Community Budget Forum - Regular Meeting

Good morning, everyone. We'll call to order the Snohomish County Council for our finance, budget, and administration committee. Today is 08/12/2025 at, 10:00AM. We're meeting in the Jackson Boardroom and also remotely. I'll read a script for public comment, and then we'll ask our clerk to take role. So we'll take public comment beginning in person and then remotely. If you're on Zoom, please click on the hand icon at the bottom of your Zoom screen. If you're calling in by phone, press 9 to call, raise your hand, and press 6 to unmute. Each speaker will have three minutes to speak. And please start your comment with your name and city of residence. Next is roll call.

Committee chair Dunn? Here. Vice chair Nearing?

Here.

Committee Member Lo?

Present.

Committee Member Mead? Here. Committee Member Peterson?

Here. Here.

Chair, there are five members present.

Thank you. Next is public comment. Did anyone wish to provide public comment today? I don't see anyone in person. If you're online, please raise your hand.

There are no hands raised.

Thank you. So we'll close public comment and move on in the agenda. We have three action items first and then discussion items. So first is motion 25 dash three six one.

Thank you, chair Dunn. Good morning, council members. For the record, Jim Martin, council staff. Post motion 25 dash three six one authorizes the county executive to sign an agreement authorizing funds for Bloomberg as a single source provider for investment services, including a real time online subscription service that provides comprehensive financial and securities market data. These services have been used by the treasurer's office for support in managing the county's investment portfolio. The single source approval is for five years and services are purchased annually. Five year cost estimate is $180,000. Requested action is to move to GLS on August 20 for consideration.

Thank you. Any questions from council? Any objection to consent? K. Hearing and seeing none, that'll go to the consent agenda on August 20. Next is motion 25 dash three seven three.

Post motion 25 dash three seven three approves and authorizes the council chair to sign the county section one twenty five flexible benefits plan document. The plan is managed by Navia Benefits Solutions Incorporated. Amendment eight, which extends the term of the agreement through 03/31/2026, creates the need for an amended and restated plan document to be signed by the council chair. No No other changes are being made to the existing plan document. Requested action is to move to GLS on August 20 for consideration.

Thank you. Questions from council? Objection to consent. Okay. Hearing none. This will move to the twentieth on consent. Next is motion 25 dash three seven two.

And proposed motion 25 dash three seven two approves and authorizes the county executive to sign the Snohomish County tourism promotion area agreement with DVA. Scope of work includes creation and implementation of a campaign strategy and management for the FIFA awareness campaign, including media strategy, project management, administration, and account management, managing digital media, including optimization and reporting, development of creative concepts, campaign asset development, and a partner toolkit, targeting of new audiences focusing on US cities that have a strong Major League Soccer fan base, direct flights to Paine Field, or favorable soccer demographics, but are not World Cup host cities. Term of the agreement is from execution through 12/31/2025 with a not to exceed amount of $165,000. Requested action is to move to GLS on August 20 for consideration.

K. Questions from counsel? Objection and consent. Okay. Hearing none, this will move to the twentieth on the consent agenda. Next, we have, three discussion items. So welcome, Linda Leishel, the executive director of the, Snohomish County Conservation District. Did you wanna intro introduce Jim?

I just Yeah. Linda Lyshaw is here to provide a presentation on the conservation district's rate and changes for rate and charges proposal. Linda?

Good morning. I'm gonna pull up a PowerPoint here. Yeah. Get that in presentation mode. There we go.

Thank you so much for taking time this morning to talk with me about our rates and charges proposal. And I'm going to give you a brief overview first about Conservation District, our work and priorities, some recent accomplishments, the identified needs, and our proposal. So first, we are a team of 30 42 professional staff. We have two field crews, and we have five elected and appointed board members. We've been working here in the county since 1941 assisting farmers, residents, and landowners on a voluntary basis.

And we are authorizing legislation is RCW eighty nine zero eight. And our mission is to work cooperatively with others to encourage conservation and responsible use of natural resources. Our work really focuses on trying to promote healthy watersheds and resilient communities. And we do this through multiple ways, by increasing climate resiliency, fostering stewardship of natural environment, supporting and protecting viable and resilient agriculture, incorporating diversity, equity, inclusion, and restoring our wildlife habitat. We provide site specific technical assistance.

We offer financial support to help implement best management practices, and we create educational and career opportunities. Our agriculture program is one of our mainstays. This was born out of the Dust Bowl era back in the late '30s, early '40s to really help address soil health and water conservation. Today, we do everything related to natural resource conservation. And some of the key aspects of our agricultural program is we do provide nutrient management plans to certify dairies.

This is required by WSDA. We also facilitate implementation of best management practices and provide funding to do this to help increase agriculture viability. We do site visits and one on one technical assistance. We've also developed one of the first agroforestry programs in the Pacific Northwest. And that's an ongoing program, and it's become very popular to really increase agriculture viability.

