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HomeMy WebLinkAboutQ1 2023 Financial Report CITY OF J A iii AGENDA BILL APPROVAL FORM rim WASHINGTON Agenda Subject: Date: 1st Quarter 2023 Financial Report (Thomas) (20 Minutes) May 31, 2023 Department: Attachments: Budget Impact: Finance Financial Report through March 2023 012023 Financial Report 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 March 31, 2023, based on financial data as of May 10, 2023. Reviewed by Council Committees: Councilmember: Baldwin Staff: Thomas Meeting Date: June 12, 2023 Item Number: C1TY OF —J A , ;" 1 Quarterly Financial Report Through March 2023 WASHINGTON This report provides an overview of the City's overall financial position for the fiscal period ending March 31, 2023, reflecting financial data available as of May 10, 2023. 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 Coming off a robust 2022 fiscal year, the City embraces a new biennial budget cycle starting in 2023. As we have seen in prior years, General Fund revenues have generally exceeded budget expectations and largely recovered from the impact of the COVID-19 mitigation measures. The current annual budgeted revenue amount is $91.2 million and an annual budgeted expenditure amount of$98.1 million; a planned decrease in General Fund balance of$7.0 million. New in 2022, the City implemented a citywide Business and Occupation (B&O) tax, wherein the City taxes businesses based on the value of gross receipts or square footage of occupied warehousing space, subject to certain exceptions. This new revenue stream achieved a total of $3.0 million in 2022, and has already provided $1.7 million year-to-date in 2023. Due to a change in the renewal schedule for business licenses design to spread revenue collection more evenly over the year, the City has also seen increased business license revenue compared to last year. Additionally, the City offers a wide range of recreational classes and access to the Auburn Golf Course. Green Fees at the Auburn Golf Course have remained a staple revenue source for the City, collecting roughly 27% of the total Culture & Recreation revenues. However, Recreational classes have significantly increased by 39% from 2022 collections. A hopeful indication that the City is returning to pre-pandemic levels. Overall, General Fund revenues collected through Q1-2023 totaled $20.3 million as compared to a year-to-date budget of$18.7 million, and were $1.6 million, or 8.6% above budget expectations. General Fund expenditures through Q1-2023 totaled $21.3 million compared to a year-to-date budget of$22.7 million; resulting in a $1.4 million or 6.2% underspend. GENERAL FUND REVENUES VS. EXPENDITURES THROUGH MARCH 2023 YTS Actuals $21.3 M Expenditures YTS Budget $22.7 M YTS Actuals $20.3 M Revenues YTS Budget $18.7 M $0 $5 $10 $15 $20 $25 $30 $MILLIONS Quarterly Financial Report Through March 2023 2 Revenue: The following factors had the most significant impacts on the budget vs. actual revenue collected: • Retail Sales Tax: The sales tax report through Q1-2023 (which is provided as an attachment to this report) reflects amounts remitted to the City of Auburn based on sales from November 2022 through January 2023. Collections through March 2023 totaled $5.6 million, a 1.0% decrease from last year. However, compared to the year- to-date budget, sales tax has a favorable variance of$664,700 or 13.4%. The increase resulted from multiple categories, particularly services and automotive. [pages 5-7] • Utility Tax: In 2022, there was a notable change in how the interfund utility taxes were transferred between the General Fund and the City's pass-through King County Metro Sewer sub-fund. Utility tax revenues through Q1-2023, were $175,000 favorable to budget. Factoring in an accounting adjustment in late 2022, collections are favorable by $210,000 against prior year-to-date revenues. [pages 7-8] • Building permits: Q1-2023 revenues collected totaled $142,500, which was $121,000 unfavorable to the year-to-date budget. While the number of permits received remain consistent with 2022, the valuation of individual permits, especially in construction permits, have decreased considerably. [page 11-12] • Intergovernmental revenue: Collections through Q1-2023 were $93,000 favorable to budget. The City received the final payment of the 2022 Muckleshoot Indian Tribe (MIT) compact, contributing to the favorable variance. However, the City has not collected any 2023 compact revenue as the current request is still