Legislative Meeting - Regular Meeting

to our May 4th, 2026. It's already May. Um, so May 4th, 2026, it's our 9:00 am strategic planning meeting. Let the record reflect that we do have all five commissioners are present. Commissioner Kurts is on Zoom, but the rest of us are in the conference room and sounds like we have a busy budget morning. So, welcome to the budget team. Jason gonna start us out with the sales tax revenue update. You'll have in your packet. It's going to be sunny and placent today, right? This is the best. This is the news. It's not even glue.

And the sales tax is truly positive. So, soak it in for the next few minutes. I'm out of here.

Okay. So, it's been a while since we presented on sales tax. Uh, April collections came in a little shy of six million, which is for April, the highest we've ever had. So year-to- date collections were about two million over the same period last year. So 8% or 8.3% over this period last year. So sales tax is doing phenomenal. Part of that is the public safety sales tax for the cities. Um that that accounts for part of that. If we back that out to normalize it, sales tax uh yearly about 6.6% instead of 8.3, but still 6.6% 6% is pretty pretty strong. And then the chart at the bottom, you can see that our average growth rate right now is 4%. Uh it went up 3.9 to about 4%. Part of that is due to the post-pandemic bumps. Um that we had like really strong sales tax growth. So that the 4% is probably a little bit higher than we would budget for. Um and our rolling quil right now is at 5.3. So we're definitely being conser trending high. So for the sectors, the accommodation and food services sector is pretty flat. If you accounted for inflation, it would actually be a little bit of a drop. Right now it's at only 210 of a percent growth over last year. Construction is at -410%. Retail trade is where we're making up all the sales tax revenue. Uh growth is up 7.3%. And that's a pretty significant uh amount too. So, you know, close to 1.6 million for February collection just for retail trade.

Next slide. This slide just goes into the some of the construction sectors, right? That's where you see like the softening. Uh non-residential construction is down six and a half%. Residential down 7/10 of a percent.

The building equipment contractors which are things that uh industries that work on the insides like plumbing, HBAC, things like that or large a lot of commercial projects is down significantly year-over-year. So down 17 and a half% or 17.6 six rather foundation and structure contractor is down just half a percent. That's just the beginning of those projects getting the like a concrete you know slabs things. Next slide. So accommodation and food sectors u it's growing modestly. Restaurants and uh bars are doing well and the accommodation is not doing as great. Uh but having the increase in for the food sales and for alcohol sales in those sectors is definitely keep this one positive for us. Next slide is does the the fact that restaurants and bars are doing good but the re visitors are down.

Yeah. It's just they run they run in line and stuff. So the is is is that then the locals are drinking more because there are fewer tourists. I mean not just me but yeah maybe some others. Yeah.

Yeah. Um for retail trade again this is our largest sector curve right. So automobile dealers are up 2.1%. And a part of this category too before we used to report uh at even more granular level when we talked about like RV sales. Um so we took a an additional look at that because since spending on recreational vehicles is so um dependent on you know discretionary income. Um RV sales year to date are up almost 50%. Yeah it's crazy. So, I went to the RV. I was curious about that because with fuel prices increasing, I had anticipated that RV sales probably go down, but I went to the RV sale. My wife wanted to go this last weekend. Um, and it was almost every RV on Sunday that we went had a sold sign up. So, 10 trailers, uh, motor homes, tons of sold signs, which is which was shocking. So, people are still spending. I mean, the economy is definitely bifurcated. you know, so um a K-shaped economy is associated with the people that have more money adaptive spending. Um and it's it's helping this significant beer, wine, and liquor retailers. So, it's not just people going to the bars, but people are still spending money at uh locally at stores for alcohol. So, that's up almost 13%. Electronic appliance retailers down 5% furniture up almost 20%. Defected by a new house recently so I'm sure that part of that

reach a bump. And then the second page for retail trade clothing retailers are up right which is uh over 10%. Department stores this hasn't happened in a while. Department stores are actually up. It's been a the trend has been department stores have been going down year-over-year um as people have made a shift towards um ordering online but department stores even though they don't make up a large part of revenue their sectors up over.

I guess that's a question. So if people are buying online are they showing up in these categories or is it show up in this category? They're going to show up in the the category at the very bottom u where it says other miscellaneous re sorry not the very bottom the next one down other miscellaneous retailers that is things like uh way bear Amazon okay it's it's our largest revenue generator so so they're not so if someone's buying electronics for Amazon they're not showing up in this category

correct y so if someone's buying electronics from Amazon, it's going to pop up under other miscellaneous retailers. Okay. It wouldn't show up um like Wayfair. Absolutely. Yes. So, these are people actually purchasing those at local stores for the department stores, correct? Right. Or like Best Buy for like that. Okay.

Like the large brick and mortars. The other miscellaneous retailers that's up 14% and again that's our largest sector. So that that accounts for about 25% of retail trade. So to account for 25% of retail trade and be up 14% is a large factor in why our sales tax growth is so strong. Other you know the other sector warehouse clubs and and super centers are things like Costco and superers like that up 7.4%. So again, another huge revenue generator. And then the last slide is just summed it all up again showing that we are up year-over-year 8.3% 2 million over our actual collections. And on the very bottom part since can't be all sunshine and rainbows uh there is is showing that uh credit card applications are have risen to their highest level and rejection rates are actually at the lowest level in a bunch of years. So people are applying for credit and they're getting it. uh which is surprising because the next part it does talk about lender initiated closes are also higher and consumers confidence in them being able to get an extra $2,000 if they need it is lower than it's been in quite a while. So it's kind of a split on that. There's still uncertainty in the market, but people are still spending. People have access to credits. People are getting the credit. They just don't feel as good about it. That's it. But it's still high. If you want to get still positive sales tax,

these are these are the counties numbers, not including cities. Correct. This is the revenue that we're generating uh throughout the entire area. So if it's if the sales occurred in the city, we would get 50% of that that revenue and they retain the other 85%. So it comes to all it's our portion of the portion bigger portion,

right? So it does it doesn't include the revenue go directly to the valley out of sales tax. Then it also doesn't show which is happy with cities or 15% is doing like well our sales are pretty late and city valley. So the April 26 would be from January actual February February's activity. It'll be interesting to see how bad news since the war started and we had some gas spike

gas spikes and other potential I don't know if it's a lot of everyday products but certain products might have gone up in price. So anyway, it' be interesting to see the next couple months about how people were spending. But you were at the RV sale. There were RVs being sold. That was at Maverick X1 Idaho. Never seen the lines of um like you could even get into the gas stations back up down the road. That say 80 cents a gallon. Not helping us. He spends over $1,000 on flowers and dirt in Washington state. The yard's getting colorful.