We also have our ongoing sound horsekeeping program. We have a lot of horse owners in Snohomish County, and we help them to keep their horses healthy and their, land healthy as well. And we provide engineering and design for agriculture infrastructure. And we did back in 2019, we developed the agriculture resilience plan for Snohomish County and continue to implement and update that plan. We also have our agri science fact sheets that we share with our, farmers and, and landowners that really help to understand better how to how to manage increased flooding and increased drought and improve soil health.

Our agroforestry program, we have two focus areas, and one's our bountiful buffers. This really increases buffer width along streams by incorporating a working buffer aspect where you can actually grow crops that are profitable. And we have our wet feet farming program, which helps farmers to access marginal lands that might not be accessible in early spring because of the amount of moisture on the land and in the soil. So we've created and this is an increasing issue. So we've created this wet feet farming, which is looking at new species to consider that are valuable, value add species for and crops for farmers to consider.

We've been doing some research on this and finding it successful. So this allows earlier production on on the land. We also do a lot of forest stewardship. We have a lot of forest properties here in Snohomish County, and we provide forest management plans, technical assistance. We help with cost share and project implementation, and we're doing a lot of community wildfire resilience work as well, partnering, with the county on that.

Really, very impressed with what the county's done with their community wildfire resilience plan. And we have been an active partner, in that work. And we really are looking to restore forest related ecosystem functions, reduce wildfire risk, improve fish and wildlife habitat, protect water quality, and reduce stormwater runoff. Also have our green stormwater infrastructure program. Every year, we install bioswales and rain gardens throughout the county.

We also do water catchment. And this is a and we also have our urban tree program, which is a really great program, which I'll talk more about in just a moment. This is just a picture of some installation of rain gardens with both our staff and community volunteers. And we've also developed a update to the rain garden handbook for Western Washington, which I have a copy of here if anybody would like one. This was, initially first created back in 2013, and we actively used this and realized it needed an update.

So we approached Department of Ecology and partnered with them to to lead an update for this this wonderful handbook. We also had assistance from Snohomish County staff on this as well. Our growing urban forest program is one of our really exciting programs right now. We're working with Tulalip tribes and the state cities of Everett and Marysville, really focusing on increasing tree equity in underserved neighborhoods and creating food forest and urban street trees for habitat, shade, and beautification of those neighborhoods. We continue to have our lawns to lettuce program, which is very popular.

We as soon as we open up applications for this program, it fills up very quickly. It's a really popular program where we provide small grants to help schools, communities, and residents to develop their own gardens to turn their lawns to lettuce, if you will, and grow food in their communities. We have our living with beavers program, which also continues to be very popular. We have a healthy beaver population here in Snohomish County. Beavers are wonderful engineers for our environment, creating wetland habitat.

They are also pests for some landowners where they create flooding and issues. So we get a lot of calls with questions about how to manage our beavers. This is a program that we have has grown significantly over the years. And, of course, we have our ongoing habitat restoration program. This program provides jobs and career training.

We utilize the Washington Conservation Corps. We also have our own community conservation crew, and we have a Latino restoration internship crew. Our crews are planting trees and shrubs. They're restoring riparian habitat, removing invasive species, and improving forest health. Our riparian refore reforestation program is robust and ongoing.

We strategically align our programming and our properties that we're working on with our partners, with the county, with tribes, and others to make sure we're really finding areas that are high priority salmon recovery areas and trying to find adjacent properties. So we're creating large stretches of riparian restoration. This is really important for our salmon populations. Also, we are removing culverts, and we're putting in a fish or better fish passage areas. This is a picture of one bridge that we built a couple of years ago, and we removed a culvert here.

We we usually do at least two of these a year, and this is opening up, miles of new habitat for salmon populations. Again, this is done very strategically. We have a plan that we share and, develop with the county and with our tribes, to develop this. One large project we're working right now is Swans Trail Slough. This is a project that is adjacent to the Chinook Marsh project, which is a county owned property and project.

And we're really focused on, improving agriculture viability and salmon habitat in this reach. There's major flooding concerns in this area. This area floods every year, and it's it's increasing increasingly flooding. So what we're trying to do here is in two different areas. One area, we're really trying to improve the fish habitat.

And what we're looking at now, we're modeling different alternatives to do this. We're currently on this is alternative three and four here on the screen. And we're currently working on alternative five. We got a lot of great input from Tulalip tribes and the Nature Conservancy to really try to emphasize the salmon habitat restoration component of this. So alternative five will open up the slough on both ends and create more water flow here and improve that fish habitat in this area, while also reducing the flooding in the egg lands and allowing the farmers to get out on their land earlier in the season and have more egg productivity.

We partner a lot. We can't do this without our partners, and so I just want to emphasize how important that is to us. We partner with county. We partner with Tulip tribes, with Stillaguamish tribe, with many other partners in our region to really make this work happen. One of those partnerships is our sustainable land strategy.

