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HomeMy WebLinkAboutQ3 2024 Financial Report CITY OF AUBURN AGENDA BILL APPROVAL FORM WASHINGTON Agenda Subject: Meeting Date: 3rd Quarter 2024 Financial Report (Thomas) (20 Minutes) December 9, 2024 Department: Attachments: Budget Impact: Finance Financial Report through September 2024, Monthly Sales Tax Report - SEPT 2024, YTD Permit Fee Analysis, 2024 Q3 Financial Update Administrative Recommendation: For discussion only. Background for Motion: Background Summary: The Financial Report summarizes the general state of 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 September 30, 2024, based on financial data available as of October 31, 2024. Councilmember: Kate Baldwin Staff: Jamie Thomas CITY OF ,-.F' ��,+4.J\TI Quarterly Financial Report Through September 2024 - WASHINGTON This report provides an overview of the City's overall cash-basis financial position for the fiscal period ending September 30, 2024, reflecting data available as of October 31, 2024. References to budget, actual and prior year amounts reflect year-to-date numbers, unless otherwise stated. Year-to-date budget expectations are generally based on the two prior years of data. General Fund Overview The City has entered 2024 on the heels of a solid financial performance in 2023 and is in the final steps of developing the biennial budget for the fiscal years of 2025-2026. General Fund revenues have generally exceeded budget expectations and largely recovered from the impact of COVID- 19. With the adoption of Ordinance #6945 in August 2024, the annual budget consists of $108.1 million in revenues and $113.6 million in expenditures - a planned decrease in General Fund balance of$5.5 million. Through the third quarter of 2024, the General Fund outperformed revenue expectations. Comparing year-to-date 2024 revenues versus year-to-date 2023 revenues, the City collected $4.8 million or 6.2% more. A large contributor to this outcome was Business and Occupation (B&O)tax revenue; through the third quarter the City collected $8.9 million in B&O taxes, which includes back dated collections. However, the City anticipates that B&O revenues will decline from a high point of$10.6 million in 2023, as payments related to prior periods decrease. The City also implemented a new photo enforcement program during the second half of 2023, which generated $2.0 million of new revenue through the third quarter of 2024. Mitigating the increases in General Fund revenues, the City also saw expenditures increase from the same period last year by $5.1 million or 7.4%. This is due to planned increases in overhead costs, professional services (citywide projects and improvements), and insurance premiums. Overall, General Fund revenues collected through Q3-2024 totaled $83.0 million as compared to the year-to-date budget of$76.7 million, and were$6.3 million, or 8.2%above budget expectations. General Fund expenditures through Q3-2024 totaled $73.4 million compared to the year-to-date budget of$80.6 million; resulting in a $7.2 million or 8.9% underspend. GENERAL FUND REVENUES VS. EXPENDITURES THROUGH SEPTEMBER 2024 VTD Actuals$73.4 M VTD Budget$80.6 M YTDActuals$83,0M YTD Budget$76.7 M $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 S100 $MILLIONS Quarterly Financial Report Through September 2024 2 Revenue: The following factors had the most significant impacts on the budget vs. actual revenue collected: • Business and Occupation Tax: Revenues collected throughout Q3-2024 totaled $8.9 million, exceeding the year-to-date budget by $3.6 million. Some of this favorable variance is due to the collection of tax obligations incurred in prior years, which is not expected to continue at the same level in the future. [page 8] • Fines and Penalties: Collections through the third quarter of 2024 were $2.8 million in total and $2.0 million favorable to budget. Higher than expected revenues from a new photo enforcement program implemented by the City during the second quarter of 2023 contributed $1.5 million toward the favorable variance. Other non-court fines and penalties are $399,000 favorable versus budget expectations, mainly due to interest and penalties on B&O tax collection. Criminal traffic and criminal costs had an unfavorable variance, slightly reducing the overall favorable variance. [pages 18-19] • Retail Sales Tax: The sales tax report for distributions through September 2024 (provided as an attachment to this report) reflects amounts remitted to the City of Auburn based on sales between November 2023 and July 2024. Collections totaled $17.1 million, which is generally on par from last year, driven by lower collections particularly in the construction and retail trade sectors. However, compared to the year-to-date budget, sales tax has a favorable variance of$1.8 million or 11.6%. [pages 6-8] • Interest and Investment Earnings: Throughout Q3-2024, interest and investment earnings have totaled $1.7 million in collections and hold a $1.4 million favorable variance to budget. This is largely due to current investments outperforming expectations throughout the year. Multiple investments mature during the remainder of the year, which may reduce the rate of collections to close out the year. [pages 19-20] • Intergovernmental revenue: Q3-2024 revenues collected totaled $5.9 million,which was $1.1 million favorable to the year-to-date budget. The variance is mainly due to the timing of collections from the approved MIT compact request. The 2023 request is fully collected and 75% of the 2024 request have been collected. Furthermore, collections from state and interlocal grants covering prior-year projects have also contributed to the favorable variance. [pages 14-15] Expenditures: Most departments operated within their year-to-date budgets through the third quarter of 2024, with some variances due to the timing of professional services payments, as well as expenses related to projects facilitated by ARPA funding. Overall, the favorable variance to the year-to-date expense budget is $7.2 million. Contributing to the favorable variance was a savings in salaries and benefits expenses of roughly $2.7 million; as of the compilation of this report, there were 25 vacant regular full-time positions in the City. Conversely, services and charges were above budget expectations through the third quarter by roughly $2.9 million. This is partially due to the timing of spend on projects in-progress within the City. Quarterly Financial Report Through September 2024 3 Enterprise Funds Overview The City's enterprise funds account for operations with revenues