No, I'm hearing that more correct. If they're if it's the hub or you know that kind of thing, then they're going over to Liberty or going over to the state line to get gas up. Yeah, that and liquor. That's the other thing gas for. Yeah. But you can see that ours is in the positive though. Yeah. despite all the other factors we may feel personally in our pocketbooks, sales tax keeps performing, which is kind of amazing.

Yeah. But to point, it's going to be interesting to see how it if it changes in the next couple of months in so that the you said 8.3% is kind of the variance year. last year as a baseline for four months of collections we're up 8.3% over the same period last year. And do you know what portion of that attributable to the public safety slice that we get?

About 410,000 of that 6 million was for the public safety. So if you back that that out that brings 8.3 to like 66. Still very good. Yeah. So that's the no one's ever the city of Denver.

That's going to go over our year to date. First quarter. Yep. Financial updates

on the screen. Perfect. And we'll focus in on the top section. Definitely hard to read on the big screen. Hopefully, um, commissioners have it up in your packet. Um, general fund for first quarter overall. Um, trending pretty well. We expect 25% of the year so far for first quarter. Um expenses are trending 24.3% overall. Um revenues are under at 17.2, but that is not shocking in any way because of the timing of property taxes. Um so we expect the bulk of our property tax payments received the end of April. Um so we have that money now today um in real life but when we pulled this report we um had only collected about 7.3% of our budget so far. Um so we expect more to come in there. Um services year-over-year is trending high. Um, we do think that is likely just timing of certain um, service payments, uh, prepaid expenses, something that had maybe been spent last year but is really attributed to all of 2026. Um, accounting would move that forward into 2026. So, we think that we just have some um, difference in our ratable spend, but not shocking at this point overall. We'll definitely check back in at the end of second quarter um and review services more closely. Next page. This is a agency by agency um summarization of general fund departments. Um any department that is over 25% of the

year spent at this point in time is highlighted in red. It is very faint in the budget used percentage column there. We are using this report as a tool to check in with all of these departments. Um some we think are um just expenses have happened earlier in the year. Um and we know for our internal services line that's spent at 38% so far that is uh our liability insurance. We will be um doing a budget amendment this year to brightsize that budget for the increased liability expense that we're facing. We'd already set that money aside last year. We just need to true it up for this year's budget. Um no

dem is likely grant spending um that needs to be cleaned up. So this is a to great tool for us to utilize. Um we see emergency communications is at 0% spent. Um we pay Shrek in two tranches closely related to when our property taxes arrive. So that payment has gone out um in the month of April which is why we don't see it reported for first quarter.

Um but overall nothing too alarming on the um expenses. The next page is a summary of all agency revenue. Um, we do see a lot more red on this sheet, but again, we are utilizing this as a tool um to help track and monitor revenue collections as well as um how our departments are budgeting their annual revenues. Um, we do intend to do a deep dive through revenues um with all of our agencies in the 2027 budget process. Um, and we'll get to budget process here a little later in this presentation. We are seeing a trend of departments overestimating revenues and then when the board is looking at budgets if you're over assuming the revenue you guys are feeling more confident to maybe get more expense against the revenue but um revenue isn't always coming in as anticipated. So, we're going to try to get that a little closer to historical trends so you guys have better data making your decisions forward.

So, while this has a lot of red on it right now, we're not too alarmed and we'll definitely check back in on revenues at the end of second quarter. And then the next page is um a summary of salary and benefit budgets um for each one of our agencies. The top section are all the agencies that report up to the board of county commissioners. The lower section um are all of our elected officials. This page was intended for the salary and benefit recovery that we u had discussed with you all last year. Um, at this point we do see some departments in the red, but uh nothing majorly alarming with those. We've used um any department in the red as an opportunity to sit down and meet with them um to review their um current spend for the year, review anomalies. Um a lot of our departments uh have some grant payroll that they need to catch up on for the year. Um we also have departments that if they've utilized a PTO cash out um like law and justice administration has utilized a PTO cash out early in the year. So that um throws their trends off for a while

budget two weeks of payroll end of the year to normalize.

Um we also have the PTO bridge cash out payments that some departments are utilizing that we're seeing show up in our trends here. We are after the first quarter baseline. Jason's been looking at it every two weeks um as payrolls come so we can start getting some trend lines to see like in the case of Sparp or shop it's going down difference each each payroll. So we get the trend line whether things are improving or whether they're getting worse. then that also gives us some just some information when we talk with the departments to see what plans are to to work on things. Um some of our bigger ones looking at the sheriff we've not left them. We're still looking for some overtime reduction hoping to come into play later this year. They did say probably about the midyear point we would start seeing some significant overtime reduction. We had heard it's been quoted about 140,000 per officer the last 10ish officers that were hired. So we'll see if that can help shrink that gap. Um we are we do have a meeting scheduled this Thursday morning that Chair Brooks is going to headline for us um in in council chambers commissioner chambers right courts um at 8:30 Jason has put together some reports that he'll be demonstrating how to use to make pulling data easier for departments so they can pull this at any given time and and see where things are going and just talk through

our goals for the year, answer questions on work day. The budget office will have um everybody will be ready for handson after the meeting when people want to come up questions, get hands-on tutorial. If we get too full, we take appointments for later. But we are hoping to um answer a lot of questions with departments and you know work day workday is working well from our perspective and the budget office. We have the luxury of one in one way I guess of being in it all day every day. It's one of those things the more you use the better you get out of it. If you have a split job and you're spending periods of time in it, but a lot of time doing other stuff, just takes a little longer to get aware of how to use it well. And so Jason and Tessa sat down with a lot of departments. I'd say a dozen departments um one- on-one answering questions. And I do believe things are getting better, but there's still room to improve. Quick question. The sheriff's office is definitely the biggest number on their variance. Is the I assume that the real time crime center operation is still being covered with other

