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HomeMy WebLinkAbout2025 -20256 Adopted Budget1 2 Table of Contents Pasco City Council ……………………………………………………………………………………………… 4 Pasco Leadership Team ……………………………………………………………………………………… 5 Readers Guide …………………………………………………………………………………….…………….. 6 Definitions, Sections & Funds……………………………………………………………………………… 7-8 City Council Goals ……………………………………………………………………………………….…….. 9 Financial Policies ………………………………………………………………………………………………. 10-14 Adopted Budget ………………………………………………………………………………………………… 15-17 Comparative Budget Summary …………………………………………………………………………… 18 Budget Overview ……………………………………………………………………………………………….. 19 Budget Purpose …………………………………………………………………………………………………. 20 Basis of Budgeting & Budget Process …………………………………………………………………… 21 Budget Timeline ………………………………………………………………………………………………… 22 Fund Description ……………………………………………………………………………………………….. 23 Fund Structure …………………………………………………………………………………………………… 24 Major Funds ………………………………………………………………………………………………………. 25-26 General Fund……………………………………………………………………………………………………… 27 -30 ARPA & Utility Fund …………………………………………………………………………………………… 31-34 Financial Data & Revenue Analysis ………………………………………………………………………. 35 -43 Expenditure All Funds Financial Analysis …………………………………………………………….. 4-55 Debts …………………………………………………………………………………………………………………. 56-61 Fund Balances ……………………………………………………………………………………………………. 62- 72 All City Departments …………………………………………………………………………………………… 73 City Council………………………………………………………………………………………………………… 74-75 City Manager’s Office ………………………………………………………………………………………….. 76-80 Municipal Court………………………………………………………………………………………………….. 81-83 Human Resources ………………………………………………………………………………………………. 84-86 Information Technology ……………………………………………………………………………………… 87- 89 Parks & Recreation …………………………………………………………………………………………….. 90- 93 Community & Economic Development ………………………………………………………………… 94-97 Finance ……………………………………………………………………………………………………………… 98-101 Police ………………………………………………………………………………………………………………… 102-105 Fire …………………………………………………………………………………………………………………… 106-108 Public Works – Engineering ………………………………………………………………………………… 109-113 Special Revenue Funds ………………………………………………………………………………………… 114-130 Enterprise Funds ………………………………………………………………………………………………… 114-130 Internal Service Funds …………………………………………………………………………………………. 131-137 Capital Plan and Budgeting ………………………………………………………………………………….. 138-139 Acknowledgement ………………………………………………………………………………………………. 140 3 4 5 6 DEFINITIONS, SECTIONS & FUNDS City Council Goals Objectives established by City Council to steer city initiatives and decision-making processes. Budget Message A communication from the City Manager to the Council outlining priorities, key issues, and fiscal assumptions for the biennium, noting any significant changes from prior budgets. Financial Policies A summary of the city’s financial policies and their impact on budget preparation. Adopted Budget Council's resolution that sets the authorized appropriations for each fund for the biennium. Budget Overview Details on the budget’s development, including priorities, calculations, processes, and timeline. Operating Budget Includes departmental proposals aligned with Council goals, covering personnel and facility operating costs. It is primarily funded through local property and sales taxes, inter- departmental transfers, licenses and fees, and charges for services. Capital Budget Supports the acquisition of significant city assets and construction of capital facilities, aligning with the City's six-year Capital Improvement Plan. It covers purchases over $5,000 expected to have a useful life of more than one year, including land, improvements, vehicles, equipment, and infrastructure. Fund Description and Structure Details on the city’s fund types, structure, and oversight, including a matrix by cost center. Financial Summaries-Major Funds An overview of the General Fund, ARPA Fund, and Utility Fund as reported in the most recent Annual Comprehensive Financial Report (ACFR). Financial Data A comparison of historical, current, and projected revenues and expenditures, with narratives on city-wide and fund-level fiscal activities and budgeting considerations. Debt An overview of the city's financing methods, types of debt used, and debt capacity. 7 2025-2026 Budget Fund Balance A snapshot of the budget’s impact on all city fund balances, listing beginning balances, inflows, outflows, net changes, and ending balances for the biennium. General Fund Balance Trend An explanation of how the General Fund balance is calculated and its expected changes. Utility Fund Balance Discussion on the impact of capital spending on the Utility Fund and the importance of maintaining an unrestricted balance. Other Changes to Funds Balances A summary of the financial impact of budgeted activities by fund. Staffing Trends A table and narrative detailing changes in full-time equivalent positions by fund and department over recent years. City of Pasco Organizational Chart Displays the organizational structure of the City of Pasco. Departments under the General Fund An organizational chart, budget summary, personnel summary, and goals for departments. Special Revenue Funds Funds dedicated to specific sources and purposes, with budgets and goals for each. Enterprise Funds Funds for city activities that charge fees for goods or services, covering utilities like Water, Sewer, and Stormwater, with divisional accomplishments and goals. Internal Service Funds Funds for tracking interdepartmental goods and services on a cost-reimbursement basis, with budgets for each fund. All Other Funds Budgets for the General Capital Project Fund, Cemetery Endowment Fund, Old Fire Pension Fund, and the Old Fire Other Post-Employment Benefits Fund. Capital Plan and Budgeting A summary of the six-year Capital Improvement Plan (CIP), including project categorization and funding, noting limitations on including all projects in the biennial budget. 8 CITY COUNCIL GOALS The City operates under the Council-Manager government system as outlined in the Revised Code of Washington Chapter 35.18, where seven elected councilmembers set policy, and the City Manager implements these policies and oversees daily operations. Every two years, coinciding with Council elections, the Council defines its goals to direct the City's efforts. The 2024 - 2025 goals were established in August 2024 after extensive discussions beginning in March 2024, which included reviewing past goals, results from the National Community Survey, community feedback, and issue papers from City departments. This goal-setting process, which integrates long-term planning like the Transportation and Capital Improvement Plans, marks the beginning of the biennial budgeting cycle, guiding staff actions and citywide initiatives. 9 FINANCIAL POLICIES Summary and Purpose of Financial Policies The City of Pasco's financial policies serve as the cornerstone of responsible fiscal management, designed to protect public interest and uphold trust. These policies provide a framework for: • Long-term financial stability and economic growth. • Ensuring operations and initiatives align with broader fiscal goals, extending well beyond the annual budget cycle. • Preventing long-term deficits and avoiding reliance on one-time revenues for ongoing needs. Challenges and Opportunities Economic challenges and opportunities have shaped recent fiscal strategies: • The pandemic created unusual economic pressures, impacting revenues from sectors like retail and entertainment. • Recovery phases have seen increased sales tax revenues from an uptick in retail and construction activities. • Ongoing growth and development continue to drive demand for expanded city services and infrastructure. Financial Core Values and Goals Key financial principles include: • Financial Stability: Commitment to consistent service levels funded by sustainable financial practices. With a long-term financial approach in mind, the City will develop and maintain long-term plans, carefully weigh the costs and benefits of development opportunities and adhere to sound debt, reserve and investment policies. For the 2025- 2026 biennium the following planning efforts are budgeted: o General Fund Long Term Financial Forecast o Completion of the City’s Comprehensive Plan o Completion of various growth focused impact fee type analyses, including utilities, traffic • Accountability and Financial Planning: Ensuring value for services and aligning them with community preferences. • Environmental and Economic Vitality: Supporting investments in the renovation and maintenance of infrastructure, facilities, policies and programs that support a clean and healthy natural environment. • Transparency and Engagement: Committing to clear communication and community involvement in financial decisions. Financial Planning & Budgeting The biennial budget is a comprehensive plan outlining expected revenues, expenditures, and capital investments. Agreed upon by the Council, City Manager, and Department Directors, it is performance-based and results-oriented, structured around the city’s priorities. A balanced budget is achieved when biennial revenues, including fund balances, meet or exceed planned expenditures. Key components include: 10 • Budget Approval: The Council approves the budget at the fund level, with any increases to appropriation levels during the biennium requiring amendment and specific approval. • Position Budgeting: Used to present actual and proposed full-time equivalent (FTE) allocations by department and fund. • Financial Management: Includes comprehensive cost allocation for each department and fund, with quarterly financial reports on revenues and expenditures for major funds and the General Fund. • Capital Planning: Aligns with the Capital Improvement Plan, ensuring funds are allocated for the maintenance, design, and replacement of the city’s infrastructure. • Asset Management: An analysis of equipment replacement and maintenance needs is integrated into the budget process to accurately forecast lifecycle costs. • Interfund transfers and/or loans will be completed only after Council approval or inclusion in the adopted budget or subsequent amendment. • Funding Consistency: Operating expenditures are financed through stable operating revenues, avoiding the use of one-time revenues for ongoing expenses unless specifically budgeted or approved. • Utility Operations: City-operated utilities are expected to maintain positive net operating results, reflecting sound financial health. Reserve Policies and Goals Financial best practices emphasize that the City must maintain adequate reserves to manage unanticipated revenue shortfalls. These reserves are crucial for the City’s financial management strategy and are vital for maintaining its creditworthiness as assessed by external agencies. Typically, the City relies on ongoing revenues to fund daily operations but may tap into these reserves for one-time expenditures to bridge temporary financial gaps. This approach helps cushion the impact of economic downturns or unforeseen financial disruptions, ensuring the City remains financially robust. • Provide sufficient cash flow to meet daily financial needs. • All expenditures drawn from reserve accounts shall require prior Council approval unless previously authorized by the City Council for expenditures within the City’s biennial budget. • If reserves fall below required levels as set by this policy, the City must include within its biennial budget a plan to restore reserves to the required levels. • General Fund: Reserves should be maintained to at least 60 days of average operating expenditures, unless otherwise adopted in the budget or otherwise approved by Council. • The City will review annually the reserve level required to meet cash flow needs. • Utility Fund and non-major Enterprise funds: Reserves should be maintained at 45 days of operating expenditures, unless otherwise adopted in the budget. • Debt Service Fund: Reserves should be maintained at an average of one year’s debt service payments for all debt, except assessment debt, or all statutorily required reserve funds to guarantee debt service, whichever is more. • Medical/Dental Insurance Fund: Reserves should be maintained at an amount equal to 16 weeks of budgeted expenses. Capital Improvement Plan (CIP) – The CIP is a six-year plan for capital improvements that support the City of Pasco’s current and future population and economy. The City’s CIP is a long- range schedule of proposed public facilities, infrastructure and major projects, which includes 11 estimated costs and sources of funding over a six-year period. The CIP is updated annually for the purpose of confirming and/or reorganizing projects on a priority basis and to prepare the Capital Projects Budget. The Council’s adoption of the CIP in no way constitutes an appropriation of funds to a specific project. • The City will make capital improvements in accordance with an adopted CIP, as budgeted within the current biennial budget. • The City will determine the most cost-effective financing method for all new projects. • For each capital project and for each year of the six-year planning period, the CIP shall include an estimate of the cost of construction, an estimate of the annual O&M impact, and anticipated sources of funding. • The CIP shall be prepared and submitted to the City Council as part the Proposed Biennial Operating Budget. • Reports on the status of projects included in the CIP shall be prepared and presented to the City Council annually. • These reports will highlight the status of project construction, scheduling, spending, funding and discuss any significant issues or trends that may affect the ability of the City to stay within budget. Equipment Replacement – The City’s physical assets, such as vehicles and buildings, represent a significant investment of resources. Timely maintenance and replacement of these assets at the end of their useful lives is necessary. This enhances reliability, quality of public services, and supports safety for the public and employees. • The City will maintain a comprehensive inventory of its physical assets, including useful life, original purchase date and cost, information on its general condition, and the estimated value of replacement. • The City will maintain a replacement schedule by physical asset indicating the replacement cost and its corresponding source of funding. The replacement schedule will be reviewed and budgeted as part of the City’s biennial budgeting process. • The City will maintain its physical assets adequately to protect the City’s capital investment. Adequate maintenance will further minimize unnecessary future repair and replacement cost. • Equipment reserve funds shall be maintained at levels sufficient to meet scheduled equipment replacement, ensure safety and to prevent a deterioration in City assets. Revenue Policies Service demands require that an adequate revenue stream be maintained. A diversified and stable revenue structure will be maintained to shelter the City from fluctuations in any single revenue source. City funds will be prudently invested to provide for sufficient liquidity to meet cash flow needs and provide interest earnings. The following serve as guidelines for maintaining a stable revenue stream: • The City will seek to avoid dependence on temporary or unstable revenues to fund recurring/basic municipal services. • The City will proactively compete for its fair share of available State and Federal revenues. • The City will diligently collect revenue due and ensure compliance with revenue regulations. • The City will establish all user charges/fees at a level related to the cost of providing the service and within policy parameters established by City Council. 12 • In conjunction with the budget process, the City will review user fees to assess for the effects of inflation and other factors as appropriate. The City will set fees and user charges for Enterprise Funds at a level that fully supports the total direct and indirect cost of the activity, including the cost of annual depreciation of capital assets. Expenditure Policies The City shall authorize only those ongoing operating expenditures that may be supported by ongoing operating revenues. Before the City undertakes any agreements or purchases that would create fixed or ongoing expenses, the cost implications of such shall be analyzed and reviewed. • Emphasis shall be placed on improving productivity, workplace innovation and program evaluation, as well as alternative means of service, rather than adding to the work force. • The City shall invest in technology and other efficiency tools to ensure high productivity. • Enterprise Fund expenditures shall be fully supported by their own rates, fees and charges and not subsidized by the General Fund without authorization of the City Council. • The Enterprise Funds shall pay their share of overhead costs and services provided by the General Fund. Debt Policies The City recognizes that prudent use of its credit can facilitate construction of essential capital improvements and services, while sharing the costs of those improvements between current and future beneficiaries. The intent of the Council is that the City shall manage its long-term debt in a manner designed to utilize its credit to optimize City services, while balancing debt levels and annual debt service obligations. The following policies are intended to apply to all forms of debt. Short-term Debt and Internal Debt: • Short-term debt is defined as a period equal to or less than one year. • The City may use short-term debt to cover temporary cash flow shortages. • The City may issue Interfund loans (internal debt) rather than outside debt to meet short- term cash flow needs. This includes “one-day” loans from the General Fund for year-end fund balance reporting. All Interfund loans with terms of three months or more will be subject to Council approval by ordinance or resolution and will bear interest. Long-term Debt: • Long-term debt is defined as a period of more than one year. • Long-term debt service payments will not exceed the expected life of a project. • The City will determine whether self-supporting bonds (such as special assessment improvement district bonds) are in the City’s best interest when planning to incur debt to finance capital improvements. • Prior to the decision to issue general obligations debt, which is an obligation against the general taxing authority of the City, the feasibility of alternative methods of financing using special assessments, fees/charges and special revenue debt, should first be determined. General Accounting, Auditing and Financial Reporting Policies The City of Pasco recognizes the need for ensuring accountability for the collection, management and expenditure of all public funds under its jurisdiction. Strong accounting practices and financial reporting is essential in ensuring compliance with governing laws, 13 ordinances and procedures. Further, this allows for timely and accurate reporting to City officials, City Council and the public. • The City will establish and maintain a high standard of internal controls and accounting practices. • The accounting system will maintain records on a basis consistent with accepted standards for local government accounting and the State of Washington Budgeting, Accounting, and Reporting Systems (BARS). • Annual financial reports will present a summary of financial activity by major types of funds. Such reports will be available via the City’s website. • The annual financial report shall conform to Generally Accepted Accounting Principles (GAAP). • A fixed asset system will be maintained to identify all City assets, their location, and condition. • The City will strive to maximize the return on its investments with the primary objective of preserving capital and use prudent investment practices as detailed in the City’s Investment Policy. • The criteria for managing the City’s investment portfolio shall be: a) to maintain liquidity to meet the City’s cash needs, b) to minimize potential market risks, and c) to maximize investment returns. • The City will deposit all funds within 24 hours of receipt as required by the State Constitution. The City will ensure that City records are audited annually, which will result in the issuance of a financial opinion. The results of such audit are to be available to the public via the City’s website. 