primarily provided from user fees, charges, or contracts for services. In the prior year, we noted that the City's cash and investment balances had increased significantly, due to increased interest rates and yields to maturity for the City's investment accounts. In 2024, the maturation of certain investments means the enterprise funds which previously saw significant year-over-year increases in interest earnings are continuing to see higher interest income, albeit at a lower growth rate. Through Q3-2024, interest earnings for the City's enterprise funds were $2.4 million, a $396,000 increase from Q3-2023. The Water Utility Fund ended Q3-2024 with operating income of $5.5 million, an increase of $183,000 compared to the same period last year. This variance is due primarily to increased water sales (+$467,000)and interest earnings (+$61,000), offset by an increase of$336,000 in operating expenditures. Operating revenues through Q3-2024 were higher than expected compared to our budget projections (+$1.1 million), which was driven in part by interest earnings (+$502,000 over budget expectations). Operating expenditures were lower than budget expectations (-$960,000) due to lower than anticipated personnel costs and external utility costs, as well as timing differences for anticipated professional services contracts. [pages 24-25] The Sewer Utility Fund ended Q3-2024 with operating income approximately $407,000 higher than Q3-2023, at $3.6 million. Drivers of this change include increased service charges (+$431,000) and interest earnings (+$272,000), offset by increases in operating expenditures (+$296,000), compared to the prior year. In total, operating revenues for this fund were $3.8 million higher compared to our budget projections, due to favorable variances in both operating revenues (+$1.6 million) and operating expenses (-$2.2 million). [page 25] The Stormwater Utility Fund ended Q3-2024 with operating income of$2.3 million, which is 0.3% (+$7,600)higher than operating income through Q3-2023. Operating revenues increased $471,000 compared to the prior year, due to an increase in charges for storm service (+$597,000) and decreases in interest earnings (-$81,000) and other miscellaneous revenue sources (-$45,000). Operating expenditures in this fund also increased compared to the prior year (+464,000), due mainly to increased personnel costs as well and utility tax expense. This fund outperformed operating revenue budget projections by$1.5 million through Q3-2024, with favorable variances to budget in operating revenues (+$1.4 million) and operating expenses (-$142,000). [page 25-26] The Solid Waste Utility Fund ended Q3-2024 with operating income of $346,000, a $379,000 decrease compared to the same period last year. Operating revenues increased $1.6 million from Q3-2023 to Q3-2024, due primarily to an increase in 2024 solid waste rates adopted in November 2023 (Ordinance #6920). Year-to-date operating expenditures increased $2.0 million compared to the prior year, driven primarily by timing differences. It is expected that increases to charges for service in this fund will have corresponding increases in payments to the City's solid waste vendor. [page 26] 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 these funds during Q3-2024. [page 26] Quarterly Financial Report Through September 2024 4 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 2024 2024 YTD Budget vs.Actual . 2023 2024 YTD Actual vs.2023 Actual Summary of Sources and Uses Annual YTD YTD Favorable(Unfavorable) YTD Favorable(Unfavorable) Budget Budget Actual Amount Percentage Actual Amount Percentage Operating Revenues Property Tax $ 24,486,386 $ 13,396,400 $ 13,569,223 $ 172,823 1 3 % $13,312,970 $ 256,253 1.9% Retail Sales Tax 20,649,700 15,337,500 17,118,816 1,781,316 11 6 % 17,105,897 12,918 0.1 % Affordable Housing Sales Tax Credit 177,587 118,800 99,332 (19,468) (16.4) % 100,399 (1,066) (1.1)% Sales Tax-Rerce County Parks 130,000 96,800 100,615 3,815 3.9 % 99,283 1,332 1.3% Criminal Justice Sales Tax 2,478,000 1,823,400 2,271,546 448,146 24.6 % 2,327,079 (55,532) (2.4)% Brokered Natural Gas Tax 150,000 121,400 200,182 78,782 64 9 % 267,471 (67,289) (25.2)% City Utilities Tax 5,989,667 4,737,000 5,104,647 367,647 7 8 % 4,709,841 394,807 8.4% Business&Occupation Tax 7,029,750 5,272,313 8,902,069 3,629,757 68 8 % 8,521,897 380,173 4.5% Admissions Tax 312,445 252,400 542,809 290,409 115 1 % 284,076 258,733 91 1 % Bectric Tax 4,426,743 3,517,200 3,569,944 52,744 15 % 3,380,170 189,774 5.6% Natural Gas Tax 1,658,523 1,304,000 1,124,464 (179,536) (138) % 1,297,025 (172,561) (133)% Cable Franchise Fee 880,889 660,667 575,593 (85,074) (12 9) % 650,579 (74,986) (11.5)% Cable Utility Tax 931,981 698,986 610,963 (88,023) (12 6) % 692,837 (81,874) (11 8)% Cable Franchise Fee-Capital 51,539 38,654 29,819 (8,835) (22 9) % 38,693 (8,874) (22.9)% Telephone Tax 435,847 308,709 538,112 229,403 74 3 % 336,654 201,458 59 8% Solid Waste Tax(external) 621,973 432,858 892,508 459,649 106 2 % 1,136,453 (243,946) (21.5)% Leasehold Excise Tax 255,335 239,214 277,328 38,114 15.9 % 251,394 25,934 10.3% Gambling Excise Tax 295,300 215,272 126,426 (88.846) (41.3) % 243,746 (117,320) (48.1)% Taxes sub-total $ 70,961,665 $ 48,571,572 $ 55,654,396 $ 7,082,824 14.6 % $54,756,463 $ 897,933 1.6% Business License Fees $ 461,250 $ 275,000 $ 429,014 $ 154,014 56 0 % $ 413,537 $ 15,478 3.7% Building Permits 956,698 684,400 655,765 (28,635) (4 2) % 590,532 65,234 11 0% Other Licenses&Parrots 1,150,950 901,600 1,047,320 145,720 162 % 1,052,048 (4,728) (04)% Intergovernmental(Grants,etc.) 6,561,349 4,863,963 5,914,344 1,050,381 21 6 % 4,494,687 1,419,657 31.6% Charges for Services - WA General Government Services 5,824,577 4,339,666 3,378,097 (961,569) (22 2) % 3,346,174 31,923 1.0% Public Safety 1,057,000 792,750 1,072,059 279,309 35 2 % 773,804 298,255 38 5% Development Services Fees 1,158,080 922,300 921,591 (709)1 (0 1) % 832,887 88,704 10.7% Culture and Recreation 2,915,485 2,467,946 2,933,340 465,394 18 9 % 2,740,415 192,925 7.0% Fines and Penalties 1,071,819 802,300 2,765,694 1.963 395 244 7 % 1,379,994 1,385,700 100.4% Fees/Charges/Fines sub-total $ 21,157,208 $ 16,049,924 $ 19,117,225 $ 3,067,301 19.1 % $15,624,078 $ 3,493,147 22.4% Interest and Investment Earnings $ 315,000 $ 236,250 $ 1,648,748 $ 1,412,498 597 9 % $ 891,832 $ 756,916 84 9% Rents and Leases 1,142,948 940,900 1,214,999 274,099 ' 29 1 % 1,029,401 185,597 18.0% Contributions and Donations 42,000 33,202 18,889 (14,313) (43 1) % 25,421 (6,533) (25 7)% Other Miscellaneous 258,000 208,213 701,042 492,829 236 7 % 371,846 329,196 