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HomeMy WebLinkAboutQ4 2023 Financial Report CITY OF -*T_ j �T* UB V RL V AGENDA BILL APPROVAL FORM A 0� WASHINGTON Agenda Subject: Date: 4th Quarter Financial Report (Thomas) (30 Minutes) April 1, 2024 Department: Attachments: Budget Impact: Finance Financial Report through December 2023 Current Budget: $0 04 2023 Financial[Iodate Presentation Proposed Revision: $0 Revised Budget: $0 Administrative Recommendation: For discussion only. Background for Motion: Background Summary: The Financial Report summarizes the general state of the citywide financial affairs and highlights significant items or trends that the City Council should be aware of. The attachment provides year-to-date financial activity through December 31, 2023, based on financial data available as of February 15, 2024. Reviewed by Council Committees: Councilmember: Kate Baldwin Staff: Jamie Thomas Meeting Date: April 8, 2024 Item Number: Page 61 of 152 CITY OF . rJ7 Quarterly Financial Report Through December 2023 WASHINGTON This report provides an overview of the City's overall cash-basis financial position for the fiscal year ending December 31, 2023, reflecting data available as of February 15, 2024. The City's fiscal year is the same as the calendar year. References to budget, actual and prior year amounts reflect year-to-date numbers, unless stated otherwise. Year-to-date performance expectations are generally based on the two prior years of data. General Fund Overview Coming off a robust 2022 fiscal year, the City has embraced a new biennial budget cycle starting in 2023. Consistent with prior years, General Fund revenues have generally exceeded budget expectations and largely recovered from the impact of COVID-19. With the adoption of budget amendment#3, Ordinance 6918, in November 2023, the annual budget consists of$97.8 million in revenues and $107.9 million in expenditures -a planned decrease in General Fund balance of $10.1 million. Despite the projected decrease within the General Fund, the City outperformed expectations. A large contributor to this outcome was the implementation of a citywide Business and Occupation (B&O)tax, wherein businesses are taxed based on the value of gross receipts or square footage of occupied warehousing space, subject to certain exceptions last year. This new revenue stream achieved a total of$3.0 million in 2022 and has provided $10.6 million during the 2023 fiscal year. A large contributor to this performance is the collection of back taxes; the City anticipates that B&O revenues will decline in 2024 as payments related to prior periods decrease, and the City will reassess budget expectations for this revenue source moving forward. Due to a change in the renewal schedule for business licenses and increased discovery through B&O tax collections, the City has seen an increase of roughly$257,250 or 78.9% in business license revenue compared to last year. The City offers a wide range of recreational classes and access to the Auburn Golf Course. Greens fees at the Auburn Golf Course have remained a staple revenue source for the City, comprising roughly 50% or$1.6 million of the total culture and recreation revenues. Recreational classes have significantly increased by 25% (+$134,000)from 2022 collections, a hopeful indication that the City is returning to pre-pandemic activity levels. Overall, General Fund revenues collected through 2023 totaled $110.0 million as compared to an annual budget of$97.8 million, and were $12.2 million, or 12.5% above budget expectations. General Fund expenditures through 2023 totaled $92.7 million compared to an annual budget of $107.9 million; resulting in a $15.2 million or 14.0% underspend. GENERAL FUND REVENUES vs.EXPENDITURES THROUGH DECEMBER 2023 YID Ntuats 592.1M STD Budget S1O7.9M YTD Ytuals 51100M YUD Budget$97 8M 529 540 560 580 5100 5120 S MILLIONS Page 62 of 152 Quarterly Financial Report Through December 2023 2 Revenue: The following factors had the most significant impacts on the budget vs. actual revenue collected: • B&O Tax: Revenues collected throughout 2023 totaled $10.6 million, exceeding the annual budget by$4.9 million. Some of this favorable variance is due to the collection of tax obligation incurred in prior years and is not expected to continue at the same level in subsequent years. [page 8] • Retail Sales Tax: The sales tax report through 2023 (which is provided as an attachment to this report) reflects amounts remitted to the City of Auburn based on sales from November 2022 through October 2023. Collections throughout2023 totaled $23.0 million, a 1.5% increase from last year. Likewise, compared to the annual budget, sales tax has a favorable variance of$2.7 million or 13.1%. The increase resulted from multiple categories, particularly services and automotive. [pages 6-8] • Solid Waste Tax - External: Budgeted 2023 tax revenues totaled $60,000, however, actual revenues collected were $1.9 million. This is largely due to the collection of backdated utility tax revenues from City solid waste haulers. The City anticipates the continued collection of these backdated taxes throughout the upcoming year. [pages 8- 10] • Fines and Penalties: Collections through the 2023 year were $2.5 million in total and $2.0 million favorable to budget.A new photo enforcement program implemented by the City during the second quarter of the year has contributed $1.1 million toward the favorable variance. Other non-court fines and penalties are$1.1 million favorable versus budget expectations, mainly due to interest and penalties on B&O tax collection. [page 17] • Culture and Recreation: Returning to pre-pandemic levels, culture and recreation collected a total of $3.3 million throughout the 2023 fiscal year. This results in a favorable variance of roughly $741,500 versus budget expectations. This is largely contributed to increased revenues at the Auburn Golf Course (+$116,000) and recreational classes held at the Auburn Community and Event Center(+$134,000)from prior year totals. [page 16] Expenditures: Throughout 2023, all departments operated within budget expectations, with some variances due to the timing of professional service payments, as well as expenses related to operating supplies. Of the favorable variance to budget mentioned above, roughly$6.6 million is comprised of underspend professional services and charges, and an additional $3.1 million of underspend is from lower personnel costs largely due to position vacancies across the City.As of the compilation of this report, there were 30 vacant regular full-time positions in the City. Page 63 of 152 Quarterly Financial Report Through December 2023 3 Street Funds Overview The City's three street funds are special revenue funds wherein the revenue sources and expenditures are legally restricted. These funds are used for street capital construction projects, as well as local and arterial street repair and preservation projects. Historically, most expenditures in all three street funds occur during the second half of the year when weather conditions are optimal for pavement construction. Variances in budget and actuals between years are generally due to the schedule and level of activity on projects in the fund, and the timing of grant reimbursements and other funding. Arterial Street Fund revenues in 2023 totaled $3.0 million compared to $2.8 million in 2022, while expenditures decreased $1.0 million from $4.4 million in 2022 to $3.4 million in 2023. [pages 22-24] Local Street Fund revenues through 2023 totaled $3.2 million compared to $1.8 million in 2022. This increase is due primarily to the change in collections for the streets funds' portion of utility tax revenue, where it has historically been included as part of the Arterial Street Preservation Fund and is now in the Local Street Fund. Expenditures in 2023 totaled $210,000 compared to $2.1 million in 2022. [pages 24-25] Arterial Street Preservation Fund revenues totaled $3.6 million in 2023 compared to $4.2 million in 2022. As noted above, a change in the collections for utility tax revenues contributed to the decrease in revenues in this fund compared to the prior year. However, the fund did receive $2.2 million from a new revenue stream, the Public Transportation Sales & Use Tax. Expenditures totaled $1.6 million in 2023 compared to $4.2 million in 2022. [pages 25-27] Enterprise Funds Overview Enterprise funds within the City account for operations with revenues primarily provided by user fees, charges, or contracts for services. Throughout 2023 we noted the City's cash and investment balances increased significantly compared to the same period last year. One key factor contributing to higher interest earnings was increased interest rates and yields to maturity for the City's investment accounts compared to last year. As such, interest earnings across all funds through 2023 increased materially, totaling $1.9 million more in the enterprise operating funds compared to the prior year. The Water Fund ended 2023 with operating income of$6.6 million, which was approximately $1.1 million higher than the same period last year. Revenues for this fund were $19.3 million through 2023, compared to $16.7 million through 2022. These revenues were offset by$12.7 million in expenditures, compared to $11.2 million in 2022. In total, operating income had a $3.4 million favorable variance compared to the 2023 budget, due to favorable variances in both revenues ($1.8 million higher than budget) and expenditures ($1.6 million lower than budget). [pages 28-29] The Sewer Fund ended 2023 with operating income of$4.2 million compared to$3.4 million in the same period last year. Operating revenues increased $1.1 million from $9.7 million in 2022 to $10.8 million in 2023. This increase in revenue was partially offset by a $400,000 increase in operating expenses. Operating income had a $4.2 million favorable variance compared to the 2023 budget, driven by favorable variances in revenues ($1.2 million)and expenditures ($3.0 million). [pages 29-30] Page 64 of 152 Quarterly Financial Report Through December 2023 4 The Stormwater Fund ended 2023 with operating income of$2.9 million compared to $2.7 million in the same period last year. Operating revenues in 2023 totaled $12.5 million compared to $11.2 million in 2023. Operating expenses increased $1.0 million from $8.5 million last year to $9.5 million in 2023. Compared to the 2023 budget, operating income held a $1.8 million favorable variance due to favorable variances in both revenues ($1.3 million) and expenditures ($500,000). [page 30] The Solid Waste Fund ended 2023 with an operating loss of$559,000, compared to an operating loss of$1.2 million through the same period last year. While operating revenues increased from $25.0 million through 2022 to$28.9 million through 2023, operating expenditures also increased. Operating expenditures through 2023 were $29.5 million, compared to $26.5 million through the same period last year. Like the other enterprise funds, operating income was favorable to the 2023 budget, due to a $275,000 favorable variance in revenues and a $201,000 favorable variance in expenditures. [page 30] The Airport Fund ended 2023 with operating income of$372,000, slightly lower(-$25,000)than operating income for the same period last year. Operating revenues increased $200,000 compared to 2022, due to higher fuel sales and interest income. Operating expenditures also increased, due to increased supply costs of fuel for resale (+$49,000) and personnel costs (+$52,000). In 2023, the Airport Fund had a favorable operating income budget variance of $211,000. [page 31] The Cemetery Fund ended 2023 with operating income of$316,000, compared to $71,600 through the same period last year. This increase was driven by increased chargers for service (+$300,000), such as lot and marker sales. Operating expenses increased $116,000 compared to the prior year, primarily due to increased cost allocations for interfund services. Compared to budget expectations, the Cemetery Fund had favorable budget variances in both operating revenues ($506,000)and expenditures ($149,000). [page 31] Internal Service Funds Overview Internal service funds provide services to other City departments and include functions such as Insurance, Worker's Compensation, Facilities, Innovation &Technology, and Equipment Rental. No significant variances were reported in the Internal Service funds during 2023. [page 32] Page 65 of 152 Quarterly Financial Report Through December 2023 .., 5 General Fund Details The following chart is a detailed breakdown of the General Fund's different sources of revenue and expenditures, broken down by department: General Fund 2023 2022 2023 YE Budget vs.Actual Summary of Sources and Uses Annual YE YE YE Favorable(Unfavorable) Budget Budget Actual Actual Amount Percentage OPeratin,q Revenues rgbperty fax $ 24,016,247 I $ 24,016,247 $ 24,149,996 $ 24,293,611 $ 133,749 0.6 % Retail Sales Tax 20,344,500 20,344,500 22,999,943 22,661,066 2,655,443 13.1 % Affordable Housing Sales Tax Credit 174,963 174,963 150,476 ' '152,865 (24,487) (14.0) % Sales Tax-Rerce County Parks 125,000 125,000 133,326 135,694 8,326 6.7 % Crirninal Justice Sales Tax 2,441,300 2,441,300 3,119,532 3,031,055 678,232 2/.8 % Brokered Natural Gas Tax 150,000 1501000 319,286 219,151 169,286 112.9 % City Utilities Tax 6,776,697 6,776,697 6,238,094 5,597,438 (538,603j (7.9) % Business&Occupation Tax 5,680,960 5,680,960 i 10,625,063 3,032,830 4,944,103 87.0 % Admissions Tax ks05,74G 308,740 403,607 154,463 94,867 30.7 % Electric Tax 4,357,031 4,357,031 4,443,631 4,045,920 86,600 2.0 Natural Gas Tax '1,64857 1,638,85i' ' 5,1.5 2,77) 1,243,873 ('169,080/. (10.3) % CCable Franchise Fee 897,035 897,035 853,521 456,739 (43,514; (4.91% Cable Utility Tax 94(J,064 949,064 909,293 1,050,577 (39,77'I_; (4.2) % Cable Franchise Fee-Capital 52,484 52,484 49,201 57,254 (3,283) `6.3) % Telephone Tax ' } 300,9T4 500,974 497,600 574,500 (3,3/4) (U.r) % Solid Waste Tax(external) 60,462 60,462 1,919,923 66,999 1,859,461 3075.4 % Leasehold Excise Tax 246,514 246,514 268,560 243,472 22,046 8.9 % Gambling Excise Tax 293,300 293,300 278,202 256 r�83 (15,098� j5.11 % Taxes sub•4:otaI $ 69,014,128 $ 69,014,128 t 78,824,00 $ $7,1)h,i�� $ 9,814,902 14.2% Business License Fees $ 450,000 $ 450,000 $ 583,469 $ 326,223 $ 133,469 29.7 % Buildingg Permts 933,364 933,364 904,387 1,001,265 (28,977) (3.1) % Other Ll(tenses&Permits 1,126,000 1,128,000 1,362,462 947,992 134,462 20. % Intergovernmental(Grants,etc.) 6,655,531 6,655,531 5,890,408 6,906,122 (765,123) (11.5) % dtO as for Selvltes: General Government Services 4,863,272 4,863,272 4,454r072 3`501,518 (409,200) (8.4) % Public Safety 1,057,000 1,057,060 1,2114,11i 1364,972 161,1)7 15.2% Development Services Fees 1,130,517 1,130,517 1,141,917 1,331,856 11„400 1.0 % Culture and Recreation 2,524,335 2,524,335 3,265,931 2,702,879 741, 96 29.4 % Fines and Penalties 422.975 422.975 2 458.44;3 390/,200 _2,035,468 481.2 % Fees/Charges1Fines sub.notar $ 19,164,994 I $ o,,,,, Y/r ,d ',,27FI,205 $ 'O,973,i)26 $ 2,h4,1'i1 11.0 % interest arid lnvestreerriEarnings $ 366,70C d 365,+00 v '1,500,200 $ 657,43'7 $ i,233,S0U 336.4% Rents and Leases 1,109,234 1,109,234 1,229,495 1,139,940 120,261 10.8 % Contributions and Donations 31,000 31,000 29,420 24,533 (1,580) (5.1) % Other Miscellaneous 299,110[/ 299,110 457,129 529,975 158,019 52.8 % Transf rs 7,703,978 ,542 3,033,653 Insurance R r Recoveries C pitahitlA&lad Operating s$ s,1'$19 ( $ �,136.d 1' y249.217 $ :1(j ,473 $ (1 11223 (17.5) % Insurance Recoveries-Capital& I 1 � 136.9 0 249.217 1 473 317 82.0 R V �(t1 2.9% fotai Operating Revenues ) 97,826,044 $ 97,826,044 I $410,630,23o b 90,736,2-29 I $ 12,204,'r94 ' 12.5% Operating Expenditures Council&Mayor $ 1,415,188 $ 1,415/188 $ 1,374,567 $ 1,494,416 $ 40,621 2.9 % Administration '1,280,462 '1,280,462 1,265,848 1,'106,061 14,614 1.1 % Human Resources 2,474,011 2,474,011 2,382,597 2,068,191 91,414 3.7 %Fn 9ance t Court&Probation - I 5 288,338 3'636,838 550,274 2,3'14,646 48'2 564 1J:J �/ lvtunici 23 5,288 323 4,689 061 3,727 235 599,262 11.3% C,ii.y kriorneyeI�. d',451,:5t 7,461,952 6Abi,324 4,647,8'10 t 3(J2,ti2b 8 i % Community Development 9,931,959 9,931,959 8,128,085 7,080,486 1,803,874 18.2% pp 705,913 705,913 514,218 - 191,695 27.2% SCORE �5,600,000 316 5,600,000 35,169,317 5,592,261 430,683 7.7 % Jail tt Pollee, c35 2,392,289 6.6 X, Public Works 4,804,092 4,804,092 4,592,820 3,653,173 211,272 4.4% Parks,Arts&Recreation 16,166,376 16,166,376 15,532,210 14,114,895 634,166 3.9% Streets 4,7 9,219 4,769,219 4,366,872� 3,715,658 4021347 8.4 % 43 p ) p' res $107,873,707 t f6ib' &767 4 '92, L 940 t $101 954,111 5,14 ,767 r 14.0% Non-De artme I 1;1 r Total O ii�ai.(r� G: r:+1c,a+u8,94U 954,'111 $ 15,144,767 I 14.0 Page 66 of 152 Quarterly Financial Report Through December 2023 6 Revenue The combined total of property, sales and use, utility, gambling, and admissions taxes provides over 70% of all resources supporting general governmental activities. Licenses, charges for services, intergovernmental revenue (grants, state shared revenue, etc.) and fines contribute a further 20% of total revenue to the General Fund. The remaining 10% is comprised of a combination of different sources that are considered to be one-time resources. The following section provides additional information on the most significant tax resource streams. Property Tax collections throughout 2023 totaled roughly $24.1 million. This is compared to an annual budget of$24.0 million. Coinciding with the due dates for County property tax billings, the City collects these revenues during the months of April, May, October, and November. Property tax accounts for roughly 30.6% of all taxes collected within the General Fund and is the highest grossing source of revenue. Since 2016, we have seen annual increases versus the prior year totals in a consistent fashion and project this trend will remain true in 2024. Property Taxes Budget —0—2023 YE Actual —2022 Actual o $24.1 Pad S25.0 $20.0 O $15.0 $10.0 $5.0 $0.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Retail Sales Tax collections through 2023 totaled $23.0 million, representing taxes remitted to the City of Auburn based on sales from November 2022 through October 2023. Overall, collections were roughly$339,000 higher throughout the 2023 fiscal year compared to the prior year, with strong performances in the automotive (+$157,400), services (+$330,000), and construction (+$122,000) industries more than offsetting slight decreases in most of the remaining industries. Within the retail trade sector, sales tax revenues generated from sporting goods, hobby, and music retailers have seen a significant increases versus last year totals and correlate with the increase in culture and recreation charges for service revenues. The notable exception to the trend of stable or increased collections is the manufacturing industry: due to a large one-time contribution in Q1-2022, annual manufacturing collections are down $218,000 (29.1%)from last year. Page 67 of 152 Quarterly Financial Report Through December 2023 7 The City set the 2023 budget expectation for sales tax in the amount of$20.3 million and sales tax revenues reported a grand total of$23.0 million, noted above, thus providing the City a $2.7 million favorable variance to the budget. The City has seen year-over-year increases dating back to 2014, although the rate of growth has been inconsistent. The City projects another increase for the upcoming year. Retail Sales&Use Tax =2023 Budget —0-2023 YE Actual —2022 Actual 5230 M 520 0 $15.0 O $10.0 $0.0 - Jan Feb Mar Apr May lun Jul Aug Sep Oct Nov Dec Retail Sales& Use Tax $25.0 $21.6 $22.7 - $23.0 $20.0 $18.8 $18.9 o $15.9 $15.0 510.0 $5.0 $0.0 2018 2019 2020 2021 2022 2023 YTD Note: The increase in sales tax revenue from 2018 to 2019 was primarily due to a policy change whereby sales tax on construction revenue is retained in the General Fund;previously, a portion was transferred to street funds. Of the year-over-year increase in sales tax revenue depicted in the graphic above from 2018 to 2019, $2.2 million of the $2.9 million increase was due to this policy change. Page 68 of 152 Quarterly Financial Report Through December 2023 8 The following table breaks out the City's retail sales tax collections by major business sector. Comparison of Retail Sales Tax Collections by Group Through December 2023 2022 2023 I Change from 2022 Component Group YE Actual YE Actual Amount Percentage Construction $ 2,828,362 $ 2,950,423 $ 122,061 4.3 % Manufacturing 749,1101 531,277 (217,833) (29.1) % Transportation & Warehousing 249,466 224,807 (24,659) (9.9) % Wholesale Trade 1,578,405 1,668,471 90,066 5.7 Automotive 4,780,001 4,937,407 157,407 3.3 % Retail Trade 6,653,1031 6,573,018 (80,084) (1.2) % Services 5,395,0101 5,724,661 329,651 6.1 % Miscellaneous 427,610 1 389,879 (37,732) (8.8) % 1 YE Total $ 22,661,066 I $ 22,999,943 $ 338,877 1.5 % Business & Occupation (B&O) Taxes were implemented by the City at the beginning of 2022. As