pending approval. Higher Liquor and Marijuana excise taxes also provided positive gain to the favorable variance during the first quarter. [page 13] • Culture and Recreation: Revenues collected through Q1-2023 totaled $796,000 and were $334,000 higher than budget expectations. Recreational classes, which saw an increase of $89,000 from 2022 totals, was the main contributor to this increase. Green fees at the Auburn Golf Course and Auburn Theater tickets sales provide additional support to the variance against the budget. [page 15] Expenditures: Almost all departments operated within their budgets through the first quarter of 2023, with some variances due to the timing of professional services payments, as well as expenses related to projects facilitated by ARPA funding. Of the favorable variance to budget mentioned above, $434,000 of that is comprised of underspend professional services, as well as $780,000 underspend in personnel costs due to position vacancies across the City. As of the compilation of this report, there were 25 vacant regular full-time positions in the City. Quarterly Financial Report Through March 2023 3 Enterprise Funds Overview The City's enterprise funds account for operations with revenues primarily provided from user fees, charges or contracts for services. Significant for 2023, the City's cash and investment balance increased significantly compared to the same quarter last year. As a result, interest earnings across all funds increased materially, totaling $570,000 more in the enterprise operating funds than in Q1-2022. Another factor contributing to higher interest earnings was increased interest rates for money market accounts compared to last year. The Water Fund ended Q1-2023 with operating income of about $948,000, which was approximately $91,000 above the same period last year. Nearly half of the increase in operating revenue was due to increased interest earnings. [page 21] The Sewer Fund ended Q1-2023 with operating income of about $989,000 versus $417,000 in the same period last year. Operating expenses decreased $363,000 which was about 19% in this quarter compared to the same quarter of last year. [page 22] The Stormwater Fund ended Q1-2023 with operating income of about $920,000 compared to $756,000 in the same period last year. The increase in revenues (primarily from charges for storm service and interest earnings) were higher than the increase in expenditures, resulting in a 22% higher operating income this quarter than the same quarter last year. [page 22] 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 Q1-2023. [page 22] Quarterly Financial Report Through March 2023 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 2023 2022 _2023 YTD Budget vs.Actual Summary of Sources and Uses Annual YTD YTD YTD Favorable(Unfavorable) Budget Budget Actual Actual Amount Percentage Operating Revenues Property Tax $ 24,016,247 $ 1,204,700 $ 1,103,605 $ 1,153,604 $ (101,095) (8.4) % Retail Sales Tax 20,344,500 4,952,000 5,616,703 5,673,725 664,703 13 4 % Affordable Housing Sales Tax Credit 174,963 43,741 48,202 47,274 4,461 10.2 % Sales Tax-Fierce County Parks 125,000 29,700 32,886 32,427 3,186 10.7 Criminal Justice Sales Tax 2,441,300 571,100 775,552 721,192 204,452 35.8 % Brokered Natural Gas Tax 150,000 40,300 144,350 51,479 104,050 258 2 % City Utilities Tax 6,776,697 1,476,300 1,445,233 1,633,844 (31,067) (2.1) % Business&Occupation Tax 5,480,960 1,370,240 1,688,685 - 318,445 23.2 % Admissions Tax 308,740 84,500 114,096 61,772 29,596 35.0 % Dectric Tax 4,357,031 1,076,400 1,041,482 999,584 (34,918) (3.2) Natural Gas Tax 1,638,857 208,900 348,245 296,575 139,345 66 7 % Cable Franchise Fee 897,035 224,259 - 232,704 (224,259) (100.0) % Cable Utility Tax 949,064 237,266 280,942 245,342 43,676 18.4 % Cable Franchise Fee-Capital 52,484 13,121 16,289 14,723 3,168 24.1 % Telephone Tax 500,974 140,994 81,478 144,011 (59,516) (42.2) % Solid Waste Tax(external) 60,462 8,221 21,426 8,948 13,204 160.6 % Leasehold Excise Tax 246,514 14,000 17,790 12,823 3,790 27.1 % Gambling Excise Tax 293.300 52.190 103.877 48.423 51.687 99.0 Taxes sub-total $ 68,814,128 $ 11,747,932 $ 12,880,841 $ 11,378,450 $ 1,132,909 9.6% Business License Fees $ 450,000 $ 110,300 $ 204,050 $ 80,118 $ 93,750 85.0 % Building Permits 933,364 263,500 142,518 297,012 (120,982) (45.9) Other Licenses&Permits 1,128,000 356,300 320,956 282,915 (35,344) (9.9) % Intergovernmental(Grants,etc.) 6,162,537 1,393,249 1,486,422 1,433,379 93,174 6 7 % Charges for Services: General