I currently serve as the co chair of that group along with Darryl Williams from Toledo Tribes. And this is just a wonderful collaboration and opportunity for us to really work together and find win win solutions for these large scale projects, especially, and really realize multi benefits from these projects. We do a lot of youth education. So I wanna highlight that. We work with preschools, elementary schools, middle schools, and high schools.

And we pry provide a program called Wheat Week, which is a very popular program. This is for fourth and fifth grade students. We opened this up in September at about 9AM, and by 12PM, it's full for the entire year. We serve this last year, we served 41 schools and about 3,800 students. And we provide a weeklong of five lessons for Wheat Week.

This really helps kids to understand where their food is coming from, how it's grown. They understand the science behind it, and they get to grow their own, wheat kernels, which is pretty fun. They really enjoy it. Very popular program. We also do Envirothon, which was with our high school students here. And we had four Snohomish County teams, compete in the Northwest competition this last year. Students learn about wildlife, aquatic ecology, water quality, soils, land use, and forestry. And we had two teams from the Henry Jackson High School competed this last year. We also do our youth art contest, which is really fun. I really enjoy this contest.

It's really hard to choose the winners. This was our first place winner this year. The theme was native flowers. So this was our first place for grades six through eight, and this was our first place for grades nine through 12. And I'm thinking that we should really be displaying displaying these either here at the county or at our new new natural resource center, which I'm going to talk about in just a moment. The natural resource center, we purchased back in 2020, we purchased 12 acres of land. Currently has a barn and a greenhouse on it, and we're actively using this site, for our conservation crews. They operate out of this site, and we keep all of our tools and vehicles there. And this is their office location. It's, 12 acres in, Lake Stevens.

And our plan is to develop our natural resource center on this site. We're currently in our design phase. This site will host our demonstration practices for wetland and stream restoration. We do have a stream running through the site. And it's a former dairy, and the land is fairly degraded. So we are doing a lot of restoration, a lot of restoration planning for this site. We're removing invasive species planting riparian buffer, doing wetland restoration. We'll be doing we'll have a compost facility on-site. We'll be really focusing on pollinator habitat, continue to use our greenhouse for propagation. We'll also have a cutting block for propagation.

And we'll be using green stormwater infrastructure on this site and using this as a showcase. So we really want to invite the community in. That's the idea of this. And it's been the idea from our board for the past twelve years. And we're finally making it happen, which is really exciting. We're also gonna have indoor and outdoor classrooms. We'll have a community meeting and event space. We've already getting, requests from members of our community to use this space from the Farm Bureau, from Washington State University Extension, from others. So we'll be active and vibrant community meeting event space. We'll have 80 accessible interpretive trails so people can look at all these different demonstration sites and learn from them.

And the building will be LEED gold with a solar array on it. So we've identified some needs, which is why we're coming to you with this proposal. We really have we have a backlog of requests, we are eager to assist the residents with this backlog and to shorten this the time frame that it takes us to serve our residents. And we currently have a waiting list for forest stewardship, habitat restoration, farm planning and projects, urban and rural drainage, rain gardens, living with beavers, and soil fertility testing. So we would like to increase our services in all these areas.

We receive a lot of grants. We receive, right now, about $2,300,000 in rates and charges. And our budget this year was over $11,000,000 So we leverage that funding and receive a lot of grants to do a lot of large scale projects. But grants don't cover all the needs. So, really, this, rates and charges, help to fill a gap, in meeting these needs.

And, the rates and charges also are essential to allow us to expand our efforts, to help us better respond to landowner needs and to enable us to deliver services more efficiently. So the proposal is to change our current rate from $10 to $20 a parcel. This will help to complete our funding for our natural resource center. It will also help us to address our cost of living increases over the next five years. And it will reduce our backlog, and it will help to fill service gaps.

And, the the budget here is for our estimated 2026 budget, of how we plan to allocate those funds. And with that, I'd like to see if there's any questions.

Questions from council? Yeah. Councilmember Lowell.

Thank you. Great to see you, and, I got to attend one of your board meetings, this last year. It was so great to meet your board members and see the great work you guys do. You mentioned about beavers.

Yes.

Beavers, beavers, beavers. It's definitely a problem. With this new funding, is there gonna be more of an outreach to help homeowners and help, people who are struggling with beavers on their property? Because it's, you know, I I know, like, in Lake Stevens, they used to help with it. Now they're not helping with it. And so a lot of homeowners are struggling Yeah. On where to turn. So can you address that a little bit?

Yes. That's exactly what we wanna do. We are as I said, we're largely funded by grants. Grants have very specific deliverables. And right now, we don't have any grant that says assist people with beavers. So what this will allow us to do is to divert our staff to do more of that community needs and less of the grant work. So, yes, we will definitely be expanding our beaver assistance.

