Budget Workshop

City of Spokane2016 BudgetRevenue update0

0Revenue updateHearings and other key datesRevenue overviewProperty TaxSales TaxUtility TaxREET

12016 Budget Key DatesBudget HearingsNov 2nd Revenue HearingNov 9th Budget Hearing - UtilitiesNov 16th Budget Hearing BDS/StreetsNov 23rd Budget Hearing Police & FireNov 30th Final Public Hearing on BudgetOther Key DatesNovember 9th Property Tax OrdinanceCouncil Briefing November 2nd Finance Committee October 5th?

2General fund RevenueProperty, Sales, & Utility Taxes > 80% of total GF revenueProperty tax 1%, New Construction, Library and Street Levies (IPD may be below 1% requiring substantial need resolution)Sales tax 8.7% Majority goes to the State General Fund ~ 1%Private Utility tax rates capped at 6%Utility Tax on City Utilities rates set by City Council

3General fundRevenue ProjectionsProperty Tax revenue1% increase - public safety capitalLibrary LLL = $0.07 / $1,000 AVStreets LLL = $0.57 / $1,000 AVSales Tax 3.0% increase2015 Currently ~ 3.7% higher than prior yearPrivate Utility tax revenue ~ 3% increaseCity Utility tax revenue ~ 2.9% increaseUtility rate increases based on long term CPI

44Property taxNew Construction ~ $520k (about the same as last year)NC Valuation lower than last year ($140M v. $170M) but mill rate higher ($3.60 v. $3.03)(2011, 2012, & 2013 New Construction amounts were 3 lowest in last 13 yrs)New Construction revenue about 1/2 of what it was during peak years (2007 & 2008)2016 Est ~ $520k2015 Revenue ~ $525k2014 Revenue ~ $325k ($110M N/C value)2013 Revenue ~ $250k ($85M N/C value) 2012 Revenue ~ $200k ($75M N/C value)2011 Revenue ~ $270k ($100M N/C value)2010 Revenue ~ $310k ($125M N/C value)2009 Revenue ~ $530K ($200M N/C value) (41% decr. in N/C AV but ~ 50% decr. in revenue due to decr. mill rate)2008 Revenue ~ $1.1M ($340M N/C value)2007 Revenue ~ $1.0M ($250M N/C value)Assessed Valuation Second consecutive year of AV growth prior to this 3 years of decline2016 ~ 3.0% Increase2015 3.1% Increase2014 1.5% Increase2013 1.5% DECREASE 2012 1% DECREASE (used in 2013 prop tax calcs) even after $300m added re: WP AnnexationWould have decreased over 2.5% w/o annexation2011 - 2% DECREASE (used in 2012 property tax calculations)2010 - 2% DECREASE (used in 2011 property tax calculations)2009 - 7% Increase2008 - 14% Increase2007 - 17% IncreaseSales Tax 1% approx $400kPrivate Utility:AVISTA: GAS:~ 15% DECREASE (Purchased Gas Cost Adjustment) effective latter part of 2015~ Pending rate increase request but not anticipating significant increaseELECTRIC:~ 3.3% Increase latter part of 2015 re: Residental Exchange program~ Pending rate increase request but not anticipating significant increase

TELECOM: ~ 0%City Utilities: ~ 2.9% Property TaxesWhere do my property taxes go?Total levyCity levy breakdownMill rate annual comparisonLevy % change Regular LevyLevy amounts Regular LevyNew Construction Impacts

5TIF Projects:Iron BridgeKendall YardsWest Quadrant

LRF:North Division Gateway Project

56Where Do My Property Taxes Go?For every $1,000 paid in property taxes, the City gets ~ $3136This is based on 2015 LevyAllocation of $1,000 in property taxesSPOKANE PUBLIC SCHOOLS$424STATE OF WA (SCHOOLS)$159SPOKANE COUNTY$106

CITY OF SPOKANE$313

78Where Does the $313 Go?For every $1,000 paid, ~ $187 goes to the General FundOver 33% is voter approved for specific purposes8Based on 2015 LevyAllocation of $313 City fundsGENERAL FUND$187VOTED STREET LEVY$ 40VOTED EMS LEVY$ 35VOTED PARK BONDS$ 25FIRE PENSION FUND$ 21VOTED LIBRARY LEVY$ 59A portion of the $187 is dedicated to TIF/LRF Projects9City of Spokane Levy Rate 08 -161010City of Spokane Levy Mill Rate Comparison20122013201420152016Est.Regular Levy2.852.923.033.603.56EMS Levy0.50 0.50 0.50 0.50 0.50Voted Debt0.89 0.920.910.350.35Total City rate4.24 4.34 4.44 4.45 4.41 112015 based upon AV estimates from County11Property Tax Revenue % Change122014 and 2015 are estimated amounts12REGULAR LEVY2006 Increase Levy Lid Lift (Moved to $3.60/$1,000) (LLL = $3.6 Million in 2006)2007 Increase Tied to IPD (3.4% plus new construction) (LLL = $4.2 Million in 2007)2008 Levy Lid Lift goes away2012 Approx. $1M new revenue from WP annexation2013 0% Increase2013 New Construction only2014 1%, Banked Capacity, Library Lid Lift public safety capital2015 1% dedicated to public safety capital; Street LLLL ($0.57/$1,000 AV)

Regular Property Tax Levy132014 and 2015 are estimated amounts132005 Increase Banked Capacity ($1.4 Million)2006 Increase Levy Lid Lift (Moved to $3.60/$1,000) (LLL = $3.6 Million in 2006)2007 Increase Tied to IPD (3.4% plus new construction) (LLL = $4.2 Million in 2007)2008 Levy Lid Lift goes away2012 WP Annexation ~ $1 million new tax revenue2013 New Construction Only2014 1%, Banked Capacity, Library Lid LiftNew Construction Impact14From AV New Construction History file in Prop Tax folder14Sales TaxSales Tax ComponentsSales tax collection Local Option 1%4-year month over month comparisonAnnual percent changeActual sales tax growth v. baseline growth