Government Services 4,466,944 1,116,736 1,091,757 875,399 (24,979) (2.2) Public Safety 910,000 227,500 237,189 268,255 9,689 4.3 % Development Services Fees 1,130,517 293,200 214,228 374,593 (78,972) (26.9) % Culture and Recreation 2,481,335 463,454 796,244 584,763 332,790 71 8 % Fines and Penalties 422.975 116.900 103.818 96.314 (13.082) (11.2) % Fees/Charges/Fines sub-total $ 18,085,672 $ 4,341,138 $ 4,597,182 $ 4,292,749 $ 256,044 5.9 % Interest and Investment Earnings $ 366,700 $ 91,675 $ 248,841 $ 89,509 $ 157,166 171 4 % Rents and Leases 1,109,234 371,000 300,463 303,178 (70,537) (19.0) % Contributions and Donations 21,000 5,250 434 3,821 (4,816) (91.7) % Other Miscellaneous 203,000 63,127 192,895 280,254 129,768 205.6 % Transfers In 2,565,692 2,089,000 2,015,000 724,000 (74,000) (3.5) % Insurance Recoveries-Capital&Operating 25.000 6.250 90.449 7.892 84.199 1347 2 % Other Revenues sub-total $ 4,290,626 $ 2,626,302 $ 2,848,082 $ 1,408,653 $ 221,780 8.4% Total Operating Revenues $ 91,190,426 $ 18,715,372 $ 20,326,104 $ 17,079,852 $ 1,610,733 8.6 % Operating Expenditures Council&Mayor $ 1,415,188 $ 375,200 $ 371,523 $ 380,829 $ 3,677 1.0 % Administration 1,265,262 377,400 297,383 257,551 21 2 % Human Resources 2,311,411 584,900 595,939 515,644 (11,039) (1.9) % Municipal Court&Probation 3,038,838 239,260 252,957 183,634 (13,698) (5.7) Finance 5,048,623 1,214,200 1,150,000 843,831 64,200 5.3 % City Attorney 6,493,752 1,271,400 1,384,348 4. 962,960 (112,948) (8.91 % Community Development 8,308,843 1,706,400 1,581,490 1,472,814 124,910 73 % DD 653,213 163,200 82,631 - 80,569 49.4 % Jail-SCORE 5,600,000 1,400,100 1,173,547 ' 809,526 226,553 16.2 % Police 35,506,676 9,248,700 8,495,621 8,311,313 753,079 8.1 % Public Works 4,639,592 1,102,400 1,035,836 `838,418 66,564 60 % Parks,Arts&Recreation 15,503,032 3,275,700 3,427,650 3,062,746 (151,950) (4.6) % Streets 4,634,919 1,047,700 938,310 M841,017 109,390 10.4 % Non-Departmental 3,724,000 725,725 540,193 575,675 i 185,532 25.6 Total Operating Expenditures $ 98,143,349 $ 22,732,285 $ 21,327,429 $ 19,055,957 , $ 1,404,856 , 6.2 % Quarterly Financial Report Through March 2023 5 Revenue The combined total of property, sales/use, utility, gambling, and admissions taxes provides over 75% 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 5% 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 in the first quarter totaled roughly $1.1 million as compared to a first quarter budget of$1.2 million. The City collected lower than expected revenues in January and March. 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 the County property tax billings. Property Taxes CI2023Budget —0-2023YFDActual —2022 Actual $30.0 $25.0 $20.0 O $15.0 $10.0 $5.0 51.1 T.' $0.0 Jan Feb Mar ;: May Aug Sep Oct Nc••.• Retail Sales Tax collections through Q1-2023 totaled $5.6 million, representing taxes remitted to the City of Auburn based on sales from November 2022 through January 2023. Overall, these revenues are on par with collections through Q1-2022, with strong performances in the automotive (+$77,200) wholesale (+$75,300) and services (+$65,900) industries more than offsetting slight decreases in most of the remaining industries. The notable exception is the manufacturing industry: due to a large one-time contribution in Q1-2022, manufacturing collections are down $207,300 (60.0%), resulting in an overall decrease of$57,000 (1.0%) in total collections from the same period last year. Despite the small overall decrease from Q1-2022, these revenues remain favorable to budget by nearly $665,000 through the first quarter. Quarterly Financial Report Through March 2023 6 Retail Sales & Use Tax 02023 Budget —0—2023 YTD Actual —2022Actual 525.0 $20.0 $15.0 0 $10.0 55.5M $5,0 $0.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Retail Sales& Use Tax $25.0 $20.3 $18.4 $20.0 516.9 $15.6 $14.9 $15.0 $10.0 $5.0 $5.0 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. Quarterly Financial Report Through March 2023 7 The following table breaks out the City's retail sales taxes by major business sector. Comparison of Retail Sales Tax Collections by Group Through March 2023 2022 2023 I Change from 2022 Component Group YTD Actual YTD Actual I Amount Percentage Construction $ 692,664 $ 677,484 $ (15,181) (2.2) % Manufacturing 345,395 138,050 (207,345) (60.0) % Transportation & Warehousing 84,228 56,265 (27,964) (33.2) % Wholesale Trade 321,255 396,540 75,285 23.4 % Automotive 1,101,151 1,178,351 77,200 7.0 % Retail Trade 1,739,428 1,735,724 (3,705) (0.2) % Services 