88 5% Transfers In 14,203,054 10,652,291 4,619,961 (6,032,330) (56 6) % 5,232,897 (612,936) (11 7)% Insurance Recoveries-Capital&Operating 25,000 18,750 42,688 23 938 127 7 % 246,312 (203,624) (82.7)% Other Revenues sub-total $ 15,986,002 $ 12,089,605 $ 8,246,326 $ (3,843,279) (31.8) % $ 7,797,709 $ 448,617 5.8% Total Operating Revenues $108,104,875 $ 76,711,101 $ 83,017,947 $ 6,306,846 8.2 % $78,178,250 $ 4,839,697 6.2% Operating Expenditures Council&Mayor $ 1,459,725 $ 1,135,699 $ 1,102,523 $ 33,176 2 91 % $ 1,081,025 $ 21,499 2.01% Administration M. 30 76,429_ 979,161 (2,736) (03) % 930,314 48,850 5.3% Human Resources 2,539,839 1,862,903 1,933,821 (70,918) (3.8) % 1,732,277 201,544 11.6% Municipal Court&ProbationMr 3,040,544 2,800,858 2,959,756 (158,898) (5.7) % 2,224,184 735,572 33.1 % Finance 5,763,940 4,288,435 3,646,091 642,344 15.0 % 3,461,109 184,982 5.3% Cdy Attorney 4,663,393 3,407,634 3,672,045 (264,411) (7 8) % 4,433,389 (761,343) (17.2)% Community Developncnt 10,115,524 6,822,115 4,921,097 1,901,018 27 9 % 5,631,503 (710,406) (12.6)% Human Services 4,031,582 3,029,092 2,093,243 935,848 30 9 % - 2,093,243 N/A% Office of Equity 950,808 714,837 668,302 46,535 6 5 % 344,016 324,285 94.3% Jail-SCORE 5,700,000 4,275,000 3,243,984 1,031,016 241 % 3,865,469 (621,485) (16,1)% Police 37,800,886 28,274,399 25,896,698 2,377,701 8 4 % 24,902,106 994,592 4.0% Public Works 4,973,495 3,701,149 3,900,217 (199,069) (54) % 3,302,992 597,225 18.1 % Parks,Arts&Recreation 16,518,129 12,396,447 12,465,695 (69,248) (0 6) % 11,699,114 _ 766,581 6.6% Streets _ 4,839,339 3,523,154 3,370,654 152,500 43 % 3,015,496 355,158 11.8% Non-Departmental 9,897,960 3,421,724 2,580,051 841,672 24 6 % 1,721,162 858,890 49.9% Total Operating Expenditures $113,620,444 $ 80,629,874 $ 73,433,344 $ 7,196,530 8.9 % $68,344,155 $ 5,089,189 7.4% Quarterly Financial Report Through September 2024 5 General Fund Revenues Budget Vs Actual Property Tax _ Retail Sales Tax Transfers-in 4.6M External Utilities Tax 7.3M B&o Tax 8.9M Intergovernmental 5.9M City Utilities Tax 5.1M General Gov't Services Other Taxes Mk Culture&Recreation 2.9M Licenses and Permits 2.1M Development Services Fees 9 k MI Rents&Leases 1.2M MI MI Fines&Penalties 2.8M MI ME Public Safety 1.1M mg I Other Miscellaneous 763k a 1 Interest&Investments imi 0 5M 10M 15M 20M 25M ■Annual Budget ■YTD Budget ■YTD Actual Quarterly Financial Report Through September 2024 6 Revenue Tax revenues, including property, sales/use, utility, business & occupation, gambling, and admissions taxes provides over 65% 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 15% 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 through the third quarter totaled roughly $13.6 million, approximately $173,000 or 1.3% above budget projections. However, as depicted in the graphic below, the majority of property taxes are collected during the months of April and October, coinciding with the due dates for county property tax billings. Property Taxes 02024 Budget f2024YTDActual -2023Actual $30 $25 $20 $13.6 M $15 $10 $5 $0 J.r Feb Mar Apr May Jun Aug Sep Oct Nov Dec Retail Sales Tax collections through Q3-2024 totaled $17.1 million, representing taxes remitted to the City of Auburn based on sales from November2023 through July 2024. Overall, these revenues increased slightly by$13,000, or 0.1%, from Q3-2023 collections due to lower performances in the construction (-$223,074), retail (-$49,886), and manufacturing (-$38,831) industries. Offsetting the slight decreases, increases in the services (+$247,277) and transportation (+$72,434) industries helped mitigate the year-to-date decrease from prior year totals. In comparison to the year-to-date budget, these revenues are favorable by nearly $1.8 million or 11.6% through the third quarter. Historically, the City collects more sales tax revenues during the second half of the year, mainly due to the upcoming holiday seasons. The City set a retail sales tax budget of$20.6 million for the fiscal year of 2024; based on year-to- date performance, collections may exceed this by year-end. King County estimates' that sales tax revenues will have an annual growth of 3.9% from 2023 actuals. By comparison, the City budgeted conservative annual growth of sales tax revenues of 1.5%. The City has seen consistent growth in recent years, but the rate of growth is volatile and has generally been in decline since 2019. 1 King County, WA. 2024. The Office of Economic and Financial Analysis. httos://kinacountv.aov/en/leaacv/independent/forecasting. Quarterly Financial Report Through September 2024 7 Retail Sales & Use Tax 02024 Budget —2023 Actual —111-2024YTD Actual $25 $20 $17.1 M $15 S10 $5 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec J Retail Sales& Use Tax $25 $22.7 Jf3.V $21.6 a $20 $18.8 518.9 $1/.1 • $15 $10 $s $0 2019 2020 2021 2022 2023 2024 YT❑ Quarterly Financial Report Through September 2024 8 The following table breaks out the City's retail sales taxes by major business sector. Comparison of Retail Sales Tax Collections by Group Through September 2024 2023 2024 Change from 2023 Component Group YTD Actual YTD Actual Amount Percentage Construction $ 2,164,791 $ 1,941,716 $ (223,074) (10.3) % Manufacturing 407,396 368,565 (38,831) (9.5) % Transportation&Warehousing 169,788 242,222 72,434 42.7 % Wholesale Trade 1,241,726 1,217,938 (23,788) (1.9) % Automotive 3,703,016 3,716,556 13,540 0.4 % Retail Trade 4,946,384 4,896,498 (49,886) (1.0) % Services 4,193,701 4,440,978 247,277 5.9 % Miscellaneous 279,142 294,342 15,200 5.4 % YTD Total $ 17,105,944 $ 17,118,815 $ 12,872 0.1 % Business & Occupation (B&O) Taxes were implemented by the City at the beginning of 2022. These taxes are collected from businesses based on either the value of gross receipts or square footage of occupied warehousing space, subject to certain constraints. While the City receives collections throughout the year, B&O taxes are generally received on a quarterly basis. By reconciling against the State's Business Licensing System, the City has been able to identify taxes collectable from prior periods, significantly contributing to the performance of this revenue. Overall collection through the third quarter of the year totaled $8.9 million versus a year-to-date budget of$5.3 million. Current 2024 collections outpace 2023 collections through the same period by $380,000 (4.5%), although recovery of back taxes is anticipated to decrease over time. Business & Occupation Tax 2024 Budget —2023 Actual —0—2024 YTD Actual $12 - $8.9 M $10 — • $8 0 $6 $4 $2 11111 $- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Quarterly Financial