previously mentioned in the General Fund Overview, B&O taxes are collected from businesses based on the value of gross receipts or square footage of occupied warehousing space, subject to certain exceptions. While the City receives collections throughout the year, B&O taxes are generally collected on a quarterly basis. Through the discovery process, where the City reconciles against the State's Business Licensing System (BLS), the City was able to identify taxes collectable from prior periods, significantly contributing to the performance of this revenue. Overall collection throughout the 2023 year totaled $10.6 million versus a budgeted amount of $4.9 million. Business & Occupation Tax ( 2023 Budget —2022 Actual —0-2023 YE Actual $12 $10.6 M $10 $8 O $6 $4 $2 $- Jan F-L Mar Apr May lun Jul Aug Sep Oct Nov fr-, Utility Taxes consist of interfund taxes on City utilities (Water, Sewer, Storm, and Solid Waste) and taxes on external utilities (Electric, Natural Gas, Telephone, and Solid Waste). Effective January 1st, 2023, Council approved an increase of the City utility tax rate from 10.0% to 11.5%. However, the additional revenue generated from this increase was dedicated to funding City street projects, while the General Fund portion remained at its previous 9.0%. Page 69 of 152 Quarterly Financial Report Through December 2023 9 Overall, utility taxes increased by$3.9 million or 24.4% during the Q4-2023 timeframe, resulting in utility taxes being $15.8 million in total and favorable to budget by roughly$1.4 million. This is largely due to the City collecting backdated utility taxes from solid waste haulers, creating a favorable variance of$1.9 million versus budget within the Solid Waste (external) category. As mentioned in previous reports, the City is no longer applying interfund utility tax to the pass- through revenue from King County Metro sewerage charges, causing an unfavorable variance to budget within this category. Additionally, beginning January 2023 external utility taxes are collected on either a quarterly or annual basis, rather than monthly. Although there have been collections throughout the year, the City saw a change to the timing of these revenues in 2023, which will affect year-over-year performance comparisons and into 2024. The table and below charts demonstrate the various utility tax revenues and show actual revenues compared to budget. Utility Tax by Type Through December 2023 2022 2023 2023 I 2023 vs.2022 Actual 2023 vs. Budget Utility Tax Type YE Actual YE Budget YE Actual i Amount I Percentage Amount I Percentage I i City Interfund Utility Taxes $ 5,597,438 $ 6,776,697 $ 6,227,463 $ 630,025 11.3% $ (549,234) (8.1)% 'Electric 4,045,920 4,357,031 4,443,631 397,711 9.8% 86,600 2.0% 'Natural Gas 1,243,873 1,638,857 1,469,777 225,904 18.2% (169,080) (10.3)% 'Telephone 574,500 500,974 497,600 (76,901) (13.4)% (3,374) (0.7)% 'Solid Waste(external) 66,999 60,462 1,919,923 1,852,924 2,765.6% 1,859,461 0.0% 'Brokered Natural Gas 219,151 150,000 319,286 100,134 45.7% 169,286 112.9 'Cable 1,050,577 949,064 909,293 (141,284) (13.4)% (39,771) (4.2)0/0 -YE Total $ 12,798,459 $ 14,433,085 $ 15,786,972 $ 2,988,513 23.4% $1,353,887 9.4% Utility Tax L�2023 Budget -0-2023 YE Actual -2022 Actual $18.0 - $15.8 M S16.0 $14.0 • • 512.0 • $10.0 • • 11111111 $80 $6.0 $4.0 • $2.0 • ' i $0.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Page 70 of 152 Quarterly Financial Report Through December 2023 10 Utility Tax Revenues $19.0 515.8 $17.0 $15.0 $13.2 $12.8 :::: $9.0 $7.0 $5.0 $3.0 2018 2019 2020 2021 2022 2023 Note: Of the total utility tax levied, 2.5% of Water/Sewer/Storm/Solid Waste tax and 1.0% of other utility tax is allocated to City streets funds and is not reflected in the General Fund's portion discussed here. The large increase from 2019 ($10.9 million) to 2020 ($12.7 million) is attributed to the City's decision mid-2020 to reallocate 1.0%previously dedicated to the Arterial Street Preservation Fund to support General Fund operations, due to the uncertainty of the economic impacts of COVID-19. The Arterial Street Preservation Fund's 1.0% was reinstated in 2021, but 2021 collections continued to increase due to an increase in the City's internal utility tax rate from 7.0% to 10.0% effective in 2021. An Admission Tax of 5.0% is placed on charges for general admission, season tickets, cover charges, etc. Revenues from admission taxes are generally collected on a quarterly basis as depicted on the chart below. Admission tax revenues of$403,500 were collected throughout the fiscal year of 2023 and were significantly higher (161.3%) than through 2022. In addition, admission tax revenues resulted in a favorable variance of$95,000 throughout 2023. This is partially due to lingering effects of the COVID-19 pandemic in the early part of last year, resulting in generally lower admissions in early 2022. The City projects admission taxes will return to pre- pandemic levels over the next biennium. Page 71 of 152 Quarterly Financial Report Through December 2023 11 Admission Tax p202.3Budget —0-2023YE Actual —2022Actual $500.0 $403 6 K $400.0 • • $300 0 ` • 0 $2000 • - $100.0 • • ' $0.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Note: The decrease in admission tax revenues in November 2022 was due to a change in accounting wherein admissions tax ceased to be charged to the City's Golf Course operations. Gambling Tax applies to all card games, punch board games, pull tabs, bingo games, raffles and amusement games played within City limits. The majority of gambling tax revenues are collected from amusement games (36.9%) and card games (53.8%). The primary driver of the $15,100 unfavorable variance to budget was card games revenues, which were down 22.5% from the prior year mainly due to the timing of quarterly payments. Despite the unfavorable variance to budget, overall collections exceeded 2022 by$21,500, mainly due to a doubling of the amount collected for amusement games compared to last year. Gambling Tax $400.0 =2023Budget --0--2023YEActual —2022 Actual $278.2 r, 5300.0 • • • 0 a $200.0 • 0 • $100.0 • $0.0 • Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 1,- Page 72 of 152 Quarterly Financial Report Through December 2023 12 Licenses and Permits include business licenses, building permits, plumbing, electric and other licenses and permit fees. Building permit fees and business licenses make up approximately 70% of the annual budgeted revenue in this category. The annual Business License renewal fee for businesses located within the City is $103. Previously, all businesses were on calendar year renewal cycle, meaning that the majority of business license revenue was collected in November and December for existing businesses renewing their licenses, which is reflected in the large peak in the chart below in 2022. As of September of 2022, businesses licenses are on an annual renewal cycle that begins on the date the business was originally granted a license. This has smoothed out revenue collection throughout the year, which can be seen in the chart below as a more linear progression of overall collections totaling $583,500, compared to $326,200 throughout 2022. Changes in the timing of collections will affect year-over-year performance comparisons for 2023 and into 2024. Collections in 2024 are projected to be on par with 2023, due to increased discovery through B&O tax collections and use of the State's Business Licensing System (BLS). Business Licenses ©2023Budget —0-2023YE Actual —2022Actual $650.0 $600.0 $583.5 K $550.0 S500.0 • $450.0 • $400.0 • • $350.0 • $300.0 • an • • O S250.0 $200.0 • $150.0 -• $100.0 $50.0 $0.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Business License Revenues $700.0 $600.0 5583 $5000 $424 $400.0 $336 $354 o $32 L F- $300.0 $353 $200.0 $100.0 $0.0 2018 2019 2020 2021 2022 2023 Page 73 of 152 Quarterly Financial Report Through December 2023 13 Building Permit revenues collected during 2023 totaled $933,350 resulting in an unfavorable variance to budget by$29,000, and a year-over-year decrease of$97,000. A large contributing factor for this unfavorable variance is the decreased valuation of construction permits on mixed- use, subdivision, and institutional builds throughout 2023, despite a higher volume of permits being issued this year than last year. Building Permits $SE 02023Budget --0-2023YEActual —2022Actual $1.4 $1.2 $1.0 $0.9 M ::: 401 ✓ • $0.4 • . • • $0.2 • • $0.0 1 2 3 4 5 6 7 8 9 10 11 12 Building Permits $2.5 $2.0 o $1.5 $l.o $0.9 $1.0 $1.2 $0.8 $1.3 C+ $0.9 $0.5 $0.0 2018 2019 2020 2021 2022 2023 YID Page 74 of 152 Quarterly Financial Report Through December 2023 14 Intergovernmental revenues include grants and stimulus monies (direct and indirect federal, state, and local), revenue from the Muckleshoot Indian Tribe (MIT) compact, as well as state shared revenues. Collections through the fiscal year 2023 totaled $5.9 million and were $765,000 unfavorable to budget expectations. Federal, state, and interlocal grants represent over half of this variance; these revenues are generally received on a cost reimbursement basis, and subject to the timing of reimbursable activities. The City has collected roughly$1.4 million from MIT through 2023 and is roughly$315,000 below budget expectations. Due to timing, some of the 2023's collected total is comprised of the final payment of the 2022 compact request. Due to timing lags, the City expects the remaining amount owed to be received in the beginning of 2024. Streamlined sales tax collections in 2023 are below 2022 collections due to the state Department of Revenue's recalculation of the payment rate: effective July 2022, payments are calculated as 80% of the payment made in the same quarter of the previous year. Mitigating some of the unfavorable variance is higher collections of liquor excise tax. Intergovernmental Revenues(Grants,Entitlements&Services) Through December 2023 2022 2023 2023 I 2023 vs.2022 Actual 2023 vs.Budget Revenue YE Actual YE Budget YE Actual Amount I%Change Amount I %Change I i Federal Grants $ 91,598 $ 112.200 $ 41,589 $ (50.009) (54.6)% $ (70,611 (62.9)% State Grants 58,034 375,694 252,504 194,470 335.1% (123,190k (32.8)% Interlocal Grants 626,873 465.907 1 258,273 (366600) (58.8)% (207,634V (44.6)% Muckleshoot Casino Services 2,004,520 1.718.458 1 1,404,116 (600,404) (30.0)% (314,342V (18.3)% One-Tme Allocation(SB 5092) - - - - State Shared Revenues: I Streamlined Sales Tax 900,142 977,156 I 720,114 (180,028) (20.0)% (257,042)1 (26.3)% Motor Vehicle Fuel Tax 1,116,525 1,144,410 