Okay, well, thank you.

We'll begin.

This is August 20th, 2025.

This is the Everett City Council budget committee meeting.

We're actually having this meeting before the council meeting.

So those of you who might be watching, I encourage you all to attend in person or I'm thankful that you're watching this via remote or via recorded.

So we have three things on our item for items today on our agenda.

Year to date general government budget performance for June 2025.

Financial forecasting and impact on the budget deficit.

And our third agenda item is contingency reserve.

We're going to cover our rainy day fund and do a review of that of that fund.

So to begin, we'll start with administration if they would like to begin.

Yes, I'll just um mention that uh finance director Heidi and Assistant Director Gameli are here, and they're she's getting up to screen in a second to do the presentation and just walk through all of those topics as kind of one briefing.

So thank you very much.

Great.

Uh good evening, Mayor and City Council.

Uh Heidi Berlantez Finance Director joining me as Jamie Lee Graves, our assistant finance director.

Um Council President Schwab already listed all of our agenda items.

So we'll just get started on the year-to-date budget performance review as of June 30th.

All right, starting off with general government revenues as of June 30th, revenues exceeded year-to-date projections by 2,253,177 or 2.8%.

This increase is driven primarily by B and O tax revenues, along with strong performance in grants and other tax categories.

Overall revenues ended the second quarter on a strong note.

Taking a closer look at our major revenue streams, business and occupation tax receipts are up 734,271 or 7.9% year to date.

Our largest B and O payments are received quarterly in January, April, July, and October.

Sales tax receipts are closely aligned with the budget, coming in just 283,489 or 1.5% below projections year to date.

As you know, sales tax receipts have a two-month leg.

So June receipts reflect April activity.

This table lists our six largest sales tax categories.

The percent each category makes up of total sales tax receipts based on June 30th results, as well as how each one is performing relative to budget.

Wholesale trade, manufacturing and information came in above budget, while retail construction and accommodation and food services have fallen short.

As mentioned, sales tax receipts are tracking close to budget, which is a strong position compared to what some of our peer jurisdictions have reported recently.

We continue to see certain categories impacted by broader national economic pressures, things like trade policy shifts, interest rates, and tariffs.

At the same time, some categories are performing above expectations.

Those gains are helping to offset the shortfall in other categories, which is why overall our sales tax revenues remain largely on target.

Moving on to general government expenditures, just like with revenues, we base our monthly expenditure forecasts on historical trends, which helps us plan for the natural ebb and flow of expenses throughout the year.

We ended the first half of the year in a good position.

Year-to-date expenditures came in $4.8 million or 5.8% under budget.

Departments have shown commendable fiscal discipline, consistently keeping expenditure below budget.

Looking ahead, expenditures are expected to align more closely with the budget as the annual pavement maintenance overlay project is now underway.

Next on the agenda.

Excuse me, Council President.

And before you move on from that, I I think that really uh sums up kind of our our June financial report.

And I just wanted to add that we have a truly exceptional finance team that has done an amazing job of forecasting, uh, not just this year, but in previous years as well.

And I think that has really helped us in comparison to some of our other cities.

So we have that B and O tax to buffer kind of the some of the ebbs and flows in sales tax.

But truly, this team has done a great job of being very conservative with their forecasting, so that when we do see lulls that um we're in a we're still in a good position as a city.

So I just wanted to publicly say that and thank you and your entire team for the really good forecasting work that you continue to do for us.

Thank you.

Thank you.

Councilmember Fogley.

May I ask a question?

Of course.

Um, I'm just curious for sales tax.

Are brick and mortar retail sales captured differently or all the same as online sales?

Like I know, well, I think I know that online sales are uh collect sales tax for the city.

Maybe I'm wrong, but can you tell me about that a little bit?

Yeah, and uh the online sales would be based on where uh those goods or services are being delivered.

Um, so uh as an example, if the consumer were to deliver goods and services within Everett City limits, then we would receive uh those tax revenues.

And can we differentiate where brick and mortar sales and online sales come from or not?

I'm just I don't know.