1,307,202 1,373,134 65,933 5.0 % Miscellaneous 82,401 61,156 (21,246) (25.8) % YTD Total $ 5,673,725 $ 5,616,703 $ (57,022) (1.0) % 1 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 increased 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%. Overall, utility taxes decreased by $17,000 or 0.5% from Q1-2022, which is primarily attributable to two factors: first, in December 2022 the City ceased charging utility tax on the pass-through revenues of the King County Metro Sewer fund. Since this change was not made until the end of the year, Q1-2022 revenues are overstated. Adjusting for this, Q1-2023 utility tax revenues surpass Q1-2022 revenues due to exceptional performance in Solid Waste and Brokered Natural Gas taxes; without the adjustment, actuals are still favorable to budget by $188,000. Second, beginning in January 2023, external utility taxes are collected on either a quarterly or annual basis, rather than monthly. Although there have been collections in January and February, the City anticipates a change to the timing of these revenues in 2023, which will affect year-over- year performance comparisons for the remainder of the year and into 2024. The table and below demonstrates the various utility tax revenues and shows actual revenues compared to budget. Utility Tax by Type Through March 2023 2022 2023 2023 I 2023 vs. 2022 Actual 2023 vs. Budget Utility Tax Type YTD Actual YTD Budget YTD Actual Amount Percentage Amount Percentage City Interfund Utility Taxes $ 1,633,844 $ 1,476,300 $ 1,445,233 $ (188,611) (11.5) % $ (31,067) (2.1) % 'Electric 999,584 1,076,400 1,041,482 41,898 4.2 % (34,918) (3.2) % (Natural Gas 296,575 208,900 348,245 51,669 17.4 % 139,345 66.7 % (Telephone 144,011 140,994 81,478 (62,533) (43.4) % (59,516) (42.2) (Solid Waste(external) 8,948 8,221 21,426 12,478 139.4 % 13,204 0.0 % IBrokered Natural Gas 51,479 40,300 144,350 92,871 180.4 % 104,050 258.2 % ICable 245,342 224,259 280,942 35,600 14.5 % 56,683 25.3 % YTD Total $ 3,379,783 $ 3,175,374 $ 3,363,155 $ (16,628) (0.5) % $ 187,781 5.9 1 Quarterly Financial Report Through March 2023 8 Utility Tax 02023 Budget —0-2023 YTD Actual —2022 Actual $16.0 :::.: $10.0 0 $8.0 $6.0 $3.4 M $4.0 • •$2.0 • $0.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Utility Tax Revenues $13,2 $12.8 $13.0 $12.7 $11.1 $10.9 $11.0 $9.0 3 $7.0 $5.0 $3.4 53.0 201E 2019 2020 2021 2022 2023 YTO 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. Quarterly Financial Report Through March 2023 9 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. Admission tax revenues of$52,000 collected through March 2023 were significantly higher than Q1-2022. This is partially due to lingering effects of the COVID-19 pandemic in the early part of the year, resulting in generally lower admissions in early 2022. The City projects Admission taxes will return to pre-pandemic levels over the biennium. As of Q1-2023, admission tax revenues are favorable to budget by roughly $29,600. Admission Tax r�2023 Budget 2O231TDActual -2022 Actual $400 $300 ----- } r v, 0 ul $200 0 $114.1 K $100 wgimi $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 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. Quarterly Financial Report Through March 2023 10 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 the gambling tax revenues are collected from amusement games and card games. As with admission tax, the City projects increased collections from 2022 totals. Through the first quarter, collections are $32,000 higher than 2022 year-to-date totals and report a $52,000 or 99.0% favorable variance to budget. This revenue source historically has significant variance from year to year: excluding 2021, first- quarter revenue has been as high as $164,000 (2016) and as low as $35,000 (2018). Gambling Tax 0 2023 Budget —o—2023 YID Actual —2022 Actual $406.0 $300.0 $Z00.0 SIDS K 100/1111jr— $106 0 $0.0 Jan Feb Mar Apr May Jun Jul Aug Sea Oct No.. 