14 ADOPTED BUDGET 15 16 NOTE: The budgeted beginning and ending fund balances presented in the Ordinance for Old Fire Pension and OPEB Funds reflect an administrative oversight. However, budgeted inflows and outflows remain reasonable, ensuring appropriate budget authority. Correct beginning fund balance should be $5,447,218 for Old Fire Pension and $5,467,055 for Old Fire OPEB. Further, the correct ending fund balance should be $6,249,110 for Old Fire Pension and $6,183,090 for Old Fire OPEB. 17 Note: The 2025 Beginning Fund Balance is an estimate of results of 2024 closing activity and hence differs from the 2024 Budgeted Ending Fund Balance. 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended Budget 2025-2026 Budget Revenues Taxes 88,635,153$ 107,991,738$ 114,432,546$ 121,384,039$ License & Permits 6,642,444 7,936,618 8,983,210 7,794,349 Intergovernmental 24,330,920 55,843,938 47,176,215 40,801,758 Charges for Service 125,518,662 138,651,148 153,004,821 163,392,036 Fines & Forfeitures 2,449,059 2,488,495 2,878,040 3,030,246 Miscellaneous 14,311,236 12,423,181 28,675,134 62,673,832 Other Sources 13,259,338 4,848,797 4,509,751 4,775,966 Total Revenues 275,146,812 330,183,915 359,659,717 403,852,226 Expenditures Salaries & Wages 64,852,461 74,031,704 100,324,566 108,838,399 Personnel Benefits 23,099,341 25,240,785 35,117,340 35,870,047 Supplies 10,135,609 14,100,458 18,518,724 19,295,922 Services & Charges 73,564,510 123,768,674 145,939,508 125,166,926 Capital Outlays 54,149,213 105,878,082 261,830,391 150,809,602 Debt Services 26,455,351 28,335,509 35,803,576 57,410,323 Total Expenditures 270,970,600 371,355,212 597,534,105 497,391,219 Other Financing Sources (uses) Debt proceeds 38,527,141 52,991,568 154,388,308 68,944,925 Proceeds from Sale of Capital Asset 2,885,651 - - - Transfer In 35,673,132 49,042,795 82,066,140 20,641,633 Transfer Out (35,709,220) (49,042,795) (82,558,553) (24,321,630) Contributed Capital - 1,260,063 43,169 - Total Financing Sources (Uses)41,376,704 54,251,631 153,939,064 65,264,928 Net Change in Fund Balance 45,552,916 13,080,334 (83,935,324) (28,274,065) Budgeted Beg Fund Balance 134,209,373 197,884,302 156,175,147 Budgeted End Fund Blaance -$ 147,289,707$ 113,948,978$ 127,901,082$ COMPARATIVE BUDGET SUMMARY ALL FUNDS 18 BUDGET OVERVIEW This section provides an overview of the 2025-2026 Biennial Budget, highlighting revenues, expenditures, and key financial challenges for all City funds. Over these two years, expenditures reflect careful management of resources amid growing community demands and infrastructure needs. Notably, the budget strives to maintain a balance between managing ongoing expenses and funding capital improvements for future growth, indicated by an anticipated increase in sales and property taxes. Key points of the 2025-2026 budget include: • Total Expenditures: $521.7 million, with capital expenses at 29% ($150.8M) and personnel costs at 28% ($129.5M). o Remaining Expense Categories: Services (25%), debt service (11%), and supplies (3%), with transfers out accounting for 4%. • Capital Projects: $147.2M planned, primarily for transportation and utility infrastructure, with $82.8M allocated to utilities (including $14M in unsecured funding). • Revenue Total: $493.4 million, sourced primarily from charges for services (33%), taxes (25%), intergovernmental revenues (8%), and miscellaneous revenues (13%). Planned budgeting for capital projects and operational subsidies includes: • Utilities Projects: $82.8M (possible project delays pending external funding) • Parks, Recreation, and Community Facilities: $19.8M • Transportation Improvements: $44.6M • Vehicle and Equipment Purchases: $3.5M Note: A link to the Capital Improvement Plan is included at the end of this budget document. The revenue structure supports various operational and capital needs, with additional financing from operational subsidies detailed as follows: Expense Budget Total $7.05M Further, the budget includes transfers to the construction fund ($13.8M) and utilities construction supported by loans ($68.9M). This budget serves as a strategic blueprint for navigating financial stewardship and community growth through careful governance and community engagement. 19 Budget Purpose The City of Pasco's budget serves as a reflection of its vision, strategy, and priorities, aiming to be comprehensive, transparent, and efficient. It engages citizens, department heads, and elected officials to build trust and ensure community buy-in. The budget acts as a comprehensive financial plan, detailing revenue sources and allocations to various programs, with the following key purposes: • Policy Tool: It reviews and possibly redirects City services and financial activities based on thorough analysis and community needs, setting policy direction for the upcoming two years. • Operational Guide: As the legal authority for expenditures, the budget sets boundaries for spending and provides legislative and administrative guidance to City employees about their roles and the scope of activities. • Financial Plan: The budget manages the City’s financial resources by addressing immediate needs and planning for the future. It includes financial forecasts to assess the long-term fiscal impacts of current policies and decisions, utilizing tools like rate studies and trend analyses. • Communication Tool: To ensure effectiveness, the budget is designed to be clear and transparent, catering to a diverse audience. It communicates key policies, challenges, and plans for the biennium, facilitating meaningful dialogue between citizens and their representatives. Budget Purpose Policy Tool Operational Guide Financial Plan Communication Tool 20 Basis of Budgeting The City adopts a biennial budget as permitted by RCW 35A.34, starting in odd-numbered years and including a mid-biennium review to adjust, rather than overhaul, the budget. Adjustments reallocate funds without changing the overall budget, whereas amendments alter the total appropriations. The mid-biennium review typically runs from September to December of the first year, enhancing long-term financial planning. Governmental funds follow a modified accrual accounting basis per generally accepted accounting principles (GAAP), while proprietary funds use a full accrual basis. Financial statements for each fund type adhere to these accounting standards. Implementation and Monitoring The budget is implemented through department objectives and financial controls managed by the Finance Department, which issues periodic variance reports to compare actuals against the budget. These detailed reports, reviewed by the City Council for oversight, assess the City’s financial health and ensure budget compliance. Departments also conduct monthly meetings to evaluate progress and make operational adjustments. The budget is managed and monitored by each department with support and reporting supplied by the Finance Department. Throughout the year, the budget’s status is regularly reviewed, with a comprehensive mid-biennium evaluation to identify any needed changes. Budget modifications can occur through transfers within department budgets, approved by Department Directors and the City Manager, or through formal amendments that change department or fund appropriations. Amendments, which might arise from new grants or unforeseen expenditure needs, require Finance Department evaluation and City Council approval. Budget Process The City of Pasco’s budget process is structured to ensure effective planning, implementation, and funding of city programs. Key components include: • Budget Planning: Involves community input via listening sessions, departmental feedback, and evaluations of previous service levels. City Council revises goals and objectives in late spring, considering staffing, emerging issues, and program priorities. • Capital Improvement Plan: Starts in May, aiming for completion by fall, with formal adoption of both the Capital and Operating Budgets in December. This plan includes projects that align with biennial goals. • Revenue Forecasting: Conducted by the Finance Department, focusing on trends and upcoming changes in rates or fees, including public hearings on the Ad Valorem Tax (Property Tax) levy to set revenue expectations and corresponding expenditure levels. • Budget Adoption: Involves public hearings and departmental coordination for transparency and timely adjustments. The Operating and Capital Budgets, including Capital Improvement Plan projects, are adopted by Council in December. • Budget Monitoring: Continuous throughout the year with monthly department head meetings to track progress and adjust as necessary. In summer of odd-numbered years, 21 departments review with the Finance Department to propose mid-biennium adjustments, which are then formalized by ordinance, no earlier than September of the year. This process not only meets legal standards as outlined in the Pasco Municipal Code and the Revised Code of Washington Chapter 35A.34 but also ensures that the City’s financial resources are aligned with its strategic goals. 22 Fund Descriptions The City of Pasco organizes its finances into approximately 39 distinct funds for fiscal and accounting purposes, each serving as a separate entity under nationally recognized governmental accounting and budgeting rules. These funds are categorized as follows: • General Fund: Supports most public services like law enforcement, fire protection, and parks, funded primarily by taxes, such as sales, property and utility taxes. It’s a major catch-all fund with a required appropriated budget. • Special Revenue Funds: These funds account for revenues legally designated for specific purposes. An example are the City Street Fund and Arterial Street Fund, which are funded by gasoline taxes, and can only be used for maintenance and improvements to roads and Streets. All special revenue funds have appropriated budgets but are rarely classified as major funds. • Debt Service Funds: Used for repaying general obligation bonds principal and interest, as well as local improvement district debt service These funds follow a fixed amortization schedule as their budget and do not require legal appropriation. • Capital Projects Fund: Manages resources for major capital facilities' acquisition and construction. The City’s Capital Projects Fund is known as the Construction Fund and is presented as a major fund for financial reporting purposes. Capital projects related to Proprietary Funds are accounted for within the Proprietary Funds. • Proprietary Funds: Activity in these funds is accounted for similar to private businesses where the costs of supplying service are recovered through user charges. Examples include the City’s provision of water or sewer services reported within the Utility Fund. These funds have appropriated budgets. • Internal Service Funds: Fund services provided between City departments on a cost- reimbursement basis, such as vehicle maintenance and rentals. These funds are not major and do not require appropriations. • Fiduciary Funds: Also known as Trust or Custodial Funds, these funds manage assets held on behalf of external parties, like the Cemetery Trust Fund for gravesite maintenance. These funds are not major and do not require appropriations. • Appropriation: While some funds do not require appropriation, the City chooses to appropriate all budgeted spending. 23 Fund Structure Finance Director General government activities 100 General Fund Operations Council Council Council Municipal Court Judge Municipal Court City Manager Council Management of City, personnel, communication, legal, risk, and City Clerk Human Resources Human Resource Director Management of Human Resources, personnel, risk management Information Services Information Services Police Police Chief Police services Fire Department Fire Chief Fire services (Not including Ambulance Services) Parks & Recreation/Facilities Parks & Rec Director Management of facilities, parks, recreation, Pasco Specialty Kitchen, and Farmers Market Community Development CED Director Community planning, economic development, and code enforcement Finance Finance Director General finance Engineering PW Director Public Works Administration and Engineering Library Parks & Rec Director Mid-Columbia Library NonDept Finance Director Citywide expenditures, fund transfers, fund balance & one-time expenditures 110 Street PW Director Operations & maintenance of City's streets 120 Arterial Street PW Director Construction & maintenance of City's arterial streets 125 I-182 Impact PW Director Construction & maintenance of geographically bound City's transportation network 130 Street Overlay PW Director Overlay of City's transportation network 140 CDBG CED Director Community Development Block Grant (CDBG) 145 MLK Center Parks & Rec Director Recreation Center 150 Ambulance Fire Chief Ambulance operations & service 155 ARPA City Manager American Rescue Plan Act funds 160 Cemetery Parks & Rec Director Cemetery operations & service 161 Blvd Maint Parks & Rec Director Maintenance of City's boulevards 165 Athletics Parks & Rec Director Manage recreation program 166 Golf Course Parks & Rec Director Manage recreation operation facility 168 Animal Control and Services Parks & Rec Director Animal control operations and services 170 Senior Center Parks & Rec Director Manage recreation program for seniors 180 Multi Modal Parks & Rec Director Train station, Bus station, & any City's transportation network 182 School Impact Finance Director Pass-through funds collected for Pasco School District 185 Marina Parks & Rec Director Manage recreation program 188 Lodging City Manager Manage Lodging tax for promotion of tourism 189 Litter Abatement CED Director 190 Revolve Abate CED Director 191 TRAC City Manager Manage Trade Recreation Agriculture center 192 Park Develop Parks & Rec Director Management of Park Development program (mostly capital projects) 193 Capital Improve Reet City Manager Real Estate Excise Tax used to fund major capital infrastructures 194 Economic Develop CED Director Promote economic development of the City through revenues received from City's property leases 195 Stadium/Conv Ctr City Manager Management of recreation program 196 Hotel/Motel Excise tax Finance Director Manage Lodging tax for promotion of tourism Debt Service Funds 200 LID Guarantee/Loans Finance Director Reserves for security of Local Improvement Districts (LID'S) and Principal & Interest payments 367 Capital Improvements Finance Director Capital Improvement- Citywide projects Enterprise Funds 410 Utilities PW Director Operation and capital fund for Water, Irrigation, Sewer, Reuse and Storm Water and Process Water Reuse Facility 510 Equipment O&M Govt PW Director Operation and maintenance of government vehicles 511 Equipment O&M Utility PW Director Operation and maintenance of enterprise vehicles 515 Equipment Repl. Govt PW Director Equipment replacement fund for government vehicles 516 Equipment Repl. Utility PW Director Equipment replacement fund for enterprise vehicles 521 Medical/Dental City Manager Management of City's self insured medical insurance 530 Central Stores Finance Director Currently dormant fund Fiduciary/Trust Funds 610 Old Fire Pension Finance Director Pension fund for fireman's retirement 619 Old Fire OPEB Finance Director Pension fund for fireman's benefits Permanent Fund 605 Cemetery Endowment Care Finance Director Long-term reserves for cemetery care and improvements 24 Major Funds The General and Utility Funds are major funds of the City. Major funds represent the City’s most important funds determined by value of financial elements like assets, liabilities or expenditures within the individual fund as compared to City-wide values. The General Fund is always a major fund. Comparative Budget Summary – General Fund *Fund Balances are estimated Expenditures Salaries & Wages 44,816,294 51,246,721 67,636,287 71,259,346 Personnel Benefits 15,702,324 17,199,865 23,203,568 23,181,518 Supplies 2,558,564 4,010,324 5,784,217 7,339,614 Services & Charges 30,466,586 38,805,993 44,574,617 50,097,711 Capital Outlays 2,558,564 3,136,258 4,654,308 576,850 Debt Services 6,193,998 7,803,775 10,589,958 10,979,371 Total Expenditures 102,296,331 122,202,936 156,442,955 163,434,410 OTHER FINANCING SOURCES (USES) Bond Proceeds 20,183,905 4,225,074 34,184,201 - Proceeds from Sale of Capital Asset 1,045,223 - 5,000,000 - Transfer In 452,986 1,094,966 925,816 927,460 Transfer Out (15,543,598) (25,608,115) (44,574,867) (8,437,000) Total Financing Sources (Uses)6,138,516 (20,288,075) (4,464,850) (7,509,540) Net Change in Fund Balance 22,961,200 (10,157,000) (14,401,260) (13,196,686) Budgeted Fund Balances - Beginning 15,790,933 38,752,133 36,413,581 25 General Fund Revenues 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Budget % Taxes $81,950,145 $96,734,320 $105,691,673 $114,384,039 72% License & Permits 5,353,252 7,156,781 7,481,532 6,584,940 4% Intergovernmental 7,906,227 16,508,804 9,065,246 7,519,082 5% Charges Goods & Services 14,800,951 17,898,565 19,281,021 21,194,237 13% Fines & Forfeitures 2,044,964 2,066,354 2,198,349 2,440,300 2% Miscellaneous Revenue 2,193,199 4,591,272 2,788,724 5,624,666 4% Transfers In 452,987 1,269,762 925,816 927,460 1% Other Financing Sources 24,936,088 586,528 6 - 0% Total Revenues & Other Financing Sources $139,637,813 $146,812,386 $147,432,367 $158,674,724 100% 26 General Fund The General Fund is the City's largest, underpinned by various factors and its broad scope of community services: • Staffing: Supports 64% of the City’s over 500 full-time positions. • Financial Overview: o Represents 39% of total City revenue and 33% of expenditures. o Tax revenues are the main source, totaling $114.3M or 72% of the fund.  Property taxes: 18.5% of General Fund revenue.  Sales taxes: 33.1% (largest source of recurring revenue).  