1 1,106,315 (10,210) (0.9)% (38,095V (3.31% Criminal Justice-High Crime 279,262 284,823 1 284,886 5.624 2.0% 631 0.0% Criminal Justice-Population 30,272 20,345 I 32,098 1,827 6.0% 11,7531 57.8% Criminal Justice-Special Proq. 134,662 91.550 I 133,769 (894) (0.7)% 42.2191 46,1% Marijuana Excise Tax 243,619 172.928 235,532 (8,087) (3.3)% 62.6041 36.2% State DUI 10,087 12,207 I 6.141 (3.946) (39.1)% (6,066)1 (49.7)% Fire Insurance Tax 104,661 89,700 1 114,235 9,574 9.1% 24.5351 27.4% Liquor Excise 622,746 488.268 622,267 (479) (0.1)% 133,9991 27.4% Liquor Profit 683,122 701.885 678,570 (4,552) (0.7)%I (23,3151' (3.3)% Total State Shared: 4,125,098 3,983.272 3,933,926 (191,171) (4.6)%I (49,34611 (1.2)% YE Total $ 6,906,122 $ 6,655,531 $ 5,890,408 $ (1,015,714)1 (14.7)% $ (765,123)I (11.5)% Intergovernmental Revenues (Grants, Entitlements&Services) $12.0 Sio.2 $1.0.0 ':\\\ $8.0 $6.9 Q $6.3 $6. =$6.3 \ 55.9 2 $6.0 $4.0 $2.0 $0.0 2018 2019 2020 2021 2022 2023 Note: 2020 revenue was higher than normal due to the receipt of$3.8 million in federal CARES grant money from the Department of Treasury. Page 75 of 152 Quarterly Financial Report Through December 2023 15 Charges for Services consist of general governmental service charges, public safety charges, development service fees, and culture and recreation fees. Total charges for services collected through the 2023 fiscal year were $10.1 million and were roughly $505,000 (or 5.3%) more than expected for the year, mainly due to exceptional performance at the Auburn Golf Course. Charges for Services by Type Through December 2023 2022 I 2023 2023 2023 vs.2022 Actual 2023 vs. Budget Revenue YE Actual I YE Budget YE Actual Amount !Percentage Amount !Percentage General Government $ 3,501,518 $ 4,863,272 $ 4,454,072 $ 952,554 27.2% $ (409,200)', (8.4) !Public Safety 864,972 1,057,000 1,218,117 353,145 40.8% 161,1171 15.2 % !Development Services 1,331,856 1,130,517 1,141,917 (189,940) (14.3)% 11,4001 1.0% !Culture&Recreation 2,702,879 2,524,335 3,265,931 563,052 20.8% 741,5961 29.4 % YE Total $ 8,401,224 $ 9,575,124 1 $ 10,080,036 $ 1,678,812 20.0 % $ 504,912 5.3 % The General Government revenue category primarily includes the interfund assessment for support departments (Finance, Human Resources and Legal). Operating costs for these departments are charged to the respective General Fund home department and the portion of those costs that provide citywide benefit are recouped from other funds via interfund charges. General Government revenues also include fees for passport services, reimbursement from cities participating in the South King Housing and Homelessness Partners (SKHHP), as well as revenues related to certain transportation projects. The unfavorable variance of$409,200 is largely due to a $300,000 SKHHP project originally scheduled for 2023 which was pushed back to 2024; the receipt of those reimbursement revenues would have mitigated roughly 85% of the variance. Furthermore, the City expected to collect revenues for the salt/sand storage (carried forward from 2022) per an interlocal agreement during the second half of the year, however, the City now expects to receive these revenues in 2024. Public Safety revenues mainly consist of revenues for law enforcement services, which are extra duty security services whereby police officers are contracted for, and reimbursement is made by the hiring agency. This category also includes reimbursements from the Muckleshoot Indian Tribe (MIT)for a full-time dedicated police officer and associated expenditures as well as funds collected from the Auburn School District for services rendered. Public safety revenues collected throughout the fiscal year of 2023 totaled approximately$1.2 million and saw a $353,000 increase from 2022 totals. However, 2022 totals were the lowest the City collected since 2016; 2023 revenues are more aligned with historical totals. Revenues generated from DUI emergency response fees represent$125,000 or 10.3% of the total amount collected and report a $120,000 favorable variance, which is a significant increase from prior years. Extra duty officer revenues during the fourth quarter saw a catch-up of collections for the year and 2023 ended roughly $34,000 favorable to budget. Resulting from these favorable variances, the overall total was $161,100 favorable to budget expectations. Development Services fee collections consist primarily of plan check fees, facility extension charges, and zoning and subdivision fees. Through 2023, development service fees collected totaled $1.1 million and were $11,400 favorable to budget expectations. Major contributors to this variance were plan check fees, where construction documents require review per Section 106.3 of the Construction Administrative Code (+$75,000) and zoning and subdivision (+$35,000) throughout the 2023 year. FAC linear charges (fees assessed on projects that require extension of public facilities) offset the favorable variance by roughly$70,500. Along with FAC linear charges, all fees in this category are down year-over-year, this is an effect of the revenue regressing to the mean after an exceptional year of high collections in 2021. Furthermore, other Page 76 of 152 Quarterly Financial Report Through December 2023 16 environmental services recorded zero activity throughout the year, also mitigating a portion of the favorable variance. Development Service Fees 520 $1.6 51.5 $1 3 $1.1 51.1 $09 $]. g 51.0 505 $0.0 2018 2019 2020 2021 2022 2023 Most of the Culture and Recreation revenues are derived from greens fees and pro shop sales at the Auburn Golf Course, recreational classes, ticket sales at the Auburn Avenue Theater, senior programs, and special events. Overall, Culture and Recreation revenues outperformed budget expectations by $741,500, or 29.4%, with nearly 70% of revenues coming from greens fees and recreational classes. Revenue from greens fees have increased $116,000 or 8.0% over last year and are favorable to budget by$420,000 due to a 3-4% increase in greens fees prices and good weather during the spring and summer months. The golf course generated its highest revenue total since its inception, bringing in $2.0 million in total. The outlook for 2024 for the golf course remains high as the City continues to see linear growth. Recreation class revenues have increased by$135,000 or 24.6% from the prior year, and ticket sales for performances held at local school venues (previously held at the Auburn Avenue Theater) have increased by $55,000 or 98.1%. Furthermore, the Senior Center saw an increase in visits and generated $50,500 more than previous years. A portion of the increase is attributable to lower revenues due to COVID-19 restrictions in place during 2022, which have since been removed. Culture & Recreation $4.0 =2023Budget —O-2023YEActual —2022Actual $3.5 53.3 M $3.0 $2.5 •' $2.0 $1.5 • $1.0 • $0.5 • ♦ $0.0 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov De( • Page 77 of 152 Quarterly Financial Report Through December 2023 17 Fines & Penalties include civil penalties (such as code compliance fines), parking and traffic infraction penalties, criminal fines (including criminal traffic, criminal non-traffic, and other criminal offenses) as well as non-court fines such as false alarm fines. The table below shows a detailed breakdown of the different types of fines and penalties collected by the City. Fines&Penalties by Type Through December 2023 2022 2023 2023 2023 vs.2022 Actual 2023 vs.Budget Month YE Actual YE Budget YE Actual Amount Percentage Amount Percentage Civil Penalties $ 5,305 $ 10,000 I$ 1,786 $ (3,519)1 (66.3)% $ (8,214)1 (82.1)% Civil Infraction Penalties 155,657 131,750 I 138,221 (17,435)1 (11.2)% 6,4711 4.9% Photo Enforcement 902 3,000 I 1,817 9151 101.5% (1,183 N/A% Parking Infractions 81,878 91,225 I 1,134,673 1,052,7951 1,285.8% 1,043,4481 1,143.8%I Criminal Traffic Misdemeanor 27,475 40,000 I 33,449 5,9741 21.7% (6,551)1 (16.4)%I Criminal Non-Traffic Fines 37,933 41,000 I 49,967 12,0341 31.7% 8,9671 21.9% Criminal Costs 25,457 30,000 1 11,350 (14,108) (55.4)% (18,6501I (62.2)% Non-Court Fines&Penalties 55,593 76,000 I 1,087,180 1,031,5871 1,855.6% 1,011,180 1,330.5% 1 YE Total $ 390,200 $ 422,975 I$ 2,458,443 $2,068,2431 530.0% $2,035,4681 481.2% Total revenues collected throughout 2023 were $2.5 million as compared to a budget of $423,000 and were 481.2% above budget expectations. This was primarily due to higher-than-expected collections of fines related to a new photo enforcement program, which are classified as parking infractions. With the implementation of this new program, the City continues to expect significant increases in revenue in this category. Furthermore, the City received an influx of non-court fines & penalties in July and August due to back-pay of B&O taxes from contracted City haulers. Municipal Court fines and penalties account for 81% of the budgeted revenue in this category, but only account for 50% of revenue actually collected. The City contracts with the King County Court to operate its municipal court services; the number of hearings,judgements, and revenue activity began decreasing in 2019 and has continued to dramatically decrease since that time; the City saw the same result in 2023. This decrease is now being offset by collections of B&O and other tax interest within non-court fines & penalties. As illustrated below, there was a spike in 2023 revenues and the City anticipates a decrease of both B&O penalties and photo enforcement fines to bring the total revenues in line with budget expectations in 2024. Fines&Penalties $3.0 $2.5 $2.5 o $2.0 a $1.5 51.0 $0.9 $0.9 $0.6 $0.4 $0.4 $0.5 $0.0 2018 2019 2020 2021 2022 2023 Page 78 of 152 Quarterly Financial Report Through December 2023 18 Miscellaneous Revenues consist of investment earnings, income from facility rentals, revenue collected for golf cart rentals at the Auburn Golf Course, contributions and donations, and other income including the quarterly purchasing card (P-card) rebate monies. A breakdown of the most significant miscellaneous revenue categories is listed in the table below. Miscellaneous Revenues by Type Through December 2023 2022 2023 2023 2023 vs.2022 Actual 2023 vs.Budget Month YE Actual YE Budget YE Actual Amount Percentage Amount Percentage Interest&Investments $ 657,437 $ 366,700 $ 1,600,200 $ 942,763 143.4 % $ 1,233,500 336.4 % Rents&Leases 1,139,940 1,109,234 1,229,495 89,555 7.9 % 120,261 10.8 % Contributions&Donations 24,533 31,000 29,420 4,888 19.9 % (1,580) (5.1)% Other Miscellaneous Revenue 529,975 