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 each business that is 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. Starting in September of 2022, business are now on an annual renewal cycle that begins on the date the business had originally been granted a license. This new methodology is expected to smooth out revenue collection throughout the year, which can also be seen in the chart below as a more linear progression of year-to-date collections totaling $204,000, compared to $81,100 in Q1-2023. As mentioned previously, changes in the timing of collections will affect year-over-year performance comparisons for the remainder of 2023 and into 2024. Moreover, collections in 2023 are projected to be higher in total than 2022, due to increased discovery through B&O tax collections and use of the State's Business Licensing System (BLS). Quarterly Financial Report Through March 2023 11 Business Licenses 2023 Budget —0—2023 YT D Actual 2022 Actual $500 $450 $400 $350 $300 O $250 $204.0 K xi— Q $200 $150 $100 • $50 • $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Business License Revenues $500 $424 $400 33:4 $336 $326 tel ra $300 $353 N ° $204 ~ $200 0 $100 $0 2018 2019 2020 2021 2022 2023 YTD Quarterly Financial Report Through March 2023 12 Building Permit revenues collected through March 2023 totaled $143,000. Building permits are approximately $155,000 lower than 2022 collections year-to-date and hold an unfavorable variance against the budget of$120,000. A large contributing factor for this unfavorable variance is due to the valuation of construction permits on mixed use and subdivision builds decreasing throughout 2023, even though the number of permits generally remain the same as 2022 counts through the same period. Building Permits I I2023 Budget —0—2023 YT❑Actual —2022 Actual $1.6 $1.4 $1.2 $1.0 $0.8 $0.6 E.O .4 0.1M 1 2 3 L 5 6 7 8 9 10 11 12 Building Permits $2.5 $2.0 $1.5 $1_0 $0.9 $1 o $0.8 $1.3 $0.5 0 $0.1 $0.0 2018 2019 2020 2021 2022 2023 YT❑ Quarterly Financial Report Through March 2023 13 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 Q1-2023 totaled $1.5 million and were $93,000 favorable to budget expectations. Much of this favorable variance is due to the final payment of the 2022 compact request made by Muckleshoot Casino in January 2023. However, the 2023 compact request is still pending MIT approval, and no 2023 revenues have been collected to date. Intergovernmental Revenues(Grants, Entitlements&Services) Through March 2023 I 2022 2023 2023 2023 vs.2022 Actual 2023 vs.Budget Revenue YTD Actual YTD Budget YTD Actual Amount %Change Amount %Change Federal Grants $ - $ - $ - $ - $ - State Grants 31,680 3,300 2,417 (29,263) (92.4)% (883) 3.0% Interlocal Grants 9,000 3,900 - (9,000) (100.0)% (3,900) 43.3% Muckleshoot Casino Services 385,997 429,615 539,508 153,511 39.8% 109,893 71.6% One-Time Allocation(SB 5092) - - - - - State Shared Revenues: Streamlined Sales Tax 250,040 244,289 200,032 (50,008) (20.0)% (44,257) 88.5 Motor Vehicle Fuel Tax 276,418 275,000 263,010 (13,408) (4.9)% (11,990) 89.4% Criminal Justice-High Crime 68,320 71,206 70,856 2,536 3.7% (350) (13.8)% Criminal Justice-Population 7,332 4,900 7,760 427 5.8% 2,860 669.2% Criminal Justice-Special Prog. 26,061 22,100 27,452 1,391 5.3% 5,352 384.7 Marijuana Excise Tax 55,748 43,232 58,580 2,831 5.1 % 15,348 542.1 % State DUI 3,682 3,052 108 (3,573) (97.1)% (2,943) 82.4 Fire Insurance Tax - - - - - Liquor Excise 148,299 117,184 147,070 (1,229) (0.8)% 29,885 (2431.8)% Liquor Profit 170,802 175,471 169,631 (1,172) (0.7)% (5,841) 498.5% Total State Shared: 1,006,702 956,434 944,497 (62,205) (6.2‘% (11,937) 19.2% YTD Total $ 1,433,379 $ 1,393,249 $ 1,486,422 $ 53,043 3.7% $ 93,174 6.7 % Intergovernmental Revenues (Grants, Entitlements& Services) $12 $10.2 $10 /\ o $g $6.9 _ $6.3 $6, \6.3 3 $6 r $4 $2 $1.5 $0 2018 2019 2020 2021 2022 2023 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 March 2023 14 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 March 2023 totaled $2.3 million and was $239,000, or 11.4%, more than expected to date, mainly due to exceptional performance at the Auburn Golf Course. Charges for Services by Type M. 1 Through March 2023 2022 2023 2023 2023 vs. 2022 Actual 2023 vs. Budget Revenue YTD Actual YTD Budget YTD Actual Amount Percentage Amount Percentage General Govemment $ 875,399 $ 1,116,736 $ 1,091,757 $ 216,358 24.7 % $ (24,979) (2.2) % (Public Safety 268,255 227,500 237,189 (31,066) (11.6) % 9,689 4.3 % (Development Services 374,593 293,200 214,228 (160,365) (42.8) % (78,972) (26.9) (Culture& Recreation 584,763 463,454 796,244 211,481 36.2 % 332,790 71.8 % IYTD Total $ 2,103,010 $ 2,100,890 I $ 2,339,418 $ 236,409 11.2 % $ 238,529 11.4 % 11 I 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 transportation projects. The unfavorable variance of$25,000 to budget is due to the timing of SKHHP revenues, which are received on a reimbursement basis. 