Draft December report shows $23,109 operating loss; committee reconsiders $15 million ‘one‑time’ tax threshold

Jeff (staff member) presented the December 2024 general fund draft financial report and told the committee, “I do wanna stress that these are draft numbers. We're still going through year end.” Jeff said the draft operating income showed a small loss and highlighted revenue shortfalls in sales tax and some utilities.

Jeff reported a total operating loss of about $23,109 and said several revenue lines finished under budget. He identified construction-related sales tax as an underperforming segment and explained that property-tax collections were lower than budget because the county calculates the final levy after the city’s budget request; he gave the budgeted property-tax figure as $5,639,000 and the amount actually levied by King County as about $5,588,600.

Committee members discussed specific revenue items and transfers. Jeff said cannabis excise tax is recorded on the intergovernmental line and that the city budgeted $110,000 and received about $131,000. He also noted a $244,000 variance in fees and penalties caused in part by legislative changes that required removing Redondo speed-camera revenue from the general fund. The report showed a transfer of about $3,900,000 in ARPA funds, approximately $2.6 million of which was used to support the general fund.

The meeting also reviewed the city’s “one‑time” tax policy (fund 309). A staff slide cited Des Moines municipal code and Ordinance 1561 (adopted 02/2012) setting a $15,000,000 project-value threshold: development projects with total value exceeding $15,000,000 produce sales and B&O revenues that the code treats as one‑time and requires the city to transfer them from the general fund to a capital improvements fund (fund 309). Staff showed the historical transfers into fund 309 (first transfers in 2016, peaks around 2018, 2021) and a current cash balance the presenter described as “almost $1,300,000.” Projects funded from the one‑time fund included Puget Sound Gateway/SR 509-related work, downtown alley improvements, Redondo paid parking, the North Bulkhead, and Soundview Park.

Staff asked the committee whether the $15,000,000 benchmark remains appropriate. Staff noted that $15,000,000 in 2012 dollars equates to roughly $20,100,000 in 2025 dollars and suggested the council revisit the policy and consider whether portions of large projects should be treated as recurring revenue versus one‑time revenue. Committee members asked staff to coordinate the review with Marina CIP work and other capital needs, consult with Mike Slavin, and return with an analysis that could inform future budgets (potentially for the 2026 biennial cycle).

Ending: No ordinance change was adopted at the meeting; staff will return with a policy analysis and recommendations for committee and council consideration.