1515Sales Tax ComponentsSales Tax ComponentsState of Washington6.50%City of Spokane **1.00%Spokane Transit Authority (STA)0.60%Public Facilities District0.10%Criminal Justice0.10%Juvenile Detention0.10%Public Safety & Health0.10%Mental Health0.10%Emergency Communications0.10%Total8.70%16Spokane County gets 15% of Citys tax16City does benefit from some of the 1/10th percent taxes however they are dedicated for specific purposes.Local Option Sales Tax$10 million in taxable retail sales ~ $85k for the Citys General Fund (County gets 15% rake)Sales TAx1717City does benefit from some of the 1/10th percent taxes however they are dedicated for specific purposes.Local Option Sales TaxSales Tax Revenue18Local Option Sales Tax18(Data/chart from GF Revenue Report file)2013 finally back to 2007 (pre-recession level) of sales tax collections2016 estimated @ 3% over 2015Sales Tax Revenue19Local Option Sales Tax19(Data/chart from GF Revenue Report file)2013 finally back to 2007 (pre-recession level) of sales tax collectionsThe more than $36 million in 2013 sales tax revenue represents over $4.3 Billion in taxable transactionsSales Tax Annual % Change202015 and 2016 are estimatesChart comes from Revenue Report Sales Tax Charts worksheet

More Volatility than our other major sources of revenue!

Majority of 2012 growth due to WP Annexation3% WP; 2% economic activityTaking this into account you would see a more gradual ramp up in 2012

2016 Budget Assumptions 3%

20Actual increases v. 2.5% baseline212015 and 2016 are estimatesChart comes from Revenue Report Sales Tax Charts worksheet

More Volatility than our other major sources of revenue!

2016 Budget Assumptions 3%

21Utility TaxesUtility Taxes Private UtilitiesElectricNatural GasTelephoneCableUtility Taxes City UtilitiesWater Sewer/Stormwater/Integrated CapitalSolid Waste22Private Utility Tax Revenue232015 & 2016 are estimated amounts232016 will have full year impact of Purchased Gas Cost Adjustment of 15% DECREASE2015 projected to end year short of budgetThru 2009 steady increase Since then rate increases tempered by elimination of surcharges, decreases in price of wholesale NG, lower overall growthAvg increase since 2006 ~ 1% (2010, 2012, & 2013 drag down the average)2015 estimated revenue increase ~ 3%2015 still about 3% below peak in 20092016 will have full year impact of Purchased Gas Cost Adjustment of 15% DECREASEPrivate Utility Tax Revenue242015 & 2016 are estimated amounts243% to 5% used to be standard

2016:Purchased Gas Cost Adjustment of 15% DECREASE in latter part of 2015Electric Residental Exchange = small increase latter part of 2015

-2005 increase primarily due to Natural Gas Utility Tax revenue increase and Utility Tax Computation on Cable -Prior to 2005 Cable providers were given a 5% credit on tax for the 5% they pay in Franchise Fee.-Exemption/Credit was eliminated in 2005.-2006 increase primarily due to Natural Gas and Electric Utility revenue increases-2010 decrease re: elimination of electric surcharge-2012 decreases in wholesale price of natural gas-Long term projection is ~3% -2016: Both Gas & Electric anticipate small rate increases

Utility Tax Revenue City Utilities252015 & 2016 are estimated amounts25Increase in 2008 due to application of tax to GROSS Revenue (Rate Stabilization, Capital Contributions)TAX RATES:2002 18.5%2003 thru 2005 17%2006 to present 20%

2016 Rate Increases = 2.9%

From the 2012 Budget Summary:Within the Enterprise Funds, the 2012 Budget: Includes the following utility rate increases for 2012: o Stormwater 0% increase (Council adopted) o Wastewater 13.5% increase (Council adopted) o Water 16% increase on consumption (Council adopted) This was the result of the steep new consumption tier system that we changed in early 2013.o Solid Waste 5.5% increase (proposed) From the 2011 Budget Letter: Within the Enterprise Funds, the Budget includes the following utility rate increases for 2011 based on the HDR Utility Rate Study: o Stormwater 0% increase o Wastewater 15% increase o Water 3.75% increase o Solid Waste 1.5% increase From the 2010 Budget Letter: Within the Enterprise Funds, the Budget includes the following utility rate increases for 2010 based on preliminary information from the HDR Utility Rate Study: o Stormwater no increase o Solid Waste 1.5% increase o Water 3.75% increase o Sewer 15% increase

Utility Tax Revenue City Utilities262015 & 2016 are estimated amounts262008 increase re: to application of tax to GROSS Revenue (Rate Stabilization, Capital Contributions)2011 increase re: 15% increase in Sewer rates (3.75% Water, 1.5% Refuse)TAX RATES:2002 18.5%2003 thru 2005 17%2006 to present 20%

2015 Rate Increases = 2.9%

Real Estate Excise Tax27272015 REET still projected ~40% below peak of 2005 REET split ~ 50/50 between Street Maintenance and Capital Street projects (This slide is from streets rev report)However per Council action in 2012, a portion of REET dedicated for Capital is being transferred to Street Maintenance-Greater of $100k or 35% of available funds per RCW 82.46.035 $400k approx. -This authority expires at end of 2016Real Estate Excise Tax Annual Percent Changes28282015 REET still ~40% below peak of 2005While we have seen decent year over year increases for several years, they are based on a much lower base.Questions?2929