And then the other thing I noticed in the proposal is kind of what's right there in front of us, kind of what your budget is. But do you have, something that's showing kind of what you currently do with the current budget? And what would the new dollars that would come from the homeowners in Sonoma County, what what increased services would they receive from going from $10 a parcel $10.10 a parcel up to $20 per parcel?

I don't have anything with me, but I could certainly, forward that to you or send that to you.

Great. Thank you.

Councilmember Nearing?

Yeah. Thank you, vice chair Dunn. I appreciate the presentation and the and the work that the conservation district does. I will say I do have some concerns with this proposal. When I started in 2017, we were at, I think, a $5 per parcel rate, and we doubled that over the of of several years. And so now going up to 20 would be a quadrupling from where the initial rate was, which which I think is significant. Right? I mean, if we look at our if we look at family budgets or business budgets, if an expense quadruples over a over a set of years, that's that I think that's something worth paying attention to, and I don't think it should be any different when it's when it's publicly funded. So that that is a concern to me. And I'm curious what the comparison is, and maybe it's a question for you, Jim, to a a property tax increase.

If we're going from 10 to $20 a parcel, my math would say that's about a 3% the equivalent of about a 3% increase to the county portion of the property tax.

Ballpark? Yeah. That's pretty close. I'd have to to do the math and and do some research to get the exact number, but it wouldn't be wouldn't be too far from that.

Okay. Yeah. And so I I appreciate that this proposal has been put together, and I think, you know, you've done a good job of outlining what, you know, what what you'd like those funds to be spent on. I think from our from from our seat, you know, the council's job is to look at both the benefits of programming like this, but also to be careful about the the burden that's placed on rate payers who we represent. So trying to find that balance is important for me. And, again, I think a quadrupling of that rate since 2017 is is of concern. One other thing I would note is, you know, I think the state law recently changed to allow it from 10 to 20. 20 is the maximum.

Twenty twenty five.

Yeah. So I think jumping immediately to the maximum, again, makes sense from the perspective of the district to be able to provide as many services as you can. But, again, just something I think that that we should be taking note of as a as a legislative body when we're looking at this. And so, again, I appreciate all the all the work that's done. I think from my perspective, just wanna make sure we're balancing the cost of living issues that that our constituents are facing with the positive services that are being provided here when we make a decision. Thank you.

Thank you. Yeah. The maximum is 25, and we're asking for 20, just to clarify. Yeah.

Thank

you. Other questions?

Yeah. Just a follow-up question. So I think the proposal I had showed 1,500,000.0 for the natural resources center for 2026. The one I see up there is 1.6.

I did adjust this. Thank you for noting that, Sam.

And so and I noticed you have a five year budget, of of kind of what that budget is, is that resource center budget, is that in each five year budget or is that just in the first year?

Just in the first year.

Okay. And then the other years, do we know where that money would I

have not provided that. The RCW requires me to provide it for next year, but I'm happy to provide that for you.

Great. Thanks. Yeah.

Yeah. Had the same question on if the if the resource center was a onetime fund, what do the future out year budgets

Right.

Look like for that 1,600,000.0? Is the $20 rate, is that the same for urban and rural properties? Yes. Okay. Any other questions from council? So we have some draft documents, or we could direct Jim to move forward with drafting the proposal. And then it would come back to council with to consider specifics on the amount the request is for 20 for an increase of 10 to 20. But is is council moving forward is council comfortable moving forward directing our staff to prepare the documents for this? Any other or any other questions that we can get answered in the meantime?

I'd just like to see some more documentation before we move forward. And I guess the other question as a follow-up is if we if the council decides not to go to 20 and they decide to go to 15, is there a contingency if we only went halfway?

We will make that work. Absolutely.

Yeah.

We prefer prefer 20. Pardon? A step increase.

A step increase. Yeah. Okay. So we're we could use some more information on out out year budgets and other, documentation. Can also reach out to

Jim.

Yeah. The other one was kinda what they're doing now with the money they get from Stomach County now. Because part of this comes from, Island County too from Camano Island.

So that I did not include in this. This is just our Snohomish County rates proposal.

But kind of what they're doing now with the Snohomish County money and what they would be doing going forward or Yeah. What would be increased if we

increase the

We don't. Yeah. Just to clarify, we don't use the Snohomish County rates on Camino. We use the Camino Island rates for that.

Okay. Any questions online?

No. I'm good with moving forward with getting a little more info.

Okay. So we'll ask Jim to draft up the ECAFs, our internal process. And any questions, reach out to Jim or Linda. Okay. Thank you so much.

Thank you.

Appreciate your time. Thank you. Thank you. Next, we have our next budget item is Nathan Kennedy for the revenue and budget update.

Good morning. Nathan Kennedy finance department. Jim, they do have a copy of the quarterly budget report. Correct?

Yes. They have the quarterly report.