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 monies collected from the Auburn School District for services rendered. Public safety revenues collected in the first quarter of 2023 totaled $237,000 and saw a $31,000 decline from 2022 first quarter totals. However, this is largely attributable to higher-than-average collections in Q1-2022, with Q1-2023 being closer to (but still below) the 5-year average. Despite this, collections were $9,700 favorable to budget due to higher than expected traffic school and DUI emergency response fees collected. Development services fee collections consist primarily of plan check fees, facility extension charges, and zoning and subdivision fees. Through Q1-2023, development service fees collected totaled $214,000 and were $79,000 unfavorable to budget expectations. Major contributors to this variance were FAC linear charges (fees assessed on projects that require extension of public facilities) as well as plan check fees; both were lower than expected, resulting in an unfavorable variance to budget of$160,000. Although FAC linear charges are down year-over-year by $98,000, this is an effect of the revenue regressing to the mean after an exceptional three-year period of high collections from 2020 through 2022. By comparison, 2023's collections, while lower than 2022, are still well above the previous average collection for the first quarter. On the other hand, plan check fee revenues are well below both the five-year and ten-year average. Quarterly Financial Report Through March 2023 15 Development Service Fees $2.0 $1.5 7j o $1.1 _ $0.9 $1_ � $1.0 f � $0.5 S0.2 $0.0 2018 2019 2020 2021 2022 2023 YTD Most of the 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, culture and recreation revenues exceeded budget by $333,000, or 71.8%. Nearly 66% of year-to-date revenues have come from greens fees and recreation classes. Greens fee revenues have increased $13,000 or 6.4% from the same period last year and are favorable to budget by $58,000 year-to-date. This is attributable to green fee rates increasing 3%-4% and slightly better weather. The City projects that green fees collections will steadily rise with the upcoming Spring and Summer seasons. Recreation class revenues have increased by$89,000 or 39.2% from prior year-to-date totals. Likewise, special events increased by$33,000 or 87.7% from 2022.A portion of the revenue increase over 2022 is attributable to lower revenues caused by COVID-19 restrictions in place during 2022, which have since been removed. Culture & Recreation $3,0 =2023 Budget —0-2023YDActual —2022Actual $25 $2.0 $15 f f . $O.S M $10 $0.5 $00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Quarterly Financial Report Through March 2023 16 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 March 2023 2022 2023 2023 2023 vs. 2022 Actual 2023 vs. Budget Month I YTD Actual YTD Budget YTD Actual Amount Percentage Amount Percentage Civil Penalties $ 165 $ 2,500 $ 210 $ 45 27.3 % $ (2,290) (91.6) % (Civil Infraction Penalties 31,417 32,300 37,218 5,801 18.5 % 4,918 15.2 % IRedflex Photo Enforcement 295 700 1,067 772 262.2 % 367 N/A % (Parking Infractions 26,666 22,200 20,004 (6,663) (25.0) % (2,196) (9.9) % (Criminal Traffic Misdemeanor 9,195 14,100 9,232 37 0.4 % (4,868) (34.5) % (Criminal Non-Traffic Fines 11,887 14,000 15,226 3,339 28.1 % 1,226 8.8 % (Criminal Costs 8,469 10,500 4,226 (4,243) (50.1) % (6,274) (59.8) % (Non-Court Fines& Penalties 8,221 20,600 16,635 8,415 102.4 % (3,965) (19.2) YTD Total $ 96,314 $ 116,900 $ 103,818 $ 7,504 7.8 % $ (13,082) (11.2) % 1 Total revenues collected through March 2023 totaled $104,000 as compared to a budget of $116,900 and were 11.2% below budget expectations primarily due to lower-than-budgeted collections in criminal costs. Civil infraction penalties (typically traffic violations) and a renewed photo enforcement contract help mitigate these unfavorable variances. Municipal Court fines and penalties account for 82% of the budgeted revenue in this category, and comprise approximately 72% of the under collection. As shown in the graph below, annual collections of fines and penalties are experiencing a decreasing trend. The City contracts with the King County Court to operate its municipal court services and the number of hearings, judgements, and collections activity began decreasing in 2019 and has continued to dramatically decrease since that time. Initially, the decreasing fines collected via the Court was partially offset by an increase in false alarm fees. Fines& Penalties $1,2 $10 .,3.1 aC,.; c SO 0.6 5 so $0.4 $0.4 $0 4 $0,2 yu,l SO 2018 2019 2020 2021 2022 2023 YTD Quarterly Financial Report Through