Federal Way finance director reports sluggish sales-tax receipts and recommends monitoring fund balance to cover shortfall

City finance staff presented the September 2025 monthly financial report, telling the committee that sales-tax revenue is running below budget though slightly ahead of last year, and that real-estate excise tax (REET) and permit revenues continue to lag. Staff said unrestricted utility tax is favorable to budget but that overall the city faces an approximately $1.1 million shortfall versus forecast for the near term.

Finance staff described how the city is managing liquidity following ARPA-era spending, saying the city is maintaining a target of roughly $20 million of liquid reserves while scaling back long-term investments and delaying projects as needed. Staff said departments were already managing expenses and that drawing on fund balance is a likely short-term option rather than making immediate service cuts.

Committee members pressed staff on triggers for cuts, carryforward rules for departmental operational budgets, the status of an interfund loan related to the Target/Trent property, and whether solar or other energy-efficiency measures had been analyzed for utilities spending. Finance staff said some revenue lines lag due to market and mortgage-rate conditions and that the department will continue monthly monitoring and provide follow-up details.

Committee vote: the committee forwarded the monthly financial report to the Nov. 5 consent agenda (voice vote recorded 3-0).