at this point in the year. Yes. I believe there's about six months worth of ARP or there was about six months worth of ARP Jan from Jan one. So we have a couple more months and then that ARP source will be fully utilized and have to go to two general funds. So I just

hoping they kind of stay in dialogue on that because if you times that by four by the end of the year if it stays on trend that's not a good number. Correct. So just wondering how we're gonna be in touch with them and see how it's going. Like I said, no, there is active discussions on it and the sheriff act grants and other opportunities. So

the three of us sat down with the sheriff's finance team last week, had a conversation with the sheriff directly also. So we're we're doing what we can from our level, but definitely one to be watching as we go forward. Another thing just in general, not necessarily with the sheriff like parks or seasonability that comes in. So they're looking really good right now, but we know when summer hits, they're black will start moving back towards zero. Um there's also other groups that maybe have frontloaded capital purchases that will also normalize as the year goes out. So they spend all of their info year to date and we're looking at dividing everything by 12 monthes. But it's still a great tool so we know which groups you want to have conversations with. It's it's best to be looking early in the year. So if you make a course correction, you have more months to to rightsize it versus if you look at this in October, there's just no time to make fixes in a meaningful way financially. Also this one

this this is showing the power of birthday work day getting all the information and I think Thursday I'll be again a good opportunity to show some departments are using cash bases off the criminal basis and so this is going to be a good way of getting again getting everybody to come together on what the numbers really are and knowing that the numbers in day are the numbers. So,

it's great that everybody's in the same system. Historically, like using grants. Um, I'd go to Heather and go, "Why is this grant a hot mess?" She didn't even know we had a grant. You know, the department had done it. They had their own software or their own offbooks way of even in fact now that everything is in workday. Um, just having that visibility that when we talk, we're all looking at the exact same numbers at the same time. a lot of value in that. No more questions on that. We'll move to the five-year pass. We'll recognize some of our football from last year as we take these sorella.

They're the jokers. We'll get there.

They're coming. So, the revenue forecast, you'll see the gray is our sales tax, our largest revenue, followed um closely by charges for service and property tax isn't that far behind. So, 85% of our revenue fairly evenly split between those three revenue sources. Um you'll see our sales tax growth rate assumptions over on the side. Property tax is flat except for we had 1.4 billion in new construction last year which translates to right at a million dollars of revenue. So as we do assumptions in the outyear we're doing a bit of an escalator on that 1.4 billion construction. So it should be adding a million

roughly a million dollars of new construction added to our revenue annually. Um charges for service are kind of inflationary. Um we did go through a line by line review of all revenues and expenses putting in most logical assumptions we could for each one to come up with the best forecast we can. Looking at the yellow bar in the middle, just a reminder, the board spent $12 million on the amentum software for the treasury assessor and that little add-on for the auditor. Um, if we just wanted to normalize that since that's not a normal ongoing. So, that is $12 million of our our ship there. Any questions on revenue before we look at expenses?

Can you just remind me on charges for services? Those are all general fund, but some of them kind of go cover an expense within that department. Correct. The bulk of our charges for services are our law enforcement contract for the city of Spokane Valley as well as our detention contracts. So most of those are as our you know census changes or as the number of employees we have changes those change with it for those specific contracts. Okay. So the 16% other would be uh like REIT and other things.

Um REIT actually goes into another fund. Uh what would be so that's things like our interest income that we earn. Um, let's see. Usually I have those so readily licensing revenues, pet licenses, some fines, uh, chain zones, cranking themselves. Um, so but if it if it's a building or planning permit, that's not general fund. It goes into if it's the planning, it does. Yeah, planning is in the general fund. building is in an enterprise fund. All right. Y

this would only be the general fund side of those types of strategies. So moving to the expenditure forecast, you'll see on average salary and benefits about 2/3 of total cost. By far the largest um expense to the county. The yellow that one is skewed because of the ARP and the big um big changes we made at the end of 24 and how it impacted in 25

slowly spending down on those ARP contracts. We're seeing that in our actuals in 2425.

So that's why you see the dip there. When it comes to salaries, we're looking at a average 7% increase. And we are literally talking just the salary side with that. So, some people are at step 13, so they don't get a step. If you're at step 12, you only get one step. Some people get double steps if they're anywhere below that. And then depending what the cola is, but on average, when you average it out, it's about a 7% increase to the salary. benefits. We're looking at a 12% increase this year. And when you figure benefits come in, you say 35% Ashley, is that a good benefit escalator? You're pushing 40% benefits versus salary.

Uh yeah, we're getting closer to that mark. So that's that's chunk of our cost there going up at 12%. Um and then liability We have plugged in 20% knowing we're going to need to be a bigger one this year. The preliminary documents we just got from Dan Gad had a range of anywhere from a suggested range from 28% to 113%. Um, so we know that's going to be a that is just the cost to be in the risk pool

from the act. Yeah. And from the actuary study. U so last year just to remind you all we did I believe an 8% medical but we we were past by the time the actuary reports came in and decisions were made we were past the point of budget that it would have been easy to go back and make changes if we would have increased at that point it would have been a lot of budget work for us and it would have also thrown all the department's budgets kind of out of whack. So we knew last year that we were looking to do at least 25% this year. So if you really look at medical, we're going to get to a chart pretty soon that shows our gap, our 17 funding gap was close to 25. Um about 10 million of our increase is medical and liability because those funds are so big. That's about a 4.8 million dollar that with these percentage numbers. The only capital we're assuming in the budget is 1.3 million. That was just sheriff's.

It was yeah a placeholder for law enforcement vehicles knowing that that isn't more of an annual operating expense um even though it is capital. Then others things like debt transfers and not things like that. Questions on the slides.

So are we just taking like a a percentage that we're assuming each year for medical or we're just it's an assumption, right? Well, it's based on cost and historical years and then we actually have an actual actually speak.