299,110 457,129 (72,846) (13.7) % 158,019 52.8 % YE Total $ 2,351,885 $ 1,806,044 $ 3,316,244 $ 964,360 41.0 % $ 1,510,200 83.6% Revenues collected throughout 2023 in this category totaled $3.3 million and were $1.5 million favorable to budget. Of the favorable variance to budget 81.7% was comprised of interest and investment collections, far exceeding budget expectations due to higher-than-expected interest rates and the timing of investment maturities. Looking forward to 2024, the City has multiple investments maturing throughout the year which will impact the amount collected. The "Other Miscellaneous Revenue" sub-category, while $72,850 less than the same timeframe last year, was nonetheless favorable to the annual budget by$158,000. This sub-category includes $78,750 in revenue related to a national opioid settlement distribution program, purchase card rebates of$168,500, and $90,100 in charges for security services at the Supermall. The rents and leases sub-category includes prepayments for facility rentals, golf cart rentals, and the restaurant lease at the golf course. During the second and third quarters, the City saw an influx of facility rentals, which coincides with prior years as the weather generally becomes more favorable for gatherings. The City collected less during the fourth quarter of the year versus prior years, however, ended the year with a favorable variance to budget of$120,250. Large contributors to the favorable variance were facility rentals (+$73,350), golf cart rentals (+$52,900), and sub-leases (+$25,125). Miscellaneous Revenues $4.0 $3.3 $3.5 $3.0 o S2.5 $2.4 2 52.0 $1.8 $1.8 51.5 $1.2 51.0 r� 50.5 Sao 2018 2019 2020 2021 2022 2023 Page 79 of 152 Quarterly Financial Report Through December 2023 19 OTHER FUNDS Real Estate Excise Tax (REET) revenues are taxes on the sale of both commercial properties and single-family residences. These collections are received into the Capital Improvement Projects Fund and used for governmental capital projects. REET revenues collected during the 2023 fiscal year total $3.5 million, which is roughly $1.3 million or 36.9%favorable to budget expectations. However, as reflected in the table below, REET revenues collected were significantly lower(32.8%) than in 2022. Continued borrowing rate increases and slower housing markets contribute to the decreased revenues during 2023. Real Estate Excise Tax 7,,, r-1202.3 Budget —0-2023 YE Actual —2022 Actual $6.0 $5.0 $4.0 $3.5M O • $3.0 •- • • $2.0 • _f • • •' $1.0 . $0.0 — 1 2 3 4 5 6 7 8 9 10 11 12 Shown in the table below, REET collections have generally been lower in most months of 2023 than their counterparts in 2022. In context, 2021-2022 saw the highest collection of REET revenue since 2015, largely due to high-value purchases made by multiple corporations and a large land purchase made by an investment group. As mentioned above, lower REET collections in 2023 represent a cooling market as interest rates increased dramatically after a period of low interest rates and historic inflation. Page 80 of 152 Quarterly Financial Report Through December 2023 20 Real Estate Excise Tax Revenues Through December 2023 I 2022 2023 2023 2023 vs. 2022 Actual 2023 vs. Budget Month YE Actual YE Budget YE Actual Amount Percentage Amount Percentage 1 $ 235,988 $ 112,068 $ 231,316 $ (4,672) (2.0) % $ 119,248 51.6 % 2 320,851 112,249 229,810 (91,041) (28.4) % 117,561 51.2 % 3 855,713 254,131 335,109 (520,604) (60.8) % 80,978 24.2 % 4 530,857 182,134 470,605 (60,253) (11.4) % 288,471 61.3 % 5 710,134 208,433 100,896 (609,238) (85.8) % (107,537) (106.6) % 6 479,225 184,014 288,285 (190,941) (39.8) % 104,271 36.2 7 331,971 177,876 396,981 65,009 19.6 % 219,104 55.2 % 8 497,294 215,051 319,792 (177,502) (35.7) % 104,741 32.8 % 9 587,492 304,681 326,357 (261,135) (44.4) % 21,676 6.6 % 10 316,404 141,042 355,405 39,001 12.3 % 214,364 60.3 % 11 I 202,461 134,581 264,919 62,458 30.8 % 130,338 49.2 % 12 I 191,104 202,039 213,893 22,789 11.9% % 11,854 5.5 % YE Total I $ 5,259,495 $ 2,228,300 $ 3,533,368 $ (1,726,127) -32.8% $ 1,305,068 36.9% I I 1 Real Estate Excise Tax Revenues $7.0 $6.0 $6.0 $5.2 ,,° "-.r . $5.3 ::: . $4.2 ,y` o $3.9� c, $3.5 i? $3.0 $2.0 $1.0 $0.0 2018 2019 2020 2021 2022 2023 Page 81 of 152 Quarterly Financial Report Through December 2023 21 American Rescue Plan Act (ARPA) Fund In March 2021, the American Rescue Plan Act (ARPA)was signed into law, with the intent of mitigating the economic impacts related to COVID-19. Through ARPA's State and Local Government Fiscal Recovery Fund program, the City was allocated $14.75 million in funding. Council approved the City's acceptance of ARPA funds in Resolution #5608, and the general spending categories of those funds (as determined by a Council ad hoc committee) in Ordinance 6832. The City's plan for using ARPA funding is to mitigate the cost of providing public safety services throughout the City. Since receiving the funding, the City has been able to offset $10.5 million in public safety expenditures, as shown in the table below and reported to the Department of the Treasury. ARPA FUNDING STATUS Total ARPA Funding Received 14,751,232 ARPA Funding Used to Mitigate Public Safety Costs 10,532,484 ARPA Funding Remaining 4,218,748 As a result of the cost mitigation provided by the ARPA funding, the City has been able to allocate General Fund funding toward projects approved by the Council ad hoc committee. Throughout 2023, the City has been able to spend $1.7 million, for a total of$4.3 million since 2021 on the following projects: 2023 Lifetime Spend 2024 Title Budget Q4Spend (includes this quarter) Remaining Budget Completed Projects 1,450,000 - 1,668,601 - Body Cameras 586,400 - 550,325 36,075 Vaccination Incentive Program 47,500 - 34,980 12,520 Neighborhood Street Light Program 500,000 27,936 86,387 413,613 Human Services Grants Includes Admin 1,000,000 189,624 441,041 558,959 420,000 Dykstra Foot Bridge 400,000 - 10,357 389,643 Minor Improvements to Qualifying Neighborhood Parks 100,000 - 28,626 71,374 Limited Term Employee(LTE):Grants Coordinator 420,000 - 118,729 301,271 145,000 Paving Gravel Roads 636,866 1,403 23,539 613,327 Translation Services 75,000 - 1,685 73,315 Auburn Way South Median Landscape Replanting/Irrigation 50,000 - 40,187 9,814 Auburn Way South Roundabout 150,000 226 789 149,211 Emergency Housing Voucher Program 2,000,000 83,018 272,350 1,727,650 875,000 Encampment Cleanup 500,000 138,195 445,392 54,608 Downtown Sidewalk Replacement on Main Street and B Street Plaza Surface Replacement 1,643,266 14,422 45,660 1,597,606 1,081,866 Broadband Grants to Hardest Hit Communities 180,000 42,563 185,348 (5,348) Community Violence Intervention Programs(Drone,SPIDR Tech) 313,600 38,212 248,227 65,373 Arts Culture Center Renovations 100,000 - - 100,000 Signing Bonuses for Police Lateral Hires 200,000 32,647 142,413 57,588 Other Projects(not started) 4,480,000 - - 4,480,000 Total: 15,051,232 568,244 4,344,635 10,706,598 4,246,866 The Minor Improvements to Qualifying Neighborhood Parks project will be able to make minor improvements in qualifying neighborhood parks. Numerous parks in our low-income census tracts are in need of modernization that will assist in getting these community members outdoors and experiencing a better quality of life. To date this project has spent$28,626 which provided new fencing around Forest Villa Tot Lot. The playground order was placed in mid-November and the construction of the playground is near completion. However, the City has yet to be billed for the work. Page 82 of 152 Quarterly Financial Report Through December 2023 22 The Human Services Grants Includes Admin project provides families with children with shelter and services that are experiencing homelessness at Mary's Place. This project also supports an LTE Contract Specialist position. During Q4-2023 this project spent$189,624 and $441,041 in total. The Encampment Cleanup project provides two service contracts that began in 2023; one contract provides continued cleanup of garbage and debris related to encampments and other illegal dumping on City-owned properties and rights of way (ROW), while the secondary contract focuses specifically on encampment trash cleanup. To date, the project has spent $445,392 and cleaned up 241 tons of liter and debris. Beginning in 2023, the Emergency Housing Voucher Program is budgeted at $2 million over the life of the program. This program is to assist residents of Auburn who are experiencing homelessness and drug addiction and who are willing to enroll in and complete inpatient treatment. The program will cover the costs of clean and sober housing of participants for up to three years, provided the participant follows the clean and sober housing agreement. Total project spend through 2023 is $272,350. The Broadband Network to Hardest Hit Communities project allows the City to expand the City's broadband network capabilities for all residents, visitors, and City employees to utilize. The IT department has acquired all necessary hardware and software related to the broadband/Wi-Fi replacement and expansion. Total spent in Q4-2023 was $42,563, bringing the cumulative project total to $185,348. All replacement of existing hardware has been completed. The expansion was completed during Q4-2023 and the project is now fully complete. Street Funds This section provides a financial overview of the City's three street funds for the period ending December 31, 2023. The City's street funds are the Arterial Street Fund (Fund 102), the Local Street Fund (Fund 103), and the Arterial Street Preservation Fund (Fund 105). As noted in the Street Funds Overview section above, variances between budget and actual amounts are generally driven by the schedule and level of activity on projects in the fund, as well as the timing of grant reimbursements and other funding. Fund 102 —Arterial Street Fund The Arterial Street Fund is a special revenue fund that is funded primarily by transportation grants, traffic impact fees, a portion of the City's gas tax receipts, Public Works Trust Fund loans, and developer contributions.As of December 31, 2023 there were 29 separate street projects budgeted in this fund. Revenues collected in 2023 totaled $3.0 million as compared to 2022 collections of$3.2 million. Total expenditures in 2023 were $3.4 million compared to $4.4 million last year. Variances in revenues and expenditures are largely due to the timing of capital expenditures and any subsequent reimbursement via grants and/or operating transfers. Expenditure timing is