Report Through September 2024 9 Utility Taxes consist of an 11.5% tax on the gross revenues of water, sewer, storm drainage and solid waste utilities and a 6.0% tax on electric, natural gas, and telephone utilities operating within the City. Of those utilities taxed at 11.5%, the General Fund receives 9.0% while the remaining 2.5% is dedicated to funding City streets projects. The utilities taxed at 6.0% contribute 5.0% to the General Fund and 1.0% to City streets projects. Overall, utility taxes increased by $220,400 or 1.9% from Q3-2023 and are $920,700 favorable to budget. Roughly 72% of the utility taxes collected by the City are represented by the city interfund utility taxes and electric utility taxes. These two revenue sources accounted for $8.7 million of the collected $12.0 million throughout the third quarter of 2024. Furthermore, telephone taxes have increased from Q3-2023 by $201,500, which was mainly due to the timing of collections from prior year activity. Telephone taxes are collected in arrears on a quarterly basis, which causes the timing variance from prior year and quarters. Currently, the largest portion of the overall favorable variance to budget occurs within the external utility taxes category due to the City collecting backdated utility taxes from solid waste haulers. The City anticipates this level of collection to slow as more utility taxes become current, since the collection of backdated taxes are assumed as a one-time collection and should not expect back taxes to contribute a material amount in the future. The table and graphics below demonstrate the various utility tax revenues and show actual revenues compared to budget. Note that these amounts represent only the General Fund portion of revenues, and do not contain those revenues allocated for funding City streets projects. Utility Tax by Type(General Fund Portion) Through September 2024 2024 Favorable(Unfavorable 2023 2024 YTD Actual vs.2023 Actual Revenue Annual Bud•et YTD Bud•et YTD Actual Amount Percenta.e • ■ . tual Amount Perc- .•e City Interfund Utility Taxes $ 5,989,667 $ 4,737,000 $ 5,104,647 $ 367,647 7 8% $ 4,709,841 $ 394,807 8.4% Electric 4,426,743 3,517,200 3,569,944 52,744 1.5% 3,380,170 189,774 5.6% Natural Gas 1,658,523 1,304,000 1,124,464 (179,536) -13.8% 1,297,025 (172,561) -13.3% Telephone 435,847 308,709 538,112 229,403 74.3% 336,654 201,458 59.8% External Utility Taxes 621,973 432,858 892,508 459,649 106.2% 1,136,453 (243,946) -21.5% Brokered Natural Gas 150,000 121,400 200,182 78,782 64.9% 267,471 (67,289) -25.2% Cable 931,981 698,986 610,963 (88,023) -12.6% 692,837 (81,874) -11.8% Total $ 14,214,734 $ 11,120,153 $ 12,040,820 $ 920,667 8.3% $ 11,820,451 $ 220,368 1.9% Quarterly Financial Report Through September 2024 10 Utility Tax ©2024 Budget —8—2024 YTD Actual —2623Actual $20 $12.0 M z z 010 $5 1.1 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Utility Tax Revenues $20 $15.8 $15 $12.7 $13.2 $12.8 $12.0 c $10.9 • o $10 $5 $0 2019 2020 2021 2022 2023 2024 VTD Note: 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 COV1D-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%. The significant jump from 2022($12.8 million) to 2023($15.4 million)is largely due to higher service revenue following a rate increase effective in 2023, combined with higher service usage and the collection of B&O taxes on businesses that provide utility services. Quarterly Financial Report Through September 2024 11 An Admission Tax of 5.0% is placed on charges for general admission, season tickets, cover charges, etc. which are generally collected on a quarterly basis. Admission tax revenues of approximately $543,000 collected through September 2024 were significantly higher (91.1%) than Q3-2023, and favorable variance to budget by$290,400. The large increase in collections in March was due to a one-time payment as part of an agreement. Controlling for this non-recurring payment, admission taxes are still reporting a favorable variance to budget by roughly $183,800. Admission Tax 2024 Budget - --2024 YTD Actual -2023 Actu $700 $600 $542,8 K $500 $400 0 $300 $200 5100 -- So Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 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 (63.0%) and card games (21.6%). At $126,400 through the third quarter, collections are $117,300 lower than 2023 year-to-date totals and report a $88,900, or 41.3%, unfavorable variance to budget. The primary driver for the unfavorable variance minimal collections for card games. The City believes this may not be mitigated by the end of the year due to the timing of collecting backdated taxes, resulting in potential higher collections in the beginning of 2025. Gambling tax revenues historically have high volatility both month-over-month and year-over-year: excluding 2021 (due to COVID-19 restrictions), recent revenues through three quarters of the year average about$223,000 but have been as high as$313,800 (2018)and as low as $75,000 (2020). Lower performance in gambling taxes combined with lower retail sales tax collections potentially indicates a decrease in disposable cash in the area. Quarterly Financial Report Through September 2024 12 Gambling Tax 02024Budget —0—2024 YT D Actual —2023Actual $400 $350 $300 $250 z $200 0 $150 $126.4K $100 $50 • =0 — Jan Feb Mar Apr M._, Sep Oct Nov Dec Licenses and Permits include business licenses, building permits, plumbing, electric and other licenses and permit fees. Building permit fees (approximately 60%) and business licenses (approximately 15%) typically comprise most of the budgeted revenue in this category. The annual Business License renewal fee for each business located within the City is $103, with the renewal cycle for each business beginning on the date the business was originally granted a license. Until September 2022 businesses had been on a calendar year renewal cycle, with most revenue being collected in November and December. The updated renewal cycle has smoothed revenue collection throughout the year, which can be seen in the chart below as a relatively linear progression of year-to-date collections totaling $429,000 compared to $413,500 in Q3-2023, a 3.7% increase. Historically, business license collections have been a highly volatile revenue source, though collections in 2024 are projected to be comparable to 2023 totals due to increased discovery through B&O tax collections due to use of the State's Business Licensing System and a revamped collection schedule of these revenues. Quarterly Financial Report Through September 2024 13 Business Licenses p2024 Budget f2024YTDActual -2023Actual $600 $500 $429.0 