Utility taxes: 19.3%. o Other revenues:  Permits and licenses: 4%  Intergovernmental: 5%  Charges for services: 13%  Fines and penalties: 2%  Miscellaneous: 4% (including debt service support, law enforcement academy administration, investment income, and facility rentals)  Grants: 1% The City's assessed valuation highlights significant growth, with a preliminary 2025 tax year assessment of $12.7 billion, marking a 245% increase since 2014. The chart below reflects the main contributors to the City's Retail Sales Tax receipts from 2021 through 2024: • Retail Sales: Nearly half of the sales tax revenue comes from retail activities, including automotive dealerships. • Construction Activity: Represents the most variable source of sales tax: o 2021: 13% o 2022: 24% 3.7 3.9 4.2 4.8 5.5 6.1 6.7 8.1 9.5 12.3 12.7 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 Bi l l i o n s 27 o 2023: 17% o 2024: 26% • Overall Growth: Excluding construction, the remaining sales tax revenue has shown consistent growth, increasing by 13% from 2021 to 2024. The General Fund's diverse revenue sources include partnerships for emergency services at Tri-Cities Airport and School Resource provisions to the Pasco School District. The Fund also encompasses receipts from issuance of building permits, grants, and overhead recovery from the City’s Utility Fund for services provided by Human Resources, financial processing and reporting, Information Technology support, and engineering. Percentage of Sales Tax Received Remaining Categories 6.6% Licensing 2.3% Transportation & Warehouse 2.4% Other Service 2.5% Real Estate & Rental/Leasing 2.5% Administrative Support - Waste Remediation 2.6% Accomodation & Food Services 6.6% Wholesale 8.0% Construction 20.6% Retail 45.9% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Pe r c e n t a g e o f T a x e s b y S a l e s T y p e 2021 -2024 Retail Sales Tax Proceeds 28 In 2022, the City established the Broadmoor Area Tax Increment Financing (TIF) Area to support $39M in transportation infrastructure improvements, aiming to spur development over 450 acres. One of the first projects within the Broadmoor Area is the construction of an Aquatic Center by the Pasco Public Facilities District (PPFD). To mitigate the impact of debt service associated with bond proceeds for Area improvements that represent a general obligation of the City, both PPFD and majority property owner with Area are partnering with City. Should debt service payments exceed related TIF area tax proceeds, partners will provide a portion of funding. The potential revenue value of this partnership is included in General Fund revenues. State-shared revenues from Washington are inflows to the General Fund. These revenues can fluctuate depending on legislative decisions. Significant shared revenues include Liquor Sales related taxation at $2.4M and Public Utility District Privilege revenue at $1.5M. Major expenses in the General Fund: • Salaries and Benefits: 55% of expenditures; departments include Police, Fire, Engineering, Permitting and Planning, Parks and Recreation, Information Technology, Finance, Human Resources, City Administration, Municipal Court and Council. • Services & Charges: 29%, covering recurring monthly costs like utilities and contracts for janitorial services or external service contracts including insurance policies, leases or facilities maintenance and unique projects like the City’s Comprehensive Plan. • Other Expenses: o Debt service: 6.4% o Transfers out: 4.9% (e.g., to Construction Fund, streets maintenance)  Transfers out include support for capital projects completed in the Construction Fund of $2.6M, transfer of fuel tax to the streets funds to support maintenance of $2.9M, and operations supporting transfers for Ambulance ($820K), Animal Shelter ($1.5M), Martin Luther King Center ($180K), and Senior Center ($340K) Funds. o Supplies: 4.3% o Capital purchases: 0.3% During the 2023-2024 biennial budget, staffing increased notably in Police, Fire, Parks and Recreation, and Information Systems. Some positions in the Fire Department, are temporarily funded by a SAFER grant set to expire during the 2025-2026 budget period. With expenses outpacing revenue growth, replacement of vacant positions will be carefully evaluated to assess opportunity to realize labor cost savings. Process improvements or reassignment of position duties to remaining staff may occur temporarily. In some cases, the result may be less or slower completion of work product. Budget reductions in other areas include: • Limited travel and training to essential certification events. • Reduced City-sponsored events. • Minimal maintenance budgets. • Paused implementation of new programs. 29 During the biennium evaluation and, where appropriate, updates to rates and fees to better align with service costs is anticipated. Also, a biennium aim is identification of process improvements to enhance efficiency through centralization and automation. ARPA Fund The American Rescue Plan Act Fund (ARPA), established in 2021 through the U.S. Department of the Treasury, allocated approximately $17.5 million to the City to address COVID-19 impacts. These funds are meant for public health responses, economic hardships, essential worker premium pay, revenue replacement, and infrastructure improvements in water, sewer, transportation, and broadband. The City must fully expend these funds by December 31, 2026, with about $4 million designated for the 2025-2026 biennium for specific projects: • Upgrades to a city-owned building used by the Boys & Girls Club. • Partial remodel of the Martin Luther King Community Center. • Implementation of the Downtown Outdoor Dining Program. • Enhancements to a City-owned facility supporting local food entrepreneurs with a certified commercial kitchen. • Expansion of regional mental health services via the Pasco Resource Navigator program. This fund is closely monitored to ensure adherence to federal guidelines including the expectation that federal funds will be depleted by end of 2026. Utility Fund The Utility Fund manages operations, maintenance, and capital projects for essential city services including potable and irrigation water, municipal and industrial wastewater treatment, and stormwater management. Each service within the fund maintains separate records to facilitate accurate budgeting, analysis, and rate setting. 2025-2026 Biennial Budget Overview: • Total Revenue: $168.3M, with $87.8M earmarked for capital projects and $80.5M for operations. A portion of this revenue is received based on charges assessed on new to utility service development. Use of this revenue stream may extend into future periods. o Charges for services make up 98% of operational revenue, derived from monthly fees and consumption charges across utilities. o License & Permit revenue represents a mere one percent (1%) of operations-related revenue. 30 Revenue and Rate Studies: • An irrigation revenue study conducted in 2024 recommends a 17% annual rate increase from 2025-2027, with subsequent annual increases of 3% through 2030. Council action was not complete in 2024 and a decision is anticipated in the first quarter of 2025. • Changes to the Process Water Reuse Facility’s revenue structure were approved at the end of 2024 to support the new Pasco Resource Recovery Center. Related budget 2023 Actual 2024 Estimate 2025 Proposed 2026 Proposed Capital Financing 73,403,909 56,088,133 57,088,812 16,618,038 Miscellaneous 1,147,613 1,530,697 3,757,624 10,963,287 Late Penalties 131,555 200,000 144,973 144,973 Charges for Services 39,237,008 39,211,000 38,676,706 40,208,099 Intergovernmental 394,314 299,551 70,000 70,000 Permits 260,603 258,550 265,926 273,483 $- $20 $40 $60 $80 $100 $120 $140 Re v e n u e & F i n a n c i n g S o u r c e s Mi l l i o n s Utility Fund Revenues & Financing Sources 2023 Actual 2024 Estimate 2025 Proposed 2026 Proposed Transfers Out ---- Salaries and Benefits 7,520,862 9,089,105 9,959,988 10,021,127 Supplies and Services 16,957,618 18,924,391 19,711,179 17,873,545 Debt Service 8,360,482 9,437,898 32,358,895 12,502,778 Capital Outlay 59,782,370 59,000,000 52,698,968 31,155,056 Fund Balance, includes Net Investment in Capital 255,351,560 256,488,097 241,763,108 238,488,482 $225 $230 $235 $240 $245 $250 $255 $260 $- $20 $40 $60 $80 $100 $120 $140 Fu n d B a l a n c e Mi l l i o n s Ex p e n s e s & C a p i t a l O u t l a y s Mi l l i o n s Utility Fund Expenses and Capital Outlays 31 amendments will take place in 2025. • Water and sewer rate studies are planned for 2025 following a review of existing models and fiscal outcomes. Expenses: • Total Expenses: $186.3M, with $83.8M dedicated to capital investments vital for maintaining and improving utility services. The utility actively seeks Federal and State grants and low-interest loans to fund these investments. When external funding is unavailable, it relies on revenue bond financing. The lifespan of the utility assets and the terms of the associated debt are closely aligned, ensuring that debt service costs are distributed fairly over the years, benefiting the corresponding customers. This alignment helps avoid burdening current customers with the costs of assets that will benefit future generations. o Operations and Maintenance: $57.6M is budgeted for the ongoing functionality and upkeep of utility systems, ensuring reliable service delivery. o Debt Service: $44.8M covers the repayment of bonds and loans, critical for financing previous and current infrastructure projects. This value also includes refinance of a bond anticipation note that was issued in 2024 associated with the East UGA Sewer LID. • Expense categories breakdown: o Salaries and benefits: 20%, reflecting maintenance of staffing levels with cost-of- living adjustments. o Supplies: 6%, strategically reduced by 12% from the previous biennium:  Janitorial supplies budgets decreased, reflective of actual spending  Chemical supplies budget increased 29%  Repair and maintenance supplies decreased by 28%  Removed purchase of water rights from budget line  Inventory supplies budget decreased by 29% o Services: 30%, adjusted for efficiency:  External services reduced by 7%  Training and Travel reduced to only maintain certifications and regulatory requirements  Cost for electricity increased 7%  Includes creation of Water Comprehensive Plan Includes planned maintenance projects at approximately twice the prior biennium. Despite this level of maintenance projects, emergencies may occur that require budget amendment. The biennial budget anticipates emergency items at a minimum level, consistent with current revenue support o Debt repayment: 34%, aligned with the lifecycle of utility assets to equitably distribute costs. o Interest: 10%, associated with borrowed funds. Capital Investments: • Focused on renewing aging infrastructure and expanding capacity, capital investments total $83.8M. • Funding sources include 73% from external sources such as revenue bond proceeds (18%) and low-interest loans (82%), with about 10% supported by rate revenues. 32 • The remaining budget, 17%, of capital investment or $13M is unsecured. Active pursuit of low-interest or grant funding in support of capital investment has been a priority. Significant capital projects budgeted this biennium include: • Infrastructure improvements at the Butterfield Water Treatment Facility ($10.6M) • West Pasco Water Treatment Plant Expansion- WWTP- ($13.5M) • The second phase in Wastewater Treatment Plant Improvements ($10.2M) as recommended by the WWTP Facility Plan • Irrigation system improvements ($6.4M) including the installation of a delivery and booster pump station and addition of a new well source for non-potable water supply • Construction and renewal of stormwater facilities ($2.8M) to prevent flooding and related damage to roadways throughout the City • Improvements benefitting the Process Water Reuse Facility capacity and treatment of industrial wastewater ($28M) Budget Challenges: • The increase in utility service costs and infrastructure demands pressures the budget, necessitating careful financial planning and regular rate adjustments. • Proactive capital planning and regular updates to rate models are essential to manage the utility systems effectively and ensure financial stability. This budget demonstrates a commitment to maintaining and enhancing Pasco’s utility infrastructure, ensuring fiscal responsibility while addressing the city's growing needs. Regular monitoring and strategic financial management are crucial for sustaining high-quality utility services. 33 FINANCIAL DATA The 2025-2026 Biennial Budget outlines a comprehensive financial strategy for all City funds, aiming to align spending with City Council goals using current biennial revenues as well as available reserves with caution. This section reviews historical and projected finances, explains key assumptions and trends, and provides detailed narratives for each fund type. Revenue Financial Analysis 34 Taxes • Tax Revenue: Second largest source, accounting for 27% of the city’s revenue. • Major Tax Types: Includes retail sales (32.9%), property (18.5%), utility (19.2%), real estate excise, lodging, gambling, and admissions taxes (combined 1.5%). • General Fund: Receives 94% of the city's tax revenue, funding essential services like police and fire protection as well as other City services provided by parks and recreation and planning and permitting Internal services, such as City administration and human resources, are General Fund departments. Over the past many years, the City has experienced a surge in residential and commercial construction and, subsequently, a significant growth in retail sales tax. The most recent instance of increase in the property tax levy which is statutorily limited to one percent increase without a vote of citizens will occur in 2025. SPECIAL REVENUE FUNDS The City’s Special Revenue Funds receive tax revenues from lodging related tax and real estate excise tax. While these tax proceeds are only five percent of city-wide taxes, they represent nearly 10% of budgeted inflows to Special Revenue Funds. Primarily these revenues support capital projects completed by the City and reported in the Capital Improvements REET Fund. Revenue Type Fund Type Name 2025-2026 Adopted Budget Percentage 310 - Taxes General Fund General Fund 114,384,039 94% Special Revenue Funds Capital Improvement REET 5,300,000 4% Hotel/Motel Excise Tax 1,700,000 1% 310 - Taxes Total 121,384,039 100% 35 The Hotel/Motel Fund governs the use of lodging tax which is used to promote tourism or operation of tourism-related facilities. . License and Permit Revenue Comprises building permits, business licenses, rental licenses, franchise fees, and industrial discharge permits, making up about 2% of the City’s budget. GENERAL FUND The General Fund receives the majority of the City’s license and permit revenues. In the biennial budget, this includes $4.6 million from building permits, $1.47 million from business licenses, and $261,000 from rental licenses. Together, these revenues make up 4% of the General Fund's total revenue. ENTERPRISE FUNDS The municipal sewer and process water reuse systems have allocated a budget of $539K for issuing industrial discharge permits. This amount represents less than half a percent of total enterprise inflows. SPECIAL REVENUE FUNDS Among the City's special revenue funds, only the Street Fund receives license and permit revenues. This category includes franchise fees and street permit revenues, totaling $670K, which comprise nearly 14% of the Street Fund's total budget inflows. Intergovernmental Revenue Intergovernmental revenues primarily come from other government bodies, and include both unique, project-specific receipts and recurring funds distributed by the State of Washington. These funds are allocated based on statutory formulas or legislative appropriations and represent about nine percent of the City's total budgeted revenue for this biennium. However, Revenue Type Fund Type Name 2025-2026 Adopted Budget Percentage 330 - Intergovermental Enterprise Funds Storm Water 140,000 0% Fiduciary Funds Old Fire Pension 319,322 1% General Capital Construction Fund General CIP 16,417,564 40% General Fund General Fund 7,519,082 18% Special Revenue Funds Street 1,988,000 5% Arterial 914,757 2% CDBG 2,000,000 5% Home 229,560 1% Ambulance 5,803,316 14% ARPA 3,857,157 9% Senior Center 1,000 0% Multi Modal 212,000 1% Economic Development 1,400,000 3% 330 - Intergovermental Total 40,801,758 100% 36 because they depend on external factors, there's a risk of fluctuations that could impact the amounts received. GENERAL FUND The General Fund receives about 18% of the City's intergovernmental revenues, mainly from Public Utility District (PUD) Privilege allocations, liquor taxes, and licensing fees managed by the State of Washington. This biennium's budget includes the final year of the Staffing for Adequate Fire and Emergency Response (SAFER) grant, as well as grants from state and federal agencies to support public safety and the City’s Comprehensive and Climate Change Plans. Overall, intergovernmental revenues are expected to contribute five percent to the General Fund's total revenue for this biennium. CONSTRUCTION FUND These revenues are comprised of state and federal grants and entitlements that are typically used to fund transportation and recreation projects. The majority of the $16.1 million grant revenue budget is due to the following projects: • Martin Luther King Renovation/Expansion ($3M) • GESA Stadium Refurbishment ($2.5M) • Ainsworth Pavement Preservation ($1.4M) • Lewis Street Pavement Preservation ($4.5M). ENTERPRISE FUNDS A $140,000 grant from the Department of Ecology is anticipated. This grant program supports activities, studies and actions that further compliance with National Pollutant Discharge Elimination permit requirements. SPECIAL REVENUE FUNDS Similar to the General Fund, the Street and Arterial Streets Funds receive motor vehicle fuel tax, based on gallons sold rather than price, distributed per capita by the State. For this biennium, the revenue is projected at nearly $2.9M. Additionally, the City actively pursues other grants and funding: • Ambulance Fund: Includes revenue from the Ground Emergency Medical Transport (GEMT) program, expected to make up 13% of its revenue, helping offset the costs of emergency services for Medicaid participants. • American Rescue Plan Act Fund: Anticipates spending $3.8M to complete qualifying projects. • Community Development Block Grant Fund: Set to receive $2 million to support affordable housing, community, and economic development initiatives funded by the US Department of Housing and Urban Development. • Sales Tax Revenue: Includes $1.4M from a state sales tax program supporting regional public facilities, with the Economic Development Fund utilizing these funds until the program ends in November 2027. 