generally determined by the current phase of each individual capital project; expenditures tend to increase as projects move from the design phase into the construction phase. Page 83 of 152 Quarterly Financial Report Through December 2023 23 Fund 102-Arterial Street 2Q23 2022 2023 YE Budget vs.Actual Summary of Sources and Uses 2023 2023 YE 2022 YE Favorable(Unfavorable) Report Period: December 2023 Budget Actual Actual Amount Percentage Revenues Federal Grants $ 3,426,817 $ 312,329 $ 332,815 $ (3,114,488) (90.9)% State And Local Grants 1,939,412 517,951 94,619 (1,421,461) (73.3)% Motor Vehicle Fuel and Multimodal Taxes 620,000 645,238 648,011 25,239 4.1 % Miscellaneous Revenue 174,640 256,353 - 81,713 46.8 % Operating Transfer In 8,874,866 889,996 1,526,013 (7,984,870) (90.0)% Contributions 8 Donations 332,500 332,000 173,498 (500) (0.2)% Investment Income 58.000 93,986 30,310 35,986 62.0 % Total Revenues ,$ 15,426,235 $ 3,047,854 $ 2,803,267 $ (12,378,381) (80.2)% Expenditures Salary and Benefits $ - $ 491,171 $ 412,987 $ (491,171) Capital Outlay 16f125,374 2,543,365 3,307,258 13,582,009 84.2 % Subtotal-Capital Project Expenditures 16,125,374 3,034,536 3,720,245 13,090,638 81.2 % Services and Charges 190,000 134,186 466,920 55,814 29.4 Interfund Payments for Services 28,400 28,404 56,200 (4) (0.0) Debt Service Principal and Interest 205,500 205,345 206,039 155 0.1 Operating Transfer Out - - - Total Expenditures $ 16,549,274 $ 3,402,470 $ 4,449,403 $ 13,146,804 1 79.4 % 1 'Net Change in Fund Balance I$ (1,123,039)1$ (351,617)1$_ (1,646,136)1$ 768,422 1 68.4 % ' Beg.Fund Balance,January 2023 $ 2,350,156 Net Change In Fund Balance,December 2023 _ (354,617) Ending Fund Balance,December 2023 $ 1,995,539 2023 Budgeted Ending Fund Balance $ 1,227,117 Arterial Street Fund-Capital Project Expenditures v.518M $16M 2023 Budget: 516.1M / /514M 512M N /i i j 530M t '�� $6M /- 56M � 2022 YTD Aduat: 54M $3.7M 52M ,,, mot 2023 Y10 Actual: -.`�� $3.MN SOM 0 lm Ft: Mar Apr Mum - lul Aug Sep Oct N. Dec The table below presents the status of the projects with the most significant budget impact on the fund. Many capital projects are budgeted over multiple years; what is displayed below is the 2023 portion of each project's budget and annual expenditures. Page 84 of 152 Quarterly Financial Report Through December 2023 24 Fund 102-Arterial Street Capital Projects Status (rounded) Name 2023 Budget YE Actual Remaining %of Budget Regional Growth Center Access Imp 2,820,000 200,000 2,620,000 17% AWS Imp.-Hemlock St SE to Poplar St SE 2,680,000 730,000 1,950,000 17% A Street Loop 1,990,000 160,000 1,630,000 12% East Valley Highway Widening 1,400,000 10,000 1,390,000 9% 10th St NW&A St NW Intersection 'moray 1,200,000 50,000 1,150,000 7% All Other Projects C19 Remaining) 6,030,000 1,860,000 4,170,000 37% Total 16,120,000 3,010,000 13,110,000 Due to the size and complexity of projects noted above, the earlier design and right-of-way phases were extended through late 2023. These projects are expected to move into the construction phase in 2024, which is where we expect a majority of the budgeted expenditure activity to take place. Fund 103 — Local Street Fund The Local Street Fund is a special revenue fund used for local street repair. Historically, this fund was funded solely by interfund transfers on a project-reimbursement basis. As noted in the Streets Funds Overview and Utility Tax Revenue sections of this report, in 2023 the City changed the receipt of the streets funds portion of utility tax revenue (2.5%)from the Arterial Streets Preservation Fund (Fund 105) to the Local Street Fund (Fund 103). This change is the primary driver for increased revenues in the Local Street Fund in 2023, as non-utilty tax related revenues ($565,000) were significantly lower than 2022 ($1.8 million). This is due to projects not having as much activity as originally expected in 2023, and is further illustrated by the year-over-year decrease in expenditures from $1.4 million in 2022 to $210,000 in 2023. Highlighted in the table below and shown in the following graph are the fund's total expenditures related to capital projects. Fund 103-Local Street Fund I 2023 2022 2023 YE Budget ve.Actual i Summary of Sources and Uses I 2023 2023 YE 2022 YE Favorable(Unfavorable) Report Period:December 2023 Budget Actual Actual Amount Percentage Revenues City U8Ory Tax S 858,300 S 907,435 5 - 49,135 5.7 % Elecmc Uli69 Tax 871,400 888.665 - 17,285 2.0 % Natural Gas May Tax 327,800 292.085 - (35,715) (10.9)% Coble TV Tax 179,400 - - (179.400) (100.0)% Telephone Utility Tax 100,200 100,057 - (143) (0.I)% Garbage Ut6iry Tax(Exlemal Haulers) 10,100 412,858 - 402,756 3987.7 % Mbcesaneouc Revenue - 6,704 - 8,704 Operating Transfer In 1,411,10E 345,789 1,761.364 (1,065.328) (75.5)% Interest Earnings 15,8130 210,547 43,472 194,747 1232.6 % (Total Revenues I S 3,774,106 S 3.166,129 S 1,824,036 1 5 (607,979) (18.11% 1 Expenditure Capital Salary and Benefits 49,493 49,957 (49,498) Capital Oullay 4,145,661 159,424 2,054,974 3,986.237 962 % Subtota-Capeal Project Expenditures 4,145,661 208,923 2,104,930 3,936,738 95.0% 0dmin Saary and Benefits S admin Services and Charges Inter and Payments for Servlcee 1,300 1,296 13.800 4 0.3 % (Total Expenditures I S 4,146,861 S 210.219 S 2.118,730 I S 3,938,742 41,9% I I Net Change In Fund Balance I$ (372.853)1 S 2.955,910 1$ (293,89511 S 3,920,783 I 692.0% I Beg.Fund Balance,January 2023 $ 3,363,496 Net Change in Fund Balance,December 2023 2,955,910 Ending Fund Balance.December 2023 $ 6,319,406 2023 Budgeted Ending Fund Balance $ 2,990,643 Page 85 of 152 Quarterly Financial Report Through December 2023 25 Local Street Fund-Capital Project Expenditures SSM 2023 Budget: S4M S4.1 M 54M S3M f / /l $3. 2022 YE Actual: W j $I.1M 52132 • 52M S1M SIM 2023 YE Actual: O SOM _ -- Jan Feb •,.. Apr May Jun Jul Aug 'Sep Oa The table below presents the status of the five active projects in Fund 103. Many capital projects are budgeted over multiple years; what is displayed below is the 2023 portion of each project's budget and annual expenditures. Fund 103-Local Street Capital Projects Status(rounded) Name 2023 Budget YE Actual Remaining %of Budget 2023 Local Street Preservation 2,810,000 130,000 2,680,000 68% D St SE&23rd St SE Storm Improvements 520,000 70,000 440,000 12% Local Street Improvement Prog 450,000 - 450,400 11% Lead Service Line Replacement 300,000 - 300,000 7% 2021 Local Street Preservation 60,000 - 60,000 2% Total 4,140,000 200,000 3,930,000 Both the Lead Service Line Replacement and 2021 Local Street Preservation projects were completed as of December 31, 2023. The remaining projects illustrated above are expected to enter the construction phase in 2024. Fund 105—Arterial Street Preservation Fund The Arterial Street Preservation Fund is a special revenue fund that historically had been funded by a portion of the utility tax collected by the City. However, in 2023 this funding was replaced by a 0.1% sales and use tax enacted by the City's Transportation Benefit District (TBD) via Ordinance 6881. To ensure that restricted TBD revenues remain in the Arterial Street Preservation Fund, the streets funds' portion of utility tax revenues are now receipted entirely into the Local Street Fund and transferred to the Arterial Street Preservation Fund on an as-needed basis. Partly as a result of this funding change, revenues for the Arterial Streets Preservation Fund in 2023 were less than prior years. In 2023, total revenues for this fund were $3.6 million (including $2.2 million in public transportation sales and use tax as described above), compared to $4.2 million reported last year. Page 86 of 152 Quarterly Financial Report Through December 2023 26 Expenditures in 2023 totaled $1.6 million compared to $4.2 million in 2022. Historically, the majority of this fund's expenditures occur in the second half of each year due to the weather sensitivity of pavement construction, which needs to be done primarily in the summer and early fall. Fund projects were in the early stages of development during 2023 and are expected to enter the construction phase in 2024. As such, reduced project-related expenses in 2023 directly impacted the subsequent cost reimbursements from grants. Highlighted in the table below and shown in the following graph are the fund's total expenditures related to capital projects. Fund 105-Arterial Street Preservation I 2023 2022 2023YE Budget vs.Acaral 1 Summary of Sources and Uses 1 2823 2023 YE 2022 YE Favorable(Unfavorable) Report Period: December 2023 I Budget Actual Actual Amount Percentage Revenues CityUtlityTax $ 1,287.500 S 825388 S 821,933 $ (482.132; (35.9)% Eledric Utility Tax - 62 809,184 82 Natural Gas thdityTax - 1,871 248,775 1,871 Cable TV Tax - 181,850 643,051 181,859I Telephone Uli9tyTax - 30 115,351 301 Garbage Utility Tax(Exlerrct Haulers) - 794 11,188 794I Pubic Transportation Sales&Use Tax 1,974,500 2,199,743 - 225,243 1 11.4 % Grants 2,293,948 94,050 1,738,882 (2,199.898' (95.8)% Transportation 1-57710 104,518 33,768 (247,682) (70.3)% Developer Mligation Fees 288,485 - - (288.485) (100.0) Interest Earnings 122,000 219,029 48,852 97,029 79.5 % !Total Revenues $ 6,318,613 $ 3,627,324 $ 4,166.964 $ (2.691.289) (42.6)% 1 ~;Expenditures Salay and Benefits $ - 3 338,138 S 395,877 5 (338,138) 'Capital0tday 8,351.951 1.248,874 3,802.7790 7,103,077 85.0 % Subtotal-Capital Pre)ect Expenditures 8.351.251 1,587,012 4,198,887 8,78039 81.0 73 I Supplies _ - Services and Charges 400003 53,552 9,801 348.448 86.8 Operating Transfer Out 185.000 -- - I 185,000 100.0 !TotalExpendhrtes $ 8,938.951 $ 1,610,564 $ 4,208.468 $ 7296,3137 81.6 % I [Net Change in Fund Balance 18 12.6I6.338)1$ 1,986,760 I$ 141,504)1$ 4,605,098 I 175.9 % I Beg,Fund Balance,January 2023 $ 3,512,939 Net Change in Fund Balance.December 2023 1.9813,700 Ending Fund Balance,December 2023 $ 5,499,099 2023 Budgeted Ending Fund Balance 5 894,001 Page 87 of 152 Quarterly Financial Report Through December 2023 27 Arterial Street Preservation Fund-Capital Project Expenditures 2023 Budget: S8.4M S6M 12 SaM i 2022 YE Actual• $4.2M V 52M / • • 2.023 YE Actual: S1.6M SOM u • .. ., 1 /an Feb Mar Apr May Jun Aug Sup On ... Our The table below presents the status of the projects with the most significant budget impact on the fund. Many capital projects are budgeted over multiple years; what is displayed below is the 2023 portion of each project's budget and annual expenditures. As noted above, these projects are expected to have increased activity in 2024 as they enter the construction