K $400 0 $300 $200 $100 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Business License Revenues $700 5583 $600 $500 5424 i $429 • $400 $300 $336 $200 $100 $0 2019 2020 2021 2022 2023 2024 YTS Building Permit revenues collected through September 2024 totaled $655,800. Building permits are approximately $65,250 higher than 2023 collections year-to-date, although there is an unfavorable variance against the budget of $28,600 (-4.2%). A large contributing factor for this favorable variance versus 2023 totals is the increased valuation of construction permits on mixed use and subdivision builds. The number of permits submitted through the third quarter have also increased by 17.4% over the same period last year, representing an increased workload of construction throughout the City. This increase is mainly from one large project within City limits. Quarterly Financial Report Through September 2024 14 Building Permits O2024Budget —111-2024YTDActual —2023Actuai $1.2 $10 $0,S $0.7 K $0.6 $0.4 $0.2 $ao Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Building Permits $2.5 $2.0 o $1.5 $1.2 $1,3 $0.9 $1.0 $0.7 $1.0 $0.8 • $0.5 $0.0 2019 2020 2021 2022 2023 2024 YVD 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 Q3-2024 totaled $5.9 million and were $1.4 million favorable to budget expectations. Much of this favorable variance is due to the collection of the approved 2024 Muckleshoot Casino compact request. The City received the final payment of the 2023 request in the beginning of the year and have since collected roughly 75% of the 2024 request. The current trend of the payments received from Muckleshoot Casino indicates we should expect the final 2024 payment to be made in the beginning of 2025. Furthermore, federal and interlocal grant reimbursements for projects like the police body-worn camera program have also contributed to the favorable variance. Quarterly Financial Report Through September 2024 15 Intergovernmental Revenues(Grants,Entitlements&Services) Through September 2024 2024 Favorable Unfavorable 2023 2024 YTD Actual vs.2023 Actual Revenue Annual Bud•et YTD Bud•et YTD Actual Amount Percenta•e YTD Actual Amount MaIMIT Federal Grants $ 107,000 $ 53,500 $ 82,994 $ 29,494 55 1% $ 478 $ 82,516 17262.8% State Grants 714,386 641,600 574,700 (66,900) -10 4% 236,620 338,080 142.9% Interlocal Grants 381,861 109,300 347,600 238,300 218.0% 112,853 234,747 208.0% Muckleshoot Casino Services 1,712,643 1,284,482 2,187,210 902,727 70.3% 1,115,913 1,071,296 96.0% State Shared Revenues: Streamlined Sales Tax 575,982 431,987 448,071 16,084 3 7% 560,089 (112,018) -20.0% Motor Vehicle Fuel Tax 1,179,887 917,800 811,840 (105,960) -11 5% 852,054 (40,214) -4.7% Cnminal Justice-High Crime 289,096 216,822 216,565 (257) -0.1% 213,279 3,286 1.5% Cnminal Justice-Population 20,650 15,300 25,168 9,868 64 5% 23,806 1,362 5.7% Criminal Justice-Special Prog. 92,924 70,100 88,491 18,391 26 2% 102,007 (13,516) -13.3% Marijuana Excise Tax 175,522 131,642 170,881 39,239 29.8% 175,439 (4,558) -2.6% State DUI 12,390 9,293 6,740 (2,552) -27.5% 3,179 3,561 112.0% Fire Insurance Tax 91,000 91,000 - (91,000) -100 0% 114,235 (114,235) -100.0% Liquor Excise 495,593 356,827 451,204 94,377 26 4% 475,812 (24,607) -5.2% Liquor Profit 712,415 534,311 502,880 (31,431) -5.9% 508,924 (6,044) -1.2% Total State Shared. 3,645,459 2,775,081 2,721,841 (53,240) -1.9% 3,028,823 (306,983) -10.1% YTD Total $ 6,561,349 $ 4,863,963 $ 5,914,344 $ 1,050,381 21 6% $ 4,494,687 $ 1,419,657 31.6% Intergovernmental Revenues (Grants, Entitlements& Services) $12 $10.2 $10 u, $8 $6 9 o $6 6.3 $5.9 $5.9 2 $6 • $4 $2 $0 2019 2020 2021 2022 2023 2024 YTD 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. Quarterly Financial Report Through September 2024 16 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 September 2024 totaled $8.3 million and were $217,600, or 2.6%, less than expected to date. This was mainly due to general government revenues (specifically SKHHP reimbursements) being lower than anticipated due to the timing of projects associated with these reimbursements. Charges for Services by Type Through September 2024 2024 Favorable(Unfavorable 2023 2024 YTD Actual vs.2023 Actual Revenue Annual Bud.et YTD Bud•et YTD Actual Amount Percenta•e YTD Actual Amount Percenta•e General Government $ 5,824,577 $ 4,339,666 $ 3,378,097 $ (961,569) -22.2% $ 3,346,174 $ 31,923 1.0% (Public Safety 1,057,000 792,750 1,072,059 279,309 35.2% 773,804 298,255 38.5% (Development Services 1,158,080 922,300 921,591 (709) -0.1% 832,887 88,704 10.7% (Culture&Recreation 2,915,485 2,467,946 2,933,340 465,394 18.9% 2,740,415 192,925 7.0% Total $ 10,955,142 $ 8,522,662 $ 8,305,087 $ 217,575 -2.6% $ 7,693,280 $ 611,807 8.0% 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 for expenses related to South King Housing and Homelessness Partners (SKHHP), as well as transportation projects. The unfavorable variance of $961,500 to budget is due to the timing of SKHHP revenues, which are received on a reimbursement basis. Based on current schedules, most of the budgeted expenses are for projects budget to occur in 2024, but which are likely to be moved to the 2025 fiscal year. Public safety revenues mainly consist of collections 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 monies collected from the Auburn School District for services rendered. Public safety revenues collected through the third quarter of 2024 totaled $1.1 million and saw a $298,300 increase from 2023 third quarter totals. This is largely attributable to higher-than-expected law enforcement services collected. Comparing 2023 vs 2024, law enforcement services have increased by $362,300. Somewhat mitigating the overall favorable variance versus prior year, DUI emergency response fees collected have decreased by $57,500.. Overall, public safety collections hold a favorable variance to year-to-date budget expectations by $279,300. Development services fee collections consist primarily of plan check fees, facility extension charges, and zoning and subdivision fees. Through Q3-2024, development service fees collected totaled $921,600, on par with budget expectations. Within this category, unfavorable variances to year-to-date budget existed in plan check fees, where construction documents require review per Section 106.3 of the Construction Administrative Code (-$13,100) and environmental services (- $21,400). These were offset by favorable variances in fees assessed on projects that require extension of public facilities (+$20,300) and zoning and subdivision fees (+$13,500). This is an effect of the revenue regressing to the mean after