37 Charges for Goods and Services The City’s largest source of revenue comes from charges for goods and services, comprising 36.7% of the City’s total revenue. GENERAL FUND As a subset of revenues reported in the General Fund, charges for goods and services represent 13.4% of fund revenues. The major services in this category include recreational activities, plan check fees associated with development services, reimbursement for some public safety services and planning and inspection activities. INTERNAL SERVICE FUNDS Internal service funds are used to manage the provision of goods and services to other City funds. Key aspects include: • Health Benefits: Premiums for medical, dental, and vision coverage for city employees and their dependents account for 12% of all city-wide service charges. These premiums fund the City’s self-insured healthcare plan, with health-related service charges comprising 97% of revenues in these funds. • Vehicle and Equipment Maintenance: The remaining internal service funds cover the maintenance and renewal of the City's vehicles and equipment. A city-operated shop provides these services, contributing to 3% of this category of revenue. Additionally, 2% of revenues are earmarked specifically for saving towards and purchasing City vehicles. The charges for services related to equipment and vehicle maintenance funds represent 96% of total revenues to the funds. The only other source of revenue is of the miscellaneous category and small by comparison (4%). Revenue Type Fund Type Name 2025-2026 Adopted Budget Percentage 340 - Charges Goods & Services Enterprise Funds Water 31,235,774 19% I rrigation 4,294,781 3% Sewer 24,781,659 15% PW Reuse Facility 13,318,385 8% Storm Water 5,254,206 3% General Fund General Fund 21,194,237 13% Internal Service Funds Dental 1,280,900 1% Equipment O&M Govt 5,115,400 3% Equipment O&M Utility 400,000 0% Equipment Replacement Govt 1,893,224 1% Equipment Replacement Utility 1,349,545 1% Medical 17,507,239 11% Vision 147,400 0% Permament Fund Cem Endow 40,000 0% Special Revenue Funds Ambulance 20,251,300 12% Animal Control 3,193,542 2% Athletics 262,700 0% Boulevard Maintenance 169,000 0% Cemetery 613,500 0% I-82 Impact 1,140,000 1% Lodging 1,186,155 1% Martin Luther King Center 31,000 0% Park Development 2,155,500 1% Revolving Abatement 138,000 0% School Impact 5,000,000 3% Senior Center 22,000 0% Street 1,416,589 1% 340 - Charges Goods & Services Total 163,392,036 100% 38 PERMANENT FUND The City operates and maintains a cemetery. A fee associated with perpetual care of the cemetery is a one-time charge upon grave site purchase. All collected fees are retained to provide a restricted balance that is invested with the sole purpose of production of interest income. The interest income is available for transfer to the Cemetery Fund to support grounds caretaking. ENTERPRISE FUNDS The City operates a Water and Sewer Utility Fund, or "Utility Fund," which includes a detailed accounting of each utility service—water, sewer, stormwater, and irrigation—plus a process water reuse facility (PWRF) that handles industrial wastewater from local food processors. Revenue Structure and Rate Adjustments: • Charges for Services: 46.9% of the Utility Fund's budgeted revenues. Excluding capital improvement funding, this figure rises to approximately 98% of all utility service revenue. • Rate Increases: The budget includes pre-approved annual increases of 5% for water and 4% for sewer services. • Rate Analysis: The City engages external consultants for rate analysis to ensure revenue adequacy and rate fairness. A recent rate study for irrigation and PWRF will lead to a budget amendment in 2025, reflecting necessary rate adjustments. The new PWRF rate structure, significantly higher than previous rates, was approved alongside the budget and will be communicated further in 2025. • Future Projections: The irrigation revenue study recommends rate increases of 17% annually from 2025 to 2027, tapering to 3% annually from 2028 to 2030. These measures help maintain the financial health of the Utility Fund while supporting the complex infrastructure necessary to provide essential services. SPECIAL REVENUE FUNDS Special revenue funds are tailored to match specific revenues with their corresponding services and expenses, comprising 21% of the City's budgeted revenues from charges for goods and services. These funds cover a variety of services, including: ambulance monthly availability fees and transport charges, fees associated with animal control services, traffic impact fees that benefit streets related improvements, park impact fees, athletic program participation fees, sales of cemetery services, abatement of hazardous or nuisance properties, and various community benefiting programs. The City also acts as an intermediary for the local school district, collecting and remitting school impact fees associated with new construction. Fines and Forfeitures Fines and forfeitures account for one percent of the City's total budgeted revenues, primarily addressing costs related to late payments and delinquent actions. Revenue Type Fund Type Name 2025-2026 Adopted Budget Percentage 350 - Fines & Penalties Enterprise Funds Water 281,946 9% PW Reuse Facility 8,000 0% General Fund General Fund 2,440,300 81% Special Revenue Funds Revolving Abatement 300,000 10% 350 - Fines & Penalties Total 3,030,246 100% 39 GENERAL FUND Fines and forfeitures make up less than two percent of the General Fund's revenues. Traffic and civil infractions contribute 81% of this figure. Revenue from red-light cameras, installed at major intersections in 2019, funds citywide traffic safety projects. Additionally, penalties from overdue utility bills generate approximately $832K over the biennium, covering collection costs and promoting timely payments to maintain cash flow. ENTERPRISE FUND Fines are uncommon in the utilities sector, typically for after-hours services, water disconnection due to non-payment, and violations by industrial wastewater processors, contributing only 0.2% of budgeted revenues. SPECIAL REVENUE FUNDS The Revolving Abatement Fund is the main source of fines, representing 10% of all City fines and 68% of the fund's revenues. Fines are issued for code violations on non-compliant or hazardous properties, with the City intervening to resolve issues and recoup costs when owners fail to comply. Miscellaneous Revenues Miscellaneous revenues primarily include investment income, donations, leases, rentals, and the sale of surplus goods. This category notably funds 74% of the Capital Improvement Plan (CIP) projects, recorded in both the General CIP and Utility Funds. These CIP related budgetary amounts are unsecured at the budget's creation, with efforts underway to secure them through grants, low-interest loans, and partnerships. GENERAL FUND Accounts for 8% of city-wide miscellaneous revenues. Major contributions include: • 38% from debt service coverage by Broadmoor Tax Increment Financing area partners. Revenue Type Fund Type Name 2025-2026 Adopted Budget Percentage 360 - Miscellaneous Rev Debt Service Funds LID 185,041 0% Enterprise Funds Irrigation 0 0% PW Reuse Facility 1,655,500 3% Sewer 4,386,676 7% Water 7,876,000 13% Fiduciary Funds Old Fire Pension 430,000 1% Old Fire OPEB 800,000 1% General Capital Construction Fund General CIP 35,502,000 60% General Fund General 4,555,860 8% Internal Service Funds Equipment O&M Govt 24,500 0% Medical 620,000 1% Special Revenue Funds Ambulance 73,800 0% Athletics 131,000 0% CDBG 800 0% Economic Development 2,000,000 3% Golf 260,000 0% Marina 57,600 0% Martin Luther King Center 97,400 0% Multi Modal 194,882 0% Senior Center 4,900 0% Stadium Convention Center 96,544 0% Street 28,600 0% 360 - Miscellaneous Rev Total 59,162,574 100% 40 • 27% from reimbursements for a regional Basic Law Enforcement Academy. • 15% from investment income. ENTERPRISE FUND Represents 24% of city-wide miscellaneous revenues, with: • Unsecured project funding (95%) • Investment income (4%) • Lease revenue (1%) CONSTRUCTION FUND Holds 60% of the city-wide total for miscellaneous revenues, predominantly unsecured funding ($35.5M) for capital projects, except for a $1M pledged donation for a pickleball court project in the Broadmoor Area. INTERNAL SERVICE Constitute a small portion, about 1% of the city-wide budget, mainly from refunds and reimbursements on healthcare claims and interest income. SPECIAL REVENUE Contribute nearly $4M to city-wide miscellaneous revenues, with: • 50% from farm leases within the Economic Development Fund. • 16% from leases at the stadium, multimodal facility, marina, golf course, MLK Center and for Ambulance Fund building rental of shared space with Franklin County Emergency Management. • 26% from investment income. DEBT SERVICE In Local Improvement Districts (LID), miscellaneous revenues come from interest on extended repayment plans for capital improvements benefiting specific property owners. Transfers In Transfers between funds are budgeted for grant-related and one-time programs, ongoing subsidies and approved capital projects. It is important to note that each of the City’s funds operates as a separate entity, and transfers between them must be carefully tracked and accounted for accordingly. GENERAL FUND Revenue Type Fund Type Name 2025-2026 Adopted Budget Percentage 450 - Transfers in General Fund General 927,460 4% General Capital Construction Fund General CIP 12,482,999 60% Special Revenue Funds Ambulance 840,000 4% Animal Control 1,539,174 7% Arterial 57,000 0% CDBG 400,000 2% Cemetery 20,000 0% Martin Luther King Center 180,000 1% Senior Center 340,000 2% Stadium Convention Center 580,000 3% Street 564,000 3% Street Overlay 2,336,000 11% TRAC 375,000 2% 450 - Transfers in Total 20,641,633 100% 41 Budgeted transfers into the General Fund represent labor costs of staff assigned to General Fund where a staff member is completing work that benefits another fund’s purpose. CAPITAL CONSTRUCTION FUND General capital construction covers all non-utility capital projects and is financed through this fund. Funding comes from bond proceeds and special revenue fund balances, detailed in the Capital Improvement Plan. This biennium's budget allocates $12.5 million for these projects. SPECIAL REVENUE FUNDS Budgeted transfers into special revenue funds support operations where current revenues do not cover expenses. Notable examples include: • Community Development Block Grant (CDBG): Requires a cash infusion from the General Fund to cover interest expenses on a Section 108 Loan for Peanut’s Park, which hosts the City’s farmers market and other events. • MLK Center and Senior Center: These centers charge fees that are insufficient to meet their budgeted expenses. • Other Transfers: Reflect shared revenues assigned by legislation or council decisions. This includes utility tax remittances to street funds, support for the Ambulance Fund based on historical levels, anticipated interest from the Cemetery Endowment Fund for cemetery operations, and Lodging Tax Advisory Committee awards. • Tri-Cities Animal Control Facility: The City, as an operator and financial partner, allocates $1.5 million from the General Fund to the Animal Control and Services Fund. Other Financing Sources – Debt Proceeds The City takes on debt to fund long-term capital investments, allowing for the construction of essential improvements while distributing costs across current and future beneficiaries in line with the asset's useful life. This approach helps mitigate the impact of these improvements on rates and other revenue streams. ENTERPRISE FUNDS The City actively participates in competitive state lending programs to secure low-interest loans for significant infrastructure projects from agencies like the Department of Health and the State Public Works Board. These loans often include forgivable portions and are treated like reimbursable grants, with funds released as eligible expenses are incurred. Loan proceeds are expected to comprise 72% of the relevant revenue, supporting major developments such as the sewer infrastructure in the new East Urban Growth Boundary. This debt will be serviced by property owners benefiting from the improvements within Local Improvement District 152, planned for bond issuance mid-2025. Only a minor fraction of revenue, 0.02% or $14,041, comes from loan repayments to the Old Fire Pension and Boulevard Maintenance Funds, which have previously supported Local Improvement Districts through interfund loans. Revenue Type Fund Type: Name 2025-2026 Adopted Budget Percentage 410 - Debt proceeds Enterprise Funds Water 16,255,704 24% Sewer 30,675,180 44% PW Reuse Facility 22,000,000 32% Fiduciary Funds Old Fire Pension 1,500 0% Special Revenue Funds Boulevard Maintenance 12,541 0% 410 - Debt proceeds Total 68,944,925 100% 42 EXPENDITURE FINANCIAL ANALYSIS 43 44 Salaries and Benefits City staff are essential for delivering all City services, making labor costs a major part of the budget. For the 2025-2026 period, salaries and benefits total about $143.8 million, or 25.8% of all expenditures. The workforce includes members from six unions, covering three police contracts, two fire department units, and the International Union of Operating Engineers for facilities maintenance and public works. Negotiations with the Pasco Police Officers’ Association are still underway, leaving the exact financial impact on the budget unclear. During the biennium other labor contracts will require bargaining as well. Results of negotiation may affect budget. Due to revenue constraints and the need for fiscal balance, no new positions are included in this biennial budget. Additionally, to manage labor costs effectively, the City will carefully review all vacant positions before filling them. Positions may remain unfilled if operational efficiencies or restructuring can maintain service levels, thus saving on salary and benefit costs. GENERAL FUND Expense Type Fund Type Name 2025-2026 Adopted Budget Percentage 510 - Salaries & Wages & 520 - Personnel Benefits Enterprise Fund Irrigation 981,001 1% PWRF 2,336,994 2% Sewer 6,632,726 5% Storm Water 2,435,153 2% Water 7,595,241 5% Fiduciary Funds Old Fire OPEB - 0% Old Fire Pension 200,984 0% General Fund General Fund 94,440,864 66% Internal Service Funds Equipment O&M Govt 2,413,326 2% Equipment O&M Utility - 0% Equipment Replacement Govt - 0% Equipment Replacement Utilit - 0% Medical/Dental 210,036 0% Special Revenue Funds ARPA 106,319 0% Ambulance 20,449,241 14% Animal Control 2,795,120 2% Athletics 62,529 0% CDBG 261,368 0% Cemetery 360,638 0% Economic Development 394,847 0% Home 12,400 0% Marina - 0% Martin Luther King Center 92,239 0% NSP - 0% Senior Center 178,180 0% Street 1,896,640 1% 510 - Salaries & Wages & 520 - Personnel Benefits Total 143,855,846 100% 45 City-wide, the General Fund is responsible for 65% of budgeted labor expenses, with salaries and benefits costing $94.4M, or 55% of the fund's total expenses. The General Fund covers a range of general government services, including: • legislative and executive functions provided by City Council and City Manager’s Office, • public safety services provided by the fire, police, and municipal court departments, • development related support from engineering, community and economic development planning and permitting, and • parks and recreation provided community programs and events. While some services generate fees, primarily the labor costs associated with service provision are funded by tax revenues. The General Fund also includes labor costs for internal service departments like human resources, finance, and information technology, which are funded through interfund charges to the benefiting departments and funds. SPECIAL REVENUE FUNDS Most of the budgeted labor cost in special revenue funds is attributed to the Ambulance Fund. Of the $27.5M 2025-2026 biennial budget, $21.3M is reflected in the Ambulance Fund. By comparison, the next largest labor cost reported is included in Animal Control and Services Fund at $2.8M, followed by the Street Fund at $1.9M. ENTERPRISE FUND City supplied utility services, including water, irrigation, municipal sewer, stormwater and industrial wastewater treatment at the Process Water Reuse Facility, account for approximately 14% of City’s labor budget. These expenses are built into revenue requirement studies and recovered as part of the rate setting process. As a percentage of Utility Fund budgeted expenses, labor cost of wages and benefits accounts for 11% of total expenses budgeted this biennium. INTERNAL SERVICE FUNDS Internal service funds within the City cover two main functions: 1. Vehicle and Equipment Maintenance: This service handles maintenance and repairs for City-owned and leased vehicles and equipment, with a labor budget of $2.6M, accounting for 2% of city-wide salaries and benefits costs. 2. Health Benefits Management: This fund oversees health benefit plans for employees, with a budgeted labor cost of $210K. This amount covers the reimbursement for human resources staff dedicated to managing these benefits. FIDUCIARY FUNDS The City administers a Fireman’s Pension Fund for firefighters hired prior to 1970. Budgeted benefits of $200K in the biennium are for four (4) inactive employees or their surviving spouses receiving pensions. The plan is closed to new members. 46 Supplies Citywide, supplies constitute 4% of the 2025-2026 budget, totaling $19.3M. This covers both office and field essentials, such as pens, paper, business forms, and small-value equipment. Key supply categories include: maintenance type supplies ($3.5M), chemicals ($3.7M), fuel ($2.1M), technology related items ($1.4M), tools and furniture ($692K), medical supplies ($654K) and inventory ($634K). GENERAL FUND Supplies for the General Fund account for 38% of all supplies budget city-wide. As a subset of General Fund budgetary spending, however, the impact is four percent. Budgetary items of note include office, repair and maintenance supplies as well as tools and technology related purchases. ENTERPRISE FUND The Enterprise Fund, composed of utility systems, contributes supplies budget of 32% of city- wide supplies budget. In addition to traditional office and laboratory supplies, these systems rely heavily on chemical supplies, inventory, repair and maintenance supplies. As a category of expenses in the Enterprise Fund, supplies accounts for three percent of expense budget. INTERNAL SERVICE FUNDS Expense Type Fund Type Name 2025-2026 Adopted Budget Percentage 530 - Supplies Capital Project General CIP - 0% Enterprise Fund Irrigation 166,730 1% PWRF 597,918 3% Sewer 2,507,210 13% Storm Water 90,327 0% Water 2,840,079 15% General Fund General Fund 7,339,614 38% Internal Service Funds Central Stores - 0% Equipment O&M Govt 2,515,556 13% Equipment O&M Utility 400,000 2% Equipment Replacement Govt - 0% Equipment Replacement Utilit - 0% Special Revenue Funds ARPA - 0% Street Overlay - 0% Ambulance 830,180 4% Animal Control 509,300 3% Arterial - 0% Athletics 102,525 1% Boulevard Maintenance - 0% CDBG 4,000 0% Cemetery 25,000 0% Economic Development 116,184 1% Golf - 0% Home 1,000 0% Marina 2,000 0% Martin Luther King Center 13,000 0% Multi Modal 10,000 0% NSP - 0% Revolving Abbatement - 0% Senior Center 7,545 0% Stadium Convention Center 2,400 0% Street 1,215,354 6% 530 - Supplies Total 19,295,922 100% 47 As part of the City, the internal service funds contribute budget for supplies equal to 15% of all supplies budget. This contribution is primarily the result of budgeted fuel purchases, $2.1M. Also represented in this budget are planned purchases for repair and maintenance supplies to support City fleet, including automotive parts, tires and batteries. As a category of expenses in the internal service funds, supplies represent 10% of all expenses. SPECIAL REVENUE FUNDS Special revenue funds contributed 14% of the city-wide supplies budget. However, among the special revenue funds, most budgeted supplies purchases are recorded in the Street (43%), Ambulance (29%), and Animal Control (18%) Funds. Of the Street Fund, supplies for general and signal maintenance as well as paint and chemicals are material. Not surprisingly, medical supplies are paramount to the ambulance service. Other noteworthy supplies to the Ambulance Fund are protective equipment, uniforms and small tools and equipment. The Animal Control and Services Fund also relies on medical supplies as well as general office and janitorial supplies for facility operations. 