phase. Fund 105-Arterial Street Preservation Capital Projects Status (rounded) Name 2023 Budget YE Actual Remaining %of Budget C St SW Presry(W Main to GSA Signal) 2,810,000 30,000 2,790,000 34% Lake Tapps Pkwy/Sumner-Tapps Hwy E Prs 1,440,000 110,000 1,330,000 17% R Street SE Preservation 1,320,000 170,000 1,140,000 18% All Other Projects(14 Budgeted) 2,780,000 1,280,000 1,510,000 33% total 8,350,000 1,590,000 6,770,000 Fund 124— Mitigation Fees The Mitigation Fees Fund is a special revenue fund for fees that are assessed at the time applications are received for development activity. These revenues are used to address costs associated with City growth. The fund houses two types of revenues: mitigation fees and impact fees. Mitigation fees are variable charges collected as a result of State Environmental Policy Act (SEPA) reviews and the City's determination that a project must pay additional fees to compensate for a unique effect that it has on the community. Impact fees are set charges collected automatically for a variety of projects. These fees are adopted annually by the City Council based on projects anticipated in the Capital Facilities Plan over the next six years. School and Fire Impact fees are collected and reimtted on behalf of the Valley Regional Fire Authority, Auburn School District, Kent School District, Federal Way School District, and Dieringer School District. Page 88 of 152 Quarterly Financial Report Through December 2023 28 Expenditures from these funds consist of transfers out to capital project funds to help support the cost of transporation and parks capital projects. The projects funded from impact and mitigation fee are new or enhanced services necessary to absorb the impact of development. In 2023, the City received $2.3 million in mitigation and impact revenues, largely driven by commercial transportation impact fees and a significant increase in interest and investment income. Overall, the fund experienced a $10.6 million favorable variance to budget, driven by higher revenues ($750,000) and lower-than-budgeted expenditures ($9.8 million). Similar to the various streets funds where budget-to-actual variances are driven by project timing, the underspend in this fund is the result of timing differences of multiple capital projects funded by mitigation and/or impact fee revenues. Most of these unspent Fund 124-Mitigation Fees Summary of Sources and Uses BUDGET YE Actuals Report Period Through: Ending Ending December 2023 Revenues Expenditures Fund Balance Revenues Expenditures Fund Balance Transportation Impact Fees $ 1,300,000 S 8,466,866 $ 3,063.173 S 1,131,088 $ 816.207 $ 10,544,920 Traffic Migitation Fees - - 139,959 - - 139,959 Fire Impact Fees 125,000 75,000 348,234 67,124 - 365,358 Fire Mitigation Fees - - 81 - - 81 Parks Impact Fees 150,000 2,830,014 2,072,205 392,000 689,330 4,454,889 Parks Mitigation Fees - - 189,262 - - 189.262 School Impact Admin Fees 5,000 - 104,539 2,971 - 102,510 Wetland Mitigation Fees - 73,000 1,010 - 73,000 1,010 Truck Impact Fees - - 38,727 2,174 - 40,901 Interest and Investment Income 21,200 - 21,200 754,896 - 754,896 Fees in Lieu of Improvements - - 27,552 - - 27,552 Permit Processing Fees - - - - - - Total S 1,601,200 S 11,444,880 S 6,005,942 S 2,350,253 S 1,578,537 S 16,621,339 Enterprise Funds Detailed income and expense statements for Enterprise and Internal Service funds can be found in an attachment at the end of this report. The attachment provides operating and —as applicable — capital fund reports for these funds showing budget, actuals, and variances. Utility activities are divided between operating funds and capital sub-funds. Operating funds house all the operating costs along with debt service and financing obligations. Capital funds show costs associated with capital acquisition and construction. Both the operating and capital funds have a working capital balance, which is equivalent to current assets minus current liabilities. This approach isolates those funds available for capital and cash flow needs for daily operations and provides and project managers information on the availability of working capital for current and planned projects. As mentioned earlier in the report, the City increased its utility tax rate from 10.0% to 11.5% in 2023. This increase directly impacted utility tax revenues for the City, as well as utility tax expenditures for the Enterprise Funds. These increases are reflected in our analysis below. Through December 2023, the Water Utility outperformed budget expectations with a favorable variance of$1.7 million in revenues, with an overall increase of$2.5 million or 15.3% from 2022. Water sales increased $2.1 million from $16.4 million through 2022 to $18.5 million through 2023. There was also a $477,000 increase in interest earnings from 2022, which is consistent with the overall increases in the City's cash and investments balances. Page 89 of 152 Quarterly Financial Report Through December 2023 29 The Water Utility also experienced favorable variances to budget for operating expenditures, primarily in other service charges and debt service interest payments. Compared to expenditures reported in 2022, operating expenditures increased by$1.5 million, mainly due to increases in personnel costs (+$426,000), interfund allocations (+$532,000) and utility taxes (+$430,000). In all, the Water Utility had operating income of$6.6 million in 2023 (operating revenues less operating expenditures), approximately $1.1 million above the same period last year. Billable water consumption through 2023 totaled 3.1 million ccf(ccf= hundred cubic feet), approximately 188,000 ccf, or 6.4%, higher than consumption volume through 2022. Compared to the prior year, consumption increased across every customer class except manufacturing, with the largest volume increases occurring in irrigation and single-family accounts. Water Revenues and Water Sold 2022 vs 2023 $2.5M 1,00.7 $Z0 800 $1.5M 600 • • $1 OM A00 • • $0.SM (T .�����rQ► 200 a 0 SO.OM 0,1, 4,9 06 .kNO4 oec 2022 Water Sales($) —.0-2023 Water Sales($) 2022 Water Sold(ccf) —.0--2023 Water Sold(ccf) Through the fourth quarter of 2023, the Sewer Utility finished with operating income of$4.2 million, an $800,000 increase compared to $3.4 million through the same period last year. The net change in working capital for 2023 was $3.4 million, compared to $2.9 million in 2022. Operating revenues were up $1.1 million, or 11.8%, from the same period last year due to stronger performance in charges for City sewer service and interest earnings. Charges for service increased $762,000 from $9.5 million through 2022 to $10.3 million through 2023, and interest earnings increased $381,000 during that same period. This increase in activity is also reflected in a favorable to budget variance in revenues of$1.2 million. Operating expenditures were favorable to budget by $3.0 million in 2023, driven primarily by a favorable to budget variance in other service charges of$2.8 million. The transfer of utility tax revenues per Ordinance 6882, as well as City's excise tax expenditures are included within this line item. To ensure the City is prepared for any increases in these expenditures, it is reasonable to expect the budgeted amount to be higher than the actual recorded expenditures in any given year. Page 90 of 152 Quarterly Financial Report Through December 2023 30 Although total operating expenditures were favorable to budget in 2023, they did increase from $6.2 million in 2022 to$6.6 million in 2023. This was due in part to increased personnel costs (+$294,000) and other miscellaneous expenditures such as utility taxes (+$213,000). These increases were partially offset by decreased expenditures for interfund support charges (-$125,000). In 2023, the Stormwater Utility had a favorable budget variance in operating revenues of$1.4 million, driven by charges for service (+$736,000) and interest revenue (+$574,000). Compared to 2022, operating revenues were up $1.3 million, also driven by increases in charges for City storm service (+ $822,000) and interest earnings (+$420,000). Most Stormwater service charges are based on a flat rate, there are not typically seasonal fluctuations in this revenue. Accordingly, service charge revenues reported throughout 2023 generated about$3 million each quarter for a total of$11.8 million through December 2023. Operating expenditures in the Stormwater Utility had a$481,000 favorable variance to budget, due to lower than budgeted expenditures in other service charges and debt interest payments. The City continues to make payments on its debt service which, in turn, lowers the amount due in interest. In 2023, operating expenditures of$9.5 million were $1.0 million higher compared to the same period last year. Most of this increase is due to higher personnel (+$486,000)and interfund allocation costs (+$415,000) compared to 2022. Overall, the Stormwater Utility recorded operating income of$2.9 million compared with $2.7 million in the same period last year, and were favorable to budget by$1.8 million. The fund finished the year with 2.0 million in working capital, a slight decrease from $2.1 million in working capital in 2022. The Solid Waste Utility finished 2023 with a favorable budget variance of$476,000, due to a favorable revenue variance of$275,000 and expenditures $201,000 lower than budgeted. The $275,000 favorable to budget operating revenue variance was due to charges for service (+$100,000) and interest(+$145,000). Increased service rates comprised the majority of$28.9 million in operating revenues for 2023, a $3.6 million increase compared to 2022. This increase was partially offset by a planned decrease of$130,000 in grant funding compared to the prior year. Operating expenditures increased $3.0 million from $26.5 million in 2022 to $29.5 million in 2023. This increase was driven almost entirely by the increase in payments made to the City's solid waste vendor for its services provided. Although favorable to budget projections, the Solid Waste Utility recorded a reduction of working capital of$559,000 in 2023, compared to a reduction of $1.2 million through the same period last year. The current mix of solid waste customer account types is: • 92.4% Residential • 6.0% Commercial • 1.6% Multifamily In total, tonnage collected decreased slightly from 69,111 in 2022 to 68,344 in 2023. The "diversion rate" is a measure of how much generated waste is not sent to the landfill, i.e., waste that is either recycled or collected yard waste. Through December 2023, the