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2024-04-09 Council FIN MinutesFINANCE COMMITTEE MEETING April 9, 2024 Elected Officials Present Staff Present Councilmember Will Chen (Chair) Dave Turley, Administrative Services Director Councilmember Jenna Nand Kim Dunscombe, Deputy Admin. Serv. Director Council President Vivian Olson (ex-officio) Oscar Antillon, Public Works Director Councilmember Susan Paine Jeff Taraday, City Attorney Mayor Mike Rosen Beckie Peterson, Council Exec. Asst. Scott Passey, City Clerk 1. CALL TO ORDER The Edmonds City Council Finance Committee meeting was called to order virtually and in the City Council Conference Room, 121 — 51h Avenue North, Edmonds, at 5:31 pm by Councilmember Chen. 2. COMMITTEE BUSINESS 1. February 2024 Monthly Financial Report Mr. Turley reviewed: • Items of note o REET revenues are up a total of $29,109 from this point in time last year, and are $(76,389) below the cumulative budget forecast for REET revenues o Property tax is up $133,086 from this point in time last year, and EMS tax is up $48,458. This is due to the increase in the levy amount from 2023 to 2024 o Sales Tax is up $125,765 from this point in time last year, and is $(49,449) below the cumulative budget forecast for sales tax revenues o Gas Utility Tax is down $(31,159) o Development services revenue overall are up a total of $13,834 from this point in time last year o P&R program fees are up $44,199 o Total Interest Earnings for all funds are up a total of $343,899 from this point in time last year. In January 2023, there were bond maturities with a premium that would have reduced interest by $(224,500). Taking out these two factors, interest has increased $45,072 from 2023 to 2024 o We are getting close to completing the process of closing the books for FY 2023; we currently estimate that the ending fund balance for the General Fund will be approximately $2.9 million. • YTD Sales Tax Revenues for the 2 months ended February 29 are $125,766 ahead of last year and $49,449 under budget • Breakdown by business category of the change in Sales Tax revenue for March 2023 compared to March 2022 04/09/24 Finance Committee Minutes, Page 2 Change in Saks Tax Revenue: \latch 2023 compared to Match 2022 icel RtnlAus.mcn.e S S E" & Dndmr Coamw. T,rS, Brnoest Sm,m $13 OStrr ..0 Rtwl Fwd Sma ccq .iwmo^.nr Rq= ,463 .ia::ewm' & Ptaeu ,s S3,3B3 HnhE & Pencul Cne S.L26q Atccczntdmoa $505 Mmd.�.mf S10' Gwkne ($6 Ccnmrccunm (SIJ36 C)x6ec cd Atctssan (S6.553 %LW Reed 'A,WkWe Trade (S_`O c" So YTD Sales Tax Revenues by category Current Period: February 2024 Year -to -Date Total $2,034,598 Construction 1 $280,826 Acco®odation, $7,388 Clothing and Accessories, S61,501 _ Communications, S44.169 Wholesale Trade. S63,880 Automotive Repair, Amusement& Health & S48,555 Recreation, $18,794 Personal Care, r $10,517 I Business Services, S223,049 Misc Retail, S436,049 Gasoline, $0 Retail Food Stores, $69,323 Retail Automotive, $470.345 "NoManufacturing: $19,675 Others, $49,678 Eating & Drinking, $230 850 • YTD General Fund Expenses for the 2 months ended February 29 are $1,704,240 less than last year and $570,018 under budget, majority of that is fire contract. Questions and discussion followed regarding whether the purchase of additional police vehicles the city is having difficulty sourcing could be deferred, commitments made regarding vehicle purchases, vehicle purchases that could be canceled, request for monthly report to show revenues and expenditures by month in addition to YTD, concern Fund 001 is not shown in January and February monthly reports, staff's intent to provide February 2024 General Fund (001) cash flow forecast to council this week, request that actuals be shown in the cash flow forecast, compliments to departments whose expenditures are under budget, whether the REET budget should be reduced, plans for a multi - department meeting to discuss reduced REET revenue, whether expenditures could be paid outside the General Fund, including liabilities and assets in the monthly report, monthly reporting on a cash basis, reporting current encumbrances with the new ERP system, timeline for Tyler's support of Eden software, and cost benefits of delaying conversation to a new ERP system. Committee recommendation: Received for Filing 2. Electronic Funds Transfer (EFT) Policy Ms. Dunscombe referred to the revised EFT Policy in the packet. Questions and discussion followed regarding a councilmember