48 Services and Charges The 2025-2026 budget allocates $124.4 million to services and charges, making up about a quarter of the city-wide budget. Of this, $16.7 million is for internally supplied services such as financial processing, information technology, and human resources, including benefits management and labor relations, primarily supported by the General and internal service funds. These funds also cover maintenance and savings for city vehicles and equipment, as well as self-insured medical benefits for employees, budgeted at $17.5 million. External services in the budget include: • Utilities for facilities and parks: $7.2M • Repair and maintenance services: $5.8M • Property and liability insurance: $5.3M Expense Type Fund Type Name 2025-2026 Adopted Budget Percentage 540 - Services Capital Project General CIP - 0% Debt Service LID - 0% Enterprise Fund Irrigation 2,512,172 2% PWRF 4,363,545 4% Sewer 9,301,537 7% Storm Water 1,279,233 1% Water 13,925,973 11% Fiduciary Funds Old Fire OPEB 152,648 0% Old Fire Pension 17,653 0% General Fund General Fund 49,997,711 40% Internal Service Funds Equipment O&M Govt 1,368,321 1% Equipment O&M Utility - 0% Equipment Replacement Govt - 0% Equipment Replacement Utilit - 0% Medical/Dental 19,372,500 16% Special Revenue Funds ARPA 7,838 0% Street Overlay 75,500 0% Ambulance 6,000,835 5% Animal Control 1,501,875 1% Arterial 26,506 0% Athletics 194,280 0% Boulevard Maintenance 3,085 0% Capital Improvement REET 114,017 0% CDBG 630,018 1% Cemetery 448,253 0% Economic Development 1,003,276 1% Golf - 0% Home 216,160 0% Hotel/Motel Excise Tax 1,906,166 2% I-82 Impact 9,616 0% Litter Abatement 9,882 0% Lodging 1,186,155 1% Marina 42,277 0% Martin Luther King Center 268,715 0% Multi Modal 142,166 0% NSP - 0% Park Development 21,527 0% Revolving Abbatement 416,251 0% School Impact 4,981,900 4% Senior Center 123,050 0% Stadium Convention Center 33,000 0% Street 2,408,892 2% TRAC 454,393 0% 540 - Services Total 124,516,926 100% 49 • Legal services: $3.1M Additionally, the budget covers intergovernmental and organizational expenses such as: • Library services: $5.3M • Jail services with the Franklin County Sheriff’s Office: $2.2M • Dispatch services: $2M • Remittance of sales and excise tax: $10.6M GENERAL FUND Of all General Fund budget, services represent 29% of expenditures. Of the items noted above, those material to the General Fund includes a budget for library services ($5.3M), property/liability insurance ($4M), legal service support ($3.1M), and public safety supporting services of dispatch and inmate security ($4.2M). Also, reflected in the General Fund budget are software maintenance services of $3.6M. Notable professional services included in the General Fund budget are supportive of online payment portal services, specialized engineering, contract inspections services, and leases of police vehicles and fire apparatus. ENTERPRISE FUND For the Enterprise Fund, services represent 17% of budgeted expenditures. Included in this category are charges for taxes due City and State of $10M, interfund services of $6.4M, planned repair and maintenance of $4.5M, payments for utilities $3.8M and professional services $2.7M. The items detailed in professional services are many and primarily represented by small values for services like outside laboratory testing, certification of equipment, inspections, and service contracts related to maintenance of facilities. INTERNAL SERVICE FUNDS Budgeted services expenditures in internal services funds account for only 16% of city-wide service budget. However, within this category of funds, services budget represents 75% of expenditures. Health benefits, including medical, dental and vision coverage and claims ($19.4M), for employees are accounted for within internal services. The health benefits funds are the beneficiaries of per employee premiums. In turn, the health benefits funds pay service providers and claims. Also operating as internal service funds are the Equipment Operations and Maintenance Funds for governmental and utilities functions. In comparison to the service budget of the health benefit funds, the service budget for fleet vehicles and equipment is small ($1.4M). SPECIAL REVENUE FUNDS Services budgeted in the special revenue funds are 16% of city-wide services budget. Collectively, the value of services accounted for is 32% of all special revenue funds expenditure budget. Nearly a quarter of the budget is associated with transactions for School Impact Fees collected with development and remitted to the Pasco School District. Ambulance Fund services budget accounts for slightly over a quarter of special revenue fund services budget (26%). FIDUCIARY FUNDS 50 The Old Fire Pension and OPEB funds represent a very small percentage of services expenses. Most of the services expense budgeted in these funds are for retiree medical services. Transfers out and Pass Through Transfers and pass-through expenditures in the 2025-2026 biennium are budgeted at $20.5 million, accounting for 4% of the total budget. These transfers primarily occur between City funds to finance capital improvements, documented within the General Capital Improvement Plan (CIP) Fund. The amount transferred varies annually based on the finalized CIP. On a smaller scale, the General Fund also provides support for other activities, such as subsidizing the Ambulance Fund. Additionally, certain revenues are designated as pass-throughs, where funds like the Hotel/Motel Excise Tax, budgeted at approximately $1 million biennially, are collected by the City and then disbursed to other entities. GENERAL FUND General Fund transfers out are the result of support for capital projects, and direct use of bond proceeds previously received, in the amount of $2.5M. An additional $150K is planned to support Expense Type Fund Type Name 2025-2026 Adopted Budget Percentage 550 - Transfers & Pass Throughs Capital Project General CIP - 0% Debt Service LID - 0% Enterprise Fund Irrigation - 0% PWRF - 0% Sewer - 0% Storm Water - 0% Water - 0% General Fund General Fund 8,537,000 41% Internal Service Funds Equipment O&M Govt - 0% Equipment O&M Utility - 0% Equipment Replacement Govt - 0% Equipment Replacement Utilit - 0% Medical/Dental - 0% Permanent Fund Cemetery Endowment - 0% Special Revenue Funds ARPA 50,630 0% Street Overlay 2,153,589 10% Ambulance - 0% Animal Control - 0% Arterial 300,648 1% Boulevard Maintenance 295,000 1% Capital Improvement REET 3,190,552 15% CDBG - 0% Economic Development 2,650,000 13% Golf - 0% Home - 0% Hotel/Motel Excise Tax 955,000 5% I-82 Impact 530,000 3% Marina - 0% Multi Modal - 0% NSP - 0% Park Development 1,966,210 10% Revolving Abbatement - 0% Stadium Convention Center - 0% Street - 0% 550 - Transfers & Pass Throughs Total 20,628,629 100% 51 a pilot project involving xeriscape of City property to assess potential long term program creation benefitting facilities, parks and boulevards. The General Fund also passes through utility tax proceeds to benefit streets funds in the amount of $2.9M. Budgeted City of Pasco share of Animal Control and Services Facility costs in 2025-2026 is $1.5M. The City subsidizes Ambulance Fund operations equal to $840K biennially. Also budgeted for potential support from General Fund are MLK Center ($180K), Senior Center ($340K). SPECIAL REVENUE FUNDS Most of the transfers out of the special revenue funds support capital projects as detailed in the CIP, nearly $10.8M. An additional $955K are budgeted to be transferred out of the Hotel/Motel Fund for tourism enhancing programs and $295K for boulevard maintenance provided by General Fund staff. Capital Outlay The City annually updates its Capital Improvement Plan (CIP) to assess funding availability and prioritize capital project expenditures. For the 2025-2026 budget years, $150.8 million is allocated for capital spending, encompassing both large-scale projects and smaller capital expenditures such as vehicle and equipment purchases. CAPITAL PROJECT FUND The General CIP Fund, which handles governmental non-utility capital construction, accounts for $64.4 million or 44% of the total capital spending. Significant expenditures include extensive transportation projects in the Broadmoor Area, funded by debt issued in the previous biennium. This debt is expected to be repaid through dedicated property tax revenues from a Tax Increment Financing Area established in 2022. Utility Capital Projects Utility-related capital projects represent $84 million or 56% of the total capital budget. Major Expense Type Fund Type Name 2025-2026 Adopted Budget Percentage 560 - Capital Outlays Capital Project General CIP 64,402,562 43% Enterprise Fund Irrigation 6,375,245 4% PWRF 28,848,500 19% Sewer 18,797,055 12% Storm Water 2,771,520 2% Water 27,061,704 18% General Fund General Fund 576,850 0% Internal Service Funds Equipment Replacement Govt 977,566 1% Equipment Replacement Utilit 560,000 0% Special Revenue Funds Ambulance - 0% Arterial - 0% Capital Improvement REET - 0% Cemetery - 0% Economic Development - 0% Golf 50,000 0% Marina - 0% Martin Luther King Center - 0% NSP - 0% Revolving Abbatement - 0% Stadium Convention Center - 0% Street 388,600 0% 560 - Capital Outlays Total 150,809,602 100% 52 projects within the Enterprise Fund include upgrades to the Process Water Reuse Facility, Wastewater Treatment Plant, Butterfield Water Treatment Plant, and enhancements to water and sewer systems. Unused capital budget from the 2023-2024 biennium will be carried over pending city council approval, following the conclusion of 2024 accounting. Specific carryover amounts will be determined and, following approval, incorporated into the budget through amendments. No carryover values are included in the current budget presentation. Interfund Payments Interfund Payments Payments to internal service funds total $15 million in 2025-2026 biennium: • budgeted values for equipment repair and contributions to savings for replacement of fleet vehicles and equipment, • services supplied to support technology maintenance and implementation from the Information Services Division, • management of self-insured health and welfare programs, • professional services provided by the Finance and Engineering Divisions, • maintenance and repair services provided by Facilities Division. 53 Debt Service The City has budgeted $57 million for debt service payments in the 2025-2026 biennium, primarily covering principal and interest on outstanding bonds. This amount also includes estimated payments for debt that has not yet been issued, which may vary based on the type and timing of the issuance. Given the significant impact of debt service on the budget, these estimates are included to ensure financial planning accuracy. Additionally, the City occasionally opts to self-fund projects through interfund borrowing, where internal loans are made between City funds. Unlike external loans, interest charged on these internal loans generates income for the lending fund within the City, providing a financial benefit. Expense Type Fund Type Name 2025-2026 Budget Percentage 570 - Debt Principal Capital Project General CIP - 0% Debt Service LID 192,441 0% Enterprise Fund Irrigation 570,000 1% PWRF 3,623,967 9% Sewer 24,409,763 62% Storm Water 175,000 0% Water 6,082,769 15% General Fund General Fund 4,005,508 10% Internal Service Funds Equipment Replacement Govt - 0% Special Revenue Funds Ambulance - 0% Boulevard Maintenance - 0% CDBG 380,000 1% Economic Development - 0% Golf - 0% Marina - 0% Stadium Convention Center 188,550 0% TRAC - 0% 570 - Debt Principal Total 39,627,998 100% Expense Type Fund Type Name 2025-2026 Budget Percentage 580 - Debt Interest Capital Project General CIP - 0% Debt Service LID 1,100 0% Enterprise Fund Irrigation 833,760 5% PWRF 2,872,951 16% Sewer 3,670,360 21% Storm Water 259,912 1% Water 2,363,191 13% General Fund General Fund 6,973,863 39% Special Revenue Funds Ambulance 35,650 0% CDBG 500,000 3% Cemetery - 0% Economic Development - 0% Marina - 0% Stadium Convention Center 245,138 1% TRAC - 0% 580 - Debt Interest Total 17,755,925 100% 54 Debt Cities finance large infrastructure projects, such as water and sewer systems and public safety facilities, through various financing tools. Cities, like private citizens, have a credit rating that affects their ability and cost to borrow. The City’s capacity to issue new debt is governed by existing debt levels, future needs, and legal borrowing limits. Key Financing Tools for the City: • Bonds: The City Council may authorize the sale of bonds to fund capital improvements. The sale and management of these bonds involve advice from financial advisors and bond counsel, with interest rates influenced by the City’s credit rating and market conditions. The City’s current bond rating for General Obligation is AA2 by Moody’s Rating in 2024. Based on a rating evaluation issued in S&P Global, also in 2024, City revenue bonds is rated at AA-. • Unlimited Tax General Obligation (UTGO) Bonds: UTGO Bonds finance municipal improvements and require voter approval. These bonds are fully backed by property taxes levied at rates necessary to repay the debt, making them a general obligation supported by the local government's full credit. o Approval Process: UTGO Bonds need 60% voter approval at elections with at least 40% voter turnout based on the last state general election's numbers. Local governments can propose bond measures twice per year. o Debt Limits: The city's voted indebtedness cannot exceed 2.5% of Assessed Value (AV) for general, utility, or community development purposes, with a total debt cap of 7.5% of AV. Currently, the city has no outstanding UTGO bonds; the last issuance was in 1999 for a library and fire station. • Limited Tax General Obligation (LTGO) Bonds: These are non-voted and can be issued by the legislative body’s majority vote. They are funded from General Fund revenues without additional taxes. o The City issued two LTGO bonds totaling $48.22 Million during the 2023-24 biennium. In 2023, $12.6 Million bond was issued to build a fire station, make improvements to the Gesa Stadium, make improvements to City Hall, install improvements at the City’s Memorial Park Pool. Additionally, the City issued a $35.62 Million LTGO for transportation improvements in the Broadmoor Tax Increment Financing Area. • Revenue Bonds: Used for self-sustaining City enterprises, such as utilities, these bonds are not backed by the full faith and credit of the City but by the revenue from the services they support. • Grants and Loans: Federal and state agencies provide funds for significant projects. These are often passed through state agencies and come with favorable terms, supporting utilities infrastructure, parks and transportation projects among other areas. • Ongoing Revenue: Regular income from service rates and taxes funds capital projects within their respective domains, following specific fund regulations. • Connection and Impact Fees: These fees help mitigate the impacts of new users on infrastructure, ensuring that existing users are not solely burdened with the costs of growth. The revenue from this category of financing is restricted for capacity enhancing project completion. • Local Improvement District (LID): LIDs allow property owners to share the costs of 55 infrastructure improvements like street improvements, and utility expansion projects. The City may issue bonds to finance these improvements, supported by the property owners specifically benefiting from them. o The City issued a Bond Anticipation Note (BAN) for the construction of sewer infrastructure improvements within an LID. The BAN, issued in the Spring of 2024 for $20.06 Million, is expected to be redeemed in full during 2025. A 15-year LID bond will be issued in its place. DEBT CAPACITY The City's total general-purpose indebtedness, including both voted and non-voted (councilmanic) debt, is capped at 2.5% of the taxable property value within city limits, with non- voted debt limited to 1.5%. Utility revenue bonds are not subject to these limits as Utility Funds operate like business units, allowing issuance based on rate-supported debt service. Bond interest rates are influenced by the overall financial health of the fund and the economic conditions of the city's residents and future needs. Historically, the City's prudent financial decisions have maintained a healthy debt capacity. As of 2024, the City's general-purpose bonded indebtedness capacity is $308 million, with current outstanding debt at $89 million, or 29% of the maximum allowable. For the 2025-2026 biennium, no new debt issuances are planned except for a Local Improvement District (LID) bond related to sewer improvements. These improvements benefit specific property owners who are responsible for the debt repayment. Upon project completion, property owners have 30 days to settle their assessments, after which a final bond will be issued to cover any outstanding amounts and repay the Bond Anticipation Note. 56 The table below outlines the principal and interest payments for the biennium, covering all funds with issued debt. It excludes anticipated debt issues and interfund loans. Principal Interest Total Principal Interest Total LTGO General Fund 2015 LTGO Police Station 425,000 211,100 636,100 440,000 194,100 634,100 LTGO General Fund 2019 LTGO Fire Stations & Animal Shelter 564,200 702,065 1,266,265 586,950 673,855 1,260,805 LTGO General Fund 2023 City Hall Remodel, Pool & Police Gen.368,550 560,560 929,110 386,750 542,133 928,883 LTGO General Fund 2024 TIF Area Improvements 270,000 2,349,601 2,619,601 855,000 1,767,250 2,622,250 Loan General Fund HUD Section 108 - Peanuts Park - 40,828 40,828 - 40,828 40,828 1,627,750 3,864,154 5,491,904 2,268,700 3,218,166 16,470,674 Loan Comm. Dev. Block Grant HUD Section 108 - Peanuts Park 190,000 250,000 440,000 190,000 250,000 440,000 190,000 250,000 440,000 190,000 250,000 440,000 LTGO Stadium Fund 2019 LTGO Gesa Stadium Improvements 55,800 69,435 125,235 58,050 66,645 124,695 LTGO Stadium Fund 2023 LTGO Gesa Stadium Improvements 36,450 55,440 91,890 38,250 53,618 91,868 92,250 124,875 217,125 96,300 120,263 216,563 LID BAN Utilities LID 152 Bond Anticipation Note 20,060,000 1,003,000 21,063,000 - - - Revenue Bond Utilities 2015 Water Capital Projects and refunding (2005)285,000 508,950 793,950 - 497,550 497,550 Revenue Bond Utilities 2017 Sewer Improvements - 362,915 362,915 - 362,915 362,915 Revenue Bond Utilities 2020A Water Refunding (2009 & 2010)785,000 175,150 960,150 820,000 143,750 963,750 Revenue Bond Utilities 2020B Reuse Facility Capital Projects 395,000 455,769 850,769 405,000 448,592 853,592 Revenue Bond Utilities 2023A 2013 Refunding & Improvements to Water, Stormwater, Irrigation 785,000 1,013,750 1,798,750 820,000 974,500 1,794,500 Revenue Bond Utilities 2023B 2013 Refunding & Improvements to Reuse Facility 710,000 675,894 1,385,894 750,000 635,168 1,385,168 DWSRF Loan Utilities Columbia Water Supply Project 1,269,780 295,570 1,565,350 1,269,780 275,959 1,545,739 PWB Loan Utilities Water Facility Capital Project 705,864 97,361 803,225 705,864 89,978 795,842 Dept of Ecology Utilities Sewer Faclity Capitl Project 1,462,064 432,834 1,894,898 1,837,420 606,437 2,443,857 CERB Utilities Sewer Faclity Capitl Project 174,916 85,000 259,916 178,414 81,502 259,916 Dept of Ecology Utilities PWRF Facility Capital Project 67,986 17,657 85,643 638,449 438,360 1,076,809 HAEIFAC Loan Utilities Reuse Facility Expansion and Improvements 149,687 18,943 168,630 154,515 14,114 168,629 26,850,297 5,142,793 31,993,090 7,579,442 4,568,825 12,148,267 28,760,297 9,381,822 38,142,119 10,134,442 8,157,253 29,275,503 2025 2026 Total for General Fund Total for Stadium Fund Total for Community Development Block Grant Fund Total Debt Debt Type Fund Description Total Utilities 57 The tables below show all the bonds and loans outstanding as of year-end 2023 based on audited 2023 financial statements and provides a summary of future debt service to maturity. 