Yeah. So we are self-funded with our medical plans. So we actually have the ability to understand what our spend is. Um we also work with Alliant who is our broker to look at um what have some of our claim costs been, what are we projecting to be spending. um so that we have a really good understanding of what our fund balance needs to be based on our current utilization as well as trends with medical cost and the utilization of our employees um whether it's premier or Kaiser benefit plan. So we review them annually and they provide to us um a recommendation of what they believe the county should take for an increase. Uh we have taken less than that recommendation for the past few years. Um, we've also seen an increased utilization of some high-cost drugs um that we have no control over. Um, and then just different claims. Additionally, medical costs are just increasing year-over-year in general. So, um, that's where Jeff and and Tessa are speaking to. Last year, we took an 8%, we maybe could have taken a little bit more to keep our fund a bit more healthy. and moving forward based on the projections, we're going to have to continue to look at options for um putting money back into that fund so that we don't end up in a spot where we are underfunded in that account. So, we're reviewing different options at this point, but to Jeff's uh discussion right now, we do need to look at what that percentage is going to need to look like uh in this year and future years to keep that fund healthy. And then we're also almost wrapped up with an actuary study right now just to get another set of eyes on it, another lens to make sure we're not missing anything.

We have a meeting with risk. Y to kind of start this conversation reliability which is different than the So we're assuming the same medical benefits for the next five years or Yes. That's how we're calculating. Yeah. No drastic changes, just an increase in the contributions to that fund. That will be something that um the board can make decisions on. Asha and I and Scott have talked like we need to look at.

Yeah, cost share and you know there are ways to help the county financially. um those trade-offs there, decisions, budgeting and name that could be one way to to help Ashley's looked at some of our comparables and we have some of the more lucrative in this area. Yes, this area the employee side as far as small small cost shares to employ. I think I've heard the city's Spokans's had to make some changes over the last couple years with benefits. So, it's just it was just a question of what was included in the assumptions. So,

okay. I'd say overall for our assumptions um we've taken kind of the most recent years worth of um direction from the board and use that in our forecasting. no major changes in any of our um operations.

So the next slide, those of you with photographic memories, you'll remember that's pretty much the end of last year. That's where we saw things five months ago when the board was voting on the budget. We had we had this as our five-year forecast. Since this time, as we were just talking, significant increases showing to be needed in both the medical and liability funds are changing. The floor pass, as I said, is between 9 and 10 million. What we're hearing is needed in liability component. Um, another the other biggest chunk that we've identified, binding arbitration on 492, as you're all aware, um, it actually went well from accounting perspective, but it still is a $2 million um, nut to the 26 budget. It was about a million6 million7 retroactive 25 and then you put some inflationary adjustment on that and it's close to million6 to7. So you'll see there we were looking at a projected $17 million gap in 27. Flipping to the next slide, you'll see where that 17 has become 25. The little crisscross dotted lines is our way of trying to normalize taking the momentum $12 million purchase out. So you'll see if you if you look at this previous slide and this one side by side, the dotted lines would take you to the last year comparable.

The shaded area is a 5% margin, two and a half on either side of the line. Projected average revenue growth is about 1.2%. Is again, you know, sales tax is up. There's only 30% of our overall revenue and then the rest of our taxes are closer to flat projected. Uh when you do that revenue projection, do you on the charges for services, do you say you assume they're inflationary or do you assume they're flat? We do assume that they grow

proportional to those salary expenses that we see down there. But um look at each one and put in a common sense um depending on what fee it is.

You'll see with our growth at only 1.2% 2% overall and expenditure growth at 6.3 overall that is a significant delta that is ongoing. So that shows of that 25 million just to remind you 1.2 1.3 of that is capital placeholder for sheriff vehicles. So it's more of a 237 if you're looking operational to operational. So it is a significant percentage of growth of sales of property tax. But no, what about the 1% uh property tax? You're not assuming that in this

we assume those until the forefront. Just making sure I understand that. So this is only assuming known decisions. Okay.

And so that's why except for some inflation area on the fees and the new structure that hit last year, the property tax, it really is just a sales tax which is several million dollars at this point over expectation. So that helps. Um but it's maybe 10 12% of our that there is a crack to solve on this one. The next slide goes back to our deck of cards from GFOA. Last year we are very focused on the padding play king there. We really focus on getting funded but historically not filled positions at the budget. That was and is across the country GFO wide city, county, state. That is the easiest and most effective way to quickly pad a budget is to get extra FTE authority, get them funded, and then you can use it for FTEES or slide it in M. So, we really worked on that. This year, as our budget um is a little tighter and there's a little bit less lowhanging fruit, we expect to see more of the crisis card. If we choose, if you you the board choose to cut something, we will hear from the constituency that likes that something and how how that will be a negative. um we'll see people of influence coming in and then the the heart tuck. Those are the ones that GFOA was forecasting as being more common this year for a lot of different groups. So we just kind of an awareness if we're kind of thinking those um it is what it is.

Sure. And last year the last budget cycle the the board kind of addressed that padding play. we re we removed the positions that were vacant but funded um and were uh an opportunity to close the budget gap. So if you will that card is kind of been folded over right now but there is a expectation that others will you'll hear from from uh the crisis card and the influence and the and the heart tug in this coming one. So I wouldn't say we got necessarily u address lowhanging fruit but in some regards we did last budget. is going to be even a tougher one because those extra uh vacant funded positions are not going to be available this year.

Definitely going to be a rougher year. Again, removing positions that don't affect people obviously is less traumatic than other cases. And with a lot of those positions now moved um decisions will have generally speaking a bit more direct direct impact on people or service one side of them and then they go to the other. It takes people to provide service unless somebody end up with something we haven't thought of yet then we know there are options.