an exceptional two-year period of high collections from 2021 through 2022. Although overall collections through the first three quarters of 2024 are lower than the same periods in 2021 and 2022, they are still higher than any other third quarter year-to-date collections dating back to 2009. Quarterly Financial Report Through September 2024 17 Development Service Fees $2.0 $1.6 ::: . $1.3 $1.1 $1.1 o_ $1 $0.9 • $0.5 $0.0 2019 2020 2021 2022 2023 2024 YTD Most Culture and Recreation revenues are derived from green 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, this category of revenues outperformed budget expectations by $465,400, or 18.9%. Nearly 65% of the year-to-date Culture and Recreation revenues have come from the Auburn Golf Course. Green fee revenues have increased by $122,000 or 8.6% from the same period last year and are favorable to budget by$187,250 year-to-date. The City projects that green fees collections will slowly decrease through the remainder of the year, as the peak season for golfers have passed. Since 2018, green fee revenues have increased annually, seeing a large spike in 2020 through 2021, followed by modest increases in 2022 and 2023. The City anticipates continued modest growth in 2024 based on updated green fee rates. Recreation classes represent 21% of year-to-date culture and recreation collections through the third quarter, and have generally remained consistent from prior year-to-date totals with $614,000 in collections. Ticket sales for performances held at local school venues (previously held at the Auburn Avenue Theater) have decreased by $22,100 or 23.2% from prior year totals but carry a favorable variance to budget by $39,300. This is mainly due to the Performing Arts Center decreasing to two shows year-to-date in 2024 compared to three shows in 2023. with continued community participation in recreational classes through the remainder of the year. Quarterly Financial Report Through September 2024 18 Culture & Recreation IO 2024 Budget f 2024 YTD Actual -2023 Actual $4 $2.9 M $3 O $2 $1 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 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 September 2024 2024 Favorable Unfavorable 2023 2024 YTD Actual vs.2023 Actual Revenue Annual Bud.et YTD Bud.et YTD Actual Amount Percenta.e YTD Actual Amount Percentage Civil Penalties $ 10,000 $ 7,970 $ 8,783 $ 813 10.2% $ 1,543 $ 7,240 469.3% Civil Infraction Penalties 138,313 98,900 132,674 33,774 34.1% 110,098 22,576 20.5°/ Photo Enforcement 3,000 1,900 157 (1,743) -91.7% 1,067 (910) -85.3% Parking Infractions 733,506 550,130 2,078,436 1,528,306 277.8% 372,412 1,706,023 458.1% Criminal Traffic Misdemeanor 40,000 28,600 25,847 (2,753) -9.6% 20,950 4,897 23.4% Criminal Non-Traffic Fines 41,000 32,400 56,679 24,279 74.9% 41,770 14,908 35.7% Criminal Costs 30,000 25,600 7,314 (18,286) -71.4% 9,667 (2,354) -24.3% Non-Court Fines&Penalties 76,000 56,800 455,806 399,006 702.5% 822,487 (366,681) -44.6% Total $ 1,071,819 $ 802,300 $ 2,765,694 $ 1,963,395 244.7% $ 1,379,994 $ 1,385,700 100.4% Total revenues collected through September 2024 totaled $2.8 million as compared to a budget of $802,000 and were 244.7% above budget expectations. This is primarily due to collections of the photo enforcement program implemented in 2023, which are classified as parking infractions. Furthermore, the City received an influx of non-court fines & penalties through the first half of the year due to back-pay of B&O taxes. The City contracts with the King County Court to operate its municipal court services. The number of hearings, judgments, and collections activity began decreasing in 2019 and has continued to decline since that time. Although the graph below shows a large spike in revenue in 2023 and strong performance in 2024, this is almost entirely due to photo enforcement and B&O-related collections. Excluding these sources, the remaining court-related collections have declined to $231,500, approximately one-third of their third quarter average for the period of 2015-2019, prior to contracting with King County. The City is currently conducting a feasibility study of alternatives to contracting with King County. Quarterly Financial Report Through September 2024 19 Fines& Penalties $3 $2.8 $2.6 • $2 0 a $1 $0.9 $0.6 $0.4 $0,4 $0 2019 2020 2021 2022 2023 2024 YTD 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. The most significant miscellaneous revenue categories are listed in the table below. Miscellaneous Revenues by Type Through September 2024 2024 Favorable(Unfavorable 2023 2024 YTD Actual vs.2023 Actual Revenue Annual Bud•et YTDBud.et YTD Actual Amount Percenta•e YTD Actual Amount Percenta•e Interest&Investments $ 315,000 $ 236,250 $ 1,648,748 $ 1,412,498 597.9% $ 891,832 $ 756,916 84 9% (Rents&Leases 1,142,948 940,900 1,214,999 274,099 29.1% 1,029,401 185,597 18 0% (Contributions&Donations 42,000 33,202 18,889 (14,313) -43.1% 25,421 (6,533) -25 7% 'Other Miscellaneous Revenue 258,000 208,213 701,042 492,829 236.7% 371,846 329,196 88 5% Total $ 1,757,948 $ 1,418,564 $ 3,583,677 $ 2,165,113 152.6% $ 2,318,500 $ 1,265,177 54.6% Revenues collected year-to-date 2024 in this category totaled $3.6 million and were $2.2 million or 152.6% favorable to budget. Of the favorable variance to budget, 65.0% was comprised of interest and investment collections,far exceeding budget expectations due to higher-than-expected interest rates and the maturation of multiple investments during the third quarter. The rents and leases category includes payments for facility rentals, golf cart rentals, and restaurant lease at the golf course. Rents and leases were favorable by $274,100 against year-to- date budget expectations, with a temporary easement of City property contributing significantly to the variance. Golf carts and other rentals were also favorable to expectations by$72,800, resulting in a favorable balance of budget to actual for the category. The rents and leases category generally exhibits seasonality, with the peak being in the spring and summer months. To date, rents and leases are $185,500 above 2023 collections through the same period, as the City has seen increased numbers of events that request the use of City facilities. The "Other Miscellaneous Revenue" sub-category reported $329,200 more than the same timeframe last year and was favorable to the year-to-date budget by $493,000. This category includes $406,500 in revenue related to a national opioid settlement distribution program. Quarterly Financial Report Through September 2024 20 Miscellaneous Revenues s.