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HomeMy WebLinkAbout2024.11.12 Council Special Meeting Packet AGENDA City Council Special Meeting 7:00 PM - Tuesday, November 12, 2024 Pasco City Hall, Council Chambers & Microsoft Teams Webinar Page 1. MEETING INSTRUCTIONS for REMOTE ACCESS - Individuals, who would like to provide public comment remotely, may continue to do so by filling out the online form via the City’s website (www.pasco-wa.gov/publiccomment) to obtain access information to comment. Requests to comment in meetings must be received by 4:00 p.m. on the day of this meeting. To listen to the meeting via phone, call 1-323-676-6197 and use access code 217 530 649#. City Council meetings are broadcast live on PSC-TV Channel 191 on Charter/Spectrum Cable in Pasco and Richland and streamed at www.pasco-wa.gov/psctvlive and on the City’s Facebook page at www.facebook.com/cityofPasco. 2. CALL TO ORDER 3. ROLL CALL (a) Pledge of Allegiance 4. HEARINGS AND COUNCIL ACTION ON ORDINANCES AND RESOLUTIONS RELATING THERETO 2 - 21 (a) Public Hearing 2025-2026 Biennial Budget (20 minutes) Conduct Public Hearing 5. ADJOURNMENT Page 1 of 21 AGENDA REPORT FOR: City Council November 8, 2024 TO: Adam Lincoln, City Manager City Council Special Meeting: 11/12/24 FROM: Adam Lincoln, City Manager City Manager SUBJECT: Public Hearing 2025-2026 Biennial Budget (20 minutes) I. REFERENCE(S): Presentations: 2025 - 2026 Biennial Budget II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Conduct Public Hearing for 2025 -2026 Biennial Budget III. FISCAL IMPACT: 2025-2026 Biennial Budgets IV. HISTORY AND FACTS BRIEF: Biennial budgeting is the practice of preparing and adopting a budget for a two- year period. This style of budgeting has been permitting in Washington cities since 1985. A biennial budget promotes and facilitates long-term financial and strategic planning - a best practice recommended by Government Finance Officers (GFOA). General Fund is a primary fund that receives majority of tax revenue and is used to fund critical City services like Police, Fire, Parks and Recreation etc. An overview of General Fund 2025-2026 preliminary budget was provided the first meeting of October 2024. Following that initial meeting, the General Fund and its respective departments as well as all other City Funds have been presented to City Council. Each presentation has provided a comprehensive review of fund or department financial activity from 2018-2024 estimated year end, requested 2025-2026 budget figures, an overview of operational outcomes including accomplishments and goals for the coming biennium and finally, potential impact of biennial budget decisions. Page 2 of 21 V. DISCUSSION: Tonight's meeting offers an overview of the City of Pasco's budget as a whole. The discussion will cover 2023-2024 budget decisions and projected end of year fiscal outcomes. Municipal budgeting always rests heavily on strategic planning and City-wide collaboration between Council, City Manager's Office and departmental staff. Planning the 2025-2026 budget relied on these recurring practices. However, due to financial constraints additional effort was made including resetting financial expectations and budgetary levels to meet current economic realities. As part of this effort to streamline expenses, the following goals were targeted:  Minimize reliance on reserves to extend savings availability  Reset budget levels resulting in reductions from 2023-2024 levels  Establish a common understanding and expectation City-wide about General Fund budget resources  Create a biennial budget that maintains critical services  Support necessary efforts in the 2025-2026 biennium that will serve as a bridge to economic development in future years As final inputs to budgetary figures, City staff requests Council direction regarding the following recommended budget elements: 1. Inclusion of a cost-of-living escalation to wage schedules, increase to existing budget of $2.9M for the biennial period. 2. Deferral of vehicle replacement savings set aside, biennial budget reduction of approximately $1.3M. 3. Strategic vacancy replacements that will serve to limit biennial labor costs by an estimated $5.8M. Without the inclusion of the above recommended budget elements, the fiscal impact of 2025-2026 biennial budget is a net General Fund deficit of $16.5M. With the determination to follow budget recommendations, the net deficit in General Fund spending reduces to $12.3M. Of this reduction in reserves, $2.6M Therefore, 2023. received proceeds in of use for accounts bond operationally the draw on reserves for the biennium is $9.6M. Reflective of economic conditions, other City funds were budgeted to meet current revenue levels. This measurement resulted in funds, especially when considering utilities, creating budgets that severely limited budget for breakage and as serve will biennium maintenance. The prudent an 2025-2026 opportunity to reset budgetary expectations with the complementary work of process improvement and careful evaluation of future operational, capital and funding scenarios. Page 3 of 21 As a result of this discussion and representative of Council direction, staff will complete any necessary budget changes and balance the budget for final presentation. A second public hearing is scheduled for the Council meeting of November 18th. Page 4 of 21 November 12, 2024 Pasco City Council Workshop Meeting Pa g e 5 o f 2 1 2025 –2026 Biennial Budget November 12, 2024 Pasco City Council Pa g e 6 o f 2 1 3 2023-2024 Overview •Population growth from 2020-2022 of 4% •Various master plan and operations studies exposed need for staff additions •Support for Animal Control Facility Operations •Basic Law