Okay. So I'm here to kinda just go over that quarterly report briefly and to give answer any of the questions that I can help you with. Let's use this quarterly report as the kind of the presentation tool or the or or how I'm gonna order the conversation. If you go to the very first chart on page three, quarterly budget report, general economic overview, That is, the nation's GDP, over a period of time. As you noticed, in the 2025, the GDP did take a drop, but in the second quarter, it has increased by about two about 3%.

That's not shown on this chart, but it, I looked it up briefly before I got in here. So it has rebounded in the second quarter. Unemployment, which is the second chart, unemployment right now, at least at the at the end of the first quarter was at 4.4%. Previously, last quarter is at 3.6%. So we are seeing an uptick in unemployment.

However, 4.4% is not considered high unemployment. It's it's still on the manageable level. If we go to the next page on page four, we have the general fund fund balance, exhibit. We are going to the end 2024 with roughly around a $120.20 excuse me. $122,000,000 of total general fund fund balance.

That's including the, uncommitted fund balance plus the rainy day, the rain the revenue stabilization fund. The two added together ends up being around a 122,000,000. We are going to, in projected in 2025, we're gonna go down to 73,000,000. I'll explain some of those that decrease to some degree here in a second because it was a budgeted decrease. Year to date revenue.

Let's talk about revenues. Go to the next page. Page five. Sales tax is not keeping up with, our budget. In 2024, sales tax was 2.5% higher than 2023.

And then in 2025, the revenue committee, the two council staff people and the two budget staff people, came together and they project that sales tax will be only at 2%, increase over twenty four's number in 2025. That nets out compared to budget of about a $5,000,000 decrease compared to budget. So that is a a good thing. Anecdotally, May's sales tax came in a couple weeks ago. May's sales tax puts us cumulatively at 1.97% which is close to the 2% that the revenue committee has come up with.

In addition, however, on the brighter side, if you go clear to the bottom of that exhibit on page five, investment earnings is up 1%. Excuse me. Not up 1%. Up $1,000,000. And, we recently just contacted the treasurer's office, they see that continuing throughout 2025.

So that helps out a little bit. If we go on to the next page on page six, wanna point out a couple of things associated with not just before we get into the six year plan. One point out, departments, by and large, most departments, with the exception of about two or three departments, are tracking to budget, largely tracking to budget. There's about two or three departments that are not, namely sheriff and sheriff corrections and OPD, and they are materially down. They are materially going to be overspending their budgets.

In the six year plan exhibit, if you look on pay on the, second column projected 2024, about halfway down to the revenues, you see $71,000,000 which is a a a blurb in, charges for services. That is basically the $16,000,000 that was in fund one thirty in the ARPA funds that we, spent in the general fund trying to make sure that we try to capture all dollars that are available to us. You will see that $16,000,000 as well as the monies that were, saved up in the general fund from ARPA for the ERP project, being coming out of the general fund and going out to the, being spent in the next column 2025 towards the bottom interfund payments of $91,000,000. So that's kind of the two little hiccups I wanted to point out. Other than that, most of the numbers are flowing based upon budget and based upon, actual trends.

This does show depict in 2020 excuse me, in 2030, a negative fund balance. Obviously, we will do something collectively to rectify that. We can't have a negative fund balance in the general fund. We have liquidity. We'll be go below liquidity by 2027.

And if you look at the total fund balance numbers, the difference between them, it it's roughly between 14 and $16,000,000 each year. So that means we are decreasing our fund balance by 14 to $16,000,000, which is our structural deficit. Next page. Let me before I finish, back up. This the expenditures for clarification, the revenues is based upon the revenue committee that just met, and the expenditures are what's based on budget.

So if the departments are spending over budget, it is not reflected in the six year plan. Now next page. Page seven. REIT, at least through the first quarter, has been coming in close close to budget or a little bit actually a slight surplus. So REIT has been doing fine so far. However, as interest rates stay up, that's going to be challenged. As interest rates go up, less property gets moved around. People don't, have the ability to borrow money to to acquire new homes. So REIT is potentially threatened in the future. How much can REIT drop?

This is the reason why we leave this chart on there and show the great recession of two thousand eight through 2012. REIT can drop and and bottom out considerably. That's the reason why we maintain healthy fund balances in there because there's a volatility to REIT. But so far, REIT has not been falling. Page eight, again, is just an unemployment chart showing again that we're up to around 4.4% unemployment for Snohomish County.

It has upticked here as of late, but, again, 4.4% is not alarming. I mean, maybe I'm showing my age, but I can think back in the eighties and nineties where it was 1012%. So it's it's not a good sign, but it's not one that I would be running around with my hair on fire. Next page, page nine, retail sales tax, numbers. Again, in 2024, wanna make sure we're clear.

2024 was an increase over 2023. It was just less than what we had budgeted. It was an increase of two and a half percent opposed to what was budgeted five. So likewise, in 2025, we, budgeted again 5%, and it looks like probably gonna come in around 2%. The cumulative, sales tax so far to date is 1.97, and we, the the revenue committee had it at estimated at 2%.

