergency Response (SAFER) grant. The SAFER grant will cover the personnel costs to fully staff Station 85 for three years. The additional station will increase the capability and decrease the response times in the Broadmoor/Road 100 area of the city as well as addressing initial growth in the next few years. The additional capability will reduce response times not only for the western portion of the city but will also allow other units to remain in service within their designated station boundaries. Capabilities, coverage, quality and timeliness continue to be areas of improvement as part of the planning the department has done to address anticipated increase in demand for services. The City has completed a rate study for the household ambulance rate which has been presented to Council and with their approval will introduce a phased approach in rate increase implementation. This phased in approach will result in a rate that will provide monthly ambulance rates equal to 83% of cost in year 2026 with the cessation of the SAFER grant and full construction and operation through Stations 81 through 85. However, not anticipated to be included in the rate increase are the effect of any additional stations outlined in the City’s Capital Improvement Plan. Based on timing and location of additions to residential and commercial population, careful consideration will be necessary. While the rate study projected the rate needed to support the ambulance portion of the added station costs, the General Fund burden is not rate financed, but instead dependent upon tax revenues. General Fund revenues support many departments. Financial planning and careful consideration of City-wide needs are a necessary consideration in these decisions. Additionally, the implementation of the Pasco Resource Navigator (PRN) program to provide assistance to high utilizers of the ambulance system have addressed the proper and appropriate use of the ambulance services. The use of contracted Navigators assisting those in need of resources to the appropriate agencies has allowed ambulances to remain in service for immediate emergencies, as designed. The investment made to the Ambulance Service, coupled with enhancements to the Fire Department, have made a significant and positive impact to the safety of the community. The needs of this fund are unique; as in, this is a highly regulated area with high equipment standards, daily demands that regularly tax the capacity of the system, constantly increasing and sometimes widely fluctuating costs for medical supplies, and a specialized workforce requiring significant ongoing training and advanced certifications. On the financial side, the fund experiences a high population of Medicare, Medicaid and uninsured patients as compared to ambulance utilities in other local jurisdictions. In the case of Medicare and particularly Medicaid, this demographic composition results in lower reimbursement revenue from the federal government as compared to private insurance reimbursement. These lower reimbursements, coupled with the high number of uninsured patients, had an adverse impact on revenues to the fund, which in turn has necessitated increases in monthly rates. The Council has faced this economic challenge for the past several years. Washington State and ambulance service providers have made considerable progress in implementing the Ground Emergency Medical Transport (GEMT) program, which in part provides reimbursement to local ambulance providers for service to Medicaid patients, including transports. When GEMT billing program began the City budgeted cautiously based on the uncertainty surrounding and new program. As experience has been gained, the revenue stream is known. Therefore, reliability of expectation has allowed for the related budgeted revenues to increase. ARPA Fund With the approval of the Coronavirus State and Local Fiscal Recovery Funds from the U.S. Department of the Treasury in 2021, the City received approximately $17.5 million. These funds are intended to address impacts of the COVID-19 pandemic and can be used for one of the following purposes: responding to the public health emergency caused by COVID or its economic hard, premium pay for eligible essential workers, revenue replacement or investment in water, sewer or broadband infrastructure. Further, these funds must be expended by December 31, 2026. In order to effectively track the use of these funds to ensure compliance with federal guidelines, the City established a separate fund named the ARPA fund. During the 21-22 biennium, the City expended approximately $3.5 million on services such as utility payment assistance, business assistance and staffing the Community Resources Specialist position. In the coming biennium, the City plans to utilize this funding to make significant facility upgrades to a city-owned building occupied by the Boys & Girls Club, partially fund the Martin Luther King Community Center, implement the Downtown Outdoor Dining Program, expand regional mental health services through the implementation of the Pasco Resource Navigator program and two water infrastructure projects. These aforementioned planned activities for 2023-2024 total $13.5 million. SUMMARY The proposed 2023 -2024 budget seeks to satisfy or make significant progress toward the City Council’s adopted goals for 2022-2023 by providing for the implementation of important policy decisions made by the City Council through the process of prioritization, recognition and implementation of efficiencies. Developing a balanced budget is always a challenge. A helpful decision-making filter used in budget considerations and the very purpose of this organization is as follows: If the City and its services went away tomorrow, why would the people want us back? As with the prior biennium, this proposed budget attempts to maximize value through the efficient provision of services while minimizing the level of taxes, rates and fees paid by the citizens of Pasco. This biennial budget also serves to move the City in new directions that maximize potential and grow in the direction of prior long-range planning efforts, recently adopted plan updates and studies, all to the benefit of future generations. Looking toward the future many exciting developments are anticipated. During the next few years, it will be vitality important to consider the impact of growth within the City and how best to fund and implement changes in the City’s financial planning. An important element of future planning and stability are fund balance and reserve balance decisions. Historically, the City has considered fund balance. However, best financial practices include reserves planning as well. Fund balance policies preserve the ability to cover short term operational funding, whereas reserves policies and practices plan for unforeseen financial events and are more long term in nature. I want to acknowledge the public for their willingness in presenting their concerns and priorities throughout the year in different venues: community meetings, listening sessions, National Community Survey, correspondence, social media, and City Council meetings. And, also, the members of the City Council for their efforts to distill all that comes before them into clear policy direction; particularly in the development of the 2022-2023 City Council Goals, which have served as a roadmap to preparing the 2023-2024 preliminary budget. Finally, I want to acknowledge the dedication and service of the City’s employees. The proposed budget is the product of an intensive effort by all departments to ensure that this is not just a document, but a plan, to best serve those who live and invest in the community. Finally, as this is the last budget I will submit for Council’s consideration, I want to thank the Pasco City Council, past and present, for their support and guidance over the past eight years. My service to Pasco has been of the most challenging, satisfying, and productive of my 42-year career in local government, in large part because the City Council has had the vision and courage to move the City forward, and an incredible team of professionals, city staff, have put their backs, hearts, and minds into the betterment of our community. Sincerely, Dave Zabell City Manager