There are options. So we're going to talk through options now. Um we know we can cut. everybody understands how cutting works. We also wanted to remind the board of the revenue option side of the equation. So, back to the 1% that was just brought up a little bit ago. These are all up twos. You could take up to the full 1% or any set amount and then a very smart number of people in the assessor office would tell us. So 888 instead of a full 1% to get say 500,000 even. But the the 1% is council manic. That was our word of the week a while back when we learned it is manic, not attic. We actually checked with our state lawyers and Deanna Dawson and we actually went to RCW. So that was our city. So the the 1% is up to about 650,000. If you took all of the main capacity that's available, that would be just over a million dollars. The road levy shift would be up to 7.5 million. And then our the levy, the general property tax levy right now is at about 70 cents per thousand. The statutory maximum is a buck 80. So, if you went all the way to a buck 80, which if you're from the press, we're not recommending that. I don't expect it. There's no report on that. Um, but the way the numbers work, you could generate another 98.5 million. We just want to present the book ends there. And that would also require voter approval. In general terms, if the funding is for operations, it's a 50% plus fund. If the funding is to back bond payments, if you're going to go

into debt, that's when it triggers the 60% plus funding. So, those are the two different voter requirements. Any questions on the property tax? You see at the top we get about six just shy of 65 million in tax from this year next year's. Next slide goes into the sales tax. Wanted to remind you of the taxes we have. So our just our regular and operational proportion we get out of the what six five six

six and a half.

So we bring in about 51.5 um that's in perpetuity that state set. So there's no expiration. The juvenile detention in jails brings in the full 1% is 17.2 million. You'll see it's currently authorized through 2035. That would take voter approval to renew. The criminal justice is one. We don't talk about the split as much. We get about 35% of it. The formula always reminds me the county gets the first 10% off the top and then the remaining 90% is split proportional county in that plot also. So you just take the population of each group. So we get about 25% of the the pot plus the 10% off the top. So that brings in about 6.3 million. The public safety is one you've all been talking about a lot. So the top one, the county is a 6040 split. If the county enacts it first, as you all know, we keep 60. 40% goes to the cities based on a population. and public safety cities is the reverse when the city goes first except in that case as you all know it's 85% stays with the city we get 15. So of our 6040 split the second from the bottom that one is currently through 2029 and for that to continue it have to go back out to the voters. We also have the two other taxes just below the emergency communications which is a voter approval um expires in 28. So that's our the next one and we get the full 172 and then the mental health tax is also the full 172 or regional tax.

You're all very aware of that. That one I believe originally there was a years ago did no one have an advisory vote of the people and then it has been council manic since the advisory vote passed. On the other side, there was excuse there is the local law enforcement 110th that was put in enacted by the legislature last year when the sheriff and I were talking late last week. He did say as of Thursday or Friday, whatever day we spoke, he does believe we are fully qualified for that. At this point, the county has signed up under a an acronym, I forget that um does some is a data sharing, I believe, with the state, but to the best of our understanding of the legislation as passed. We are qualified. You'll recall if you enact the tax and you're not qualified, there's a $100,000 per month penalty until you're qualified. And then there's also the public safety two tents, the safe and healthy task force. A lot of talk around that with that task force that would require voter approval. And with our two largest cities already taken a share of it and the way you do all the math and the splits, it' be about a $15.7 billion increase to the county fee. And then just to add one more thought on top of everything. Rebecca, if you could throw up the one we just sent around this morning, the the date that it passes anywhere that

the timeline of him impacting a sales tax matters when it comes to how it fits your budget the first year. So, 7.2 million is a fullear current estimate for a 1%. So then you also see the quarterly that comes out to.3 monthly 1.4. Of course there's cycles to it but we're just going to make it a total average. Whether the public votes on a sales tax to increase or add something or it's councilman the rest of that quarter when the action happens plus one full quarter for do update all the systems get stuff ready and then as we were just talking earlier as council member Waldith brought up you know in April we're looking at March or February um actual take. So if if it was something to actually get 17.2 million next year, you'd have to make a decision next six weeks give or take. If if a decision was made in the second quarter, the third quarter would be the do and you can start and collect it in October, but October collections don't end until December. So you get a touch in December and then the full year. You can see in quarter year, if you did it in quarter three, you would get a third of quarter one, giving you 14.3 million. If you did it in quarter four, when the budget is passed, you get 58% of the revenue next year. You want to start collecting until quarter two, you only get one month collection because of the two-month delay. Just wanted to point that out. As the board looks at all the options on the table, we just wanted you to know a decision doesn't necessarily mean 17.2

million. When the decision is made matters on the property tax, the board will certify the property tax levy late in the year and whatever is certified as well and collected. So the property tax does not have this delay on the ramp up and of course in the out years you don't have it but um just wanted to remind you of how the calendar works when it comes to sales tax. Any questions on sales tax before we go along? Is there um just a an overview of that local law enforcement program one10enth that lays out some of the rules and

believe I do have something I just So you said that there's a penalty if you don't meet all the requirements for it.

Correct. The state withholds $100,000 monthly until you remedy the situation if it's written. If you recall when the legislature passed the it was a hundred million um for law enforcement and safety there were qualifications to apply for that grant when they gave the council manic authority for the 1% I believe you had if you did not meet the qualifications for the grant that's when the penalty came in you didn't have to apply for the grant you just had to be eligible to

so you can do the 110th without doing the grant is what you're saying. Okay. But you have to be eligible for that grant criter. That is my understanding. Okay. And how what is the max you can get from the grant program? I would have to look that up. I don't 100 million isn't a lot when you think statewide. That's what I was wondering. they're gonna do a first round, you know, like with applications that have already gotten in and then not a lot on that one. So, I'd have to look that up. And then what are the limitations of what you can spend it on? I guess if you have like a one pager on that, that would be

um some general information from MRSC. Um that just summarizes what the RCW formally says. Um that it's restricted to criminal justice purposes. Um criminal justice purposes are defined as substantially assist the criminal justice system which may include circumstances where ancillary benefit to the civil justice and behavioral health system occurs. So, I think that includes all of your court systems, um, domestic violence, staffing for adequate public defenders, um, diversion programs, but even though it's called law enforcement, that's called system,

prosecutor, defense, courts, okay, jail, all those. Got it. They've just given it a slightly more unique name than criminal justice or public safety, all the other taxes we all already have. Got it. Okay. I didn't know if it was just for law enforcement. That's why I was based on your conversations. Is there any latest thinking in the sheriff's office on applying for that or consideration? Our conversation didn't actually go there. We we were just talking about the fact that we are qualified. They were literally qualified as of that morning.