Again, less than budget. Sales tax bounces. One would say, well, then if you keep on, why do you pick 5%? Well, because historically, over the last twenty five years, the average is about 5.3%, 5.4% over the last twenty five years is the average increase in sales tax. So 5% seems like a reasonable increase long term for your budget.

And then the last exhibit on page 10 is the, breakdown of where our retail sales tax comes in from. Largely, it's retail trade, particularly motor and vehicles. Motor vehicle parts and and new vehicles, which is still the lion's share of, our retail sales tax amounts coming in. Construction is also a large component and, as well. It's about about fifth or sixth of the overall sales tax. And then you can see miscellaneous and all kinds of other things that we have sales tax revenue coming in from. And as for the, first quarter report, that is it. Here to take any questions.

Questions from council members? Council member, Nearing?

Thank you. So on the percentages, I've heard different percentages, and that's probably because it's, you know, it's changing every day. But you just said 2% is where we're at, and we budgeted at 5%. Correct. In dollar amounts, where does that put us? What is what is the dollar amount delta there?

So the delta for 2025 is about $5,000,000 between the two sales tax that we have coming into the general fund.

That 3% difference, about 5,000,000. Okay. That's helpful.

Because it's a lower of the '24 because we we developed the the the, estimate in 2020 midway through 2024. At the 2024, it came in less. Mhmm. And then now with you estimate off of that

lower base Right. It's about a $5,000,000 difference, but then you said about a million dollars in additional investment income. So we're looking for, like, a $4,000,000 delta right now.

Yes. From what we had budgeted.

Okay. And then just a quick follow-up on the mid biennium update. I know this doesn't make a difference in terms of the dollars, but I guess just for accuracy, is there a thought to updating those projections, lowering that 5 percent to 2% or 3%, or do we leave it at 5% since that's what we said at the outset of the biennium?

So as I discussed with the exec's office, council adopted a a two year budget. Mhmm. We have the ability to amend that budget based upon needs, or or other economic issues that come up. The exec's still in the process of deliberating within themselves and trying to figure out what they wanna do. So with that being said, I'm not sure where we're gonna go with it.

Okay. However, we will be doing another review with the revenue committee here shortly this month and next couple weeks and, to look at our revenue estimates and to get a better understanding of where we sit on our six year plan. And that may change that may make the exec's office decide one way or the other. I don't know.

Okay. Thank you.

We have a question online, and then I'll, so council member Peterson.

Thank you, chair Dunn. Have you looked at all, kind of back of the napkin stuff regarding REIT, how our REIT numbers would change if any of the proposed progressive REIT policies were passed at the state level and allowed and, like, counties were allowed to use progressive REIT?

If you're referring council member, if you're referring to being allowed to use REIT two for REIT one expenses, yes, we've been looking at that. We do we are not

No. I was actually looking if if we had progressive REIT rates. So if a property Oh. Over $5,000,000 had a higher percentage as a, you know, a property that was sold at $500,000.

Right. No. We have not adjusted our rate REIT estimates due to any of that. No. We're sticking with the old formula.

Okay. Appreciate it.

Council member, Mead?

Yeah. Thank you. So this question, I have a handful of questions, but this one just is purely out of ignorance. So we're seeing a shortfall in sales tax revenue. There an expect this historically, is there an expected, like, say, it rebounds? Historically, is there a, like, a high pent up demand where it rebounds stronger and we can estimate estimate that that second half of the year if whatever is happening in the federal administration with tariffs or whatever it is economically that's keeping sales tax revenues lower? Or can we expect it to be rebounded at 7%, 8% for Q3, four historically? Or is it

It's a good question. Sales tax bounces a lot. On average, it increases 5% a year. It can decrease. During the Great Recession, we had a negative 8% and a negative 7% back to back. Can it grow, up to I think the highest we've ever had was something like 19%. So it can bounce quite a bit because of the volatility of sales tax. It's one of the reasons why I've been quietly pushing for, you know, fund balance is important because of that volatility. When it will bounce back? How much it will bounce back?

I have no clue. As long as you have a growing economy, as long excuse me. As long as you have a strong employment, strong, growing economy, the Boeing plant does great, long term outlook is always gonna be good. When that will kick in, I don't know. How much? I don't know.

Okay. So there's the short answer is no. There it's not predictable. Might It's not predictable. Might look look like. Like. So on page six I'll get back to it here. You said that the you said something right at the end when before we moved pages that the overspend, department overspends are not included Correct. In this. Correct. But the sales tax, it has been adjusted for the reduced sales tax number or

Yes. That's been the methodology we've applied for the last before I got here.

Okay. So this already, like, doesn't look great. Right. But you said $14,000,000 structural deficit. Right. But then we you have the overspends. And you mentioned the three departments. I think you said sheriff, corrections, and OPD.

Yes.

That's not included in here, but we know that they have overspent. Yes. So why wouldn't we have included it in this for us to see

We haven't included

how big that got.