- $3.6 $3.3 • $3 $2.4 0 $2 $1.8 $1S $1.2 $1 $0 2019 2020 2021 2022 2023 2024 YT❑ OTHER FUNDS Real Estate Excise Tax (REET) revenues are taxes on the sale of both commercial properties and single-family residences. These collections are receipted into the Capital Improvement Projects Fund and used for governmental capital projects. REET revenues collected year-to-date in 2024 total $4.1 million which is $2.4 million or 58.7% favorable to budget expectations. According to King County assessed valuations of property taxes, the City has increased in property value by 2.3%. Accompanied with lower interest rates currently, the current climate for real estate sales is favorable for citizens within the State of Washington. Quarterly Financial Report Through September 2024 21 Real Estate Excise Tax 02024Budget —0—2024 YTD Actual —2023Actual $4 1 M S1 Aug Sep Oct Nov Dec Year-to-date REET collections in 2024 are significantly outpacing those of last year, and have only been exceeded in the last ten years by 2015 and 2022 year-to-date collections. This is a sign of recovery after two years of declining annual REET revenues. Collections peaked in 2021 following two years of historic low interest rates maintained by the Federal Reserve in response to COVID- 19. However, interest rates were increased throughout 2022 and 2023 to address severe inflation, cooling the market and lowering REET collections in those years. The federal funds rate decreased in September and is expected to change again in October. With an expected reduction later this year, REET collections appear to be improving. Generally, REET revenues have reflected the overall market volatility in recent years, with a standard deviation of $960,400 or 29.0% of the average annual collections over the time period of 2017 to 2023. Real Estate Excise Tax Revenues Through September 2024 2024 Favorable(Unfavorable 2023 2024 YTD Actual vs.2023 Actual Revenue Annual Bud.et YTD Bud.et YTD Actual Amount Percenta.e •Actual Amount Percentage Real Estate Excise Tax $ 2,228,300 $ 1,679,482 $ 4,063,530 $ 2,384,049 58.7% $ 2,699,151 $ 1,364,380 50.5% Total $ 2,228,300 $ 1,679,482 $ 4,063,530 $ 2,384,049 58.7% $ 2,699,151 $ 1,364,380 50.5% Quarterly Financial Report Through September 2024 22 Real Estate Excise Tax Revenues $7 $6.0 $6 $5.2 $5.3 $5 w $4.2 $4.1 C 0 $4 7.G 3 $3 $2 $1 $0 2019 2020 2021 2022 2023 2024 YT❑ Quarterly Financial Report Through September 2024 23 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 used all $14.8 million to offset public safety expenditures, as shown in the table below and reported to the Department of the Treasury. ARPA FUNDING STATUS Total ARPA Funding Received 14,751,231 ARPA Funding Used to Mitigate Public Safety Costs 14,751,231 ARPA Funding Remaining - 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. As of September 30, 2024, the City has been able to spend $900,693 year-to-date and $5.3 million since 2021 on the following projects: 2024 Lifetime Spend Title Budget Q3Spend (includes this quarter) Remaining Completed Projects 2,041,659 - 2,041,658 Body Cameras 586,400 - 550,325 36,075 Vaccination Incentive Program 47,500 - 34,980 12,520 Neighborhood Street Light Program 1,300,000 2,400 94,536 1,205,464 Neighborhood Traffic Calming 200,000 82 18,496 181,504 Recreation Access Grants 150,000 650 650 149,350 Human Services Grants Includes Admin 1,000,000 4,841 445,882 554,118 Theater 389,700 - - 389,700 Limited Term Employee(LTE):Grants Coordinator 420,000 - 118,729 301,271 Paving Gravel Roads 135,000 - 23,539 111,461 2023 Local Street Preservation 501,886 - - 501,886 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 17,862 19,460 130,540 Emergency Housing Voucher Program 2,000,000 92,681 492,780 1,507,220 DEI Dashboard(Inclusive Auburn) 130,000 92,805 92,805 37,195 Duct cleaning in applicable buildings 150,000 - - 150,000 Encampment Cleanup 500,000 1,589 451,867 48,133 Downtown Sidewalk Replacement on Main Street and B Street Plaza Surface Replacement 2,009,409 292,308 354,034 1,655,375 Cameras in qualified census tracts 150,000 - 73,283 76,717 Community Violence Intervention Programs(Drone,SPIDR Tech) 236,248 - 170,875 65,373 Arts Culture Center Renovations 100,000 - - 100,000 Auburn Ave Theater Demolition 300,000 15,757 31,700 268,300 Signing Bonuses for Police Lateral Hires 200,000 32,696 196,938 3,062 Other Projects(not started) 1,928,430 - - 1,928,430 Total: 14,751,231 553,670 5,254,408 9,496,822 The project Downtown Sidewalk Replacement on Main Street and B Street Plaza Surface Replacement will construct infrastructure improvements in Downtown Auburn along Auburn Ave. from East Main St. N to 1st St. NE and on East Main St. from Auburn Ave to B St. NE, including B Quarterly Financial Report Through September 2024 24 St. Plaza. The improvements will support existing and future re-development activities and replace infrastructure that is at or near the end of its useful service life. The project team is designing the improvements and anticipates completing the design by the end of the year with construction to begin in early 2025. Total spend of this project so far is $354,034 with $292,306 spent in the third quarter. The DEI Dashboard project entered into a contract with an outside consultant firm for development of the City's DEI data strategy. The purpose of this plan is to outline and roadmap of the City's data practices, aimed at tracking and monitoring key organizational DEI objectives. The consultant is working with the Office of Equity to complete Phase 1. Overall spend of this project is $92,805 which was all spent in the third quarter of 2024. Beginning in 2023, the Emergency Housing Voucher Program is budgeted at $2 million over the life of the program. This program assists residents of Auburn who are experiencing homelessness and drug addiction 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 if the participant follows the clean and sober housing agreement. Life-to-date project spend is $492,780, with $92,681 occurring in Q3-2024. Beginning in 2024, the Auburn Avenue Theater Demolition project is budgeted at $300,000. The project will demolish the existing Auburn Avenue Theater building, provide support to the shared wall with the adjacent building, and disconnect existing utilities. The Auburn Ave Theater building demolition is complete, and the contractor is performing the final site cleanup. A proposed in-fund transfer of ARPA funds of $190,000 increased the total budget to $490,000 as the total project estimated costs are $364,550. The lifetime project cost through Q3-2024 is $31,700. Enterprise Funds 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 project managers information