58 59 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Debt limit 91,985$ 98,436$ 105,699$ 120,022$ 137,507$ 153,031$ 169,960$ 201,630$ 243,800$ 308,279$ Total net debt applicable to limit 12,174 10,442 9,660 8,865 26,125 24,795 23,920 23,010 34,665 89,070 Legal debt margin 79,811$ 87,994$ 96,039$ 111,157$ 111,382$ 128,236$ 146,040$ 178,620$ 209,135$ 219,209$ Total net debt applicable to the limit as a percentage of debt limit 13.23% 10.61% 9.14% 7.39% 19.00% 16.20% 14.07% 11.41% 14.22% 28.89% Legal debt margin calculation for fiscal year 2024 ####### 55,191 Less: Non-Voted GO Bonds Outstanding (11,180) (594) (11,774) Remaining capacity without a vote 43,417 Voted and Non-Voted Debt Capacity: (2.5% of Assessed Value)91,985 Less: Voted GO Bonds Outstanding (400) Non-Voted GO Bonds Outstanding (11,180) Other Non-voted General Obligations Outstanding (594) (12,174) Legal Debt Margin Last Ten Fiscal Years (amounts expressed in thousands) Fiscal Year Ended December 31 Non-Voted Debt Capacity Value (1.5% of Assessed Value)184,967 2023 Assesed Valuation for 2024 Collections 12,331,147$ 89,070 Other Non-voted General Obligations Outstanding 274,037 308,279 (89,070) - 219,209$ Note: The total indebtedness for general purposes with or without a vote cannot exceed 2.5% of the value of taxable property. The general purposes indebtedness includes debt for capital leases without a vote. The legal limit for capital leases debt (RCW 35.42.200) is included in the 2.5 percent and does not constitute extra allowable debt. The 1.5 percent is the maxium limit for gerneral purposes without a vote (councilmanic debt). A council may choose to allocate any portion of this debt capacity to the "voted" category. If done so, this 1.5 percent of the indebtedness available without vote is to be proportionately reduced by the excess "voted" debt over 1 percent. - 60 FUND BALANCE General Fund The General Fund, as the primary operating fund of the City, manages all activities not designated to other specific funds like Special Revenue or Proprietary Funds. It is crucial to maintain adequate fund balance levels to support cash flow, accommodate economic downturns, and address emergencies. Monitoring fund balance trends aids in budgetary decisions, allowing for program expansion when positive and necessitating expenditure cuts or revenue enhancements when negative. Pasco has seen significant population growth over the last decade, enhancing property tax and sales tax revenues through new developments and increased commercial activities. Unusual spending patterns during the pandemic years and major construction projects also temporarily boosted sales tax revenues. The City’s significant investment in roadway construction ($39M) and utilities extensions ($13.5M) in the Broadmoor Area will open opportunities for new commercial and housing construction. Also, an expanded urban growth boundary is expected to provide additional space for economic development to occur. In the past biennium, the infrastructure for sewer service was established in this expanded area through the formation of a Local Improvement District. Growth, and the demand for City services, is expected to continue. Recent years have seen staff additions in various departments to meet service demands based on daily operational needs, implementation of strategic plans and addition of new or expanded services, like the operation of the Animal Control and Services Fund and assumption of downtown community events. The 2023-2024 period marked the first recent instance where General Fund expenses exceeded revenues, leading to the use of accumulated balances to cover shortfalls. Delays in development, particularly in the Broadmoor Area, have slowed expected revenue increases, prompting stringent budget monitoring and reduced expenditure efforts. For the 2025-2026 Biennial Budget, the City plans to maintain conservative spending while awaiting the fruition of developments in Broadmoor, Industrial, and Downtown areas, which are expected to bolster economic fundamentals. However, the pace of these developments is uncertain, and the City will need to continuously assess economic outcomes. Based on budgeted revenues and expenditures, the ending fund balance as of 12/31/2026 is estimated to decrease by $13M. At this pace, the estimated ending fund balance is valued at $18M and continues to exceed recommend reserve balance of 60 days operating costs. To better navigate future budgetary challenges, the City is developing a General Fund Forecasting Model to be completed in 2025, providing a critical tool for long-term financial planning. 61 $(12) $(10) $(8) $(6) $(4) $(2) $- $2 $4 $6 $- $5 $10 $15 $20 $25 $30 $35 $40 Actual 2020 Actual 2021 Actual 2022 Actual 2023 Estimated 2024 Budgeted 2025 Budgeted 2026 Mi l l i o n s Mi l l i o n s General Fund Ending Fund Balance Ending Fund Balance Change in Ending Fund Balance 62 Enterprise Fund – Fund Balance The City of Pasco's Utility Fund manages utility services like water, sewer, and stormwater, using full accrual accounting which reflects capital assets and liabilities, unlike the modified accrual basis for governmental funds. This fund’s net investment in capital assets is not available for future expenditures, making the unrestricted fund balance critical for meeting financial obligations. The budgeting process considers this unrestricted balance as a key indicator of financial health and a buffer for operational needs. For the 2025-2026 biennium, budget preparations included reviewing the unrestricted fund balance from 2023 and projecting the 2024 year-end balance to determine available funds. This helps in planning for necessary reserves and ensuring funds designated for specific purposes, like bond reserve balances and restricted capital funds, are properly accounted for. This focus allows the City to differentiate between expenditures that can be covered by rate revenues and those that require long-term debt, highlighting any rate insufficiencies. The Utility Fund faces increasing demands due to customer growth and inflation, raising expenses for supplies, services, and staffing, although no new staff additions are planned for the next biennium. The budget includes significant capital investments to enhance service capacity and update aging infrastructure, funded through a mix of revenue bonds, state loans, grants, and user fees. While external funding in the form of borrowing helps reduce immediate ratepayer burdens, the resulting debt service reduces unrestricted fund balance availability. Rate studies are conducted for each utility service to ensure rates support system needs and accommodate future growth. Key points from the rate studies include: • Multi-year Rate Increases: To ease customer impact, rates are set to increase annually, with water services increasing by 5% and sewer services by 4%. • Process Water Reuse Facility: Rate changes approved in late 2024, effective starting 2025. • Irrigation Services: A study recommends a 17% annual increase for the 2025-2026 biennium, with a council decision expected early 2025. These studies aim to ensure financial stability by: • Operational Reserve: Targeting a reserve of 45 days of operational costs, approximately $7 million. • Debt Service Coverage: Ensuring revenues cover 1.25 to 1.5 times annual debt service costs, amounting to between $13 million and $20 million for this biennium. 63 $- $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 Mi l l i o n s Utility Fund Unrestricted Balance at Year End 2018 Actual 2020 Actual 2022 Actual 2024 Estimate 2026 Budget Based 64 2025-2026 Budget Summary – All Funds Budgeted Beginning Fund Balance Revenues & Resource Inflows Expenditures & Resource Outflows Budgeted Budgeted End Fund Balance Net Change in Fund Balance GENERAL FUND 31,264,925$ 158,674,724$ 171,871,410$ 18,068,239$ (13,196,686)$ Street 647,542 4,677,189 5,909,486 (584,755) (1,232,297) Arterial 1,133,548 1,041,757 327,154 1,848,151 714,603 I-182 Impact 1,176,717 1,210,000 539,616 1,847,101 670,384 Street Overlay 2,091,426 2,376,000 2,229,089 2,238,337 146,911 CDBG/HOME 9,605 2,630,360 2,554,946 85,019 75,414 Martin Luther King Center 15,194 309,700 373,954 (49,060) (64,254) Ambulance 7,248,206 26,974,216 28,168,506 6,053,916 (1,194,290) ARPA 50,630 3,907,157 3,957,787 - (50,630) Cemetery 523,697 644,500 833,891 334,305 (189,392) Boulevard Maintenance 2,095,226 237,541 298,085 2,034,682 (60,544) Athletics 307,291 400,700 359,334 348,657 41,366 Golf course 309,767 264,000 50,000 523,767 214,000 Animal Shelter Operations 73,579 4,732,716 4,806,295 - (73,579) Senior Center 159 368,200 308,775 59,584 59,425 Multi Modal 317,347 416,882 152,166 582,063 264,716 School Impact 83,990 5,000,000 4,981,900 102,090 18,100 Pasco Marina 37,198 58,300 44,277 51,221 14,023 Lodging - 1,186,155 1,186,155 - - Litter Abatement 86,340 700 9,882 77,158 (9,182) Revolving Abatement 2,442 438,400 416,251 24,591 22,149 TRAC 105,978 377,700 454,393 29,285 (76,693) Park Development 2,724,929 2,235,500 1,987,737 2,972,692 247,763 Capital Improvement Reet 8,104,674 5,725,000 3,304,569 10,525,105 2,420,431 Economic Development 15,606,207 3,575,000 4,164,307 15,016,900 (589,307) Stadium/Convention Center 154,994 686,544 469,088 372,450 217,456 Hotel/Motel Excise Tax 1,819,119 1,721,000 2,861,166 678,953 (1,140,166) DE B T SE R V I C E LID - 219,941 219,941 - - CA P I T A L PR O J E C T General Capital Improvement - 64,402,563 64,402,563 - - Utility Fund Total 60,283,227 168,281,921 186,281,536 42,283,612 (17,999,615) Water 15,474,653 57,792,147 59,868,957 13,397,843 (2,076,810) Irrigation 9,418,523 4,491,333 11,438,908 2,470,948 (6,947,575) Sewer 18,549,286 63,037,811 65,318,651 16,268,446 (2,280,840) PWRF 10,075,241 37,493,214 42,643,875 4,924,580 (5,150,661) Storm Water 6,765,524 5,467,416 7,011,145 5,221,795 (1,543,729) Equipment O&M Govt (10,100) 5,143,900 6,297,203 (1,163,403) (1,153,303) Equipment O&M Enterprise - 400,000 400,000 - - Equipment Replacement Govt 9,261,874 2,048,224 977,566 10,332,532 1,070,658 Equipment Replacement Enterprise 6,059,692 1,504,545 560,000 7,004,237 944,545 Medical/Dental/Vision 2,919,070 19,622,539 19,582,536 2,959,073 40,003 Central Stores - - - - - Old Fire Pension (See note page 33)65,403 934,672 218,637 1,551,920 1,486,517 Old Fire OPEB (See note page 33)835,885 954,540 152,648 867,295 31,410 PE R M A N E N T F U N D Cemetery Endowment 769,366 56,000 - 825,366 56,000 156,175,147$ 493,438,786$ 521,712,849$ 127,901,083$ (28,274,064)$ FI D U C I A R Y F U N D S TOTAL 2025-2026 BUDGET SUMMARY - ALL FUNDS Fund SP E C I A L R E V E N U E F U N D S EN T E R P R I S E FU N D IN T E R N A L SE R V I C E F U N D S 65 Other Funds - Fund Balance Summaries The information below addresses changes in fund balances with significant changes as shown in the “2025-2026 BUDGET SUMMARY – ALL FUNDS” chart on the preceding pages. This section also addresses lesser changes in the balances of Internal Service, and Fiduciary. Street Fund – The Street Fund’s primary sources of revenue are Motor Vehicle Fuel Tax, revenues associated with completion of pavement preservation projects, franchise fees and utility taxes. Motor Vehicle Fuel Tax is a product of the number of gallons of fuel sold State-wide and distributed on a per capita basis. The City’s receipts have increased in the last few years, the impact of high fuel costs, and resulting potential negative pressure on fuel sales contributes to a conservative estimation of 2025 revenues. 2026 was estimated with a slightly more positive expectation. Depending upon the source of revenue, inflows over the past many years have reduced or remained flat. At the same time, expenses in the fund have increased significantly related across all expense categories. This outpace of expenses over revenues as of the end of 2026 is budgeted to draw the ending fund balance down by $1.2 M. It will be necessary during this biennium to evaluate options for enhanced revenues to make the fund solvent. Arterial Fund – The Arterial Fund also benefits from Motor Vehicle Fuel Tax. All other revenues are small amounts in comparison. Funds accumulated are used for capital projects typically serving as a match to Federal or State grants. The fund balance is expected to increase $714,603 by the end of 2026 to support continued capital investment. The highest dollar value project that to be financed with Arterial Fund proceeds in 2025-2026 is a pedestrian crossing from Argent Road and Road 68 to Sandifur Parkway and Road 90. I-182 Impact Fund – This fund is tied to development and associated transportation construction in the I-182 Corridor. Within the I-182 Fund, the City accumulates fund balance to complete projects, many times as matching funds to Federal or State grants for major eligible projects. The fund balance for 2026 is anticipated to reflect an increase of $670,384 over the biennium. For the biennium, funding from the I-182 Impact Fund will support transportation projects in the Broadmoor Area. When comparing projects designated suitable for Impact Fund support as outlined in the Capital Improvement Plan, the need far outpaces the revenue. Street Overlay Fund – Similar to the theme of needed funding outlined in the other street related funds, revenues of the Overlay Fund are an important and highly desired funding source for transportation improvements. Overlay Fund revenues are solely composed of business and occupation taxes charged by the City. The revenue source contributes approximately $1.1 million annually. During this biennium, budgeted fund support for pavement overlay projects include portions of the Lewis Street Overpass and Lewis Street. Other important overlay related work is spread throughout the City and completed by City staff as noted in the Streets Fund. These projects are often smaller is scope but equally important towards of a efficient, well- maintained transportation network. Use of City staff to maintain these smaller areas of overlay work serves to allow for year-to-year analysis and repair that complements other City work. 66 Ambulance Services Fund – The Ambulance Fund biennial budget activity estimates a decrease in the ending fund balance. It is important to note this budget includes rate increases annually to both the availability rate assessed through the City’s monthly utility billing system as well as rates associated with service for ambulance transportation. Beginning in 2023, the City was the beneficiary of a SAFER grant that will conclude in 2025. The grant’s purpose was to ease the financial burden associated with the addition of nine staff members that were added in the last biennium. As budgeted, revenues in the first year of the biennium nearly cover the expenditures of the fund. However, for the second year of the biennium the fund is projected to use close to $1M from reserves. A revenue requirements study for the service is anticipated to be undertaken in 2025. Boulevard Maintenance Fund – The Boulevard Maintenance Fund is the repository for fees assessed to new development. Fees accumulate in the fund to be used for boulevard greenspace maintenance. Beginning in 2023, the cost of an employee was charged to this fund via a transfer out to General Fund to offset cost of groundman position. It is important to note that the total costs associated with maintenance of the City’s many boulevards significantly exceed the work product of one person. For future consideration, it will be necessary to evaluate true costs and investigate mitigation efforts to allow for funding to support maintenance undertaken. This analysis is especially important for the eventual day when development slows leaving existing boulevard spaces to maintain in perpetuity. Animal Control and Services – The Animal Control and Services Fund was new in the budget for 2023-2024. Budgeted revenues and expenses are nearly equal. In the coming years, it will be important to continue evaluating actual activity to fully understand the impact of shared costs on the City and our partners. Ultimately, the financial burden of Animal Control services is shared by the three partner Cities of Kennewick, Richland and Pasco. In the 2025-2026 biennium, the burden of the Tri-Cities Animal Control Facility operational support to the City’s General Fund is budgeted at $1.5M. Senior Center Fund – The Senior Center Fund continues to require a subsidy in this biennium from the General Fund. The need to subsidize operations at the Senior Center is not unusual. Revenues are small and do not keep pace with cost of service. Revolving Abatement Fund – Fund balance in this fund is estimated to increase by $24,591 in the biennium. This increase is primarily the result of a reduction in the number of abated nuisance properties. Over the course of the last couple biennium, extensive Downtown clean- up efforts and the purchase of a dilapidated property depleted the existing fund balance. Moving forward, abatement efforts will need to be scrutinized to assure revenues will cover expenses and maintain positive fund balance. Park Development Fund – The Park Development Fund ending fund balance increases throughout the biennium by approximately $247 Thousand, leaving an estimated fund balance in 2026 of $2.9 Million. The strong revenues derived from new construction related fees are highly dependent on the pace of development, which we anticipate remaining strong in 2025- 2026. If planned spending outlined in the Capital Improvement Plan (CIP) takes place, fund revenues will be sufficient to meet fund requested support. However, there are many park projects included in the CIP that have no assigned funding. While the projects are known 67 community improvement desires, funding from this fund or other sources is currently unknown or insufficient. Capital Improvement (REET) Fund – Funding in the Capital Improvement Fund is the byproduct of real estate excise tax. Anticipating a reasonable level of fund revenue was challenging during this budget planning period. In 2021-2022, the fund’s revenues were approximately $7.3M. In 2023-2024 biennium, they reduced to $5.3M, most likely because of pressure on sales due to increased rates of interest in the biennium. Projects that fit appropriately in this category of funding support are always numerous. The budgeted use of funds in the biennium total $3.3 Million. Most notable project support are for extension of Road 40 East and City participation in capital improvements at regional dispatch center. The results of the budgeted activity reflect a positive ending fund balance of $10.5 Million in 2026. Based on the City’s expanding footprint and an ever-present need for capital investment, it is important to monitor and plan use of fund assets with purpose. Economic Development Fund – The Economic Development Fund accumulates revenue primarily from a limited-term agreement associated with region convention centers and annual lease fees at City-owned farm operations. The revenues support farm operations and capital, general economic development efforts, and capital improvement projects that serve as economic drivers. Through the course of this biennium, the budget-based change in fund balance is a reduction of $589,307. For the next biennium, revenues are expected to decrease significantly with the cessation of the convention center related inflow in December 2027. The decrease will limit the fund’s ability to contribute to capital investment. Stadium/Convention Center Fund – The fund balance is increasing slightly during this biennium. This increase is primarily the outcome of maximizing revenue and mitigating costs to ensure they are sufficiently supporting ongoing operations. While significant projects are planned and being completed, more improvements are expected. It will be necessary for the City to explore funding opportunities for those potential projects. Hotel/Motel Excise Tax Fund –Revenues have rebound from the effects of the pandemic shut down. A conservative increase in revenues is expected for 2025-2026. Budgeted expenses are increased to maximize support to encourage tourism and provide community enrichment activities. The fund balance remains strong through the end of 2026. Council authorizes allocations of Hotel/Motel Excise Tax each year in a separate process. LID (Local Impact Districts) Fund – Local Improvement Districts are financing instruments created for the primary purpose of constructing streets, storm drainage, sidewalk, street lighting, water, and/or sewer improvements. Following construction and approval of final assessment, long term debt is issued. Benefiting property owners are in turn assessed their share of debt service on an annual basis. The assessments are liens against the property. While rare, should an assessment become sufficiently delinquent, foreclosure may occur. Revenues and expenses of the fund are equal as receipts are used to redeem outstanding debt. Equipment O&M Government Fund – A decrease in fund balance is due to budgeted expenses exceeding anticipated revenue. It will be necessary to evaluate and revise service rates charged to ensure appropriate revenue to support services. 