Because that's the the methodology we have stuck with a certain methodology on the six year plan for like I said before I got here. And from my understanding, from one of the old timers that has recently retired, he said one of the problems is is when you start changing methodologies on a on on a regular basis, it waters down the plan. And then you have everybody, every council member and the executive, and maybe even every executive director has the wrong six year plan, and then it waters down the usefulness. So is it a perfect document? No.

But it by keeping a a a static methodology, do you have something that you know what every everybody knows what you're looking at, and everybody understands. See speaking from the same set of numbers. Yes. So that's the reason why we didn't

hear you on the methodology being consistent makes a lot of sense. But it's hard for me as a council member. I don't know. I don't know. My last question is gonna be what those numbers are what those overspends are for those three departments if you have them. But for me as a council member looking at this six year outlook, seeing, okay, we've got some time. If you look at it, we got till year 06/2030 until we're in the negative. So okay. But like, actually, is our hair on fire? Do we have three departments who are excessively over budget to the point where that timeline has moved up three years?

There are three departments that are materially over budget, and they need to address that issue, my opinion. Yeah.

It'd be helpful if maybe do you know the number for sheriff correction at OPD overspend to date?

Corrections has have put in a request, in the mid biennium review process. We ask all departments to, you know, submit your request. If you want your budget changed or altered, this is the time for you to do that because this is the process.

And it's that's gonna be based on a one year, or is it to date August?

What they it would be to fix their biennium budget.

Okay.

So the corrections department asked for $14,700,000 to fix their biennium budget, so that's two years. OPD was 4,700,000.0. The sheriff's office road patrol didn't ask, but we we anticipate they'll be materially over. Not nearly as much as corrections, but they will be materially over as well.

Okay. So 14.7 OPD is also over two years?

4.7 for OPD. 4.7. Sorry. 4.7 for OPD is over two years.

Okay. That's $20,000,000 in two years, let's say. And you didn't even give me the sheriff's number.

14.7 plus 47 is 1819.4. Yeah.

And that's not including the sheriff's Correct. Non corrections budget that you say is also gonna be materially over budget.

That is correct.

And our structural deficit is 14,000,000 a year.

14 to 16. That is correct.

So it's a doubling of our structural deficit. So our hair is on fire. But why is there not a column here that tells me our hair is on fire?

Well, several reasons.

Is that I guess, before you answer that, is it normal that it do we do this every year where we were a little bit off and we just adjusted and it's not that big of a deal?

Why

So why are we not getting

It's just a couple things. First thing, one of the benefits that we do have in this organization, specifically in our general fund is we we're ending the the 2024 year with a $122,000,000. So we do have a cushion there to right size the ship and to make a decision.

Are all one time. When we we built that cushion up Correct. With two

pretty So you have some time to fix things.

Right. So But we are not there's no impetus to fix it if we don't know our hair is on fire or if our hair is doubly on

fire.

Don't know if there's a a financial term called hair on fire.

We have 14 we have a $14,000,000 structural deficit that we've actually that we've recognized. Yes. But it's actually twice that this year.

Correct.

That's, like

That's significant. It's so couple things. Remember the structural deficit, 6,000,000 doll 5 to $6,000,000 of that structural deficit is the sales tax, which bounces. It has bounced in the wrong direction for us this time around. So that's part of it.

You need to talk to the sheriff's office and OPD about their overspends and get clarity of what's going on there and what can and cannot be fixed or not fixed, how much. And then you have the ongoing structural deficit, the rest of it that we've had for five, ten, fifteen before I got here.

But it's grown. Right? I mean, it wasn't $4,000,000 when I started just five years

ago. It's grown. Remember, part of it's the sales tax. I mean, that's 5 to 6,000,000 of it right there. But, yeah, it has grown, and then lot of due to wage pressures too. Mhmm. We gave out some significant wage increases, last several years to keep up with the inflation and and to be competitive in the marketplace. We did do that.

Okay. Thank you.

Nathan, one note on sales tax. So sales tax fluctuates throughout the year, and we're looking at a point in time and a year to date. Correct. Typically, it's bigger at the end of the year, a lot of spending Right. Holidays.

Right? Right.

So

are we matching trends?

Compared, yes. In terms of the the volatility of like you said, the seasonality of sales tax, yes. Because you always have the big your big sales tax is is December. Right? Christmas. And so are we kinda following that? Yes. Are we staying within budget? No. We're we're 3% this year down this year, and we were about two and a half, 3% down last year as well.

So we're at a similar amount lower compared to previous years. When you look at overall the amount of sales tax, it will

Lower than what was anticipated and budgeted. We're still ahead of last year by two 1.97%. So we're higher than last year, but they're less than budget. So that's a problem because does that mean were we anticipating were we depending upon that increase? Yeah. We were.

And council isn't included in that. We have two council representatives on that

Heidi and Jim. Yep. Revenue committee.