Okay. viable system in the state but might be new enough process not going to follow up on that we should I believe it does just require us to file documentation with the criminal justice training commission um and then they have I believe the RCW had 45 days to review the submittal and make a determination on eligibility

I believe the AG's office is part of that to looking to affirm whether or lot who we could assume were qualified, but then if they say they disagree, we assume they went since they write the law and then we'd have to pay the pen until the point criteria, but I believe the sheriff mentioned part of that. If you could check in, that'd be great. Thank you. Um, for sure.

Yeah. Um, c can I ask for for clarification? Um, Tessa, when you were reading what the dollars could be used for, was that the onetenth or was that what the grant of the $100 million could be spent on? Cuz my understanding was the $100 million that was set aside by the legislature was for actual law enforcement personnel that I thought you could you could get the money for three years. The first year it could be used to pay 75% of um in our case a deputy salary. The second year it was 50%, the third year it was 25%. But you had to agree to keep that individual employed for up to five years. Is is was that it?

I believe what you've just quoted is what the grant language is. what I quoted was the um RCW for the sales tax, the 1%. Okay. Okay. I I just wanted to make sure that Okay, perfect. Um and then I had a follow-up question. Can you click back to the previous slide that was up there? It'll be just a second. It's a separate document. Okay. Okay. We did an addition to throw back off a little bit.

Okay. So my well my my question um with the the last slide was if um if the 110th the the public safety 110th is um council manically uh adopted um does that mean I I know a county is my my understanding is a county is limited at 3/10en if we were to utilize the local law enforcement programs 110th is that different than the public safety 110th? Yes, this is a different completely separate from the 310 that wasized in the

25 legislative session. Got it. Okay. For about a year. Okay. Okay. So, so in theory a county could get to 410s which are essentially used for much of the same purposes. uh for that then. Okay. Okay. Thank you. And then one also a difference on the 1% this new 1% there's no split with the city.

They would keep it all but a city can also take it and then if you are a resident of that city that jurisdiction you would pay an additional two10. So, they're staffed. Um, both the city can take the full 1%, keep it all, and the county can take the full 1% and then you'd pay 2% if you shopped in that jurisdiction. Okay. Thank you for clarifying that. Appreciate it.

House, before we So, we'll move forward to the next one. just um the last year our mantra was a flat budget and the parent of four kids a lot of equity in that kind of makes up the pain nobody complains so everybody complains the same um so we are looking for some guidance from the board and certainly today when we come back on how the board would like to approach this budget is it just a flat Everybody gets the same percentage cut. Again, there are particularly our small offices such as Farber's administration office, um the hearing examiner and department of department

board of equalization like board of equalization had the person and the admin hearing examiner had the examiner and the admin. Those two departments are now sharing an admin between them. They don't have $5,000 with and so MO didn't get them their 7% cut. So they jointly took a much bigger than 7% cut which if we did a flat budget again I would argue they took enough last year for this year and next year also. Sparber also went from a threeperson office to a twoperson office. So a similar variation of that. Um, we could also just assign target budgets based on priorities as developed by the board. And you know, some of those is up on the screen there. You know, we ask people, we tell them how much money is available for the core service versus just looking at what did you spend last year for services. That's easier said than done. um urging departments to really scrutinize their spending. We we know last year we found the document from many years before I think Mr. acco found for us back I think it was during the time of John Dixon where every department had gone through trying to separate out what was truly a core service and and what was something in addition to that core service and I remember as you guys perused through it some were head nods liking it and there was actually some laughter because it just didn't seem to make sense based on what you were reading so sometimes easier said than done but we want to throw this in just for your reading pleasure on, you know, target based budgeting and what you put behind that.

Um, we did find a lot of value in having the targets assigned for each general fund agency. Um, we think it makes it very easily identify something for them to strive to or the mark to hit. um so we don't miss the mark unintentionally um and provide uh more pain than we need to um inflict in any situation. Um it also helps us as we um kind of carry your wishes out to all the departments and stuff. You go will give us direction and then we will take it forward. Um and it's makes it significantly easier for our office to support your wishes and desires through the budget process. So,

so last year we asked everybody to cut their budgets by 7%. We heard a lot of screaming and yelling and and for next year looks like we're looking at closer to 9 to 10%. And two questions. One, do you think that's there? And um if it's not there then is the only course of action to increase revenue or are there certain elements or certain programs we just cut and say we're not doing that anymore. Uh so

roughly threearters of our budget is law justice the entire system looking from the sheriff to the prosecutor defender to the court system district and superior and on the backside detention services. You guys have talked through the choices there. you know, if we were to become a countyon jail, for instance. Um, so we could look at that. But I would say everything we're doing is a core service, are we going to do less of it? Are we not going to house all of our partner jurisdictions? And with that being, as I said, threequarters of our overall budget, that's huge. Yeah. The one department we have that is not legally a mandate is the parks department. Um we just talked about a dog park. I can only imagine if we close in our parks department, you know, but legally speaking and if we close that entire department, it's what$4 million. Um

it doesn't get us it doesn't get us anywhere where we need to be. So we would we would have to look at service level reductions to get if you're if the goal is to come in with an all cuts budget there would be some serious service level. I think the reality would be would have to start with the sheriff mathematically because that's what drives our number of prosecutors and defenders which is what drives how many people are in our jail system. Not suggesting that. I'm just talking mathematically when threearters of our budget is criminal justice and the sheriff's department is the intake system so to speak. You know, the the public in general likes the officers on the street and people committing crimes locked up

and

yeah, we are I asked the sheriff again last week. Washington State is one of, if not the lowest law enforcement per capita and Spokane County is on the low end of that. So I I don't think anybody could honestly say we're we're oversubscribed there looking at averages and comparisons. You can certainly make the case philosophically but by averages and comparisons we're on the lower end. So that would be the I think just that would be the choice to get up to a 23.8 8 million cut if we didn't do any cop cars. Um, you'd have to start with with that whole system