68 Equipment Replacement Enterprise Fund – This fund serves as a financing mechanism for purchase of City vehicles and equipment. Annual contributions on a per department, per vehicle basis are accumulated in the fund to meet estimated replacement cost at the conclusion of an asset’s useful life. Based on the number and accompanying cost of assets, the value of these savings is material across the organization. Aware of budgetary constraints in many City funds and with awareness of need to carefully evaluate management of this impactful purchase process, the City reduces the pace of saving in this biennium, allowing the fund balance to increase. It is important to mention that accompanying this delay is the risk that savings will be insufficient to support eventual purchase. Medical/Dental/Vision Fund – The City is self-insured. The fund balance for the Fund is nearly flat over the biennium. This fund will be carefully monitored throughout the biennium with the aim of maintaining a healthy fund balance to meet medical cost needs. Old Fire Pension – This fund provides pension benefits to firefighters that were hired before 1970. Savings in the pension fund were accumulated in years past and invested to recognize investment income. The fund also receives contributions via a transfer in from the General Fund. This transfer is the product of General Fund recognized State shared revenue distributed from proceeds of fire insurance premiums. Annual revenues are expected to far exceed budgeted expenses. At end of biennium the fund balance is projected to be approximately $6.2 million. Old Fire Other Post-Employment Benefits (OPEB) – Participants in this fund mirror those of the Old Fire Pension Fund. As such, the comparison of investment income to fund expenditures budgeted in the biennium are representative of a surplus of revenues. A December 2026, fund balance is budgeted to be approximately $6.2M. Staffing Trends This section reviews the past, current, and future staffing levels across various City departments, with a strong focus on public safety due to increasing population and corresponding needs. Key points include: • Public Safety: Since 2016, significant staffing increases have been in Fire, Ambulance, and Police departments to improve community safety and well-being. Pasco is now ranked as the eighth safest city in Washington. • Police Department: Enhanced by grants like the Community Oriented Policing Services (COPS), which funded 4 new FTEs from 2019-2022. The department also added 14 FTEs in the 2023-2024 biennium following strategic planning recommendations and started a Regional Basic Law Enforcement Academy to expand the candidate pool. • Fire Department: Received a SAFER Grant in 2023, funding 15 new FTEs to staff the new Fire Station 85, enhancing service in the northwest area of town. • Other Departments: As the City grows, there is also a need for more non-public safety staffing to manage increased activities and infrastructure. For instance, 20 FTEs were added for the regional animal shelter management transition from external contractors, and two additional FTEs in 2025-2026 for in-house veterinary services. Eight additional 69 FTEs were added for facilities and parks maintenance in the 2023/24 biennium to keep pace with new parks and landscaped boulevards. Despite these enhancements, revenue growth lags behind expenditure increases, leading to budget deficits. To manage this, the City plans to keep some positions vacant as they become available, opting for process improvements or reassignment to save on labor costs. However, this may slow down service delivery. The tables and charts below illustrate the changes in staffing levels relative to population growth from 2016 to 2026. 70 General Fund - Departments 2021 2022 2023 2024 2025 2026 24-26 Changes City Council 7.00 7.00 7.00 7.00 7.00 7.00 0.00 Municipal Court 15.85 1 5.85 17.85 17.85 17.85 17.85 0.00 City Manager 5.00 5 .00 9.00 9.00 11.50 11.50 2.50 Human Resources 5.50 6.50 7.00 7.00 7.00 7.00 0.00 Information Technology 0.00 0.00 0.00 0.00 14.40 14.40 14.40 Police 92.00 96.00 110.00 110.00 110.00 110.00 0.00 Fire 38.00 38.50 47.50 47.50 47.00 47.00 -0.50 Parks & Recreation 41.55 42.55 55.95 55.95 39.55 39.55 -16.40 Finance 17.05 1 9.05 21.55 21.55 21.55 21.55 0.00 Community & Economic Development 25.00 28.00 32.00 32.00 32.00 32.00 0.00 Engineering 10.65 1 3.65 16.65 16.65 15.80 15.80 -0.85 Sub-Total General Fund 257.60 27 2.10 324.50 324.50 323.65 323.65 -0.85 Other Funds 2021 2022 2023 2024 2025 2026 24-26 Changes Streets 7.50 7.50 7.50 7.50 7.67 7.67 0.17 CDBG 1.00 1 .00 1.00 1.00 1.00 1.00 0.00 Martin Luther King Center 0.45 0.45 0.45 0.45 0.45 0.45 0.00 Ambulance 43.75 44.25 56.85 56.85 57.35 57.35 0.50 ARPA 0.00 1 .00 0.50 0.50 0.50 0.50 0.00 Animal Shelter Operations 0.00 0.00 20.00 20.00 22.00 22.00 2.00 Cemetery 1.50 1 .50 1.50 1.50 2.00 2.00 0.50 Senior Center 1.50 1 .50 1.50 1.50 1.50 1.50 0.00 Economic Development 1.00 1 .00 1.00 1.00 1.00 1.00 0.00 Water/Sewer Utility 63.36 65.36 78.86 79.86 78.93 78.93 -0.93 Equipment RR 6.69 6.69 10.19 10.19 9.30 9.30 -0.89 Internal Medical Insurance 0.50 0.50 1.00 1.00 1.00 1.00 0.00 Sub-Total Other Funds 127.25 1 30.75 180.35 181.35 182.70 182.70 1.35 Total, City-wide 384.85 402.85 504.85 505.85 506.35 506.35 0.50 FTE Allocation 71 72 CITY COUNCIL 73 74 75 76 77 City Manager 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended Budget 2025-2026 Adopted Revenue Charges Goods & Services 97,590 8,982 28,911 146,550 Miscellaneous 47,563 49,665 42,402 - Department Total 145,153 58,647 71,313 146,550 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended Budget 2025-2026 Adopted Expenditures Salaries 1,583,7 54 1,391,293 2,37 1,565 2,441,149 Personnel Benefits 606,942 464,7 66 845,940 87 2,208 Supplies 61,645 84,47 2 827 ,200 316,600 Services 548,884 320,659 502,510 1,808,659 Capital Outlays 5,806 51,409 - - Department Total 2,807,031 2,312,598 4,547,215 5,438,616 78 Position 2025 2026 City Manager 1 1 Deputy City Manager 1 1 Assistant City Manager 1 1 Executive Assistant 1 1 Management Analyst 1 1 Digital Media Administrator 1 1 Communications Coordinator*0.5 0.5 Lead Communication & Engagement Strategist 1 1 Adminstrative Assistant II 1 1 City Clerk 1 1 Deputy City Clerk 1 1 Department Assistant II 1 1 Total 11.5 11.5 *0.5 Communications Coordinator in ARPA Fund City Manager Personnel Summary 79 80 81 82 83 84 Salaries - 861,732 1,171,383 1,333,678 Personnel Benefits - 342,862 444,899 488,818 Supplies - 11,588 55,861 33,300 Services - 482,360 977,432 930,355 Capital Outlays - - - - - 1,698,542 2,649,575 2,786,151 HR Director*0.5 0.5 HR Administrative Coordinator 1 1 HR Business Partner 0.5 0.5 HR Specialist 3 3 Senior HR Generalist 1 1 Safety & Risk Program Admin 1 1 T otal 7 7 *0.5 HR Director & 0.5 Business Partner in Medical/Dental Insurance Fund fund 85 86 87 Position 2025 2026 Information Technology Director 1 1 IT Application Lead 1 1 IT Customer Service Lead 1 1 IT GIS Lead 1 1 IT Operations Lead 1 1 IT Project Manager 1 1 Network Administrator 1 1 Cybersecurity Administrator 1 1 Business Analyst 1 1 GIS Specialist 1 1 PC Specialist 1 1 Systems Adminstrator 1 1 Application Specialist 2 2 IT Radio Equip- Vehicle Specialist*0.4 0.4 Total 14.40 14.40 Information Technology Personnel Summary *.6 of IT Radio Equip - Vehicle Specialist is in Ambulance Fund 88 89 90 91 Position 2025 2026 Parks and Recreation Director 1 1 Recreation Services Manager 1 1 Facilities Manager 1 1 Parks Manager 1 1 Parks Lead 2 2 G roundsman I 4 4 G roundsman II 8 8 G roundsman III 5 5 Facilities Lead 1 1 Facilities Maintenance Workers 6 6 Arborist 1 1 Park Ranger 1 1 Recreation Specialist 3.55 3.55 Adminstrative Assistant II 1 1 Adminstrative Assistant I 1 1 Department Aide II 2 2 T otal 39.55 39.55 Parks and Recreation Personnel Summary 92 93 94 95 96 97 98 99 Finance 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended Budget 2025-2026 Adopted Revenue Intergovernmental 43,7 81 4,845 - Charges Goods & Services 622,848 631,842 516,081 231,000 Miscellaneous 37 5 407 ,820 832,000 Department Total 667 ,004 636,687 923,901 1,063,000 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended Budget 2025-2026 Adopted Expenditures Salaries 2,465,230 2,807 ,807 3,421,560 3 ,604,338 Personnel Benefits 964,123 1,07 0,686 1,247 ,631 1,37 1,343 Supplies 56,27 0 57 ,57 1 55,639 44,914 Services 1,7 15,07 3 1,845,955 2,026,7 49 2,353,543 Capital Outlays 17 ,386 16,7 50 Department Total 5,218,082 5,7 98,7 69 6,7 51,57 9 7 ,37 4,138 100 101 102 103 104 105 106 107 108 109 110 Public Works – Engineering 111 Public Works – Streets 110 - City Streets Fund 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Taxes - - - - License & Permits 87 4,647 841,246 97 3,800 67 0,000 Intergovernmental 1,962,029 1,966,424 1,934,432 1,988,000 Charges for Goods & Services 1,089,683 1,056,156 1,495,930 1,416,589 Miscellaneous Revenue 61,047 47 ,325 682 28,600 NonOper Rev - Interest - - 10,000 Transfer In 1,919,27 5 868,860 562,323 564,000 Department Total 5,906,681 4,780,011 4,967,167 4,677,189 Expenditures Salaries & Wages 947 ,063 835,024 1,219,185 1,356,908 Personnel Benefits 433,7 13 37 3,856 507 ,543 539,7 32 Supplies 7 44,132 968,502 901,033 1,215,354 Services & Charges 2,391,008 2,295,244 2,347 ,851 2,408,892 Transfers & Pass Trough's 321,484 36,57 4 222,000 - Capital Outlays 7 0,926 - 215,615 388,600 Department Total 4,908,326 4,509,200 5,413,227 5,909,486 Position 2025 2026 Public Works Director 0.11 0.11 Public Works Operation Manager 0.06 0.06 Public Works Division Manager 0.25 0.25 Public Works Lead 1 1 Maintenance Worker 3 5 5 I nstrumentation Tech 1 1 Administrative Assistant II 0.04 0.04 Department Assistant II 0.04 0.04 Deputy Public Works Director 0.11 0.11 Construction Manager 0.06 0.06 Total 7.67 7.67 City Streets Personnel Summary 112 SPECIAL REVENUE FUNDS The City uses Special Revenue Funds to account for revenues that must be used by law for specific purposes. Examples are the City Street Fund and Arterial Street Fund that account for gasoline taxes received that can only be used for maintenance and improvements to roads and streets, as well as the Ambulance Fund that provides vital emergency medical services to our residents. Below is the list of all of City’s Special Revenue Funds: • Fund 110 – Street • Fund 120 – Arterial Street • Fund 130 – Street Overlay • Fund 140 – Community Development Block Grant (CDBG) • Fund 142 – HOME Program • Fund 144 – NSP Fund • Fund 145 – Martin Luther King (MLK) Center • Fund 150 – Ambulance Services • Fund 155 – ARPA • Fund 160 – City View Cemetery • Fund 161 – Boulevard Maintenance • Fund 165 – Athletic Program • Fund 166 – Golf • Fund 168 – Animal Control Operations • Fund 170 – Senior Center • Fund 180 – Multi-Modal Facility • Fund 182 – School Impact Fees • Fund 185 – Rivershore Trail and Marina • Fund 188 – Special Assessment Lodging • Fund 189 – Litter Abatement • Fund 190 – Revolving Abatement • Fund 191 – TRAC Development and Operating • Fund 192 – Park Development • Fund 193 – Capital Improvement Fund (Real Estate Excise Tax) • Fund 194 – Economic Development Fund • Fund 195 – Stadium Convention Center • Fund 196 – Hotel/Motel Excise Tax 113 Arterial Fund I-182 Impact Fund 120 - Arterial Fund 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Intergovernmental 97 3,145 983,165 833,834 914,7 57 Charges for Goods & Services 7 42,214 5,609 - - Miscellaneous Revenue 22,080 18,7 06 12,915 7 0,000 Transfer In 906,255 400,000 57 ,000 Department Total 1,737,439 1,913,735 1,246,749 1,041,757 Expenditures Services & Charges 13,963 3,527 6,443 26,506 Transfers & Pass Trough's 929,089 47 2,037 2,7 09,192 300,648 Capital Outlay - - - Debt Principal 81,955 - Debt Interest Department Total 1,025,007 475,564 2,715,635 327,154 125 - I82 Impact Fee 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Charges for Goods & Services 1,182,823 2,000,935 1 ,128,356 1,140,000 Miscellaneous Revenue 38,118 22,357 2 1,525 7 0,000 Debt Proceeds 191,547 Department Total 1,412,488 2,023,292 1,149,881 1,210,000 Expenditures Services & Charges 9,236 2,415 5 ,369 9,616 Transfers & Pass Trough's 284,313.00 1,87 2,505.00 1 ,043,295.00 530,000.00 Department Total 293,549 1,874,920 1,048,664 539,616 114 Street Overlay Fund Community Development Block Grant 130 - Street Overlay Fund 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Miscellaneous Revenue 152,523 37 ,002 1 6,000 40,000 Transfer In 2,080,364 1,886,568 2 ,254,07 4 2,336,000 Department Total 2,232,887 1,923,570 2 ,270,074 2,376,000 Expenditures Services & Charges 1,652,217 71,294 186,625 7 5,500 Transfers & Pass Trough's 605,815 2,032,137 5,236,088 2,153,589 Department Total 2,258,032 2,103,431 5 ,422,713 2,229,089 Community Development Block Grant (CDBG) 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Intergovernmental 1,290,058 2,475,820 2,396,100 2,000,000 Miscellaneous 26,245 179,639 - 800 Debt Proceeds - 3,781,000 - - Transfers In - 131,008 250,500 400,000 Department Total 1,316,303 6,567,467 2,646,600 2,400,800 Expenditures Salaries 171,517 165,536 182,037 190,912 Personnel Benefits 64,505 58,203 67,452 70,456 Supplies 1,095 7,223 6,000 4,000 Services 429,852 865,866 1,245,339 630,018 Transfers & Pass Throughs 701,938 4,699,959 447,788 550,000 Debt Principal - 380,000 380,000 380,000 Debt Interest - 142,404 360,500 500,000 Department Total 1,368,907 6,319,192 2,689,116 2,325,386 115 Home Program HOME Investment Partnership Program 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Intergovernmental 95,681 46,624 242,400 229,560 Miscellaneous - - - Debt Proceeds - - - - Transfers In - - - - Department Total 95,681 46,624 242,400 229,560 Expenditures Salaries 5,894 6,559 - 9,000 Personnel Benefits 2,267 2,466 - 3,400 Supplies - 1,876 4,000 1,000 Services 87,169 33,062 238,400 216,160 Transfers & Pass Throughs - 202 - - Department Total 95,330 44,165 242,400 229,560 116 Martin Luther King Center Fund Intergovernmental 6,801 1,686 - - Charges Goods & Services 2,286 16,308 8,000 31,000 Miscellaneous 71,083 90,680 98,600 97,400 Interest - 322 - 1,300 Transfers In 140,000 1 60,000 238,000 180,000 220,170 268,997 344,600 309,700 Expenditures Salaries 80,931 80,251 59,579 70,142 Personnel Benefits 32,086 30,264 19,698 22,097 Supplies 11,219 5,990 13,660 13,000 Services 177,842 165,959 197,791 268,715 Capital Outlays 18,316 - - - 320,394 282,465 290,728 373,954 Recreation Specialist 0.45 0.45 Total 117 FIRE DEPARTMENT – AMBULANCE UTILITY 150 - Ambulance Services 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Taxes 8,011,953 Intergovernmental 6,17 8,806 8,983,655 5 ,803,316 Charges for Goods & Services 13,110,652 14,094,203 1 6,27 6,355 20,251,300 Miscellaneous Revenue 7 3,200 7 4,545 5 3,97 2 7 3,800 NonOper Rev - Interest - 1,639 1 ,300 5,800 Other Financing Sources - 48,938 - - Transfer In 1,540,000 847 ,500 1 ,140,000 840,000 Department Total 22,735,805 21,245,631 26 ,455,282 26,974,216 Expenditures Salaries & Wages 9,232,17 8 10,916,808 1 3,980,807 16,922,995 Personnel Benefits 2,553,463 2,967 ,553 3 ,946,7 19 4,37 8,846 Supplies 509,166 7 26,259 1 ,086,7 00 830,180 Services & Charges 3,358,062 5,117 ,7 18 7 ,080,383 6,000,835 Transfers & Pass Trough's - 45 - - Capital Outlays 63,386 149,67 5 2 17 ,000 - Debt Principal 2,000,000 11,7 95 - - Debt Interest 48,680 1,115 - 3 5,650 Department Total 17,764,935 19,890,968 2 6,311,609 28,168,506 118 ARPA Fund 155 - ARPA 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Intergovernmental 5,642,7 54 402,7 12 3,857 ,157 Miscellaneous Revenue 107 ,407 20,000 50,000 Department Total - 5,750,161 422,712 3,907,157 Expenditures Salaries & Wages 58,329 7 2,942 7 5,509 Personnel Benefits 25,463 29,691 30,810 Supplies - - - Services & Charges 2,999,916 7 8 3,800,208 Transfers & Pass Trough's 2,553,016 11,084,27 1 50,630 Department Total - 5,636,724 11,186,982 3,957,157 119 Cemetery Fund Boulevard Maintenance Fund Cemetery 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Intergovernmental 3,891 - - Charges Goods & Services 747,718 919,912 825,181 613,500 Miscellaneous Rev 5 3,436 15 - Interest 3,342 4,434 1,356 11,000 Other Financing Sources - 2,736 - - Transfers In - - 175,000 20,000 Department Total 754,956 930,518 1,001,552 644,500 Expenditures Salaries 187,621 213,095 193,213 244,253 Personnel Benefits 75,225 73,257 86,596 116,385 Supplies 49,834 33,209 49,620 25,000 Services 347,546 414,256 452,359 448,253 Capital Outlays 8,263 - - - Department Total 668,489 733,817 781,788 833,891 161 - Blvd Maint 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Charges