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Home My WebLink About1_04 Financial UpdateFINANCIAL UPDATE COUNCIL RETREAT 2026 Agenda •Financial Outlook and Major Cost Drivers •Year End Update (2025) •Anticipated budget needs for 2026 •General Fund Revenues •Property Tax •Sales Tax •Fiscal Sustainability •Long Range Forecast •Transparency and Data-Informed Oversight •Budget timeline & public outreach •Budget 2027-2028 •Challenges, Changes, Limitations and New •Debt 2025 PRELIMINARY YEAR END GENERAL FUND General Fund Budgeted Projected Beginning Fund Balance $116.0 $116.0 Revenues 151.3 158.1 Expenditures 168.6 157.4 Projected Gain(Use) of Reserves* * Projected reserves do not include unspent committed costs of approx $2.5M (17.3) 0.7 $98.7 $116.7 Projected Ending Fund Balance 2026 UNAPPROPRIATED COSTS General Fund Carryforward of Committed Costs $ 2.5 Flood Repairs 5.0 Existing Capital Project Needs 4.0 Property Acquisitions 2.3 Legal Fees 1.0 Total additional needed for 2026 $ 14.8 1. Other taxes includes business license fees, permits, gambling, admissions, franchise fees and REET 2. Intergovernmental includes stated shared revenue and service charges 3. Miscellaneous includes fines, forfeits, interfund transfers and development services Property Tax 19% Sales Tax 29% Utility Tax 13% B & O Taxes 16% Other Taxes1 4% Intergovernmental2 6% Miscellaneous3 13% GENERAL FUND REVENUES PROPERTY TAX DISTRIBUTION 2026 Renton School $ 3.443 State School Fund 2.250 King County 1.550 Renton RFA 0.969 City of Renton 0.880 VMC #1 0.742 KCLS 0.235 EMS 0.251 Regional Transit Authority 0.159 Port of Seattle 0.099 Total Property Tax Rate $ 10.578 ANNUAL SALES TAX COMPARISON $38.1M 2025 Sales Tax Revenue (down 0.3% from 2024) Summary ($ in Millions) 2024 Actual 2025 Proj Actual 2026 Estimated 2027 Projected 2028 Projected 2029 Projected 2030 Projected 2031 Projected Beginning Fund Balance 99.2$ 116.0$ 116.7$ 98.5$ 94.4$ 88.6$ 81.0$ 71.3$ Operating Revenue 156.3$ 158.1$ 150.0$ 152.8$ 155.8$ 158.7$ 161.8$ 164.9$ Base Operating Expenditure (122.8) (130.7) (149.1) (155.2) (159.9) (164.9) (169.9) (175.1) Carryforward/Q1 BA - - (2.5) - - - - - Operating Surplus (Deficit)33.4$ 27.4$ (1.6)$ (2.3)$ (4.1)$ (6.2)$ (8.2)$ (10.3)$ 1X Sources -$ -$ -$ -$ -$ -$ -$ -$ 1X Uses (16.7) (26.7) (16.6) (1.7) (1.7) (1.5) (1.5) (1.5) Net Resources - (Uses)16.7$ 0.7$ (18.2)$ (4.0)$ (5.8)$ (7.7)$ (9.7)$ (11.8)$ Ending Fund Balance 116.0$ 116.7$ 98.5$ 94.4$ 88.6$ 81.0$ 71.3$ 59.5$ Ending Bal as % of Opr Budget (Target=12%)94%89%66%61%55%49%42%34% $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 2024 Actual 2025 Proj Actual 2026 Estimated 2027 Projected 2028 Projected 2029 Projected 2030 Projected 2031 Projected Mi l l i o n s Operating Revenue Base Operating Expenditure Ending Fund Balance Long Range Financial Projection 2026-2031 2027/2028 BUDGET TIMELINE Committee of the Whole JUN Regular Council Meeting JUL AUG SEPT NOVOCT JUN JUL AUG SEPT OCT NOV Communitywide Budget Survey April Department Presentations October 12, 19, 26 Public Hearing #1 June 22 Mayor delivers budget message; Preliminary budget presented to Council October 5 Public Hearing #2 on Revenue Sources & Proposed Budget (as required by RCW 35A.34) October 12 Public Hearing #3 November 2 Q1 Financial Update, Revenue Assumptions, Budget Survey and Dept Priorities June 22 PUBLIC ENGAGEMENT •Three Public Hearings •Community Budget Survey Wider range of feedback on citywide priorities Ability to reach diverse population/demographics Gather feedback earlier in the budget process CHALLENGES & LIMITATIONS •No Increased Revenues: Flat tax base and limited revenue growth restrict additional programs •Repurposing Existing Funds: Administrators will need to consider reallocating current funding to support any new programs or priorities •Ongoing Capital Projects: Projects already in progress require continued funding commitments •Rising Costs: Inflation and supply chain impacts may require additional appropriations to complete capital improvements •Limited Flexibility: Contractual obligations and essential services reduce discretionary spending capacity DEBT OPTIONS backed by the full faith and credit of the city backed by user fee revenues Revenue BondsGeneral Obligation (GO) Bonds LIMITATION OF DEBT 1. General Obligation Debt – 2.5% •Non-Voter Approval - up to 1.5% of city’s total assessed property value •Funded through existing revenue (like taxes and fees) •Voter Approval - up to 1% of the city’s total assessed property value •Funded by an additional property tax (voter-approved bonds) 2. Utility – 2.5% •Requires voter approval •Funded by utility rates or special taxes 3. Open Space and Parks – 2.5% •Requires voter approval DEBT 14 BUDGET DEVELOPMENT – NEXT STEPS •Leadership budget planning session – to identify department needs and priorities •Prioritize capital improvement projects •Prepare baseline department budgets, long-range forecast and revenue projections •Citywide staff collaboration to consider budget requests, recognize potential cost/budget savings and identify funding sources Questions?