and see what could be done. I think Commissioner French, the levers being pulled are all the ones that you suggest. It's probably a combination of all those things that be considered. Yeah, I'm not I expected the answer I got. So, thank you. La

last year, we as a budget team and talking with Scott, the rest of the executive team and with the commissioners offline, we were confident we could do what we did last year for the current year taking out a lot. There was a lot of unfilled but funded positions. That was the lion share of where revenue um cuts or not revenue cut expenditure cuts came from last year. you're the pain would be felt much more acutely if we had that this year. Commissioner Kurts,

thank you. Um, I know I've I've talked with budget a couple of times over the last several years about this is looking at what other counties how other counties budget as far as percentage of their general fund to each of the individual departments and kind of comparing it to us. So, I mean, I'll I'll just use for an example. I mean, you know, I I would recommend looking at more, but you know, if we just look at our neighbors to the south in Whitman County, taking their total general fund budget, how much of their what percentage of their general fund goes to the sheriff? What percentage of their general fund goes to parks? What percentage of their general fund goes to the clerk, the assessor, the otter, and so on, and comparing that with ours. So, are there any departments in Spokane County that are getting an oversized share of our general fund compared to other counties around the state and then maybe diving in there to see why that is? Is there a way to fix that? Are there any departments that have just been a larger chunk of our general fund just kind of, you know, forever and it's just something we've gotten used to and never really dive down to see why that is. So, if that's something could look at possibly. I don't know. Not sure if there would be any answers there.

Yeah.

And I know there's other factors too, but you know, I just could be an easy easy thing to look at. I know Jason did some of that last year. We can do some more. From my time at King County, which was 6 to 17, I would say our percentages were similar. Um, but we'll we'll do some we'll pull some data for you. So, um, I went through this exercise when I was at the city and compared the city's annual budget and broke it down to cost per taxpayer uh, to Tacoma. And Tacoma was charging u well, their tax structure almost twice what the city of Spokane was. That's 20 years ago. Um, sure that that gap has narrowed a lot in the last several years, but I was just wondering if you compared our budget and what we're charging what our taxpayers are paying per capita for services in Spokane compared to u I don't know or king or pierce or thirsten or any of those other counties. How are we are are our taxpayers getting full value for what they're paying or are are we are they paying more than what other counties are charging for equivalent services? Does that make sense?

Yeah, we can we can crunch some numbers. In fact, yeah, another good metric to look at. I I think last year we we did the exercise with looking at all departments and trying to ask them to look at like that same cut and I think to your point the small very small departments we've pretty much cut to where um we can.

Yeah. So I mean my suggestion is to look at the larger cost centers where there is more um you know there's more room in their budgets to go okay what is a need and what is a want and so um I'm not sure if we did a did we end up doing a 7% cut in the sheriff's department we did the sheriff's budget is a flat budget so that that means they cut 7% % to absorb the the increased cost, but they did get the increased revenue from the valley, right? Well, that's revenue backed. Okay. So, that doesn't help their overall. So, it was a flat budget. Yeah.

I don't know if Yeah. Every every department we ensured we all departments through the initial submissions met their targets. any differences were outlined for you commissioners and then you did the process where you did adbacks from there. It was about three to four. So some people may not have plat juvenile in juvenile we did some adbacks in parks we use read to adback we did some other extra up until the adbacks it was a flat 7% for everybody the adbacks would skew it some

and then we made those changes to the tension services which included cutting so the services yeah anyway I just I don't know. I mean, I I think that the larger my recommendation is look at the larger I wouldn't take up a lot of our time with, you know, public records. It's we already went through that last year. We did make some cuts, but then we added the extra software to do better um hopefully reduce the cost of get more volume out of the people

employees into the future um by using technology to help do public record requests. So, um, but if there are other opportunities to share admin staff between different offices like we did with the the board of equalization and the hearing examiner. I mean, I think that's something to look at. It's not always possible, but it may um allow our smaller departments to share some staff. that in our office Courtney does payroll and accounts receivables for

a number of I know we've talked about u maybe making some more changes across the organization like with uh how we manage our fleet and you know because we manage fleet in like three or four different departments and I know we've talked about hey what would that look like? Would there be over time any savings to manage fleet in a more centralized way or if there's any centralization of services? I don't think you're going to get much um cost savings this year, but as we're looking out into future years, I would just want us to start looking at those as soon as possible. Um because it usually takes a year or two for those things to go into place and then to start to see changes. have a long conversation with section.

Got it. And then I have Josh. So

I just comment back on the target based budgeting slide. We've learned a lot the last number of years going through budget. We've learned what not what works, what doesn't work. And years back where we asked the departments, tell us what you need, what your budget are is. Then we rolled it all up and it's like, well, we can't afford that. We don't have enough revenue. That didn't work. And it sets some expectations with the departments. Now you're cutting them. Last year we knew we had to have about a 7% reduction as Commissioner French said. So we asked all the departments come up with your 7% reduction. Well we pivoted u midway through the budget because that wasn't working. We said we got to go with target target budgets. Here's your budget. You guys budget to it. So I think the target based budgeting is what worked well as we morphed to that last year and I would suggest we do something similar this year be our recommendation because it is the departments then know what their goal is. So give them a total gul

without commissioner Kurts.

Um, one of the things that has kind of stood out to me too was the the the spreadsheet you had on uh a little earlier in the presentation showing the expected revenue from the different departments. Some of those were single digits when they should be around 25%. And I know some of the departments, you know, it's going to depend on kind of timing. Some of them have, you know, just maybe they get them twice a year, maybe they get them quarterly, but some of those ones that were single digits is pretty concerning. Um, and I mean, let let's hope they get up to the to their expected expected um, you know, uh, re revenue projections, but some of those are very concerning when you're in single digits. Um the other thing I wanted to ask uh I know last year when we went through the budget we talked a lot about travel and reduction of travel. Have our have all the departments been kind of sticking to that um mantra of cutting down on the amount of travel that they're doing for the year or are there any outliers? Has anybody increased their travel? because I I remember us being pretty clear uh travel was something we needed to to really kind of nip in the bud there.