for Goods & Services 415,040 148,07 5 92,946 169,000 Miscellaneous Revenue 62,7 27 - 12,344 - NonOper Rev - Interest 21,840 9,315 56,000 Debt Repayment 39,263 43,043 36,000 12,541 Department Total 517,030 212,958 150,605 237,541 Expenditures Services & Charges 4,228 3,994 3,7 88 3,085 Transfers & Pass Trough's 207 ,600 290,000 237 ,816 295,000 Department Total 211,828 293,994 241,604 298,085 120 Athletics Fund Golf Fund Beginning in 2022, the City’s role in golf course operations changed to a lessor arrangement. Athletics 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Charges Goods & Services 223,271 238,788 352,139 262,700 Miscellaneous Rev 8,894 31,967 6,000 131,000 Interest 1,727 296 7,000 Department Total 232,165 272,482 358,435 400,700 Expenditures Salaries 24,054 20,273 54,710 56,045 Personnel Benefits 5,022 4 ,000 11,252 6,484 Supplies 61,389 65,544 94,200 102,525 Services 197,563 191,218 160,291 194,280 Department Total 288,028 281,036 320,453 359,334 166 - Golf 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Charges for Goods & Services 2,922,065 1,436,356 - - Miscellaneous Revenue 594,643 436,089 2 00,000 260,000 NonOper Rev - Interest 2,926 - 4 ,000 Department Total 3,516,708 1,875,371 2 00,000 264,000 Expenditures Supplies 400 9,962 - - Services & Charges 3,584,889 1,7 22,67 6 2 32,964 - Transfers & Pass Trough's 5 - - Capital Outlays - 100,000 5 0,000 Department Total 3,584,889 1,732,643 3 32,964 50,000 121 Animal Control Operations Animal Control Operations Fund 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Taxes Charges for Goods & Services 3,226,609 3,193,542 Miscellaneous Revenue Debt Proceeds Transfer In 1,549,173 1,539,174 Total Revenues - - 4,775,782 4,732,716 Expenditures Salaries & Wages 2730508 2795120 Supplies 367486 509300 Services & Charges 1,649,788 1,501,875 Total Expenditures -$ -$ 4,747,782$ 4,806,295$ 122 Senior Center Fund Senior Center 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Intergovernmental 22,814 242 - 1,000 Charges Goods & Services 18,218 13,231 15,586 22,000 Miscellaneous Rev 31,042 3,521 3,293 4,900 Interest 220 280 300 Other Financing Sources - - - - Transfers In 464,116 254,116 436,700 340,000 Department Total 536,190 271,330 455,859 368,200 Expenditures Salaries 209,135 1 89,851 240,753 136,375 Personnel Benefits 83,797 83,109 94,164 41,805 Supplies 8,073 6,429 8,800 7,545 Services 197,033 91,957 87,632 123,050 Department Total 498,038 371,347 431,349 308,775 123 Multi-Modal Fund School Impact Fund Marina Fund 180 - MultiModal 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Intergovernmental 204,825 206,909 247 ,951 212,000 Miscellaneous Revenue 17 2,544 17 6,345 17 2,850 194,882 NonOper Rev - Interest 3,395 600 10,000 Department Total 377,369 386,649 421,401 416,882 Expenditures Supplies 15,468 24,189 20,000 10,000 Services & Charges 150,490 139,265 134,539 142,166 Transfers & Pass Trough's 300,000 91,514 7 0,000 - Department Total 465,958 254,968 224,539 152,166 182 - School Impact 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Charges for Goods & Services 5,7 55,350 4,623,450 5,237 ,600 5,000,000 Department Total 5,755,350 4,623,450 5,237,600 5,000,000 Expenditures Services & Charges 5,698,87 8 4,613,692 5,224,7 14 4,981,900 Department Total 5,698,878 4,613,692 5,224,714 4,981,900 185 - Marina 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Intergovernmental 157,937 - - Miscellaneous Revenue 857 ,334 55,47 7 53,902 57 ,600 NonOper Rev - Interest 366 461 7 00 Department Total 857,334 213,780 54,363 58,300 Expenditures Supplies 150 - 2,000 Services & Charges 89,585 160,7 51 29,195 42,27 7 Transfers & Pass Trough's 17 ,550 - 200,000 - Capital Outlays 53,869 Debt Principal 141,204 - - Debt Interest 8,7 96 - - Department Total 161,004 310,901 229,195 44,277 124 Lodging Fund Litter Abatement Fund 185 - Marina 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Intergovernmental 157,937 - - Miscellaneous Revenue 857 ,334 55,47 7 53,902 57 ,600 NonOper Rev - Interest 366 461 7 00 Department Total 857,334 213,780 54,363 58,300 Expenditures Supplies 150 - 2,000 Services & Charges 89,585 160,7 51 29,195 42,27 7 Transfers & Pass Trough's 17 ,550 - 200,000 - Capital Outlays 53,869 Debt Principal 141,204 - - Debt Interest 8,7 96 - - Department Total 161,004 310,901 229,195 44,277 188 - Lodging 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Taxes (30,141) - - Charges for Goods & Services 529,7 64 993,17 4 1,37 0,312 1,186,155 NonOper Rev - Interest 827 462 - Department Total 529,764 963,860 1,370,774 1,186,155 Expenditures Services & Charges 529,7 64 963,860 1,37 0,7 7 4 1,186,155 Department Total 529,764 963,860 1,370,774 1,186,155 189 - Litter Abatement 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Charges for Goods & Services 33,27 6 25,000 25,669 - NonOper Rev - Interest 554 155 7 00 Transfer In 5,000 10,000 Department Total 33,276 30,554 35,824 700 Expenditures Services & Charges 21,521 8,907 33,964 9,882 Department Total 21,521 8,907 33,964 9,882 125 Revolving Abatement Fund TRAC/HAPO Fund Revolving Abatement 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Charges Goods & Services 174,772 1 71,878 189,833 138,000 Fines & Penalties 403,595 466,433 509,825 300,000 Miscellaneous 42,654 - - - Interest - 42,315 50,457 400 Department Total 621,021 680,626 750,115 438,400 Expenditures Services 422,251 657,656 1,252,937 416,251 Capital Outlays - 106,139 - - Department Total 422,251 763,795 1,252,937 416,251 TRAC/HAPO 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Miscellaneous 8,397 15,651 - - Interest - 2,931 646 2,700 Transfers In 421,260 198,347 540,000 375,000 Department Total 429,657 216,929 540,646 377,700 Expenditures Services 426,069 367,899 545,322 454,393 Department Total 426,069 367,899 545,322 454,393 126 Park Development Fund Capital Improvement (REET) Fund Non-recurring Capital Expenditures – The Capital Improvement Fund receives its revenue from Real Estate Excise Tax and is earmarked for large capital projects. Most notable in this biennium is the City’s contribution toward regional dispatch center and Rd 40 extension project. 192 - Park Development 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Charges for Goods & Services 1,57 5,17 4 1,224,412 1,121,640 2,155,500 NonOper Rev - Interest 97 ,47 2 29,025 8,610 80,000 Department Total 1,672,646 1,253,437 1,130,250 2,235,500 Expenditures Services & Charges 14,358 7 ,469 24,47 7 21,527 Transfers & Pass Trough's 452,916 1,139,822 3,091,533 1,966,210 Department Total 467,274 1,147,291 3,116,010 1,987,737 193 - Capital Improvement 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Taxes 5,581,649 7 ,256,201 7 ,216,036 5,300,000 Miscellaneous Revenue 236,7 46 63,153 NonOper Rev - Interest (110,17 9) 110,931 2 4,131 425,000 Department Total 5,708,216 7,367,132 7 ,303,320 5,725,000 Expenditures Services & Charges 26,584 30,07 5 4 2,505 114,017 Transfers & Pass Trough's 4,944,491 4,7 12,639 9 ,365,247 3,190,552 Department Total 4,971,075 4,742,714 9 ,407,752 3,304,569 127 Economic Development Fund 194 - Economic Development 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Intergovernmental 930,192 1,161,7 85 1 ,286,7 23 1,400,000 Miscellaneous Revenue 2,046,655 1,959,080 1 ,853,317 2,000,000 NonOper Rev - Interest 35,418 10,362 1 7 5,000 Capital Outlays 7 45,27 2 Transfer In 12,302,988 Department Total 2,976,847 16,204,543 3 ,150,402 3,575,000 Expenditures Salaries & Wages 204,499 217 ,330 2 88,308 301,804 Personnel Benefits 45,859 86,7 07 9 8,87 2 93,043 Supplies 105,27 0 133,469 1 95,000 116,184 Services & Charges 1,257 ,817 1,07 5,57 2 9 56,635 1,003,27 6 Transfers & Pass Trough's 2,986,437 1,583,224 2 ,650,000 Capital Outlays 330,124 162,620 1 ,312,000 - Department Total 1,943,569 4,662,135 4,434,039 4,164,307 128 Stadium/Convention Center Fund Hotel/Motel Excise Tax Fund Stadium/Conv Ctr 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Taxes - - - - Miscellaneous 74,391 73,969 64,290 96,544 Interest - 6,393 2,091 10,000 Debt Proceeds 2,000,000 - 1,109,000 - Transfers In 160,000 128,750 645,000 580,000 Department Total 2,234,391 209,112 1,820,381 686,544 Expenditures Supplies - 1,955 - 2,400 Services 33,564 33,197 31,600 33,000 Transfers & Pass Throughs 1,182,653 341,246 1,978,232 - Capital Outlays - - - - Debt Principal 45,000 94 ,500 102,600 188,550 Debt Interest 76,169 154,970 241,633 245,138 Department Total 1,337,386 625,868 2,354,065 469,088 Hotel/Motel 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Taxes 1,251,000 1 ,603,703 1,524,837 1,700,000 Interest - 5,257 1,287 21,000 Department Total 1,251,000 1,608,960 1,526,124 1,721,000 Expenditures Services 1,073,219 383,183 1,195,731 1,906,166 Transfers & Pass Throughs 937,869 327,097 540,000 955,000 Department Total 2,011,088 710,279 1,735,731 2,861,166 129 ENTERPRISE FUND PUBLIC WORKS – UTILITIES OPERATIONS DIVISION Position 2025 2026 Public Works Director 0.63 0.63 Public Works Division Manager 3.75 3.75 Public Works Operations Manager 0.7 0.7 Finance Director 0.1 0.1 Chief Industrial Wastewater Farm Ops 1 1 Chief Plant Operator 3 3 Public Works Lead 4 4 Water Plant Operator 10 10 Waste Water Plant Operator 8 8 Lab Technician 1 1 Pump Mechanic 10 10 Maintenance Worker 3 24 24 Maintenance Worker 2 4 4 Administrative Assistant II 1.46 1.46 Department Assistant II 0.72 0.72 Environmental Compliance Coordinator 1 1 Public Works Project Coordinator 3 3 Pre-Treatment Technician 1 1 Deputy Public Works Director 0.63 0.63 Construction Manager 0.94 0.94 Total 78.93 78.93 Water/Sewer Utilities Personnel Summary 130 INTERNAL SERVICE FUNDS Equipment Operation & Maintenance End Fund Balance – This fund supports the maintenance of City’s vehicles. Expenses and revenues are not only based on routine maintenance, but some unexpected expenses as well. During this biennium, a comprehensive analysis of equipment rental operations and reserve planning will occur. This analysis will address rates and fund sustainability. Equipment O&M Gov't 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Charges Goods & Services 2,924,009 4,195,232 4,594,152 5,115,400 Miscellaneous 28,988 32,456 12,000 24,500 Interest 5,060 988 - 4,000 Transfers In 7,384 - - - Department Total 2,965,441 4,228,676 4,606,152 5,143,900 Expenditures Salaries 7 98,200 954,208 1,440,041 1,7 28,7 91 Personnel Benefits 305,67 2 37 9,030 546,431 684,535 Supplies 1,334,549 1,930,389 2,37 3,550 2,515,556 Services 643,513 1,003,47 5 895,7 12 1,368,321 Department Total 3,081,934 4,267 ,103 5,255,7 34 6,297 ,203 Equipment O&M Utility 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Charges Goods & Services 194,463 309,663 501,400 400,000 Department Total 194,463 309,663 501,400 400,000 Expenditures Supplies 194,463 309,663 495,400 400,000 Services 7 ,384 - - - Department Total 201,847 309,663 495,400 400,000 131 Equipment Replacement Equipment Replacement Utility 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Charges Goods & Services 1,709,593 1,871,178 2,309,533 1,349,545 Miscellaneous 14,716 325 - - Interest 107,284 52,490.96 - 155,000 Transfers In - - - Department Total 1,831,593 1,923,994 2,309,533 1,504,545 Expenditures Salaries - - 38,363 - Personnel Benefits - - 13,183 - Supplies - 2,000 - - Capital Outlays 7 7 0,084 245,397 3,47 4,160 560,000 Department Total 770,084 247,397 3,525,706 560,000 Equipment Replacement Gov't 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Charges Goods & Services 3,091,241 4,120,325 4,042,529 1 ,893,224 Miscellaneous 71,652 51,809 - - Interest 160,884 94,968 - 1 55,000 Debt Proceeds - 266,249 - - Capital Asset Sale 467,141 32,970 - - Department Total 3,790,918 4,566,322 4,042,529 2,048,224 Expenditures Salaries - - 38,363 - Personnel Benefits - - 13,183 - Supplies 239,554 646,722 - - Services - 125,000 - - Transfers & Pass Throughs 7 10,184 758,468 - - Capital Outlays 851,625 2,560,740 4,97 5,7 36 97 7 ,566 Department Total 1,801,363 4,090,930 5,027 ,282 97 7 ,566 132 Medical Service Fund Medical/Vision 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Intergovernmental 10,157 Charges Goods & Services 11,886,175 12,753,230 15,095,372 17,654,639 Miscellaneous Rev 520,311 472,044 596,048 620,000 Interest - 36,487 210 65,000 Other Financing Sources - 8,802 100,000 - Debt Proceeds 1,710,338 - - - Department Total 14,126,981 13,270,564 15,791,630 18,339,639 Expenditures Salaries 120,285 138,015 223,830 159,000 Personnel Benefits 40,416 44,369 92,67 6 51,036 Services 12,403,602 13,524,886 15,635,7 23 17 ,7 86,27 8 Department Total 12,564,303 13,7 07 ,27 0 15,952,229 17 ,996,314 Dental 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Charges Goods & Services 921,146 995,478 1,191,472 1,280,900 Miscellaneous Rev 3,832 - - - Interest - 1,402 11,538 2,000 Debt Proceeds 137,670 - - - Department Total 1,062,648 996,880 1,203,010 1,282,900 Expenditures Services 987 ,115 97 3,868 1,227 ,423 1,586,222 Department Total 987 ,115 97 3,868 1,227 ,423 1,586,222 Position 2025 2026 HR Director 0.5 0.5 HR Business Partner 0.5 0.5 T otal 1 1 Medical/Dental Insurance Personnel Summary 133 Central Stores Fund ALL OTHER FUNDS General Capital Construction Projects Fund Central Stores 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenue Interest 240 117 - - Department Total 240 117 - - Expenditures Supplies 240 - 1,000 - Department Total 240 - 1,000 - General Capital Construction 2019-2020 Actual 2021-2022 Actual 2023-2024 Amended 2025-2026 Adopted Revenues Budgeted Beg Fund Balance Intergovernmental 1,334,380 18,17 4,908 21,958,87 7 16,417 ,564 Miscellaneous Revenue - 1,37 1,662 113,919 35,502,000 Capital Contribution Cash - Debt Proceeds (457 ,026) Transfer In 24,17 8,161 25,259,430 35,87 7 ,519 12,482,999 Deparment Total 25,055,515 44,806,000 57 ,950,315 64,402,563 Expenditures Transfers 11,860 Supplies 552,866 104,7 66 - - Services & Charges 1,87 4,548 846,095 136,822 - Capital Outlay 22,7 16,939 43,7 7 2,068 69,112,238 64,402,563 Ending Fund Balance Deparment Total 25,156,213 44,7 22,929 69,249,060 64,402,563 134 Parks And Recreation 19,777,265 A Street Sports Complex Phase 2 80,000 Big Cross Mountain Bike Trails 250,000 Burden Blvd. Soccer Complex Improvement - Phase 2 200,000 Burden Blvd. Soccer Complex Improvements - Phase 1 1,800,000 City Hall Generator 467,000 City-Wide Trail Connection and Trail Improvement 225,000 Franklin County Irrigation District Trail New Construction Phase 1 & 2 75,000 Gesa Stadium Refurbishment 2,500,000 Highland Park Improvements (Goal Posts & Restroom/Storage Building)372,642 Highland Park South Side Update 100,000 Irrigation Clock Conversion Replacement - City Wide 400,000 Land Purchases - Parks 1,500,000 Lighted Pickleball Complex - Broadmoor Area 1,560,000 Marina Dock B Replacement 2,310,000 Martin Luther King Center Renovation/Expansion - E Columbia St & S Wehe Ave 3,730,000 Memorial Park Conversion of Play Fields Refurbishment 950,000 Memorial Pool - Bubble Cover & Improvements 1,208,623 Park Security/Pathway Lighting Pilot - Various Parks 175,000 Pasco Specialty Kitchen Building Expansion 700,000 Peanuts Park North Refurbishment 150,000 Police HQ Generator 414,000 Shoreline Drive Park 60,000 Sylvester Park Enhancements 150,000 Thunderbird/Farmer's Market Parking Lot 250,000 Xeriscape Boulevards, Facilities & Parks 150,000 Transportation - Public Works 44,625,297 Ainsworth Ave Pavement Preservation 2,082,000 Annual Pavement Preservation 1,416,589 Argent Rd/Rd 88 and Sandifur Pkwy/Rd 90 Pedestrian Crossings 1,122,048 Burden Blvd/Madison Ave Intersection Improvements 360,000 Burden Blvd/Rd 60 Intersection Improvements 360,000 Burden Rd/Rd 44 Intersection Improvements 360,000 Burns Rd Extension - Missing Link 3,350,000 Clark St Improvements 420,000 Columbia St Improvements 390,000 Court St /Rd 68 Intersection Improvements 100,000 Court St Safety Improvements 110,000 I-182/Broadmoor Blvd I/C Improvements - Eastbound 100,000 I-182/Broadmoor Blvd I/C Multiuse Pathway/Bridge 11,180,000 Lewis St Corridor Improvements - 2nd Ave to 5th Ave (Phase 1)4,348,000 Lewis St Overpass 100,000 Lewis St Pavement Preservation 5,146,000 Lewis Street Underpass Demolition 3,000,000 Rd 40 E Extension 930,000 Rd 40 East Pathway 500,000 Rd 68 Widening - Chapel Hill Blvd to Argent Rd 750,000 Rd 76 Overpass 5,759,000 Sandifur Pkwy/Rd 76 Intersection Safety Enhancements 389,000 South 4th Ave Festival Street Improvements 1,080,000 Sylvester St Overpass Pedestrian/Bicycle Access 580,660 Sylvester Street Safety Improvements 100,000 W 'A' St/6th Ave Pedestrian Crossing 592,000 64,402,562Grand Total 135 Cemetery Endowment Fund Old Fire Pension Fund Old Fire OPEB Fund Old Fire Pension Fund 2019-2020 Actual 2021-2022 Actual 2023-2024 Budget 2025-2026 Adopted Revenues Intergovernmental 1 36,917 - 201,396 319,322 Miscellaneous Revenue 244,684 81,601 - 430,000 Non Oper Rev- Interest - 6,571 150 35,850 Dividends - 72,113 68,620 148,000 Debt Proceeds - 5,183 3,836 1,500 Deparment Total 381,601 165,468 274,002 934,672 Expenditures Salaries & Wages 248,902 156,386 174,118 200,984 Personnel Benefits - - - - Services & Charges 10,793 8,823 13,787 17,653 Department Total 259,695 165,208 187,905 218,637 Old Fire OPEB Fund 2019-2020 Actual 2021-2022 Actual 2023-2024 Budget 2025-2026 Adopted Revenues Miscellaneous Revenue 1 ,580,351 486,939 - 800,000 Non Oper Rev- Interest - 243 - 4,540 Dividends - 138,059 1,014,000 150,000 Deparment Total 1,580,351 625,241 1,014,000 954,540 Expenditures Salaries & Wages 532,535 87,540 175,080 - Services & Charges 69,933 2,911 153,058 152,648 Department Total 602,468 90,451 328,138 152,648 136 2025-2030 Capital Improvement Plan 137 CAPITAL PLAN AND BUDGETING The Capital Improvements Projects (CIP) section outlines capital projects planned over a six- year period, detailing estimated costs, funding sources, and scheduling. The CIP supports the City of Pasco’s evolving needs by scheduling necessary public facilities, infrastructure, and major projects. Annually updated, the CIP prioritizes projects and assists in preparing the Capital Projects Budget, though adoption by the Council does not guarantee funding for specific projects. Capital improvements will follow the adopted Capital Improvement Plan and fit within the biennial budget. The City evaluates the most cost-effective financing methods for all new projects. Each project in the CIP includes construction cost estimates, expected annual operation and maintenance impacts, and anticipated funding sources for each year of the six-year plan. Recently, the City introduced a Capital Budgeting software to digitally publish and interactively communicate its six-year capital plans. The digital Capital Improvement Plan is accessible online: https://city-pasco-wa-budget-book.cleargov.com/18579 138 ACKNOWLEDGEMENT We acknowledge the following employees for their hard work and dedication in creating the City of Pasco 2025-2026 Adopted Biennial Budget. Each member of this team has made a significant contribution to the success of this project and their efforts are greatly appreciated. Darcy Buckley Finance Director Griselda Garcia Finance Manager Veronica Perez Lead Accountant Aileen Coverdell Lead Accountant Karen Conn Staff Accountant Julie Grant Staff Accountant Susana Benitez Staff Accountant Joseph Mugo Staff Accountant Vanessa Flores Administrative Assistant II Laurel McQuade Lead Communications & Engagement Strategist 139