It’s that time of year when the city rolls up its sleeves for the mid-biennium budget housekeeping.
The city is proposing mid-biennium budget amendments to account for changes in expenditures it has seen so far this year.
The projected ending fund for the biennium is $23.4 million.
City officials briefed Renton City Council members regarding property taxes, and other budget revenue amendments. Council members are expected to deliberate and vote on various budget-related ordinances and resolutions later this year.
Property taxes, the city’s No. 1 revenue source, took a dip in 2017.
The decrease is mostly attributed to the fire department service switch over to the Regional Fire Authority. The city will see additional $5.5 million reduction next year once the construction of Fire Station 15 in Kennydale is complete.
This year, officials estimate the 2018 levy to be about $19 million ($1.17 per $1,000 assessed value). This figure is an increase from the projected 2018 budget, largely due to new construction according to Fiscal Services Director Jamie Thomas.
Preliminary projections from King County were higher than expected, and the city is going to request the county to revise their numbers, Thomas said.
The maximum statutory levy is about $37 million, which means the council can vote to increase the levy to that amount (around $2.25 per $1,000 assessed value).
The council will vote on the levy ordinance in November.
The city has seen interesting trends in its second highest tax revenue — sales tax.
This year’s collection is expected to be 1 percent over the budget. Officials are revising the budget to reflect this $150,000 increase.
Wholesale, general retail, services and construction sectors saw a small to moderate increase over 2016, however the growth arrow did not apply to the manufacturing and auto sales.
Thomas said these industries have a cyclical revenue stream.
“When you do see large increases, we should rely on them as one-time sources, rather than sustainable sources,” she said.
Starting next year, the city will no longer receive sales tax annexation credit from the Benson Hill annexation, which is estimated to be around $3 million.
Utility taxes are expected to outperform the original projections by 2 percent in 2017 and 0.5 percent in 2018.
Officials are asking for an upward adjustment of $275,000 for 2017 and $50,000 for 2018 to increase natural and electric gas
If you notice an increase in electric and natural gas utility tax, officials say it’s largely due to the recent trend of colder winter compared to recent years.
The city collected $6.4 million in Business and Occupation (B&O) tax in 2016. Collections for 2017 have increased by 18 percent, and are projected to exceed the budget by 10 percent.
Businesses with a gross revenue of $1.5 million or more pay B&O taxes, and businesses makes less pay head tax. Both B&O tax and business license revenue are shared between the general fund and capital improvement funds.
Development fees collected in 2017 are expected to exceed last year’s by $600,000, which is 12 percent. That increase is offset by $200,00 in fire permit fees the city no longer collects. Officials aren’t asking an adjustment to development fees, as the actual collection is in line with the 2017 and 2018 budget amounts.
These fees include land use review fees, public work fees and impact fees.
REAL ESTATE EXCISE TAX
Collections for this year are expected to decrease from 2016 by $950,000, which is about 16 percent. Officials are asking for an upward adjustment of $750,000 to be made to this year’s budget.
The year-to-date real estate excise tax is 60 percent above the year-to-date budget.
This tax is restricted for capital purposes and is currently used to fund general governmental capital.
A public hearing has been scheduled for Oct. 23 council meeting for the mid-biennium budget adjustments, the 2018 property tax levy and the proposed fee schedule adjustments. Council members will deliberate and finalize the committee report on Nov. 6, and vote on the ordinances and resolutions Nov. 13.