Enforcement Academy •Fire Station 85 Opening •Pasco Public Facilities District support •Downtown Events, Farmers’ Market and Pasco Specialty Kitchen •Addition of Broadmoor Area and East UGA •Significant increase in transportation and utilities funding and projects Pa g e 7 o f 2 1 4 2023-2024 Overview •2023-2024 Biennium included addition of staffing City-wide •53 FTE in General Fund •25 for public safety services of fire, police and municipal court •9 supporting parks & recreation and facilities •3 engineering staff to aid in project delivery •4 community development staff •12 spread across supporting departments of Finance, Information Technology, City Managers’ Office and Human Resources Pa g e 8 o f 2 1 5 Biennium Projected Revenues As of 9/30/2024 •Building permits slightly lagging budgetary levels •Charges for Services related to development plan fees •Miscellaneous revenues are higher due to interest earnings on available cash balance •Other financing sources reflect bond proceeds for TIF projects Pa g e 9 o f 2 1 6 Biennium Projected Expenses As of 9/30/2024 •Pace of transportation projects in Tax Increment Area may require transfer out amendment. Bond revenue supports. •For other expense types, current expectation is within budgetary limits. •Risk of overage •Overtime •Vacation Cash Out •Repair for unexpected breakage Pa g e 1 0 o f 2 1 7 2023-2024 Budgetary Impacts •Higher Interest Rates: Slowing commercial and residential development. •Inflation Impact: •Reduced buying power for residents. •Significant cost increases for City opertaions. Pa g e 1 1 o f 2 1 8 2023-2024 Budgetary Projection •2023-2024 Budget Plan: •Projected expense-revenue gap: $15.3M •2024 Year-End Projection (as of 9/30/2024): •Net operating revue: Break-even to $3M deficit (current trend) •Future Outlook: •Relief anticipated from delayed debt service initiation for 2025 TIF area improvements. Pa g e 1 2 o f 2 1 Municipal Budgeting 9 Council Goals and Workplan Strategic planning •Traffic Improvement Plan •Capital Improvement Plan Preliminary Finance Projections •Revenue estimates •Internal services budget •Labor expense projections Budget Kick-Off and Training Meeting Department budget planning and update •New requests for personnel, programs and purchases Review requests for budget sufficiency Presentation of Preliminary Budget Pa g e 1 3 o f 2 1 10 2025-2026 Biennial Budgeting Process •Initial Baseline Budget Challenge: Average General Fund reserve drawdown of $12.2M per year (2025-2026 biennium). •Collaborative Revision Effort: Led by City Managers’ Office, department directors, and finance staff. Goals: 1.Preserve Reserves: Reduce reliance on General Fund reserves. 2.Align Expenses with Revenue: Reset budget to match operational revenues. 3.Unified Vision: Foster consistent, City-wide understanding of budget capacity. 4.Sustain Critical Services: Bridge funding gaps while maintaining essential services. 5.Future Growth: Economic development (Broadmoor Area, Urban Growth Boundary expansion) to generate additional resources. Pa g e 1 4 o f 2 1 11 2025-2026 Budgetary Revenues and Expenses Prior to Recommended Items Pa g e 1 5 o f 2 1 12 2025-2026 General Fund Seeking Council Direction: Wage schedule increase Deferral of vehicle and equipment savings accumulation Strategic and deferred replacement for labor position vacancies Net budgeted ending fund balance improvement with options: $2.0M in 2025 $2.2M in 2026 Pa g e 1 6 o f 2 1 13 •Process improvement •Evaluate opportunity to centralize processing for common, across departments activity •Investigate use of existing or low- cost software solutions to minimize demand on staff while meeting or exceeding current service levels •LEAN 2025-2026 Initiatives •Establish schedule for fee and rate evaluation across City Funds •Evaluation of fund operations and financing focusing on funds requiring, •Subsidies •Sufficiency of reserves •Capital support •Quarterly financial reporting Budget and operational planning in this biennium has been reset to better match revenue level expenditures. 2025-2026 Biennium expected to serve as bridge to future opportunity with addition of Broadmoor Area economic development. Pa g e 1 7 o f 2 1 14 2025-2026 Budgetary Impacts Budgetary Reductions •Training and travel where not required for certifications •Combination/limitations for community events •Deferral of maintenance to meet a break-fix schedule •Pause in implementation of new programs or positions •Judicious review of open positions •Reassign roles to limit labor costs •Will result in slower response time to non-emergency requests •With reduced workforce non- essential timelines will extend What will not be impacted •Essential, certification necessary training •Response to emergency, critical public safety •Provision of necessary tools and protective gear •Commitment to quality customer service •Dedication to financial stewardship •Strategic approach to fundraising Pa g e 1 8 o f 2 1 15 Next Steps •Required Council direction o Wage schedule increase (Cost of Living Adjustment) o Deferral of vehicle and equipment savings accumulation o Strategic and deferred replacement for position vacancies •Second public hearing, November 18th, 2024 •Based on Council direction, finalization of budgetary figures and balance of funds can occur •Request for approval, November 25th, 2025 Pa g e 1 9 o f 2 1 16 Future Considerations •Conservative Budgeting: Awaiting rate and fee discussions. •Future Planning: •Operational and capital needs require funding scenario evaluations. •Timing of projects and Council input will guide decisions. •Flexibility: Budget amendments may be necessary in case of unexpected issues. Pa g e 2 0 o f 2 1 Questions? Pa g e 2 1 o f 2 1