March 2023 17 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 are listed in the table below. Miscellaneous Revenues by Type Through March 2023 2022 2023 2023 I 2023 vs.2022 Actual 2023 vs. Budget Month YTD Actual YTD Budget YTD Actual 1 I Amount Percentage Amount Percentage Interest& Investments $ 89,509 $ 91,675 $ 248,841 $ 159,332 178.0 % $ 157,166 171.4 % (Rents& Leases 303,178 371,000 300,463 (2,714) (0.9) % (70,537) (19.0) % (Contributions& Donations 3,821 5,250 434 (3,387) (88.6) % (4,816) (91.7) % 'Other Miscellaneous Revenue 280,254 63,127 192,895 (87,359) (31.2) % 129,768 205.6 % YTD Total $ 676,761 $ 531,052 $ 742,633 $ 65,872 9.7 % $ 211,581 39.8 % 1 Revenues collected YTD 2023 in this category totaled $743,000 and were $212,000 favorable to budget. The majority of the favorable variance to budget was in the interest and investments category, with the City receiving nearly 70% of the annual budgeted amount in the first quarter. The "other" miscellaneous revenue category, while $87,000 less than the same timeframe last year, was nonetheless favorable to the 2023 budget by $130,000. This category includes $52,100 in revenue related to a national opioid settlement distribution program. The rents and leases category includes prepayments for facility rentals. Although these revenue collections are on par with last year, they are below budget projections year-to-date. Miscellaneous Revenues $2.5 p^ $2.0 . i.f $1.8 \ 3 $1. ° $1.5 1.2 $1.0 >u.i $0.5 $0.0 2018 2019 2020 2021 2022 2023 YTD Quarterly Financial Report Through March 2023 18 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 2023 total $796,000 which is $239,000 or 30.0% favorable to budget expectations. However, as reflected in the table below, REET revenues collected were significantly lower (43.6%) than in 2022. Higher borrowing rates and slower housing markets contribute to the decreased revenues during this period. However, the City anticipates continued growth in REET revenues as property values on new and existing homes increase. Real Estate Excise Tax $70 02023Burl6Pt Cana VTnActual -2022 Actual $6.0 $5.0 y $4.0 $3.0 $2.0 • r$0.8M $1.0 • $0.0 1 2 3 4 5 6 7 8 9 10 11 12 Quarterly Financial Report Through March 2023 19 Shown in the table below, REET collections have been lower in each month of 2023 than their counterparts in 2022. In context, 2022 saw the highest first-quarter collection of REET revenue since 2015; lower REET collections in 2023 represent a cooling market after a period of increasing interest rates and historic inflation. Real Estate Excise Tax Revenues Through March 2023 2022 2023 2023 2023 vs.2022 Actual 2023 vs. Budget Month YTD Actual YTD Budget YTD Actual Amount Percentage Amount Percentage 1 $ 235,988 $ 185,700 $ 231,316 $ (4,672) (2.0) % $ 45,616 19.7 2 320,851 185,700 229,810 (91,041) (28.4) % 44,110 19.2 % 3 855,713 185,700 335,109 (520,604) (60.8) % 149,409 44.6 4 530,857 185,700 5 710,134 185,700 6 479,225 185,700 7 331,971 185,700 8 497,294 185,700 9 587,492 185,700 10 316,404 185,700 11 202,461 185,700 12 191,104 185,600 YTD Total $ 1,412,552 $ 557,100 $ 796,235 $ (616,317) -43.6% $ 239,135 30.0% Real Estate Excise Tax Revenues $7.0 $6.0 $6.0 $5.2 $5.3 $5.0 y $4.2 o $3.9 _ $4.0 $3.0 $2.0 $1.0 $0.8 Q $0.0 2018 2019 2020 2021 2022 2023 YTD Quarterly Financial Report Through March 2023 20 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 $6.5 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 6,545,198 ARPA Funding Remaining 8,206,034 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 March 31, 2023, the City has been able to spend $386,000 year-to-date and $3.0 million since 2021 on the following projects: 2023 Lifetime Spend Title Budget Q1 Spend (includes this quarter) Remaining Completed Projects 1,450,000 - 1,450,000 - UtilityAssistanceProgram 525,000 - 218,601 306,399 Body Cameras 650,000 4,091 550,325 99,675 Vaccination Incentive Program 47,500 - 34,980 12,520 Human Services Grants includes adman 1,000,000 16,782 16,782 983,218 Dykstra Foot Bridge 500,000 - 10,357 489,643 Minor Improvements to Qualifying Neighborhood Parks 150,000 19,603 19,603 130,397 Limited Term Employee(LTE):Grants Coordinator 420,000 23,352 118,729 301,271 Paving Gravel Roads 636,866 628 3,463 633,403 Translation Services 75,000 1,216 1,216 73,784 Auburn Way South Median Landscape Replanting/Irrigation 50,000 - 40,187 9,814 Auburn Way South Roundabout 150,000 29 29 149,971 Emergency Housing Voucher Program 2,000,000 14,200 14,200 1,985,800 Encampment Cleanup 500,000 