performing an internal audit of EFTs, what the goal of a councilmember performing an internal audit would be, whether an internal audit would 04/09/24 Finance Committee Minutes, be subject to a public records request, state auditor auditing EFTs, the council's versus administration's role, and EFTs in the new ERP system. Committee recommendation: Consent agenda 3. Council Rules of Procedure Council President Olson explained the rules of procedure are to document the council's practices. She reviewed revisions to Section 13 regarding Reimbursement of Expenses including allowing the council president to pre -authorize trainings revelation to the councilmember role up to a pre -authorized budget amount per councilmember annually. Questions and discussion followed regarding support for the proposed language and individual council training budgets. Committee recommendation: Consent agenda 4. Discussion of Proposed Strategic Approach to Financial Resiliency, and Next Steps Mayor Rosen recalled the recommendation the blue ribbon panel developed and shared during the council meeting via Mike Bailey was to look for opportunities to save this year and via a budgeting by priorities process, engage citizens and identify services citizens expect from government. The council has not yet received the Fitch report regarding fire service options; each option will have cost impacts. The concept the blue ribbon panel suggested was to get through 2024 and continue to save where possible, borrow internally to get through 2025, make decision regarding fire service, identify the City's priorities and consider going to the voters in late 2025 for a levy to, 1) buy time, 2) options regarding fire/EMS, or 3) cover any gap based on budgeting by priorities. He commented on the importance of taking time to engage the community. Discussion followed regarding putting every option on the table related to robust cuts as well as raising revenues, requirements for pursuing a one year levy, inability for the City to save its way out of this situation, inevitability the City will have to ask the voters for money and ensure that ask is successful, concern about making a levy ask without adequate knowledge and engagement, and the philosophy regarding a levy ask. Councilmember Nand advised a levy request on the August primary would require a resolution and explanatory statement by May 3, pro/con committee established by May 10 and pro/con rebuttal statement by May 14. Discussion followed regarding concern with cutting vital services to vulnerable community members, raising revenues to cover services that have traditionally been provided in Edmonds, information that would be provided by a levy consultant, engaging the community in determining what is important to them, getting through 2024 and 2025 and doing public outreach in order to make decisions informed by the public, possibility of going to the voters this year regarding annexation to the RFA, how voter approval of RFA annexation would affect the 2025 budget, and council making a decision regarding options for fire/EMS service. Mr. Taraday relayed his understanding it is already too late this year to have an election certified for the City to annex into the RFA on January 1, 2025. As long as an election is certified by August 1, 2025, the City would have that option for 2026. There are at least four elections between now and then so there is no urgency regarding a decision on the RFA. 04/09/24 Finance Committee Minutes, Page 4 Discussion continued regarding whether the City has the internal capacity to borrow to fix the problem for 2025 and 2026, whether internal borrowing affects public works and maintenance projects and asking staff to do that analysis; internal borrowing from utility funds does not affect utility rates, internal loan paying interest to utilities, delay in funds contributed from the General Fund to facilities maintenance, cost of deferred maintenance with internal fund borrowing, determining what LOS residents are willing to sacrifice to avoid raising taxes such as snow response, conducting a survey to assess the community's priorities, having an outside entity conduct a statistically valid survey, difficulty reaching minority populations in a survey, and the blue ribbon panel's recommendation related to internal borrowing, budgeting by priorities, and bridging the gap. Committee recommendation: Discussion 3. ADJOURNMENT The meeting was adjourned at 6:53 pm.