Revenue committee. Thank And then the departments had to take a targeted reduction.

That is correct.

So there's an overspending. This is a look at our our revenue. But, when you think about the spending side, each department also has a targeted reduction.

That's correct. And vast majority of departments, we anticipate will be fine. There are some that aren't. There's the ones we mentioned materially. It might be one or two others that are gonna be over, but not by huge large sums. Okay. But most departments finances is holding its own. HR is holding its own. DCNR is holding its own. So I could go on.

Other questions from council? Councilor Marbleau?

Yeah. So getting back to council member Meade, talking about the sheriff's department. So I've been working with Jim and Nicole the last several weeks on this. I think the sheriff's office in corrections, I think we've already spent over $5,000,000 in overtime this year, first quarter, which is our first six months, which is really what the two year budget is for corrections. And so that money is not coming back, and we are gonna have to find that hole.

And you mentioned, third 14,700,000.0. So, a lot of that, I think, is gonna come from from the overtime with the corrections. You know, I asked I was hoping we'd have this report two weeks ago when we were making decisions on adding more positions because I do believe our hair is on fire. I think I think we are facing a significant budget problem in in my estimation. Do you have that same concern or estimation with I

am concerned, council member. When we have a structural deficit, an ongoing structural deficit, and then we have departments that are overspending, of course, I'm concerned.

So to get to the point, we made a decision. The council did. Next day, I get the first quarter report. I start digging in with with our staff. The report was a lot later than we normally get it. Normally, get it the last of of May first, maybe first week in June. Traditionally, we get the second quarter report in September, like third week in September. My question for you is, are we gonna get the second quarter report by the September?

Yes. We had a little bit of a blurb. Like I said, I've I've, lost some very key two key staff members in my budget division. Well, one is step back, one is retired. And, so yours truly has had to pick up the football and actually do all that work. And, so I'm a little bit slow the first quarter, but we anticipate to be back on target and on track. Yes. And then you mentioned as

you came in today, you saw the May numbers, and it was a little encouraging.

That's correct.

1.9%, I think, is what you said. Cumulatively. Yeah. Coming up. So because we're facing this $20,000,000 overages with several departments, we already have a $14,000,000 structural deficit. Can counsel be included in those monthly finance updates on

The sales tax you're referring to?

The sales tax.

It's not a problem. We do get an email. We can shoot the email to Jim, and then Jim can distribute the sales tax numbers to the five of you.

I mean, yeah, traditionally, it's been 5%. We budgeted it at the 5%. That's all great, but our budget is based off that, and we're not meeting that. And on top of the structural deficit, I'm concerned about it. Let's see. I have a lot of stuff here. I know we're almost out of time. I think what I'll do is follow-up with Jim on some of my questions, and then maybe he can follow-up with you on it. Some of them were answered, but, I could go probably another hour on questions, and we don't have time for that. So thank you.

Nathan, do we have, bank capacity from the county not taking all of our our

Yes. It's around, $4.04 and a half million, if I'm not mistaken, in bank capacity. Yes.

Thank you.

Current bank capacity. I'd have to check with the assessor's office to give you an exact number.

Other questions? We have one more discussion item, but it can be quick. So other quick questions?

It can be quick. Thank you. Yep. So I share the concern that's been expressed about the level of spending and the associated deficit. My question is, you know, if it'd be worth that a future finance committee may be having those departments that are overspending just come in so we can have a conversation about that. I recognize some of that overspending is maybe out of out of their hands, so to speak. But at the very least, I think it's helpful when we're looking at future budgets to make sure that what we're budgeting is is accurate in terms of what we should be expecting those numbers to be. And so, yeah, if we can do that at some point, I think

that'd piggyback on that, those three departments for sure. I've also heard maybe district court might be starting to go up too. So would that be a good one to also add as a fourth?

Potentially, they they're experiencing some strain as well, but not like the the three that I mentioned.

Thank you. Maybe we could do that before the next finance committee. Maybe we do it at admin or something because I don't wanna wait two weeks to do to at least hear from the main departments. Feel like we're gonna be having to make decisions in the next month as a council. It'd be good to hit get this information sooner. I don't know if it's possible with the chair, schedule on the admin.

I I don't have an issue with that if that's something that departments can make work.

Yeah. I'll I'll I'll coordinate with Nicole from law and justice and reach out to the departments and see if we can coordinate a time when they can come up in in the future, either admin or GLS over the next week or so.

Okay. Other questions? Okay. Thank you, Nathan. Next, we just have our 2025 budget note and conditions matrix.

This this will be very quick. The only updated provided by for the second quarter by the executive's office is the offer for development and operation at the Lynnwood crisis care center has been accepted by Seymour. That was the only update that we had for the, budget notes and conditions for the second quarter.

Okay. And everything else is written in the Yep. Link in the document. Okay. That concludes our agenda. And then next is our 11:00 committee meeting for health and community services that we're in recess for until eleven.