total diversion rate was 26.8%, which represents a total of 18,316 tons of waste that was diverted from landfills. Page 91 of 152 Quarterly Financial Report Through December 2023 31 In 2023, the Airport Fund experienced a favorable budget variance of$235,000 in operating revenues and an unfavorable variance of$23,000 in operating expenditures, resulting in an overall favorable variance of$212,000. Like the other enterprise funds described in this section, the favorable revenue variances were driven by higher-than-expected charges for service and interest earnings. The unfavorable to budget operating expenditure variance was driven by slightly higher-than-budgeted personnel costs (+$16,200) and supply costs (+$27,000). There is a direct correlation between supply costs for fuel for resale and revenues for fuel sales, and that is reflected in the Airport Fund's operating activity for 2023. Operating income was $372,000, approximately$25,000 lower than operating income throughout the previous year. Operating revenues increased $200,000 from 2022, driven by increases in charges for service (+$134,000), which includes fuel sales and hangar rent. Conversely, operating expenditures increased $225,000 because of higher supply costs for fuel (+$49,000), as well as higher personnel (+$52,000)and interfund charges (+$82,000), compared to the prior year. In all, the Airport Fund saw a reduction in working capital of$239,000 in 2023, due mainly to increased transfers for the fund's capital projects. Both Cemetery Fund operating revenues and expenditures had favorable budget variances in 2023, resulting in a favorable operating income budget variance of$655,000. Total operating income increased $245,000 from $71,600 in 2022 to $316,000 in 2023, driven primarily by increases in charges for service, such as lot and marker sales (+$300,000). Operating expenditures increased about 7%, or$116,000, from $1.6 million in 2022 to $1.7 million in 2023, driven primarily by an increase in interfund cost allocation for support services (+$178,500). This increase was offset by slight decreases in personnel costs (-$49,000) and charges for supplies (-$30,000). In 2023, the fund saw an increase of$69,000 in working capital, compared to an increase of$13,400 in the prior year. Cemetery Expenditures S3M 2023 Budget: $2.4M S2M 2023 YTD Actual: - y $2.0M W - • I � • _ • ial $1M - _ • 2022 YTD Actual: $L7M SUM - Jan Feb Mar Apr May Jun Juui Aug Sap 0.*. Dec Page 92 of 152 Quarterly Financial Report Through December 2023 32 Internal Service Funds Operating expenditures within the Insurance Fund represent the premium cost pool that will be allocated monthly to other City funds over the course of the year. As a result, the expenditure balance gradually diminishes each month throughout the year. No significant variances were reported in the Workers' Compensation, Facilities, Innovation & Technology or Equipment Rental Funds through 2023. Contact Information This report is prepared by the Finance Department. Additional financial information can also be viewed at our website: http://www.auburnwa.dov/. For any questions about this report please contact Jamie Thomas at idthomasaauburnwa.aov. Page 93 of 152 City of Auburn 4th Quarter 2023 Financial Report CITY COUNCIL STUDY SESSION APRIL 8 , 2024 General Fund Revenue Overview Summary Variance to Variance Budget to 2022 •Collected 12% more 2022 2023 2023 Favorable Favorable revenue YTD Revenue YTD Actual YTD Budget YTD Actual (Unfavorable) % (Unfavorable) Property Tax $ 24,293,611 $ 24,016,247 $ 24,149,996 $ 133,749 $ (143,615) compared to budget Sales Tax 22,661,066 20,344,500 22,999,943 2,655,443 338,877 and 21% more than Utility Tax 12,798,458 14,433,085 15,797,604 1,364,519 2,999,146 YTD last year B&OTax* 3,032,830 5,680,960 10,625,063 4,944,103 7,592,233 Other Tax 4,488,227 4,539,336 5,256,424 717,088 768,197 •Underspent the YTD Licenses and Permits 2,275,480 2,511,364 2,850,318 338,954 574,838 Intergovernmental 6,906,122 6,655,531 5,890,408 (765,123) (1,015,714) budgeted Charges for Services 8,401,225 9,575,124 10,080,037 504,913 1,678,812 expenditures by 14% Other 2,845,557 2,365,919 6,023,904 3,657,985 3,178,347 and have spent 9% Transfers In 3,033,653 7,703,978 6,356,542 (1,347,436) 3,322,889 Total Revenue $ 90,736,229 $ 97,826,044 $ 110,030,239 $ 12,204,195 12% $ 19,294,010 21% more compared to Total Expenditures $ 101,954,211 $ 107,873,707 $ 92,728,940 $ 15,144,767 14% $ 9,225,271 9% YTD last year r. Page 95 of 152 Tax Revenue 2023 budgeted taxes account for $68.8 million, or 75% of the General Fund budget Property Tax (35% of taxes) • $24 million 2023 budget • Collected 100% at year-end Retail Sales and Use Tax (30% of taxes) • $20.3 million 2023 budget • $339,000 (1%) over prior YTD actual • $2.6 million (13%) over YTD budget Page 96 of 152 Tax Revenue Utility Tax (21% of taxes) Utility Tax • $14.4 million 2023 budget S18.0 12023Budget —0—2023 YE Actual —2022 Actual Water, Sewer, Storm,Solid Waste Utility Tax rate 9% s16.0 515sM ($6.8 million of total budget) Electric, Natural Gas, Cable, and Telephone Utility Tax s14.0 rate 5% ($7.6 million of total budget) s120 • • • $1.4 million (9%) over budget s10A Higher than expected natural gas and solid waste tax collected g s8.0 • $3.0 million (23%) over prior year S6.0 Higher electric, natural gas, and solid waste tax S4.0 collected compared to 2022 52.0 500 - - lan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Page 98 of 152 Tax Revenue Business and Occupation Tax (B&O) (8% of total taxes) o $5.5 million 2023 budget • $10.6 million collected YTD* • $6.7 million in gross receipts tax(63%) • $3.9 million in square foot tax (37%) • Includes Q4 2022, Q1 2023, Q2 2023, and 2022 Annual Filings • $5.0 million (87%) over YTD budget Other Taxes (8% of total taxes) • $4.4 million budgeted • Criminal justice sales tax, admissions tax, gambling tax, leasehold excise tax, franchise fees • $717k (16%) over 2023 YTD budget • $768k (17%) over 2022 YTD collections • Both variances are mostly due to higher sales tax collection ($678,000) Page 99 of 152 Licenses and Permits Accounts for 3% of the total General Fund Resources Building Permits 02023Budget -C-2023YE Actual —2022 Actual S $2.5 million budgeted in 2023 Most all of this ($2.0 million is related to $1.4 building permits) $1.2 $339,000 (13%) over budget $1.0 50.9M • • $575,000 (25%) over prior year 508 • $257,000 YTD increase in business license 50.6 - revenue and a $318,000 increase in YTD building permit 5°4 Total building permits issued YTD 2023 50.2 exceeded 2022 by 23% but total value of • 5°.0 permit has decreased by 38% 1 2 3 4 5 6 1 .Y q 10 11 12 Page 100 of 152 Intergovernmental Revenues include: Federal/State/Interlocal Grants, Muckleshoot Indian Tribe (MIT) Compact, State Shared Revenue • State Shared Revenue: Streamlined Sales Tax, Motor Vehicle Excise Tax (MVET), Marijuana/Liquor excise taxes, Criminal Justice Sales Tax $765,000 (12%) under 2023 YTD budget • Timing of contribution payment from the MIT compact ($300,000 outstanding), and Streamlined Sales Tax Mitigation reductions ($257k) $1.0 million (15%) under 2022 YTD collections • Timing of contribution payment from the MIT compact ($300,000 outstanding), Streamlined Sales Tax Mitigation reductions ($257k), and fewer grant revenues ($824k) . .. ,.. _ - .. ' i_.�.---�--- ----.. Page 101 of 152 Charges for Services General Government - $409,000 below budget (8%) o Timing of SKHHP Payments — Reimbursement basis Public Safety - $161,000 above budget (15%) • Private business charges (up $34,000) • DUI emergency response fees (up $120,000) Development Services - $11,400 above budget (1%) Culture and Recreation - $742,000 above budget (29%) o Green fees and pro shop sales are up $116,000 (8%) compared to previous Recreation Classes and Special Events account are up $135,000 (25%) compared to previous year T y n Page 102 of 152 ARPA Update 2023 Lifetime Spend 2024 Title Budget 1 Q4Spend (indudes this quarter) Remaining Budget Completed Projects 1,450,000 - 1,668,601 - Body Cameras 586,403 - 550,325 36,075 Vaccination Incentive Program 47,500 - 34,980 12,520 Neighborhood Street Light Program 500,000 27,936 86,387 413,613 Human Services Grants Includes Adm in 1,000,000 189,624 441,041 558,959 420,000 Dykstra Foot Bridge 400,000 - 10,357 389,643 Minor Improvements to Qualifying Neighborhood Parks 100,000 - 28,626 71,374 Limited Term Employee(LTE):Grants Coordinator 420,030 - 118,729 301,271 145,000 Paving Gravel Roads 636,865 1,403 23,539 613,327 Translation Services 75,000 - 1,685 73,315 Auburn Way South Median Landscape Replanting/Irrigation 50,000 - 40,187 9,814 Auburn Way South Roundabout 150,000 226 789 149,211 Emergency Housing Voucher Program 2,000,030 83,018 272,350 1,727,650 875,000 Encampment Cleanup 503,030 138,195 445,392 54,608 Downtown Sidewalk Replacement on Main Street and B Street Plaza Surface Replacement 1,643,266 14,422 45,660 1,597,606 1,081,866 Broadband Grants to Hardest Hit Communities 180,000 42,563 185,348 (5,348) Community Violence Intervention Programs(Drone,SPIDR Tech) 313,600 38,212 248,227 65.373 Arts Culture Center Renovations 100,000 - - 100,000 Signing Bonuses for Police Lateral Hires 200,000 32,647 142413 57,538 Other Projects(not started) 4,480,000 - - 4,430,000 Total: 15,051,232 568,244 4,344,635 10,706,598 4,246,866 Page 104 of 152 Non -General Fund Ca—Hi hli hts ital � � p Real Estate Excise Tax (REET) Real Estate Excise Tax YTD Collections: $3.5 million 57.0 1:=1 2023 Budget —0—2023 YE Actual —2022Actual $1.7 million less prior year 56.0 $1.3 million over YTD budget Ss.0 - $4.0 53.5 M 0 - $3.0 $2.0 51.0 2 3 4 5 6 7 8 9 10 11 12 Page 105 of 152 Non -General Fund Highlights — Enterprise Funds Water, Sewer and Stormwater Utilities • Before capital contributions, each utility ended the year with operating incomes: $5.4 million, $3.4 million, and $2.0 million, respectively • Overall 2023 Ending Fund Balance: $17.4 million, $15.6 million, and $16.1 million • Water Fund Balance ended the year$11.2 million over budget due to unspent budgeted capital items • Sewer Fund Balance ended the year$4.7 million over budget due to unspent professional service, lower taxes, and unspent capital budgets • Stormwater Fund Balance ended the year$2.6 million over budget due to greater collection of interest and service fees than budgeted Solid Waste Utility • Operating loss of $559k • Overall Ending Fund Balance: $2.1 million ($476k greater than budgeted) • Planned loss to smooth rate increases over 2022-2024 Page 106 of 152