I know I do know the sheriff's office travel increase. They've had some they share with us they have some state mandates on more training that requires travel. And when it comes to separately electeds, there's also that um kind of executive legislative hug that you see at other levels. quite a few departments that cut travel I think where other departments have been able to save if they've had vacancy savings or other things and have not had um a payoff that needed to cover that expense

they've been able to transfer that to afford themselves other M opportunities um that could be travel training things like that um especially if the turnover turned into new staff needing to be trained Can't remember which, but I know some departments who did cut it. They ended up with revenue that they shifted to it to take advantage when maybe there was a long vacancy open. So, some of, you know, they managed, we hope they're managing to their budget and and doing a good job with that. Um, but we can highlight travel when we bring the next quarterly.

Anything about workday is give Jason a half hour and he can full. So on that point just remind me what level are we budgeting at? Are we budgeting at the department level or not? Is that correct right now? Correct. The agency level that is presented in your

So really the the way that we're adopting the budget is giving each department a top line and then they have a lot of discretion of how they may move expenditures between those lines. Okay. But the problem is salaries and wages takes up most of the budget. So this so there isn't a lot I would say there's not a lot of discretion in their budget employees. So it would mean it's to reduce budget sometimes it's going to be employees.

Yes. I'm just thinking about commissioner Kern's comment about travel. Even though the board may have expressed a wish we haven't put a string on travel. We did talk about we talked about having a maximum on salary and benefits. We also talked about travel and training on Indiana. We did not put that into the budget. Historically, if you go back couple decades, um there was some budgets, there were some budgets that were passed with some line item more stringent than top.

I think another thing to look at that asked the board to consider is setting the number of FTEES. Those are going to be changed throughout the year, but at least this is your max as the budget starts. Um, and then that could be another way to help manage some expenses. You can get as surgical as you want. Right now, it's at the at the department agency level. You can go down to an FTE level. You can go down to a line. So, board's choice on that.

I I think the departments have come a long way. I think workday has helped, but we still have some departments that have come in just bluntly told us, "Well, you messed up. You didn't give us enough budget for all our people." And so we politely replied them, "That's not the way it works." that we talked through the departments, the needs with the board and this was the amount given and you to the amount not not the daughters of sons of billionaires here where you just spend and mom and dad to pay the bill. Um, we do have we have constraints just like I think everybody here probably has in their home budget. So, this just shows where we are in the process. You know, we've done the revenue forecasting looking to start doing a target budget. the next time we come before you'll be looking for more direct guidance on that. And then the last thing we have is the calendar. And um it's really just moving this draft is really moving last year's stuff to the new numbers this year. But we wanted to know if you know people are going to be out of town, conferences, travel that we are not aware of. Um how is it's looking ahead? Little unusual this year. September 1st is a Tuesday and by RCW we present on the first Tuesday. So, you're used to us always presenting the Tuesday after Labor Day, but this year we'll be presenting the Tuesday before Labor Day, just the way the calendar falls. A

little bit unusual there. And then December 1st is also a Tuesday and we pass the budget on the first Monday in December. So, there's a more time between um Thanksgiving and in the December than we're used to, just the way the calendar falls. We we have the same number of public hearings. We have the evening public hearing listed. Um we are looking this year because of what we're seeing some some revenue projections. It appears people are just adding 3% to last year. I'm assuming that's their revenue even though last year came in at 60% of projection. So we do want to put a little bit more of a lens on expected revenues. So we will in the red section, one thing we are looking at doing differently is having revenue estimates come in separate from the budget. Um the expense part of it to really get departments focusing on that revenue and giving it some more direct. Um we thought there'd be a way to call it call it out a bit more. Any other serious changes?

Big change is trying to give the departments almost two full months in the adaptive planning budgeting tool. Um it was rolled out new last year. We didn't have quite as much time as we probably would have liked. So we were hoping more time would give the departments um lots of room for analytics on their revenue estimates. having those due the 26th of June um after being in the system for a full three weeks. So that would push our proposed um opening of the budget cycle for departments to June 3rd. Um, and so that has June 2nd, the day before, as a target date to send our 2027 budget letter out, which unfortunately puts a little bit of time constraint uh to get those targets worked in over the next couple of strategic planning sessions with you all. So we would propose we come back and visit again on the 18th, talk more, bring back some of the um facts and figures, kind of comparative data, some other thought processes on the 18th of May for target options and then try to finalize Monday June 1st. And then proposals for the round tables, those can be very flexible. um the three round tables later in September, October, November. So if those dates don't work, please do let us know. I just so you know I've had a conflict come up on 18 so I likely won't be here but there's I can just give you input or feedback on the calendar that we should be aware

of or is this a good of course we can make changes as we go but is this a good tenative draft to start from? You guys see other stuff, you know, just have your office let us know if something sums us up for this morning. Thank you. concern miscellaneous items or ineffective sessions.

We do have some exec sessions. We do have some exact sessions, but I thought

an hour of executive sessions. It is all pending and potential litigation. There's no action anticipated. First one, Matt Olsome, Jeff Mcorris, Scott Simmons, Sarah Herb, Ashley Cloud, Josh Ro, Vicky Dalton, Tim Dunovan, Tessa Sheldon. 20 minutes, no action. The second, Matt Coulson, Jeff Morris, Scott Simmons, Deon Cura, Justin Johnson, Heather Arnold, Mike Sparber in no action. The third, Matt Folsome, Jeff Morris, the Scott Simmons, Devin Curt, Ashley Cloud, Dan Gad, Preston McCullum, and final 20 minutes no final one is 10 minutes no action. Scott Simmons, Jeff Mcorris, Deon Curta, Preston McCulla, Dan G.

Hey, and I'm all for Sparber and third and fourth fourth. May I the fourth one here? Yes. Same group for the last two or the third and fourth. So we are going to go into executive session for an hour for the items just discussed with people we just discussed. Um at the end of that hour we will for the morning or for the day. And so everybody back for our nine o'clock tomorrow morning. Uh it is 10:30. Okay. I went to executive session for a nap. Thank you all very much.