on the availability of working capital for current and planned projects. Through September 2024, the Water Utility Fund had operating income of$5.5 million (operating revenues less operating expenditures), approximately $183,000 higher than the same period last year. Most of this increase is due to higher revenues from water sales due to increased rates and consumption; charges for service revenues were$14.8 million through Q3-2024 compared to$14.3 million through Q3-2023. In addition to increased water sales, the fund also saw higher expenses in personnel costs (+$42,000), supplies (+$17,000) and other service charges (+$222,000), which includes utility taxes. Utility and excise taxes are proportional to revenue; therefore, when a fund experiences increased revenue growth, it is expected that utility and excise taxes will also increase over the same period. Q3-2024 activity is consistent with the seasonality of this revenue stream, where revenues remain relatively low early in the year and then increase in Q2 and Q3 as the weather grows warmer. In total, operating income for this fund was $2.0 million favorable to the year-to-date budget. Quarterly Financial Report Through September 2024 25 Operating revenues were$1.1 million higher than expected through Q3-2024,with interest earnings outperforming budget expectations by $501,000 and charges for service $552,000 higher than projected. Operating expenditures had a $960,000 favorable variance to budget, driven by lower- than-expected personnel costs (-$227,000), as well as timing differences in public utility payments (-$265,000), and professional service charges (-$289,000). Billable water consumption through Q3-2024 totaled 2.4 million ccf (hundred cubic feet), approximately 82,000 ccf or 3.0% lower than consumption volume through Q3-2023. Decreases in consumption were seen primarily in irrigation, school, and single-family customer classes compared to the prior year, while consumption increased in the manufacturing and commercial customer classes. Water Revenues and Water Sold 2023 vs 2024 $3.OM 1,000 $2.5M 800 $2.0M 600 2 $1-SM a 400 s $1-OM $05M $0.0M - ac Qe �a pQ 40 NS 5�\ �% yeQ 0' °� O6' 2023 Water Sales($) 2024 Water Sales($) 2023 Water Sold(cc) _2024 Water Sold(ccf) Compared to the same period last year, the Sewer Utility Fund experienced marginal growth, finishing Q3-2024 with $3.6 million in operating income, $407,000 higher than Q3-2023. Operating revenues were up $703,000 or 8.6% from the same period last year due to stronger performance in charges for City sewer service (+$431,000) and higher interest earnings (+$272,000). Operating expenses increased $296,000 from the prior year, due primarily to increased personnel costs (+$44,000), supply costs (+$13,000), as well as other service charges (+$221,000), which includes utility tax expense. Through Q3-2024, this fund performed better than budget expectations with a $1.6 million favorable variance in operating revenues, both in charges for service (+$980,000) and interest earnings (+$633,000). Additionally, operating expenditures had a $2.2 million favorable variance compared to budget expectations, driven primarily by the elimination of utility tax charges on pass-through revenues for King County Metro Sewer service. The Stormwater Utility Fund had operating income of $2.3 million through Q3-2024, an insignificant increase (+0.3%, or +$7,600) from the same period last year. This is consistent with the historical activity of this fund; as most Stormwater service charges are based on a flat rate, there are not typically seasonal fluctuations in Stormwater revenue. While operating revenues were higher through Q3-2024 compared to Q3-2023 (+$471,000), operating expenses for this fund were also higher during this same period (+$464,000). Primary Quarterly Financial Report Through September 2024 26 drivers for the increase in operating expenditures were increased personnel costs (+$351,000)and other service charges (+$124,000). These increases were partially offset by underspend in supplies (-$13,000). This fund also outperformed budget expectations, with a $1.5 million favorable to budget variance in operating income, driven by higher than anticipated revenues (+$1.4 million) and a favorable to budget variance in operating expenditures (-$142,000) through Q3-2024. The Solid Waste Utility Fund finished Q3-2024 with operating income of $346,000, which is $379,000 lower than operating income reported through same period last year. The primary driver of this variance is the timing differences of payments for solid waste service. Operating revenues increased $1.6 million, due primarily to increased service rates adopted for 2024. However, operating expenditures also increased approximately $2.0 million, due primarily to timing differences of payments for solid waste service as well as utility and excise taxes. Compared to budget expectations, operating revenues saw a favorable variance (+$490,000) due to higher than anticipated charges for service and interest earnings. The fund also saw a $345,000 favorable variance to budget in operating expenditures, in part due to cost savings from the dissolution of the City's solid waste team after the full transition to third-party solid waste services earlier in the year (+$142,000). Further, other charges for service had a $160,000 favorable variance, due to slight timing differences in payments to the City's solid waste provider and utility tax payments. We expect these timing differences to be resolved by year-end. Internal Service Funds Operating expenditures within the Insurance Fund represent the premium cost pool that is allocated to other City funds on an annual basis. Historically, the total premium cost was allocated to the other City funds monthly, which resulted in the balance in this fund being paid down gradually over a twelve-month period. Earlier in 2024, the full annual cost was paid by City funds rather than being allocated on a monthly basis. As such, there is a timing difference that results in a variance when comparing current period and prior period costs. In all, activity within this fund is consistent with expectations and no other significant activity was reported during Q3-2024. No significant variances are reported in the Workers' Compensation, Facilities, Innovation & Technology, or Equipment Rental Funds. Contact Information This report is prepared by the Finance Department. Additional financial information can also be viewed at our website: htto://www.auburnwa.aov/. For any questions about this report please contact Jamie Thomas at idthomas(a�auburnwa.aov.