Okay, we'll begin.

This is the City of Everett budget council committee meeting for September 16th, 2026.

Um, we are in the Everett City Council chambers, and all of us are present, including the mayor, which is great to see.

Um, on our agenda today is the 2026 budget status update.

And I'll pass that over to our administrator Jennifer Gregerson.

Um, thank you.

Well, uh, finance director Chris Godwin, I'll get the presentation up for you and we'll get rolling.

All right.

Much faster this week than last week.

Um, thank you for the record, Chris Godwin, Finance Director City of Everett.

Um, so today we're going to be giving a budget update that covers our July year to day performance and year-end projection.

Um, talking a little bit about our 2027 baseline position and then reviewing the budget process from here.

There have been some changes and dates.

Um the intent of the meeting is this is to discuss where we are financially right now, what we think that's going to look like for the year end, and how that's going to inform some of uh next year's discussion, and to make sure that you have a pretty good, pretty strong foundation on our starting position and then our anticipated expenditures um again from a starting position for next year.

Um and all of this is building toward next week where we have a revenue update and then getting ready for the budget hearings on November 4th, 10th, and 18th, when we're really going to be talking about the nuts and bolts of the actual budget.

All right.

So July financials and looking at our general government revenues, as of the close of July, our cumulative general fund revenues are about 40,000 higher than our year to date budgetary projection.

Um this is reflective of all general government revenues.

By and large, the various revenues are meeting or exceeding expectations, and we're going to dive more into those in detail next week, going over all of the revenue streams in general government at the revenue workshop.

But today we are going to briefly discuss two of the revenue streams in a little bit more detail.

Starting with sales tax.

And the reason we're talking about sales tax is because last year when we did fall short of our sales tax projections by about 1.3 million.

It was a source of concern, largely driven by the strike.

Um, that is not a concern this year, but I wanted to spend a couple seconds talking about that now.

Um generally sales tax proceeds are up across the board, with the exception of construction and with the led by um building construction in specific.

Uh, despite that, looking at where we are at this point this year, we are projecting to be about $600,000 to the good at the year end in sales tax.

So it's a pretty big swing from 25 to 26.

And again, that's largely just because there was a one-time incident in 25 that's not there anymore.

The other revenue stream I wanted to talk about today is uh BO taxes.

Prior to July, B and O taxes were on track to narrow the gap that started in January.

And what I mean by that is if you look at that percentage column on that table on the left, in January, we started at about 80% of our budget revenues.

And then in February and March, we kind of caught up.

Then if you look at April, May, and June, that number jumped up to 95%.

And this is because B and O taxes have a natural cycle to them every quarter.

You get about 75% of your revenues for the quarter in the first month of the quarter, and then about 20%, and then about 5%.

Most businesses report in that first quarterly month.

Looking at quarter one compared to quarter two, we had hoped and would have hoped that in quarter three in July that we did see that number ticking up closer to 96 or 97%.

However, in July, um, our B and O receipts, specifically in the manufacturing sector, did fall below projections.

While they did fall below projections, this was not unanticipated.

When we develop the budget as we're doing right now, we do dive into these numbers a little bit more deeply and do reach out to certain stakeholders.

And in those in that analysis and in those conversations, we did anticipate falling short in 2026 in manufacturing a little bit, but that it would be offset in 2027 by an approximately commensurate amount.

So at this point, we're looking at the shortfall in 26 as a one-time sort of impact that should be recovered in 2027.

Question.

Yeah.

Why?

Well, why I mean, okay, you anticipated the 26, and why do you expect the 27 to make up for it?

Um that's an answer I'd love to punt to next week when we go into detail on the revenues.

However, even then, I won't necessarily be able to speak about it in detail in public because there are certain restrictions on what I can discuss about specific B and O receipts.

However, it's largely due to the delivery of large manufactured products.

Thank you.

Okay.

So those are the revenues.

Again, that's only two, but those are sort of two of our largest um revenue streams, especially in taxes.

The third one, as you you're all probably gonna guess, is property taxes and property taxes almost always perform right around 100% of what uh of what we project.

And that's because it's a very estimable, you know, figure.

Switching briefly to the July year to date expenditures.

Um expenditures in July did pick up a little bit.

And again, I'm benchmarking this against that year to date percent of budget column on the right where we jumped from 99% to 101.5%.

Um, that a dollar figure translates to us having spent about $500,000 more through July than our budgetary projection through July.

It's important to note that when we set the budget, we do set it for the whole year.