147,405 147,405 352,595 Broadband grants to hardest hit communities 180,000 125,266 137,818 42,182 Community violence intervention programs(drone,SPIDR Tech) 250,000 - 207,831 42,169 Signing bonuses for lateral hires 200,000 33,080 65,670 134,330 Other Projects(not started) 5,966,866 - - 5,966,866 Total: 14,751,232 385,651 3,037,196 11,714,036 The Neighborhood Parks Improvement 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 $19,603 which provided new fencing around Forest Villa Tot Lot. The City plans to start building a new playground in the near future. The Encampment Cleanup project is a service contract that began in 2023 and provides continued cleanup of garbage and debris related to encampments and other illegal dumping on City-owned properties and rights of way (ROW). To date, the project has spent $147,405 with $352,595 remaining. Quarterly Financial Report Through March 2023 21 Beginning in 2023, the Clean and Sober Housing 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 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. Total project spend through Q1- 2023 is $14,200. 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 have acquired all necessary hardware and software related to the broadband/Wi-Fi replacement and expansion. Total spent in Q1-2023 was $125,266 bringing the accumulated project total to $137,818. All replacement of existing hardware has been completed. The expansion is estimated to begin in late 2023. Utility 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. This approach isolates those funds available for capital and cash flow needs for daily operations, and project managers will know exactly how much working capital is available for current and planned projects. Through March 2023, the Water Utility had operating income of$948,000 (operating revenues less operating expenditures), approximately $91,000 above the same period as last year. Water Fund operating revenues were $317,000 or 9.4% higher than Q1-2022; the majority of this variance was due to higher revenues from water sales and interest earnings. Operating expenditures also increased by $226,000 mainly due to an increase in personnel costs and interfund operating rentals. Billable water consumption through March 2023 totaled 590,000 hundred cubic feet (ccf), equivalent to consumption volume in Q1-2022. Slight decreases in multifamily, manufacturing and wholesale consumption were offset by increases in commercial, school and other consumption. Water Revenues and Water Sold 2022 vs 2023 ✓* $2.5M 1000 0 $2.0M — — 500 $1.5M 600 ................... ••• •••. SHIM 400 S0.5M 0Q.•1a... ••.. ...... 200 -a 0 $0.0M - �ao Fev 4,4 PQt 4,;k >o\ °4 yet cP a64 o�c 2022 Water Sales($) 2023 Water Sales($) 2022 Water Sold(ccf) :2023 Water Sold(ccf) Quarterly Financial Report Through March 2023 22 Through the first quarter of 2023, the Sewer Utility finished with operating income of$989,000 as compared to $417,000 in the same period last year. Operating revenues were up $208,000 or 8.8% from the same period last year due to stronger performance in charges for City sewer service and higher interest earnings. Interest earnings went from $3,000 in Q1-2022 to $127,000 in Q1-2023 due to higher cash and investment balance and higher interest rates. Operating expenses were down $363,000 due to decreased in expense related to interfund utility taxes. As discussed on pages 7-8, the City is no longer charging this tax on the pass-through King County Metro revenue. This, combined with lower interfund charges, more than offset increases in personnel costs and supplies, resulting in overall lower expenses compared to last year. Through March 2023, the Stormwater Utility had operating income of$920,000 compared with $756,000 in the same period last year. Operating revenues were up $366,000 compared to same period last year due to charges for City storm service and interest earnings. Interest earnings increased from $3,900 in Q1-2022 to $159,000 in Q1-2023. As most Stormwater Utility charges are based on a flat rate, there are not typically significant fluctuations in this revenue. Operating expenditures in the Stormwater Utility were up $201,000 this quarter compared to the same quarter of last year. This increase was mainly due to higher service charges and supplies. 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 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: http://www.auburnwa.gov/. For any questions about this report please contact Jamie Thomas at idthomas(c�auburnwa.gov.