Committee forwards March financial report and vouchers amid questions on sales tax, permits and vacancies

The Federal Way Finance and Administration Committee on April 22 forwarded the city’s March monthly financial report and the month’s accounts-payable and payroll vouchers to the May 6 consent agenda after a detailed presentation by Finance Director Jack Grooms.

Grooms told the committee that national inflation has declined for two consecutive months and reviewed city revenue lines. He said sales-tax receipts were 3% below budget but 4% above the prior year, and that permit-fee revenue was $473,000 unfavorable to budget and $330,000 under prior year. “This has got a $473,000 unfavorable variance to budget so far,” Grooms said.

Grooms and committee members discussed other revenue items: real-estate-excise tax showed an uptick in March compared with prior months, while interest revenue trailed budget because the city spent significant cash early in the year on one-time items (insurance, elections, IT licensing). Grooms noted the city’s investment yields remain elevated compared with 2024, but said forecasting remains uncertain because many revenues arrive on lags.

Council members pressed staff on staffing and operational questions. Committee members sought a snapshot of current vacancies and the potential for a hiring freeze. Grooms said the human-resources and finance teams have been rebuilding after recent departures and that the finance department had several recent promotions and hires; he and committee members agreed to convey the request for a hiring-freeze briefing to the administration.

Members also raised the status of the previously negotiated sale of the old Target property to Trent. Grooms said the development agreement is signed but the transaction has not closed and the city has not received proceeds. He noted the city used internal capital funds to cover the purchase and structured an interfund arrangement expecting proceeds from the sale; those internal payments remain on the city’s books pending a closing.

Other items discussed: the police vehicle fleet replacement cadence, timing of large permit-related cash inflows for ongoing housing developments, and the first debt payment on the operations and maintenance bond, which Grooms said is scheduled for December and is included in the budget.

Committee action: the committee moved to forward AP vouchers (March 16–April 15) and payroll vouchers (March 30–31) to the May 6 consent agenda; it also moved to forward the March monthly financial report to the May 6 consent agenda. All motions carried.

Why it matters: the report identified several unfavorable variances against the adopted budget — notably sales tax and permit fees — prompting council members to request additional forecasting, vacancy data, and options such as hiring freezes or project deferrals to manage potential shortfalls.

What’s next: staff will provide follow-up details requested by council members (vacancy snapshot, permit timing for major developments, status of Trent/Target transaction) and the forwarded items will appear on the May 6 city council consent agenda for final action.